FORM OF INVESTMENT ADVISORY AGREEMENT
FIRSTHAND FUNDS
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
This Investment Advisory and Management Agreement ("Agreement"), is
made and entered into as of September 9, 1999 by and between FIRSTHAND FUNDS, a
Delaware business trust (the "Trust") and FIRSTHAND CAPITAL MANAGEMENT, INC.,
(the "Adviser") each having its principal place of business at 000 Xxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxx, Xxxxxxxxxx 00000.
WHEREAS, the Fund, an open-end, non-diversified investment company
registered under the Investment Company Act of 1940, as amended, (the "1940
Act"), wishes to retain the Adviser to provide investment advisory and
management services to TECHNOLOGY VALUE FUND (the "Fund"); and
WHEREAS, the Adviser is willing to furnish such services on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. The Trust hereby appoints the Adviser to manage the investment and
reinvestment of assets of the Fund for the period and on the terms set
forth in this Agreement. The Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation
herein provided.
2. The Fund shall at all times inform the Adviser as to the securities
owned by it, the funds available or to become available for investment
by it, and generally as to the condition of its affairs. It shall
furnish the Adviser with such other documents and information with
regard to its affairs as the Adviser may from time to time reasonably
request.
3. Subject to the direction and control of the Fund's Board of Trustees,
the Adviser shall regularly provide the Fund with investment research,
advice, management and supervision and shall furnish a continuous
investment program for the Fund's portfolio of securities consistent
with the Fund's investment objective, policies, and limitations as
stated in the Fund's current Prospectus and Statement of Additional
Information. The Adviser shall determine from time to time what
securities will be purchased, retained or sold by the Fund, and shall
implement those decisions, all subject to the provisions of the Fund's
Declaration of Trust, the 1940 Act, the applicable rules and
regulations of the Securities and Exchange Commission, and other
applicable federal and state laws, as well as the investment
objectives, policies, and limitations of the Fund. In placing orders
for the Fund with brokers and dealers with respect to the execution of
the Fund's securities transactions, the Adviser shall attempt to
obtain the best net results. In doing so, the Adviser may consider
such factors which it deems relevant to the Fund's best interest, such
as price, the size of the transaction, the nature of the market for
the security, the amount of the commission, the timing of the
transaction, the reputation, experience and financial stability of the
broker-dealer involved and the quality of service rendered by the
broker-dealer in other transactions. The Adviser shall have the
discretionary authority to
utilize certain broker-dealers even though it may result in the
payment by the Fund of an amount of commission for effecting a
securities transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction,
providing, however, that the Adviser had determined that such amount
of commission was reasonable in relation to the value of the brokerage
and research services provided by the broker-dealer effecting the
transaction. In no instance will portfolio securities be purchased
from or sold to the Adviser or any affiliated person thereof except in
accordance with the rules and regulations promulgated by the
Securities and Exchange Commission pursuant to the 0000 Xxx. The
Adviser shall also provide advice and recommendations with respect to
other aspects of the business and affairs of the Fund and shall
perform such other functions of management and supervision as may be
directed by the Board of Trustees of the Fund, provided that in no
event shall the Adviser be responsible for any expense occasioned by
the performance of such functions.
4. The Adviser is responsible for (1) compensation of any of the Fund's
trustees, officers and employees who are interested persons of the
Adviser and (2) compensation of the Adviser's personnel and other
expenses incurred in connection with the provisions of portfolio
management services under this Agreement. Other than as herein
specifically indicated, the Adviser shall not be responsible for the
Fund's expenses. Specifically, the Adviser will not be responsible,
except to the extent of the reasonable compensation of employees of
the Fund whose services may be used by the Adviser hereunder, for any
of the following expenses of the Fund, which expenses shall be borne
by the Fund: legal and audit expenses, organization expenses;
interest; taxes; governmental fees; fees, voluntary assessments and
other expenses incurred in connection with membership in investment
company organizations; the cost (including brokerage commissions or
charges, if any) of securities purchased or sold by the Fund and any
losses incurred in connection therewith; fees of custodian, transfer
agents, registrars or other agents; distribution fees; expenses of
preparing share certificates; expenses relating to the redemption or
purchase of the Fund's shares; expenses of registering and qualifying
Fund shares for sale under applicable federal and state law and
maintaining such registrations and qualification; expenses of
preparing, setting in print, printing and distributing prospectuses,
proxy statements, reports, notices and dividends to Fund shareholders;
cost of stationery; costs of shareholders and other meetings of the
Fund; compensation and expenses of the independent trustees of the
Fund; and the Fund's pro rata portion of premiums of any fidelity bond
and other insurance covering the Fund and its officers and trustees.
5. No trustee, officer or employee of the Fund shall receive from the
Fund any salary or other compensation as such trustee, officer or
employee while he is at the same time a director, officer or employee
of the Adviser or any affiliated company of the Adviser. This
paragraph shall not apply to trustees, executive committee members,
consultants and other persons who are not regular members of the
Adviser's or any affiliated company's staff.
6. As compensation for the services performed by the Adviser, the Fund
shall pay the Adviser, as promptly as possible after the last day of
each month, a fee, accrued each calendar day (including weekends and
holidays) at the rate of 1.5% per annum of the daily net assets of the
Fund. The Adviser shall reduce such fee or, if necessary, make expense
reimbursements to the Fund to the extent required to limit the total
annual
operating expenses of the Fund (net of Rule 12b-1 and shareholder
servicing fees) to 1.95% of its average daily net assets up to $200
million; 1.90% of such assets from $200 million to $500 million; 1.85%
of such assets from $500 million to $1 billion; and 1.80% of such
assets in excess of $1 billion. The daily net assets of the Funds
shall be computed as of the time of the regular close of business of
the New York Stock Exchange or such other time as may be determined by
the Board of Trustees of the Fund. Any of such payments as to which
the Adviser may so request shall be accompanied by a report of the
Fund prepared either by the Fund or by a reputable firm of independent
accountants which shall show the amount properly payable to the
Adviser under this Agreement and the detailed computation thereof.
7. The Adviser assumes no responsibility under this Agreement other than
to render the services called for hereunder in good faith, and shall
not be responsible for any action of the Board of Trustees of the Fund
in the following or declining to follow any advice or recommendation
of the Adviser; provided that nothing in this Agreement shall protect
the Adviser against any liability to the Fund or its stockholders to
which it would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties
hereunder.
8. The Adviser shall be an independent contractor and shall have no
authority to act for or represent the Fund in its investment
commitments unless otherwise provided. No agreement, bid, offer,
commitment, contract or other engagement entered into by the Adviser
whether on behalf of the Adviser or whether purporting to have been
entered unto on behalf of the Fund shall be finding upon the Fund, and
all acts authorized to be done by the Adviser under this Agreement
shall be done by it as an independent contractor and not as an agent.
9. Nothing in this Agreement shall limit or restrict the right of any
director, officer, or employee of the Adviser who may also be a
trustee, officer, or employee of the Fund, to engage in any other
business or to devote his time and attention in part to the management
or other aspects of any other business, whether of a similar nature or
a dissimilar nature, nor to limit or restrict the right of the Adviser
to engage in any other business or to render services of any kind,
including investment advisory and management services, to any other
corporation, firm, individual or association.
10. As used in this Agreement, the terms "assignment," "interested
person," and "majority of the outstanding voting securities" shall
have the meanings given to them by Section 2(a) of the 1940 Act,
subject to such exemptions as may be granted by the Securities and
Exchange Commission by any rule, regulation or order.
11. This Agreement shall terminate automatically in the event of its
assignment by the Adviser and shall not be assignable by the Fund
without the consent of the Adviser. This Agreement may also be
terminated at any time, without the payment of penalty, by the Fund or
by the Adviser on sixty (60) days' written notice addressed to the
other party at its principal place of business.
12. This Agreement shall become effective on the date hereof and shall
continue in effect for two years and from year to year thereafter only
so long as specifically approved annually,
(1) by vote of a majority of the trustees of the Fund who are not
parties to this Agreement or interested persons of such parties, cast
in person at a meeting called for that purpose, and, (2) either by
vote of the holders of a majority of the outstanding voting securities
of the Fund or by a majority vote of the Fund's Board of Trustees.
13. No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the
party against which enforcement of the change, waiver, discharge or
termination is sought, and no materials amendment of this Agreement
shall be effective until approved by vote of the holders of a majority
of the Fund's outstanding voting securities.
14. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and
their respective successors.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and sealed by their officers thereunto duly authorized on the day and
year first above written.
FIRSTHAND FUNDS
By ___________________________
its President
FIRSTHAND CAPITAL MANAGEMENT, INC.
By ___________________________
its President
