THIRD AMENDED AND RESTATED
UNDERWRITING AGREEMENT
E*TRADE FUNDS
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As of August 19, 2003
E*TRADE Securities, LLC
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Re: Third Amended and Restated Underwriting Agreement ("Agreement")
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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 a Second
Amended and Restated Underwriting Agreement dated as of September 10, 2001, as
amended on October 7, 2002 and February 26, 2003 with respect to the Funds
("Original Agreement"), 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 purpose of this document is to amend and restate the Original
Agreement, to reflect the reorganization of the E*TRADE Premier Money Market
Fund with and into the Premier Class of the E*TRADE Money Market Fund, to
include all prior amendments to the Original Agreement into a single document,
and to permit E*TRADE Securities to continue to act as the exclusive selling
agent and principal underwriter for the Shares of the Funds, as set forth on
Schedule A, as amended from time to time, under substantially the same terms as
the Original Agreement. This Agreement shall supersede the terms of the Original
Agreement.
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. 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.
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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 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
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authorities. You will furnish us with copies of all such material prior to their
use and no such material shall be published if we shall reasonably and promptly
object.
You shall comply with the applicable federal and state laws and regulations
where our Shares are offered for sale and conduct your affairs with us and with
dealers, brokers or investors in accordance with the Rules of Fair Practice of
the National Association of Securities Dealers, Inc.
10. Redemption. You are authorized as our agent and subject to our
direction, to redeem outstanding Shares of 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 Trustees of the Trust who are not interested
persons or parties to this Agreement (other than as Trustees of the Trust), 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
disinterested Trustees. The Agreement shall automatically terminate if it is
assigned by you.
14. Suspension of Sales. We reserve the right at all times to suspend or
limit the public offering of the Shares upon written notice to you, and to
reject any order in whole or in part.
15. Miscellaneous.
(a) This Agreement shall be subject to the laws of the State of
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
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Securities," shall have the meanings set forth in the 1933 Act and the 1940 Act,
as applicable, and the rules and regulations promulgated thereunder. Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and to
interpretation thereof, if any, by the United States courts or, in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC validly issued pursuant to the 1940 Act. In addition, when the effect
of a requirement of the 1940 Act reflected in any provision of this Agreement is
modified, interpreted or relaxed by a rule, regulation or order of the SEC,
whether of special or of general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order. The 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 a monthly fee
(payable on or before the fifth (5/th/) 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.
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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
attached Schedule A)
By:
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Title:
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Agreed to and Accepted:
E*TRADE SECURITIES, LLC
By:
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Title:
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SCHEDULE A
to the
Third Amended and Restated
Underwriting Agreement
The series of E*TRADE Funds currently subject to this Third Amended and Restated
--------------------------------------------------------------------------------
Underwriting Agreement, as amended, are as follows:
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E*TRADE Asset Allocation Fund
E*TRADE Bond Fund
E*TRADE California Municipal Money Market Fund
E*TRADE Government Money Market Fund
E*TRADE International Index Fund
E*TRADE Money Market Fund/*/
E*TRADE Municipal Money Market Fund
E*TRADE New York Municipal Money Market Fund
E*TRADE ▇▇▇▇▇▇▇ 2000 Index Fund
E*TRADE S&P 500 Index Fund
E*TRADE Technology Index Fund
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/*/ E*TRADE Premier Money Market Fund shall remain subject to this Agreement
until the completion of the reorganization of the Premier Money Market Fund
with and into the Premier Class of the E*TRADE Money Market Fund.
A-1
SCHEDULE B
to the
Third Amended and Restated
Underwriting Agreement
FUND End of Initial Term
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E*TRADE Asset Allocation Fund March 1, 2003
E*TRADE Bond Fund August 12, 2001
E*TRADE California Municipal Money Market Fund
Sweep Class October 7, 2004
E*TRADE Government Money Market Fund
Sweep Class October 7, 2004
E*TRADE International Index Fund October 22, 2001
E*TRADE Money Market Fund
Institutional Class July 1, 2005
Premier Class/*/ __________, 2005
Sweep Class October 7, 2004
E*TRADE Municipal Money Market Fund
Premier Class May 1, 2005
Sweep Class October 7, 2004
E*TRADE New York Municipal Money Market Fund
Sweep Class October 7, 2004
E*TRADE ▇▇▇▇▇▇▇ 2000 Index Fund December 26, 2002
E*TRADE S&P 500 Index Fund February 3, 2001
E*TRADE Technology Index Fund August 12, 2001
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/*/ This agreement will become effective with respect to the Premier Class of
the E*TRADE Money Market Fund upon the completion of the reorganization of
the E*TRADE Premier Money Market Fund with and into the Premier Class of
the E*TRADE Money Market Fund.
B-1
SCHEDULE C
to the
Third Amended and Restated
Underwriting Agreement
FUND/CLASS Rule 12b-1 Fee
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E*TRADE Money Market Fund
Sweep Class 0.60% of the Fund's average
daily net assets, calculated
as described in Section 17 of
the Agreement.
Premier Class N/A
Institutional Class N/A
E*TRADE Government Money Market Fund
Sweep Class 0.50% of the Fund's average
daily net assets, calculated
as described in Section 17 of
the Agreement.
E*TRADE Municipal Money Market Fund
Sweep Class 0.50% of the Fund's average
daily net assets, calculated
as described in Section 17 of
the Agreement.
Premier Class N/A
E*TRADE California Municipal Money Market Fund
Sweep Class 0.50% of the Fund's average
daily net assets, calculated
as described in Section 17 of
the Agreement.
E*TRADE New York Municipal Money Market Fund
Sweep Class 0.50% of the Fund's average
daily net assets, calculated
as described in Section 17 of
the Agreement.
C-1