SHAREHOLDER SERVICES AGREEMENT
This Agreement is made as of November 16, 2001, between E*TRADE Funds, a
Delaware business trust ("Trust"), on behalf of each series listed on Schedule A
hereto as amended from time to time, and E*TRADE Asset Management, Inc., a
Delaware corporation ("ETAM").
RECITALS
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act");
WHEREAS, the Trust issues shares of beneficial interest ("shares") in
separate series ("Portfolios"), with each Portfolio representing interests in a
separate portfolio of securities and other assets;
WHEREAS, certain beneficial owners of the Trust's shares ("investors" or
"shareholders") may require administrative, recordkeeping, and other services,
and the provisions of such services to investors requiring these services may
benefit such investors and facilitate their ability to invest in the Portfolios;
WHEREAS, ETAM serves as the investment adviser and administrator to the
Trust under separate agreements; and
WHEREAS, the Trust desires that ETAM provide, or arrange for an affiliate
to provide, certain shareholder services with respect to shares of the
Portfolios in accordance with the terms and conditions of this Agreement set
forth below.
WITNESSETH:
The Trust and ETAM (each a "Party") agree as follows:
1. APPOINTMENT. The Trust hereby authorizes ETAM to provide certain
shareholder support services to investors in the Portfolios. The appointment of
ETAM hereunder is non-exclusive, and ETAM recognizes and agrees that, from time
to time, the Trust may enter into other agreements with financial intermediaries
with respect to the provision of administrative, recordkeeping or investor
services.
2. SERVICES TO BE PERFORMED. For the duration of this Agreement, ETAM
agrees to use its best efforts, subject to applicable legal and contractual
restrictions and in compliance with the procedures described in the
prospectus(es) and statement(s) of additional information of the Portfolios as
from time to time in effect (collectively, the "Prospectus"), to provide in
respect of investors investing in shares of the Portfolios the following
services:
(a) Support services to investors in connection with investments in the
Shares of a Portfolio, which services may include, but are not limited to:
receiving, aggregating and processing purchase and redemption orders; arranging
for the wiring of funds; providing and maintaining retirement plan records;
communicating periodically with investors or shareholders and answering
questions and handling correspondence from investors or shareholders about their
accounts; acting as the sole shareholder of record and nominee for shareholders;
maintaining account records and providing beneficial owners with account
statements; processing subaccounting services for payments; issuing shareholder
reports and transaction confirmations; integrating periodic statements with
other shareholder transactions; providing subaccounting services for payments;
providing subaccounting services for Portfolio shares held beneficially;
forwarding shareholder communications to beneficial owners; general account
administration activities; and providing such other similar services as the
Trust may reasonably request to the extent ETAM is permitted to do so under
applicable statutes, rules, or regulations. Overhead and other expenses of ETAM
related to its "service activities," including telephone and other
communications expenses, may be included in the information regarding amounts
expended for such activities.
(b) ETAM will provide such office space and equipment, telephone
facilities, and personnel (which may be any part of the space, equipment, and
facilities currently used in ETAM's business, or any personnel employed by ETAM)
as may be reasonably necessary or beneficial in order to provide such support
services with respect to a Portfolio's Shares.
3. COMPENSATION.
(a) In consideration of ETAM's provision of the services as described in
this Agreement, the Trust agrees, subject to the limitations of applicable law
and regulations, to pay ETAM fees ("Service Fees") at an annual rate, as
specified in Schedule A hereto, of the average of the aggregate net asset value
of outstanding shares of each Portfolio serviced by ETAM, measured on each
business day during each month. ETAM may, in turn, pay any or all of these
Services Fees to affiliates or other service providers with whom it has entered
into services agreements, with no recourse to or liability on the part of the
Trust or any Portfolio. Service Fees shall be accrued daily and paid monthly or
at such other interval as Trust and ETAM shall agree. The Parties acknowledge
and agree that the Service Fees will be paid by the Trust on behalf of each
Portfolio and shall be paid for each Portfolio only so long as the Agreement is
in effect.
(b) Notwithstanding other provisions of this Agreement, the fee rate with
respect to any Portfolio may be prospectively increased or decreased by the
Trust, in its sole discretion, at any time upon notice to ETAM.
(c) On behalf of each Portfolio, ETAM may spend such amounts and incur
such expenses as it deems necessary or appropriate on any service activities.
Such expenses may include, without limitation, compensation to employees and
expenses, including overhead and telephone and other communications expenses, as
ETAM may determine to be necessary. ETAM shall be solely liable for any expenses
it incurs hereunder.
(d) In addition, ETAM will furnish to the Trust or its designees such
information as the Trust or its designees may reasonably request (including,
without limitation, periodic certifications confirming the rendering of services
with respect to shares of the Portfolios as described herein) and will otherwise
cooperate with the Trust and its designees (including, without limitation, any
auditors designed by the Trust) in the preparation of reports to the Trust's
Board of Trustees concerning this Agreement and the monies paid or payable by
the Trust pursuant hereto, as well as any other reports or filings that may be
required by law.
4. REPRESENTATIONS OF THE PARTIES. Each Party represents and warrants to
each other Party that (i) it is duly authorized to execute and deliver this
Agreement and to perform its obligations hereunder and has taken all necessary
action to authorize such execution, delivery and performance, (ii) the person
signing this Agreement on its behalf is duly authorized to do so, (iii) it has
obtained all authorizations of any governmental body required in connection with
this Agreement and such authorizations are in full force and effect and (iv) the
execution, delivery and performance of this Agreement will not violate any law,
ordinance, charter, by-law or rule applicable to it or any agreement by which it
is bound or by which any of its assets are affected.
5. TERM AND TERMINATION.
(a) Unless sooner terminated, this Agreement will continue in effect until
one year from the date hereof and thereafter for successive annual periods,
provided that such continuance is specifically approved at least annually by
votes of a majority of both (i) the Board of Trustees of the Trust and (ii)
those Trustees of the Trust who are not "interested persons" (as defined in the
0000 Xxx) and have no direct or indirect financial interest in the operation of
the Agreement.
(b) This Agreement may be terminated with respect to a Portfolio, at any
time without the payment of any penalty, by (i) a vote of a majority of the
Board of Trustees of the Trust; (ii) a vote of a majority of a Portfolio's
shares; or (iii) by ETAM on 30 days' written notice.
6. GOVERNING LAW. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of the State of
Delaware applicable to agreements fully executed and to be performed therein,
without regard to its conflicts of law rules.
7. LIMITATION ON LIABILITY. The obligations of each Portfolio of the Trust
under this Agreement shall only be binding upon the assets and property of that
Portfolio of the Trust, and shall not be binding upon any Trustee, officer or
shareholder of the Trust individually or upon any other Portfolio of the Trust.
8. EXCULPATION: INDEMNIFICATION.
(a) The Trust shall not be liable to ETAM and ETAM shall not be liable to
the Trust except for acts or failures to act which constitute lack of good faith
or gross negligence and for
obligations expressly assumed by either Party hereunder. Nothing contained in
this Agreement is intended to operate as a waiver by the Trust or by ETAM of
compliance with any applicable federal or state law, rule, or regulation.
(b) ETAM will indemnify the Trust and hold it harmless from any claims or
assertions relating to the lawfulness of ETAM's participation in this Agreement
and the transactions contemplated hereby or relating to any activities of any
persons serving as officers or employees of ETAM and performed in connection
with the discharge of its responsibilities under this Agreement. If any such
claims are asserted, the Trust shall have the right to manage its own defense,
including the selection and engagement of legal counsel of its choosing, and all
costs of such defense shall be borne by ETAM.
9. NOTICES. Each notice required by this Agreement shall be given in
writing and delivered personally, mailed by certified mail or courier service,
or sent by facsimile or electronic mail to the Party's address identified on the
signature page to this Agreement or such other address as each Party may by
written notice provide to the other.
10. COMPLETE AGREEMENT. This Agreement, including Schedule A, contains the
full and complete understanding of the parties and supersedes all prior
representations, promises, statements, arrangements, agreements, warranties and
understandings between the parties with respect to the subject matter hereof,
whether oral or written, express or implied. This Agreement shall not be deemed
to be complete absent Schedule A.
11. AMENDMENT. This Agreement may be modified or amended, and the terms of
this Agreement may be waived, by a writing signed by each of the parties.
12. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
13. SEVERABILITY. If any provision of this Agreement shall be held invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement by their
duly authorized officers as of the date and year first written above.
E*TRADE FUNDS
By: Address for Notices:
---------------------------------- 000 Xxxx Xxxxxx
Name: Xxx Xxxxxxxxx, XX 00000
-------------------------------- Fax: (000) 000-0000
Title:
-------------------------------
E*TRADE ASSET MANAGEMENT, INC.
By: Address for Notices:
---------------------------------- 000 Xxxx Xxxxxx
Name: Xxx Xxxxxxxxx, XX 00000
-------------------------------- Fax: (000) 000-0000
Title:
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SCHEDULE A
TO THE
SHAREHOLDER SERVICES AGREEMENT
TRUST PORTFOLIOS AND SHAREHOLDER SERVICES FEES
PORTFOLIO SERVICE FEE
--------- -----------
E*TRADE Delphi Value Fund 0.00%
E*TRADE International Index Fund 0.00%
E*TRADE Kobren Growth Fund 0.00%
E*TRADE Xxxxxxx 2000 Index Fund 0.00%
E*TRADE S&P 500 Index Fund 0.00%
E*TRADE Technology Index Fund 0.00%
