ADMINISTRATION AGREEMENT
Agreement dated as of April 29, 2005 by and between State Street
Bank and Trust Company, a Massachusetts trust company (the "Administrator"), and
Rydex ETF Trust, A Delaware statutory trust (the "Trust").
WHEREAS, the Trust is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust desires to retain the Administrator to furnish
certain administrative services to the Trust, and the Administrator is willing
to furnish such services, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF ADMINISTRATOR
The Trust hereby appoints the Administrator to act as administrator
with respect to the Trust for purposes of providing certain administrative
services for the period and on the terms set forth in this Agreement. The
Administrator accepts such appointment and agrees to render the services stated
herein.
The Trust will initially consist of the portfolio(s) and/or
class(es) of shares (each an "Investment Fund") listed in Schedule A to this
Agreement. In the event that the Trust establishes one or more additional
Investment Funds with respect to which it wishes to retain the Administrator to
act as administrator hereunder, the Trust shall notify the Administrator in
writing. Upon written acceptance by the Administrator, such Investment Fund
shall become subject to the provisions of this Agreement to the same extent as
the existing Investment Funds, except to the extent that such provisions
(including those relating to the compensation and expenses payable by the Trust
and its Investment Funds) may be modified with respect to each additional
Investment Fund in writing by the Trust and the Administrator at the time of the
addition of the Investment Fund.
2. DELIVERY OF DOCUMENTS
The Trust will promptly deliver to the Administrator copies of each
of the following documents and all future amendments and supplements, if any:
a. The Trust's Declaration and by-laws;
b. The Trust's currently effective registration statement under
the Securities Act of 1933, as amended (the "1933 Act"), and
the 1940 Act and the Trust's Prospectus(es) and Statement(s)
of Additional Information relating to all Investment Funds and
all amendments and supplements thereto as in effect from time
to time;
c. Certified copies of the resolutions of the Board of Trustees
of the Trust (the "Board") authorizing (1) the Trust to enter
into this Agreement and (2) certain individuals on behalf of
the Trust to (a) give instructions to the
Administrator pursuant to this Agreement and (b) sign checks
and pay expenses;
d. A copy of the investment advisory agreement between the Trust
and its investment adviser; and
e. Such other certificates, documents or opinions which the
Administrator may, in its reasonable discretion, deem
necessary or appropriate in the proper performance of its
duties.
3. REPRESENTATIONS AND WARRANTIES OF THE ADMINISTRATOR
The Administrator represents and warrants to the Trust that:
a. It is a Massachusetts trust company, duly organized and
existing under the laws of The Commonwealth of Massachusetts;
b. It has the corporate power and authority to carry on its
business in The Commonwealth of Massachusetts;
c. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement;
d. No legal or administrative proceedings have been instituted or
threatened which would impair the Administrator's ability to
perform its duties and obligations under this Agreement; and
e. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of the Administrator or any law or regulation
applicable to it.
4. REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trust represents and warrants to the Administrator that:
a. It is a statutory trust, duly organized, existing and in good
standing under the laws of Delaware;
b. It has the corporate power and authority under applicable laws
and by its charter and by-laws to enter into and perform this
Agreement;
c. All requisite proceedings have been taken to authorize it to
enter into and perform this Agreement;
d. It is an investment company properly registered under the 1940
Act;
e. A registration statement under the 1933 Act and the 1940 Act
has been filed and will be effective and remain effective
during the term of this Agreement. The Trust also warrants to
the Administrator that as of the effective date of this
Agreement, all necessary filings under the securities
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laws of the states in which the Trust offers or sells its
shares have been made;
f. No legal or administrative proceedings have been instituted or
threatened which would impair the Trust's ability to perform
its duties and obligations under this Agreement;
g. Its entrance into this Agreement will not cause a material
breach or be in material conflict with any other agreement or
obligation of the Trust or any law or regulation applicable to
it; and
h. As of the close of business on the date of this Agreement, the
Trust is authorized to issue shares of beneficial interest,
and it will initially offer shares, in the authorized amounts
as set forth in Schedule A to this Agreement.
5. ADMINISTRATION SERVICES
The Administrator shall provide the following services, subject to
the control, supervision, authorization and direction of the Trust and, in each
case where appropriate, the review and comment by the Trust's auditors and legal
counsel and in accordance with procedures which may be established from time to
time between the Trust and the Administrator:
a. Prepare for review and approval by officers of the Trust the Investment
Funds' financial information contained within the Trust's semi-annual and
annual shareholder reports, Form N-Q reports and other quarterly reports
(as mutually agreed upon), including tax footnote disclosures where
applicable;
b. Coordinate the audit of the Trust's financial statements by the Trust's
independent accountants, including the preparation of supporting audit
workpapers and other schedules, and make such reports and recommendations
to the Board concerning the performance of the independent accountants as
the Board may reasonably request;
c. Prepare for review by an officer of the Trust the Trust's periodic
financial reports required to be filed with the Securities and Exchange
Commission ("SEC") on Form N-SAR and financial information required by
Form N-1A, Form N-CSR and such other reports, forms or filings as may be
mutually agreed upon;
d. Provide periodic testing of portfolios with respect to compliance with
Internal Revenue Code mandatory qualification requirements, the
requirements of the 1940 Act and the Investment Funds' prospectus
limitations as may be mutually agreed upon, including quarterly compliance
reporting to the Trust's officers as well as preparation of Board
compliance materials;
e. Prepare and furnish total return performance information, including such
information on an after-tax basis, calculated in accordance with
applicable U.S. securities laws and regulations, as may be reasonably
requested by fund management;
f. Prepare and disseminate vendor survey information;
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g. Prepare and coordinate the filing of Rule 24f-2 notices, including
coordination of payment;
h. Provide on a periodic basis information to the Investment Funds' Chief
Compliance Officer regarding State Street's compliance with its Compliance
Program;
i. Provide sub-certificates in connection with the certification requirements
of the Xxxxxxxx-Xxxxx Act of 2002 with respect to the services provided by
State Street;
j. Maintain certain books and records of the Trust as required under Rule
31a-1(b) of the 1940 Act, as may be mutually agreed upon;
k. Consult with the Trust's officers, independent accountants, legal counsel,
custodian, fund accountant, distributor, and transfer agent in
establishing the accounting policies of the Trust;
l. Compute tax basis provisions for both excise and income tax purposes;
m. Prepare each Investment Fund's federal, state, and local income tax
returns and extension requests for review and for filing by the Trust's
independent accountants and filing by the Trust's treasurer, including
Form 1120-RIC, Form 8613 and Form 1099-MISC;
n. Coordinate Forms 1042/1042S with the Trust's transfer agent;
o. Review and sign off on periodic income distribution calculations and
annual minimum distribution calculations (income and capital gain) prior
to their declaration;
p. Provide periodic certifications and reasonable documentation to the Chief
Compliance Officer of the Trust in connection with Rule 38a-1 of the 1940
Act;
q. Prepare for review by an officer of the Trust annual fund expense budgets,
as necessary, perform accrual analyses and rollforward calculations and
recommend changes to fund expense accruals on a periodic basis, arrange
for payment of the Trust's expenses, review calculations of fees paid to
the Trust's investment adviser, custodian, fund accountant, distributor
and transfer agent, and obtain authorization of accrual changes and
expense payments;
r. Prepare information for Section 852 mailings; and
s. Provide on a periodic basis information to the Investment Funds' Chief
Compliance Officer regarding State Street's compliance with its Compliance
Program.
The Administrator shall perform such other services for the Trust that are
mutually agreed to by the parties from time to time, for which the Trust will
pay such fees as may be mutually agreed upon, including the Administrator's
reasonable out-of-pocket expenses. The provision of such services shall be
subject to the terms and conditions of this Agreement.
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The Administrator shall provide the office facilities and the personnel
determined by it to perform the services contemplated herein.
6. FEES; EXPENSES; EXPENSE REIMBURSEMENT
The Administrator shall receive from the Trust such compensation for
the Administrator's services provided pursuant to this Agreement as may be
agreed to from time to time in a written fee schedule approved by the parties
and initially set forth in the Fee Schedule to this Agreement. The fees are
accrued daily and billed monthly and shall be due and payable upon receipt of
the invoice. Upon the termination of this Agreement before the end of any month,
the fee for the part of the month before such termination shall be prorated
according to the proportion which such part bears to the full monthly period and
shall be payable upon the date of termination of this Agreement. In addition,
the Trust shall reimburse the Administrator for its out-of-pocket costs incurred
in connection with this Agreement. All rights of compensation and expense
reimbursement under this Agreement for services performed as of the termination
date shall survive the termination of this Agreement.
The Trust agrees promptly to reimburse the Administrator for any
equipment and supplies specially ordered by or for the Trust through the
Administrator and for any other expenses not contemplated by this Agreement that
the Administrator may incur on the Trust's behalf at the Trust's request or with
the Trust's consent.
The Trust will bear all expenses that are incurred in its operation
and not specifically assumed by the Administrator. Expenses to be borne by the
Trust, include, but are not limited to: organizational expenses; cost of
services of independent accountants and outside legal and tax counsel (including
such counsel's review of the Trust's registration statement, proxy materials,
federal and state tax qualification as a regulated investment company and other
reports and materials prepared by the Administrator under this Agreement); cost
of any services contracted for by the Trust directly from parties other than the
Administrator; cost of trading operations and brokerage fees, commissions and
transfer taxes in connection with the purchase and sale of securities for the
Trust; investment advisory fees; taxes, insurance premiums and other fees and
expenses applicable to its operation; costs incidental to any meetings of
shareholders including, but not limited to, legal and accounting fees, proxy
filing fees and the costs of preparation, printing and mailing of any proxy
materials; costs incidental to Board meetings, including fees and expenses of
Board members; the salary and expenses of any officer, director\trustee or
employee of the Trust; costs incidental to the preparation, printing and
distribution of the Trust's registration statements and any amendments thereto
and shareholder reports; cost of typesetting and printing of prospectuses; cost
of preparation and filing of the Trust's tax returns, Form N-1A or N-2, Form
N-CSR, Form N-Q, Form N-PX and Form N-SAR, and all notices, registrations and
amendments associated with applicable federal and state tax and securities laws;
all applicable registration fees and filing fees required under federal and
state securities laws; fidelity bond and directors' and officers' liability
insurance; and cost of independent pricing services used in computing the
Investment Funds' net asset values.
The Administrator is authorized to and may employ or associate with such
person or persons as the Administrator may deem desirable to assist it in
performing its duties under this Agreement; provided, however, that the
compensation of such person or persons shall be paid by the Administrator and
that the Administrator shall be as fully responsible to the Trust for the acts
and omissions of any such person or persons as it is for its own acts and
omissions.
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7. INSTRUCTIONS AND ADVICE
At any time, the Administrator may apply to any officer of the Trust
for instructions and may consult with its own legal counsel or outside counsel
for the Trust or the independent accountants for the Trust at the expense of the
Trust, with respect to any matter arising in connection with the services to be
performed by the Administrator under this Agreement. The Administrator shall not
be liable, and shall be indemnified by the Trust, for any action taken or
omitted by it in good faith in reliance upon any such instructions or advice or
upon any paper or document believed by it to be genuine and to have been signed
by the proper person or persons. The Administrator shall not be held to have
notice of any change of authority of any person until receipt of written notice
thereof from the Trust. Nothing in this paragraph shall be construed as imposing
upon the Administrator any obligation to seek such instructions or advice, or to
act in accordance with such advice when received.
8. LIMITATION OF LIABILITY AND INDEMNIFICATION
The Administrator shall be responsible for the performance of only
such duties as are set forth in this Agreement and, except as otherwise provided
under Section 6, shall have no responsibility for the actions or activities of
any other party, including other service providers. The Administrator shall have
no liability in respect of any loss, damage or expense suffered by the Trust
insofar as such loss, damage or expense arises from the performance of the
Administrator's duties hereunder in reliance upon records that were maintained
for the Trust by entities other than the Administrator prior to the
Administrator's appointment as administrator for the Trust. The Administrator
shall have no liability for any error of judgment or mistake of law or for any
loss or damage resulting from the performance or nonperformance of its duties
hereunder unless solely caused by or resulting from the gross negligence or
willful misconduct of the Administrator, its officers or employees. The
Administrator shall not be liable for any special, indirect, incidental,
punitive or consequential damages, including lost profits, of any kind
whatsoever (including, without limitation, attorneys' fees) under any provision
of this Agreement or for any such damages arising out of any act or failure to
act hereunder, each of which is hereby excluded by agreement of the parties
regardless of whether such damages were foreseeable or whether either party or
any entity had been advised of the possibility of such damages. In any event,
the Administrator's cumulative liability for each calendar year (a "Liability
Period") with respect to the Trust under this Agreement regardless of the form
of action or legal theory shall be limited to its total annual compensation
earned with respect to the Trust and fees payable hereunder during the preceding
Compensation Period, as defined herein, for any liability or loss suffered by
the Trust including, but not limited to, any liability relating to qualification
of the Trust as a regulated investment company or any liability relating to the
Trust's compliance with any federal or state tax or securities statute,
regulation or ruling during such Liability Period. "Compensation Period" shall
mean the calendar year ending immediately prior to each Liability Period in
which the event(s) giving rise to the Administrator's liability for that period
have occurred. Notwithstanding the foregoing, the Compensation Period for
purposes of calculating the annual cumulative liability of the Administrator for
the Liability Period commencing on the date of this Agreement and terminating on
December 31, 2005 shall be the date of this Agreement through December 31, 2005,
and the Compensation Period for the Liability Period commencing January 1, 2006
and terminating on December 31, 2006 shall be January 1, 2006 through December
31, 2006.
The Administrator shall not be responsible or liable for any failure
or delay in performance of its obligations under this Agreement arising out of
or caused, directly or
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indirectly, by circumstances beyond its control, including without limitation,
work stoppage, power or other mechanical failure, computer virus, natural
disaster, governmental action or communication disruption.
The Trust shall indemnify and hold the Administrator and its
directors, officers, employees and agents harmless from all loss, cost, damage
and expense, including reasonable fees and expenses for counsel, incurred by the
Administrator resulting from any claim, demand, action or suit in connection
with the Administrator's acceptance of this Agreement, any action or omission by
it in the performance of its duties hereunder, or as a result of acting upon any
instructions reasonably believed by it to have been duly authorized by the Trust
or upon reasonable reliance on information or records given or made by the Trust
or its investment adviser, provided that this indemnification shall not apply to
actions or omissions of the Administrator, its officers or employees in cases of
its or their own gross negligence or willful misconduct.
The indemnification contained herein shall survive the termination
of this Agreement.
9. CONFIDENTIALITY
The Administrator agrees that, except as otherwise required by law
or in connection with any requested disclosure to a banking or other regulatory
authority or the Administrator is advised by counsel that it may incur liability
for failure to make a disclosure, it will keep confidential all records and
information in its possession relating to the Trust or its shareholders or
shareholder accounts and will not disclose the same to any person except at the
request or with the written consent of the Trust.
10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS; RECORDS
The Trust assumes full responsibility for complying with all
securities, tax, commodities and other laws, rules and regulations applicable to
it.
In compliance with the requirements of Rule 31a-3 under the 1940
Act, the Administrator agrees that all records which it maintains for the Trust
shall at all times remain the property of the Trust, shall be readily accessible
during normal business hours, and shall be promptly surrendered upon the
termination of the Agreement or otherwise on written request. The Administrator
further agrees that all records which it maintains for the Trust pursuant to
Rule 31a-1 under the 1940 Act will be preserved for the periods prescribed by
Rule 31a-2 under the 1940 Act unless any such records are earlier surrendered as
provided above. Records may be surrendered in either written or machine-readable
form.
11. SERVICES NOT EXCLUSIVE
The services of the Administrator to the Trust are not to be deemed
exclusive, and the Administrator shall be free to render similar services to
others. The Administrator shall be deemed to be an independent contractor and
shall, unless otherwise expressly provided herein or authorized by the Trust
from time to time, have no authority to act or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
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12. TERM, TERMINATION AND AMENDMENT
(a) This Agreement shall become effective as of the date first
above written. The Agreement shall remain in effect unless
terminated by either party on sixty (60) days' prior written
notice. Termination of this Agreement with respect to any
given Investment Fund shall in no way affect the continued
validity of this Agreement with respect to any other
Investment Fund.
(b) Upon termination of this Agreement, the Trust shall pay to the
Administrator such compensation and any reimbursable expenses
as may be due under the terms hereof as of the date of such
termination, including reasonable out-of-pocket expenses
associated with such termination.
(c) This Agreement may be modified or amended from time to time by
mutual written agreement of the parties hereto.
13. NOTICES
Any notice or other communication authorized or required by this
Agreement to be given to either party shall be in writing and deemed to have
been given when delivered in person or by confirmed facsimile, or posted by
certified mail, return receipt requested, to the following address (or such
other address as a party may specify by written notice to the other): if to the
Trust: Rydex ETF Trust, 0000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, XX 00000,
Attn: Xxx Xxxxx, fax: 000-000-0000; if to the Administrator: State Street Bank
and Trust Company, X.X. Xxx 0000, Xxxxxx, XX 00000-0000, Attn: Fund
Administration Legal Department, fax: 000-000-0000.
14. NON-ASSIGNABILITY
This Agreement shall not be assigned by either party hereto without
the prior consent in writing of the other party, except that the Administrator
may assign this Agreement to a successor of all or a substantial portion of its
business, or to a party controlling, controlled by or under common control with
the Administrator.
15. SUCCESSORS
This Agreement shall be binding on and shall inure to the benefit of
the Trust and the Administrator and their respective successors and permitted
assigns.
16. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties
hereto with respect to the subject matter hereof and supersedes all previous
representations, warranties or commitments regarding the services to be
performed hereunder whether oral or in writing.
17. WAIVER
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The failure of a party to insist upon strict adherence to any term
of this Agreement on any occasion shall not be considered a waiver nor shall it
deprive such party of the right thereafter to insist upon strict adherence to
that term or any term of this Agreement. Any waiver must be in writing signed by
the waiving party.
18. SEVERABILITY
If any provision of this Agreement is invalid or unenforceable, the
balance of the Agreement shall remain in effect, and if any provision is
inapplicable to any person or circumstance it shall nevertheless remain
applicable to all other persons and circumstances.
19. GOVERNING LAW
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
20. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, exhibits, attachments and
amendments hereto may be reproduced by any photographic, xerographic,
photostatic, microfilm, micro-card, miniature photographic or other similar
process. The parties hereto all/each agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
21. COUNTERPARTS
This Agreement may be executed by the parties hereto on any number
of counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written above.
RYDEX ETF TRUST
By: /s/ Xxxx Xxxxx
--------------
Name: XXXX XXXXX
Title: VP & TREASURER
STATE STREET BANK AND TRUST COMPANY
By: /s/ Xxxx X. Xxxxxx
------------------
Name: Xxxx X. Xxxxxx
Title: Senior Vice President
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ADMINISTRATION AGREEMENT
RYDEX ETF TRUST
SCHEDULE A
LISTING OF INVESTMENT FUNDS
INVESTMENT FUNDS
Rydex Xxxxxxx Top 50 ETF
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EXHIBIT 1
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, as of April 29, 2005 that Rydex ETF Trust (the
"Trust") on behalf of its series (the "Funds") with principal offices at 0000
Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, XX 00000, makes, constitutes, and appoints
STATE STREET BANK AND TRUST COMPANY (the "Administrator") with principal offices
at Xxx Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx its lawful attorney-in-fact for it
to do as if it were itself acting, the following:
1. NOTICE FILINGS FOR FUND SHARES. The Power to submit notice filings for the
Funds in each jurisdiction in which the Funds' shares are offered or sold and in
connection therewith the power to prepare, execute, and deliver and file any and
all of the Funds' applications including without limitation, applications to
provide notice for the Funds' shares, consents, including consents to service of
process, reports, including without limitation, all periodic reports, or other
documents and instruments now or hereafter required or appropriate in the
judgment of the Administrator in connection with the notice filings of the
Funds' shares.
2. CHECKS. The power to draw, endorse, and deposit checks in the name of the
Funds in connection with the notice filings of the Funds' shares with state
securities administrators.
3. AUTHORIZED SIGNERS. Pursuant to this Limited Power of Attorney, individuals
holding the titles of Officer at the Administrator shall have authority to act
on behalf of the Funds with respect to items 1 and 2 above.
The execution of this limited power of attorney shall be deemed coupled with an
interest and shall be revocable only upon receipt by the Administrator of such
termination of authority. Nothing herein shall be construed to constitute the
appointment of the Administrator as or otherwise authorize the Administrator to
act as an officer, director or employee of the Trust.
IN WITNESS WHEREOF, the Trust has caused this Agreement to be executed in its
name and on its behalf by and through its duly authorized officer, as of the
date first written above.
RYDEX ETF TRUST
By: /s/ Xxxx Xxxxx
--------------
Name: XXXX XXXXX
Title: VP & TREASURER
Subscribed and sworn to before me
this 29 day of April, 2005.
/s/ Xxxxxx X. X'Xxxxx
---------------------
Notary Public
State of Maryland
In and for the County of Xxxxxxxxxx
My Commission expires 08-14-07
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