This is a Member
Control Agreement for_________ dated effective as of _____,
20__ by and among __________, a
Minnesota limited liability company, and
the Member named on the attached Schedule A.
Terms. The terms defined in this Article shall have
the meanings given to them in this Article for purposes of this
Agreement. Certain other capitalized terms in this Agreement may be
defined elsewhere in this Agreement. All defined terms in this
Agreement include the singular and the plural as the context
“Agreement” means this Member Control Agreement as amended or
of Organization. “Articles of Organization” or
“Articles” means the Articles of Organization for the Company
filed with the Minnesota Secretary of State as amended or restated.
1.4 Board of
Governors. “Board of Governors” or “Board” means the
Board of Governors of the Company.
“Code” means the Internal Revenue Code of 1986, as amended, and
any comparable successor to such Code. All references to a section
of the Code shall mean and include any subsequent amendment or
replacement of such section.
“Company” means (LLC
1.7 Event of
Termination. An “Event of Termination” means an event
described in Section 10.1.
Rights. “Financial Rights” means the Member’s rights
to share in income, gain, receipt, loss, deduction, credit and
distribution as provided in this Agreement and any right to assign
Rights. “Governance Rights” mean all of the Member’s
rights as a Member in the Company except for Financial Rights or any
right to assign Financial Rights.
“Governor” or “Board member” means each natural person
serving on the Board. Governors or Board members are collectively
referred to as “Governors” or “Board members.” A Governor
need not be the Member of the Company.
1.11 LLC Act.
“LLC Act” means the Minnesota limited liability company act, as
amended, and any comparable successor to such LLC Act. All
references to a section of the LLC Act shall mean and include any
subsequent amendment or replacement of such section.
“Manager” means the Person elected, appointed, or otherwise
designated as a Manager pursuant to this Agreement and the LLC Act,
including the Chief Manager and Treasurer. Managers are collectively
referred to as “Managers.” A Manager need not be the Member of
“Member” means the Person reflected in the required records of
the Company as the owner of a Membership Interest.
Interest. “Membership Interest” means the interest in
the Company consisting of the Member’s Financial Rights and
“Person” includes a natural person or a domestic or foreign
limited liability company, corporation, partnership, limited
partnership, joint venture, association, business trust, estate,
trust, enterprise, and any other legal or commercial entity.
Regulations. The “Treasury Regulations” mean the
treasury regulations promulgated under the Code.
“Units” are used to designate Membership Interests as provided
in Article 4 of this Agreement.
SCOPE AND EFFECT OF AGREEMENT
Control Agreement. This Agreement shall constitute a Member
Control Agreement under Section 322B.37 of the LLC Act. It is
expressly intended that, during the entire term of this Agreement,
the provisions of this Agreement shall supersede any provisions of
the LLC Act, as they now exist or as may be subsequently amended or
restated, that are inconsistent or conflict with the provisions of
this Agreement to the maximum extent permitted by law.
Agreements. This Agreement supersedes all prior agreements
to which any or all of the parties to this Agreement are parties to
the extent that such prior agreements are inconsistent with this
ORGANIZATION OF COMPANY
of the Company. The Company is a limited liability company
formed pursuant to the terms of the LLC Act except as otherwise
provided in this Agreement, and the rights and liabilities of the
Member, Governors and Managers are as provided under the LLC Act,
except as otherwise provided in this Agreement.
3.2 Term of
the Company. The Company shall exist perpetually until it is
terminated in accordance with this Agreement and the LLC Act.
The Company shall indemnify each Member, Governor, Manager and agent
of the Company in such manner, under such circumstances, and to such
extent as permitted by Section 332B.699 of the LLC Act.
Matters. If the Company is disregarded for income tax
purposes, the Company shall not be disregarded as a separate legal
entity for any other purpose, including but not limited to,
diminishing in any respect the LLC Act providing that a Member,
Governor, Manager, or other agent of the Company is not, merely on
account of such status, personally liable for the acts, debts,
liabilities, or obligations of the Company.
MEMBERSHIP INTERESTS, UNITS AND REGISTRATION
4.1 Class of Membership Interests. The Company
shall have one class of Membership Interests having the Governance
Rights and Financial Rights described in this Agreement.
Classes of Membership Interests. Membership Interests
of the Company of a different class or series than the existing
Membership Interests may only be issued by the Board if the Member
authorizes such different class or series of Membership Interests
pursuant to an amendment to this Agreement giving such authority to
the Board and amending the other terms of this Agreement to reflect
the Governance Rights and Financial Rights associated with such
different class or series of Membership Interests.
The Company shall use Units to designate Membership Interests for
purpose of allocating income, gain, receipt, loss, deduction, credit,
and distribution; voting; and such other purposes as provided in this
Each Unit shall represent Governance Rights consisting of one vote
per Unit when a vote is permitted or required by this Agreement and
the LLC Act and Financial Rights consisting of the right to the
allocations of income, gain, receipt, loss, deduction and credit and
the right to distributions as provided in the Agreement.
The Governance Rights and Financial Rights associated with a Unit
are not separately assignable.
Records. Ownership of Membership Interests and the
Units designating Membership Interests, including the Governance
Rights and Financial Rights, shall be as is reflected in the required
records of the Company and shall be binding on the Company only to
the extent so reflected. No transfer or assignment shall be
effective until reflected in the required records of the Company and
then only to the extent so reflected. The Company may request
written evidence of any transfer or assignment in a form and content
acceptable to the Company before reflecting any such transfer,
assignment, or designation in the required records of the Company.
Any allocations of income, gain, receipt, loss, deduction, credit,
and distribution by the Company and votes made, in each case, in
reliance on the Company’s required records shall acquit the Company
of all liability to any Person who may have an interest in such
allocations, distributions, or vote.
of Income and Losses if a Sole Member. During the period
that the Company has one Member, the Company shall be disregarded as
an entity separate from the Member for income tax purposes pursuant
to Treasury Regulation § 301.7701-3(b)(1)(ii). For financial
purposes, all items of income, gain, receipt, loss, deduction and
credit sale by allocated to the account of the sole Member.
Distributions. Subject to Section 322B.54 of the LLC
Act, distributions may be made from the Company at such times and in
such amounts as determined from time to time by the Board to the
Member. It is intended that the method of allocating distributions
provided in this Section overrides Section 322B.50 of the LLC Act.
Distributions. Upon termination of the Company,
assets of the Company, including proceeds from liquidation of the
Company’s assets, shall be applied in the following order of
creditors of the Company, including the Member if the Member is a
creditor, to the extent otherwise permitted by law, in satisfaction
of liabilities of the Company.
reasonable reserves, if any, deemed necessary by the Board to provide
for the contingent liabilities of the Company.
6.2 In Kind.
Distributions from the Company may be in cash or in kind, but the
Member shall not have any right to demand and receive any
distribution from the Company in any form other than cash.
and Voting. The Member shall have one
vote for each Unit that is reflected in the name of the Member in the
required records of the Company. It is intended that the method of
voting by the Member provided in this Section and throughout this
Agreement overrides Section 322B.356, Subd. 2. Meetings of the
Member may be called in accordance with the LLC Act. Any action
required or permitted to be taken at a meeting of the Member may be
taken by written action signed by the Member. Regular meetings of
the Member shall be held on an annual or other less frequent basis as
shall be determined by the Board or by the President.
BOARD OF GOVERNORS
Authority. The business and affairs of the Company
shall be directed by a Board of Governors except as may be provided
in this Agreement or as authorized by the affirmative vote of the
The Board shall consist of one or more natural persons. The number
of Governors on the first Board (if not named in the Articles of
Organization) shall be determined by the organizer. Thereafter the
Member shall determine the number of Governors. There shall be no
cumulative voting by the Member.
Each Governor shall serve for an indefinite term that expires at the
next regular meeting of the Member, or until his
successor is elected and qualified, or until his
earlier death, resignation, disqualification or removal as provided
by the LLC Act.
The acts of a majority of the Governors present at a meeting at
which a quorum is present shall be the act of the Board of Governors.
Any Governor may call a Board meeting by giving notice to all
Governors of the date and time of the meeting at least 24 hours prior
to the meeting or such longer or shorter period of time as the Board
may establish by resolution adopted by the Board. The notice need
not state the purpose of the meeting. If a meeting schedule is
adopted by the Board, or if the date and time of a Board meeting has
been announced at a previous meeting, no notice shall be required. A
Governor may waive notice of any meeting before, at or after the
meeting, in writing, orally or by attendance. Attendance at a
meeting by a Governor is a waiver of notice of that meeting unless
the Governor objects at the beginning of the meeting to the
transaction of business because the meeting is not lawfully called or
convened and does not participate thereafter in the meeting.
A majority of the Governors currently holding office shall
constitute a quorum for the transaction of business unless the Board
establishes a higher or lower threshold for a quorum by resolution
adopted by the Board. In the absence of a quorum, a majority of the
Governors present may adjourn a meeting from time to time until a
quorum is present. If a quorum is present when a duly called or held
meeting is convened, the Governors present may continue to transact
business until adjournment even though the withdrawal of a number of
Governors originally present leaves less than the proportion or
number otherwise required for a quorum.
Action. Any action required or permitted to be
taken at a meeting of the Board may be taken by written action signed
by all of the Governors or, in cases where the action need not be
approved by the Member, by written action signed by the number of
Governors that would be required to take the same action at a meeting
of the Board at which all Governors were present.
Authority. The business and affairs of the Company
shall be managed by the Managers subject to the direction of the
The Company shall have one or more Persons to hold the following
offices of the Company:
Manager. A natural person who is a Chief Manager who
may be designated as President and/or Chief Manager.
A natural person who is a Treasurer who may be designated as
Treasurer and/or Chief Financial Officer.
Such other Managers or agents as the Board deems necessary for the
operation and management of the Company, including, but not limited
to, a Chair of the Board, a Chief Executive Officer, Secretary, and
one or more Vice Presidents.
Managers may also be known as the officers of the Company.
Authority. The Managers of the Company
shall have the following powers, rights, duties, and responsibilities
unless otherwise determined by the Board:
Manager/President. Unless otherwise provided by a
resolution adopted by the Board, the Chief Manager (i) shall
have general active management of the business of the Company;
(ii) shall, when present and in the absence of the Chair of the
Board, preside at all meetings of the Member and Board; (iii) shall
see that all orders and resolutions of the Board are carried into
effect; (iv) shall sign and deliver in the name of the Company
any deeds, mortgages, bonds, contracts, or other instruments
pertaining to the business of the Company, except in cases in which
the authority to sign and deliver is required by law to be exercised
by another person or is expressly delegated by this Agreement or the
Board to some other Manager or agent of the Company; (v) shall
maintain records of and, when necessary, certify all proceedings of
the Board and the Member; (vi) shall perform the duties of the
Secretary if there is no Secretary; and (vii) shall perform such
other duties as may from time to time be assigned to him or her by
Financial Officer. Unless provided otherwise by a
resolution adopted by the Board, the Treasurer (i) shall keep
accurate financial records for the Company; (ii) shall deposit
all monies, drafts and checks in the name of and to the credit of the
Company in such banks and depositories as the Board shall designate
from time to time; (iii) shall endorse for deposit all notes,
checks and drafts received by the Company as ordered by the Board,
making proper vouchers therefor; (iv) shall disburse Company
funds and drafts in the name of the Company, as ordered by the Board;
(v) shall render to the Chief Manager and the Board, whenever
requested, an account of all transactions by the Treasurer and of the
financial condition of the Company; and (vi) shall perform such
other duties as may be prescribed by the Board or the Chief Manager
from time to time.
of the Board. The Chair of the Board shall preside at
all meetings of the Board and the Member and shall exercise general
supervision and direction over the more significant matters of policy
affecting the affairs of the Company, including particularly its
financial and fiscal affairs.
Executive Officer. If the Company has a Chief
Executive Officer, unless otherwise prescribed by the Board, the
Chief Executive Officer shall hold the office of Chief Manager and/or
President and, if the Company has a President, the President shall
have such powers and shall perform such duties as may be prescribed
by the Board.
President. Each Vice President shall have such powers
and shall perform such duties as may be prescribed by the Board.
The Secretary shall, unless otherwise determined by the Board, be
secretary of and attend all meetings of the Board and the Member, and
may record the proceedings of such meetings in the minute book of the
Company and, whenever necessary, certify such proceedings. The
Secretary shall maintain or see to the maintenance of the required
records and information of the Company as provided in Section
322B.373 of the LLC Act. The Secretary shall give proper notice of
meetings of the Member and shall perform such other duties as may be
prescribed by the Board or Chief Manager from time to time.
The Board shall elect or appoint the Chief Manager, Treasurer,
and such other Managers the Board determines appropriate.
Managers shall hold office until the next election of Managers or
until their successors are elected or appointed and qualified or
until their earlier death, resignation or removal.
Unless prohibited by a resolution approved by the affirmative vote
of a majority of the Governors present, a Manager elected or
appointed by the Board may delegate in writing some or all of the
duties and powers of his office to other
EVENTS TERMINATING MEMBERSHIP
10.1 Events of
Termination. The continued membership of the Member
in the Company is terminated upon the first to occur of any of the
following events occurring with respect to the Member (each an “Event
Member’s retirement or resignation as the Member of the Company as
defined in Section 322B.306 of the LLC Act;
redemption of the Member’s complete Membership Interest in the
assignment or a buyout of the Member’s Membership Interest;
dissolution of the Member that is a domestic or foreign limited
liability company, corporation, partnership, limited partnership,
joint venture, operation, business trust, estate, trust, enterprise,
or any other legal or commercial entity;
merger in which the Company is not the surviving organization; or
occurrence of any other event that terminates the continued
membership of the Member in the Company.
10.2 Effect of
Event of Termination. If an Event of Termination
occurs with respect to the Member, the following provisions shall
on the Company. The Company shall continue and shall
not be dissolved and terminated.
on Member. The Membership Interest of the Member
shall continue to have the same Governance Rights and Financial
Rights as existed immediately prior to such Event of Termination
except to the extent that such Event of Termination resulted in the
redemption of such Membership Interest or the cancellation of such
Membership Interest as in the event of a merger in which the Company
is not the surviving organization.
IN WITNESS WHEREOF, the Company and the Member have executed this
Agreement with all of the schedules referenced herein effective as of
the date first above written.
MEMBER CONTROL AGREEMENT
Number of Units