FORM OF
STATE SECURITIES COMPLIANCE SERVICES AGREEMENT
THIS AGREEMENT is made as of August __, 1999 by and between E*TRADE ASSET
MANAGEMENT, INC., a Delaware corporation ("E*TRADE"), and PFPC INC., a Delaware
corporation ("PFPC"), which is a wholly owned subsidiary of PFPC Worldwide, Inc.
W I T N E S S E T H :
WHEREAS, E*TRADE wishes to retain PFPC to provide service, on behalf of
E*TRADE Funds (the "Fund"), to the Fund's investment portfolios listed on
Exhibit A attached hereto and made a part hereof, as such Exhibit A may be
amended from time to time (each a "Portfolio"), and PFPC wishes to furnish such
service.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and intending to be legally bound hereby the
parties hereto agree as follows:
1. Definitions. As Used in this Agreement:
(a) "Change of Control" means a change in ownership or control (not
including transactions between wholly-owned direct or indirect
subsidiaries of a common parent) of 25% or more of the beneficial
ownership of the shares of common stock or shares of beneficial
interest of an entity or its parent(s).
(b) "SEC" means the Securities and Exchange Commission. (c) "Securities
Laws" means the state securities laws pertaining to
the registration or qualification of Shares and those state
requirements to benefit from the federal preemption thereof.
(d) "Shares" means the shares of beneficial interest of any series or
class of the Fund.
(e) "Written Instructions" mean written instructions signed by a
representative of E*TRADE and received by PFPC. The instructions may
be delivered by hand, mail, tested telegram, cable, telex, facsimile
sending device or electronic mail transmission.
2. Appointment. E*TRADE hereby appoints PFPC to provide service to each of
the Portfolios, in accordance with the terms set forth in this Agreement.
PFPC accepts such appointment and agrees to furnish such service.
3. Delivery of Documents. The Fund has provided or, where applicable, will
provide PFPC with the following: (a) copies of the resolutions of the
Fund's Board of Trustees,
approving the appointment of PFPC or its affiliates to provide
the services set forth herein to each Portfolio and approving
this Agreement;
(b) a copy of Fund's most recent effective registration statement;
and
(c) copies of any and all amendments or supplements to the foregoing.
4. Compliance with Rules and Regulations.
PFPC undertakes to comply with all applicable requirements of any laws,
rules and regulations of governmental authorities having jurisdiction with
respect to the duties to be performed by PFPC hereunder. Except as
specifically set forth herein, PFPC assumes no responsibility for such
compliance by E*TRADE, the Fund or any Portfolio.
5. Instructions.
(a) Unless otherwise provided in this Agreement, PFPC shall act only
upon Written Instructions.
(b) PFPC shall be entitled to rely upon any Written Instructions it
receives from E*TRADE (or from a person reasonably believed by
PFPC to be a representative of E*TRADE) pursuant to this
Agreement. PFPC may assume that any Written Instruction received
hereunder is not in any way inconsistent with the provisions of
organizational documents or this Agreement or of any vote,
resolution or proceeding of the Fund's Board of Trustees or of
the Fund's shareholders, unless and until PFPC receives Written
Instructions to the contrary.
6. Right to Receive Advice.
(a) Advice of E*TRADE. If PFPC is in doubt as to any action it should or
should not take, PFPC may request directions or advice from E*TRADE.
(b) Advice of Counsel. If PFPC shall be in doubt as to any question of
law pertaining to any action it should or should not take, PFPC may
request advice at its own cost from such counsel of its own choosing
(who may be counsel for the Fund, the Fund's investment adviser, the
Fund's investment sub-adviser, or PFPC, at the option of PFPC).
(c) Conflicting Advice. In the event of a conflict between
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directions, advice or Written Instructions PFPC receives from
E*TRADE and the advice PFPC receives from counsel, PFPC may rely
upon and follow the advice of counsel provided PFPC notifies
E*TRADE in advance and in writing as to the nature of the action
and the advice. In the event PFPC so relies on and in accordance
with the advice of counsel, PFPC remains liable for any action or
omission on the part of PFPC which constitutes willful
misfeasance, bad faith, negligence or reckless disregard by PFPC
of any duties, obligations or responsibilities set forth in this
Agreement.
(d) Protection of PFPC. PFPC shall be protected in any action it
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takes or does not take in reliance upon directions, advice or
Written Instructions it receives from E*TRADE and which PFPC
believes, in good faith, to be consistent with those directions,
advice and Written Instructions. Nothing in this section shall
be construed so as to impose an obligation upon PFPC (i) to seek
such directions, advice or Written Instructions, or (ii) to act
in accordance with such directions, advice or Written
Instructions unless, under the terms of other provisions of this
Agreement, the same is a condition of PFPC's properly taking or
not taking such action. Nothing in this subsection shall excuse
PFPC when an action or omission on the part of PFPC constitutes
willful misfeasance, bad faith, negligence, reckless disregard by
PFPC of any duties, obligations or responsibilities set forth in
this Agreement or any breach of this Agreement.
7. Records; Visits.
(a) The books and records pertaining to the Fund and the Portfolios
which are in the possession or under the control of PFPC shall be
the property of the Fund. Such books and records shall be
prepared and maintained as required by the applicable securities
laws, rules and regulations. The Fund and E*TRADE shall have
access to such books and records at all times during PFPC's
normal business hours. Upon the reasonable request of the Fund
or E*TRADE, copies of any such books and records shall be
provided by PFPC to the Fund or to E*TRADE, at the Fund's expense.
(b) PFPC shall keep the following records:
(i) all books and records with respect to each Portfolio's
books of account; and
(ii) all other books and records as are required to maintain
pursuant to Securities Laws in connection with the services
provided hereunder.
8. Confidentiality. PFPC agrees to keep confidential the records of the Fund
and information relating to the Fund and its shareholders, unless the
release of such records or information is otherwise consented to, in
writing, by the Fund. The Fund agrees that such consent shall not be
unreasonably withheld and may not be withheld where PFPC may be exposed to
civil or criminal contempt proceedings or when required to divulge such
information or records to duly constituted authorities.
9. Disaster Recovery. PFPC shall enter into and shall maintain in effect
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with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to
the extent appropriate equipment is available. In the event of
equipment failures, PFPC shall, at no additional expense to the Fund,
take reasonable steps to minimize service interruptions. PFPC shall
have no liability with respect to the loss of data or service
interruptions caused by equipment failure, provided such loss or
interruption is not caused by PFPC's own willful misfeasance, bad
faith, negligence or reckless disregard of its duties or obligations
under this Agreement.
10. Year 2000 Readiness Disclosure. PFPC, with respect to services
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provided hereunder, (a) has reviewed its business and operations, (b)
has implemented a program to remediate or replace computer applications
and systems, and (c) has implemented a testing plan to test the
remediation or replacement of computer applications and systems, in
each case, to address on a timely basis the risk that certain computer
applications and systems used by PFPC may be unable to recognize and
perform properly date sensitive functions involving dates prior to,
including and after December 31, 1999, including dates such as February
29, 2000 (the "Year 2000 Challenge"). To the best of PFPC's knowledge
and belief, the reasonably foreseeable consequences of the Year 2000
Challenge will not adversely effect PFPC's ability to perform its
duties and obligations under this Agreement. If requested by E*TRADE
Asset Management, the Fund or the Fund's Board of Trustees, PFPC will
provide written materials describing PFPC's current status and plans
with respect to the Year 2000 Challenge for use in the Fund's
registration statement and/or in materials presented to the Fund's
Board of Trustees.
11. Compensation. As compensation for services rendered by PFPC during the
term of this Agreement, E*TRADE will pay to PFPC a fee or fees as may be
agreed to in writing by E*TRADE and PFPC.
12. Indemnification. E*TRADE agrees to indemnify and hold harmless PFPC
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and its affiliates from all taxes, charges, expenses, assessments,
claims and liabilities (including, without limitation, liabilities
arising under securities laws and any state or foreign securities and
blue sky laws, and amendments thereto), and expenses, including
(without limitation) attorneys' fees and disbursements arising directly
or indirectly from any action or omission to act which PFPC takes (i)
at the request or on the direction of or in reliance on the advice of
the Fund or (ii) upon Written Instructions. Neither PFPC, nor any of
its affiliates, shall be indemnified against any liability (or any
expenses incident to such liability) arising out of PFPC's or its
affiliates' own willful misfeasance, bad faith, negligence, reckless
disregard of its duties and obligations under this Agreement or any
breach of this Agreement. Any amounts payable by the Fund hereunder
shall be satisfied only against the relevant Portfolio's assets and not
against the assets of any other investment portfolio of the Fund. PFPC
agrees to indemnify and hold harmless E*TRADE from all taxes, charges,
expenses, assessments, claims and liabilities (including, without
limitation, liabilities arising under securities laws and any state or
foreign securities and blue sky laws, and amendments thereto), and
expenses, including (without limitation) attorneys' fees and
disbursements arising directly or indirectly from any action or
omission to act which E*TRADE takes at the request or on the direction
of or in reliance on the advice of PFPC.
13. Responsibility of PFPC.
(a) PFPC shall be under no duty to take any action on behalf of
E*TRADE, the Fund or any Portfolio, except as specifically set
forth herein or as may be specifically agreed to by PFPC in
writing. PFPC shall be obligated to exercise care and diligence
in the performance of its duties hereunder and to act in good
faith in performing services provided for under this Agreement.
PFPC shall be liable for any damages arising out of PFPC's
failure to perform its duties under this Agreement to the extent
such damages arise out of PFPC's willful misfeasance, bad faith,
negligence, reckless disregard of such duties or any breach of
this Agreement.
(b) Without limiting the generality of the foregoing or of any other
provision of this Agreement, (i) PFPC shall not be liable for
losses beyond its control, provided that PFPC has acted in
accordance with the standard of care set forth above; and (ii)
PFPC shall not be liable for (A) the validity or invalidity or
authority or lack thereof of any Written Instruction, notice or
other instrument which conforms to the applicable requirements of
this Agreement, and which PFPC reasonably believes to be genuine;
or (B) subject to Section 9, delays or errors or loss of data
occurring by reason of circumstances beyond PFPC's control,
including acts of civil or military authority, national
emergencies, labor difficulties, fire, flood, catastrophe, acts
of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply.
(c) Notwithstanding anything in this Agreement to the contrary,
neither PFPC nor its affiliates shall be liable to E*TRADE, the
Fund or to any Portfolio for any consequential, special or
indirect losses or damages which E*TRADE, the Fund or any
Portfolio may incur or suffer by or as a consequence of PFPC's or
any affiliates' performance of the services provided hereunder,
whether or not the likelihood of such losses or damages was known
by PFPC or its affiliates.
14. Description of Services on a Continuous Basis. For those Portfolios
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not previously registered, PFPC will register or claim available
preemption for shares of such Portfolios in each jurisdiction in which
shares of the Portfolios are offered or sold and in connection
therewith shall have the power to prepare, execute, and deliver and
file any and all notices, applications, including without limitation,
notices and applications to register shares, claim preemption,
consents, including consents to service of process, reports, including
without limitation, all periodic reports, claims for exemption, or
other documents and instruments now or hereafter required or
appropriate in the judgment of the E*TRADE, the Fund or PFPC in
connection with the registration of shares of the Portfolios. For
those Portfolios previously registered, and for those Portfolios
initially registered by PFPC, PFPC will monitor, update, amend and file
the registrations, claims for preemption, notices, reports, including
without limitation, all periodic reports for amounts of shares of
Portfolios sold in each state, and any claims for exemption now or
hereafter required or appropriate in the judgment of the E*TRADE, the
Fund or PFPC in connection with the offer and sale of shares of the
Portfolios.
15. Duration and Termination. This Agreement shall continue until terminated
by the Fund or by PFPC on sixty (60) days' prior written notice to the
other party.
16. Notices. All notices and other communications, including Written
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Instructions, shall be in writing or by confirming telegram, cable,
telex, facsimile or electronic mail sending device. If notice is sent
by confirming telegram, cable, telex, facsimile or electronic mail
sending device, it shall be deemed to have been given immediately. If
notice is sent by first-class mail, it shall be deemed to have been
given three days after it has been mailed. If notice is sent by
messenger, it shall be deemed to have been given on the day it is
delivered. Notices shall be addressed (a) if to PFPC, at 000 Xxxxxxxx
Xxxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: President; (b) if to
E*TRADE, at 0000 Xxxxxxxx Xxxxx, Xxxxx Xxxx, XX 00000, Attention:
President; or (c) if to neither of the foregoing, at such other address
as shall have been provided by like notice to the sender of any such
notice or other communication by the other party.
17. Amendments. This Agreement, or any term thereof, may be changed or waived
only by written amendment, signed by the party against whom enforcement of
such change or waiver is sought.
18. Delegation; Assignment. PFPC may assign its rights and delegate its
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duties hereunder to any majority-owned direct or indirect subsidiary of
PFPC or another wholly owned subsidiary of PFPC Worldwide, Inc.,
provided that (i) PFPC gives E*TRADE 30 days prior written notice of
such assignment or delegation, (ii) the assignee or delegate agrees and
is ready, willing and able to comply with the terms of the Agreement,
and (iii) PFPC and such assignee or delegate promptly provide such
information as E*TRADE may reasonably request, and respond to such
questions as E*TRADE may reasonably ask, relative to the assignment or
delegation (including, without limitation, the capabilities of the
assignee or delegate).
19. 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 instrument.
20. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
21. Miscellaneous.
(a) This Agreement embodies the entire agreement and understanding
between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, provided
that the parties may embody in one or more separate documents
their agreement, if any, with respect to delegated duties. The
captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect. Notwithstanding any provision hereof, the services of
PFPC are not, nor shall they be, construed as constituting legal
advice or the provision of legal services for or on behalf of
E*TRADE, the Fund or any other person.
(b) PFPC shall have, unless otherwise expressly provided or authorized
in this Agreement, no authority to act for or represent E*TRADE or
the Fund in any way or otherwise be deemed an agent of E*TRADE or
the Fund.
(c) This Agreement shall be deemed to be a contract made in Delaware and
governed by Delaware law, without regard to principles of conflicts
of law.
(d) If any provision 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. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
(e) The facsimile signature of any party to this Agreement shall
constitute the valid and binding execution hereof by such party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC INC.
By:
Title:
E*TRADE ASSET MANAGEMENT, INC.
By:
Title:
Sections 7, 9, 10 and 13 Accepted and Agreed:
E*TRADE FUNDS
By: ____________________
Title: ___________________
EXHIBIT A
THIS EXHIBIT A, dated as of _________, 1999 is Exhibit A to that certain
Service Agreement dated as of ________, 1999 between PFPC Inc. and E*TRADE Asset
Management.
PORTFOLIOS
E*TRADE S&P 500 Index Fund
E*TRADE Extended Market Index Fund
E*TRADE Bond Index Fund
E*TRADE Technology Index Fund
E*TRADE International Index Fund
E*TRADE E-Commerce Index Fund
COMPENSATION SCHEDULE
Portfolio
E*TRADE S&P 500 Index Fund ________________________
E*TRADE Extended Market Index Fund ________________________
E*TRADE Bond Index Fund ________________________
E*TRADE Technology Index Fund ________________________
E*TRADE International Index Fund ________________________
E*TRADE E-Commerce Index Fund ________________________
The Compensation Schedule to the State Securities Compliance Services
Agreement is accepted and agreed to on this ___ day in _________, 1999.
PFPC INC.
By:
Title:
E*TRADE ASSET MANAGEMENT, INC.
By:
Title:
