Exhibit E2
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of December 16, 2003, between RYDEX SERIES FUNDS
(the "Trust"), a Delaware business trust and RYDEX DISTRIBUTORS, INC. (the
"Distributor"), a Maryland corporation.
WHEREAS, the Trust 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 Trust and Distributor hereby agree as follows:
ARTICLE 1. SALE OF SHARES. The Trust grants to the Distributor the
exclusive right to sell units (the "Shares") of the portfolios (the
"Portfolios") of the Trust, in such classes as may be offered from time to time,
at the net asset value per Share, plus any applicable sales charges in
accordance with the current prospectus, as agent and on behalf of the Trust,
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").
ARTICLE 2. 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 of the Trust; 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 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 or to maintain its
registration in any jurisdiction in which it is now registered or obligate the
Distributor to sell any particular number of Shares.
ARTICLE 3. AUTHORIZED REPRESENTATIONS. The Distributor is not authorized
by the Trust to give any information or to make any representations other than
those contained in the current registration statements and prospectuses of the
Trust filed with the SEC or contained in shareholder reports or other material
that may be prepared by or on behalf of the Trust 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 4. REGISTRATION OF SHARES. The Trust 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 Trust shall make available to the Distributor
1
such number of copies of its currently effective prospectus and statement of
additional information as the Distributor may reasonably request. The Trust
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 of the Trust.
ARTICLE 5. COMPENSATION. As compensation for providing the services under
this Agreement:
(a) The Distributor shall receive from the Trust:
(1) distribution and service fees, if any, at the rate and under the
terms and conditions set forth in each distribution and/or
shareholder services plan applicable to the appropriate class of
shares of each Portfolio, as such plans may be amended from time to
time, and subject to any further limitations on such fees as the
Board of Trustees of the Trust may impose;
(2) front-end sales charges, if any, on purchases of Shares of each
Portfolio sold subject to such charges as described in the Trust's
Registration Statement and current prospectuses, as amended from
time to time. The Distributor, or brokers, dealers and other
financial institutions and intermediaries that have entered into
sub-distribution agreements with the Distributor, may collect the
gross proceeds derived from the sale of such Shares, remit the net
asset value thereof to the Trust upon receipt of the proceeds and
retain the applicable sales charge; and
(3) contingent deferred sales charges ("CDSCs"), if any, applied on
redemptions of Shares subject to such charges on the terms and
subject to such waivers as are described in the Trust's Registration
Statement and current prospectuses, as amended from time to time, or
as otherwise required pursuant to applicable law.
(b) The Distributor may reallow any or all of the distribution or service
fees, front-end sales charges and contingent deferred sales charges which
it is paid by the Trust to such brokers, dealers and other financial
institutions and intermediaries as the Distributor may from time to time
determine.
ARTICLE 6. INDEMNIFICATION OF DISTRIBUTOR. The Trust 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,
prospectus, shareholder reports or other information filed or made public by the
Trust (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 Trust 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 Trust
2
by or on behalf of the Distributor.
In no case (i) is the indemnity of the Trust to be deemed to protect the
Distributor against any liability to the Trust 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 Trust 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 Trust 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 Trust of any claim shall not relieve the Trust 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 Trust 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 Trust elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the Trust and satisfactory to the indemnified defendants in the suit
whose approval shall not be unreasonably withheld. In the event that the Trust
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 Trust 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.
The Trust agrees to notify the Distributor promptly of the commencement of
any litigation or proceedings against it or any of its officers or Trustees in
connection with the issuance or sale of any of its Shares.
ARTICLE 7. INDEMNIFICATION OF TRUST. The Distributor covenants and agrees
that it will indemnify and hold harmless the Trust and each of its Trustees and
officers and each person, if any, who controls the Trust 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, prospectus, Shareholder reports or other information
filed or made public by the Trust (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 Trust by or on behalf of the Distributor.
In no case (i) is the indemnity of the Distributor in favor of the Trust
or any other person indemnified to be deemed to protect the Trust or any other
person against any liability to which the
3
Trust 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 Trust or
any person indemnified unless the Trust 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 Trust or upon any person (or
after the Trust 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 Trust 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.
The Distributor agrees to notify the Trust promptly of the commencement of
any litigation or proceedings against it or any of its officers in connection
with the issue and sale of any of the Trusts' Shares.
ARTICLE 8. 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 9. EFFECTIVE DATE. This Agreement shall be effective upon its
execution, and, unless terminated as provided, shall continue in force for one
year from the effective date and thereafter from year to year, provided that
such annual continuance is approved by (i) either the vote of a majority of the
Trustees of the Trust, or the vote of a majority of the outstanding voting
securities of the Trust, and (ii) the vote of a majority of those Trustees of
the Trust who are not parties to this Agreement or the Trust's distribution plan
or interested persons of any such party ("Qualified Trustees"), cast in person
at a meeting called for the purpose of voting on the approval. This Agreement
shall automatically terminate in the event of its assignment. As used in this
paragraph the terms "vote of a majority of the outstanding voting securities,"
"assignment" and "interested person" shall have the respective meanings
specified in the 1940 Act. In addition, this Agreement may at any time be
terminated without penalty by the Distributor, by a vote of a majority of
Qualified Trustees or by vote of a majority of the outstanding voting securities
of the Trust upon not less than sixty days prior written notice to the other
party.
ARTICLE 10. 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,
4
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 Trust, 0000
Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, XX 00000, and if to the Distributor, 0000
Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, XX 00000.
ARTICLE 11. LIMITATION OF LIABILITY. A copy of the Certificate of Trust of
the Trust 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
of the Trust as Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees, officers or shareholders of
the Trust individually but binding only upon the assets and property of the
Trust.
ARTICLE 12. 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 13. 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 14. 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 15. 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 Trust and Distributor have each duly executed this
Agreement, as of the day and year above written.
RYDEX SERIES FUNDS RYDEX DISTRIBUTORS, INC.
By: By:
Name: XXXX X. XXXXXXXXXXX Name: XXXX X. XXXXXXXXXXX
-------------------------- --------------------------
Title: PRESIDENT Title: PRESIDENT
-------------------------- --------------------------
5
