EXHIBIT 3.2
LIMITED LIABILITY COMPANY AGREEMENT
OF
RYDEX SPECIALIZED PRODUCTS LLC
This Limited Liability Company Agreement (the "Agreement") of Rydex
Specialized Products LLC (the "Company") is entered into as of September 14,
2005 by PADCO Advisors II, Inc., a Maryland corporation ("PADCO II").
WHEREAS, Xxx Xxxxx (the "Forming Person"), caused the Company to be
formed as a Delaware limited liability company pursuant to the Delaware Limited
Liability Company Act, as amended from time to time (the "Act"), by filing a
Certificate of Formation of the Company (the "Certificate of Formation") with
the Delaware Secretary of State on September 14, 2005;
WHEREAS, the Certificate of Formation provides that Forming Person's
status as an authorized person terminated upon the filing of the Certificate of
Formation; and
WHEREAS, upon the execution of this Agreement, PADCO II shall be
designated as an authorized person within the meaning of the Act and is a member
of the Company (the "Member") on the terms and conditions set forth below.
NOW, THEREFORE, the Member agrees as follows:
1. Name. The name of the limited liability company is Rydex Specialized
Products LLC or such other name as may be selected by the Member from time
to time that is acceptable to the appropriate recording officials of the
State of Delaware.
2. Certificates. The Forming Person executed, delivered and filed the
Certificate of Formation with the Delaware Secretary of State. Upon the
filing of the Certificate of Formation with the Delaware Secretary of
State, his powers as an authorized person ceased and the Member is hereby
designated as the authorized person within the meaning of the Act. Any
Member or officer of the Company shall execute, deliver and file any
certificates or documents (and any amendments and/or restatements thereof)
as may be necessary for the Company to qualify to do business in such
jurisdictions in which the Company may wish to conduct business.
3. Purpose. The Company is formed for the object and purpose of, and the
nature of the business to be conducted and promoted by the Company is,
engaging in any lawful act or activity for which limited liability
companies may be formed under the Act.
4. Powers. In furtherance of its purposes, but subject to all of the
provisions of this Agreement, the Company shall possess and may exercise
all the powers and privileges granted by the Act, by any other law and by
this Agreement, together with any powers incidental thereto, including,
without limitation, such powers and privileges as are necessary or
convenient to the conduct, promotion or attainment of the business purposes
or activities of the Company.
5. Principal Business Office. The principal business office of the Company
shall be located at 0000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx
00000 or at such other place as the Members may select from time to time.
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6. Registered Office. The address of the registered office of the Company in
the State of Delaware shall be Corporation Trust Center, 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx Xxxxxxxx 00000 or such other address
as the Members may select from time to time.
7. Registered Agent. The name and address of the registered agent of the
Company for service of process on the Company in the State of Delaware
shall be The Corporation Trust Company which is located at Corporation
Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx
00000 or such other name and address as the Members may select from time to
time.
8. Members. The name and mailing address of the Member and the Member's
percentage interest in the Company are set forth on Schedule A attached
hereto. Schedule A shall be amended as necessary to reflect any changes in
the membership or ownership of the Company.
9. Term. The term of the Company commenced on the date of its formation under
the Act and shall continue until terminated in accordance with the
provisions of the Act or this Agreement.
10. Limited Liability. Except as otherwise provided by the Act, the debts,
obligations and liabilities of the Company, whether arising in contract,
tort or otherwise, shall be solely the debts, obligations and liabilities
of the Company, and no Member or officer of the Company shall be obligated
personally for any such debt, obligation or liability of the Company solely
by reason of being a Member or officer of the Company.
11. Capital Contributions. The Member will contribute to the Company the amount
of United States Dollars as set forth on Schedule A.
12. Additional Contributions. No Member shall be required to make any
additional capital contribution to the Company. However, any Member may
make additional capital contributions to the Company with the written
consent of the other Member(s).
13. Allocation of Profits and Losses. The Company's profits and losses shall be
allocated to the Members in accordance with their respective percentage
interests in the Company.
14. Distributions. Distributions shall be made to the Members at the times and
in the aggregate amounts as may be determined by the Members, provided
that, with respect to any fiscal year, the Company shall distribute, if
available, to the Members an amount of cash reasonably estimated to be
sufficient to enable the Members to pay taxes on their distributive share
of Company income for such fiscal year. Notwithstanding any provision to
the contrary contained in this Agreement, the Company shall not make a
distribution to any Member on account of its interest in the Company if
such distribution would violate Section 18-607 of the Act or other
applicable law.
15. Board of Managers.
(a.) Board of Managers. In accordance with Section 18-402 of the Act,
the business and affairs of the Company shall be managed under the
direction and control of the Board of Managers (which may also be referred
to as the "Board of Directors"). The Board of Managers shall consist of a
minimum of three (3) Managers (who may also be referred to as
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"Directors") who shall be elected by the Member. The Board of Managers
initially shall consist of the following:
Xxxx Xxxxxxxxxxx
Xxxx Xxxxx
Xxxxxxx Xxxxx
who are each hereby elected by the Member. A Manager shall hold office
until his or her removal or resignation. A Manager may be removed by the
Member with or without cause. A Manager may voluntarily resign at any time
by delivering written notice to the Member. A resignation is effective when
such notice is delivered unless the notice specifies a later effective
date.
(b.) Authority and Powers. Subject to the other provisions of this
Agreement, all powers of the Company shall be exercised by or under the
authority of the Board of Managers. Decisions of the Board of Managers
within its scope of authority shall be binding upon the Company and the
Member. The Board of Managers may execute all documents, instruments, and
agreements reasonably deemed by the Board of Managers to be necessary,
appropriate, or needed for the performance of its duties and the exercise
of its powers. Furthermore, the Board of Managers may retain attorneys,
accountants, and other professionals in the course of the performance of
the Managers' duties and exercise of their powers.
(c.) Actions by Managing Board. Any actions of the Board of Managers
shall be taken on the consent of a majority by number of the Managers
obtained pursuant to this Section 15(c).
(i.) Manner of Acting. The Managers' consent to any act or
failure to act may be given orally or in writing. Any person alleging
that the requisite consent was given has the burden of proving the
validity of that consent, except in the case of a written consent
unanimously signed by the Managers. Written records kept pursuant to
Section 15(c)(iii) below of a meeting at which Managers voted on an
issue shall be prima facie proof of such consent, if notice of the
issue to be discussed at the meeting was duly given or waived pursuant
to Section 15(c)(v) below. Such meetings may be conducted in person, by
telephone, or both.
(ii.) Action Without Meeting. Any action required or permitted by
this Agreement or by applicable law to be taken at a meeting of the
Board of Managers may be taken without a meeting. The action shall be
evidenced by a written consent action describing the action taken and
signed by a majority by number of the Managers. Such action will be
effective when the Managers sign the consent, unless the consent
specifies a different effective date.
(iii.) Records. The Company shall keep written records of all
actions taken by the Board of Managers, which records shall be kept and
maintained by the Secretary of the Company, if there is one appointed,
and otherwise by any manager selected by the Board of Managers.
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(iv.) Voting. Each Manager shall be entitled to one vote. Any
Manager abstaining from voting on a given issue will be deemed to have
voted in the same manner as the majority, if any, of the Managers not
abstaining from voting on that issue.
(v.) Notice. No issue shall be voted on by the Board of Managers
unless reasonable notice of the meeting of the Board of Managers and
the issue is given or such notice is waived by any Manager not
receiving it. Notice shall be deemed to be reasonable if given to each
Manager not less than twenty-four (24) hours prior to the meeting
orally, telephonically or in writing, including in person or by
telecopy. Any person alleging that the requisite notice was given or
waived has the burden of proving the validity of the notice or waiver,
except in the case of (1) a signed acknowledgment of receipt of notice
or (2) a waiver of notice signed by the Managers not receiving the
notice. Written records kept pursuant to Section 4.01(c)(ii) above of a
meeting at which a Manager appeared shall be prima facie evidence that
such Manager was duly notified of the meeting and the issues voted on
at the meeting or that such Manager waived the requirement of such
notice, unless the purpose for the appearance was to contest the
validity of notice of such issues.
16. Board of Managers Audit Committee.
(a.) Selection. The Board of Managers will delegate audit-related
functions and oversight to an Audit Committee which shall consist of a
minimum of three (3) Managers. The Audit Committee initially shall consist
of the following:
Xxxx Xxxxxxxxxxx
Xxxx Xxxxx
Xxxxxxx Xxxxx
who are hereby appointed to the Audit Committee by the Member. An Audit
Committee member shall hold office until his or her removal or resignation.
An Audit Committee member may be removed by the Member with or without
cause. An Audit Committee member may voluntarily resign at any time by
delivering written notice to the Member. A resignation is effective when
such notice is delivered unless the notice specifies a later effective
date.
(b.) Qualifications. All members of the Audit Committee must be able to
read and understand fundamental financial statements, including the
Company's balance sheet, income statement and cash flow statement or will
become able to do so within a reasonable period of time after appointment
to the Audit Committee. Additionally, one member of the Audit Committee
must have past employment experience in finance or accounting, requisite
professional certification in accounting, or other comparable experience or
background which results in the member's financial sophistication,
including being or having been a chief executive officer, chief financial
officer or other senior officer with financial oversight responsibilities.
(c.) Functions. The Audit Committee shall be authorized (i) to
recommend to the Board of Directors a firm of independent auditors to be
employed by the Company; (ii) to
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consult with the independent auditors regarding the plan of audit; (iii) to
review the independent auditor's report of audit and accompanying
management letter; (iv) to consult periodically with the independent
auditors regarding the adequacy of the internal accounting controls of the
Company; and (v) to deliver recommendations to the Chief Executive Officer
or to the Board of Directors concerning the Company's accounting and
auditing policies and procedures.
17. Officers. If necessary or convenient to carry out the business of the
Company, the Board of Managers may appoint one or more individuals as Chief
Executive Officer, Chief Financial Officer, president, secretary and
treasurer of the Company, and may appoint one or more vice presidents and
one or more assistant secretaries and assistant treasurers. Such appointees
may hold more than one office and need not be Managers of the Company.
Unless the Board of Managers decides otherwise, the appointment of an
individual to an office shall constitute the delegation to that individual
of the authority and duties that are normally associated with the holder of
that office in a stock corporation organized under the General Corporation
Law of the State of Delaware. Any appointment made pursuant to this Section
18 may be revoked by the Board of Managers at any time.
18. Chief Executive Officer. The Member hereby appoints Xxxx Xxxxxxxxxxx as the
initial Chief Executive Officer to personally supervise the day-to-day
operations of the Company. The Chief Executive Officer shall be subject to
the general supervision and control of the Board of Managers and shall
carry out the policy decisions made by the Board of Managers. At the
direction of the Board of Managers, the Chief Executive Officer shall have
the full power to execute, for and on behalf of the Company, any and all
documents and instruments which may be necessary to carry on the business
of the Company. No person dealing with the Chief Executive Officer need
inquire into the validity or propriety of any document or instrument
executed in the name of the Company by the Chief Executive Officer, or as
to the authority of the Chief Executive Officer in executing the same.
19. Other Business. The Members may engage in or possess an interest in other
business ventures (unconnected with the Company) of every kind and
description, independently or with others. The Company shall not have any
rights in or to such business ventures or the income or profits derived
therefrom by virtue of this Agreement.
20. Exculpation and Indemnification. No Member or officer shall be liable to
the Company, or any other person or entity who has or had an interest in
the Company, including the Forming Person (each, an "Indemnified Party"),
for any loss, damage or claim incurred by the Company by reason of any act
or omission performed or omitted by such Indemnified Party in good faith on
behalf of the Company and in a manner reasonably believed to be within the
scope of the authority conferred on such Indemnified Party by this
Agreement, except that an Indemnified Party shall be liable for any such
loss, damage or claim incurred by the Company by reason of such Indemnified
Party's fraud or willful misconduct. To the fullest extent permitted by
applicable law, an Indemnified Party shall be entitled to indemnification
from the Company for any loss, damage or claim incurred by such Indemnified
Party by reason of any act or omission performed or omitted by such
Indemnified Party in good faith on behalf of the Company and in a manner
reasonably believed to be within the scope of the authority conferred on
such Indemnified Party by this Agreement, except that no Indemnified Party
shall be entitled to be indemnified for any such loss, damage or claim
incurred by such
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Indemnified Party by reason of such Indemnified Party's fraud or willful
misconduct; provided, however, that any indemnity or advancement of
expenses under this Section 20 shall be provided out of and to the extent
of Company assets only, and no Member shall have personal liability on
account thereof. The costs and expenses of any Indemnified Party reasonably
incurred in defending any threatened or pending action, suit or proceeding,
whether civil, criminal, administrative or investigative, shall be paid by
the Company in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the
Indemnified Party to repay such amount if it shall ultimately be determined
that such Indemnified Party is not entitled to be indemnified by the
Company as authorized by this Section 20.
21. Assignments. A Member may assign all or part of its percentage interest in
the Company with the written consent of the Members. If a Member transfers
all or part of its interest in the Company pursuant to this Section 21, the
transferee shall be admitted as a Member of the Company with the written
consent of the Members and upon its execution of an instrument, in form and
substance satisfactory to the Members, transferring to the transferee all
or part of the transferring Member's percentage interest in the Company and
signifying the transferee's agreement to be bound by the terms and
conditions of this Agreement. Such admission shall be deemed effective
immediately prior to the transfer, and, immediately following such
admission, the transferring Member shall cease to be a Member of the
Company with respect to the percentage interest in the Company transferred.
22. Resignation. A Member may resign from the Company with the written consent
of the Members. If a Member is permitted to resign pursuant to this Section
22 and there are no other Members, an additional Member shall be admitted
to the Company, subject to Section 23. Such admission shall be deemed
effective immediately prior to the resignation, and, immediately following
such admission, the resigning Member shall cease to be a Member of the
Company.
23. Admission of Additional Members. Upon the written consent of the Members,
one or more persons or entities may be admitted as a Member of the Company
upon such terms and conditions, including, without limitation, the number
of additional interests in the Company to be issued and the consideration
therefor, as the Members shall determine. The new Member shall be admitted
upon the execution of an instrument, in form and substance satisfactory to
the Members, signifying its agreement to be bound by the terms and
conditions of this Agreement.
24. Dissolution.
(a.) The Company shall dissolve, and its affairs shall be wound up upon
the first to occur of the following: (i) the written consent of the
Members, (ii) if there is only one Member, the retirement, resignation or
dissolution of such Member or the occurrence of any other event which
terminates the continued membership of such Member in the Company, unless
the business of the Company is continued in a manner permitted by the Act,
or (iii) the entry of a decree of judicial dissolution under Section 18-802
of the Act.
(b.) The bankruptcy of any Member will not cause such Member to cease
to be a Member of the Company and, upon the occurrence of such an event,
the business of the Company shall continue without dissolution.
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(c.) In the event of dissolution, the Company shall conduct only such
activities as are necessary to wind up its affairs (including the sale of
the assets of the Company in an orderly manner), and the assets of the
Company shall be distributed in the manner, and in the order of priority,
as set forth in Section 18-804 of the Act.
25. Miscellaneous.
(a.) Notices. Any notice, demand or communication required or permitted
to be given by any provision of this Agreement to the Members or to the
Company shall be in writing and, except as otherwise set forth in this
Agreement, shall be deemed to have been given when actually received. Any
such notice, demand or communication may be given by mail, express courier
service, telex or facsimile and shall be addressed to each Member at their
respective address set forth on Schedule A or to the Company at its
principal business office, as the case may be, or to such other address as
a party may from time to time designate by notice to the other parties.
(b.) Construction. When used in this Agreement, the masculine, feminine
or neuter gender and the singular or plural number shall each be deemed to
include the others where the context so requires, indicates or permits. As
used in this Agreement, the term "Member" shall mean a person or entity who
has been admitted as a member of the Company pursuant to this Agreement.
(c.) Headings. The headings in this Agreement are inserted for
convenience only and are in no way intended to describe, interpret, define,
or to limit the scope, extent or intent of, this Agreement or any provision
hereof.
(d.) Waivers. Any failure of any of the parties to comply with any
obligation, covenant, agreement or condition in this Agreement may be
waived by the party or parties entitled to the benefits thereof only by a
written instrument signed by the party or parties granting such waiver, but
any such waiver, or the failure to insist upon strict compliance with any
obligation, covenant, agreement or condition herein, shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
(e.) Heirs, Successors and Assigns. Each and all of the covenants,
terms, provisions and agreements in this Agreement shall be binding upon
and inure to the benefit of the parties hereto and, to the extent permitted
by this Agreement, their respective heirs, legal representatives,
successors and assigns.
(f.) Separability of Provisions. Each provision of this Agreement shall
be considered separable and, if for any reason any provision or provisions
herein are determined to be invalid, unenforceable or illegal under any
existing or future law, such invalidity, unenforceability or illegality
shall not impair the operation of or affect those portions of this
Agreement which are valid, enforceable and legal.
(g.) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original of this Agreement.
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(h.) Entire Agreement. This Agreement constitutes the entire agreement
of the Members with respect to the subject matter hereof.
(i.) Governing Law. This Agreement shall be governed by, and construed
under, the laws of the State of Delaware (without regard to conflict of
laws principles), with all rights and remedies under this Agreement being
governed by said laws.
(j.) Amendments. This Agreement may not be modified, altered,
supplemented or amended except pursuant to a written agreement executed and
delivered by the Members.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has
duly executed this Agreement as of the date first set forth above.
PADCO ADVISORS II, INC.
By: /s/ Xxxx Xxxxxxxxxxx
Name: Xxxx Xxxxxxxxxxx
Title: CEO and Treasurer
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LIMITED LIABILITY COMPANY AGREEMENT
OF
RYDEX SPECIALIZED PRODUCTS LLC
SCHEDULE A
----------
AGREED VALUE OF
---------------
MEMBER AND ADDRESS CAPITAL CONTRIBUTION PERCENTAGE INTEREST
------------------ -------------------- -------------------
PADCO Advisors II, Inc. $100.00 100%
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