PARTICIPANT AGREEMENT
This Participant Agreement (the "Agreement") is entered into by and
between Rydex Distributors, Inc (the "Distributor"), State Street Bank and Trust
Company, as transfer agent (the "Transfer Agent") and Xxxxxxx Xxxxx & Co (the
"Participant") and is subject to acceptance by Rydex ETF Trust (the "Trust").
The Distributor has been retained to provide certain services with respect to
acting as principal underwriter of the Trust in connection with the creation and
distribution of shares of series of the Trust (each a "Fund" and together, the
"Funds"). The Transfer Agent has been retained to provide certain services with
respect to the creation and redemption of shares of the Funds. As specified in
the Trust's prospectus and Statement of Additional Information (together, the
"Prospectus"), shares of each Fund may be created or redeemed only in
aggregations of 50,000 shares, referred to therein and herein as a "Creation
Unit". The Prospectus provides that Creation Units shall be issued in exchange
for a Fund Deposit delivered by the Participant on behalf of the investor (which
may be the Participant) to the Trust. The Prospectus also provides that Creation
Units shall be redeemed in exchange for Fund Securities and an amount of cash.
Capitalized terms not otherwise defined herein are used herein as defined in the
Prospectus.
This Agreement is intended to set forth certain premises and the
procedures by which the Participant may create and/or redeem Creation Units (i)
through the Continuous Net Settlement ("CNS") clearing process of NSCC as such
processes have been enhanced to effect creations and redemptions of Creation
Units, such processes being referred to herein as the "Clearing Process", or
(ii) outside the Clearing Process (i.e , through the facilities of The
Depository Trust COMPANY ("DTC"). The parties hereto in consideration of the
premises and of the mutual agreements contained herein agree as follows:
1. Status of Participant. The Participant hereby represents, covenants and
warrants that (i) with respect to orders FOR the creation or redemption of
Creation Units by means OF the Clearing Process, it is a member of NSCC
and a participant in the CNS System of NSCC (as defined in the Prospectus,
a "Participating Party"); and (ii) with respect to orders for the creation
OR redemption of Creation Units outside the Clearing Process, it is a DTC
Participant (as defined in the Prospectus, a "OTC Participant") The
Participant may place orders for the creation or redemption of Creation
Units either through the Clearing Process or outside the Clearing Process,
subject to the procedures for creation and redemption referred to in
paragraph 2 of this Agreement ("Execution of Orders"). Any change in the
foregoing status of Participant shall terminate this Agreement and
Participant shall give notice to the Distributor, Transfer Agent and the
Trust of such change.
2. Execution of Orders. All orders FOR the creation or redemption of Creation
Units shall be handled by each party hereto in accordance with the terms
of the Prospectus and the procedures described in Attachment A to this
Agreement Each party hereto agrees to comply with the provisions of such
documents to the extent applicable to it. In the event the procedures
include the use of recorded telephone lines, the Participant hereby
consents to such use The Trust reserves the right to issue additional or
other reasonable procedures relating to the manner of creating
1
or redeeming Creation Units and the Participant, the Transfer Agent and
the Distributor each agrees to comply with such procedures as may be
issued from time to time.
3. NSCC. Solely with respect to orders for the creation or redemption of
Creation Units through the Clearing Process, the Participant as a
Participating Party hereby authorizes the Transfer Agent to transmit to
NSCC on behalf of the Participant such instructions, including share and
cash amounts as are necessary with respect to the creation and redemption
of Creation Units consistent with the instructions issued by the
Participant to the telephone representative of the Transfer Agent for
purchases and the telephone representative of the Transfer Agent for
redemption. The Participant agrees to be bound by the terms of such
instructions issued by the Transfer Agent (or the Distributor on behalf of
the Trust) and reported to NSCC as though such instructions were issued by
the Participant directly to NSCC.
4 Role of Participant. The Participant shall have no authority in any
transaction to act as agent of the Distributor, Transfer Agent or the
Trust.
5. Fees. In connection with the creation or redemption of Creation Units, the
Trust shall charge and the Participant agrees to pay on behalf of the
investor to the Trust the Transaction Fee prescribed in the Prospectus
applicable to creation or redemption through the Clearing Process, or the
Transaction Fee and such additional fee as may be prescribed pursuant to
the Prospectus applicable to creation or redemption outside the Clearing
Process. The Trust reserves the right to adjust the Transaction Fee
subject to any limitation as prescribed in the Prospectus.
6. Authorized Persons. Concurrently with the execution of this Agreement and
from time to time thereafter, the Participant shall deliver to the
Distributor, the Transfer Agent and the Trust, duly certified as
appropriate by its secretary or other duly authorized official, a
certificate, in the form set forth in Attachment B, setting forth the
names and signatures of all persons authorized to give instructions
relating to activity contemplated hereby or any other notice, request or
instruction on behalf of the Participant (each an "Authorized Person").
Such certificate may be accepted and relied upon by the Distributor, the
Transfer Agent and the Trust as conclusive evidence of the facts set forth
therein and shall be considered to be in full force and effect until
delivery to the Distributor, the Transfer Agent and the Trust of a
superseding certificate bearing a subsequent date. The Transfer Agent
shall issue to each Authorized Person a unique personal identification
number ("PIN Number") by which such Authorized Person and the Participant
shall be identified and instructions issued by the Participant hereunder
shall be authenticated. Upon the termination or revocation of authority of
such Authorized Person by the Participant, the Participant shall give
prompt written notice of such
2
fact to the Distributor, the Transfer Agent and the Trust and such notice
SHALL be effective upon receipt by the Distributor, the Transfer Agent and
the Trust.
7. Redemption. The Participant represents and warrants that it will not
obtain an Order Number (as described in Attachment A) for the purpose of
redeeming a Creation Unit unless it or the party for which it is acting,
as the case may be, either (i) first owns the requisite number of shares
to be redeemed as a Creation Unit, or (ii) has a reasonable expectation
that the shares to be redeemed as a Creation Unit will be available for a
regular way settlement of the redemption.
8. Beneficial Ownership. The Participant represents and warrants to the
Distributor, Transfer Agent and the Trust that it does not hold for the
account of any single Beneficial Owner of SHARES OF A given Fund of the
Trust 80 percent (80%) or more of outstanding shares of a given Fund of
the Trust such as to cause the respective Fund of the Trust to have a
basis in the Deposit Securities deposited with the Trust different from
the market value of such Deposit Securities on the date of such deposit,
pursuant to Section 351 of the Internal Revenue Code. The Transfer Agent
shall have the right to require information from the Participant regarding
share ownership, and to rely thereon to the extent necessary to make a
determination regarding ownership of 80 percent (80%) or more of
outstanding shares of a given Fund of the Trust by a Beneficial Owner as a
condition to the acceptance of a Fund Deposit.
Distributor represents and warrants that (i) the registration statement on
Form N-lA (No. 2) and the prospectus contained therein conforms in all
material respects to the requirements of the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations of the Securities and
Exchange Commission thereunder and do not and will not, as of the
applicable effective date as to the registration statement and any
amendment thereto and as of the applicable filing date as to the
prospectus and any amendment or supplement thereto, contain 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; (ii) the sale and distribution of Trust Shares as contemplated
herein will not conflict with or result in a breach or violation of any
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over Transfer Agent or Distributor; and
no consent, approval, authorization, order, registration or qualification
of or with any such court or governmental agency or body is required for
the issue and sale of Trust Shares, except the registration under the Act
of Trust Shares; and (iii) the names and addresses and other information
concerning Participant's customers provided by Participant are and shall
remain the sole property of the Participant, and neither the Distributor,
the Transfer Agent, the Trust or any of their respective affiliates shall
use such names, addresses or other information for any purpose except in
connection with the performance of their duties and responsibilities
hereunder.
9. Indemnification. This Section 9 shall survive the termination of this
Agreement.
a. The Participant hereby agrees to indemnify and hold harmless the
Distributor, Transfer Agent and the Trust and their respective
subsidiaries, affiliates, directors, officers, employees and agents
(each an "Indemnified Party") from and against any loss, liability,
cost and expense incurred by such Indemnified Party as a result of
(i) any breach by the Participant of any provision of this
3
Agreement; or (ii) any actions of such Indemnified Party in reliance
upon any instructions issued in accordance with Attachment A (as may
be amended from time to time) reasonably believed by the
Distributor, the Transfer Agent and/or Trust to be genuine and to
have been given by the Participant.
b. The Distributor hereby agrees to indemnify and hold harmless the
Participant, its respective subsidiaries, affiliates, directors,
officers, employees and agents, and each person, if any, who
controls such persons within the meaning of Section 15 of the 1933
Act (each an "Indemnified Party") from and against any loss,
liability, cost and expense (including attorneys' fees) incurred by
such Indemnified Party as a result of (i) any breach by the
Distributor of any provision of this Agreement; (ii) any failure on
the part of the Distributor to perform any obligations set forth in
this Agreement; (iii) any failure by the Distributor to comply with
applicable laws, including rules and regulations of self-regulatory
organizations; or (iv) actions of such Indemnified PARTY in reliance
upon any representations made in accordance with Attachment A (as
may be amended from time to time) reasonably believed by the
Participant to be genuine and to have been given by the Distributor.
The Participant shall not be liable to the Distributor for any
damages arising out of mistakes or errors in data provided to the
Participant, or out of interruptions of delays of communications
with an Indemnified Party who is a service provider to the Trust,
nor is the Participant liable for any action, representation, or
solicitation made by the wholesalers of the Trust. In addition, the
Distributor shall indemnify and hold harmless each Indemnified Party
from and against any loss, liability, cost and expense (including
attorneys' fees), incurred by such Indemnified Party as a result of
any untrue statement, or alleged untrue statement, of a material
fact contained in the Trust's registration statement, the prospectus
or the statement of additional information as each may be amended
from time to time, or any omission, or alleged omission, to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
c. Each Indemnified Party, to the extent it is not a party to this
Agreement, is a third-party beneficiary of this Agreement (each, a
"Third Party Beneficiary") and may proceed directly against any
indemnifying party (including by bringing proceedings against such
indemnifying party in its own name) to enforce any obligation of
such indemnifying party under this Agreement which directly or
indirectly benefits such Third Party Beneficiary.
10. Additional Payment on Redemption. In the event that the Participant
receives Fund Securities the value of which exceeds net asset value at the
time of redemption, the Participant agrees to pay, or cause the beneficial
owner(s) of the shares redeemed to pay, to the Trust an amount in cash
equal to the difference.
11. Acknowledgment. The Participant acknowledges receipt of the Prospectus and
represents it has reviewed such document and understands the terms
thereof. The Transfer Agent agrees to process orders for creations,
subject to approval by the Distributor, and redemptions, in accordance
with the provisions of the Prospectus. Distributor will provide to the
Participant copies of the then current prospectus and any printed
supplemental information in reasonable quantities upon request. The
Distributor represents, warrants and agrees that it will notify the
Participant when a revised, supplemented or amended prospectus for Trust
Shares is
4
available and deliver or otherwise make available to the Participant (by
sending an electronic copy to prospectus-NY r@ny email gs com) copies of
such revised, supplemented or amended prospectus at such time and in such
numbers as to enable the Participant to comply with any obligation it may
have to deliver such prospectus to customers. As a general matter, the
Distributor will make such revised, supplemented or amended prospectus
available to the Participant on or before its effective date.
12. Notices. Except as otherwise specifically provided in this Agreement, all
notices required or permitted to be given pursuant to this Agreement SHALL
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 telex, telegram or facsimile 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 Trust shall be
given or sent as follows: State Street Bank and Trust Company, Global
Client Support, P. 0. Xxx 0000, Xxxxxx, XX 00000, Attn.: Rydex ETF Trust.
All notices to the Participant and the Distributor or the Transfer Agent,
as the ease may be, shall BE directed TO the address, telephone, or
facsimile numbers indicated below the signature line of such party.
13. Termination and Amendment. This Agreement shall become effective in this
form as of the date accepted by the Trust and may be terminated at any
time by any party upon thirty days prior notice to the other parties (i)
unless earlier terminated by the Trust in the event of a breach of this
Agreement or the procedures described herein by the Participant or (ii) in
the event that the Trust is terminated pursuant to the Trust's Declaration
of Trust, dated November 22, 2002. THIS Agreement supersedes any prior
such agreement between the parties. This Agreement may be amended by the
Trust from time to time with the consent of the Distributor, the Transfer
Agent and the Participant, which consent shall not be unreasonably
withheld, by the following procedure. The Trust will mail a copy of the
amendment to the Distributor, the Transfer Agent and the Participant. If
neither the Distributor, the Transfer Agent nor the Participant objects in
writing to the amendment within ten days after its receipt, such lack of
written objection is deemed to be consent and the amendment will become
part of this Agreement in accordance with its terms. For purpose of this
provision, receipt is assumed to be three business days from the date of
the mailing.
14. Counterparts. This Agreement may be simultaneously executed in several
counterparts, each of which shall be an original and all shall constitute
but one and the same instrument.
15. Governing Law. This Agreement and all transactions hereunder shall be
governed by and interpreted in accordance with the laws of The
Commonwealth of Massachusetts.
16. Anti-Money Laundering Program. The Participant represents and warrants to
the Trust that it has, or its relevant service providers on its behalf
have:
a. Established and implemented policies, procedures and internal
controls reasonably designed to achieve compliance with the Bank
Secrecy Act (the "BSA") and applicable regulations adopted to
implement the provisions of the
5
BSA, including policies and procedures that can be reasonably
expected to detect and cause the reporting of transactions under
Section 5318 of the BSA;
b. Designated an individual or individuals responsible for implementing
and monitoring those policies, procedures and internal controls;
c. Provided ongoing training for the appropriate personnel with respect
to those policies, procedures and internal controls; and
d. Provided for testing of those policies, procedures and internal
controls by independent personnel or by a qualified outside party.
6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the 2nd day of May, 2005.
RYDEX DISTRIBUTORS, INC.
BY: /s/Xxxx X. Xxxxxxxxxxx
-----------------------
TITLE: CEO
ADDRESS: 0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
STATE STREET BANK AND TRUST COMPANY
BY: /s/Illegible Signature
-----------------------
TITLE: Executive Vice President
ADDRESS: X.X. Xxx 0000
Xxxxxx, XX 00000
Attention: Rydex ETF Trust
TELEPHONE: 0-000-000-0000
FACSIMILE:
XXXXXXX SACHS & CO.
BY: /s/Illegible Signature
-----------------------
TITLE: Managing Director
ADDRESS: Xxx Xxx Xxxx Xxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
TELEPHONE: 000-000-0000
FACSIMILE: 212-343-1673
(With a copy of all notices to General Counsel
Equities)
ACCEPTED BY:
RYDEX ETF TRUST
By: /s/Xxxx X. Xxxxxxxxxxx
-----------------------
TITLE: President
7
ATTACHMENT A
This document supplements the Prospectus with respect to the procedures TO
be USED by the Transfer Agent (i) in processing an order for the creation of
Creation Units of each series of Rydex ETF Trust (each a "Fund"), subject to
approval by the Distributor, and (ii) in processing an order for redemption of
Creation Units To accommodate Participants with restricted securities in the
standard basket, State Street has developed custom creation and redemption
baskets. For a Participant to transact in a custom basket, the Participant must
acknowledge the additional procedures described in Appendix I relating to custom
baskets.
A Participant is required to have signed the Participant Agreement. Upon
acceptance of the Participant Agreement by the Trust, the Transfer Agent will
assign a personal identification number to each Authorized Person authorized to
act for the Participant This will allow a Participant through its Authorized
Person(s) to place an order with respect to Creation Units.
TO PLACE AN ORDER FOR CREATION OR REDEMPTION OF CREATION UNITS
1. Call to Receive an Order Number. For creations and redemptions, an
Authorized Person for THE Participant will call the telephone
representative at 0-000-000-0000 not later than the closing time of the
regular trading session on the New York Stock Exchange (the "NYSE Closing
Time") (ordinarily 4:00 p.m. New York time) to receive an Order Number.
Upon verifying the authenticity of the caller (as determined by the use of
the appropriate PIN Number) and the terms of the order, the telephone
representative will issue a unique Order Number All orders with respect to
the creation or redemption of Creation Units are required to be in writing
and accompanied by the designated Order Number. Incoming telephone calls
are queued and will be handled in the sequence received. Calls placed
before the NYSE Closing Time will be processed even if the call is taken
after this cut-off time. ACCORDINGLY, DO NOT HANG UP AND REDIAL. INCOMING
CALLS THAT ARE ATTEMPTED LATER THAN THE NYSE CLOSING TIME WILL NOT BE
ACCEPTED.
NOTE THAT THE TELEPHONE CALL. IN WHICH THE. ORDER NUMBER IS ISSUED
INITIATES THE ORDER PROCESS BUT DOES NOT ALONE CONSTITUTE THE ORDER AN
ORDER IS ONLY COMPLETED AND PROCESSED UPON RECEIPT OF WRITTEN INSTRUCTIONS
CONTAINING THE DESIGNATED ORDER NUMBER AND PIN NUMBER AND TRANSMITTED BY
FACSIMILE OR TELEX (the "Order").
2. Place the Order An Order. Number is only valid for a limited time. The
Order for creation OR redemption of Creation Units must be sent by
facsimile or telex to the telephone representative within 20 minutes of
the issuance of the Order Number In the event that the Order is not
received within such time period, the telephone representative will
attempt to contact the Participant to request immediate
8
transmission of the Order. Unless the Order is received by the telephone
representative upon the earlier of (i) within 15 minutes of contact with
the Participant or (ii) 45 minutes after the NYSE Closing Time, the order
will be deemed invalid.
3. Await Receipt of Confirmation.
A. Clearing Process. The Transfer Agent shall issue a confirmation of
Order acceptance within 15 minutes of its receipt of an Order
received in good form. In the event the Participant does not receive
a timely confirmation from Transfer Agent, it should contact the
telephone representative at the business number indicated.
B. Outside the Clearing Process. IN lieu of receiving a confirmation of
Order acceptance, the DTC Participant will receive an acknowledgment
of Order acceptance_ The DTC Participant shall deliver on trade date
plus one the Deposit Securities and Cash Component (in the case of
creations) or the Creation Unit size aggregation of shares (in the
case of redemptions) to the Trust through DTC. The Trust shall settle
the transaction within three (3) Business Days.
4. Ambiguous Instructions. In the event that an Order contains terms that
differs from the information provided in the telephone call at the time of
issuance of the Order Number, the telephone representative will use
efforts that are reasonable under the circumstances to contact the
Participant promptly following receipt of such submission to request
confirmation of the terms of the order. If an Authorized Person confirms
the terms as they appear in the Order then the order will be processed. If
an Authorized Person contradicts its terms, the Order will be deemed
invalid and a corrected Order must be received by the telephone
representative not later than the earlier of (i) within 15 minutes of such
contact with the Participant or (ii) 45 minutes after the NYSE Closing
Time. If the telephone representative is not able to contact an Authorized
Person, then the Order shall be processed in accordance with its terms
notwithstanding any inconsistency from the terms of the telephone
information. In the event that an Order contains terms that are illegible,
as determined in the sole discretion of the Transfer Agent, the Order will
be deemed invalid and the telephone representative will attempt to contact
the Participant to request retransmission of the Order. A corrected ORDER
must be RECEIVED by the telephone representative not later than the
earlier of (i) within 15 minutes of such contact with the Participant or
(ii) 45 minutes after the NYSE Closing Time.
5. Processing an Order. The Transfer Agent and Distributor reserves the right
to suspend an Order in the event that its acceptance would appear to
result in the Participant or a Beneficial Owner owning 80 percent (80%) or
more of all outstanding shares of a given Fund. In such event, the
Transfer Agent or Distributor will attempt to contact an Authorized Person
for purposes of confirmation of the fact that with respect to such
Participant no Beneficial Owner would own 80 percent (80%) or more of all
outstanding shares of a given Fund upon execution of the Order. In the
event that (i) the Transfer Agent or Distributor is unable to contact an
Authorized Person or (ii) the Participant fails to transmit an identical
Order containing a representation and warranty as to such
9
fact, then the Order shall be deemed invalid.
6. Creation of Creation Units Prior to Receipt of Deposit Securities
Creation. Units of each Fund may be created in advance of receipt by the
Trust of all or a portion of the applicable Deposit Securities, provided
that the Participant deposits an initial deposit of cash with the Trust
having a value greater than the net asset value of the shares on the date
the order is placed in proper form. In addition to available Deposit
Securities, cash must be deposited in an amount equal to the sum of (i)
the Cash Component, plus (ii) 115% of the market value of the undelivered
Deposit Securities (the "Additional Cash Deposit") The order shall be
deemed to be received on the Business Day on which the order is placed
provided that the order is placed in proper form prior to 4:00 p. m
eastern time such date and federal funds in the appropriate amount are
deposited with the Trust's Custodian by 11:00 a.m. eastern time the
following Business Day, If the order is not placed in proper form by 4:00
p.m. eastern time or federal funds in the appropriate amount are not
received by 11:00 am. eastern time the next Business Day, then the order
may be deemed to be rejected and the investor shall be liable to the Trust
for losses, if any, resulting therefrom. An additional amount of cash
shall be required to be deposited with the Trust, pending delivery of the
missing Deposit Securities to the extent necessary to maintain an amount
of cash on deposit with THE Trust at least equal to 115% of the daily
marked to market value of the missing Deposit Securities. To the extent
that missing Deposit Securities are not received by 1:00 p m. eastern time
on the third Business Day following the day on which the purchase order is
deemed received by the Distributor or in the event a xxxx to market
payment is not made within one Business Day following notification by the
Distributor that such a payment is required, the Trust may use the cash on
deposit to purchase the missing Deposit Securities: The Participant will
be liable to the Trust for the costs incurred by the Trust in connection
with any such purchases. These costs will be deemed to include the amount
by which the actual purchase price of the Deposit Securities exceeds the
market value of such Deposit Securities on the day the purchase order was
deemed received by the Distributor plus the brokerage and related
transaction costs associated with such purchases. The Trust will return
any unused portion of the Additional Cash Deposit once all of the missing
Deposit Securities have been properly received by the Custodian or
purchased by the Trust and deposited into the Trust. The Trust shall
charge and the Participant agrees to pay to the Trust the Transaction Fee
prescribed in the Prospectus applicable to creation or redemption through
the Clearing Process, or the Transaction Fee and such additional fee as
may be prescribed pursuant to the Prospectus applicable to creation or
redemption outside the Clearing Process The delivery of Creation Units of
each Fund so created will occur no later than the third Business Day
following the day on which the purchase order is deemed received by the
Distributor.
10
APPENDIX 1--PROCEDURES SPECIFIC TO CUSTOM BASKETS
To accommodate Participants with restricted securities in the standard
basket of a Fund, State Street has developed custom creation and redemption
baskets (the "Custom Baskets"). Custom Baskets are intended to allow
Participants with restricted issues in a particular Fund, to transact in that
Fund using the Custom Basket process. The Custom Basket process substitutes
cash-in-lieu for the restricted securities and continues to settle through the
standard CNS process at NSCC. It is the responsibility of the Participant to
apply to the NSCC by contacting DTCC Participant Services at 0-000-000-0000 to
allow them to receive Custom Baskets as well as the regular daily standard
baskets (the "Standard Baskets"). To ensure proper tracking of the Fund to its
benchmark index the following guidelines must be followed when transacting
Custom Baskets:
1. On or before T-1, the Participant must request a Custom Basket from the
Transfer Agent by calling 0-000-000-0000. The Transfer Agent will fax a
standard form (see attached) on which the Participant must identify the
restricted securities to be omitted from the creation or redemption
basket. At this time, the Participant is limited to substituting
cash-in-lieu only for restricted issues_ Participants may request that the
Custom Basket be available for creations and redemptions for a one-time
transaction, a specific period or indefinitely- The Trust will review the
Custom Basket request and, if approved, will deliver a confirmation back
to the Participant In the event subsequent additions and/or deletions to
restricted issues are required to change the custom basket already
approved, the Participant is responsible for completing a new standard
form with the Transfer Agent.
2. On trade date, prior to the opening of the NYSE, State Street will notify
NSCC as to the components of the approved Custom Baskets available that
day along with the components of the Standard Basket. Each Custom Basket
will be identified by a separate NSCC assigned instruction CUSIP.
3. On trade date, the Participant will follow the directions regarding
placing orders outlined in Attachment A. A Participant wishing to create
or redeem a Custom Basket must identify the custom CUSIP on the order form
in the blank provided Orders received without a custom CUSIP indicated
will be processed as orders for Standard Baskets. Participants placing
orders for Custom Baskets must note that the cut-off-time to create and
redeem a Custom Basket will be 3:00 p.m.. New Yolk time. ORDERS FOR CUSTOM
BASKETS WILL NOT BE PROCESSED IF RECEIVED BY STATE STREET AFTER 3:00 P.M.
NEW YORK TIME. The Participant must transact on the Standard Basket after
3:00 p.m. New York time.
11
IN WITNESS WHEREOF, the Participant acknowledges that he or she has read
the procedures relating to Custom Baskets and agrees to comply with all such
procedures. Failure to comply with the Custom Basket procedures will require the
transaction to be effected in Standard Basket
XXXXXXX XXXXX EXECUTION & CLEARING, L.P.
BY: /s/Illegible Signature
-------------------------
TITLE: Managing Director
ADDRESS: Xxx Xxx Xxxx Xxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
TELEPHONE: 000-000-0000
FACSIMILE: 212-343-1673
DATE: May 2, 2005
12
ATTACHMENT B
The following individuals are Authorized Persons pursuant to Section 6 of
the Participant Agreement between Rydex Distributors Inc, State Street Bank and
Trust Company and Xxxxxxx Sachs & Co.:
XXXXXXX XXXXX & CO.
By: /s/Xxxxxxx X. Xxxxxxxx
-----------------------
Xxxxxxx X. Xxxxxxxx
Xxxxxxxxxxx X. Xxxx
Xxxxxxx Xxxxxxx
Xxxx Xxxxx
Xxxxxx Xxxxx
13
