DEALER AGREEMENT
Rydex Distributors, Inc. (the "Distributor") serves as the principal
underwriter for the Rydex|SGI family of investment companies, including the
open-end investment companies (the "Open-End Funds") and closed-end investment
companies (the "Closed-End Funds") set forth on Schedule A to this Agreement
(each, a "Fund," and collectively, the "Funds"), as such Schedule may be amended
by notice from time to time. The Distributor and [DEALER FIRM]("Dealer") hereby
agree that Dealer will participate in the distribution of shares ("Shares") of
the Funds, subject to the terms of this Agreement.
SECTION 1. LICENSING
a. Dealer represents and warrants that: (i) it is a broker-dealer
registered with the Securities and Exchange Commission ("SEC"); (ii) it is a
member in good standing of the Financial Industry Regulatory Authority
("FINRA"); (iii) it is licensed by the appropriate regulatory agency of each
state or other jurisdiction in which Dealer will offer and sell Shares of the
Funds; and (iv) each of its partners, directors, officers, employees, and agents
who will participate or otherwise be involved in the offer or sale of the Shares
or the performance by Dealer of its duties and activities under this Agreement
is either appropriately licensed or exempt from such licensing requirements by
the appropriate regulatory agency of each state or other jurisdiction in which
Dealer will offer and sell Shares of the Funds.
b. Dealer agrees that: (i) termination or suspension of its
registration with the SEC; (ii) termination or suspension of its membership with
FINRA; or (iii) termination or suspension of its license to do business by any
state or other jurisdiction shall immediately cause the termination of this
Agreement. Dealer further agrees to notify the Distributor promptly in writing
of any such action or event.
c. Dealer agrees that this Agreement is in all respects subject
to the Conduct Rules of FINRA and such Conduct Rules shall control any provision
to the contrary in this Agreement. Without limiting the generality of the
foregoing, Dealer acknowledges that it is solely responsible for all suitability
determinations with respect to offers and sales of Shares of the Funds to
Dealer's customers and that the Distributor has no responsibility for the manner
of Dealer's performance of, or for Dealer's acts or omissions in connection
with, the duties and activities Dealer performs under this Agreement.
d. Dealer agrees to be bound by and to comply with all applicable
federal and state laws and all rules and regulations promulgated thereunder
generally affecting the sale or distribution of mutual fund shares or classes of
such shares.
SECTION 2. TERMS AND CONDITIONS APPLICABLE TO DISTRIBUTION OF THE FUNDS
The following provisions relate to the offer and sale of Shares of the
Funds. Unless otherwise noted, references to "Funds" in this Section 2 shall
include both Open-End Funds and Closed-End Funds.
a. Orders
(i) Dealer agrees to offer and sell Shares of the Funds
(including classes thereof) only at the regular public offering price applicable
to such Shares and in effect at the time of each transaction. The procedures
relating to all orders and the handling of each order (including the manner of
computing the net asset value of Shares and the effective time of orders
received from Dealer) are subject to: (A) the terms of the then-current
prospectus and Statement of Additional Information (including any supplements,
stickers or amendments thereto) relating to each Fund (or, as appropriate, class
thereof), as filed with the SEC (collectively, the "Prospectus"); (B) the new
account application for each Fund (or, as
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appropriate, class thereof), as supplemented or amended from time to time; and
(C) the Distributor's written instructions and multiple class pricing procedures
and guidelines, if any, as provided to Dealer from time to time. To the extent
that the Prospectus contains provisions that are inconsistent with this
Agreement or any other document, the terms of the Prospectus shall be
controlling.
(ii) the Funds reserve the right at any time, and without
notice to Dealer, to suspend the sale of Shares or to withdraw or limit the
offering of Shares.
(iii) In all offers and sales of the Shares to the public,
Dealer is not authorized to act as broker or agent for, or employee of, the
Distributor, any Fund or any other dealer, and Dealer shall not represent to any
third party that Dealer has such authority or is acting in such capacity.
Rather, Dealer agrees that it is acting as principal for Dealer's own account or
as agent on behalf of Dealer's customers in all transactions in Shares, except
as provided in Section 2.b(ix) hereof.
(iv) All orders are subject to acceptance by the Distributor
and the Funds in their discretion. The Distributor and the Funds reserve the
unqualified right not to accept any specific order for the purchase or sale of
Shares.
(v) The Distributor agrees that it will accept from Dealer
orders placed through a remote terminal or otherwise electronically transmitted
via the National Securities Clearing Corporation ("NSCC") Fund/Serv Networking
program, provided, however, that appropriate documentation thereof and
agreements relating thereto are executed by both parties to this Agreement,
including in particular the standard NSCC Networking Agreement and any other
related agreements between the Distributor and Dealer deemed appropriate by the
Distributor, and that all accounts opened or maintained pursuant to that program
will be governed by applicable NSCC rules and procedures. Both parties further
agree that, if the NSCC Fund/Serv Networking program is used to place orders,
the standard NSCC Networking Agreement will control insofar as there is any
conflict between any provision of this Dealer Agreement and the standard NSCC
Networking Agreement.
b. Duties of Dealer
(i) Dealer agrees to purchase Shares only from the Distributor
or from Dealer's customers.
(ii) Dealer agrees to enter orders for the purchase of Shares
only from the Distributor and only for the purpose of covering purchase orders
Dealer has already received from its customers or for Dealer's own bona fide
investment.
(iii) Dealer agrees to date and time stamp all orders for the
purchase or sale of Shares received by Dealer, and to promptly forward such
orders to the Distributor in time for processing at the public offering price
next determined after receipt of such orders by Dealer, in each case as
described in the applicable Prospectus. All orders individually or with a
combined total greater than the amount set out in Schedule C, per fund, are
subject to the provisions set forth in Sections 2.c(i) and 2.c(ii) hereof.
Dealer represents that it has procedures in place reasonably designed to ensure
that orders received by Dealer are handled in a manner consistent with Rule
22c-1 under the Investment Company Act of 1940, as amended (the "1940 Act"), and
any SEC staff positions or interpretations issued thereunder.
(iv) Dealer agrees not to withhold placing orders for Shares
with the Distributor so as to profit itself as a result of such inaction.
(v) Dealer agrees to maintain records of all purchases and
sales of Shares made through Dealer and to furnish the Distributor or regulatory
authorities with copies of such records upon
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request. In that regard, Dealer agrees that, unless Dealer holds Shares as
nominee for its customers or participates in the NSCC Fund/Serv Networking
program, at certain matrix levels, it will provide the Distributor with all
necessary information to comply properly with all applicable federal, state and
local reporting requirements, including, without limitation, backup and
nonresident alien withholding requirements for its customer accounts. Dealer
represents and agrees that all Taxpayer Identification Numbers ("TINs") provided
are certified, and that no account that requires a certified TIN will be
established without such certified TIN. With respect to all other accounts,
including Shares held by Dealer in omnibus accounts and Shares purchased or sold
through the NSCC Fund/Serv Networking program, at certain matrix levels, Dealer
agrees to perform all federal, state and local tax reporting with respect to
such accounts, including, without limitation, redemptions and exchanges.
(vi) Dealer agrees to distribute or cause to be delivered to
its customers Prospectuses, proxy solicitation materials and related information
and proxy cards, semi-annual and annual shareholder reports and any other
materials in compliance with applicable legal requirements, except to the extent
that the Distributor expressly undertakes in writing to do so on Dealer's
behalf.
(vii) Dealer agrees that payment for Shares ordered from the
Distributor shall be in Fed Funds, New York clearinghouse or other immediately
available funds and that such funds shall be received by the Distributor by the
earlier of: (A) the end of the third (3rd) business day following Dealer's
receipt of the customer's order to purchase such Shares; or (B) the settlement
date established in accordance with Rule 15c6-1 under the Securities Exchange
Act of 1934, as amended (the "1934 Act"). If such payment is not received by the
Distributor by such date, Dealer shall forfeit its right to any compensation
with respect to such order, and the Distributor reserves the right, without
notice, to cancel the sale, or, at its option (in the case of Open-End Funds),
to sell the Shares ordered back to the Fund, in which case the Distributor may
hold Dealer responsible for any loss, including loss of profit, suffered by the
Distributor resulting from Dealer's failure to make payment. If a purchase is
made by check, the purchase is deemed made upon conversion of the purchase
instrument into Fed Funds, New York clearinghouse or other immediately available
funds.
(viii) Dealer agrees that it shall assume responsibility for
any loss to the Fund caused by a correction to any order placed by Dealer that
is made subsequent to the trade date for the order, to the extent such order
correction was not based on any negligence on the Distributor's part. Dealer
further agrees that it will immediately pay such loss to the Fund upon
notification.
(ix) Dealer agrees that, in connection with orders for the
purchase of Shares on behalf of any IRAs, 401(k) plans or other retirement plan
accounts, by mail, telephone, or wire, Dealer shall act as agent for the
custodian or trustee of such plans (solely with respect to the time of receipt
of the application and payments), and Dealer shall not place such an order with
the Distributor until it has received from its customer payment for such
purchase and, if such purchase represents the first contribution to such a
retirement plan account, the completed documents necessary to establish the
retirement plan.
(x) Dealer agrees that it will not make any conditional orders
for the purchase or redemption of Shares and acknowledges that the Distributor
will not accept conditional orders for Shares.
(xi) Dealer agrees that all out-of-pocket expenses incurred by
it in connection with its activities under this Agreement will be borne by
Dealer.
c. Estimate Requirements
(i) Dealer, or in the event that dealer employs agents,
dealer's agent, agrees to communicate directly to Rydex|SGI, all orders
individually or with a combined total per fund, greater
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than the amount set by Rydex|SGI as listed in Schedule C, for all Rydex|SGI
funds. Such communication must be made on the trade date of the order, prior to
the telephone cut-off times of each respective fund as listed in the prospectus.
(ii) Failure, by the registered representative, to adhere to
the requirements set forth in Section 2.c(i) may lead to rejection of purchase
or exchange order(s) and possibly suspension or termination of trading
privileges for the registered agent of record on such accounts.
(iii) In the event that dealer utilizes brokers or agents to sell shares of the
Funds, failure to adhere to the requirements set forth in Section 2c.(i), will
not subject dealer to suspension or termination of trading privileges.
d. Multiple Classes of Shares; Reduced Sales Charges
(i) Dealer acknowledges that the Funds may offer multiple
classes of Shares, including classes offering different sales charges, Rule
12b-1 Plan or Shareholder Services Plan (as described below) fees or other
operating expenses. Dealer agrees that it is solely responsible for all
suitability determinations with respect to offers and sales of Shares of Funds
to Dealer's customers.
(ii) In accordance with the terms of each applicable
Prospectus, Dealer acknowledges that a reduced sales charge or no sales charge
(collectively, "discounts") may be available to purchasers of Shares. Dealer
agrees to: (A) obtain all necessary information from its customers to allow
Dealer to provide all available discounts; (B) inform its customers of
applicable discount opportunities and inquire about other qualifying holdings
that might entitle customers to receive discounts; and (C) advise the
Distributor, contemporaneously with each purchase as to amounts of any and all
purchases of Shares made by Dealer, as agent for its customers, qualifying for
discounts. Dealer further agrees that it will not combine customer orders to
reach "breakpoints" in commissions or other applicable discounts for any
purposes whatsoever, unless authorized by the then current Prospectus in respect
of Shares of a particular class or by the Distributor in writing.
(iii) Dealer agrees that it has, and will maintain during the
term of this Agreement, adequate written supervisory procedures, controls, and
exception reports to ensure that Dealer's customers receive all available
discounts.
e. Dealer Compensation
(i) In return for providing the services set forth in this
Agreement, Dealer shall be entitled to any concessions and/or sales charges
(collectively, "Concessions") set forth in the Prospectus of the applicable Fund
or class thereof. In addition, the Distributor may pay Dealer a fee, as
established by the Distributor from time to time in its sole discretion and as
set forth on Schedule B to this Agreement, for performing distribution-related
services and/or shareholder services with respect to Shares. Dealer acknowledges
and agrees that (A) with respect to Shares of any Open-End Fund, any
compensation to be paid for performing distribution-related services shall be
paid pursuant to the Fund's "Rule 12b-1 Plan" and any compensation to be paid
for performing shareholder services shall be paid pursuant to the Fund's
"Shareholder Services Plan," and (B) with respect to Shares of any Closed-End
Fund, any compensation to be paid for performing distribution-related services
and/or shareholder services shall be paid pursuant to the terms described in
such Fund's Prospectus. In determining the amount payable to Dealer hereunder,
the Distributor reserves the right to exclude any sales which it reasonably
determines are not made in accordance with the terms of the Prospectus and
provisions of this Agreement.
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(ii) Dealer acknowledges and agrees that each Fund may,
without prior notice, suspend or eliminate the payment of any compensation,
including Rule 12b-1 Plan payments, Shareholder Service Plan payments or other
dealer compensation, by amendment, sticker or supplement to the then current
Prospectus for such Fund. The Distributor shall have no obligation to pay any
compensation to Dealer for the sale of Shares of a Fund, whether pursuant to a
Rule 12b-1 Plan, Shareholder Service Plan or otherwise, unless and until the
Distributor receives the related compensation from the Fund, and the
Distributor's liability to Dealer for such payments is limited solely to the
related compensation that the Distributor receives from such Fund.
f. Redemptions, Repurchases and Exchanges of Open-End Funds
(i) Dealer agrees that it will not make any representations to
shareholders relating to the redemption of their Shares other than the
statements contained in the applicable Prospectus and the underlying
organizational documents of the Open-End Fund to which it refers, and that
Dealer will pay as redemption proceeds to shareholders the net asset value,
minus any applicable redemption fee, determined after receipt of the order as
discussed in the Prospectus.
(ii) Dealer agrees not to repurchase any Shares from its
customers at a price below that next quoted by an Open-End Fund for redemption
or repurchase, i.e., at the net asset value of such Shares, less any applicable
redemption fee, in accordance with the Open-End Fund's Prospectus. Dealer shall,
however, be permitted to sell Shares for the account of the customer or record
owner to an Open-End Fund at the repurchase price then currently in effect for
such Shares and may charge the customer or record owner a fair service fee or
commission for handling the transaction, provided Dealer discloses the fee or
commission to the customer or record owner. Nevertheless, Dealer agrees that it
shall not maintain a secondary market in such repurchased Shares.
(iii) Dealer agrees that, with respect to a redemption order
it has made, if instructions in proper form, including any outstanding
certificates, are not received by the Distributor within the time customary or
required by law, the redemption may be canceled without any responsibility or
liability on the Distributor's part or on the part of any Open-End Fund, or the
Distributor, at its option, may buy the shares redeemed on behalf of the
Open-End Fund, in which latter case the Distributor may hold Dealer responsible
for any loss, including loss of profit, suffered by the Distributor resulting
from the Distributor's failure to settle the redemption.
(iv) Dealer agrees that if any Share is repurchased by any
Open-End Fund or is tendered for redemption within seven (7) business days after
confirmation by the Distributor of the original purchase order from Dealer,
Dealer shall forfeit its right to any compensation with respect to such Share
and shall forthwith refund to the Distributor the full compensation, if any,
paid to Dealer on the original sale. The Distributor agrees to notify Dealer of
such repurchase or redemption within a reasonable time after settlement.
Termination or cancellation of this Agreement shall not relieve Dealer from its
obligation under this provision.
(v) Dealer agrees that it will comply with any restrictions
and limitations on exchanges described in each Open-End Fund's Prospectus,
including any restrictions or prohibitions relating to frequent purchases and
redemptions (i.e., market timing).
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g. Repurchases and Tender Offers of Closed-End Funds
(i) Dealer agrees that Shares of a Closed-End Fund will not be
repurchased by either the Closed-End Fund (other than through tender offers from
time to time, if any) or the Distributor, and that no secondary market for the
Shares of the Closed-End Fund exists currently or is expected to develop. Dealer
further agrees that, in the event any purchase order for shares of a Closed-End
Fund is canceled after confirmation by the Distributor, such Shares may not be
repurchased, remarketed or otherwise disposed of by or through the Distributor.
(ii) Dealer agrees that, while a Closed-End Fund may consider
tendering for all or a portion of its Shares on a periodic basis, there is no
assurance that the Closed-End Fund will tender for Shares at any time, or that,
following such a tender, Shares tendered will be repurchased by the Closed-End
Fund. Dealer further agrees that, as set forth in the applicable Closed-End
Fund's Prospectus, under certain circumstances an early withdrawal charge
payable to the Distributor may be imposed on Shares accepted for tender. Any
representation as to a tender offer by a Closed-End Fund, other than as set
forth in the Closed-End Fund's Prospectus, is expressly prohibited.
h. Fund Information
(i) Dealer agrees that neither it nor any of its partners,
directors, officers, employees, and agents is authorized to give any information
or make any representations concerning Shares of any Fund except those contained
in the Fund's Prospectus or in materials provided by the Distributor.
(ii) The Distributor will supply to Dealer Prospectuses,
reasonable quantities of sales literature, sales bulletins, and additional sales
information as provided by the Distributor. Dealer agrees to use only
advertising or sales material relating to the Funds that: (A) is supplied by the
Distributor, or (B) conforms to the requirements of all applicable laws or
regulations of any government or authorized agency having jurisdiction over the
offering or sale of Shares of the Funds and is approved in writing by the
Distributor in advance of its use. Such approval may be withdrawn by the
Distributor in whole or in part upon written notice to Dealer, and Dealer shall,
upon receipt of such notice, immediately discontinue the use of such sales
literature, sales bulletins and advertising. Dealer is not authorized to modify
or translate any such materials without the Distributor's prior written consent.
SECTION 3. REGISTRATION OF SHARES
a. The Distributor acts solely as agent for the Funds and the
Distributor shall have no obligation or responsibility with respect to Dealer's
right to purchase or sell Shares in any jurisdiction.
b. The Distributor shall periodically furnish Dealer with
information identifying the states or jurisdictions in which it is believed that
all necessary notice, registration or exemptive filings for Shares have been
made under applicable securities laws such that offers and sales of Shares may
be made in such states or jurisdictions. The Distributor shall have no
obligation to make such notice, registration or exemptive filings with respect
to Shares in any state or jurisdiction.
c. Dealer agrees not to transact orders for Shares in states or
jurisdictions in which it has been informed that Shares may not be sold or in
which it and its personnel are not authorized to sell Shares.
d. The Distributor shall have no responsibility, under the laws
regulating the sale of securities in the United States or any foreign
jurisdiction, with respect to the qualification or status of Dealer or Dealer's
personnel selling Fund Shares. The Distributor shall not, in any event, be
liable or
6
responsible for the issue, form, validity, enforceability and value of such
Shares or for any matter in connection therewith.
e. Dealer agrees that it will make no offers or sales of Shares
in any foreign jurisdiction, except with the express written consent of the
Distributor.
SECTION 4. INDEMNIFICATION
a. Dealer agrees to indemnify, defend and hold harmless the
Distributor and the Funds and their predecessors, successors, and affiliates,
each current or former director, officer, employee, shareholder or agent and
each person who controls or is controlled by the Distributor from any and all
losses, claims, liabilities, costs, and expenses, including attorney fees, that
may be assessed against or suffered or incurred by any of them howsoever they
arise, and as they are incurred, which relate in any way to: (i) any alleged
violation of any statute or regulation (including, without limitation, the
securities laws and regulations of the United States or any state or
jurisdiction) or any alleged tort or breach of contract, related to the offer or
sale by Dealer of Shares of the Funds pursuant to this Agreement (except to the
extent that the Distributor's negligence or failure to follow correct
instructions received from Dealer is the cause of such loss, claim, liability,
cost or expense); (ii) any redemption or exchange pursuant to instructions
received from Dealer or its directors, partners, affiliates, officers, employees
or agents; (iii) incorrect investment instructions received by the Distributor
from Dealer; or (iv) the breach by Dealer of any of its representations and
warranties specified herein or the Dealer's failure to comply with the terms and
conditions of this Agreement, whether or not such action, failure, error,
omission, misconduct or breach is committed by Dealer or its predecessor,
successor, or affiliate, each current or former partner, officer, director,
employee or agent and each person who controls or is controlled by Dealer.
b. The Distributor agrees to indemnify, defend and hold harmless
Dealer and its predecessors, successors and affiliates, each current or former
director, officer, employee, shareholder or agent and each person who controls
or is controlled by Dealer from any and all losses, claims liabilities, costs
and expenses, including attorney fees, that may be assessed against or suffered
or incurred by any of them howsoever they arise, and as they are incurred, which
relate in any way to (i) any untrue statement of a material fact, or any
omission to state a material fact, contained in a Prospectus or in any written
sales literature or other marketing materials provided by the Distributor to the
Dealer, or (ii) the breach by the Distributor of any of its representations and
warranties specified herein or the Distributor's failure to comply with the
terms and conditions of this Agreement, whether or not such action, failure,
error, omission, misconduct or breach is committed by the Distributor or its
predecessor, successor, or affiliate, each current or former partner, officer,
director, employee or agent and each person who controls or is controlled by the
Distributor.
c. Dealer agrees to notify the Distributor, within a reasonable
time, of any claim or complaint or any enforcement action or other proceeding
with respect to Shares offered hereunder against Dealer or its partners,
affiliates, officers, directors, employees or agents, or any person who controls
Dealer, within the meaning of Section 15 of the 1933 Act.
SECTION 5. TERMINATION; AMENDMENT
a. In addition to the automatic termination of this Agreement
specified in Section 1.b. of this Agreement, each party to this Agreement may
unilaterally cancel its participation in this Agreement by giving thirty (30)
days prior written notice to the other party. In addition, each party to this
Agreement may, in the event of a material breach of this Agreement by the other
party, terminate this Agreement immediately by giving written notice to the
other party, which notice sets forth in reasonable detail the nature of the
breach. Such notice shall be deemed to have been given and to be effective on
the
7
date on which it was either delivered personally to the other party or any
officer or member thereof, or was mailed postpaid or delivered to a telegraph
office for transmission to the other party's designated person at the addresses
shown herein.
b. This Agreement shall terminate immediately upon the
appointment of a Trustee under the Securities Investor Protection Act or any
other act of insolvency by Dealer.
c. The termination of this Agreement by any of the foregoing
means shall have no effect upon transactions entered into prior to the effective
date of termination and shall not relieve Dealer of its obligations, duties and
indemnities specified in this Agreement. A trade placed by Dealer subsequent to
its voluntary termination of this Agreement will not serve to reinstate the
Agreement. Reinstatement, except in the case of a temporary suspension of
Dealer, will only be effective upon written notification by the Distributor.
d. Either party may, on thirty (30) day's prior written notice to
the other party, assign or transfer this Agreement to any successor in interest,
its affiliates, subsidiaries, and companies under common control. The
Distributor may also transfer any of its duties under this Agreement to any
entity that controls or is under common control with the Distributor.
e. This Agreement may be amended by the Distributor at any time
by written notice to Dealer. Dealer's placing of an order or accepting payment
of any kind after the effective date and receipt of notice of such amendment
shall constitute Dealer's acceptance of such amendment.
SECTION 6. REPRESENTATIONS AND WARRANTIES
a. The Distributor represents and warrants that:
(i) It is a corporation duly organized and existing and in
good standing under the laws of the state of Delaware and is duly registered or
exempt from registration as a broker-dealer in all states and jurisdictions in
which it provides services as a non-exclusive distributor for the Funds.
(ii) It is a member in good standing of FINRA.
(iii) It is empowered under applicable laws and by the
Distributor's organizational documents to enter into this Agreement and perform
all activities and services of the the Distributor provided for herein and that
there are no impediments, prior or existing, regulatory, self-regulatory,
administrative, civil or criminal matters affecting the Distributor's ability to
perform under this Agreement.
(iv) All requisite actions have been taken to authorize the
Distributor to enter into and perform this Agreement.
b. In addition to the representations and warranties found
elsewhere in this Agreement, Dealer represents and warrants that:
(i) It is duly organized and existing and in good standing
under the laws of the state, commonwealth or other jurisdiction in which Dealer
is organized and that Dealer will not offer Shares of any Fund for sale in any
state or jurisdiction where such Shares may not be legally sold or where Dealer
is not qualified to act as a broker-dealer.
(ii) It is empowered under applicable laws and by Dealer's
organizational documents to enter into this Agreement and perform all activities
and services of the Dealer provided for herein and
8
that there are no impediments, prior or existing, regulatory, self-regulatory,
administrative, civil or criminal matters affecting Dealer's ability to perform
under this Agreement.
(iii) All requisite actions have been taken to authorize
Dealer to enter into and perform this Agreement.
(iv) It is not, at the time of the execution of this
Agreement, subject to any enforcement or other proceeding with respect to its
activities under state or federal securities laws, rules or regulations.
(v) It has, and will maintain during the term of this
Agreement, appropriate broker's blanket bond insurance policies covering any and
all acts of Dealer's partners, directors, officers, employees, and agents
adequate to reasonably protect and indemnify the Distributor and the Funds
against any loss which any party may suffer or incur, directly or indirectly, as
a result of any action or omission by Dealer or Dealer's partners, directors,
officers, employees, and agents.
SECTION 7. ANTI-MONEY LAUNDERING RESPONSIBILITY
Dealer agrees that it will be responsible for complying with all
applicable money laundering laws, regulations, and government guidance,
including cash and suspicious activity reporting, customer identification
programs and recordkeeping requirements, and to have adequate policies,
procedures and internal controls in place to ensure compliance. Dealer will
provide the Distributor, upon request and within a reasonable time, copies of
its anti-money laundering compliance programs or materials, including policies
and procedures for complying with the applicable anti-money laundering laws and
regulations, "Know Your Customer" and/or customer identification policies and
procedures, and procedures for identifying and reporting suspicious
transactions. Any such request for information shall not in any way be construed
or impose any obligation upon the Distributor to review and ensure the accuracy
or adequacy of any of Dealer's policies or procedures.
SECTION 8. PRIVACY
Dealer represents that it has adopted and implemented procedures to
safeguard customer information and records that are reasonably designed to: (a)
ensure the security and confidentiality of customer records and information; (b)
protect against any anticipated threats or hazards to the security or integrity
of customer records and information; (c) protect against unauthorized access to
or use of customer records or information that could result in substantial harm
or inconvenience to any customer; (d) protect against unauthorized disclosure of
non-public personal information to unaffiliated third parties; and (e) otherwise
ensure Dealer's compliance with SEC Regulation S-P.
SECTION 9. SETOFF; GOVERNING LAW
a. Should any of Dealer's compensation accounts with the Distributor
have a debit balance, or should Dealer otherwise owe any amounts to the
Distributor, the Distributor shall be permitted to offset and recover the amount
owed from any account Dealer has with the Distributor, without notice or demand
to Dealer.
b. This Agreement shall be governed and construed in accordance with
the laws of the state of Delaware, without reference to the choice-of-law
principles thereof.
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SECTION 10. INVESTIGATIONS AND PROCEEDINGS
The parties to this Agreement agree to cooperate fully in any
securities regulatory investigation or proceeding or judicial proceeding with
respect to each party's activities under this Agreement and promptly to notify
the other party of any such investigation or proceeding.
SECTION 11. CAPTIONS
All captions used in this Agreement are for convenience only, are not a
party hereof, and are not to be used in construing or interpreting any aspect
hereof.
SECTION 12. ENTIRE UNDERSTANDING
This Agreement contains the entire understanding of the parties hereto
with respect to the subject matter contained herein and supersedes all previous
agreements. This Agreement shall be binding upon the parties hereto when signed
by Dealer and accepted by the Distributor.
SECTION 13. SEVERABILITY
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law.
If, however, any provision of this Agreement is held under applicable law to be
invalid, illegal, or unenforceable in any respect, such provision shall be
ineffective only to the extent of such invalidity, and the validity, legality
and enforceability of the remaining provisions of this Agreement shall not be
affected or impaired in any way.
SECTION 14. SURVIVAL
The representations, warranties, covenants and agreements of the
undersigned contained in this Agreement, including, without limitation, the
indemnity agreement contained in Section 5 hereof, shall survive any termination
of this Agreement.
SECTION 15. NOTICES
Unless otherwise agreed to by both parties, all notices under this
Agreement will be given in writing and delivered by personal delivery or by
postage prepaid, registered or certified United States first class mail, return
receipt requested, or by facsimile, telecopier, telex or similar means of same
day delivery (with a confirming copy by mail as provided herein). Unless
otherwise notified in writing, all notices to the Distributor shall be given or
sent to the Distributor at its offices, located at 0000 Xxxxxxxxx Xxxx,
Xxxxxxxxx, XX 00000, and all notices to Dealer shall be given or sent to Dealer
at the Dealer's address shown below.
10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year set forth below.
RYDEX DISTRIBUTORS, INC.
By: _________________________________
(Signature)
Name: _________________________________
Title: _________________________________
DEALER: [DEALER FIRM]
By: _________________________________
(Signature)
Name: _________________________________
Title: _________________________________
Address:
Telephone:
FINRA CRD #
Date: _________________________________
11
SCHEDULE A DATED 11/11/2009 TO THE
RYDEX|SGI FAMILY OF FUNDS
DEALER AGREEMENT
LIST OF APPLICABLE FUNDS AND AUTHORIZED SHARE CLASSES
-------------------------------------------------------------------------------------------------
INVESTOR/H CLASS ADVISOR CLASS A CLASS C CLASS
-------------------------------------------------------------------------------------------------
--------------------------
FUND NAME FINRA CUSIP FUND ID FINRA CUSIP FUND FINRA CUSIP FUND ID FINRA CUSIP FUND ID
SYMBOL SYMBOL ID SYMBOL SYMBOL
--------------------------------------------------------------------------------------------------------------------------
All-Asset Aggressive RYGHX 00000X000 274 RYGGX 00000X000 774 RYGEX 00000X000 874
Strategy
--------------------------------------------------------------------------------------------------------------------------
All-Asset Conservative RYEPX 00000X000 272 RYEOX 00000X000 772 RYEEX 00000X000 872
Strategy
--------------------------------------------------------------------------------------------------------------------------
All-Asset Moderate RYMLX 00000X000 273 RYMOX 00000X000 773 RYMYX 00000X000 873
Strategy
--------------------------------------------------------------------------------------------------------------------------
All-Cap Opportunity RYSRX 00000X000 258 RYAMX 00000X000 758 RYISX 00000X000 858
--------------------------------------------------------------------------------------------------------------------------
Alternative Strategies RYFOX 00000X000 280 RYFDX 00000X000 780 RYFFX 00000X000 880
Allocation
--------------------------------------------------------------------------------------------------------------------------
Banking RYKIX 783554868 242 RYKAX 783554876 342 RYBKX 00000X000 742 RYKCX 783554314 842
--------------------------------------------------------------------------------------------------------------------------
Basic Materials RYBIX 783554843 235 RYBAX 783554850 335 RYBMX 00000X000 735 RYBCX 783554298 835
--------------------------------------------------------------------------------------------------------------------------
Biotechnology RYOIX 783554827 000 XXXXX 783554835 343 RYBOX 00000X000 743 RYCFX 783554280 843
--------------------------------------------------------------------------------------------------------------------------
Commodities Strategy RYMBX 00000X000 265 RYMEX 00000X000 765 RYMJX 00000X000 865
--------------------------------------------------------------------------------------------------------------------------
Consumer Products RYCIX 783554793 236 RYCAX 783554819 336 RYPDX 00000X000 000 XXXXX 783554272 836
--------------------------------------------------------------------------------------------------------------------------
Dow 2x Strategy RYCVX 00000X000 248 RYLDX 00000X000 748 RYCYX 00000X000 848
--------------------------------------------------------------------------------------------------------------------------
Electronics RYSIX 783554777 244 RYSAX 783554785 344 RYELX 00000X000 744 RYSCX 783554264 844
--------------------------------------------------------------------------------------------------------------------------
Energy RYEIX 783554751 231 RYEAX 783554769 331 RYENX 00000X000 731 RYECX 783554256 831
--------------------------------------------------------------------------------------------------------------------------
Energy Services RYVIX 783554736 241 RYVAX 783554744 341 RYESX 00000X000 741 RYVCX 783554249 841
--------------------------------------------------------------------------------------------------------------------------
Europe 1.25x Strategy RYEUX 783554447 201 RYAEX 00000X000 701 RYCEX 783554116 801
--------------------------------------------------------------------------------------------------------------------------
Financial Services RYFIX 783554710 232 RYFAX 783554728 332 RYFNX 00000X000 732 RYFCX 783554231 832
--------------------------------------------------------------------------------------------------------------------------
Global 130/30 Strategy RYQMX 00000X000 259 RYASX 00000X000 759 RYQCX 00000X000 859
--------------------------------------------------------------------------------------------------------------------------
Global Market Neutral RYGNX 00000X000 282 RYGAX 00000X000 782 RYGMX 00000X000 882
--------------------------------------------------------------------------------------------------------------------------
Govt Long Bond 1.2x RYGBX 783554504 212 RYADX 00000X000 312 RYABX 00000X000 712 RYCGX 783554330 812
Strategy
--------------------------------------------------------------------------------------------------------------------------
Health Care RYHIX 783554686 233 RYHAX 783554694 333 RYHEX 00000X000 733 RYHCX 783554223 833
--------------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxx Xxxxxxxx XXXXX 00000X000 276 RYHDX 00000X000 776 RYHHX 00000X000 876
--------------------------------------------------------------------------------------------------------------------------
International OpportunityRYFHX 00000X000 278 RYFRX 00000X000 778 RYFWX 00000X000 878
--------------------------------------------------------------------------------------------------------------------------
Internet RYIIX 783554496 245 RYIAX 783554488 345 RYINX 00000X000 745 RYICX 783554215 845
--------------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxx 0x Xxxxxxxx XXXXX 00000X000 249 RYIDX 00000X000 749 RYCZX 00000X000 849
--------------------------------------------------------------------------------------------------------------------------
Inverse Govt Long Bond RYJUX 783554702 214 RYJAX 00000X000 314 RYAQX 00000X000 714 RYJCX 783554322 814
Strategy
--------------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxx Xxxxx XXXXX 00000X000 277 RYILX 00000X000 777 RYIYX 00000X000 877
Strategy
--------------------------------------------------------------------------------------------------------------------------
Inverse Mid Cap Strategy RYMHX 00000X000 255 RYAGX 00000X000 755 RYCLX 00000X000 855
--------------------------------------------------------------------------------------------------------------------------
Inverse NASDAQ-100(R) 2x RYVNX 783554397 230 RYVTX 00000X000 730 RYCDX 00000X000 830
Strategy
--------------------------------------------------------------------------------------------------------------------------
Inverse NASDAQ-100(R) RYAIX 783554512 220 RYAAX 00000X000 320 RYAPX 00000X000 720 RYACX 783554348 820
Strategy
--------------------------------------------------------------------------------------------------------------------------
Inverse Xxxxxxx 2000 2x RYIRX 00000X000 271 RYIUX 00000X000 771 RYIZX 00000X000 871
Strategy
--------------------------------------------------------------------------------------------------------------------------
Inverse Xxxxxxx 2000 RYSHX 00000X000 250 RYAFX 00000X000 750 RYCQX 00000X000 850
Strategy
--------------------------------------------------------------------------------------------------------------------------
Inverse S&P 500 2x RYTPX 783554421 227 RYTMX 00000X000 727 RYCBX 00000X000 827
Strategy
--------------------------------------------------------------------------------------------------------------------------
Inverse S&P 500 Strategy RYURX 783554405 217 RYUAX 783554538 317 RYARX 00000X000 717 RYUCX 783554363 817
--------------------------------------------------------------------------------------------------------------------------
Japan 2x Strategy RYJHX 00000X000 279 RYJSX 00000X000 779 RYJTX 00000X000 879
--------------------------------------------------------------------------------------------------------------------------
Leisure RYLIX 783554660 237 RYLAX 783554678 337 RYLSX 00000X000 737 RYLCX 783554199 837
--------------------------------------------------------------------------------------------------------------------------
Long/Short Commodities RYLFX 00000X000 281 RYLBX 00000X000 781 RYLEX 00000X000 881
Strategy
--------------------------------------------------------------------------------------------------------------------------
Managed Futures Strategy RYMFX 00000X000 275 RYMTX 00000X000 775 RYMZX 00000X000 875
--------------------------------------------------------------------------------------------------------------------------
Mid Cap 1.5x Strategy RYMDX 00000X000 204 RYAHX 00000X000 704 RYDCX 00000X000 804
--------------------------------------------------------------------------------------------------------------------------
Money Market RYMXX 783554306 000 XXXXX 783554561 310 RYAXX 00000X000 710 RYCXX 00000X000 810
--------------------------------------------------------------------------------------------------------------------------
Multi-Hedge Strategies RYMSX 00000X000 267 RYMQX 00000X000 767 RYMRX 00000X000 867
--------------------------------------------------------------------------------------------------------------------------
NASDAQ-100(R) RYOCX 783554603 218 RYAOX 783554520 318 RYATX 00000X000 718 RYCOX 783554355 818
--------------------------------------------------------------------------------------------------------------------------
NASDAQ-100(R) 2x RYVYX 783554413 228 RYVLX 00000X000 728 RYCCX 00000X000 828
Strategy
--------------------------------------------------------------------------------------------------------------------------
Nova RYNVX 783554108 215 RYNAX 783554546 315 RYANX 00000X000 715 RYNCX 783554371 815
--------------------------------------------------------------------------------------------------------------------------
Precious Metals RYPMX 783554207 216 RYMPX 00000X000 316 RYMNX 00000X000 716 RYZCX 783554181 816
--------------------------------------------------------------------------------------------------------------------------
Real Estate RYHRX 00000X000 000 XXXXX 00000X000 747 RYCRX 00000X000 847
--------------------------------------------------------------------------------------------------------------------------
Retailing RYRIX 783554645 238 RYRAX 783554652 338 RYRTX 00000X000 738 RYRCX 783554173 838
--------------------------------------------------------------------------------------------------------------------------
Xxxxxxx 0000 XXXXX 00000X000 269 RYRRX 00000X000 769 RYROX 00000X000 869
--------------------------------------------------------------------------------------------------------------------------
Xxxxxxx 2000 1.5x RYMKX 783554389 203 RYAKX 00000X000 703 RYCMX 00000X000 803
Strategy
--------------------------------------------------------------------------------------------------------------------------
Xxxxxxx 2000 2x Strategy RYRSX 00000X000 270 RYRUX 00000X000 770 RYRLX 00000X000 870
--------------------------------------------------------------------------------------------------------------------------
S&P 500 RYSPX 00000X000 000 XXXXX 00000X000 768 RYSYX 00000X000 868
--------------------------------------------------------------------------------------------------------------------------
S&P 500 2x Strategy RYTNX 783554439 225 RYTTX 00000X000 725 RYCTX 00000X000 825
--------------------------------------------------------------------------------------------------------------------------
S&P 500 Pure Growth RYAWX 00000X000 257 RYLGX 00000X000 757 RYGRX 00000X000 857
--------------------------------------------------------------------------------------------------------------------------
S&P 500 Pure Value RYZAX 00000X000 256 RYLVX 00000X000 756 RYVVX 00000X000 856
--------------------------------------------------------------------------------------------------------------------------
S&P MidCap 400 Pure RYBHX 00000X000 254 RYMGX 00000X000 754 RYCKX 00000X000 854
Growth
--------------------------------------------------------------------------------------------------------------------------
S&P MidCap 400 Pure
Value RYAVX 00000X000 253 RYMVX 00000X000 753 RYMMX 00000X000 853
--------------------------------------------------------------------------------------------------------------------------
S&P SmallCap 600 Pure RYWAX 00000X000 252 RYSGX 00000X000 752 RYWCX 00000X000 852
Growth
--------------------------------------------------------------------------------------------------------------------------
S&P SmallCap 600 Pure RYAZX 00000X000 251 RYSVX 00000X000 751 RYYCX 00000X000 851
Value
--------------------------------------------------------------------------------------------------------------------------
Strengthening Dollar 2x RYSBX 00000X000 264 RYSDX 00000X000 764 RYSJX 00000X000 864
Strategy
--------------------------------------------------------------------------------------------------------------------------
Technology RYTIX 783554629 234 RYTAX 783554637 334 RYTHX 00000X000 000 XXXXX 783554165 834
--------------------------------------------------------------------------------------------------------------------------
Telecommunications RYMIX 783554595 239 RYMAX 783554611 339 RYTLX 00000X000 739 RYCSX 783554157 839
--------------------------------------------------------------------------------------------------------------------------
Transportation RYPIX 783554579 240 RYPAX 783554587 340 RYTSX 00000X000 740 RYCNX 783554140 840
--------------------------------------------------------------------------------------------------------------------------
Utilities RYUIX 783554470 246 RYAUX 783554462 346 RYUTX 00000X000 746 RYCUX 783554132 846
--------------------------------------------------------------------------------------------------------------------------
Weakening Dollar 2x RYWBX 00000X000 263 RYWDX 00000X000 763 RYWJX 00000X000 863
Strategy
--------------------------------------------------------------------------------------------------------------------------
12
LIST OF APPLICABLE FUNDS (FORMERLY KNOWN AS THE "SECURITY FUNDS")
AND AUTHORIZED SHARE CLASSES
-------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C INSTITUTIONAL CLASS
-------------------------------------------------------------------------------------------------
--------------------------
FUND NAME FINRA CUSIP FUND ID FINRA CUSIP FUND FINRA CUSIP FUND ID FINRA CUSIP FUND ID
SYMBOL SYMBOL ID SYMBOL SYMBOL
--------------------------------------------------------------------------------------------------------------------------
All Cap Value SESAX 814219382 --- --- SEVCX 814219374 SVSIX 814219366
--------------------------------------------------------------------------------------------------------------------------
Alpha Opportunity SAOAX 814219481 SAOBX 814219473 SAOCX 814219465 SAOIX
--------------------------------------------------------------------------------------------------------------------------
Equity SECEX 814219101 SEQBX 814219200 SFECX 814219846 --- ---
--------------------------------------------------------------------------------------------------------------------------
Global SEQAX 814219309 SGOBX 814219408 SFGCX 814219838 --- ---
--------------------------------------------------------------------------------------------------------------------------
Global Institutional --- --- --- --- --- --- SGOLX 814219457
--------------------------------------------------------------------------------------------------------------------------
High Yield SIHAX 814291878 SIHBX 814291860 SIHSX 814291761 SHYIX 814291662
--------------------------------------------------------------------------------------------------------------------------
Large Cap Value SECIX 814289104 SECBX 814289203 SEGIX 814289302 --- ---
--------------------------------------------------------------------------------------------------------------------------
Large Cap Value
Institutional --- --- --- --- --- --- SLCIX 814289500
--------------------------------------------------------------------------------------------------------------------------
Mid Cap Growth SECUX 815174107 SEUBX 815174206 SUFCX 815174305 --- ---
--------------------------------------------------------------------------------------------------------------------------
Mid Cap Value SEVAX 814219887 SVSBX 814219879 SEVSX 814219820 --- ---
--------------------------------------------------------------------------------------------------------------------------
Mid Cap Value
Institutional --- --- --- SVUIX 814219432
--------------------------------------------------------------------------------------------------------------------------
Select 25 SEFAX 814219739 SEFBX 814219721 SSSCX 814219713 --- ---
--------------------------------------------------------------------------------------------------------------------------
Small Cap Growth SSCAX 814219861 SEPBX 814219853 SESCX 814219812 --- ---
--------------------------------------------------------------------------------------------------------------------------
Small Cap Value SSUAX 814219416 --- --- SSVCX 814219390 SSUIX 814219424
--------------------------------------------------------------------------------------------------------------------------
U.S. Intermediate Bond
(formerly Diversified
Income) SIUSX 814291209 SUGBX 814291407 SDICX 814291779 --- ---
--------------------------------------------------------------------------------------------------------------------------
13
SCHEDULE B DATED 11/11/2009
TO THE
DEALER AGREEMENT DATED ________
BETWEEN
RYDEX DISTRIBUTORS, INC.
AND
[DEALER FIRM]
DISTRIBUTION AND SERVICE FEES. The following fees are due and payable monthly
pursuant to Section 2.e. of the DEALER AGREEMENT between RYDEX DISTRIBUTORS,
INC. (the "Distributor") and [DEALER FIRM]
CLASS DISTRIBUTION AND SERVICE FEES
(PURSUANT TO RULE 12B-1)
Investor None
Advisor 0.25% (25 basis points)
A 0.25% (25 basis points)
C 1.00% (divided into 75 basis points for distribution services
and 25 basis points for shareholder services)
H 0.25% (25 basis points)
Institutional None
In no event will the fee for performing distribution-related services exceed
0.25% (25 basis points) of average daily net assets with respect to Advisor
Class, A-Class and H-Class Shares, or 0.75% (75 basis points) of average daily
net assets with respect to C-Class Shares. In addition, in no event will the fee
for performing shareholder services exceed 0.25% (25 basis points) of average
daily net assets with respect to Advisor Class and C-Class Shares. To the extent
the Distributor waives any payments payable to the Distributor under such
Distribution Plan, the amounts payable to you will also be reduced.
Agreed to and accepted by:
RYDEX DISTRIBUTORS INC. [DEALER FIRM]
Print Name: Print Name:
----------------------- ---------------------------
Title: Title:
---------------------------- --------------------------------
Date: Date:
---------------------------- --------------------------------
14
SCHEDULE B CONTINUED
In addition to amounts paid as a sales commission, Rydex|SGI, at its expense,
currently provides additional compensation to certain investment dealers who
have sold shares of Rydex|SGI Funds. These payments may provide an incentive for
dealers to sell shares of the Rydex|SGI Funds and promote the retention of their
customer's assets in the Funds. Rydex|SGI determines the cash payments described
above in response to requests from dealer firms, based on factors it deems
relevant. (A number of factors will be considered in determining payments,
including the dealer's sales, assets, share class utilized and the quality of
the dealer's relationship with Rydex|SGI.) Rydex|SGI will, on an annual basis,
determine the advisability of continuing these payments and the level of
payments made to dealers in any given year will vary. Rydex|SGI may also pay
expenses associated with meetings that facilitate educating financial advisers
and shareholders about the Rydex|SGI Funds that are conducted by dealers.
15
SCHEDULE C DATED 11/11/2009
TO THE
DEALER AGREEMENT DATED ________
BETWEEN
RYDEX DISTRIBUTORS, INC.
AND
[DEALER FIRM]
ESTIMATE REQUIREMENTS. For purposes of executing Section 2.c(i). of the DEALER
AGREEMENT between RYDEX DISTRIBUTORS, INC. (the "Distributor") and [DEALER
FIRM](the "Dealer"), the Distributor has determined the following:
All orders individually or with a combined total greater than $250,000, are
subject to the estimate requirements set forth in the aforementioned dealer
agreement.
The Distributor reserves the right to adjust the required estimate amount from
time to time, as necessary. Distributor will promptly notify Dealer of any
subsequent change in the required estimate amount.
The Estimate Requirement does not apply with respect to orders for those
Rydex|SGI Funds formerly known as the "Security Funds."
Agreed to and accepted by:
RYDEX DISTRIBUTORS INC. [DEALER FIRM]
Print Name: Print Name:
----------------------- ---------------------------
Title: Title:
---------------------------- --------------------------------
Date: Date:
---------------------------- --------------------------------
16
SCHEDULE D DATED 11/11/2009
TO THE
DEALER AGREEMENT AGREEMENT DATED _____________
BETWEEN
RYDEX DISTRIBUTORS, INC.
AND
[DEALER FIRM]
Each Rydex|SGI Fund is registered and its Shares are qualified for sale in the
following states and jurisdictions(1) as of 11/11/2009.
Alabama Montana
Xxxxxx Xxxxxxxx
Arizona New Hampshire
Arkansas New Jersey
California New York
Colorado Nevada
Connecticut New Mexico
Delaware North Carolina
Florida North Dakota
Georgia Ohio
Hawaii Oklahoma
Idaho Oregon
Illinois Pennsylvania
Indiana Puerto Rico
Iowa Rhode Island
Kansas South Carolina
Kentucky South Dakota
Louisiana Tennessee
Maine Texas
Maryland Utah
Massachusetts Vermont
Michigan Virginia
Minnesota Washington
Mississippi West Virginia
Missouri Wisconsin
Wyoming
District of Columbia
Guam(2)
--------------------
(1) We assume no responsibility or obligation as to your right to offer or
sell Shares in any state or jurisdiction.
(2) Rydex|SGI Funds formerly known as the "Security Funds" are not
qualified for sale in Guam
17
