FORM OF
DISTRIBUTION AGREEMENT
RYDEX SERIES TRUST
THIS DISTRIBUTION AND SHAREHOLDER SERVICES AGREEMENT is made as of this
____ day of ___________, 199__ (the "Agreement") by and between Rydex Series
Trust, a Delaware business trust (the "Trust"), and PADCO Financial Services,
Inc. ("PADCO"), a Maryland corporation.
WHEREAS, the Trust is registered as an open-end investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"); and its
units of beneficial interest (such units of all series are hereinafter called
the "Shares"), are registered with the Securities and Exchange Commission
(the "SEC") under the Securities Act of 1933 (the "1933 Act"); and
WHEREAS, PADCO is registered as a broker-dealer with the SEC under the
Securities Exchange Act of 1934, and is a member in good standing of the
National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, the Trust desires to retain PADCO to: (i) distribute the
Advisor Class Shares of certain investment portfolios of the Trust (the
"Funds"); (ii) provide, pursuant to the Distribution and Shareholder Services
Plan (the "Plan") as adopted by the Trust under Rule 12b-1 under the 1940
Act, for the sale and distribution of the Funds, and for such additional
classes or series as the Trust may issue; (iii) provide shareholder services
to customers of the Trust ("Clients") who purchase Shares of the Funds; and
(iv) pay PADCO certain fees pursuant to the Plan; and
WHEREAS PADCO, or such other service provider as PADCO shall determine,
is prepared to provide such services commencing on the date first written
above; and
WHEREAS, the Trust and PADCO wish to enter into an agreement with each
other with respect to the continuous offering of the Trust's Shares.
NOW THEREFORE, in consideration of the premises and mutual covenants set
forth herein, PADCO and the Trust hereto agree as follows:
1. DISTRIBUTION AND SHAREHOLDER SERVICES
1.1 The Trust hereby appoints, and PADCO hereby agrees, to act as the Trust's
agent to sell and arrange for the sale of the Shares covered by the
Registration Statement under the 0000 Xxx.
1.2 PADCO agrees to use its best efforts in connection with the distribution of
Shares, including such advertising and promotion as it believes reasonable
in connection with such distribution. PADCO shall hold itself available to
receive orders, that PADCO reasonably believes to be in good order, for the
purchase of the Shares and shall accept such orders and will transmit such
orders as are so accepted and funds received by it in payment for such
Shares to the Trust's transfer agent or custodian, as appropriate, as
promptly as practicable. Purchase orders shall be deemed effective at the
time and in the manner set forth in the Prospectus. The offering price of
the Shares shall be the net asset value per share of the Shares plus any
applicable sales charges, determined as set forth in the Prospectus. PADCO
shall not make any short sales of Shares.
PADCO shall comply with all applicable laws, rules and regulations,
including, without limitations, all rules and regulations made or adopted
by the SEC or by any securities association registered under the 1934 Act.
PADCO shall maintain the required licenses and registrations for itself as
a broker or dealer, and for its registered representatives or other
associated persons, under the 1934 Act and applicable state securities
laws.
PADCO is not authorized by the Trust to give on behalf of the Trust any
information or to make any representations in connection with the sale of
Shares other than the information and representations contained in a
Registration Statement filed with the SEC under the 1933 Act and the 1940
Act, as such Registration Statement may be amended from time to time, or
contained in shareholder reports or other material that may be prepared by
or on behalf of the Trust for PADCO's use.
1.3 PADCO will provide all office space and equipment, telephone facilities and
personnel (which may be part of the space, equipment and facilities
currently used in PADCO's business, or any personnel employed by PADCO) as
may be reasonably necessary or beneficial in order to provide the services
stated herein and in the Plan, and provide assistance to Clients.
1.4 The Trust understands that PADCO is now, or may in the future be, the
distributor of the shares of several investment companies or series
(collectively, the "Investment Entities"), including Investment Entities
having investment objectives similar to those of the Trust. The Trust
further understands that investors and potential investors in the Trust may
invest in shares of such other Investment Entities. The Trust agrees that
PADCO's duties to such Investment Entities shall not be deemed in conflict
with its duties to the Trust under this Section 1.4.
1.5 PADCO shall not utilize any materials in connection with the sale or
offering of Shares except the Trust's current prospectus and statement of
additional information ("SAI") and such other materials as the Trust shall
provide or approve.
1.6 All activities by PADCO and its employees, as distributor of the Shares,
shall comply with all applicable laws, rules and regulations, including,
without limitation, all rules and regulations made or adopted by the SEC or
the National Association of Securities Dealers.
1.7 PADCO will transmit any orders received by it for purchase or redemption of
the Shares to the transfer agent for the Trust.
1.8 Whenever in its judgment such action is warranted by unusual market,
economic or political conditions or abnormal circumstances of any kind, the
Trust may decline to accept any orders for, or make any sales of, the
Shares until such time as the Trust deems it advisable to accept such
orders and to make such sales, and the Trust advises PADCO promptly of such
determination.
1.9 The Trust agrees to pay all costs and expenses in connection with the
registration of Shares under the Securities Act of 1933, as amended, and
all expenses in connection with maintaining facilities for the issue and
transfer of Shares and for supplying information, prices and other data to
be furnished by the Funds hereunder, and all expenses in connection with
the preparation and printing of the Funds' prospectuses and SAI for
regulatory purposes and for distribution to shareholders.
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1.10 The Trust agrees at its own expense to execute any and all documents and to
furnish any and all information and otherwise to take all actions that may
be reasonably necessary in connection with the qualification of the Shares
for sale in such states as PADCO may designate. The Trust shall notify
PADCO in writing of the states in which the Shares may be sold and shall
notify PADCO in writing of any changes to the information contained in the
previous notification.
1.11 The Trust shall furnish from time to time, for use in connection with the
sale of the Shares, such information with respect to the Trust and the
Shares as PADCO may reasonably request. The Trust shall also furnish PADCO
upon request with: (a) audited annual statements and unaudited semi-annual
statements of a Fund's books and accounts prepared by the Trust,
(b) quarterly earnings statements prepared by the Trust, (c) a monthly
itemized list of the securities in the Funds, (d) monthly balance sheets as
soon as practicable after the end of each month, and (e) from time to time
such additional information regarding the financial condition of the Trust
as PADCO may reasonably request.
1.12 The Trust represents to PADCO that all Registration Statements and
prospectuses filed by the Trust with the SEC under the 1933 Act with
respect to the Shares have been prepared in conformity with the
requirements of the 1933 Act and the rules and regulations of the SEC
thereunder. As used in this Agreement, the term "Registration Statement"
shall mean any registration statement and any prospectus and any SAI
relating to the Trust filed with the SEC and any amendments or supplements
thereto at any time filed with the SEC. Except as to information included
in the Registration Statement in reliance upon information provided to the
Trust, PADCO or any affiliate of PADCO, expressly for use in the
Registration Statement, the Trust represents and warrants to PADCO that any
Registration Statement, when such Registration Statement becomes effective,
will contain statements required to be stated therein in conformity with
the 1933 Act and the rules and regulations of the SEC; that all statements
of fact contained in any such Registration Statement will be true and
correct when such Registration Statement becomes effective, and that no
Registration Statement when such Registration Statement becomes
effective will include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading to a purchaser of the Shares.
PADCO may, but shall not be obligated to, propose from time to time such
amendment or amendments to any Registration Statement and such
supplement or supplements to any prospectus as, in the light of future
developments, may, in the opinion of the Trust's counsel, be necessary
or advisable. The Trust shall promptly notify PADCO of any advice given
to it by its counsel regarding the necessity or advisability of amending
or supplementing such Registration Statement. The Trust shall not file
any amendment to any Registration Statement or supplement to any
prospectus without giving PADCO reasonable notice thereof in advance;
provided, however, that nothing contained in this Agreement shall in any
way limit the Trust's right to file at any time such amendments to any
Registration Statements and/or supplements to any prospectus, of
whatever character, as the Trust may deem advisable, such right being in
all respects absolute and unconditional.
1.13 The Trust agrees to indemnify and hold harmless PADCO, its officers,
directors, and employees, and any person who controls PADCO within the
meaning of Section 15 of the 1933 Act, free and harmless from and against
any and all claims, costs, expenses (including reasonable attorneys' fees)
losses, damages, charges, payments an liabilities of any sort or kind which
PADCO, its officers, directors, employees or any such controlling person
may incur under the 1933 Act, under any other statute, at common law or
otherwise, but only to the extent that such liability or expense incurred
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by PADCO, its officers, directors, employees or any controlling person
resulting from such claims or demands arises out of the acquisition of
Shares by any person which is based upon: (i) any untrue statement, or
alleged untrue statement, of a material fact contained in the Trust's
Registration Statement, prospectus, SAI, or sales literature (including
amendments and supplements thereto), or (ii) any omission, or alleged
omission, to state a material fact required to be stated in the Trust's
Registration Statement, prospectus, SAI or sales literature (including
amendments or supplements thereto), necessary to make the statements
therein not misleading.
Notwithstanding the foregoing, the Trust shall not be obligated to
indemnify any entity or person pursuant to this paragraph 1.13 against any
losses, claims, costs, charges, payments, damages, liabilities or expenses
(including attorneys' fees) of any sort or kind arising (i) out of the
acquisition of Shares by any person which is based upon any untrue
statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information furnished to the Trust by
PADCO or its affiliated persons for use in the Trust's Registration
Statement, prospectus, or SAI or sales literature (including amendments or
supplements thereto); (ii) by reason of PADCO's willful misfeasance, bad
faith or negligence in the performance of PADCO's duties hereunder; (iii)
by reason of reckless disregard of PADCO's obligations or duties hereunder,
from reliance on information furnished to the Trust by PADCO or its
affiliates; or (iv)by reason of PADCO's refusal or failure to comply with
the terms or conditions of this Agreement.
1.14 PADCO agrees to indemnify and hold harmless the Trust, its several officers
and Trustees and each person, if any, who controls a Fund or Funds within
the meaning of Section 15 of the 1933 Act against any and all claims,
costs, expenses (including reasonable attorneys' fees), losses, damages,
charges, payments and liabilities of any sort or kind which the Trust, its
officers or Trustees, or any such controlling person may incur under the
1933 Act, under any other statute, at common law or otherwise, but only to
the extent that such liability or expense incurred by the Trust, its
officers or Trustees, or any controlling person resulting from such claims
or demands arose (i) out of the acquisition of any Shares by any person
which may be based upon any untrue statement, or alleged untrue statement,
of a material fact contained in the Trust's Registration Statement,
prospectus, SAI (including amendments and supplements thereto) or sales
literature alleged omission, to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, if such
statement or omission was made in reliance upon information furnished or
confirmed in writing to the Trust by PADCO or its affiliated persons (as
defined in the 1940 Act); (ii) by reason of PADCO's willful misfeasance,
bad faith or negligence in performance of PADCO's duties or obligations
hereunder or by reason of reckless disregard of its duties or obligations
hereunder; (iii) from reliance on information furnished to the Trust by
PADCO or its affiliates; or (iv) from PADCO's refusal or failure to comply
with the terms or conditions of this Agreement.
1.15 In any case in which one party hereto (the "Indemnifying Party") may be
asked to indemnify or hold the other party hereto (the "Indemnified Party")
harmless, the Indemnified Party will notify the Indemnifying Party promptly
after identifying any situation which it believes presents or appears
likely to present a claim for indemnification (an "Indemnification Claim")
against the Indemnifying Party, although the failure to do so shall not
prevent recovery by the Indemnified Party, and shall keep the Indemnifying
Party advised with respect to all developments concerning such situation.
The Indemnifying Party shall have the option to defend the Indemnified
Party against any Indemnification Claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so elects,
such defense shall be conducted by counsel chosen by the
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Indemnifying Party and satisfactory to the Indemnified Party, whose
approval shall not be unreasonably withheld. In the event that the
Indemnifying Party elects to assume the defense of any Indemnification
Claim and retains legal counsel, the Indemnified Party shall bear the
fees and expenses of any additional legal counsel retained by it. The
Indemnified Party will not confess any Indemnification Claim or make any
compromise in any case in which the Indemnifying Party will be asked to
provide indemnification, except with the Indemnifying Party's prior
written consent. The obligations of the parties hereto under this
Section 1.15 shall survive the termination of this Agreement.
In the event that the Indemnifying Party does not elect to assume the
defense of any such suit, or in case the Indemnified Party reasonably does
not approve of counsel chosen by the Indemnified Party, or in case there is
a conflict of interest between the Trust and PADCO, the Indemnifying Party
will reimburse the Indemnified Party, its officers, trustees, directors and
employees, or the controlling person or persons named as defendant or
defendants in such suit, for the reasonable fees and expenses of any
counsel retained by the Indemnified Party or such defendants. The
Indemnifying Party's indemnification agreement contained in this
Section 1.15 and the Indemnifying Party's representations and warranties in
this Agreement shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Indemnified
Party, its officers, directors, trustees or employees, or any controlling
persons, and shall survive the delivery of any Shares. This agreement of
indemnity will inure exclusively to the Indemnified Party's benefit, to the
benefit of its several officers, trustees, directors and employees, and
their respective estates and to the benefit of the controlling person(s)
and their successors. The Indemnifying Party agrees promptly to notify the
Indemnified Party of the commencement of any litigation or proceedings
against the Indemnifying Party or any of its officers, trustees or
directors in connection with the issue and sale of any Shares.
1.16 No Shares shall be offered by either PADCO or the Trust under any of the
provisions of this Agreement and no orders for the purchase or sale of
Shares hereunder shall be accepted by the Trust if and so long as
effectiveness of the Registration Statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
1933 Act, or if and so long as a current prospectus as required by
Section 5(b)(2) of the 1933 Act is not on file with the SEC; provided,
however, that nothing contained in this Section 1.16 shall in any way
restrict or have any application to or bearing upon the Trust's obligation
to redeem Shares tendered for redemption by any shareholder in accordance
with the provisions of the Trust's Registration Statement, Declaration of
Trust, or bylaws.
1.17 The Trust agrees to advise PADCO as soon as reasonably practical by a
notice in writing delivered to PADCO:
(i) in the event of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement, prospectus or SAI then in
effect or the initiation by service of process on the Trust of any
proceeding for that purpose;
(ii) of any happening of any event that makes untrue any statement of a
material fact made in the Registration Statement, prospectus or SAI then in
effect or that requires the making of a change in such Registration
Statement, prospectus or SAI in order to make the statements therein not
misleading, and
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(iii) of all actions of the SEC with respect to any amendments to any
Registration Statement, prospectus or SAI which may from time to time be
filed with the SEC.
For purposes of this section, informal requests by or acts of the Staff of
the SEC shall not be deemed actions of the SEC.
2. TERM
2.1 This Agreement shall become effective on the date first written above and,
unless sooner terminated as provided herein, shall continue for an initial
two-year term and thereafter shall be renewed for successive one-year terms
in accordance with the requirements of the 1940 Act. This Agreement is
terminable without penalty, on at least sixty days' written notice, by
either party. This Agreement will also terminate automatically in the
event of its assignment (as defined in the 1940 Act and the rules
thereunder).
2.2 In the event a termination notice is given by the Trust, all reasonable
expenses associated with movement of records and materials and conversion
thereof will be borne by the Trust.
3. LIMITATION OF LIABILITY
3.1 PADCO shall at all times act in good faith and agrees to use its best
efforts, within commercially reasonable limits, to ensure the accuracy of
all services performed under this Agreement. PADCO shall not be liable to
the Trust for any error of judgment or mistake of law or for any loss
suffered by the Trust in connection with the performance of its obligations
and duties under this Agreement, except a loss resulting from: (1) PADCO's
willful misfeasance, bad faith or negligence in the performance of such
obligations and duties, or by reason of its reckless disregard thereof;
(ii) reliance on information furnished to the Trust by PADCO or its
affiliates; or (iii) PADCO's refusal or failure to comply with the terms
or conditions of this Agreement.
3.2 The Trust shall not be liable to PADCO for any error of judgment or mistake
of law or for any loss suffered by PADCO, except a loss resulting from the
Trust's willful misfeasance, bad faith or negligence in the performance of
its duties and obligations hereunder, or by reason of reckless disregard
thereof.
3.3 Each party shall have the duty to mitigate damages for which the other
party may become responsible.
4. EXCLUSION OF WARRANTIES
THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, PADCO DISCLAIMS ALL OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS
OR IMPLIED, MADE TO THE TRUST, THE FUNDS OR ANY OTHER PERSON, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTIES REGARDING QUALITY, SUITABILITY,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE
(IRRESPECTIVE OF ANY COURSE OF DEALING, CUSTOM OR USAGE OF TRADE) OF ANY
SERVICES OR ANY GOODS PROVIDED INCIDENTAL TO SERVICES
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PROVIDED UNDER THIS AGREEMENT. PADCO DISCLAIMS ANY WARRANTY OF TITLE OR
NON-INFRINGEMENT EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT.
5. MODIFICATIONS AND WAIVERS
No change, termination, modification, or waiver of any term or condition of
the Agreement shall be valid unless made in writing signed by each party.
No such writing shall be effective as against PADCO unless said writing is
executed by a Senior Vice President, Executive Vice President or President
of PADCO. A party's waiver of a breach of any term or condition in the
Agreement shall not be deemed a waiver of any subsequent breach of the same
or another term or condition.
6. NO PRESUMPTION AGAINST DRAFTER
PADCO and the Trust have jointly participated in the negotiation and
drafting of this Agreement. The Agreement shall be construed as if drafted
jointly by the Trust and PADCO, and no presumptions arise favoring any
party by virtue of the authorship of any provision of this Agreement.
7. PUBLICITY
Neither PADCO nor the Trust shall release or publish news releases, public
announcements, advertising or other publicity relating to this Agreement or
to the transactions contemplated by it without prior review and written
approval of the other party; provided, however, that either party may make
such disclosures as are required by legal, accounting or regulatory
requirements after making reasonable efforts in the circumstances to
consult in advance with the other party.
8. SEVERABILITY
The parties intend every provision of this Agreement to be severable. If a
court of competent jurisdiction determines that any term or provision is
illegal or invalid for any reason, the illegality or invalidity shall not
affect the validity of the remainder of this Agreement. In such case, the
parties shall in good faith modify or substitute such provision consistent
with the original intent of the parties. Without limiting the generality
of this paragraph, if a court determines that any remedy stated in this
Agreement has failed of its essential purpose, then all other provisions of
this Agreement, including the limitations on liability, shall remain fully
effective.
9. FORCE MAJEURE
No party shall be liable for any default or delay in the performance of its
obligations under this Agreement if and to the extent such default or delay
is caused, directly or indirectly, by (i) fire, flood, elements of nature
or other acts of God; (ii) any outbreak or escalation of hostilities, war,
riots or civil disorders in any country, (iii) any act or omission of the
other party or any governmental authority; (iv) any labor disputes (whether
or not the employees' demands are reasonable or within the party's power to
satisfy); or (v) nonperformance by a third party or any similar cause
beyond the reasonable control of such party, including without limitation,
failures or fluctuations in telecommunications or other equipment. In any
such event, the non-performing party shall be excused from any further
performance and observance of the obligations so affected only for so long
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as such circumstances prevail and such party continues to use commercially
reasonable efforts to recommence performance or observance as soon as
practicable.
EQUIPMENT FAILURES. Notwithstanding any other provision in this Agreement,
in the event of equipment failures or the occurrence of events beyond
PADCO's control which render its performance under this Agreement
impossible, PADCO shall at no additional expense to the Trust take
reasonable steps to minimize service interruptions. PADCO shall develop
and maintain a plan for recovery from equipment failures which may include
contractual arrangements with appropriate third parties making reasonable
provisions for emergency use of electronic data processing equipment.
10. MISCELLANEOUS
10.1 Any notice or other instrument authorized or required by this Agreement to
be given in writing to the Trust or PADCO shall be sufficiently given if
addressed to the party and received by it at its office set forth below or
at such other place as it may from time to time designate in writing.
To the Trust:
Rydex Series Trust
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attn:____________________
To PADCO:
PADCO Financial Services, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attn:____________________
11. GOVERNING LAW/VENUE. The laws of the State of Maryland, excluding the laws
on conflicts of laws, and the applicable provision of the 1940 Act shall
govern the interpretation, validity, and enforcement of this Agreement. To
the extent the provisions of Maryland law or the provisions hereof conflict
with the 1940 Act, the 1940 Act shall control. All actions arising from or
related to this Agreement shall be brought in the state and federal courts
within the State of Maryland, and PADCO and the Trust hereby submit
themselves to the exclusive jurisdiction of those courts.
12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and which
collectively shall be deemed to constitute only one instrument.
13. CAPTIONS. The captions of this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.
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14. SUCCESSORS. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and is not
intended to confer upon any other person any rights or remedies hereunder.
15. ARBITRATION. Any claim or controversy arising out of or relating to this
Agreement, or breach hereof, shall be settled by arbitration administered
by the American Arbitration Association in accordance with its applicable
rules, except that the Federal Rules of Evidence and the Federal Rules of
Civil Procedure with respect to the discovery process shall apply. The
parties hereby agree that judgment upon the aware rendered by the
arbitrator may be entered in any court having jurisdiction.
The parties acknowledge and agree that the performance of the obligations
under this Agreement necessitates the use of instrumentalities of
interstate commerce and, notwithstanding other general choice of law
provisions in this Agreement, the parties agree that the Federal
Arbitration Act shall govern and control with respect to the provision of
this Article.
16. OBLIGATIONS OF THE TRUST
The Trust and PADCO agree that the obligations of the Trust under the
Agreement shall not be binding upon any of the trustees, shareholders,
nominees, officers, employees or agents, whether past, present or future,
of the trust individually, but are binding only upon the assets and
property of the Trust, as provided in the Trust's Declaration of Trust.
The execution and delivery of this agreement have been authorized by the
Directors of the Trust, and signed by an authorized officer of the Trust,
acting as such, and neither such authorization by such trustees nor such
execution and delivery by such officer shall be deemed to have been made by
any of them or any shareholder of the Trust individually or to impose any
liability on any of them or any shareholder of the Trust personally, but
shall bind only the assets and property of the Trust as provided in the
Trust's Declaration of Trust.
17. ENTIRE AGREEMENT
This Agreement, including all Schedules hereto, constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous proposals, agreements, contracts,
representations, and understandings, whether written or oral, between the
parties with respect to the subject matter hereof.
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IN WITNESS WHEREOF, THE parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
RYDEX SERIES TRUST
BY:
Name:
Title:
PADCO FINANCIAL SERVICES, INC.
By:
Name:
Title:
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