Form of agreement subject to completion
E*TRADE FUNDS
AMENDMENT
TO
TRANSFER AGENCY SERVICES AGREEMENT
This Amendment (the "Amendment") is made as of the __________ day of
__________, 2006, by and between E*TRADE FUNDS (the "Fund") and PFPC INC.
("PFPC").
BACKGROUND:
A. PFPC and the Fund entered into a Transfer Agency Services Agreement dated
as of December 29, 1998, as amended to date (the "Agreement") relating to
PFPC's provision of transfer agency services to the Fund and its
Portfolios.
B. The Fund and PFPC desire to amend the Agreement as set forth herein.
TERMS:
The parties hereby agree that:/1/
1. Section 1(e) of the Agreement is hereby deleted in its entirety.
2. The following sentence is added to the end of the definition of
"Oral Instructions" in Section 1(f) of the Agreement:
"PFPC may consider and rely upon instructions it receives from an
Authorized Person via electronic mail as Oral Instructions."
3. The second sentence of the definition of "Written Instructions" in
Section 1(j) of the Agreement is hereby deleted in its entirety and
replaced with the following:
"The instructions may be delivered electronically or by hand, mail,
tested telegram, cable, telex or facsimile sending device;
provided, however, that if delivered by electronic mail, it must be
sent to as least two (2) of the parties listed in the Authorized
E-mail Recipient List, which PFPC will make available to the Fund
and Authorized Persons."
4. Sections 5(b) and 5(c) of the Agreement are hereby deleted in their
entirety and replaced with the following:
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"(b) PFPC shall be entitled to rely upon any Oral Instruction or
Written Instruction it receives from an Authorized Person (or
from a person reasonably believed in good faith by PFPC to be
an Authorized Person) 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 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 or unless PFPC
has actual knowledge 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 so long as it
acts in good faith, unless PFPC has actual knowledge to the
contrary."
5. Section 6 of the Agreement is hereby deleted in its entirety and
replaced with the following:
"6. Right to Receive Advice.
(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
or PFPC, at the option of PFPC); provided, however, that such
counsel and any related expense must be approved in advance
by the Fund's investment adviser (the "Adviser") or the Fund.
(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 may rely upon
and follow the advice of counsel only after it has discussed
the matter with the Adviser, 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, willful misconduct,
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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 indemnified by the Fund and
without liability for any action PFPC takes or does not take in
good faith and 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 and Oral Instructions or Written Instructions. Nothing in
this section shall be construed so 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. The second sentence of Section 7 of the Agreement is hereby deleted
in its entirety and replaced with the following:
"The Fund, 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."
7. Section 8 of the Agreement is hereby deleted in its entirety and
replaced with the following:
"8. Confidentiality.
(a) Each party shall keep confidential any information relating
to the other party's business ("Confidential Information").
Confidential Information shall include (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,
their respective subsidiaries and affiliated companies and
the customers, clients and suppliers of any of them; (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 such confidentiality obligations if it: (a) is
already known to the receiving party at the time it is
obtained;
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(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 restriction; (e) is 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; or (g) has been
or is independently developed or obtained by the receiving
party. The provisions of this Section 8 shall survive
termination of this Agreement for a period of three (3) years
after such termination.
(b) PFPC agrees to keep confidential all records of the Fund and
information relating to any of the Fund or 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 when PFPC may be exposed to civil or
criminal contempt proceedings or when required to divulge
such information or records to duly constituted authorities.
Notwithstanding any provision herein to the contrary, each
party agrees that any Nonpublic Personal Information as
defined under Section 248.3(t) of Regulation S-P ("Regulation
S-P"), promulgated under the Xxxxx-Xxxxx Xxxxxx Act (the
"Act"), disclosed or otherwise made accessible by a party
hereunder is for the specific purpose of permitting the other
party to perform its duties as set forth in this Agreement.
Each party agrees that, with respect to such information, it
will comply with Regulation S-P and the Act and that it will
not disclose any Nonpublic Personal Information received in
connection with this Agreement to any other party, except to
the extent necessary to carry out the services set forth in
this Agreement or as otherwise permitted by Regulation S-P or
the Act.
8. The second sentence of Section 10 of the Agreement is hereby
deleted in its entirety and replaced with the following:
"The Fund shall have the right to review any such agreement or
arrangement. In the event of equipment failures, PFPC shall, at no
additional expense to the Fund, make reasonable best efforts to
minimize service interruptions."
9. Section 13 of the Agreement is hereby deleted in its entirety and
replaced with the following:
"13. Indemnification.
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(a) Subject to subsection (b) of this Section 13, 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, attorneys' fees
and disbursements and liabilities arising under the
Securities Laws and any state and foreign securities and blue
sky laws) arising directly or indirectly from any action or
omission to act which PFPC takes in connection with the
provision of services to the Fund. 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, willful
misconduct, bad faith, negligence or reckless disregard in
the performance of PFPC's activities under this Agreement.
(b) PFPC agrees to indemnify and hold harmless the Fund from all
taxes, charges, assessments, claims and liabilities arising
from PFPC's obligations pursuant to this Agreement
(including, without limitation, liabilities arising under the
Securities Laws, and any state and foreign securities and
blue sky laws, and amendments thereto) and expenses,
including (without limitation) reasonable attorneys' fees and
disbursements arising directly or indirectly out of PFPC's or
its nominees' own willful misfeasance, willful misconduct,
bad faith, negligence or reckless disregard of its duties and
obligations under this Agreement.
(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,
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 or shareholders. PFPC
further agrees that it will look only to the assets and
property of a particular Portfolio of the Fund, should the
Fund have established separate series, in asserting any
rights or claims under this Agreement with respect to
services rendered with respect to that Portfolio and will not
seek to obtain settlement of 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) In order that the indemnification provisions contained in
this Section shall apply, upon the assertion of a claim for
which one party may be required to indemnify the other party,
the party seeking indemnification shall promptly notify the
other party of such assertion, and shall keep the other party
advised with respect to all developments concerning such
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claim. The party who may be required to indemnify shall have
the option to participate with the party seeking
indemnification in the defense of such claim. The party
seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may
be required to indemnify it except with the other party's
prior written consent.
(e) The provisions of this Section 13 shall survive termination
of this Agreement."
10. Section 15 of the Agreement is hereby deleted in its entirety and
replaced with the following:
"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 and use its
best efforts 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, willful misconduct, bad faith, 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 has acted in accordance with
the standard of care set forth above and has used reasonable
efforts to minimize the impact of any of the foregoing on its
ability to fully perform its obligations hereunder; and
(ii) PFPC 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) No party may assert a cause of action against PFPC or any of
its affiliates that allegedly occurred more than twelve
(12) months
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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 parties may become responsible.
(f) The provisions of this Section 15 shall survive termination
of this Agreement.
11. Section 17 of the Agreement is hereby deleted in its entirety and
replaced with the following:
"17. Duration and Termination.
(a) This Agreement shall be effective on the date first written
above and unless terminated pursuant to its terms shall
continue for a period of three (3) years (the "Initial
Term"); provided, however, that the Fund may terminate the
Agreement prior to the conclusion of the Initial Term by
providing PFPC not less than ninety (90) days' written notice.
(b) Upon the expiration of the Initial Term, this Agreement shall
automatically renew for successive terms of one (1) year
("Renewal Terms") each, unless the Fund or PFPC provides
written notice to the other of its intent not to renew. Such
notice must be received not less than ninety (90) days' prior
to the expiration of the Initial Term or the then current
Renewal Term.
(c) In the event the Fund gives notice of termination, all
expenses associated with movement of records and materials
and conversion thereof to a successor service provider will
be borne by the Fund and paid to PFPC prior to any such
conversion.
(d) In the event PFPC gives notice of termination, the Fund will
be reimbursed for reasonable out of pocket costs and expenses
related to directly to the Fund's conversion to another
service provider.
(e) If for the thirty (30) days preceding the written notice
referenced below in this 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 termination notice to the
Defaulting Party. In all cases, termination by the
Non-Defaulting Party shall not constitute a waiver by
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Form of agreement subject to completion
the Non-Defaulting Party of any other rights it might have
under this Agreement or otherwise against the Defaulting
Party.
(f) Notwithstanding anything contained in this Agreement to the
contrary, if a merger, consolidation, adoption, acquisition,
change in control, re-structuring, re-organization or any
other similar action involving the Fund or any affiliate (as
defined under the 0000 Xxx) of the Fund results in the Fund's
giving notice to PFPC terminating it as the provider of any
of the services hereunder or otherwise terminating this
Agreement before the expiration of the then-current Initial
or Renewal Term ("Early Termination"), PFPC shall, if
requested by the Fund, make a good faith effort to facilitate
a conversion to the Fund's successor service provider,
provided that PFPC makes no guarantee that it will be able to
effect a conversion on the date(s) requested by the Fund.
12. Section 18 of the Agreement is hereby deleted in its entirety.
13. Clauses (a) and (b) of Section 20 of the Agreement are hereby
deleted in their entirety and replaced with the following:
"(a) if to PFPC, at 0000 Xxxxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx
00000, Attn: President; (b) if to the Fund, at 0000 Xxxxxxxx Xxxxx,
Xxxxx Xxxx, XX 00000, Attn: President or"
14. The following new sections 28, 29, 30, 31 and 32 are hereby added
to the Agreement:
"28. Property of the Fund. Information or material including client
data owned by the Fund shall remain the property of the Fund. In
the event of termination of this Agreement, information belonging
to the Fund, including client data owned by the Fund shall be
returned by PFPC, as directed by the Fund. This information shall
be in a form that can reasonably be accessed by the Fund; however,
nothing herein shall require PFPC to disclose any of its
intellectual property to the Fund or to any other service provider
or third party."
"29. 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 developed by and utilized by PFPC in
connection with the services provided by PFPC to the Fund. PFPC
shall have no right, title or interest in any of the foregoing
(including, without limitation, any databases) or in any
information developed, owned or used by the Fund or its affiliates
or furnished to PFPC by the Fund or its affiliates and all such
rights, property and information shall remain vested in the Fund
and its affiliates. No rights or licenses to
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any of the foregoing rights, property or information are implied or
granted under this Agreement."
"30. Privacy. Each party hereto acknowledges and agrees that,
subject to the reuse and re-disclosure provisions of Xxxxxxxxxx
X-X, 00 XXX Part 248.11, it 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."
"31. Anti-Money Laundering. To the extent the other provisions of
this Agreement require PFPC to establish, maintain and monitor
accounts of investors in the Fund consistent with securities laws,
PFPC shall perform reasonable actions necessary to help the Fund be
in compliance with Section 352 of the USA PATRIOT Act, as follows:
In this regard, PFPC shall: (a) establish and implement written
internal policies, procedures and controls reasonably designed to
help prevent the Fund 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 may 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. Without limiting or expanding
the foregoing, the parties agree the provisions herein do not apply
to Section 326 of the USA PATRIOT Act (or other sections other than
Section 352) or regulations promulgated thereunder."
"32. 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:
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Form of agreement subject to completion
(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 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 in the Fund via the
Internet or telephone, work with the Fund to notify
prospective Customers, consistent with 31 CFR
103.(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 above in Section 30, PFPC need not collect the Data
Elements for (or verify) prospective customers (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 Fund to
be in compliance with relevant customer identification
program regulations.
(c) Notwithstanding anything in this Agreement or otherwise to the
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contrary, PFPC need not perform any of the steps described
above with respect to persons purchasing Shares via exchange
privileges."
15. Exhibit A of the Agreement is hereby deleted in its entirety and
replaced with the Amended Exhibit A attached to this Amendment.
16. Miscellaneous.
(a) As hereby amended and supplemented hereby, the Agreement
shall remain in full force and effect.
(b) The Agreement, as amended and supplemented hereby,
constitutes the complete understanding and agreement of the
parties with respect to the subject matter of the Agreement
and supersedes all prior communications with respect thereto.
(c) This Amendment 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. The
facsimile signature of any party to this Amendment shall
constitute the valid and binding execution hereof by such
party.
(d) This Amendment shall be governed by the laws of the State of
Delaware, without regard to its principles of conflicts of
laws.
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Form of agreement subject to completion
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers designated below as of the date and
year first above written.
E*TRADE FUNDS
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
PFPC INC.
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
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Form of agreement subject to completion
AMENDED EXHIBIT A
This Amended Exhibit A is dated as of ___________, 2006 and is the Exhibit A to
that certain Transfer Agency Services Agreement dated as of December 29, 1998,
as amended, between PFPC INC. and E*TRADE FUNDS.
Portfolios:
E*TRADE S&P 500 Index Fund
E*TRADE Technology Index Fund
E*TRADE Xxxxxxx 2000 Index Fund
E*TRADE International Index Fund
E*TRADE Kobren Growth Fund
E*TRADE Delphi Value Fund
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