Form of agreement subject to completion
FIFTH AMENDED AND RESTATED
ADMINISTRATIVE SERVICES AGREEMENT
FIFTH AMENDED AND RESTATED ADMINISTRATIVE SERVICES AGREEMENT ("Agreement")
effective as of [ ], 2006, by and between E*TRADE Funds, a Delaware
statutory trust ("Trust") on behalf of each series listed on Exhibit A hereto
as amended from time to time (each a "Fund" and collectively, the "Funds"), and
E*TRADE Asset Management, Inc., a Delaware corporation ("Administrator").
WHEREAS, the Trust and the Administrator entered into the Fourth Amended and
Restated Administrative Services Agreement on February 26, 2003, as amended
from time to time, and each party wishes to amend and restate that agreement
herein;
WHEREAS, the Trust is a registered open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Administrator is able to act as administrator of the Fund;
WHEREAS, the Trust wishes to retain the Administrator to render
administrative services with respect to each of the Funds listed on Exhibit A
hereto (as the same may be amended from time to time by the mutual written
consent of the parties), and the Administrator has agreed to act as
administrator for each of the Funds; and
WHEREAS, the E*TRADE Bond Fund was liquidated effective as of June 25, 2004,
and the E*TRADE Money Market Fund and E*TRADE Government Money Market Fund were
liquidated effective March 18, 2005, and the E*TRADE Municipal Money Market
Fund, E*TRADE California Municipal Money Market Fund, and E*TRADE New York
Municipal Money Market Fund were liquidated effective as of March 25, 2005.
NOW, THEREFORE, for good and valuable consideration, the receipt whereof is
hereby acknowledged, and the mutual performance of undertakings herein, it is
agreed by and between the parties hereto as follows:
1. Services to be Provided by the Administrator. (a) Subject to the control,
direction and supervision of the Board of Trustees of the Trust ("Board") and
in compliance with the objectives, policies and limitations set forth in the
Trust's Registration Statement, Declaration of Trust and By-Laws; applicable
laws and regulations; and all resolutions and policies implemented by the
Board, the Administrator shall have general responsibility for the oversight of
the Trust's administrative operations and will provide the following services:
(i) Trust Administration,
(ii) Compliance Services, and
(iii) Trust Accounting.
A detailed description of each of the above services is contained
in Schedules B and C, respectively, to this Agreement.
(b) The Administrator will also:
(i) provide, without additional cost to the Trust except for
out-of-pocket expenses, office facilities in an appropriate location
with respect to the provision of the services contemplated herein
(which may be in the offices of the Administrator or a corporate
affiliate of the Administrator);
(ii) provide, without additional remuneration from, or other cost
to, the Trust except for out-of-pocket expenses, the services of
individuals to serve as officers of the Trust who will be designated
by the Administrator and elected by the Board subject to reasonable
Board approval;
(iii) provide or otherwise obtain, without additional remuneration
from or other cost to the Trust except for out-of-pocket expenses,
personnel sufficient for provision of the services contemplated
herein;
(iv) furnish, at no additional cost to the Trust except for
out-of-pocket expenses, equipment and other materials, which are
necessary or desirable for provision of the services contemplated
herein; and
(v) keep records, at no additional cost to the Trust except for
out-of-pocket expenses, relating to the services provided hereunder
in such form and manner as the Administrator may deem appropriate or
advisable.
2. Compensation.
(a) For the services provided by the Administrator, each of the Funds
shall pay to the Administrator a fee, computed daily and to be paid on
the last business day of each month equal on an annual basis to the
amount of the average daily net assets of such Fund or, if applicable,
the average daily net assets of such Fund attributable to a class, as
listed opposite that Fund's or Class' name in Exhibit A, attached
hereto. The term "average daily net assets of the Fund" is defined as
the average of the values placed on the net assets of the Fund as of
the close of the New York Stock Exchange, on each day on which the net
asset value of the portfolio of the Fund is determined consistent with
the provisions of Rule 22c-1 under the 1940 Act or, if the Fund
lawfully determines the value of the net assets of its portfolio as of
some other time on each business day, as of such time. The value of
the net assets of the Fund shall be determined pursuant to the
applicable provisions of the Fund's then current registration
statement under the 1940 Act and the Securities Act of 1933, as
amended, ("Registration Statement"). If, pursuant to such provisions,
the determination of net asset value is suspended for any particular
business day, then for the purposes of this Section 2, the value of
the net assets of the Fund shall be deemed to be the value of such net
assets as last
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determined in accordance with the Registration Statement. If the
determination of the net asset value of the Fund has been suspended
pursuant to the Registration Statement for a period including a month
for which payment pursuant to this Agreement is due, the
Administrator's compensation payable at the end of such month shall be
computed on the basis of the value of the net assets of the Fund or of
such Fund attributable to a class as last determined (whether during
or prior to such month).
(b) The Trust shall be solely responsible for compensating any
sub-administrator for performing any of the duties and obligations
delegated to such sub-administrator, provided that the Trust and the
Administrator may agree that the Administrator directly pay the
sub-administrator. However, the compensation paid to the Administrator
shall be increased by amounts it pays directly to any
sub-administrator.
3. Allocation of Charges and Expenses.
(a) Except as otherwise specifically provided in this Section 3, the
Administrator shall pay the compensation and expenses of all of its directors,
officers and employees who serve as trustees, officers and executive employees
of the Trust (including the Trust's share of payroll taxes), and the
Administrator shall make available, without expense to each Fund or Class, the
service of its directors, officers and employees who may be duly elected
officers of the Trust, subject to their individual consent to serve and to any
limitations imposed by law.
(b) The Administrator shall not be required to pay pursuant to this
Agreement any expenses of each Fund or Class other than those specifically
allocated to the Administrator in this section 3.
4. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Administrator hereby agrees that all records which it
maintains or causes to be maintained for the Funds are the property of the
Funds and further agrees to surrender promptly to the Funds any of such records
upon the Trust's request. The Administrator further agrees to preserve or cause
to be preserved for the periods prescribed by Rule 31a-2 under the 1940 Act the
records required to be maintained by Rule 31a-1 under the 1940 Act.
5. Sub-Contracts. The Administrator may, from time to time, employ or
associate with itself such person or persons as it believes necessary to assist
it in carrying out its obligations under this Agreement. The Funds may also
enter into agreements with other entities besides ETAM to provide
administrative services.
6. Compliance. The Administrator shall observe and comply with the
Certificate of Trust and organizing documents of the Trust, the applicable
provisions of the Registration Statement, federal securities laws, all lawful
resolutions of the Board and other lawful orders and directions given to it
from time to time by the Board. All activities engaged in by the Administrator
hereunder shall be at all times subject to the control of and review by the
Board.
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7. Limitations of Liability.
(a) Except as may otherwise be required by the 1940 Act or the rules
thereunder or other applicable law, neither the Administrator nor its
shareholders, officers, directors, employees or agents shall be subject to any
liability for, or any damages, expenses or losses incurred in connection with,
any act or omission connected with or arising out of any services rendered
under this Agreement, except by reason of willful misfeasance, bad faith or
negligence in the performance of the Administrator's duties or by reason of
reckless disregard of the Administrator's obligations and duties under this
Agreement. Notwithstanding the foregoing, the Administrator shall not be liable
to the Trust or the Funds for the acts and omissions of any party engaged by
the Administrator to assist it in carrying out its obligations under this
Agreement except to the extent that such party is liable to the Administrator
for such acts and omissions pursuant to the contract under which the
Administrator shall have retained such party. Any person, even though also
employed by the Administrator, who may be or become an employee of and paid by
the Trust shall be deemed, when acting within the scope of his employment by
the Trust, to be acting in such employment solely for the Trust and not as the
employee or agent of the Administrator.
(b) The Administrator shall look only to the assets of a particular Fund
or to the assets attributable to a particular Class of a Fund, as applicable,
for the performance of the Agreement by the Trust with respect to such Fund,
and neither the Trustees nor any of the Trust's shareholders, officers,
employees or agents, whether past, present or future, shall be personally
liable therefor.
8. Non-Exclusivity. Nothing in this Agreement will in any way limit or
restrict the Administrator or any of its officers, directors, employees, agents
or affiliates from providing administrative services or other services to any
other person or entity pursuant to any contract or otherwise; and no such
performance of administrative or other services or taking of any such action or
doing of any such thing, shall be in any manner restricted or otherwise
affected by any aspect of any relationship of the Administrator to the Trust or
the Funds or be deemed to violate or give rise to any duty or obligation of the
Administrator to the Trust, except as otherwise imposed by law.
9. Duration and Termination. This Agreement shall continue in effect until
[ ], 2007, if not sooner terminated. This Agreement shall continue in
effect thereafter with respect to each Fund for successive 12-month periods,
unless terminated, provided that each such continuance is specifically approved
at least annually by (a) the vote of a majority of the entire Board, or by the
vote of a majority of the outstanding voting securities (as defined in the 1940
Act), of the Funds and (b) the vote of a majority of those Trustees who are not
parties to this Agreement or interested persons (as such term is defined in the
1940 Act). This Agreement may be terminated at any time without payment of any
penalty, by the Trust upon the vote of a majority of the Board or by a majority
of the outstanding voting securities of the Fund or class, as applicable, or by
the Administrator, in each case, on sixty (60) days' written notice to the
other party.
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10. Reliance on Information. In discharging the functions specified in this
Agreement, the Administrator may, without inquiry, rely and act upon all
notices, information or other communications reasonably believed to have been
supplied to it by any one or more of the Trustees or agents of the Trust.
11. Amendments. 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.
12. Miscellaneous.
a. This Agreement shall be construed in accordance with the laws of the
State of Delaware, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, as amended, or rules or orders of the SEC
thereunder.
b. The captions of this Agreement are included for convenience only and in
no way define or delimit any of the provisions hereof or otherwise affect their
construction or effect.
c. If any provisions 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 and, to this extent, the provisions of this
Agreement shall be deemed to be severable.
d. The Administrator shall for all purposes herein be deemed to be an
independent contractor and shall have, unless otherwise expressly provided or
authorized, no authority to act for or represent the Trust or the Funds in any
way or otherwise be deemed an agent of the Trust or the Funds.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
E*TRADE FUNDS (on behalf of the
series or classeslisted on Exhibit A)
By:
-----------------------------
Name:
Title:
E*TRADE ASSET MANAGEMENT, INC.
By:
-----------------------------
Name:
Title:
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AMENDED EXHIBIT A
to the
FIFTH AMENDED AND RESTATED
ADMINISTRATIVE SERVICES AGREEMENT
Name of Fund Fee
------------ ----
E*TRADE Delphi Value Fund 0.15%
E*TRADE International Index Fund 0.15%
E*TRADE Kobren Growth Fund 0.15%
E*TRADE Xxxxxxx 2000 Index Fund 0.15%
E*TRADE S&P 500 Index Fund 0.15%
E*TRADE Technology Index Fund 0.15%
E*TRADE Funds E*TRADE Asset Management, Inc.
By: __________________________________ By: __________________________________
Name: Name:
Title: Title:
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EXHIBIT B
to the
FIFTH AMENDED AND RESTATED
ADMINISTRATIVE SERVICES AGREEMENT
GENERAL DESCRIPTION OF TRUST ADMINISTRATIVE AND COMPLIANCE SERVICES
I. GENERAL
A. Coordinate and manage the work relationships among all service providers to
the Trust, including, but not limited to, supervision of any sub-administrator
of the Trust.
B. Perform trust operational management, including development of control
procedures and monitor the performance of all service vendors to the Trust.
C. Propose and carry out policies, particularly in the area of operational
problem inquiry and resolution, such as, among others, potential/actual
compliance violations, valuation of complex securities or those trading in
problematic markets, and Trust share valuation errors, as applicable.
II. FINANCIAL AND TAX REPORTING OBLIGATIONS
A. Prepare management reports and Board of Trustees materials, such as, for
example, unaudited financial statements and summaries of dividends and
distributions.
B. Supervise the reporting by any sub-administrator of the Trust's performance
to outside service providers as directed by Trust management.
C. Assist Trust management in making final determinations of distribution
amounts.
D. The Trust will advise the Administrator of the declaration of any dividend
or distribution and the record and payable date thereof at least five (5) days
prior to the record date, and the Administrator will make appropriate credits
to each shareholder's account.
E. Supervise the preparation and filing by the sub-administrator of the Trust's
Form N-SAR with the SEC.
F. Supervise the preparation, coordination and filing with the appropriate
regulatory agencies of the Trust's semi-annual and annual reports to
shareholders on Form N-CSR. The Administrator shall be responsible for
preparing the "President's Letters" or the "Management's discussion of each
Fund's performance" for inclusion in the Trust's annual reports to shareholders.
G. Supervise the preparation by the Trust's officers of financial information
for the Trust's semi-annual and annual reports, proxy statements and other
communications required or otherwise sent to the Trust's shareholders and
arrange for the dissemination of such reports and communications.
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H. Provide financial information for Trust proxies and prospectuses including
expense table.
III. PORTFOLIO COMPLIANCE
The Administrator shall provide the following compliance services in
conjunction with the investment adviser's obligations pursuant to its
Investment Advisory Agreement with the Trust and all applicable laws.
A. Mail quarterly requests for "Securities Transaction Reports" to the Trust's
Trustees and officers and "access persons" under the terms of the Trust's Code
of Ethics and regulations promulgated by the U.S. Securities and Exchange
Commission.
B. Prepare, distribute, and utilize in compliance training sessions,
comprehensive compliance materials, including compliance manuals and
checklists, and develop or assist in developing guidelines and procedures to
improve overall compliance by the Trust and its various agents.
IV. REGULATORY AFFAIRS AND CORPORATE GOVERNANCE
A. Prepare, review and file post-effective amendments to the Trust's
registration statement and supplements as needed with respect to the currently
existing Funds only.
B. Prepare and file proxy materials and administer shareholder meetings.
C. Prepare minutes, and follow up on matters related to the Administrator's
responsibilities under this Agreement that are raised at all Board meetings.
D. In coordination with the investment adviser, make reports and
recommendations to the Board concerning the performance of the investment
adviser and other service providers for the Trust, as the Board may reasonably
request.
E. Supervise the preparation and filing with the SEC of Rule 24f-2 Notices (and
all similar state filings, if required by the states). The Administrator shall
not be responsible for preparing any legal opinions required in connection with
Rule 24f-2 Notices.
F. Review and monitor the fidelity bond and errors and omissions insurance
coverage and the submission of any related regulatory filings.
G. Prepare and update documents, such as charter document, by-laws, and foreign
qualification filings.
H. Provide support and counsel with respect to routine regulatory examinations
or investigations of the Trust and work closely with the Trust's legal counsel
in response to any non-routine regulatory matters. Also, coordinate all
communications and data collection with regard to any regulatory examinations
and yearly audits by independent accountants.
I. Supervise the preparation and filing of the Trust's proxy voting record on
an annual basis on Form N-PX.
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J. Supervise the preparation and filing of the Trust's portfolio holdings
information on Form N-Q for the first and third fiscal quarters.
K. Maintain general corporate calendar.
L. Assist with preparations for, attend and prepare minutes of shareholder
meetings.
M. When requested, provide consultation on regulatory matters relating to
portfolio management, Trust operations and any potential changes in each Fund's
investment policies, operations or structure.
N. Maintain continuing awareness of significant emerging regulatory and
legislative developments which may affect each Fund, update the Board and the
investment adviser on those developments and provide related planning
assistance where reasonably requested or appropriate.
V. ADMINISTRATION
A. Furnish appropriate officers for the Trust, subject to Board approval,
including a Chief Compliance Officer for the Trust.
B. For new Funds, obtain Employer or Taxpayer Identification Number and CUSIP
numbers, as necessary. Estimate organizational costs and expenses and monitor
against actual disbursements.
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EXHIBIT C
to the
FIFTH AMENDED AND RESTATED
ADMINISTRATIVE SERVICES AGREEMENT
DESCRIPTION OF TRUST ACCOUNTING SERVICES
The Administrator shall provide the following accounting services to the Trust:
A. Supervise the maintenance of the books and records for the Trust's assets,
including records of all securities transactions.
B. Supervise the calculation of each Fund's net asset value in accordance with
each Fund's prospectus and, after the Fund meets eligibility requirements,
supervise the transmission to NASDAQ and to such other entities as directed by
the Trust.
C. Supervise the accounting for dividends and interest received and
distributions made by the Trust.
D. Coordination with the Trust's independent auditors with respect to the
annual audit, and as otherwise requested by the Trust.
E. Consult with the Trust's officers, independent public accountants and other
appropriate persons in establishing the accounting policies of the Trust.
F. As mutually agreed upon, the Administrator will provide domestic and/or
international reports.
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