Exhibit h
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of June 1, 2003, between RYDEX
CAPITAL PARTNERS SPHINX FUND (the "Fund"), a Delaware business trust and RYDEX
DISTRIBUTORS, INC. (the "Distributor"), a Maryland corporation.
WHEREAS, the Fund is registered as an investment company with
the Securities and Exchange Commission (the "SEC") under the Investment Company
Act of 1940, as amended (the "1940 Act"), and its shares are registered with the
SEC under the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Distributor is registered as a broker-dealer with
the SEC under the Securities Exchange Act of 1934, as amended;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter contained, the Fund and Distributor hereby agree as follows:
ARTICLE I
SALE OF SHARES
The Fund grants to the Distributor the exclusive right to sell
shares of beneficial interest of the Fund ("Shares"), at the public offering
price(s) in accordance with the current prospectus and the terms set forth
therein, as agent and on behalf of the Fund, during the term of this Agreement
and subject to the registration requirements of the 1933 Act, the rules and
regulations of the SEC and the laws governing the sale of securities in the
various states ("Blue Sky Laws"). However, the Fund, in its absolute discretion,
may: (a) issue or sell Shares directly to holders of Shares upon such terms and
conditions and for such consideration, if any, as it may determine, whether in
connection with the distribution of subscription or purchase rights, the payment
or reinvestment of dividends or distributions, or otherwise; and (b) issue or
sell Shares at net asset value in connection with merger or consolidation with,
or acquisition of the assets of, other investment companies or similar
companies.
The Distributor shall have the right to enter into agreements
with dealers of its choice for the sale of Shares; provided that the Fund shall
approve the form of such agreements. Shares sold to dealers shall be for resale
by such dealers only (1) at the public offering price(s) set forth in the
prospectus and (2) to "Eligible Investors." The term "Eligible Investor" shall
have the meaning ascribed thereto in the registration statement of the Fund
filed with the SEC (the "Registration Statement").
ARTICLE II
SOLICITATION OF SALES
In consideration of these rights granted to the Distributor,
the Distributor agrees to use all reasonable efforts in connection with the
distribution of Shares; provided, however, that the Distributor shall not be
prevented from entering into like arrangements with other issuers. The
provisions of this paragraph do not obligate the Distributor to (i) register as
a broker or
dealer under the Blue Sky Laws of any jurisdiction when it determines it would
be uneconomical for it to do so, (ii) maintain its registration in any
jurisdiction in which it is now registered or (iii) obligate the Distributor to
sell any particular number of Shares.
The Distributor will not make, nor authorize any dealers or
others to make, any sale of Shares to any investor who does not represent to the
Fund or the Distributor, or whose dealer does not represent to the Fund or the
Distributor, that the investor is an Eligible Investor.
In selling Shares for the account of the Fund, the Distributor
will conform to the requirements of applicable Federal and State laws and
regulations and the Conduct Rules of the National Association of Securities
Dealers, Inc.
The Distributor will require each dealer to conform to the
provisions hereof and of the Registration Statement (and related prospectus) at
the time in effect under the 1933 Act with respect to the public offering price
of the Shares.
ARTICLE III
AUTHORIZED REPRESENTATIONS
The Distributor is not authorized by the Fund, nor will the
Distributor authorize dealers or others, to give any information or to make any
representations other than those contained in the currently effective
Registration Statement or contained in shareholder reports or other material
that may be prepared by or on behalf of the Fund for the Distributor's use. The
Distributor may prepare and distribute sales literature and other material, as
it may deem appropriate, provided that such literature and materials have been
prepared in accordance with applicable rules and regulations.
ARTICLE IV
REGISTRATION OF SHARES
The Fund agrees that it will take all action necessary to
register Shares under the Federal and State securities laws so that there will
be available for sale the number of Shares the Distributor may reasonably be
expected to sell and to pay all fees associated with said registration. The Fund
shall make available to the Distributor such number of copies of its currently
effective prospectus and statement of additional information as the Distributor
may reasonably request. The Fund shall furnish to the Distributor copies of all
information, financial statements and other papers that the Distributor may
reasonably request for use in connection with the distribution of Shares. Each
of the foregoing obligations of the Fund shall be fulfilled by the Fund at its
own expense.
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ARTICLE V
COMPENSATION
The Distributor shall not be entitled to receive compensation
from the Fund for providing services hereunder.
ARTICLE VI
INDEMNIFICATION OF DISTRIBUTOR
The Fund agrees to indemnify and hold harmless the Distributor
and each of its directors and officers and each person, if any, who controls the
Distributor within the meaning of Section 15 of the 1933 Act against any loss,
liability, claim, damages or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damages, or
expense and reasonable counsel fees and disbursements incurred in connection
therewith), arising by reason of any person acquiring any Shares, based upon the
ground that the Registration Statement, shareholder reports or other information
filed or made public by the Fund (as from time to time amended) included an
untrue statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements made not misleading.
However, the Fund does not agree to indemnify the Distributor or hold it
harmless to the extent that the statements or omission was made in reliance
upon, and in conformity with, information furnished to the Fund by or on behalf
of the Distributor.
In no case (i) is the indemnity of the Fund to be deemed to
protect the Distributor against any liability to the Fund or its shareholders to
which the Distributor or such person otherwise would be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under this Agreement, or (ii) is the Fund to be liable to the Distributor under
the indemnity agreement contained in this paragraph with respect to any claim
made against the Distributor or any person indemnified unless the Distributor or
other person shall have notified the Fund in writing of the claim within a
reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the
Distributor or such other person (or after the Distributor or the person shall
have received notice of service on any designated agent). However, failure to
notify the Fund of any claim shall not relieve the Fund from any liability which
it may have to the Distributor or any person against whom such action is brought
otherwise than on account of its indemnity agreement contained in this
paragraph.
The Fund shall be entitled to participate at its own expense
in the defense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this indemnity provision. If the Fund elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the Fund and satisfactory to the indemnified defendants in the suit
whose approval shall not be unreasonably withheld. In the event that the Fund
elects to assume the defense of any suit and retain counsel, the indemnified
defendants shall bear the fees and expenses of any additional counsel retained
by them. If the Fund does not elect to assume the defense of a suit, it will
reimburse the indemnified defendants for the reasonable fees and expenses of any
counsel retained by the indemnified defendants.
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The Distributor agrees to notify the Fund promptly of the
commencement of any litigation or proceedings against it or any of its directors
or officers, or any other person entitled to indemnification under this Article
VI, in connection with the issue and sale of any Shares.
ARTICLE VII
INDEMNIFICATION OF FUND
The Distributor covenants and agrees that it will indemnify
and hold harmless the Fund and each of the trustees and officers of the Fund and
each person, if any, who controls the Fund within the meaning of Section 15 of
the 1933 Act, against any loss, liability, damages, claim or expense (including
the reasonable cost of investigating or defending any alleged loss, liability,
damages, claim or expense and reasonable counsel fees incurred in connection
therewith) based upon the 1933 Act or any other statute or common law and
arising by reason of any person acquiring any Shares, and alleging a wrongful
act of the Distributor or any of its employees or alleging that the Registration
Statement, shareholder reports or other information filed or made public by the
Fund (as from time to time amended) included an untrue statement of a material
fact or omitted to state a material fact required to be stated or necessary in
order to make the statements not misleading, insofar as the statement or
omission was made in reliance upon and in conformity with information furnished
to the Fund by or on behalf of the Distributor.
In no case (i) is the indemnity of the Distributor in favor of
the Fund or any other person indemnified to be deemed to protect the Fund or any
other person against any liability to which the Fund or such other person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (ii) is the
Distributor to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Fund or any person
indemnified unless the Fund or person, as the case may be, shall have notified
the Distributor in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the nature of
the claim shall have been served upon the Fund or upon any person (or after the
Fund or such person shall have received notice of service on any designated
agent). However, failure to notify the Distributor of any claim shall not
relieve the Distributor from any liability which it may have to the Fund or any
person against whom the action is brought otherwise than on account of its
indemnity agreement contained in this paragraph.
The Distributor shall be entitled to participate, at its own
expense, in the defense or, if it so elects, to assume the defense of any suit
brought to enforce the claim, but if the Distributor elects to assume the
defense, the defense shall be conducted by counsel chosen by the Distributor and
satisfactory to the indemnified defendants whose approval shall not be
unreasonably withheld. In the event that the Distributor elects to assume the
defense of any suit and retain counsel, the defendants in the suit shall bear
the fees and expenses of any additional counsel retained by them. If the
Distributor does not elect to assume the defense of any suit, it will reimburse
the indemnified defendants in the suit for the reasonable fees and expenses of
any counsel retained by them.
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The Fund agrees to notify the Distributor promptly of the
commencement of any litigation or proceedings against it or any of its officers
or trustees, or any other person entitled to indemnification under this Article
VII, in connection with the issuance or sale of any of its Shares.
ARTICLE VIII
CONSEQUENTIAL DAMAGES
In no event and under no circumstances shall either party to
this Agreement be liable to anyone, including, without limitation, the other
party, for consequential damages for any act or failure to act under any
provision of this Agreement.
ARTICLE IX
EFFECTIVE DATE
This Agreement shall be effective upon its execution, and,
unless terminated as provided herein, shall continue in force for an initial
term of two years from the effective date and shall continue in effect from year
to year thereafter, provided that such annual continuance is specifically
approved, at least annually, in the manner required by the 1940 Act. This
Agreement shall automatically terminate in the event of its "assignment," as
such term is defined by the 1940 Act and the rules thereunder, unless such
automatic termination shall be prevented by an exemptive order or rule of the
SEC. This Agreement may at any time be terminated, without penalty, by the
Distributor or by the Fund, by a vote of a majority of its trustees or by vote
of a majority of the outstanding voting securities of the Fund, upon not less
than sixty days' prior written notice to the other party.
ARTICLE X
NOTICES
Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or certified mail,
postage prepaid, addressed by the party giving notice to the other party at the
last address furnished by the other party to the party giving notice: if to the
Fund, 0000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000, and if to the
Distributor, 0000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000.
ARTICLE XI
LIMITATION OF LIABILITY
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 Agreement is executed on behalf of the trustees as trustees of the Fund and
not individually and that the obligations of this instrument are not binding
upon any of the trustees, officers or shareholders of the Fund individually but
binding only upon the assets and property of the Fund.
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ARTICLE XII
ENTIRE AGREEMENT; AMENDMENTS
This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement, draft or agreement or
proposal with respect to the subject matter hereof. This Agreement or any part
hereof may be changed or waived only by an instrument in writing signed by the
party against which enforcement of such change or waiver is sought.
ARTICLE XIII
GOVERNING LAW
This Agreement shall be construed in accordance with the laws
of the State of Delaware and the applicable provisions of the 1940 Act. To the
extent that the applicable laws of the State of Delaware, or any of the
provisions herein, conflict with the applicable provisions of the 1940 Act, the
latter shall control.
ARTICLE XIV
MULTIPLE ORIGINALS
This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
ARTICLE XV
SEVERABILITY
If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
IN WITNESS WHEREOF, the Fund and Distributor have each duly
executed this Agreement, as of the day and year above written.
RYDEX CAPITAL PARTNERS SPHINX FUND RYDEX DISTRIBUTORS, INC.
By: By:
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Name: Name:
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Title: Title:
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