FORM OF
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made this ___ day of _______, 1999, between E*TRADE Funds (a
Delaware business trust, hereinafter referred to as the "Company"), on behalf of
the series listed on Exhibit A hereto (each a "Fund" and collectively, the
"Funds") and E*TRADE Asset Management, Inc. (a Delaware corporation, hereinafter
referred to as the "Administrator").
WHEREAS, the Company is a registered investment company under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Administrator is able to act as administrator of the Fund;
and
WHEREAS, the Company wishes to appoint the Administrator and the
Administrator has agreed to act as administrator for the Funds in accordance
with the terms and conditions of this Agreement.
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. The Administrator, as
administrator for the Funds, will, at its own expense:
(a) Furnish to the Funds the services of its employees and agents in
the management and conduct of the corporate business and affairs of
the Funds;
(b) If requested, provide the services of its officers as
administrative executives of the Funds and the services of any
trustees of the Funds who are "interested persons" of the
Administrator or its affiliates, as that term is defined in the Act,
subject in each case to their individual consent to serve and to
applicable legal limitations;
(c) Provide office space, secretarial and clerical services and wire
and telephone services (not including toll charges, which will be
reimbursed by the Funds), and monitor and review the Funds' contracted
services and expenditures;
(d) Prepare or supervise the preparation of periodic reports to the
Funds' shareholders and prepare and file, with such advice of counsel
as reasonably deemed necessary by the Administrator, such documents
and other papers as may be required to comply with the rules,
regulations and requirements of the Securities and Exchange Commission
("SEC") and other governmental agencies, whether state or federal,
except that the Funds shall bear the expenses provided for in Section
2 hereof (Special services, if any, rendered to individual
shareholders or groups of shareholders shall not be included in the
services to be rendered by the Administrator pursuant to this
paragraph, but the Administrator shall be reimbursed for the actual
cost of such services pursuant to the provisions of Section 2 below.);
(e) Coordinate the services provided to the Funds by the investment
advisor, transfer and dividend disbursing agent, custodian,
sub-administrator, shareholder servicing agent, independent auditors
and legal counsel; and
(f) Report to the Trustees of the Funds concerning its activities
pursuant to this Agreement at regular meetings of the Trustees and at
such other times as the Trustees may request.
2. Expenses. The Administrator shall bear expenses incurred by it which
are necessary for the performance of its duties and activities specified in this
Agreement, except such expenses as are assumed by the Funds under this
Agreement. The Administrator (or its affiliates, as applicable) will also pay
the compensation and expenses of all officers and executive employees of the
Funds who are directors, officers or employees of the Administrator or of its
affiliates and will make available or cause to be made available, without
expense to the Funds, the services of such of the directors, officers and
employees of the Administrator or its affiliates as may fully be elected
officers or trustees of the Funds, subject to their individual consent to serve
and to any limitations imposed by law. The Administrator will also be
responsible for the expenses otherwise payable by the Funds for transfer agency,
dividend disbursing, custody, auditing and legal fees, to the extent such
expenses equal or exceed the maximum amount specified in Exhibit B hereto. The
Funds shall bear all of their other expenses incurred in their operation and not
specifically assumed by the Administrator. The expenses assumed by the Funds
shall include, without limitation: organizational expenses of the Funds; fees
and expenses incurred in connection with the Funds' memberships in investment
company organizations; fees of the investment advisers; interest expenses, taxes
and governmental fees; distribution fees; brokerage commissions and other
expenses incurred in acquiring or disposing of the Funds' portfolio securities;
expenses of registering and qualifying the Funds' shares for sale with the SEC
and with various state securities authorities; the expenses of qualifying the
Funds to do business in jurisdictions where such qualification is required; the
cost of preparing share certificates or any other expenses, including clerical
and administrative expenses, related to the issue, redemption and repurchase of
Fund shares; insurance premiums; expenses of obtaining quotations on the Funds'
portfolio securities and pricing of the Funds' shares; expenses of shareholders'
meetings; expenses of preparing and distributing reports, proxies and
prospectuses to existing shareholders; and expenses and fees of the Funds'
Trustees who are not "interested persons" of the Funds, as that term is defined
in the 1940 Act and any independent legal counsel retain to advise such
Trustees.
3. Compensation. For the services provided and the expenses assumed 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: 0.25% of the average daily net assets of the Fund.
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 ("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
3, the value of the net assets of the Fund shall be deemed to be the value of
such net assets as last 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 as last determined (whether during or
prior to such month).
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 Company'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, at its own
expense, employ or associate with itself such person or persons as it believes
necessary to assist it in carrying out its obligations under this Agreement.
6. Compliance. The Administrator shall observe and comply with the
Certificate of Trust and organizing documents of the Company, the applicable
provisions of the Registration Statement, federal securities laws, all lawful
resolutions of the Company's Trustees and other lawful orders and directions
given to it from time to time by the Trustees. All activities engaged in by the
Administrator hereunder shall be at all times subject to the control of and
review by the Trustees.
7. Limitations of Liability. 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 Company 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 Company shall be deemed, when acting within the scope of his employment
by the Company, to be acting in such employment solely for the Company and not
as the employee or agent of the Administrator.
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 Company or the
Funds or be deemed to violate or give rise to any duty or obligation of the
Administrator to the Company, except as otherwise imposed by law.
9. Duration and Termination. This Agreement shall become effective as
of ______, 1999 and shall continue in force until ______, 2001, if not sooner
terminated. This Agreement shall continue in effect 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 of
Trustees of the Funds, or by the vote of a majority of the outstanding voting
securities of the Funds (as defined in the 1940 Act), 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 0000 Xxx) at a meeting called for the
purpose of voting on such approval. This Agreement may be terminated at any time
without payment of any penalty, by the Company upon the vote of a majority of
the Company's Board of Trustees or by a majority of the outstanding voting
securities of the Funds, or by the Administrator, in each case, on sixty (60)
days' written notice to the other party. This Agreement shall automatically
terminate in the event of its assignment (as such term is defined in the 1940
Act).
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 Company.
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 Company or the Funds in any
way or otherwise be deemed an agent of the Company 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 listed on Exhibit A)
By:___________________________
Name:
Title:
E*TRADE ASSET MANAGEMENT, INC.
By:___________________________
Name:
Title:
EXHIBIT A
E*TRADE S&P 500 Index Fund
EXHIBIT B
The Administrator is responsible for expenses otherwise payable by a
Fund for transfer agency, dividend disbursing, custody, auditing and legal fees,
to the extent those expenses equal or exceed 0.005% of a Fund's average daily
net assets.
