DISTRIBUTION AGREEMENT
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This Agreement made as of September 22, 2005 by and among The Black Pearl
Funds (the "Trust"), a Delaware statutory trust, Firsthand Capital Management,
Inc., a California corporation, and Ultimus Fund Distributors, LLC, an Ohio
limited liability company ("Distributor").
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, Distributor is a broker-dealer registered with the Securities and
Exchange Commission and a member of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Distributor are desirous of entering into an
agreement providing for the distribution by Distributor of shares of beneficial
interest (the "Shares") of each series of shares of the Trust listed on Schedule
A attached hereto (the "Series"), as such Schedule A may be amended from time to
time;
NOW, THEREFORE, in consideration of the premises and agreements of the
parties contained herein, the parties agree as follows:
1. Appointment.
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The Trust hereby appoints Distributor as its exclusive agent for the
distribution of the Shares, and Distributor hereby accepts such appointment
under the terms of this Agreement. While this Agreement is in force, the
Trust shall not sell any Shares except on the terms set forth in this
Agreement. Notwithstanding any other provision hereof, the Trust may
terminate, suspend or withdraw the offering of Shares whenever, in its sole
discretion, it deems such action to be desirable.
2. Sale and Repurchase of Shares.
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(a) Distributor will have the right, as agent for the Trust, to enter into
dealer agreements with responsible investment dealers, and to sell
Shares to such investment dealers against orders therefor at the
public offering price (as defined in subparagraph 2(d) hereof) stated
in the Trust's effective Registration Statement on Form N-1A under the
Act and the Securities Act of 1933, as amended, including the then
current prospectus and statement of additional information (the
"Registration Statement"). Upon receipt of an order to purchase Shares
from a dealer with whom Distributor has a dealer agreement,
Distributor will promptly cause such order to be filled by the Trust.
All dealer agreements shall be in such form as has been approved by
the Trust.
(b) Distributor will also have the right, as agent for the Trust, to sell
such Shares to the public against orders therefor at the public
offering price.
(c) Distributor will also have the right to take, as agent for the Trust,
all actions which, in Distributor's reasonable judgment, are necessary
to carry into effect the distribution of the Shares.
(d) The public offering price for the Shares of each Series shall be the
respective net asset value of the Shares of that Series then in
effect, plus any applicable sales charge determined in the manner set
forth in the Registration Statement or as permitted by the Act and the
rules and regulations of the Securities and Exchange Commission
promulgated thereunder. In no event shall any applicable sales charge
exceed the maximum sales charge permitted by the Rules of the NASD.
(e) The net asset value of the Shares of each Series shall be determined
in the manner provided in the Registration Statement, and when
determined shall be applicable to transactions as provided for in the
Registration Statement. The net asset value of the Shares of each
Series shall be calculated by the Trust or by another entity on behalf
of the Trust. Distributor shall have no duty to inquire into or
liability for the accuracy of the net asset value per Share as
calculated.
(f) On every sale, the Trust shall receive the applicable net asset value
of the Shares promptly, but in no event later than the third business
day following the date on which Distributor shall have received an
order for the purchase of the Shares.
(g) Upon receipt of purchase instructions, Distributor will transmit such
instructions to the Trust or its transfer agent for the issuance and
registration of the Shares purchased.
(h) Nothing in this Agreement shall prevent Distributor or any affiliated
person (as defined in the Act) of Distributor from acting as
distributor for any other person, firm or corporation (including other
investment companies) or in any way limit or restrict Distributor or
any such affiliated person from buying, selling or trading any
securities for its or their own account or for the accounts of others
from whom it or they may be acting; provided, however, that
Distributor expressly represents that it will undertake no activities
which, in its reasonable judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
(i) Distributor, as agent of and for the account of the Trust, may
repurchase the Shares at such prices and upon such terms and
conditions as shall be specified in the Registration Statement.
3. Sale of Shares by the Trust.
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The Trust reserves the right to issue any Shares at any time directly to
the holders of Shares ("Shareholders"), to sell Shares to its Shareholders
or to other persons at not less than net asset value and to issue Shares in
exchange for substantially all the assets of any corporation or trust or
for the shares of any corporation or trust.
4. Basis of Sale of Shares.
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Distributor does not agree to sell any specific number of Shares.
Distributor, as agent for the Trust, undertakes to sell Shares on a best
efforts basis only against orders therefor.
5. Rules of NASD, etc.
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(a) In providing services hereunder, Distributor will comply with the
Rules of the NASD, the federal securities laws and the rules
thereunder and the securities laws and regulations of each state and
other jurisdiction in which it sells, directly or indirectly, any
Shares.
(b) Distributor will require each dealer with whom Distributor has a
dealer agreement to conform to the applicable provisions hereof and
the Registration Statement with respect to the public offering price
of the Shares, and neither Distributor nor any such dealers shall
withhold the placing of purchase orders so as to make a profit
thereby.
(c) Distributor agrees to furnish to the Trust sufficient copies of any
agreements, plans or other materials it intends to use in connection
with any sales of Shares in reasonably adequate time for the Trust to
file and clear them with the proper authorities before they are put in
use, and not to
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use them until so filed and cleared. At the request of the Trust,
Distributor will assume responsibility for the review and clearance of
all advertisements and sales literature.
(d) Distributor, at its own expense, will qualify as dealer or broker, or
otherwise, under all applicable state or federal laws required in
order that Shares may be sold in such States as may be mutually agreed
upon by the parties.
(e) Distributor shall not make, or permit any representative, broker or
dealer to make, in connection with any sale or solicitation of a sale
of the Shares, any representations concerning the Shares except those
contained in the then current prospectus and statement of additional
information covering the Shares and in printed information approved by
the Trust as information supplemental to such prospectus and statement
of additional information. Copies of the then effective prospectus and
statement of additional information and any such printed supplemental
information will be supplied by the Trust to Distributor in reasonable
quantities upon request.
6. Records to be supplied by Trust.
--------------------------------
The Trust shall furnish to Distributor copies of all information, financial
statements and other papers which Distributor may reasonably request for
use in connection with the distribution of the Shares, and this shall
include, but shall not be limited to, one certified copy, upon request by
Distributor, of all financial statements prepared for the Trust by
independent public accountants.
7. Fees and Expenses.
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For performing its services under this Agreement, Distributor will receive
a fee from the Trust or the Adviser in accordance with agreements between
them as permitted by applicable laws, including the Act and rules and
regulations promulgated thereunder. The fee is charged at the rate of
$6,000 per annum, and shall be paid on a monthly basis (provided, however,
that until shares of the Trust are marketed to the general public, the fee
shall be charged at the rate of $3,000 per annum). The Trust or its
investment adviser shall promptly reimburse Distributor for any expenses
that are to be paid by the Trust in accordance with the following
paragraph.
In the performance of its obligations under this Agreement, Distributor
will pay only the costs incurred in qualifying as a broker or dealer under
state and federal laws and in establishing and maintaining its
relationships with the dealers selling the Shares. All other costs in
connection with the offering of the Shares will be paid by the Trust or the
Adviser in accordance with agreements between them as permitted by
applicable laws, including the Act and rules and regulations promulgated
thereunder. These costs include, but are not limited to, licensing fees,
filing fees (including NASD), travel and such other expenses as may be
incurred by Distributor on behalf of the Trust.
Notwithstanding the foregoing, Distributor agrees that it shall not be
entitled to receive any fee from the Trust or to be reimbursed by the Trust
for any distribution or offering related costs unless and until the Trust
has adopted a plan of distribution pursuant to Rule 12b-1 which permits the
payment of such fee or the reimbursement of such costs.
8. Indemnification of Trust.
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Distributor agrees to indemnify and hold harmless the Trust and each person
who has been, is, or may hereafter be a Trustee, officer, employee,
shareholder or control person of the Trust against any loss, damage or
expense (including the reasonable costs of investigation and reasonable
attorneys' fees) reasonably incurred by any of them in connection with any
claim or in connection with any action,
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suit or proceeding to which any of them may be a party, which arises out of
or is alleged to arise out of or is based upon (i) any untrue statement or
alleged untrue statement of a material fact, or the omission or alleged
omission to state a material fact necessary to make the statements not
misleading, on the part of Distributor or any agent or employee of
Distributor or any other person for whose acts Distributor is responsible,
unless such statement or omission was made in reliance upon written
information furnished by the Trust; (ii) Distributor's failure to exercise
reasonable care and diligence with respect to its services, if any,
rendered in connection with investment, reinvestment, automatic withdrawal
and other plans for Shares; and (iii) Distributor's failure to comply with
applicable laws and the Rules of the NASD. The Distributor will advance
attorneys' fees or other expenses incurred by any such person in defending
a proceeding, upon the undertaking by or on behalf of such person to repay
the advance if it is ultimately determined that such person is not entitled
to indemnification. The term "expenses" for purposes of this and the next
paragraph includes amounts paid in satisfaction of judgments or in
settlements which are made with Distributor's consent. The foregoing rights
of indemnification shall be in addition to any other rights to which the
Trust or each such person may be entitled as a matter of law.
9. Indemnification of Distributor.
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The Trust agrees to indemnify and hold harmless Distributor and each person
who has been, is, or may hereafter be a director, officer, employee,
shareholder or control person of Distributor against any loss, damage or
expense (including the reasonable costs of investigation and reasonable
attorneys' fees) reasonably incurred by any of them in connection with the
matters to which this Agreement relates, except a loss resulting from the
failure of Distributor or any such other person to comply with applicable
law or the terms of this Agreement, or from willful misfeasance, bad faith
or negligence, including clerical errors and mechanical failures, on the
part of any of such persons in the performance of Distributor's duties or
from the reckless disregard by any of such persons of Distributor's
obligations and duties under this Agreement, for all of which exceptions
Distributor shall be liable to the Trust. The Trust will advance attorneys'
fees or other expenses incurred by any such person in defending a
proceeding, upon the undertaking by or on behalf of such person to repay
the advance if it is ultimately determined that such person is not entitled
to indemnification.
In order that the indemnification provisions contained in this Paragraph 9
shall apply, it is understood that if in any case the Trust may be asked to
indemnify Distributor or any other person or hold Distributor or any other
person harmless, the Trust shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that Distributor will use all reasonable care to identify and
notify the Trust promptly concerning any situation which presents or
appears likely to present the probability of such a claim for
indemnification against the Trust. The Trust shall have the option to
defend Distributor and any such person against any claim which may be the
subject of this indemnification, and in the event that the Trust so elects
it will so notify Distributor, and thereupon the Trust shall take over
complete defense of the claim, and neither Distributor nor any such person
shall in such situation initiate further legal or other expenses for which
it shall seek indemnification under this Paragraph 9. Distributor shall in
no case confess any claim or make any compromise in any case in which the
Trust will be asked to indemnify Distributor or any such person except with
the Trust's written consent.
Notwithstanding any other provision of this Agreement, Distributor shall be
entitled to receive and act upon advice of counsel (who may be counsel for
the Trust or its own counsel) and shall be without liability for any action
reasonably taken or thing reasonably done pursuant to such advice, provided
that such action is not in violation of applicable federal or state laws or
regulations.
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10. Representations of the Parties.
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(a) The Trust certifies to Distributor that: (1) as of the date of the
execution of this Agreement, each Series that is in existence as of
such date has an unlimited number of authorized shares, and (2) this
Agreement has been duly authorized by the Trust and, when executed and
delivered by the Trust, will constitute a legal, valid and binding
obligation of the Trust, enforceable against the Trust in accordance
with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the rights
and remedies of creditors and secured parties.
(b) Distributor represents and warrants that: (1) the various procedures
and systems which Distributor has implemented with regard to
safeguarding from loss or damage attributable to fire, theft, or any
other cause the records and other data of the Trust and Distributor's
records, data, equipment facilities and other property used in the
performance of its obligations hereunder are adequate and that it will
make such changes therein from time to time as are required for the
secure performance of its obligations hereunder, and (2) this
Agreement has been duly authorized by Distributor and, when executed
and delivered by Distributor, will constitute a legal, valid and
binding obligation of Distributor, enforceable against Distributor in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
11. Termination and Amendment of this Agreement.
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This Agreement shall automatically terminate, without the payment of any
penalty, in the event of its assignment by Distributor. This Agreement may
be amended only if such amendment is approved (i) by Distributor and (ii)
by the Board of Trustees of the Trust, including the approval of a majority
of the Trustees of the Trust who are not interested persons of the Trust or
of Distributor by vote cast in person at a meeting called for the purpose
of voting on such approval.
Either the Trust or Distributor may at any time terminate this Agreement on
sixty (60) days' written notice delivered or mailed by registered mail,
postage prepaid, to the other party.
12. Effective Period of this Agreement.
-----------------------------------
This Agreement shall take effect upon its execution and shall remain in
full force and effect for an initial term of two (2) years from the date of
its execution (unless terminated as set forth in Section 11), and shall
continue in effect from year to year thereafter, subject to annual approval
of such continuance by the Board of Trustees of the Trust, including the
approval of a majority of the Trustees of the Trust who are not interested
persons of the Trust or of Distributor by vote cast in person at a meeting
called for the purpose of voting on such approval.
13. Successor Investment Company.
-----------------------------
Unless this Agreement has been terminated in accordance with Paragraph 11,
the terms and provisions of this Agreement shall become automatically
applicable to any investment company which is a successor to the Trust as a
result of reorganization, recapitalization or change of domicile.
14. Limitation of Liability.
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It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust
property of the Trust. The execution and delivery of this Agreement have
been authorized
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by the Trustees of the Trust and signed by an officer of the Trust, acting
as such, and neither such authorization by such Trustees nor such execution
and delivery by such officer shall be deemed to have been made by any of
them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust. If a matter relates only
to a particular series of the Trust, that series shall be solely
responsible for all liabilities in connection with such matter, and the
Distributor agrees that resort shall be had solely to the assets of such
series for the payment or performance thereof.
15. Severability.
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In the event any provision of this Agreement is determined to be void or
unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
16. Questions of Interpretation.
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(a) This Agreement shall be governed by the laws of the State of Ohio.
(b) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or
provision of the Act shall be resolved by reference to such term or
provision of the Act and to interpretation thereof, if any, by the
United States courts or in the absence of any controlling decision of
any such court, by rules, regulations or orders of the Securities and
Exchange Commission issued pursuant to said Act. In addition, where
the effect of a requirement of the Act, reflected in any provision of
this Agreement is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
17. Notices.
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Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party, with a copy to the
Trust's counsel, at such address as such other party may designate for the
receipt of such notice. Such notice will be effective upon receipt. Until
further notice to the other party, it is agreed that the address of the
Trust and the Adviser for this purpose shall be 000 Xxxxx Xxxxxx, Xxxxx
0000, Xxx Xxxx, Xxxxxxxxxx 00000, Attn: Xxxxx Xxxxxx; and that the address
of Distributor for this purpose shall be 000 Xxxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxx 00000, Attn: Xxxxxx X. Xxxxxx.
18. Execution
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This Agreement may be executed by one or more counterparts, each of which
shall be deemed an original, but all of which together will constitute one
in the same instrument.
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IN WITNESS WHEREOF, the Trust and Distributor have each caused this
Agreement to be signed in duplicate on their behalf, all as of the day and year
first above written.
ATTEST: THE BLACK PEARL FUNDS
/s/Xxxxxx Xxxxx /s/Xxxxx Xxxxxx
By:
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Name: Xxxxx Xxxxxx
Its: President
ATTEST: ULTIMUS FUND DISTRIBUTORS, LLC
/s/Xxxx Bridge /s/Xxxxxx X. Xxxxxx
By:
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Name: Xxxxxx X. Xxxxxx
Its: President
ATTEST: FIRSTHAND CAPITAL MANAGEMENT, INC.
/s/Xxxxxx Xxxxx /s/Xxxxx Xxxxxx
By:
----------------------------------- -----------------------------------
Name: Xxxxx Xxxxxx
Its: President
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SCHEDULE A
TO THE DISTRIBUTION AGREEMENT BETWEEN
THE BLACK PEARL FUNDS, FIRSTHAND CAPITAL MANAGEMENT, INC.
AND
ULTIMUS FUND DISTRIBUTORS, LLC
FUND PORTFOLIOS
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Black Pearl Focus Fund
Black Xxxxx Xxxx Short Fund
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