DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of May 1, 2000, as amended April 6, 2004, be-
tween the BERKSHIRE FUNDS, ("Fund"), a Delaware Business Trust, BERKSHIRE
CAPITAL HOLDINGS, INC. (the "Adviser") and XXXXXXXX CAPITAL MARKETS, LLC,
("RCM"), a corporation organized and existing under the laws of the State of
New York.
WHEREAS the Fund is registered under the Investment Company Act of 1940,
as amended ("1940 Act"), as an open-end management investment company, and has
registered one or more distinct series of shares of beneficial interest
("Shares") for sale to the public under the Securities Act of 1933, as amended
("1933 Act"), and has qualified its shares for sale to the public under
various state securities laws; and
WHEREAS the Fund desires to retain RCM as principal underwriter in
connection with the offering and sale of the Shares of each series listed on
Schedule A (as amended from time to time) to this Agreement; and
WHEREAS this Agreement has been approved by a vote of the Fund's board of
trustees or directors ("Board") and its disinterested trustees/directors in
conformity with Section 15(c) under the 1940 Act; and
WHEREAS RCM is willing to act as principal underwriter for the Fund on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment
The Fund hereby appoints RCM as its agent to be the principal underwriter
so as to hold itself out as available to receive and accept orders for the
purchase and redemption of Shares on behalf of the Fund, subject to the terms
and for the period set forth in this Agreement. RCM hereby accepts such
appointment and agrees to act hereunder. The Fund understands that any
solicitation activities conducted on behalf of the Fund will be conducted
primarily, if not exclusively, by employees of the Fund's sponsor who shall
become registered representatives of RCM.
2. Services and Duties of RCM
(a) RCM agrees to sell Shares on a best efforts basis from time to
time during the term of this Agreement as agent for the Fund and upon the
terms described in the Registration Statement. As used in this Agreement, the
term "Registration Statement" shall mean the currently effective registration
statement of the Fund, and any supplements thereto, under the 1933 Act and the
1940 Act.
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(b) RCM will hold itself available to receive purchase and redemption
orders satisfactory to RCM for Shares and will accept such orders on behalf of
the Fund. Such purchase orders shall be deemed effective at the time and in
the manner set forth in the Registration Statement.
(c) RCM, with the operational assistance of the Fund's transfer agent,
shall make Shares available through the National Securities Clearing
Corporation's Fund/SERV System.
(d) RCM shall provide to investors and potential investors only such
information regarding the Fund as the Fund shall provide or approve. RCM shall
review and file all proposed advertisements and sales literature with
appropriate regulators and consult with the Fund regarding any comments
provided by regulators with respect to such materials.
(e) The offering price of the Shares shall be the price determined in
accordance with, and in the manner set forth in, the most-current Prospectus.
The Fund shall make available to RCM a statement of each computation of net
asset value and the details of entering into such computation.
(f) RCM at its sole discretion may repurchase Shares offered for sale
by the shareholders. Repurchase of Shares by RCM shall be at the price
determined in accordance with, and in the manner set forth in, the
most-current Prospectus. At the end of each business day, RCM shall notify, by
any appropriate means, the Fund and its transfer agent of the orders for
repurchase of Shares received by RCM since the last such report, the amount to
be paid for such Shares, and the identity of the shareholders offering Shares
for repurchase. The Fund reserves the right to suspend such repurchase right
upon written notice to RCM. RCM further agrees to act as agent for the Fund to
receive and transmit promptly to the Fund's transfer agent shareholder
requests for redemption of Shares.
(g) RCM shall not be obligated to sell any certain number of Shares.
(h) RCM shall prepare reports for the Board regarding its activities
under this Agreement as from time to time shall be reasonably requested by the
Board.
3. Duties of the Fund
(a) The Fund shall keep RCM fully informed of its affairs and shall
provide to RCM from time to time copies of all information, financial
statements, and other papers that RCM may reasonably request for use in
connection with the distribution of Shares, including, without limitation,
certified copies of any financial statements prepared for the Fund by its
independent public accountant and such reasonable number of copies of the most
current Prospectus, Statement of Additional Information ("SAI"), and annual
and interim reports as RCM may request, and the Fund shall fully cooperate in
the efforts of RCM to sell and arrange for the sale of Shares.
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(b) The Fund shall maintain a currently effective Registration
Statement on Form N-1A with the Securities and Exchange Commission (the
"SEC"), maintain qualification with applicable states and file such reports
and other documents as may be required under applicable federal and state
laws. The Fund shall notify RCM in writing of the states in which the Shares
may be sold and shall notify RCM in writing of any changes to such
information. The Fund shall bear all expenses related to preparing and
typesetting such Prospectuses, SAI and other materials required by law and
such other expenses, including printing and mailing expenses, related to the
Fund's communication with persons who are shareholders.
(c) The Fund shall not use any advertisements or other sales materials
that have not been (i) submitted to RCM for its review and approval, and (ii)
filed with the appropriate regulators.
(d) The Fund represents and warrants that its Registration Statement
and any advertisements and sales literature (excluding statements relating to
RCM and the services it provides that are based upon written information
furnished by RCM expressly for inclusion therein) of the Fund shall not
contain any untrue statement of material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and that all statements or information furnished to RCM,
pursuant to Section 3(a) hereof, shall be true and correct in all material
respects.
4. Other Broker-Dealers
RCM in its discretion may enter into agreements to sell Shares to such
registered and qualified retail dealers, as reasonably requested by the Fund.
In making agreements with such dealers, RCM shall act only as principal and
not as agent for the Fund. The form of any such dealer agreement shall be
mutually agreed upon and approved by the Fund and RCM.
5. Withdrawal of Offering
The Fund reserves the right at any time to withdraw all offerings of any
or all Shares by written notice to RCM at its principal office. No Shares
shall be offered by either RCM or the Fund under any provisions of this
Agreement and no orders for the purchase or sale of Shares hereunder shall be
accepted by the Fund if and so long as effectiveness of the Registration
Statement then in effect or any necessary amendments thereto shall be
suspended under any of the provisions of the 1933 Act, or if and so long as a
current prospectus as required by Section 5(b)(2) of the 1933 Act is not on
file with the SEC.
6. Services Not Exclusive
The services furnished by RCM hereunder are not to be deemed exclusive.
RCM shall be free to furnish similar services to others so long as its
services under this Agreement are not impaired thereby. The Fund reserves the
right to (i) sell Shares to investors on applications received and accepted by
the Fund; (ii) issue Shares in connection with a merger, consolidation or
recapitalization of the Fund; or (iii) issue additional Shares to holders of
Shares.
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7. Expenses of the Fund
The Fund shall bear all costs and expenses of registering the Shares with
the SEC and state and other regulatory bodies, and shall assume expenses
related to communications with shareholders of the Fund including, but not
limited to, (i) fees and disbursements of its counsel and independent public
accountant; (ii) the preparation, filing, and printing of Registration
Statements and/or Prospectuses or SAIs; (iii) the preparation and mailing of
annual and interim reports, Prospectuses, SAIs, and proxy materials to
shareholders; (iv) such other expenses related to the communications with
persons who are shareholders of the Fund; and (v) the qualifications of Shares
for sale under the securities laws of such jurisdictions as shall be selected
by the Fund pursuant to Paragraph 3(b) hereof, and the costs and expenses
payable to each such jurisdiction for continuing qualification therein. In
addition, the Fund shall bear all costs of preparing, printing, mailing and
filing any advertisements and sales literature. RCM does not assume
responsibility for any expenses not assumed hereunder.
8. Compensation
As compensation for the services performed and the expenses assumed by RCM
under this Agreement including, but not limited to, any commissions paid for
sales of Shares, the Adviser shall pay RCM, as promptly as possible after re-
ceipt of a quarterly invoice, a fee as set forth in Schedule B to this Agree-
ment.
9. Share Certificates
The Fund shall not issue certificates representing Shares unless
requested to do so by a shareholder. If such request is transmitted through
RCM, the Fund will cause certificates evidencing the Shares owned to be issued
in such names and denominations as RCM shall from time to time direct.
10. Status of RCM
RCM is an independent contractor and shall be agent of the Fund only with
respect to the sale and redemption of Shares.
11. Indemnification
(a) The Fund agrees to indemnify, defend, and hold RCM, its officers
and directors, and any person who controls RCM within the meaning of Section
15 of the 1933 Act, free and harmless from and against any and all claims,
demands, liabilities, and expenses (including the cost of investigating or
defending such claims, demands, or liabilities and any counsel fees incurred
in connection therewith) that RCM, its officers, directors, or any such
controlling person may incur under the 1933 Act, or under common law or
otherwise, arising out of or based upon any (i) alleged untrue statement of a
material fact contained in the Registration Statement, Prospectus, SAI or
sales literature, (ii) alleged omission to state a material fact required to
be stated in the either thereof or necessary to make the statements therein
not misleading, or (iii) failure by the Fund to comply with the terms of the
Agreement; provided, that in no event shall anything contained herein be so
construed as to protect RCM against any liability to the Fund or its
shareholders to which RCM 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 under this
Agreement.
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(b) The Fund shall not be liable to RCM under this Agreement with
respect to any claim made against RCM or any person indemnified unless RCM or
other such person shall have notified the Fund in writing of the claim within
a reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon RCM or such
other person (or after RCM or the person shall have received notice of service
on any designated agent). However, failure to notify the Fund of any claim
shall not relieve the Fund from any liability that it may have to RCM or any
person against whom such action is brought otherwise than on account of this
Agreement.
(c) The Fund shall be entitled to participate at its own expense in
the defense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this Agreement. If the Fund elects to assume the
defense of any such claim, the defense shall be conducted by counsel chosen by
the Fund and satisfactory to indemnified defendants in the suit whose approval
shall not be unreasonably withheld. In the event that the Fund elects to
assume the defense of any suit and retain counsel, the indemnified defendants
shall bear the fees and expenses of any additional counsel retained by them.
If the Fund does not elect to assume the defense of a suit, it will reimburse
the indemnified defendants for the reasonable fees and expenses of any counsel
retained by the indemnified defendants. The Fund agrees to promptly notify RCM
of the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issuance or sale of any of its
Shares.
(d) RCM agrees to indemnify, defend, and hold the Fund, its officers
and directors, and any person who controls the Fund within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities, and expenses (including the cost of
investigating or defending against such claims, demands, or liabilities and
any counsel fees incurred in connection therewith) that the Fund, its
directors or officers, or any such controlling person may incur under the 1933
Act, or under common law or otherwise, resulting from RCM's willful
misfeasance, bad faith or gross negligence in the performance of its
obligations and duties under this Agreement, or arising out of or based upon
any alleged untrue statement of a material fact contained in information
furnished in writing by RCM to the Fund for use in the Registration Statement,
Prospectus or SAI arising out of or based upon any alleged omission to state a
material fact in connection with such information required to be stated in
either thereof or necessary to make such information not misleading.
(e) RCM shall be entitled to participate, at its own expense, in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce the claim, but if RCM elects to assume the defense, the defense shall
be conducted by counsel chosen by RCM and satisfactory to the indemnified
defendants whose approval shall not be unreasonably withheld. In the event
that RCM elects to assume the defense of any suit and retain counsel, the
defendants in the suit shall bear the fees and expenses of any additional
counsel retained by them. If RCM does not elect to assume the defense of any
suit, it will reimburse the indemnified defendants in the suit for the
reasonable fees and expenses of any counsel retained by them.
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12. Duration and Termination
(a) This Agreement shall become effective on the date first written
above or such later date as indicated in Schedule A and, unless sooner
terminated as provided herein, will continue in effect for two years from the
above written date. Thereafter, if not terminated this Agreement shall
continue in effect for successive annual periods, provided that such
continuance is specifically approved at least annually (i) by a vote of a
majority of the Fund's Board who are neither interested persons (as defined in
the 0000 Xxx) of the Fund ("Independent trustees/directors") or RCM, cast in
person at a meeting called for the purpose of voting on such approval, and
(ii) by the Board or by vote of a majority of the outstanding voting
securities of the Fund.
(b) Notwithstanding the foregoing, this Agreement may be terminated in
its entirety at any time, without the payment of any penalty, by vote of the
Board, by vote of a majority of the Independent trustees/directors, or by vote
of a majority of the outstanding voting securities of the Fund on ten days'
written notice to RCM and the Adviser or by RCM at any time, without the pay-
ment of any penalty, on ten days' written notice to the Fund and the Adviser.
This Agreement will automatically terminate in the event of its assignment.
13. Amendment of this Agreement
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. This Agreement may be amended with the approval of the Board or of a
majority of the outstanding voting securities of the Fund; provided, that in
either case, such amendment also shall be approved by a majority of the
Independent trustees/directors.
14. Limitation of Liability
The Board and shareholders of the Fund shall not be personally liable for
obligations of the Fund in connection with any matter arising from or in
connection with this Agreement. This Agreement is not binding upon any
trustees, officer or shareholder of the Fund individually, and no such person
shall be individually liable with respect to any action or inaction resulting
from this Agreement.
15. Notice
Any notice required or permitted to be given by any party to any other
party shall be deemed sufficient upon receipt in writing at the other party's
principal offices.
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16. Miscellaneous
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. 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. As used in this Agreement, the terms "majority of
the outstanding voting securities","interested person", and "assignment" shall
have the same meaning as such terms have in the 1940 Act.
17. Governing Law
This Agreement shall be construed in accordance with the laws of the State
of New York and the 1940 Act. To the extent that the applicable laws of the
State of New York conflict with the applicable provisions of the 1940 Act, the
latter shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated as of the day and year first above
written.
THE BERKSHIRE FUNDS
By: /s/ Xxxxxxx X. Xxxxx III
------------------------
Title: President
BERKSHIRE CAPITAL HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxx III
------------------------
Title: Chairman & CEO
XXXXXXXX CAPITAL MARKETS, LLC
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------
Title: President
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SCHEDULE A
to the
DISTRIBUTION AGREEMENT
between
BERKSHIRE FUNDS,
BERKSHIRE CAPITAL HOLDINGS, INC.
and
XXXXXXXX CAPITAL MARKETS, LLC
Pursuant to section 1 of the Distribution Agreement between the BERKSHIRE
FUNDS, ("Fund"), BERKSHIRE CAPITAL HOLDINGS, INC. (the "Adviser") and
Xxxxxxxx Capital Markets, LLC ("RCM"), the Fund hereby appoints RCM as its
agent to be the principal underwriter of the Fund with respect to its follow-
ing series:
*Berkshire Focus Fund
Dated as of: December 7, 2002
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