Form of agreement subject to completion
FIFTH AMENDED AND RESTATED
UNDERWRITING AGREEMENT
E*TRADE FUNDS
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
As of September [ ], 2006
E*TRADE Securities, LLC
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Re: Fifth Amended and Restated Underwriting Agreement ("Agreement")
Ladies and Gentlemen:
E*TRADE Funds ("Trust"), on behalf of each of it series (each a "Fund") and
E*TRADE Securities, LLC ("E*TRADE Securities") entered into this Fifth Amended
and Restated Underwriting Agreement dated as of September [______], 2006,
pursuant to which E*TRADE Securities acts as the exclusive selling agent and
principal underwriter for the shares of the series and classes of the Trust, as
set forth on Schedule A, as amended from time to time.
The Trust is a Delaware statutory trust operating as an open-end management
investment company. The Trust is registered as such under the Investment
Company Act of 1940, as amended ("1940 Act"), and interests in the Trust
("Shares") are registered under the Securities Act of 1933, as amended ("1933
Act"). The Trust currently consists of the series listed on the attached
Schedule A, each of which is subject to this Agreement. The Trust, on behalf of
each Fund, desires to offer and sell the authorized but unissued Shares of each
Fund to the public in accordance with applicable federal and state securities
laws.
You have informed us that E*TRADE Securities, LLC 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 each Fund and for such other series of
the Trust 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 Trust to execute and deliver this Agreement to you by a
resolution of our Board 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 and who have no direct or indirect financial
interest in this Underwriting Agreement ("Independent Trustees"). This
Underwriting Agreement is intended to apply to all Shares of each Fund issued
before or after this Agreement.
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 Trust or each 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 each Fund shall be offered at a price
equivalent to their net asset value as set forth in each 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
Sub-Administrator, Fund Accounting Agent, 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 Trust stating
the amount to be received therefor; and (iii) receipt of
2
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) If and to the extent that such payments may be made consistently with
Rule 12b-1 or any plan adopted thereunder by the Fund, each 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.
3
10. Redemption. You are authorized as our agent and subject to our
direction, to redeem outstanding Shares of each Fund when properly tendered by
shareholders pursuant to the redemption right granted to the shareholders by
the Trust Instrument of the Trust, as from time to time in effect, at a
redemption price equal to the NAV per Share of each Fund next determined after
proper tender and acceptance. The Trust has delivered to you a copy of its
Trust Instrument as currently in effect and agrees to deliver to you any
amendments thereto.
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 the Agreement. This Agreement shall continue in effect with
respect to each Fund as indicated on Schedule B hereto. The Agreement shall
continue annually thereafter for successive one (1) year periods if approved at
least annually for a Fund (i) by a vote of a majority of the outstanding voting
securities of the respective Fund or by a vote of the Trustees of the Trust,
and (ii) by a vote of a majority of the Independent Trustees, 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 Trust, 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 Independent 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 Delaware and
shall be interpreted and construed to further and promote the operation of the
Trust 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
4
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 Trust
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 Trust on behalf of such series and neither the Trustees
nor any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor.
17. Compensation. Pursuant to a Distribution Plan adopted in accordance with
Rule 12b-1 under the 1940 Act ("Rule 12b-1 Plan") by each fund or class listed
in Schedule C ("Rule 12b-1 Fund"), E*TRADE Securities shall be compensated by
each such Rule 12b-1 Fund through the payment of a monthly fee (payable on or
before the fifth (5th) business day of the following month) computed daily at
the annual rate for each Rule 12b-1 Fund as specified in Schedule C.
18. Quarterly Reporting. E*TRADE Securities shall furnish to the Trust, at
least quarterly, reports as to the sales of each Rule 12b-1 Fund's shares made
with respect to which E*TRADE Securities provides services and/or assumes
expenses under the Rule 12b-1 Plan as well as information as to the
distribution activities and services provided to each such Rule 12b-1 Fund by
E*TRADE Securities and others under the Rule 12b-1 Plan. These reports may be
combined with any similar report prepared by E*TRADE Securities.
5
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 each Fund listed in
the attachedSchedule A)
By:
-----------------------------
Title:
-----------------------------
Agreed to and Accepted:
E*TRADE SECURITIES, LLC
By:
-------------------------
Title:
-------------------------
6
Form of agreement subject to completion
SCHEDULE A
to the
Fifth Amended and Restated
Underwriting Agreement
The series of E*TRADE Funds currently subject to this Fifth Amended and
Restated Underwriting Agreement, as amended, are as follows:
E*TRADE Delphi Value Fund
E*TRADE International Index Fund
E*TRADE Kobren Growth Fund
E*TRADE Xxxxxxx 2000 Index Fund
E*TRADE S&P 500 Index Fund
E*TRADE Technology Index Fund
A-1
Form of agreement subject to completion
SCHEDULE B
to the
Fifth Amended and Restated
Underwriting Agreement
FUND End of Initial Term
---- -------------------
E*TRADE Delphi Value Fund [ ]
E*TRADE International Index Fund October 22, 2001
E*TRADE Kobren Growth Fund [ ]
E*TRADE Xxxxxxx 2000 Index Fund December 26, 2002
E*TRADE S&P 500 Index Fund February 3, 2001
E*TRADE Technology Index Fund August 12, 2001
B-1
Form of agreement subject to completion
SCHEDULE C
to the
Fifth Amended and Restated
Underwriting Agreement
FUND/CLASS Rule 12b-1 Fee
---------- -----------------------------------------------------------
E*TRADE Delphi Value Fund 0.25% of the Fund's average daily net assets, calculated as
Retail Class described in Section 17 of the Agreement
C-1
