AMENDED AND RESTATED TRANSFER AGENCY SERVICES AGREEMENT
The Transfer Agency Services Agreement between PFPC INC. ("PFPC") and
E*TRADE FUNDS (the "Fund") made as of December 29, 1998 (the "Agreement") is
hereby amended and restated as set forth below. The date of this amendment and
restatement is as of November 20, 2006.
W I T N E S S E T H :
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain PFPC to provide transfer agency-related
services set forth below 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 services.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and intending to be legally bound hereby the parties hereto
amend and restate the Agreement as follows:
1. DEFINITIONS. As used in this Agreement:
(a) "1933 ACT" means the Securities Act of 1933, as amended.
(b) "1934 ACT" means the Securities Exchange Act of 1934, as amended.
(c) "AUTHORIZED PERSON" means any officer of the Fund and any other
person duly authorized by the Fund to give Oral Instructions or
Written Instructions on behalf of the Fund. An Authorized Person's
scope of authority may be limited by setting forth such limitation
in a written document signed by both parties hereto.
(d) "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).
(e) "ORAL INSTRUCTIONS" mean oral instructions received by PFPC from an
Authorized Person or from a person reasonably believed by PFPC in
good faith to be an Authorized Person. PFPC may consider and rely
upon instructions it receives from an Authorized Person via
electronic mail as Oral Instructions.
(f) "SEC" means the Securities and Exchange Commission.
(g) "SECURITIES LAWS" means the 1933 Act, the 1934 Act and the 1940 Act.
(h) "SHARES" means the shares of beneficial interest of any series or
class of a Portfolio.
(i) "WRITTEN INSTRUCTIONS" mean (i) written instructions signed by an
Authorized Person (or a person reasonably believed by PFPC in good
faith to be an Authorized Person) and received by PFPC or (ii) trade
instructions transmitted (and received by PFPC) by means of an
electronic transaction reporting system access to which requires use
of a password or other authorized identifier. The instructions may
be delivered electronically (with respect to sub-item (ii) above) or
by hand, mail, tested telegram, cable, telex or facsimile sending
device.
2. APPOINTMENT. The Fund hereby appoints PFPC to provide the transfer
agency-related services set forth below, in accordance with the terms set
forth in this Agreement. PFPC accepts such appointment and agrees to
furnish such services.
3. COMPLIANCE WITH RULES AND REGULATIONS.
2
PFPC undertakes to comply with all applicable requirements of the
Securities Laws, and any laws, rules and regulations of governmental
authorities having jurisdiction with respect to the duties to be performed
by PFPC hereunder. PFPC assumes no responsibility for any compliance by
the Fund or any other entity.
4. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC shall act only
upon Oral Instructions or Written Instructions.
(b) PFPC shall be entitled to rely upon any Oral Instruction or Written
Instruction it receives pursuant to this Agreement. PFPC may assume
that any Oral Instruction or Written Instruction received hereunder
is not in any way inconsistent with the provisions of organizational
documents of the Fund 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.
(c) The Fund agrees to forward to PFPC Written Instructions confirming
Oral Instructions (except where such Oral Instructions are given by
PFPC or its affiliates) so that PFPC receives the Written
Instructions as promptly as practicable and in any event by the
close of business on the day after such Oral Instructions are
received. The fact that such confirming Written Instructions are not
received by PFPC or differ from the Oral Instructions shall in no
way invalidate the transactions or enforceability of the
transactions authorized by the Oral Instructions or PFPC's ability
to rely upon such Oral Instructions.
5. RIGHT TO RECEIVE ADVICE.
3
(a) ADVICE OF THE FUND. If PFPC is in doubt as to any action it should
or should not take, PFPC may request directions or advice, including
Oral Instructions or Written Instructions, from any Authorized
Person.
(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 counsel of its own choosing (who
may be counsel for the Fund, the Fund's investment adviser or PFPC,
at the option of PFPC).
(c) CONFLICTING ADVICE. In the event of a conflict between directions or
advice or Oral Instructions or Written Instructions PFPC receives
from any Authorized Person, and the advice PFPC receives from
counsel, if it involves an issue of compliance with law or legal
requirements, PFPC shall be entitled to rely upon and follow the
advice of counsel but only after it has discussed the matter with
the Fund and the Fund's counsel and the conflict is not resolved. In
the event PFPC so relies on the advice of counsel, PFPC remains
liable for any action or omission on the part of PFPC which
constitutes willful misfeasance, bad faith, gross negligence or
reckless disregard by PFPC of any duties, obligations or
responsibilities set forth in this Agreement.
(d) PROTECTION OF PFPC. PFPC shall be indemnified by the Fund and
without liability for any action PFPC takes or does not take without
bad faith and in reliance upon directions or advice or Oral
Instructions or Written Instructions PFPC receives from or on behalf
of the Fund or from counsel and which PFPC reasonably believes, in
good faith, to be consistent with those directions or advice or Oral
Instructions or Written Instructions. Nothing in this section shall
be construed so
4
as to impose an obligation upon PFPC (i) to seek such directions or
advice or Oral Instructions or Written Instructions, or (ii) to act
in accordance with such directions or advice or Oral Instructions or
Written Instructions.
6. 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 1940 Act and other applicable Securities Laws, rules and
regulations. The Fund and Authorized Persons and the staff of any
regulatory agency having authority over the Fund shall have access to such
books and records at all times during PFPC's normal business hours. Upon
the reasonable request of the Fund, copies of any such books and records
shall be provided by PFPC to the Fund or to an Authorized Person, at the
Fund's expense. Upon reasonable notice by the Fund, PFPC shall make
available during regular business hours its facilities and premises
employed in connection with its performance of this Agreement for
reasonable visits by the Fund, any agent or person designated by the Fund
or any regulatory agency having authority over the Fund.
(b) PFPC shall provide to the Fund any report on Controls Placed in Operation
and Tests of Operating Effectiveness which PFPC receives from PFPC's
independent accountants in accordance with U.S. Statement of Auditing
Standards No. 70 ("SAS 70 Report") promptly after PFPC receives the SAS 70
Report from its independent accountants, regardless of whether the Fund is
covered by such SAS 70 Report, provided the primary scope of such SAS 70
Report is PFPC's transfer agency business.
7. CONFIDENTIALITY.
5
(a) Each party shall keep confidential any information relating to the
other party's business which information relates to the provision of
the services provided under this Agreement. Confidential information
shall include the following to the extent that it relates to the
provision of the services provided under this Agreement: (a) any
data or information that is competitively sensitive material, and
not generally known to the public, including, but not limited to,
information about product plans, marketing strategies, finances,
operations, customer relationships, customer profiles, customer
lists, sales estimates, business plans, and internal performance
results relating to the past, present or future business activities
of the Fund or PFPC or their respective subsidiaries and affiliated
companies; (b) any scientific or technical information, design,
process, procedure, formula, or improvement that is commercially
valuable and secret in the sense that its confidentiality affords
the Fund or PFPC a competitive advantage over its competitors; (c)
all confidential or proprietary concepts, documentation, reports,
data, specifications, computer software, source code, object code,
flow charts, databases, inventions, know-how, and trade secrets,
whether or not patentable or copyrightable; and (d) anything
designated as confidential. Notwithstanding the foregoing,
information shall not be confidential information and shall not be
subject to the foregoing confidentiality obligations if it: (a) is
already known to the receiving party at the time it is obtained; (b)
is or becomes publicly known or available through no wrongful act of
the receiving party; (c) is rightfully received from a third party
who, to the best of the receiving party's knowledge, is not under a
duty of confidentiality; (d) is released by the protected party to a
third party without
6
restriction; (e) is requested or required to be disclosed by the
receiving party pursuant to a court order, subpoena, governmental or
regulatory agency request or law (provided the receiving party will
provide the other party written notice of the same, to the extent
such notice is permitted); (f) is relevant to the defense of any
claim or cause of action asserted against the receiving party; (g)
is Fund information provided by PFPC in connection with an
independent third party compliance or other review; (h) is necessary
for PFPC to release such information in connection with the
provision of services under this Agreement; or (i) has been or is
independently developed or obtained by the receiving party.
(b) PFPC acknowledges and agrees that it will comply with the sections
of Regulation S-P (17 CFR Part 248) applicable to its duties
hereunder, including, but not limited to, the reuse and
re-disclosure provisions and the disposal of consumer report
information provisions. PFPC shall not disclose the non-public
personal information of investors in the Fund obtained under this
Agreement, except as necessary to carry out the services set forth
in this Agreement or as otherwise permitted by law or regulation.
(c) The provisions of this Section 7 shall survive termination of this
Agreement for a period of three (3) years after such termination.
8. COOPERATION WITH ACCOUNTANTS. PFPC shall cooperate with the Fund's
independent registered public accounting firm and shall take all
reasonable action in the performance of its duties under this Agreement to
assure that the necessary information (to the extent maintained by PFPC)
is made available to such firm for the expression of its opinion with
respect to the Portfolios' annual financial statements, as reasonably
required by the Fund.
7
9. PFPC SYSTEM. PFPC shall retain title to and ownership of any and all data
bases, computer programs, screen formats, report formats, interactive
design techniques, derivative works, inventions, discoveries, patentable
or copyrightable matters, concepts, expertise, patents, copyrights, trade
secrets, and other related legal rights ("Intellectual Property") owned by
PFPC or licensed from third parties by PFPC and used by PFPC in connection
with the services provided by PFPC to the Fund ("PFPC Intellectual
Property"). Nothing herein shall be interpreted or construed to grant to
the Fund any title or ownership of PFPC Intellectual Property. Nothing
contained herein shall be interpreted to confer upon or grant to PFPC any
right, title or interest in any Intellectual Property belonging to or
licensed solely by the Fund.
10. DISASTER RECOVERY. PFPC shall enter into and shall maintain in effect 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, make reasonable efforts
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, gross negligence or reckless disregard of
its duties or obligations under this Agreement.
11. COMPENSATION.
(a) As compensation for transfer-agency related services rendered by
PFPC during the term of this Agreement, the Fund, on behalf of each
Portfolio, will pay to PFPC a fee or fees as may be agreed to in
writing by the Fund and PFPC.
8
(b) The Fund hereby represents and warrants to PFPC that (i) the terms
of this Agreement, (ii) the fees and expenses associated with this
Agreement, and (iii) any benefits accruing to PFPC or to the adviser
or sponsor to the Fund in connection with this Agreement, including
but not limited to any fee waivers, conversion cost reimbursements,
up front payments, signing payments or periodic payments made or to
be made by PFPC to such adviser or sponsor or any affiliate of the
Fund relating to this Agreement have been fully disclosed to the
Board of Trustees of the Fund and that, if required by applicable
law, such Board of Trustees has approved or will approve the terms
of this Agreement, any such fees and expenses, and any such
benefits.
(c) PFPC shall establish certain cash management accounts ("Service
Accounts") required to provide services under this Agreement. The
Fund acknowledges (i) PFPC may receive investment earnings from
sweeping the funds in such Service Accounts into investment accounts
including, but not limited, investment accounts maintained at an
affiliate or client of PFPC; (ii) balance credits earned with
respect to the amounts in such Service Accounts ("Balance Credits")
will be used to offset the banking service fees imposed by the cash
management service provider (the "Banking Service Fees"); (iii) PFPC
shall retain any excess Balance Credits for its own use; (iv)
Balance Credits will be calculated and applied toward the Fund's
Banking Service Fees regardless of the Service Account balance sweep
described in Section 11(c)(i); and (v) PFPC may use the services of
third-party vendors in connection with the issuance of redemption
and distribution checks and shall retain any benefits obtained from
any arrangements with such vendors,
9
including any commission or return on float paid to it by any such
vendors.
12. INDEMNIFICATION.
(a) Subject to subsection (c) of this Section 12, the Fund (on behalf of
each Portfolio) agrees to indemnify, defend and hold harmless PFPC
and its affiliates, including their respective officers, directors,
agents and employees, from all taxes, charges, expenses,
assessments, claims and liabilities (including, without limitation,
reasonable attorneys' fees and disbursements) arising directly or
indirectly from (i) any action or omission to act which PFPC takes
in connection with the provision of services to the Fund or (ii) the
acceptance, processing and/or negotiation of checks or other methods
utilized for the purchase of Shares. 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, gross negligence or
reckless disregard in the performance of PFPC's activities under
this Agreement.
(b) PFPC agrees to indemnify, defend and hold harmless the Fund only
from those taxes, charges, expenses, assessments, claims and
liabilities (including, without limitation, reasonable attorneys'
fees and disbursements) resulting from PFPC's failure to perform its
duties under this Agreement and only to the extent such taxes,
charges, expenses, assessments, claims and liabilities are the
result of PFPC's willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties under this Agreement. Any
obligation of PFPC to indemnify, defend or hold harmless the Fund is
subject to the provisions of this Agreement limiting PFPC's
responsibility to the Fund.
10
(c) The Trustees and shareholders of the Fund, or any Portfolio thereof,
shall not be liable for any obligations of the Fund, or any such
Portfolio, under this Agreement, and PFPC agrees that in asserting
any rights or claims under this Agreement against a Portfolio, it
shall look only to the assets and property of the particular
Portfolio in settlement of such rights or claims and not to such
members of the Board of Trustees or shareholders. PFPC further
agrees that in asserting any rights or claims under this Agreement
against a Portfolio it will look only to the assets and property of
that Portfolio and will not seek to obtain settlement of any such
rights or claims from assets of any other Portfolio of the Fund.
Notwithstanding the foregoing, in asserting any rights or claims
under this Agreement, PFPC shall not be prevented from looking to
the assets and property of the Fund sponsor or any other appropriate
party(ies) in settlement of such rights or claims.
(d) Upon the assertion of a claim for which a party may seek
indemnification under this Agreement, the party seeking such
indemnification shall promptly notify the other party of such
assertion, and shall keep the other party advised with respect to
all developments concerning such claim. Notwithstanding the
foregoing, a delay in notice shall not relieve an indemnifying party
of any liability to an indemnified party, except to the extent the
indemnifying party shows that the delay prejudiced the defense of
the claim. The party who may be required to indemnify shall have the
option to participate with the party seeking indemnification in the
defense of the claim. No party shall confess any claim or make any
compromise in any case in which it is seeking or may seek
indemnification under this Agreement, except
11
with the prior written consent of the other party against which it
is seeking or may seek such indemnification.
(e) The provisions of this Section 12 shall survive termination of this
Agreement.
13. RESPONSIBILITY OF PFPC.
(a) PFPC shall be under no duty to take any action hereunder on behalf
of the Fund or any Portfolio except as specifically set forth herein
or as may be specifically agreed to by PFPC and the Fund in a
written amendment hereto. 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 only 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, gross negligence or reckless disregard of such duties.
(b) Notwithstanding anything in this Agreement to the contrary, (i) PFPC
shall not be liable for losses, delays, failure, errors,
interruption or loss of data occurring directly or indirectly by
reason of circumstances beyond its reasonable control, including
without limitation acts of God; action or inaction of civil or
military authority; public enemy; war; terrorism; riot; fire; flood;
sabotage; epidemics; labor disputes; civil commotion; interruption,
loss or malfunction of utilities, transportation, computer or
communications capabilities; insurrection; elements of nature; or
non-performance by a third party caused by any of the foregoing;
provided that PFPC shall use reasonable efforts to minimize the
impact of any of the foregoing on its ability to perform its
obligations hereunder; and (ii) PFPC
12
shall not be under any duty or obligation to inquire into and shall
not be liable for the validity or invalidity, authority or lack
thereof, or truthfulness or accuracy or lack thereof, of any
instruction, direction, notice, instrument or other information
which PFPC reasonably believes in good faith to be genuine.
(c) Notwithstanding anything in this Agreement to the contrary, (i)
neither PFPC nor its affiliates shall be liable for any
consequential, special or indirect losses or damages, whether or not
the likelihood of such losses or damages was known by PFPC or its
affiliates and (ii) PFPC's cumulative liability to the Fund for all
losses, claims, suits, controversies, breaches or damages for any
cause whatsoever (including but not limited to those arising out of
or related to this Agreement) and regardless of the form of action
or legal theory shall not exceed the greater of $500,000 or the fees
received by PFPC for services provided hereunder during the twelve
(12) months immediately prior to the date of such loss or damage.
(d) No party may assert a cause of action against PFPC or any of its
affiliates that allegedly occurred more than twelve (12) months
immediately prior to the filing of the suit (or, if applicable,
commencement of arbitration proceedings) alleging such cause of
action.
(e) Each party shall have a duty to mitigate damages for which the other
party may become responsible.
(f) The provisions of this Section 13 shall survive termination of this
Agreement.
(g) Notwithstanding anything in this Agreement to the contrary, PFPC
shall have no liability either for any error or omission of any of
its predecessors as servicer on behalf of the Fund or for any
failure to discover any such error or omission.
13
14. DESCRIPTION OF SERVICES.
(a) SERVICES PROVIDED ON AN ONGOING BASIS, IF APPLICABLE.
(i) Calculate 12b-1 payments;
(ii) Maintain proper shareholder registrations;
(iii) Prepare and certify shareholder lists in conjunction with
proxy solicitations;
(iv) Provide periodic shareholder lists and statistics to the
Fund;
(v) Provide detailed data for underwriter/broker confirmations;
(vi) Notify on a timely basis the investment adviser, accounting
agent, and custodian of Share activity;
(vii) Perform other participating broker-dealer shareholder
services as may be agreed upon from time to time;
(viii) Accept and post daily Share purchases and redemptions;
(ix) Accept, post and perform shareholder transfers and
exchanges;
(x) Review new applications and correspond with shareholders to
complete or correct information;
(xi) Direct payment processing of checks or wires;
(xii) Prepare and mail to shareholders confirmation of activity;
(xiii) Provide toll-free lines for direct shareholder use, plus
customer liaison staff for on-line inquiry response; and
(xiv) Perform certain administrative and ministerial duties
relating to opening, maintaining and processing transactions
for shareholders or financial intermediaries that trade
Shares through the NSCC.
(b) PURCHASE OF SHARES. PFPC shall issue and credit an account of an
investor, in the manner described in the Fund's prospectus, once it
receives:
(i) A purchase order in completed proper form;
14
(ii) Proper information to establish a shareholder account; and
(iii) Confirmation of receipt or crediting of funds for such order
to the Fund's custodian.
(c) REDEMPTION OF SHARES. PFPC shall redeem Shares only if that function
is properly authorized by the Fund's Certificate of Trust or
resolution of the Fund's Board of Trustees. Shares shall be
transferred or redeemed and payment therefor shall be made in
accordance with the Fund's prospectus, when the recordholder tenders
Shares in proper form (accompanied by such documents as PFPC
reasonably may deem necessary) and directs the method of redemption.
When Shares are redeemed, PFPC shall deliver to the Fund's custodian
(the "Custodian") and the Fund or its designee a notification
setting forth the number of Shares redeemed. PFPC shall, upon
receipt of the monies provided to it by the Custodian for the
redemption of Shares, pay such monies as are received from the
Custodian, all in accordance with the procedures established from
time to time between PFPC and the Fund.
When a broker-dealer notifies PFPC of a redemption desired by a
customer, and the Custodian provides PFPC with funds, PFPC shall
make the payment to the broker-dealer on behalf of its customer.
(d) DIVIDENDS AND DISTRIBUTIONS. Upon receipt of a resolution of the
Fund's Board of Trustees authorizing the declaration and payment of
dividends and distributions and Written Instructions to PFPC, PFPC
shall issue dividends and distributions declared by the Fund in
Shares, or, upon shareholder election, pay such dividends and
distributions in cash. Such issuance or payment, as well as payments
upon
15
redemption as described above, shall be made after deduction and
payment of the required amount of funds to be withheld in accordance
with any applicable tax laws, rules or regulations. PFPC shall mail
to the Portfolios' shareholders such tax forms and other tax
information, or permissible substitute notice, relating to dividends
and distributions paid by the Portfolios as are required to be filed
and mailed by applicable tax law, rule or regulation. PFPC shall
prepare, maintain and file with the Internal Revenue Service and
other appropriate taxing authorities reports relating to all
dividends above a stipulated amount paid by the Portfolios to
shareholders as required by tax law, rule or regulation.
(e) SHAREHOLDER ACCOUNT SERVICES.
(i) PFPC may arrange, in accordance with the Fund's prospectus,
for a shareholder's: exchange of Shares for shares of another
fund with which a Portfolio has exchange privileges; automatic
redemption from an account where that shareholder participates
in an automatic redemption plan; and/or redemption of Shares
from an account with a checkwriting privilege.
(ii) PFPC may arrange, in accordance with the Fund's prospectus,
for issuance of Shares obtained through: any pre-authorized
check plan; and/or direct purchases through broker wire
orders, checks and applications.
(f) RECORDS. PFPC shall maintain records of the accounts for each
shareholder showing the following information:
(i) Name, address and United States Tax Identification or Social
Security number;
16
(ii) Number and class of Shares held and number and class of Shares
for which certificates, if any, have been issued, including
certificate numbers and denominations;
(iii) Historical information regarding the account of each
shareholder, including dividends and distributions paid and
the date and price for all transactions on a shareholder's
account;
(iv) Any stop or restraining order placed against a shareholder's
account;
(iv) Any correspondence relating to the current maintenance of a
shareholder's account;
(v) Information with respect to withholdings; and
(vii) Any information required in order for PFPC to perform any
calculations contemplated or required by this Agreement.
(g) LOST OR STOLEN CERTIFICATES. PFPC shall place a stop notice against
any certificate reported to be lost or stolen and comply with all
applicable federal regulatory requirements for reporting such loss
or alleged misappropriation. A new certificate shall be registered
and issued only upon:
(i) the shareholder's pledge of a lost instrument bond or such
other appropriate indemnity bond issued by a surety company
approved by PFPC; and
(ii) completion of a release and indemnification agreement signed
by the shareholder to protect PFPC and its affiliates.
(h) SHAREHOLDER INSPECTION OF STOCK RECORDS. Upon a request from any
Portfolio shareholder to inspect stock records, PFPC will notify the
Fund and the Fund will issue Oral or Written Instructions granting
or denying each such request. Unless PFPC has acted contrary to the
Fund's instructions, the Fund agrees and does hereby release PFPC
from any liability for refusal of permission for a particular
shareholder to inspect the Fund's stock records.
17
(i) WITHDRAWAL OF SHARES AND CANCELLATION OF CERTIFICATES. Upon receipt
of Written Instructions, PFPC shall cancel outstanding certificates
surrendered by the Fund to reduce the total amount of outstanding
shares by the number of shares surrendered by the Fund.
(j) COMMUNICATIONS TO SHAREHOLDERS. Upon timely Written Instructions,
PFPC shall mail all communications by the Portfolios to their
shareholders, including:
(i) Reports to shareholders;
(ii) Confirmations of purchases and sales of Shares;
(iii) Monthly or quarterly statements;
(iv) Dividend and distribution notices; and
(v) Tax form information.
(k) LOST SHAREHOLDERS. PFPC shall perform such services as are required
in order to comply with Rule 17Ad-17 of the 1934 Act (the "Lost
Shareholder Rule"), including, but not limited to, those set forth
below. PFPC may, in its sole discretion, use the services of a third
party to perform some of or all such services.
(i) documentation of search policies and procedures;
(ii) execution of required searches;
(iii) tracking results and maintaining data sufficient to comply
with the Lost Shareholder Rule; and
(iv) preparation and submission of data required under the Lost
Shareholder Rule.
"Lost Shareholder" services will not be performed by PFPC on any
shareholder accounts that are broker-controlled accounts where PFPC
is not able to identify
18
and depict "RPO" status. Except as set forth above in this Section
14(k), PFPC shall have no responsibility for any escheatment
services.
(l) RETIREMENT PLANS.
(i) In connection with the individual retirement accounts,
simplified employee pension plans, rollover individual
retirement plans, educational IRA's and ▇▇▇▇ individual
retirement accounts ("▇▇▇ Plans"), 403(b) Plans and money
purchase and profit sharing plans ("Qualified Plans")
(collectively, the "Retirement Plans") within the meaning of
Section 408 of the Internal Revenue Code of 1986, as amended
(the "Code") sponsored by the Fund for which contributions of
the Portfolio's shareholders (the "Participants") are invested
solely in Shares, PFPC shall provide the following
administrative services:
(A) Establish a record of types and reasons for
distributions (i.e., attainment of age 59-1/2,
disability, death, return of excess contributions,
etc.);
(B) Record method of distribution requested and/or made;
(C) Receive and process designation of beneficiary forms
requests;
(D) Examine and process requests for direct transfers
between custodians/trustees; transfer and pay over to
the successor assets in the account and records
pertaining thereto as requested;
(E) Prepare any annual reports or returns required to be
prepared and/or filed by a custodian of a Retirement
Plan, including, but not limited to, an annual fair
market value report, Forms 1099R and 5498; and file same
with the Internal Revenue Service and provide same to
Participant/Beneficiary, as applicable; and
(F) Perform applicable federal withholding and send
Participants/Beneficiaries an annual TEFRA notice
regarding required federal tax withholding.
(iii) PFPC shall arrange for PFPC Trust Company to serve as
custodian for the Retirement Plans sponsored by the Fund for
which contributions of the Participants are invested solely in
Shares.
(iii) With respect to the Retirement Plans sponsored by the Fund for
which contributions of the Participants are invested solely in
Shares, PFPC shall provide the Fund with the associated
Retirement Plan documents for use
19
by the Fund and PFPC shall be responsible for the maintenance
of such documents in compliance with all applicable provisions
of the Code and the regulations promulgated thereunder.
(m) PRINT MAIL. The Fund hereby engages PFPC as its print/mail service
provider with respect to those items and for such fees as may be
agreed to from time to time in writing by the Fund and PFPC.
15 DURATION AND TERMINATION.
(a) This Agreement shall continue in effect for a period of at least one
(1) year from November 20, 2006 (the "Initial Term"). Either party
to this Agreement may terminate this Agreement at the conclusion of
the Initial Term by providing the other party not less than ninety
(90) days prior written notice of such termination. Following the
conclusion of the Initial Term, either party to this Agreement may
terminate this Agreement by providing the other party not less than
ninety (90) days prior written notice of such termination (which
notice shall not be provided prior to the conclusion of the Initial
Term).
(b) In the event the Fund gives notice of termination other than
pursuant to Section 15(d) below, all reasonable expenses associated
with movement of records and materials and conversion thereof to a
successor transfer agent which are incurred by PFPC will be paid to
PFPC by the Fund prior to any such conversion.
(c) In the event PFPC gives notice of termination other than pursuant to
Section 15(d) below, all reasonable expenses associated with
movement of records and materials and conversion thereof to a
successor transfer agent which are incurred by the Fund will be paid
to the Fund by PFPC prior to any such conversion.
(d) If for the thirty (30) days preceding the written notice referenced
below in this
20
sentence a party hereto is guilty of a material failure to perform
its duties and obligations hereunder (a "Defaulting Party") the
other party (the "Non-Defaulting Party") may give written notice
thereof to the Defaulting Party, and if such material failure shall
not have been remedied within sixty (60) days after such written
notice is given, then the Non-Defaulting Party may terminate this
Agreement by giving a written declaration of termination to the
Defaulting Party. Termination by the Non-Defaulting Party shall not
constitute a waiver by the Non-Defaulting Party of any other rights
it might have under this Agreement or otherwise against the
Defaulting Party.
16. NOTICES. Notices shall be addressed (a) if to PFPC, at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President (or such other
address as PFPC may inform the Fund in writing); (b) if to the Fund, at
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President
(or such other address as the Fund may inform PFPC in writing); or (c) if
to neither of the foregoing, at such other address as shall have been
given by like notice to the sender of any such notice or other
communication. If notice is sent by confirming telegram, cable, telex or
facsimile 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 (3) 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.
17. AMENDMENTS. This Agreement, or any term hereof, may be changed or waived
only by a written amendment, which has been mutually consented to by the
parties hereto.
18. ASSIGNMENT. Except as provided below, this Agreement may not be assigned
by either party without the written consent of the other party. PFPC may
assign, at its own expense,
21
this Agreement to any affiliate (as defined in the ▇▇▇▇ ▇▇▇) of PFPC or of
The PNC Financial Services Group, Inc., provided that (i) PFPC gives the
Fund sixty (60) days prior written notice of such assignment, (ii) the
assignee agrees to comply with the relevant provisions of the 1940 Act,
and (iii) PFPC and such assignee promptly provide such information as the
Fund may reasonably request, and respond to such questions as the Fund may
reasonably ask, relative to the assignment (including, without limitation,
the capabilities of the assignee).
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) Notwithstanding anything in this Agreement to the contrary, the Fund
agrees not to make any modifications to its registration statement
or adopt any policies which would affect materially the obligations
or responsibilities of PFPC hereunder without the prior written
approval of PFPC, which approval shall not be unreasonably withheld
or delayed.
(b) Except as expressly provided in this Agreement, PFPC hereby
disclaims all representations and warranties, express or implied,
made to the Fund or any other person, including, without limitation,
any warranties regarding quality, suitability, merchantability,
fitness for a particular purpose or otherwise (irrespective of any
course of dealing, custom or usage of trade), of any services or any
goods
22
provided incidental to services provided under this Agreement. PFPC
disclaims any warranty of title or non-infringement except as
otherwise set forth in this Agreement.
(c) This Agreement embodies the entire agreement and understanding
between the parties relating to the subject matter hereof 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.
(d) The Fund will provide such information and documentation as PFPC may
reasonably request in connection with services provided by PFPC to
the Fund.
(e) 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.
(f) 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.
(g) The facsimile signature of any party to this Agreement shall
constitute the valid and binding execution hereof by such party.
(h) To help the U.S. government fight the funding of terrorism and money
laundering activities, U.S. Federal law requires each financial
institution to obtain, verify, and record certain information that
identifies each person who initially opens an
23
account with that financial institution on or after October 1, 2003.
Certain of PFPC's affiliates are financial institutions, and PFPC
may, as a matter of policy, request (or may have already requested)
the Fund's name, address and taxpayer identification number or other
government-issued identification number, and, if such party is a
natural person, that party's date of birth. PFPC may also ask (and
may have already asked) for additional identifying information, and
PFPC may take steps (and may have already taken steps) to verify the
authenticity and accuracy of these data elements.
22. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS. A copy of the
Certificate of Trust of the Fund is on file with the Secretary of State of
the State of Delaware, and notice is hereby given that this instrument is
executed on behalf of the Trustees of the Fund as Trustees, and not
individually, and that the obligations of this instrument are not binding
upon any of the Trustees or Fund shareholders individually.
23. INSURANCE. PFPC shall maintain insurance of the types and in the amounts
deemed by it to be appropriate. To the extent that policies of insurance
may provide for coverage of claims for liability or indemnity by the
parties set forth in this Agreement, the contracts of insurance shall take
precedence, and no provisions of this Agreement shall be construed to
relieve an insurer of any obligation to pay claims to PFPC or other
insured party which would otherwise be a covered claim in the absence of
any provision of this Agreement.
24. ANTI-MONEY LAUNDERING.
24.1. To the extent the other provisions of this Agreement require PFPC to
establish, maintain and monitor accounts of investors in the Portfolios
consistent with securities laws, PFPC shall perform reasonable actions
necessary to help the Fund be in compliance
24
with Section 352 of the USA PATRIOT Act, as follows: PFPC shall: (a)
establish and implement written internal policies, procedures and controls
reasonably designed to help prevent the Portfolios from being used to
launder money or finance terrorist activities; (b) provide for independent
testing, by an employee who is not responsible for the operation of PFPC's
anti-money laundering ("AML") program or by an outside party, for
compliance with PFPC's established AML policies and procedures; (c)
designate a person or persons responsible for implementing and monitoring
the operation and internal controls of PFPC's AML program; and (d) provide
ongoing training of PFPC personnel relating to the prevention of
money-laundering activities. Upon the reasonable request of the Fund, PFPC
shall provide to the Fund: (x) a copy of PFPC's written AML policies and
procedures (it being understood such information is confidential and
proprietary information of PFPC and shall not be disclosed without PFPC's
prior written consent); (y) at the option of PFPC, a copy of a written
assessment or report prepared by the party performing the independent
testing for compliance, or a summary thereof, or a certification that the
findings of the independent party are satisfactory; and (z) a summary of
the AML training provided for appropriate PFPC personnel. PFPC agrees to
permit inspections relating to its AML program by U.S. Federal departments
or regulatory agencies with appropriate jurisdiction and to make available
to examiners from such departments or regulatory agencies such information
and records relating to PFPC's AML program as such examiners shall
reasonably request. The parties agree the provisions of this Section 24.1
do not apply to Section 326 of the USA PATRIOT Act (or other sections
other than Section 352 of the USA PATRIOT Act) or to regulations not
promulgated under Section 352 of the USA PATRIOT Act.
25
24.2. To help the Fund comply with its requirements to establish and
implement a due diligence program for "foreign financial institution"
accounts (which the Fund is required to have under regulations issued
under Section 312 of the USA PATRIOT Act), PFPC will do the following with
respect to the Portfolios:
(i) Implement and operate a due diligence program that includes
appropriate, specific, risk-based policies, procedures and controls
that are reasonably designed to enable the Fund to detect and
report, on an ongoing basis, any known or suspected money laundering
activity conducted through or involving any correspondent account
established, maintained, administered or managed by a Portfolio for
a "foreign financial institution" (as defined in 31 CFR 103.175(h))
("Foreign Financial Institution");
(ii) Conduct due diligence to identify and detect any such Foreign
Financial Institution accounts in connection with new accounts and
account maintenance;
(iii) Assess the money laundering risk presented by each such Foreign
Financial Institution account, based on a consideration of all
appropriate relevant factors (as generally outlined in 31 CFR
103.176) and assign a risk category to each such Foreign Financial
Institution account;
(iv) Apply risk-based procedures and controls to each such Foreign
Financial Institution account reasonably designed to detect and
report known or suspected money laundering activity, including a
periodic review of the Foreign Financial Institution account
activity sufficient to determine
26
consistency with information obtained about the type, purpose and
anticipated activity of the account;
(v) Include procedures to be followed in circumstances in which the
appropriate due diligence cannot be performed with respect to a
Foreign Financial Institution account;
(vi) Adopt and operate enhanced due diligence policies, where necessary,
as may be required by future regulations pending for Foreign
Financial Institution accounts;
(vii) Record due diligence program and maintain due diligence records
relating to Foreign Financial Institution accounts;
(viii) Report to the Fund about measures taken under (i)-(vii) above; and
(ix) Set forth on a separate fee schedule compensation amounts due for
these Foreign Financial Institution services.
Notwithstanding anything in this Agreement or otherwise to the contrary,
and without expanding the scope of the express language in this Section
24.2, PFPC need not complete any due diligence beyond the requirements of
the relevant Foreign Financial Institution due diligence program
regulations and PFPC need not perform any task that need not be performed
for the Fund to be in compliance with relevant Foreign Financial
Institution due diligence program regulations. The parties agree the
provisions of this Section 24.2 do not apply to Section 326 of the USA
PATRIOT Act (or other sections other than Section 312 of the USA PATRIOT
Act) or to regulations not promulgated under Section 312 of the USA
PATRIOT Act. Notwithstanding anything in this Section 24.2 to the
contrary, the provisions of this
27
Section 24.2 specifically exclude private bank account provisions of
Section 312 of the USA PATRIOT Act.
25. CUSTOMER IDENTIFICATION PROGRAM ("CIP") SERVICES.
(a) To help the Fund comply with its Customer Identification Program (which
the Fund is required to have under regulations issued under Section 326 of
the USA PATRIOT Act) PFPC will do the following:
(i) Implement procedures under which new accounts in the Portfolios are
not established unless PFPC has obtained the name, date of birth
(for natural persons only), address and government-issued
identification number (collectively, the "Data Elements") for each
corresponding "Customer" (as defined in 31 CFR 103.131).
(ii) Use collected Data Elements to attempt to reasonably verify the
identity of each new Customer promptly before or after each
corresponding new account in a Portfolio is opened. Methods of
verification may consist of non-documentary methods (for which PFPC
may use unaffiliated information vendors to assist with such
verifications) and documentary methods (as permitted by 31 CFR
103.131), and may include procedures under which PFPC personnel
perform enhanced due diligence to verify the identities of Customers
the identities of whom were not successfully verified through the
first-level (which will typically be reliance on results obtained
from an information vendor) verification process(es).
(iii) Record the Data Elements and maintain records relating to
verification of new Customers consistent with 31 CFR 103.131(b)(3).
(iv) Regularly report to the Fund about measures taken under (i)-(iii)
above.
(v) If PFPC provides services by which prospective Customers may
subscribe for Shares via the Internet or telephone, work with the
Fund to notify such prospective Customers, consistent with 31 CFR
103.131(b)(5), about the Fund's Customer Identification Program.
(vi) Set forth on a separate fee schedule compensation amounts due for
these CIP Services.
(b) Notwithstanding anything in this Agreement or otherwise to the contrary,
and without expanding the scope of the express language in this Section
25, PFPC need not collect the
28
Data Elements for (or verify) prospective customer (or accounts) beyond
the requirements of relevant customer identification program regulations
(for example, PFPC will not verify customers opening accounts through
NSCC) and PFPC need not perform any task that need not be performed for
the Portfolios to be in compliance with relevant customer identification
program regulations.
(c) PFPC agrees to permit inspections relating to the CIP Services provided
under this Section 25 by U.S. Federal departments or regulatory agencies
with appropriate jurisdiction and to make available to examiners from such
departments or regulatory agencies such information and records relating
to the CIP Services provided under this Section 25 as such examiners shall
reasonably request.
(d) Notwithstanding anything in this Agreement or otherwise to the contrary,
PFPC need not perform any of the steps described above in this Section 25
with respect to persons purchasing Shares via exchange privileges.
26. DATA DELIVERY SERVICES. In accordance with the terms of this Section 26,
PFPC shall, through its proprietary Data Delivery product, provide such
registered investment advisers, broker-dealers and other financial
professionals that the Fund has authorized pursuant to Written
Instructions (collectively, "Financial Professionals"), with online access
to such Portfolio information and such shareholder account information
relating to the shareholders of the Portfolios holding Shares through such
Financial Professionals as is set forth in the "Data Delivery
Documentation" (as defined below). PFPC shall provide the Fund with the
appropriate documentation and procedures (the "Data Delivery
Documentation") to enable the Fund to properly use PFPC's proprietary Data
Delivery product. In addition to and as more fully described in the Data
Delivery Documentation,
29
PFPC shall run and complete data extracts after PFPC's nightly transfer
agent cycles in order to provide the files set forth in the Data Delivery
Documentation to the Financial Professionals. In connection with PFPC's
proprietary Data Delivery product, the Fund has responsibility for, and
PFPC shall be without liability for losses or damages arising from, (i)
the Fund's errors and mistakes in the use of PFPC's proprietary Data
Delivery product, (ii) the Fund's failure to use and employ PFPC's
proprietary Data Delivery product in accordance with the Data Delivery
Documentation; (iii) the Fund's utilization of the control procedures set
forth and described in the Data Delivery Documentation; and (iv) the
Fund's failure to verify promptly reports or output received through the
use of PFPC's proprietary Data Delivery product.
27. SECURITY. PFPC represents and warrants that, to the best of its knowledge,
the various procedures and systems which PFPC has implemented with regard
to the safeguarding from loss or damage attributable to fire, theft or any
other cause (including provision for 24-hour restricted access) of the
Portfolios' blank checks, certificates, records and other data and PFPC's
equipment, facilities and other property used in the performance of its
obligations hereunder are commercially reasonable, and that it will make
such changes therein from time to time as in its reasonable judgment are
required for the secure performance of its obligations hereunder. PFPC
shall review such systems and procedures on a periodic basis and the Fund
shall have reasonable access to review these systems and procedures.
30
IN WITNESS WHEREOF, the parties hereto have caused this amendment and
restatement of the Agreement to be executed as of the date of this amendment and
restatement set forth on the first page hereof.
PFPC INC.
By:
Name:
Title:
E*TRADE FUNDS
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------
Title: President
----------------------------
31
EXHIBIT A
THIS EXHIBIT A, dated as of November 20, 2006 is Exhibit A to that certain
Amended and Restated Transfer Agency Services Agreement dated as of November 20,
2006 between PFPC Inc. and E*Trade Funds.
PORTFOLIOS
E*TRADE S&P 500 Index Fund
E*TRADE Technology Index Fund
E*TRADE ▇▇▇▇▇▇▇ 2000 Index Fund
E*TRADE International Index Fund
E*TRADE Kobren Growth Fund
E*TRADE Delphi Value Fund
32
