AMENDED AND RESTATED
DISTRIBUTION AGREEMENT
THIS AGREEMENT, dated as of January 18, 2008, is entered into by and
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 open-end 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. AML SERVICES. The Trust hereby delegates to the
Distributor, and the Distributor accepts delegation of, the performance, on
behalf of the Trust, of those anti-money laundering services (the "AML
Services") set forth in Schedule A concerning
1
shareholder accounts that are maintained pursuant to omnibus account
relationships between the Distributor and Sub-Distributors pursuant to
certain Dealer Agreements that the Distributor may elect to enter into from
time to time. The Distributor agrees to the foregoing delegation and agrees
that it will perform the delegated AML Services in accordance with the
Trust's AML Program. In connection therewith, the Distributor agrees to
maintain policies and procedures, and related internal controls, that are
consistent with the Trust's AML Program and the requirement that the Trust
employ procedures reasonably designed to achieve compliance with applicable
anti-money laundering laws, regulations and rules, including the requirement
to have policies and procedures that can be reasonably expected to detect and
cause the reporting of transactions under the Bank Secrecy Act, as amended by
the USA PATRIOT Act of 2001. The Distributor also agrees to keep and maintain
on behalf of the Trust all books and records which the Trust and the
Distributor is, or may be, required to keep and maintain pursuant to any
applicable laws, regulations, and rules, including without limitation Rules
31a-1 and 31a-2 under the 1940 Act, relating to the maintenance of books and
records in connection with the AML services to be provided hereunder. The
Distributor further agrees that all such books and records shall be the
property of the Trust and to make such books and records available for
inspection by the Trust or by the Trust's regulators, including the SEC, at
reasonable times and otherwise to keep confidential all books and records and
other information relative to the Trust and its shareholders consistent with
the requirements of Regulation S-P.
ARTICLE 5. AUTHORITY TO ENGAGE SUB-DISTRIBUTORS AND OTHER SERVICERS.
In providing the services and assuming the obligations set forth herein, the
Distributor may, contract with one or more Sub-Distributors or third party
service providers ("Servicers") as the Distributor deems appropriate in
connection with the performance of the Distributor's duties and obligations
hereunder. Reference herein to the duties and responsibilities of the
Distributor shall include the duties and responsibilities of any
Sub-Distributor contracted with by the Distributor to the extent that the
Distributor shall delegate such duties and responsibilities to such
Sub-Distributor.
ARTICLE 6. 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 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 7. 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
2
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 8. 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 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,
3
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 9. 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 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.
4
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 10. 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 11. 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 12. NOTICES. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party
giving notice: if to the Trust, 0000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, XX
00000, and if to the Distributor, 0000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx,
XX 00000.
ARTICLE 13. 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
5
and property of the Trust.
ARTICLE 14. 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 15. 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 16. 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 17. 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.
6
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: /s/ Xxxx X. Xxxxxxxxxxx By: /s/ Xxxx X. Xxxxxxxxxxx
----------------------- -----------------------
Name: Xxxx X. Xxxxxxxxxxx Name: Xxxx X. Xxxxxxxxxxx
Title: President Title: President
7
SCHEDULE A
TO THE AMENDED AND RESTATED DISTRIBUTION AGREEMENT
BETWEEN
RYDEX SERIES FUNDS
AND
RYDEX DISTRIBUTORS, INC.
AML SERVICES
1. Establish and implement an AML Program, including a Customer
Identification Program ("CIP"), that is consistent with applicable
anti-money laundering laws, regulations and rules ("Applicable AML Laws")
and the Trust's AML Program.
2. Analyze the anti-money laundering risks posed by particular omnibus
accounts based upon a risk-based evaluation of relevant factors regarding
the entity holding the omnibus account (e.g., a retailing broker-dealer),
including such factors as (i) the type of entity, (ii) its location, (iii)
type of regulation that it is subject to, and the (iv) viability of its
AML Program.
3. Respond promptly to requests from Financial Crimes Enforcement Network
("FinCEN"), a department of the U.S. Treasury, about accounts or
transactions by reporting to FinCEN the identity of the specified
individual or organization, the account number, all identifying
information provided by the account holder when the account was
established, and the date and type of transaction, after providing notice
to the Trust to the extent reasonably practical and allowed by Applicable
AML Laws.
4. Share information with the Trust, and other financial institutions as
requested by the Trust, regarding those suspected of terrorism and money
laundering for the purposes of identifying and reporting activities that
may involve terrorist acts or money laundering activities in compliance
with Applicable AML Laws.
5. File with FinCEN an initial notice before sharing any information with any
other financial institutions, including affiliates, and file annual
notices afterwards using forms made available at XXX.XXXXXX.XXX and take
reasonable steps to verify that the other financial institution has
submitted the requisite notice to FinCEN, either by obtaining confirmation
from the financial institution or by consulting a list of such financial
institutions that FinCEN will make available.
6. Identify and verify the identity of all shareholders upon the opening of
new accounts in compliance with Applicable AML Laws.
7. Perform additional due diligence to verify the identity of shareholders
with accounts that may pose a greater risk of terrorism or money
laundering activity, such as foreign accounts, domestic or foreign
corporate or business entity accounts, domestic or foreign trust accounts,
offshore accounts, intermediary accounts, account in high risk and
non-cooperative jurisdictions, and senior foreign government or public
official accounts in compliance with Applicable AML Laws.
8
8. Check shareholders against Treasury's Office of Foreign Assets Control
("OFAC") list of "Specifically Designated Nationals and Blocked Persons
List" and similar lists of terrorists received from governmental agencies,
and place holds on transactions in shareholder accounts or freeze assets
in shareholder accounts, as required by Applicable AML Laws.
9. Provide notices to shareholders, prior to the opening of an account or
trading authority is granted, that the Trust will request information,
from either the shareholder or a third party, to verify the identity of
the shareholder in compliance with Applicable AML Laws.
10. Monitor, identify and report shareholder transactions and identify and
report suspicious activities that are required to be so identified and
reported, and provide other required reports to the SEC, the U.S. Treasury
Department, the Internal Revenue Service or each agent's designated agent,
in each case consistent with the Trust's AML Program.
11. Maintain the confidentiality of any reports provided to the SEC, the U.S.
Treasury Department, the Internal Revenue Service or each agency's
designated agent in compliance with Applicable AML Laws.
12. Create documentation to provide a basis for law enforcement authorities to
trace illicit funds.
13. Maintain all records or other documentation related to shareholder
accounts and transactions therein that are required to be prepared and
maintained pursuant to the Trust's AML Program, and make the same
available for inspection by (i) the Trust's AML Compliance Officer, the
Board, or the independent auditor of the Board, (ii) any auditor of the
Trust's AML Program or related procedures, policies or controls that has
been designated by the Trust in writing, or (iii) regulatory or law
enforcement authorities, and otherwise make said records or other
documents available at the reasonable direction of the Trust's AML
Compliance Officer.
14. Arrange for periodic reviews of the AML Services of the Distributor at
least annually, which reviews are performed by qualified outside parties
knowledgeable about Applicable AML Laws, but not involved in the
day-to-day operation of the AML Services.
15. Develop and implement an ongoing employee training program providing
training, at least annually, with regard to how to identify red flags and
signs of terrorism or money laundering activities, what to do if such a
red flag is identified, AML record retention policies, and the
consequences of not complying with the Applicable AML Laws.
16. Perform such other related services as are required by the Trust's AML
Program as it relates to shareholder accounts that are maintained pursuant
to omnibus account relationships between the Distributor and
Sub-Distributors pursuant to certain Dealer Agreements that the
Distributor may elect to enter into from time to time.
17. Provide a copy of the Distributor's AML Program, and promptly provide any
subsequent amendments thereto, and an annual written certification to the
Trust that the Distributor has implemented an AML Program that is
consistent with the AML Program of the Trust and will perform the
specified requirements of the CIP.
9
