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
Execution & Clearing, L.P. (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 "DTC 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 or
redeeming Creation Units and the
1
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, upon approval by the Distributor, 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 Transfer Agent,
the Distributor 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 Transfer Agent, the Distributor 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
immediate written notice of such fact to the Transfer Agent, the
Distributor and the Trust and such notice shall be effective upon receipt
by the Distributor 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 reasonable expectation that
the shares to be redeemed as a Creation Unit will be available for a
regular way settlement of the redemption.
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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-IA (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 Xxxxx as a result of (i) any breach
by the Participant of any provision of' this 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 Transfer Agent, Distributor and/or Trust to be
genuine and to have been given by the Participant This paragraph shall
survive the termination of this Agreement.
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
3
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 available and deliver or otherwise make available to the
Participant (by sending an electronic copy to
xxxxxxxxxx-XX@xx.xxxxx.xx.xxx) 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
4
States first class mail, return receipt requested, 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, X.X. Xxx 0000, Xxxxxx, XX 00000, Attn.: Rydex ETF
Trust.
All notices to the Participant and the Distributor or the Transfer Agent,
as the case may be, shall be directed to the address or 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 patties. 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 wan-ants 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 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.
5
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 VP
ADDRESS: X.X. Xxx 0000
Xxxxxx, XX 00000
Attention: Rydex ETF Trust
TELEPHONE: (000) 000-0000
FACSIMILE:
XXXXXXX XXXXX EXECUTION CLEARING, INC.
BY: /s/Illegible Signature
-----------------------
TITLE: Managing Director
ADDRESS: 000 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
(With a copy of all notices to General Counsel
Equities)
ACCEPTED BY:
RYDEX ETF TRUST
BY: /s/Xxxx X. Xxxxxxxxxxx
-----------------------
TITLE: President
6
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 1 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'.
7
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 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 the 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 DT'C. The Trust shall
settle the transaction within three (3) Business Days.
4. AMBIGUOUS INSTRUCTIONS In the event that an Order contains terms that
differo from the information provided in the telephone call at the time of
issuance of the Order Number, the telephone representative will use
reasonable efforts 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 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
8
more of all outstanding shares of a given Fund. IN SUCH event, the
Transfer Agent or the 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 (1) the Transfer Agent or the 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 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 am. 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 a m. 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.
9
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 00-000-000-0000 The Transfer Agent will fax a standard
form 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 pm.
New York 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.
10
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: 000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
DATE: 5/3/05
11
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 Execution & Clearing, LP:
XXXXXXX XXXXX EXECUTION & CLEARING, L.P.
BY: /s/Illegible Signature
-------------------------------
By: /s/Xxxxxxx Xxxxxx By: /s/Xxxxxx Xxxxxxx
212.433.5328 212.433.5445
xxxxx.xxxxxx@xx.xxx xxxxxxxxxxxx@xx.xxx
By: /s/Xxxx Xxxxxxxx By: /s/Xxxx Xxxx
212.357.8007 212.357.6776
xxxx.xxxxxxxx@xx.xxx xxxxxxx.xxxx@xx.xxx
By: /s/Xxxxx Xxxxxx By: /s/Xxxxxxx Xxxxxxxxx
212.357.1972 212.357.7957
xxxxx.x.xxxxxxx@xx.xxx xxxxxxx.xxxxxxxxx@xx.xxx
By: /s/Xxxx Xxxxxx By: /s/Xxxxx Xxxxx
212.357.7056 212.357.2827
xxxxxxx.xxxxxx@xx.xxx xxxxx.xxxxx@xx.xxx
12
