FORM OF
UNDERWRITING AGREEMENT
E*TRADE FUNDS
0000 Xxxx Xxxx
Xxxx Xxxx, XX 00000
_____________, 1999
E*TRADE Securities, Inc.
0000 Xxxx Xxxx
Xxxx Xxxx, XX 00000
Re: Underwriting Agreement
Gentlemen:
E*TRADE Funds is a Delaware business trust operating as an open-end
management investment company (hereinafter referred to as the "Company"). The
Company is registered as such under the Investment Company Act of 1940, as
amended (the "1940 Act"), and interests in the Company ("Shares") are registered
under the Securities Act of 1933, as amended (the "1933 Act"). The Company
currently consists of one series, the E*TRADE S&P 500 Index Fund (the "Fund").
The Company, on behalf of the Fund, desires to offer and sell the authorized but
unissued Shares of the Fund to the public in accordance with applicable federal
and state securities laws.
You have informed us that E*TRADE Securities, Inc. is registered as a
broker-dealer under the provisions of the Securities Exchange Act of 1934 and is
a member in good standing of the National Association of Securities Dealers,
Inc. You have indicated your desire to act as the exclusive selling agent and
principal underwriter for the Shares of the Fund and for such other series of
the Company hereinafter established as agreed to from time to time and evidenced
by the addition of such series to Schedule A of this Agreement. We have been
authorized by the Company to execute and deliver this Agreement to you by a
resolution of our Board of Trustees (the "Trustees") adopted at a meeting of the
Trustees, at which a majority of Trustees, including a majority of our Trustees
who are not otherwise interested persons of our investment manager or its
related organizations, were present and voted in favor of the said resolution
approving this Underwriting Agreement. This Underwriting Agreement is intended
to apply to all Shares of the Fund issued before or after this amendment.
1. Appointment of Underwriter. Upon the execution of this Agreement and in
consideration of the agreements on your part herein expressed and upon the terms
and conditions set forth herein, we hereby appoint you as the exclusive sales
agent for distribution of the Shares and agree that we will deliver to you such
Shares as you may sell. You agree to use your best efforts to promote the sale
of the Shares, but you are not obligated to sell any specific number of the
Shares.
2. Independent Contractor. You will undertake and discharge your
obligations hereunder as an independent contractor and shall have no authority
or power to obligate or bind the Company or the Fund by your actions, conduct or
contracts, except that you are authorized to accept orders for the purchase or
repurchase of the Shares as our agent. You may appoint sub-agents or distribute
the Shares through dealers (or otherwise) as you may determine necessary or
desirable from time to time. This Agreement shall not, however, be construed as
authorizing any dealer or other person to accept orders for sale or repurchase
on our behalf or to otherwise act as our agent for any purpose.
3. Offering Price. Shares of the Fund shall be offered at a price
equivalent to their net asset value as set forth in the Fund's Prospectus. On
each business day on which the New York Stock Exchange is open for business, we
will furnish you with the net asset value of the Shares, which shall be
determined and become effective as of the close of business of the New York
Stock Exchange on that day. The net asset value so determined shall apply to all
orders for the purchase of the Shares received by dealers prior to such
determination, and you are authorized in your capacity as our agent to accept
orders and confirm sales at such net asset value; provided that, such dealers
notify you of the time when they received the particular order and that the
order is placed with you prior to your close of business on the day on which the
applicable net asset value is determined. To the extent that our Fund
Shareholder Servicing Agent and Transfer Agent and Dividend Disbursing Agent
(collectively, "Agent") and the Custodian(s) for any pension, profit-sharing,
employer or self-employed plan receive payments on behalf of the investors, such
Agent and Custodian(s) shall be required to record the time of such receipt with
respect to each payment, and the applicable net asset value shall be that which
is next determined and effective after the time of receipt by them. In all
events, you shall forthwith notify all of the dealers comprising your selling
group and the Agent and Custodian(s) of the effective net asset value as
received from us. Should we at any time calculate our net asset value more
frequently than once each business day, you and we will follow procedures with
respect to such additional price or prices comparable to those set forth above
in this Section 3.
4. Payment of Shares. At or prior to the time of delivery of any of the
Shares you will pay or cause to be paid to the Custodian, for our account, an
amount in cash equal to the net asset value of such Shares. In the event that
you pay for Shares sold by you prior to your receipt of payment from purchasers,
you are authorized to reimburse yourself for the net asset value of such Shares
from the offering price of such Shares when received by you.
5. Registration of Shares. No Shares shall be registered on our books until
(i) receipt by us of your written request therefor; (ii) receipt by the
Custodian and Agent of a certificate signed by an officer of the Company stating
the amount to be received therefor; and (iii) receipt of payment of that amount
by the Custodian. We will provide for the recording of all Shares purchased in
unissued form in "book accounts", unless a request in writing for certificates
is received by the Agent, in which case certificates for shares in such names
and amounts as is specified in such writing will be delivered by the Agent, as
soon as practicable after registration thereof on the books.
6. Purchases for Your Own Account. You shall not purchase Shares for your
own account for purposes of resale to the public, but you may purchase Shares
for your own investment account upon your written assurance that the purchase is
for investment purposes only and that the Shares will not be resold except
through redemption by us.
7. Payment of Expenses.
(a) The Fund shall assume and pay for the following expenses: (i) costs
of preparing, printing and distributing reports, Prospectuses and Statements of
Information used by it in connection with the sale or offering of its Shares and
all advertising and sales literature relating to it printed at your instruction;
and (ii) counsel fees and expenses in connection with the foregoing.
(b) You shall pay all of your own costs and expenses connected with the
sale of Shares.
8. Furnishing of Information. We will furnish to you such information with
respect to our company and its Shares, in such form and signed by such of our
officers as you may reasonably request, and we warrant that the statements
therein contained when so signed will be true and correct. We will also furnish
you with such information and will take such action as you may reasonably
request in order to qualify our Shares for sale to the public under the Blue Sky
Laws or in jurisdictions in which you may wish to offer them. We will furnish
you at least annually with audited financial statements of our books and
accounts certified by independent public accountants, and with such additional
information regarding our financial condition, as you may reasonably request
from time to time.
9. Conduct of Business. Other than the currently effective Prospectus and
Statement of Additional Information, you will not issue any sales material or
statements except literature or advertising which conforms to the requirements
of federal and state securities laws and regulations and which have been filed,
where necessary, with the appropriate regulatory authorities. You will furnish
us with copies of all such material prior to their use and no such material
shall be published if we shall reasonably and promptly object.
You shall comply with the applicable federal and state laws and regulations
where our Shares are offered for sale and conduct your affairs with us and with
dealers, brokers or investors in accordance with the Rules of Fair Practice of
the National Association of Securities Dealers, Inc.
10. Redemption . You are authorized as our agent and subject to our
direction, to redeem outstanding Shares of the Fund when properly tendered by
shareholders pursuant to the redemption right granted to the shareholders by the
Trust Instrument of the Company, as from time to time in effect, at a redemption
price equal to the NAV per Share of the Fund next determined after proper tender
and acceptance. The Company has delivered to you a copy of its Trust Instrument
as currently in effect and agrees to deliver to you any amendments thereto
promptly upon filing thereof with the Office of the Secretary of State of the
State of Delaware.
11. Other Activities. Your services pursuant to this Agreement shall not be
deemed to be exclusive, and you may render similar services and act as an
underwriter, distributor or dealer for other investment companies in the
offering of their Shares.
12. Term of Agreement. This Agreement shall remain in effect until
______________, 1999, and shall continue annually thereafter for successive one
(1) year periods if approved at least annually (i) by a vote of a majority of
the outstanding voting securities of the Funds or by a vote of the Trustees of
the Company, and (ii) by a vote of a majority of the Trustees of the Company who
are not interested persons or parties to this Agreement (other than as Trustees
of the Company), cast in person at a meeting called for the purpose of voting on
this Agreement.
13. Termination. Either party may terminate this Agreement without the
payment of any penalty, upon not more than sixty days' nor less than thirty
days' written notice delivered personally or mailed by registered mail, postage
prepaid, to the other party; provided, that in the case of termination by any
series of the Company, such action shall have been authorized (i) by resolution
of the Trustees, or (ii) by vote of a majority of the outstanding voting
securities of the respective series, or (iii) by written consent of a majority
of the disinterested Trustees. The Agreement shall automatically terminate if it
is assigned by you.
14. Suspension of Sales. We reserve the right at all times to suspend or
limit the public offering of the Shares upon written notice to you, and to
reject any order in whole or in part.
15. Miscellaneous.
(a) This Agreement shall be subject to the laws of the State of
Maryland and shall be interpreted and construed to further and promote the
operation of the Company as an open-end investment company.
(b) As used herein, the terms "Net Asset Value," "Offering Price,"
"Investment Company," "Open-End Investment Company," "Assignment," "Principal
Underwriter," "Interested Person," "Parents," and "Majority of the Outstanding
Voting Securities," shall have the meanings set forth in the 1933 Act and the
1940 Act, as applicable, and the rules and regulations promulgated thereunder.
Any question of interpretation of any term or provision of this Agreement having
a counterpart in or otherwise derived from a provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 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 SEC validly issued pursuant to the 1940 Act. In addition, when the effect
of a requirement of the 1940 Act reflected in any provision of this Agreement is
modified, interpreted or relaxed by a rule, regulation or order of the SEC,
whether of special or of general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order. the company and you
may from time to time agree on such provisions interpreting or clarifying the
provisions of this Agreement as, in our joint opinion, are consistent with the
general tenor of this Agreement and with the specific provisions of this Section
15(b). Any such interpretations or clarification shall be in writing signed by
the parties and annexed hereto, but no such interpretation or clarification
shall be effected if in contravention of any applicable federal or state law or
regulations, and no such interpretation or clarification shall be deemed to be
an amendment of this Agreement.
16. Liability.
(a) Nothing contained herein shall be deemed to protect you against any
liability to us or to our shareholders to which you would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your reckless disregard of
your obligations and duties hereunder.
(b) You shall look only to the assets of a series for the performance
of this Agreement by the Company on behalf of such series and neither the
Trustees nor any of the Company's officers, employees or agents, whether past,
present or future, shall be personally liable therefor.
If the foregoing meets with your approval, please acknowledge your
acceptance by signing each of the enclosed counterparts hereof and returning
such counterparts to us, whereupon this shall constitute a binding agreement as
of the date first above written.
Very truly yours,
E*TRADE FUNDS
(on behalf of the E*TRADE S&P 500 Index Fund)
By: ___________________________________
Title: ___________________________________
Agreed to and Accepted:
E*TRADE SECURITIES, INC.
By: ______________________________
Title: ______________________________
SCHEDULE A
The series of E*TRADE Funds currently subject to this Agreement are as follows:
E*TRADE S&P 500 Index Fund
