SF 833

as introduced - 81st Legislature (1999 - 2000) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to business organizations; regulating 
  1.3             business corporations; defining terms; modifying the 
  1.4             authority to grant restricted stock; regulating 
  1.5             take-over offers; providing for name changes in 
  1.6             certain circumstances; regulating mergers and 
  1.7             exchanges; making clarifying and technical changes; 
  1.8             removing ambiguities; regulating limited liability 
  1.9             companies; eliminating unnecessary provisions; 
  1.10            correcting terminology; regulating member control 
  1.11            agreements and dissolutions; providing for the 
  1.12            duration of certain companies; making conforming 
  1.13            changes required by the enactment of the revised 
  1.14            Uniform Partnership Act; amending Minnesota Statutes 
  1.15            1998, sections 302A.011, subdivisions 7 and 56; 
  1.16            302A.111, subdivision 5; 302A.181, subdivision 1; 
  1.17            302A.223, subdivision 3; 302A.402, subdivision 3; 
  1.18            302A.405, subdivision 1; 302A.417, subdivision 7; 
  1.19            302A.457, subdivisions 1 and 2; 302A.471, subdivision 
  1.20            1; 302A.613, subdivision 1; 302A.621, subdivisions 1 
  1.21            and 6; 302A.675, subdivision 2; 319B.02, subdivisions 
  1.22            10, 12, 21, and 22; 319B.04, subdivisions 2 and 3; 
  1.23            319B.08, subdivision 1; 319B.10, subdivision 2; 
  1.24            319B.11, subdivisions 3, 4, and 8; 322A.02; 322A.87; 
  1.25            322A.88; 322B.03, subdivisions 12, 30, 44, and 45; 
  1.26            322B.115, subdivisions 1, 2, and 3; 322B.155; 322B.20, 
  1.27            subdivisions 1 and 2; 322B.30, subdivision 2; 
  1.28            322B.306; 322B.31, subdivision 3; 322B.313, 
  1.29            subdivisions 2, 3, and 7; 322B.323, subdivision 2; 
  1.30            322B.326; 322B.33, subdivisions 1 and 4; 322B.333, 
  1.31            subdivisions 1 and 3; 322B.336, subdivisions 1 and 3; 
  1.32            322B.34, subdivisions 2 and 3; 322B.343, subdivisions 
  1.33            1 and 2; 322B.346; 322B.35, subdivision 1; 322B.353; 
  1.34            322B.356, subdivisions 1, 2, and 3; 322B.363, 
  1.35            subdivisions 2 and 3; 322B.366, subdivision 1; 
  1.36            322B.37; 322B.383, subdivision 1; 322B.386, 
  1.37            subdivisions 1, 2, 4, and 5; 322B.40, subdivisions 1, 
  1.38            5, and 6; 322B.41, subdivisions 3 and 4; 322B.42, 
  1.39            subdivision 5; 322B.43, subdivisions 1 and 3; 322B.50; 
  1.40            322B.51; 322B.52; 322B.54, subdivision 1; 322B.56, 
  1.41            subdivision 1; 322B.603; 322B.606, subdivision 1; 
  1.42            322B.61; 322B.613; 322B.616; 322B.623; 322B.626; 
  1.43            322B.63, subdivision 1; 322B.636, subdivisions 1 and 
  1.44            3; 322B.64; 322B.643, subdivisions 1, 3, and 4; 
  1.45            322B.646; 322B.65; 322B.653; 322B.656, subdivision 1; 
  1.46            322B.66, subdivision 2; 322B.663, subdivision 4; 
  2.1             322B.666, subdivision 1; 322B.673, subdivisions 1 and 
  2.2             2; 322B.676; 322B.686, subdivision 3; 322B.689; 
  2.3             322B.699, subdivision 4; 322B.72, subdivisions 1 and 
  2.4             2; 322B.80, subdivision 1; 322B.813, subdivision 3; 
  2.5             322B.816, subdivision 4; 322B.833, subdivisions 2, 5, 
  2.6             and 6; 322B.843, subdivision 2; 322B.873, subdivisions 
  2.7             1 and 4; 323A.10-01; and 323A.11-02; repealing 
  2.8             Minnesota Statutes 1998, sections 322B.03, 
  2.9             subdivisions 4, 5, 9, and 16; 322B.363, subdivision 8; 
  2.10            322B.366, subdivision 2; 322B.816, subdivision 3; and 
  2.11            322B.873, subdivisions 2 and 3. 
  2.12  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.13                             ARTICLE 1 
  2.14                       BUSINESS CORPORATIONS 
  2.15     Section 1.  Minnesota Statutes 1998, section 302A.011, 
  2.16  subdivision 7, is amended to read: 
  2.17     Subd. 7.  [CONSTITUENT CORPORATION.] "Constituent 
  2.18  corporation" means a domestic or corporation or a foreign 
  2.19  corporation that is a party to a merger or exchange: 
  2.20     (1) in a merger is either the surviving corporation or a 
  2.21  corporation that is merged into the surviving organization; or 
  2.22     (2) in an exchange is either the acquiring corporation or a 
  2.23  corporation whose shares are acquired by the acquiring 
  2.24  organization.  
  2.25     Sec. 2.  Minnesota Statutes 1998, section 302A.011, 
  2.26  subdivision 56, is amended to read: 
  2.27     Subd. 56.  [CONSTITUENT ORGANIZATION.] "Constituent 
  2.28  organization" means a corporation, foreign corporation, or a 
  2.29  domestic limited liability company or foreign limited liability 
  2.30  company that is a party to a merger or an exchange: 
  2.31     (1) in a merger is either the surviving organization or an 
  2.32  organization that is merged into the surviving organization; or 
  2.33     (2) in an exchange is either the acquiring organization or 
  2.34  an organization whose securities are acquired by the acquiring 
  2.35  organization. 
  2.36     Sec. 3.  Minnesota Statutes 1998, section 302A.111, 
  2.37  subdivision 5, is amended to read: 
  2.38     Subd. 5.  [OPTIONAL PROVISIONS:  GENERALLY.] The articles 
  2.39  may contain other provisions not inconsistent with section 
  2.40  302A.201 or any other provision of law relating to the 
  2.41  management of the business or the regulation of the affairs of 
  3.1   the corporation.  
  3.2      Sec. 4.  Minnesota Statutes 1998, section 302A.181, 
  3.4   subdivision 1, is amended to read: 
  3.5      Subdivision 1.  [GENERALLY.] A corporation may, but need 
  3.6   not, have bylaws.  Bylaws may contain any provision relating to 
  3.7   the management of the business or the regulation of the affairs 
  3.8   of the corporation not inconsistent with section 302A.201 or any 
  3.9   other provision of law or the articles.  
  3.10     Sec. 5.  Minnesota Statutes 1998, section 302A.223, 
  3.11  subdivision 3, is amended to read: 
  3.12     Subd. 3.  [REMOVAL BY SHAREHOLDERS.] Except as provided in 
  3.13  subdivision 4, any one or all of the directors may be removed at 
  3.14  any time, with or without cause, by the affirmative vote of the 
  3.15  holders of the proportion or number a majority of the voting 
  3.16  power of the all shares of the classes or series the director 
  3.17  represents sufficient to elect them, except as provided in 
  3.18  subdivision 4 entitled to vote at an election of directors; 
  3.19  provided that, if a director has been elected solely by the 
  3.20  holders of a class or series of shares, as stated in the 
  3.21  articles or bylaws, then that director may be removed only by 
  3.22  the affirmative vote of the holders of a majority of the voting 
  3.23  power of all shares of that class or series entitled to vote at 
  3.24  an election of that director.  
  3.25     Sec. 6.  Minnesota Statutes 1998, section 302A.402, 
  3.26  subdivision 3, is amended to read: 
  3.27     Subd. 3.  [BY ACTION OF BOARD ALONE; FILING OF ARTICLES OF 
  3.28  AMENDMENT.] (a) Subject to the restrictions provided in 
  3.29  subdivision 2 or any restrictions provision in the articles that 
  3.30  states that section 302A.402, subdivision 3, does not apply, a 
  3.31  share dividend, division, or combination may be effected by 
  3.32  action of the board alone, without the approval of shareholders 
  3.33  under sections 302A.135 and 302A.137.  In effecting a division 
  3.34  or combination under this subdivision, the board may amend the 
  3.35  articles to increase or decrease the par value of shares, 
  3.36  increase or decrease the number of authorized shares, and make 
  3.37  any other change necessary or appropriate to assure that the 
  4.1   rights or preferences of the holders of outstanding shares of 
  4.2   any class or series will not be adversely affected by the 
  4.3   division or combination. 
  4.4      (b) If a division or combination that includes an amendment 
  4.5   of the articles is effected under this subdivision, then 
  4.6   articles of amendment must be prepared that contain the 
  4.7   information required by section 302A.139 and a statement that 
  4.8   the amendment will not adversely affect the rights or 
  4.9   preferences of the holders of outstanding shares of any class or 
  4.10  series and will not result in the percentage of authorized 
  4.11  shares of any class or series that remains unissued after the 
  4.12  division or combination exceeding the percentage of authorized 
  4.13  shares of that class or series that were unissued before the 
  4.14  division or combination. 
  4.15     Sec. 7.  Minnesota Statutes 1998, section 302A.405, 
  4.16  subdivision 1, is amended to read: 
  4.17     Subdivision 1.  [CONSIDERATION; PROCEDURE.] Subject to any 
  4.18  restrictions in the articles: 
  4.19     (a) Shares may be issued for any consideration, including, 
  4.20  without limitation, money or other tangible or intangible 
  4.21  property received by the corporation or to be received by the 
  4.22  corporation under a written agreement, or services rendered to 
  4.23  the corporation or to be rendered to the corporation under a 
  4.24  written agreement, as authorized by resolution approved by the 
  4.25  affirmative vote of the directors required by section 302A.237, 
  4.26  or, if provided for in the articles, approved by the affirmative 
  4.27  vote of the shareholders required by section 302A.437, 
  4.28  establishing a price in money or other consideration, or a 
  4.29  minimum price, or a general formula or method by which the price 
  4.30  will be determined; and 
  4.31     (b) A corporation may, without any new or additional 
  4.32  consideration, issue its own shares in exchange for or in 
  4.33  conversion of its outstanding shares, or, subject to 
  4.34  authorization of share dividends, divisions, and combinations 
  4.35  according to section 302A.402, issue its own shares pro rata to 
  4.36  its shareholders or the shareholders of one or more classes or 
  5.1   series, to effectuate share dividends, divisions, or 
  5.2   combinations.  No shares of a class or series, shares of which 
  5.3   are then outstanding, shall be issued to the holders of shares 
  5.4   of another class or series (except in exchange for or in 
  5.5   conversion of outstanding shares of the other class or series), 
  5.6   unless the issuance either is expressly provided for in the 
  5.7   articles or is approved at a meeting by the affirmative vote of 
  5.8   the holders of a majority of the voting power of all shares of 
  5.9   the same class or series as the shares to be issued. 
  5.10     Sec. 8.  Minnesota Statutes 1998, section 302A.417, 
  5.11  subdivision 7, is amended to read: 
  5.12     Subd. 7.  [UNCERTIFICATED SHARES.] Unless uncertificated 
  5.13  shares are prohibited by the articles or bylaws, a resolution 
  5.14  approved by the affirmative vote of a majority of the directors 
  5.15  present may provide that some or all of any or all classes and 
  5.16  series of its shares will be uncertificated shares.  The 
  5.17  resolution does not apply to shares represented by a certificate 
  5.18  until the certificate is surrendered to the corporation.  Within 
  5.19  a reasonable time after the issuance or transfer of 
  5.20  uncertificated shares, the corporation shall send to the new 
  5.21  shareholder the information required by this section to be 
  5.22  stated on certificates.  This information is not required to be 
  5.23  sent to the new shareholder by a publicly held corporation that 
  5.24  has adopted a system of issuance, recordation, and transfer of 
  5.25  its shares by electronic or other means not involving an 
  5.26  issuance of certificates if the system complies with section 174 
  5.27  17A of the Securities Exchange Act of 1934.  Except as otherwise 
  5.28  expressly provided by statute, the rights and obligations of the 
  5.29  holders of certificated and uncertificated shares of the same 
  5.30  class and series are identical. 
  5.31     Sec. 9.  Minnesota Statutes 1998, section 302A.457, 
  5.32  subdivision 1, is amended to read: 
  5.33     Subdivision 1.  [AUTHORIZED.] A written agreement among the 
  5.34  shareholders of a corporation and the subscribers for shares to 
  5.35  be issued, relating to the control of any phase of the business 
  5.36  and affairs of the corporation, its liquidation and dissolution, 
  6.1   or the relations among shareholders of or subscribers to shares 
  6.2   of the corporation is valid and specifically enforceable as 
  6.3   provided in subdivision 2.  The agreement may also include as 
  6.4   parties persons who are neither shareholders nor subscribers. 
  6.5      Sec. 10.  Minnesota Statutes 1998, section 302A.457, 
  6.6   subdivision 2, is amended to read: 
  6.7      Subd. 2.  [METHOD OF APPROVAL; ENFORCEABILITY; COPIES.] (a) 
  6.8   A written agreement among persons as described in subdivision 1 
  6.9   that relates to the control of or the liquidation and 
  6.10  dissolution of the corporation, the relations among them the 
  6.11  shareholders and subscribers, or any phase of the business and 
  6.12  affairs of the corporation, including, without limitation, the 
  6.13  management of its business, the declaration and payment of 
  6.14  distributions, the election of directors or officers, the 
  6.15  employment of shareholders and others by the corporation, or the 
  6.16  arbitration of disputes, is valid and specifically enforceable, 
  6.17  if the agreement is signed by all persons who, on the date the 
  6.18  agreement first becomes effective, are then the shareholders of 
  6.19  the corporation, whether or not the shareholders all have voting 
  6.20  shares, and the subscribers for shares, whether or not voting 
  6.21  shares, to be issued.  A written agreement as described in 
  6.22  subdivision 1 may provide for its amendment through nonunanimous 
  6.23  means. 
  6.24     (b) The agreement is enforceable by the persons described 
  6.25  in subdivision 1 who are parties to it and is binding upon and 
  6.26  enforceable against only those persons and other persons having 
  6.27  knowledge of the existence of the agreement.  A copy of the 
  6.28  agreement shall be filed with the corporation.  The existence 
  6.29  and location of a copy of the agreement shall be noted 
  6.30  conspicuously on the face or back of each certificate for shares 
  6.31  issued by the corporation and included in information sent to 
  6.32  the holders of uncertificated shares according to section 
  6.33  302A.417, subdivision 7. 
  6.34     (c) A shareholder, a beneficial owner of shares, or another 
  6.35  person having a security interest in shares has the right upon 
  6.36  written demand to obtain a copy of the agreement from the 
  7.1   corporation at the expense of the corporation. 
  7.2      Sec. 11.  Minnesota Statutes 1998, section 302A.471, 
  7.3   subdivision 1, is amended to read: 
  7.4      Subdivision 1.  [ACTIONS CREATING RIGHTS.] A shareholder of 
  7.5   a corporation may dissent from, and obtain payment for the fair 
  7.6   value of the shareholder's shares in the event of, any of the 
  7.7   following corporate actions:  
  7.8      (a) An amendment of the articles that materially and 
  7.9   adversely affects the rights or preferences of the shares of the 
  7.10  dissenting shareholder in that it:  
  7.11     (1) alters or abolishes a preferential right of the shares; 
  7.12     (2) creates, alters, or abolishes a right in respect of the 
  7.13  redemption of the shares, including a provision respecting a 
  7.14  sinking fund for the redemption or repurchase of the shares; 
  7.15     (3) alters or abolishes a preemptive right of the holder of 
  7.16  the shares to acquire shares, securities other than shares, or 
  7.17  rights to purchase shares or securities other than shares; 
  7.18     (4) excludes or limits the right of a shareholder to vote 
  7.19  on a matter, or to cumulate votes, except as the right may be 
  7.20  excluded or limited through the authorization or issuance of 
  7.21  securities of an existing or new class or series with similar or 
  7.22  different voting rights; except that an amendment to the 
  7.23  articles of an issuing public corporation that provides that 
  7.24  section 302A.671 does not apply to a control share acquisition 
  7.25  does not give rise to the right to obtain payment under this 
  7.26  section; 
  7.27     (b) A sale, lease, transfer, or other disposition of all or 
  7.28  substantially all of the property and assets of the corporation, 
  7.29  but not including a transaction permitted without shareholder 
  7.30  approval in section 302A.661, subdivision 1, or a disposition in 
  7.31  dissolution described in section 302A.725, subdivision 2, or a 
  7.32  disposition pursuant to an order of a court, or a disposition 
  7.33  for cash on terms requiring that all or substantially all of the 
  7.34  net proceeds of disposition be distributed to the shareholders 
  7.35  in accordance with their respective interests within one year 
  7.36  after the date of disposition; 
  8.1      (c) A plan of merger, whether under this chapter or under 
  8.2   chapter 322B, to which the corporation is a party constituent 
  8.3   organization, except as provided in subdivision 3; 
  8.4      (d) A plan of exchange, whether under this chapter or under 
  8.5   chapter 322B, to which the corporation is a party as the 
  8.6   corporation whose shares will be acquired by the acquiring 
  8.7   corporation, if the shares of the shareholder are entitled to be 
  8.8   voted on the plan; or 
  8.9      (e) Any other corporate action taken pursuant to a 
  8.10  shareholder vote with respect to which the articles, the bylaws, 
  8.11  or a resolution approved by the board directs that dissenting 
  8.12  shareholders may obtain payment for their shares. 
  8.13     Sec. 12.  Minnesota Statutes 1998, section 302A.613, 
  8.14  subdivision 1, is amended to read: 
  8.15     Subdivision 1.  [BOARD APPROVAL; NOTICE TO SHAREHOLDERS.] A 
  8.16  resolution containing the plan of merger or exchange shall be 
  8.17  approved by the affirmative vote of a majority of the directors 
  8.18  present at a meeting of the board of each constituent 
  8.19  corporation and shall then be submitted at a regular or a 
  8.20  special meeting to the shareholders of (i) each constituent 
  8.21  corporation, in the case of a plan of merger, and (ii) the 
  8.22  corporation whose shares will be acquired by the acquiring 
  8.23  organization in the exchange, in the case of a plan of 
  8.24  exchange.  The plan of merger or exchange may require that it be 
  8.25  submitted to the shareholders whether or not the board of 
  8.26  directors determines at any time after the board of directors' 
  8.27  initial approval of the plan that the plan is no longer 
  8.28  advisable and recommends that the shareholders reject it.  If 
  8.29  shareholders holding any class or series of stock of the 
  8.30  corporation are entitled to vote on the plan of merger or 
  8.31  exchange pursuant to this section, written notice shall be given 
  8.32  to every shareholder of a corporation, whether or not entitled 
  8.33  to vote at the meeting, not less than 14 days nor more than 60 
  8.34  days before the meeting, in the manner provided in section 
  8.35  302A.435 for notice of meetings of shareholders.  The written 
  8.36  notice shall state that a purpose of the meeting is to consider 
  9.1   the proposed plan of merger or exchange.  A copy or short 
  9.2   description of the plan of merger or exchange shall be included 
  9.3   in or enclosed with the notice.  If the merger or exchange is 
  9.4   with a domestic or foreign limited liability company, the plan 
  9.5   of merger or exchange must also be approved in the manner 
  9.6   required by the laws of the state under which the limited 
  9.7   liability company is organized. 
  9.8      Sec. 13.  Minnesota Statutes 1998, section 302A.621, 
  9.9   subdivision 1, is amended to read: 
  9.10     Subdivision 1.  [WHEN AUTHORIZED; CONTENTS OF PLAN.] A 
  9.11  parent owning at least 90 percent of the outstanding shares of 
  9.12  each class and series of a subsidiary directly, or indirectly 
  9.13  through related corporations, may merge the subsidiary into 
  9.14  itself or into any other subsidiary at least 90 percent of the 
  9.15  outstanding shares of each class and series of which is owned by 
  9.16  the parent directly, or indirectly through related corporations, 
  9.17  without a vote of the shareholders of itself or any subsidiary 
  9.18  or may merge itself, or itself and one or more of the 
  9.19  subsidiaries, into one of the subsidiaries under this section.  
  9.20  A resolution approved by the affirmative vote of a majority of 
  9.21  the directors of the parent present shall set forth a plan of 
  9.22  merger that contains:  
  9.23     (a) The name of the subsidiary or subsidiaries, the name of 
  9.24  the parent and the name of the surviving corporation; 
  9.25     (b) The manner and basis of converting the shares of the 
  9.26  subsidiary or subsidiaries or parent into securities of the 
  9.27  parent, subsidiary, or of another corporation or, in whole or in 
  9.28  part, into money or other property; 
  9.29     (c) If the parent is a constituent corporation but is not 
  9.30  the surviving corporation in the merger, a provision for the pro 
  9.31  rata issuance of shares of the surviving corporation to the 
  9.32  holders of shares of the parent on surrender of any certificates 
  9.33  for shares of the parent; and 
  9.34     (d) If the surviving corporation is a subsidiary, a 
  9.35  statement of any amendments to the articles of the surviving 
  9.36  corporation that will be part of the merger.  
 10.1      If the parent is a constituent corporation and the 
 10.2   surviving corporation in the merger, it may change its corporate 
 10.3   name, without a vote of its shareholders, by the inclusion of a 
 10.4   provision to that effect in the resolution of merger setting 
 10.5   forth the plan of merger that is approved by the affirmative 
 10.6   vote of a majority of the directors of the parent present.  Upon 
 10.7   the effective date of the merger, the name of the parent shall 
 10.8   be changed. 
 10.9      If the parent is a constituent corporation but is not the 
 10.10  surviving corporation in the merger, the resolution is not 
 10.11  effective unless it is also approved by the affirmative vote of 
 10.12  the holders of a majority of the voting power of all shares of 
 10.13  the parent entitled to vote at a regular or special meeting held 
 10.14  in accordance with section 302A.613 if the parent is a domestic 
 10.15  corporation or in accordance with the laws under which it is 
 10.16  incorporated if the parent is a foreign corporation. 
 10.17     Sec. 14.  Minnesota Statutes 1998, section 302A.621, 
 10.18  subdivision 6, is amended to read: 
 10.19     Subd. 6.  [RIGHTS OF DISSENTING SHAREHOLDERS.] In the event 
 10.20  all of the stock of one or more domestic subsidiaries that is a 
 10.21  constituent party to a merger under this section is not owned by 
 10.22  the parent directly, or indirectly through related corporations, 
 10.23  immediately prior to the merger, the shareholders of each 
 10.24  domestic subsidiary have dissenters' rights under 
 10.25  section sections 302A.471, (without regard to section 302A.471, 
 10.26  subdivision 3) and 302A.473.  If the parent is a constituent 
 10.27  corporation but is not the surviving corporation in the merger, 
 10.28  and the articles of incorporation of the surviving corporation 
 10.29  immediately after the merger differ from the articles of 
 10.30  incorporation of the parent immediately prior to the merger in a 
 10.31  manner that would entitle a shareholder of the parent to 
 10.32  dissenters' rights under section 302A.471, subdivision 1, 
 10.33  paragraph (a), if the articles of incorporation of the surviving 
 10.34  corporation constituted an amendment to the articles of 
 10.35  incorporation of the parent, that shareholder of the parent has 
 10.36  dissenters' rights as provided under sections 302A.471 and 
 11.1   302A.473.  Except as provided in this subdivision, sections 
 11.2   302A.471 and 302A.473 do not apply to any merger effected under 
 11.3   this section. 
 11.4      Sec. 15.  Minnesota Statutes 1998, section 302A.675, 
 11.5   subdivision 2, is amended to read: 
 11.6      Subd. 2.  [EXCEPTION.] Subdivision 1 does not apply if the 
 11.7   proposed acquisition of shares is approved, before the purchase 
 11.8   of any shares by the offeror pursuant to the earlier takeover 
 11.9   offer, by a committee of the board's disinterested directors 
 11.10  before the purchase of any shares by the offeror pursuant to the 
 11.11  earlier takeover offer.  The provisions of section 302A.673, 
 11.12  subdivision 1, paragraph (d), relating to a committee of 
 11.13  disinterested directors, apply to this section board, comprised 
 11.14  solely of directors who: 
 11.15     (1) neither are officers or employees of, nor were during 
 11.16  the five years preceding the formation of the committee officers 
 11.17  or employees of, the corporation or a related organization; 
 11.18     (2) are neither the offerors nor affiliates or associates 
 11.19  of the offeror; 
 11.20     (3) were not nominated for election as directors by the 
 11.21  offeror or an affiliate or associate of the offeror; and 
 11.22     (4) were directors at the time of the first public 
 11.23  announcement of the takeover offer or were nominated, elected, 
 11.24  or recommended for election as directors by a majority of the 
 11.25  directors. 
 11.26     Sec. 16.  [EFFECTIVE DATE.] 
 11.27     Sections 1 to 15 are effective the day following final 
 11.28  enactment. 
 11.29                             ARTICLE 2
 11.30                    LIMITED LIABILITY COMPANIES
 11.31     Section 1.  Minnesota Statutes 1998, section 322B.03, 
 11.32  subdivision 12, is amended to read: 
 11.33     Subd. 12.  [CONSTITUENT ORGANIZATION.] "Constituent 
 11.34  organization" means a limited liability company or a domestic or 
 11.35  corporation or a foreign corporation that is a party to a merger 
 11.36  or an exchange.: 
 12.1      (1) in a merger is either the surviving organization or an 
 12.2   organization that is merged into the surviving organization; or 
 12.3      (2) in an exchange is either the acquiring organization or 
 12.4   an organization whose securities are acquired by the acquiring 
 12.5   organization. 
 12.6      Sec. 2.  Minnesota Statutes 1998, section 322B.03, 
 12.7   subdivision 30, is amended to read: 
 12.8      Subd. 30.  [MEMBER.] "Member" means a person reflected in 
 12.9   the required records of a limited liability company as the owner 
 12.10  of some governance rights of a membership interest of the 
 12.11  limited liability company.  A person may be a member without 
 12.12  having voting rights. 
 12.13     Sec. 3.  Minnesota Statutes 1998, section 322B.03, 
 12.14  subdivision 44, is amended to read: 
 12.15     Subd. 44.  [SERIES.] "Series" means a category of 
 12.16  membership interests, within a class of membership interests, 
 12.17  that have some of the same rights and preferences as other 
 12.18  membership interests within the same class, but that differ in 
 12.19  or one or more rights and preferences from another category of 
 12.20  membership interests within that class. 
 12.21     Sec. 4.  Minnesota Statutes 1998, section 322B.03, 
 12.22  subdivision 45, is amended to read: 
 12.23     Subd. 45.  [SIGNED.] (a) "Signed" means that the signature 
 12.24  of a person has been written on a document, as provided in 
 12.25  section 645.44, subdivision 14, and, with respect to a document 
 12.26  required by this chapter to be filed with the secretary of 
 12.27  state, means that the document has been signed by a person 
 12.28  authorized to do so by this chapter, the articles of 
 12.29  organization, a member control agreement, or operating agreement 
 12.30  or a resolution approved by the governors as required by section 
 12.31  322B.653 or the members as required by section 322B.346. 
 12.32     (b) A signature on a document may be a facsimile affixed, 
 12.33  engraved, printed, placed, stamped with indelible ink, 
 12.34  transmitted by facsimile or electronically, or in any other 
 12.35  manner reproduced on the document. 
 12.36     Sec. 5.  Minnesota Statutes 1998, section 322B.115, 
 13.1   subdivision 1, is amended to read: 
 13.2      Subdivision 1.  [REQUIRED PROVISIONS.] The articles of 
 13.3   organization must contain: 
 13.4      (1) the name of the limited liability company; 
 13.5      (2) the address of the registered office of the limited 
 13.6   liability company and the name of its registered agent, if any, 
 13.7   at that address; 
 13.8      (3) the name and address of each organizer; and 
 13.9      (4) a statement of the period of existence for the limited 
 13.10  liability company if different from the 30-year period set forth 
 13.11  in section 322B.20, subdivision 2. 
 13.12     Sec. 6.  Minnesota Statutes 1998, section 322B.115, 
 13.13  subdivision 2, is amended to read: 
 13.14     Subd. 2.  [STATUTORY PROVISIONS THAT MAY BE MODIFIED ONLY 
 13.15  IN ARTICLES OF ORGANIZATION OR A MEMBER CONTROL AGREEMENT.] The 
 13.16  following provisions govern a limited liability company unless 
 13.17  modified in the articles of organization or a member control 
 13.18  agreement under section 322B.37: 
 13.19     (1) a limited liability company has general business 
 13.20  purposes (section 322B.10); 
 13.21     (2) a limited liability company has certain powers (section 
 13.22  322B.20); 
 13.23     (3) the power to adopt, amend, or repeal the operating 
 13.24  agreement is vested in the board of governors (section 
 13.25  322B.603); 
 13.26     (4) a limited liability company must allow cumulative 
 13.27  voting for governors (section 322B.63); 
 13.28     (5) the affirmative vote of a majority of governors present 
 13.29  is required for an action of the board of governors (section 
 13.30  322B.653); 
 13.31     (6) a written action by the board of governors taken 
 13.32  without a meeting must be signed by all governors (section 
 13.33  322B.656); 
 13.34     (7) the board may accept contributions, make contribution 
 13.35  agreements, and make contribution allowance agreements (sections 
 13.36  322B.40, subdivision 1; 322B.42; and 322B.43); 
 14.1      (8) all membership interests are ordinary membership 
 14.2   interests entitled to vote and are of one class with no series 
 14.3   (section 322B.40, subdivision 5, clauses (1) and (2)); 
 14.4      (9) all membership interests have equal rights and 
 14.5   preferences in all matters not otherwise provided for by the 
 14.6   board of governors (section 322B.40, subdivision 5, clause (2)); 
 14.7      (10) the restatement of value of previous contributions is 
 14.8   to be determined according to a specified process restated when 
 14.9   a new contribution is accepted (section 322B.41, subdivisions 3 
 14.10  and 4); 
 14.11     (11) a member has certain preemptive rights, unless 
 14.12  otherwise provided by the board of governors (section 322B.33); 
 14.13     (12) the affirmative vote of the owners of a majority of 
 14.14  the voting power of the membership interests present and 
 14.15  entitled to vote at a duly held meeting is required for an 
 14.16  action of the members, except where this chapter requires the 
 14.17  affirmative vote of a majority of the voting power of all 
 14.18  membership interests entitled to vote (section 322B.35, 
 14.19  subdivision 1); 
 14.20     (13) the voting power of each membership interest is in 
 14.21  proportion to the value reflected in the required records of the 
 14.22  contributions of the members (section 322B.356); 
 14.23     (14) members share in distributions in proportion to the 
 14.24  value reflected in the required records of the contributions of 
 14.25  members (section 322B.50); 
 14.26     (15) members share profits and losses in proportion to the 
 14.27  value reflected in the required records of the contributions of 
 14.28  members (section 322B.326); 
 14.29     (16) a written action by the members taken without a 
 14.30  meeting must be signed by all members (section 322B.35); 
 14.31     (17) members have no right to receive distributions in kind 
 14.32  and the limited liability company has only limited rights to 
 14.33  make distributions in kind (section 322B.52); 
 14.34     (18) a member is not subject to expulsion (section 
 14.35  322B.306, subdivision 2); 
 14.36     (19) unanimous consent is required for the transfer of 
 15.1   governance rights to a person not already a member (section 
 15.2   322B.313, subdivision 2); and 
 15.3      (20) for limited liability companies whose existence begins 
 15.4   before August 1, 1999, unanimous consent is required to avoid 
 15.5   dissolution (section 322B.80, subdivision 1, clause (5)(B)(i)); 
 15.6      (21) the termination of a person's membership interest has 
 15.7   specified consequences (section 322B.306); and 
 15.8      (22) restrictions apply to the assignment of governance 
 15.9   rights (section 322B.313). 
 15.10     Sec. 7.  Minnesota Statutes 1998, section 322B.115, 
 15.11  subdivision 3, is amended to read: 
 15.12     Subd. 3.  [STATUTORY PROVISIONS THAT MAY BE MODIFIED EITHER 
 15.13  IN ARTICLES OF ORGANIZATION, A MEMBER CONTROL AGREEMENT, OR IN 
 15.14  THE OPERATING AGREEMENT.] The following provisions govern a 
 15.15  limited liability company unless modified in the articles of 
 15.16  organization, a member control agreement under section 322B.37 
 15.17  or in the operating agreement: 
 15.18     (1) governors serve for an indefinite term that expires at 
 15.19  the next regular meeting of members (section 322B.616); 
 15.20     (2) the compensation of governors is fixed by the board of 
 15.21  governors (section 322B.623); 
 15.22     (3) a certain method must be used for removal of governors 
 15.23  (section 322B.636); 
 15.24     (4) a certain method must be used for filling board of 
 15.25  governor vacancies (section 322B.64); 
 15.26     (5) if the board of governors fails to select a place for a 
 15.27  board meeting, it must be held at the principal executive office 
 15.28  (section 322B.643, subdivision 1); 
 15.29     (6) the notice of a board of governors meeting need not 
 15.30  state the purpose of the meeting (section 322B.643, subdivision 
 15.31  3); 
 15.32     (7) a majority of the board of governors is a quorum for a 
 15.33  board meeting (section 322B.65); 
 15.34     (8) a committee consists of one or more persons, who need 
 15.35  not be governors, appointed by affirmative vote of a majority of 
 15.36  the governors present (section 322B.66, subdivision 2); 
 16.1      (9) the board may establish a special litigation committee 
 16.2   (section 322B.66); 
 16.3      (10) the chief manager and treasurer have specified duties, 
 16.4   until the board of governors determines otherwise (section 
 16.5   322B.673); 
 16.6      (11) managers may delegate some or all of their duties and 
 16.7   powers, if not prohibited by the board of governors from doing 
 16.8   so (section 322B.689); 
 16.9      (12) regular meetings of members need not be held, unless 
 16.10  demanded by a member under certain conditions (section 
 16.11  322B.333); 
 16.12     (13) in all instances where a specific minimum notice 
 16.13  period has not otherwise been fixed by law, not less than ten 
 16.14  days' notice is required for a meeting of members (section 
 16.15  322B.34, subdivision 2); 
 16.16     (14) for a quorum at a members' meeting there is required a 
 16.17  majority of the voting power of the membership interests 
 16.18  entitled to vote at the meeting (section 322B.353); 
 16.19     (15) the board of governors may fix a date up to 60 days 
 16.20  before the date of a members' meeting as the date for the 
 16.21  determination of the members entitled to notice of and entitled 
 16.22  to vote at the meeting (section 322B.356, subdivision 1); 
 16.23     (16) indemnification of certain persons is required 
 16.24  (section 322B.699); 
 16.25     (17) the board of governors may authorize, and the limited 
 16.26  liability company may make, distributions not prohibited, 
 16.27  limited, or restricted by an agreement (section 322B.54, 
 16.28  subdivision 1); and 
 16.29     (18) members have no right to interim distributions except 
 16.30  as provided through the operating agreement or an act of the 
 16.31  board of governors (section 322B.51).  
 16.32     Sec. 8.  Minnesota Statutes 1998, section 322B.155, is 
 16.33  amended to read: 
 16.34     322B.155 [CLASS OR SERIES VOTING ON AMENDMENTS.] 
 16.35     The owners of the outstanding membership interests of a 
 16.36  class or series are entitled to vote as a class or series upon a 
 17.1   proposed amendment to the articles of organization, whether or 
 17.2   not entitled to vote on the amendment by the provisions of the 
 17.3   articles of organization, if the amendment would: 
 17.4      (1) effect an exchange, reclassification, or cancellation 
 17.5   of all or part of the membership interests of the class or 
 17.6   series; 
 17.7      (2) effect an exchange, or create a right of exchange, of 
 17.8   all or any part of the membership interests of another class or 
 17.9   series for the membership interests of the class or series; 
 17.10     (3) change the rights or preferences of the membership 
 17.11  interests of the class or series; 
 17.12     (4) change the membership interests of the class or series 
 17.13  into the same or a different number of membership interests of 
 17.14  another class or series; 
 17.15     (5) create a new class or series of membership interests 
 17.16  having rights and preferences prior and superior to the 
 17.17  membership interests of that class or series, or increase the 
 17.18  rights and preferences or the number of membership interests, of 
 17.19  a class or series having rights and preferences prior or 
 17.20  superior to the membership interests of that class or series; 
 17.21     (6) divide the membership interests of the class into 
 17.22  series and determine the designation of each series and the 
 17.23  variations in the relative rights and preferences between the 
 17.24  membership interests of each series or authorize the board of 
 17.25  governors to do so; 
 17.26     (7) limit or deny any existing preemptive rights of the 
 17.27  membership interests of the class or series; or 
 17.28     (8) cancel or otherwise affect distributions on the 
 17.29  membership interests of the class or series. 
 17.30     Sec. 9.  Minnesota Statutes 1998, section 322B.20, 
 17.31  subdivision 1, is amended to read: 
 17.32     Subdivision 1.  [GENERALLY AND LIMITATIONS.] A limited 
 17.33  liability company has the powers set forth in this section, 
 17.34  subject to any limitations provided in any other statute of this 
 17.35  state or in its articles of organization.  The articles may not 
 17.36  limit the powers stated in subdivision 3.  A member control 
 18.1   agreement may limit the powers stated in subdivisions 4 to 24. 
 18.2      Sec. 10.  Minnesota Statutes 1998, section 322B.20, 
 18.3   subdivision 2, is amended to read: 
 18.4      Subd. 2.  [DURATION.] (a) A limited liability company whose 
 18.5   existence begins before August 1, 1999, has a limited duration 
 18.6   of 30 years from the date the articles of organization are filed 
 18.7   with the secretary of state, unless the articles of organization 
 18.8   state a shorter or longer period of duration, which may be 
 18.9   perpetual. 
 18.10     (b) A limited liability company whose existence begins on 
 18.11  or after August 1, 1999, has perpetual duration. 
 18.12     Sec. 11.  Minnesota Statutes 1998, section 322B.30, 
 18.13  subdivision 2, is amended to read: 
 18.14     Subd. 2.  [STATEMENT OF MEMBERSHIP INTEREST.] At the 
 18.15  request of any member, the limited liability company shall state 
 18.16  in writing the particular membership interest owned by that 
 18.17  member as of the moment the limited liability company makes the 
 18.18  statement.  The statement must describe the member's rights to 
 18.19  vote, if any, to share in profits and losses, and to share in 
 18.20  distributions, restrictions on assignments of financial rights 
 18.21  under section 322B.31, subdivision 3, or governance rights under 
 18.22  section 322B.313, subdivision 6, then in effect, as well as any 
 18.23  assignment of the member's rights then in effect other than a 
 18.24  security interest.  The statement is not a certificated security 
 18.25  as defined in section 336.8-102(1)(a), is not a negotiable 
 18.26  instrument, and may not serve as a vehicle by which a transfer 
 18.27  of any membership interest may be effected. 
 18.28     Sec. 12.  Minnesota Statutes 1998, section 322B.306, is 
 18.29  amended to read: 
 18.30     322B.306 [TERMINATION OF A MEMBERSHIP INTEREST.] 
 18.31     Subdivision 1.  [TERMINATION DEFINED; MEMBER'S POWER TO 
 18.32  TERMINATE MEMBERSHIP.] The continued membership of a member in a 
 18.33  limited liability company is terminated by: 
 18.34     (i) the member's death; 
 18.35     (ii) the member's retirement; 
 18.36     (iii) the member's resignation; 
 19.1      (iv) redemption of the member's complete membership 
 19.2   interest; 
 19.3      (v) an assignment of the member's governance rights under 
 19.4   section 322B.313 which leaves the assignor with no governance 
 19.5   rights; 
 19.6      (vi) a buyout of a member's membership interest under 
 19.7   section 322B.833 that leaves that member with no governance 
 19.8   rights; 
 19.9      (vii) the member's expulsion; 
 19.10     (viii) the member's bankruptcy; 
 19.11     (ix) the dissolution of a member that is an organization; 
 19.12     (x) a merger in which the limited liability company is not 
 19.13  the surviving organization; or 
 19.14     (xi) the occurrence of any other event that terminates the 
 19.15  continued membership of a member in the limited liability 
 19.16  company. 
 19.17     A member always has the power, though not necessarily the 
 19.18  right, to terminate its membership by resigning or retiring at 
 19.19  any time.  A member's resignation or retirement, whether 
 19.20  rightful or wrongful, causes dissolution under section 322B.80, 
 19.21  subdivision 1, clause (5), unless dissolution is avoided under 
 19.22  that clause.  A member has no power to transfer all or part of 
 19.23  the member's membership interest, except as provided in sections 
 19.24  322B.31 and 322B.313. 
 19.25     Subd. 2.  [WHEN EXPULSION PERMITTED.] Unless otherwise 
 19.26  provided in the articles of organization or a member control 
 19.27  agreement, a member may not be expelled.  
 19.28     Subd. 3.  [EFFECT OF TERMINATION OF MEMBERSHIP ON THE 
 19.29  GOVERNANCE RIGHTS OF THE TERMINATED MEMBER.] If for any reason 
 19.30  the continued membership of a member is terminated, then subject 
 19.31  to the articles of organization and any member control agreement:
 19.32     (1) if dissolution under section 322B.80, subdivision 1, 
 19.33  clause (5), is avoided under that clause, then the termination 
 19.34  does not result in the dissolution of the limited liability 
 19.35  company, the member whose membership has terminated loses all 
 19.36  governance rights and will be considered merely an assignee of 
 20.1   the financial rights owned before the termination of membership; 
 20.2   and 
 20.3      (2) if dissolution under section 322B.80, subdivision 1, 
 20.4   clause (5), is not avoided under that clause the termination 
 20.5   results in the dissolution of the limited liability company, the 
 20.6   member whose continued membership has terminated retains all 
 20.7   governance rights and financial rights owned before the 
 20.8   termination of the membership and may exercise those rights 
 20.9   through the winding up and termination of the limited liability 
 20.10  company.  
 20.11     Subd. 4.  [ADDITIONAL EFFECTS IF TERMINATION OF MEMBERSHIP 
 20.12  IS WRONGFUL.] If a member resigns or retires in contravention of 
 20.13  the articles of organization or a member control agreement then: 
 20.14     (1) if dissolution avoidance consent is obtained, the 
 20.15  member who has wrongfully resigned or retired is liable to the 
 20.16  limited liability company to the extent damaged by the wrongful 
 20.17  resignation or retirement; and 
 20.18     (2) if dissolution avoidance consent is not obtained, 
 20.19  section 322B.873 applies. 
 20.20     Sec. 13.  Minnesota Statutes 1998, section 322B.31, 
 20.21  subdivision 3, is amended to read: 
 20.22     Subd. 3.  [RESTRICTIONS OF ASSIGNMENT OF FINANCIAL RIGHTS.] 
 20.23  (a) A restriction on the assignment of financial rights may be 
 20.24  imposed in the articles, in a member control agreement, in the 
 20.25  operating agreement, by a resolution adopted by the members, or 
 20.26  by an agreement among or other written action by members or 
 20.27  among them and the limited liability company.  A restriction is 
 20.28  not binding with respect to financial rights reflected in the 
 20.29  required records before the adoption of the restriction, unless 
 20.30  the owners of those financial rights are parties to the 
 20.31  agreement or voted in favor of the restriction.  
 20.32     (b) Subject to paragraph (c), a written restriction on the 
 20.33  assignment of financial rights that is not manifestly 
 20.34  unreasonable under the circumstances and is noted conspicuously 
 20.35  in the required records may be enforced against the owner of the 
 20.36  restricted financial rights or a successor or transferee of the 
 21.1   owner, including a pledgee or a legal representative.  Unless 
 21.2   noted conspicuously in the required records, a restriction, even 
 21.3   though permitted by this section, is ineffective against a 
 21.4   person without knowledge of the restriction.  
 21.5      (c) With regard to restrictions on the assignment of 
 21.6   financial rights, a would-be assignee of financial rights is 
 21.7   entitled to rely on a statement of membership interest issued by 
 21.8   the limited liability company under section 322B.30.  A 
 21.9   restriction on the assignment of financial rights, which is 
 21.10  otherwise valid and in effect at the time of the issuance of a 
 21.11  statement of membership interest but which is not reflected in 
 21.12  that statement, is ineffective against an assignee who takes an 
 21.13  assignment in reliance on the statement. 
 21.14     (d) Notwithstanding any provision of law, articles of 
 21.15  organization, member control agreement, operating agreement, 
 21.16  other agreement, resolution, or action to the contrary, a 
 21.17  security interest in a member's financial rights may be 
 21.18  foreclosed and otherwise enforced, and a secured party may 
 21.19  assign a member's financial rights in accordance with chapter 
 21.20  336, without the consent or approval of the member whose 
 21.21  financial rights are subject to the security interest. 
 21.22     Sec. 14.  Minnesota Statutes 1998, section 322B.313, 
 21.23  subdivision 2, is amended to read: 
 21.24     Subd. 2.  [WHEN UNANIMOUS CONSENT REQUIRED.] Subject to 
 21.25  subdivision 6, a member may, without the consent of any other 
 21.26  member, assign governance rights, in whole or in part, to 
 21.27  another person already a member at the time of the assignment.  
 21.28  Except as otherwise set forth in the articles of organization or 
 21.29  a member control agreement, any other assignment of any 
 21.30  governance rights is effective only if all the members, other 
 21.31  than the member seeking to make the assignment, approve the 
 21.32  assignment by unanimous written consent.  Subject to subdivision 
 21.33  6, a member may grant a security interest in a complete 
 21.34  membership interest or governance rights without obtaining the 
 21.35  consent required by this subdivision.  However, a secured party 
 21.36  may not take or assign ownership of governance rights without 
 22.1   first obtaining the consent required by this subdivision.  If a 
 22.2   secured party has a security interest in both a member's 
 22.3   financial rights and governance rights, including a security 
 22.4   interest in a complete membership interest, this subdivision's 
 22.5   requirement that the secured party obtain consent applies only 
 22.6   to taking or assigning ownership of the governance rights and 
 22.7   does not apply to taking or assigning ownership of the financial 
 22.8   rights. 
 22.9      Sec. 15.  Minnesota Statutes 1998, section 322B.313, 
 22.10  subdivision 3, is amended to read: 
 22.11     Subd. 3.  [EFFECT ON MEMBERSHIP.] When an assignment of 
 22.12  governance rights is effective under subdivision 2: 
 22.13     (1) if the assignment is not a security interest, the 
 22.14  assignee becomes a member, if not already a member; and 
 22.15     (2) if the assignor does not retain any governance rights, 
 22.16  the assignor ceases to be a member and the written consent 
 22.17  required under subdivision 2 also constitutes the dissolution 
 22.18  avoidance consent necessary to avoid dissolution that would 
 22.19  otherwise ensue under section 322B.80, subdivision 1, clause 
 22.20  (5), on account of the assignor ceasing to be a member if the 
 22.21  consent required to avoid dissolution is not greater than the 
 22.22  consent required under subdivision 2. 
 22.23     Sec. 16.  Minnesota Statutes 1998, section 322B.313, 
 22.24  subdivision 7, is amended to read: 
 22.25     Subd. 7.  [FORECLOSURE OF SECURITY INTEREST.] Subject to 
 22.26  subdivision 6, a member may grant a security interest in a 
 22.27  complete membership interest or governance rights without 
 22.28  obtaining the consent required by subdivision 2.  However, a 
 22.29  secured party may not take or assign ownership of governance 
 22.30  rights without first obtaining the consent required by 
 22.31  subdivision 2.  If a secured party has a security interest in 
 22.32  both member's financial rights and governance rights, including 
 22.33  a security interest in a complete membership interest, this 
 22.34  subdivision's requirement that the secured party obtain the 
 22.35  consents required by subdivision 2 applies only to taking or 
 22.36  assigning ownership of the governance rights and does not apply 
 23.1   to taking or assigning ownership of the financial rights.  
 23.2   Notwithstanding any provision of law, articles of organization, 
 23.3   member control agreement, operating agreement, other agreement, 
 23.4   resolution, or action to the contrary, a security interest in a 
 23.5   member's full membership interest or governance rights may be 
 23.6   foreclosed and otherwise enforced, and a secured party may 
 23.7   assign a member's complete membership interest or governance 
 23.8   rights in accordance with chapter 336, all without the consent 
 23.9   or approval of the member whose full membership interest or 
 23.10  governance rights are the subject of the security interest. 
 23.11     Sec. 17.  Minnesota Statutes 1998, section 322B.323, 
 23.12  subdivision 2, is amended to read: 
 23.13     Subd. 2.  [WHEN MEMBERSHIP IS TERMINATED.] If an event 
 23.14  referred to in subdivision 1 causes the termination of a 
 23.15  member's membership interest and the termination does not result 
 23.16  in dissolution is avoided under section 322B.80, subdivision 1, 
 23.17  clause (5), then subject to the articles of organization and any 
 23.18  member control agreement:  
 23.19     (1) as provided in section 322B.306, subdivision 3, the 
 23.20  terminated member's interest will be considered to be merely 
 23.21  that of an assignee of the financial rights owned before the 
 23.22  termination of membership; and 
 23.23     (2) the rights to be exercised by the legal representative 
 23.24  of the terminated member will be limited accordingly. 
 23.25     Sec. 18.  Minnesota Statutes 1998, section 322B.326, is 
 23.26  amended to read: 
 23.27     322B.326 [SHARING OF PROFITS AND LOSSES.] 
 23.28     Unless otherwise provided in the articles of organization, 
 23.29  a member control agreement, or by the board of governors under 
 23.30  section 322B.40, subdivisions 5 and 6, the profits and losses of 
 23.31  a limited liability company are to be allocated among the 
 23.32  members, and among classes and series of members, in proportion 
 23.33  to the value of the contributions of the members reflected in 
 23.34  the required records. 
 23.35     Sec. 19.  Minnesota Statutes 1998, section 322B.33, 
 23.36  subdivision 1, is amended to read: 
 24.1      Subdivision 1.  [PRESUMPTION AND MODIFICATION.] Unless 
 24.2   denied or limited in the articles of organization, a member 
 24.3   control agreement, or by the board of governors pursuant to 
 24.4   section 322B.40, subdivision 5, clause (2), a member of a 
 24.5   limited liability company has the preemptive rights provided in 
 24.6   this section.  
 24.7      Sec. 20.  Minnesota Statutes 1998, section 322B.33, 
 24.8   subdivision 4, is amended to read: 
 24.9      Subd. 4.  [EXEMPTIONS.] Unless otherwise provided in the 
 24.10  articles of organization or a member control agreement, no 
 24.11  preemptive rights according to this section arise as to 
 24.12  contributions to be accepted from others or as to contribution 
 24.13  allowance agreements to be made with others when the 
 24.14  contribution is:  
 24.15     (1) to be made in a form other than money; 
 24.16     (2) to be made or reflected pursuant to a plan of merger or 
 24.17  exchange; 
 24.18     (3) to be made or reflected pursuant to an employee or 
 24.19  incentive benefit plan approved at a meeting by the affirmative 
 24.20  vote of the owners of a majority of the voting power of all 
 24.21  membership interests entitled to vote; 
 24.22     (4) to be made pursuant to a previously made contribution 
 24.23  allowance agreement; or 
 24.24     (5) to be made or reflected pursuant to a plan of 
 24.25  reorganization approved by a court of competent jurisdiction 
 24.26  pursuant to a statute of this state or of the United States.  
 24.27     Sec. 21.  Minnesota Statutes 1998, section 322B.333, 
 24.28  subdivision 1, is amended to read: 
 24.29     Subdivision 1.  [FREQUENCY.] Regular meetings of members 
 24.30  may be held on an annual or other less frequent periodic basis, 
 24.31  but need not be held unless required by the articles of 
 24.32  organization, a member control agreement, or operating agreement 
 24.33  or by subdivision 2.  
 24.34     Sec. 22.  Minnesota Statutes 1998, section 322B.333, 
 24.35  subdivision 3, is amended to read: 
 24.36     Subd. 3.  [TIME AND PLACE.] A regular meeting, if any, must 
 25.1   be held on the day or date and at the time and place fixed by, 
 25.2   or in a manner authorized by, the articles, a member control 
 25.3   agreement, or operating agreement, except that a meeting called 
 25.4   by or at the demand of a member pursuant to subdivision 2 must 
 25.5   be held in the county where the principal executive office of 
 25.6   the limited liability company is located.  
 25.7      Sec. 23.  Minnesota Statutes 1998, section 322B.336, 
 25.8   subdivision 1, is amended to read: 
 25.9      Subdivision 1.  [WHO MAY CALL.] Special meetings of the 
 25.10  members may be called for any purpose or purposes at any time, 
 25.11  by:  
 25.12     (1) the chief manager; 
 25.13     (2) the treasurer; 
 25.14     (3) two or more governors; 
 25.15     (4) a person authorized in the articles, a member control 
 25.16  agreement, or operating agreement to call special meetings; or 
 25.17     (5) a member or members owning ten percent or more of the 
 25.18  voting power of all membership interests entitled to vote.  
 25.19     Sec. 24.  Minnesota Statutes 1998, section 322B.336, 
 25.20  subdivision 3, is amended to read: 
 25.21     Subd. 3.  [TIME AND PLACE.] Special meetings must be held 
 25.22  on the date and at the time and place fixed by the chief 
 25.23  manager, the treasurer, the board of governors, or a person 
 25.24  authorized by the articles, a member control agreement, or 
 25.25  operating agreement to call a meeting, except that a special 
 25.26  meeting called by or at the demand of a member or members 
 25.27  pursuant to subdivision 2 must be held in the county where the 
 25.28  principal executive office is located.  
 25.29     Sec. 25.  Minnesota Statutes 1998, section 322B.34, 
 25.30  subdivision 2, is amended to read: 
 25.31     Subd. 2.  [WHEN GIVEN.] In all instances where a specific 
 25.32  minimum notice period has not otherwise been fixed by law, the 
 25.33  notice must be given at least ten days before the date of the 
 25.34  meeting, or a shorter time provided in the articles of 
 25.35  organization, a member control agreement, or operating 
 25.36  agreement, and not more than 60 days before the date of the 
 26.1   meeting.  
 26.2      Sec. 26.  Minnesota Statutes 1998, section 322B.34, 
 26.3   subdivision 3, is amended to read: 
 26.4      Subd. 3.  [CONTENTS.] The notice must contain the date, 
 26.5   time, and place of the meeting, the information with respect to 
 26.6   dissenters' rights required by section 322B.386, subdivision 2, 
 26.7   if applicable, and any other information required by this 
 26.8   chapter.  In the case of a special meeting, the notice must 
 26.9   contain a statement of the purposes of the meeting.  The notice 
 26.10  may also contain any other information required by the articles 
 26.11  of organization, a member control agreement, or operating 
 26.12  agreement or considered necessary or desirable by the board of 
 26.13  governors or by any other person or persons calling the meeting. 
 26.14     Sec. 27.  Minnesota Statutes 1998, section 322B.343, 
 26.15  subdivision 1, is amended to read: 
 26.16     Subdivision 1.  [ELECTRONIC CONFERENCES.] If and to the 
 26.17  extent authorized in a member control agreement, the operating 
 26.18  agreement, or by the board of governors of a closely held 
 26.19  limited liability company, a conference among members by any 
 26.20  means of communication through which the members may 
 26.21  simultaneously hear each other during the conference constitutes 
 26.22  a regular or special meeting of members, if the same notice is 
 26.23  given of the conference to every owner of membership interests 
 26.24  entitled to vote as would be required by this chapter for a 
 26.25  meeting, and if the membership interests held by the members 
 26.26  participating in the conference would be sufficient to 
 26.27  constitute a quorum at a meeting.  Participation in a conference 
 26.28  by that means constitutes presence at the meeting in person or 
 26.29  by proxy if all the other requirements of section 322B.363 are 
 26.30  met. 
 26.31     Sec. 28.  Minnesota Statutes 1998, section 322B.343, 
 26.32  subdivision 2, is amended to read: 
 26.33     Subd. 2.  [PARTICIPATION BY ELECTRONIC MEANS.] If and to 
 26.34  the extent authorized in a member control agreement, the 
 26.35  operating agreement, or by the board of governors of a closely 
 26.36  held limited liability company, a member may participate in a 
 27.1   regular or special meeting of members not described in 
 27.2   subdivision 1 by any means of communication through which the 
 27.3   member, other members so participating, and all members 
 27.4   physically present at the meeting may simultaneously hear each 
 27.5   other during the meeting.  Participation in a meeting by that 
 27.6   means constitutes presence at the meeting in person or by proxy 
 27.7   if all the other requirements of section 322B.363 are met.  
 27.8      Sec. 29.  Minnesota Statutes 1998, section 322B.346, is 
 27.9   amended to read: 
 27.10     322B.346 [ACT OF MEMBERS.] 
 27.11     Subdivision 1.  [MAJORITY REQUIRED.] The members shall take 
 27.12  action by the affirmative vote of the owners of the greater of: 
 27.13  (1) a majority of the voting power of the membership interests 
 27.14  present and entitled to vote on that item of business; or (2) a 
 27.15  majority of the voting power that would constitute a quorum for 
 27.16  the transaction of business at the meeting, except where this 
 27.17  chapter or, the articles of organization, or a member control 
 27.18  agreement, require a larger proportion.  If the articles or a 
 27.19  member control agreement require a larger proportion than is 
 27.20  required by this chapter for a particular action, the 
 27.21  articles or the member control agreement control.  
 27.22     Subd. 2.  [VOTING BY CLASS OR SERIES.] In any case where a 
 27.23  class or series of membership interests is entitled by this 
 27.24  chapter, the articles of organization, a member control 
 27.25  agreement, or the terms of the membership interests to vote as a 
 27.26  class or series, the matter being voted upon must also receive 
 27.27  the affirmative vote of the owners of the same proportion of the 
 27.28  membership interests present of that class or series, or of the 
 27.29  total outstanding membership interests of that class or series, 
 27.30  as the proportion required pursuant to subdivision 1, unless the 
 27.31  articles or the member control agreement require a larger 
 27.32  proportion.  Unless otherwise stated in the articles, a member 
 27.33  control agreement, or operating agreement in the case of voting 
 27.34  as a class or series, the minimum percentage of the total voting 
 27.35  power of membership interests of the class or series that must 
 27.36  be present is equal to the minimum percentage of all membership 
 28.1   interests entitled to vote required to be present under section 
 28.2   322B.353.  
 28.3      Sec. 30.  Minnesota Statutes 1998, section 322B.35, 
 28.4   subdivision 1, is amended to read: 
 28.5      Subdivision 1.  [METHOD.] An action required or permitted 
 28.6   to be taken at a meeting of the members may be taken by written 
 28.7   action signed by all of the members.  If the articles or a 
 28.8   member control agreement so provide, any action may be taken by 
 28.9   written action signed by the members who own voting power equal 
 28.10  to the voting power that would be required to take the same 
 28.11  action at a meeting of the members at which all members were 
 28.12  present.  
 28.13     Sec. 31.  Minnesota Statutes 1998, section 322B.353, is 
 28.14  amended to read: 
 28.15     322B.353 [QUORUM.] 
 28.16     The owners of a majority of the voting power of the 
 28.17  membership interests entitled to vote at a meeting are a quorum 
 28.18  for the transaction of business, unless a larger or smaller 
 28.19  proportion is provided in the articles, a member control 
 28.20  agreement, or operating agreement.  If a quorum is present when 
 28.21  a duly called or held meeting is convened, the members present 
 28.22  may continue to transact business until adjournment, even though 
 28.23  the withdrawal of members originally present leaves less than 
 28.24  the proportion otherwise required for a quorum.  
 28.25     Sec. 32.  Minnesota Statutes 1998, section 322B.356, 
 28.26  subdivision 1, is amended to read: 
 28.27     Subdivision 1.  [DETERMINATION.] The board of governors may 
 28.28  fix, or authorize a manager to fix, a date not more than 60 
 28.29  days, or a shorter time period provided in the articles of 
 28.30  organization, a member control agreement, or operating 
 28.31  agreement, before the date of a meeting of members as the date 
 28.32  for the determination of the owners of membership interests 
 28.33  entitled to notice of and entitled to vote at the meeting.  When 
 28.34  a date is so fixed, only members on that date are entitled to 
 28.35  notice of and permitted to vote at that meeting of members. 
 28.36     Sec. 33.  Minnesota Statutes 1998, section 322B.356, 
 29.1   subdivision 2, is amended to read: 
 29.2      Subd. 2.  [VOTING POWER.] Unless otherwise provided in the 
 29.3   articles, a member control agreement, or by the board of 
 29.4   governors under section 322B.40, subdivisions 5 and 6, members 
 29.5   have voting power in proportion to the value of the 
 29.6   contributions of the members as reflected in the required 
 29.7   records.  
 29.8      Sec. 34.  Minnesota Statutes 1998, section 322B.356, 
 29.9   subdivision 3, is amended to read: 
 29.10     Subd. 3.  [NONMEMBERS.] The articles of organization or a 
 29.11  member control agreement may give or prescribe the manner of 
 29.12  giving a creditor, security holder, or other person a right to 
 29.13  vote under this section, but no prescription under this 
 29.14  subdivision may have the effect of transferring from an assignor 
 29.15  of financial rights to the assignee the assignor's voting rights.
 29.16     Sec. 35.  Minnesota Statutes 1998, section 322B.363, 
 29.17  subdivision 2, is amended to read: 
 29.18     Subd. 2.  [DURATION.] The appointment of a proxy is valid 
 29.19  for 11 months, unless a longer period is expressly provided in 
 29.20  the appointment.  No appointment is irrevocable and any 
 29.21  agreement purporting to grant an irrevocable proxy is void.  A 
 29.22  member who revokes a proxy is not liable in any way for damages, 
 29.23  restitution, or other claim unless the appointment is coupled 
 29.24  with an interest in the membership interests or the limited 
 29.25  liability company.  
 29.26     Sec. 36.  Minnesota Statutes 1998, section 322B.363, 
 29.27  subdivision 3, is amended to read: 
 29.28     Subd. 3.  [TERMINATION.] An appointment may be terminated 
 29.29  at will, unless the appointment is coupled with an interest, in 
 29.30  which case it shall not be terminated except in accordance with 
 29.31  the terms of an agreement, if any, between the parties to the 
 29.32  appointment.  Termination may be made by filing written notice 
 29.33  of the termination of the appointment with a manager of the 
 29.34  limited liability company, or by filing a new written 
 29.35  appointment of a proxy with a manager of the limited liability 
 29.36  company.  Termination in either manner revokes all prior proxy 
 30.1   appointments and is effective when filed with a manager of the 
 30.2   limited liability company.  
 30.3      Sec. 37.  Minnesota Statutes 1998, section 322B.366, 
 30.4   subdivision 1, is amended to read: 
 30.5      Subdivision 1.  [GENERAL RULE.] Except as provided in 
 30.6   subdivision 2, A written agreement among persons who are then 
 30.7   members or who have signed contribution agreements, relating to 
 30.8   the voting of their membership interests, is valid and 
 30.9   specifically enforceable by and against the parties to the 
 30.10  agreement.  The agreement may override the provisions of section 
 30.11  322B.363, subdivisions 1 to 7, regarding proxies.  
 30.12     Sec. 38.  Minnesota Statutes 1998, section 322B.37, is 
 30.13  amended to read: 
 30.14     322B.37 [MEMBER CONTROL AGREEMENTS.] 
 30.15     Subdivision 1.  [AUTHORIZATION AND SCOPE.] A written 
 30.16  agreement among persons who are then members, including a sole 
 30.17  member, or who have signed contribution agreements, relating to 
 30.18  the control of any phase of the business and affairs of the 
 30.19  limited liability company, its liquidation, dissolution and 
 30.20  termination, or the relations among members or persons who have 
 30.21  signed contribution agreements is valid as provided in 
 30.22  subdivision 2.  Wherever this chapter provides that a particular 
 30.23  result may or must be obtained through a provision in the 
 30.24  articles of organization (other than a provision required by 
 30.25  section 322B.115, subdivision 1, to be contained in the 
 30.26  articles) or in the operating agreement, the same result can be 
 30.27  accomplished through a member control agreement valid under this 
 30.28  section or through a procedure established by a member control 
 30.29  agreement valid under this section.  A member control agreement 
 30.30  may waive, in whole or in part, a member's dissenting rights 
 30.31  under sections 322B.383 and 322B.386, but may not waive 
 30.32  dissenters' rights under section 322B.873, subdivision 2, clause 
 30.33  (1).  A member control agreement relating to any phase or aspect 
 30.34  of the business and affairs of a limited liability company is 
 30.35  valid as provided in subdivision 2 and enforceable as provided 
 30.36  in subdivision 3.  A member control agreement valid under 
 31.1   subdivision 2 may relate to, without limitation, the management 
 31.2   of the limited liability company's business, the declaration and 
 31.3   payment of distributions, the sharing of profits and losses, the 
 31.4   election of governors or managers, the employment of members and 
 31.5   others by the limited liability company, the relations among 
 31.6   members and persons who have signed contribution agreements 
 31.7   (including the termination of continued membership), the 
 31.8   dissolution, termination, and liquidation of the limited 
 31.9   liability company (including the continuation of the limited 
 31.10  liability company's business through a successor organization or 
 31.11  individual), and the arbitration of disputes.  Wherever this 
 31.12  chapter provides that a particular result may or must be 
 31.13  obtained through a provision in the articles of organization 
 31.14  (other than a provision required by section 322B.115, 
 31.15  subdivision 1, to be contained in the articles), in the bylaws, 
 31.16  or by an act of the board, the same result can be accomplished 
 31.17  through a member control agreement valid under this section or 
 31.18  through a procedure established by a member control agreement 
 31.19  valid under this section.  A member control agreement may 
 31.20  allocate to the members authority ordinarily exercised by the 
 31.21  board of governors, allocate to the board of governors authority 
 31.22  ordinarily exercised by the members, or structure the governance 
 31.23  of the limited liability company in any agreed fashion and may 
 31.24  waive, in whole or in part, a member's dissenting rights under 
 31.25  sections 322B.383 and 322B.386. 
 31.26     Subd. 2.  [METHOD OF APPROVAL.] A written agreement among 
 31.27  persons described in subdivision 1 that relates to the control 
 31.28  of or the liquidation, dissolution and termination of the 
 31.29  limited liability company, the relations among them, or any 
 31.30  phase of the business and affairs of the limited liability 
 31.31  company, including, without limitation, the management of its 
 31.32  business, the declaration and payment of distributions, the 
 31.33  sharing of profits and losses, the election of governors or 
 31.34  managers, the employment of members by the limited liability 
 31.35  company, or the arbitration of disputes, is valid, if the 
 31.36  agreement is signed by all persons who are then the members of 
 32.1   the limited liability company, whether or not the members all 
 32.2   have voting power, and all those who have signed contribution 
 32.3   agreements, regardless of whether those signatories will, when 
 32.4   members, have voting power.  An agreement authorized under this 
 32.5   section may allocate to the members authority ordinarily 
 32.6   exercised by the board of governors, allocate to the board of 
 32.7   governors authority ordinarily exercised by the members, or 
 32.8   structure the governance of the limited liability company in any 
 32.9   agreed fashion.  A member control agreement as described in 
 32.10  subdivision 1 is valid if the agreement is in writing and is 
 32.11  signed by the persons who, on the date the agreement first 
 32.12  becomes effective, comprise all the members of the limited 
 32.13  liability company (regardless of voting power), and all persons 
 32.14  who are party to contribution agreements that on that date have 
 32.15  not yet been fully performed (regardless of whether those 
 32.16  parties will, when members, have voting power).  A member 
 32.17  control agreement may also include as parties persons who are 
 32.18  neither members nor parties to a contribution agreement.  A 
 32.19  member control agreement may provide for its amendment through 
 32.20  nonunanimous means. 
 32.21     Subd. 3.  [ENFORCEABILITY AND COPIES.] (a) An A member 
 32.22  control agreement valid under subdivisions 1 and 2 is 
 32.23  enforceable by persons who are parties to it and is binding upon 
 32.24  and enforceable against only those persons and other persons 
 32.25  having knowledge of the existence of the member control 
 32.26  agreement.  A copy of the member control agreement must be filed 
 32.27  with the limited liability company.  The limited liability 
 32.28  company shall note in its required records that the members' 
 32.29  interests are governed by a member control agreement entered 
 32.30  into under this section.  
 32.31     (b) A member control agreement valid under subdivisions 1 
 32.32  and 2 is specifically enforceable. 
 32.33     (c) A member control agreement may waive dissenters' 
 32.34  rights, subject to section 322B.873, subdivision 3.  
 32.35     (d) A member or any assignee of financial rights has the 
 32.36  right upon written demand to obtain a copy of any member control 
 33.1   agreement from the limited liability company at the company's 
 33.2   expense.  
 33.3      Subd. 4.  [LIABILITY.] If an a member control agreement 
 33.4   authorized under this section takes away from any person any of 
 33.5   the authority and responsibility which that person would 
 33.6   otherwise possess under this chapter, the effect of the member 
 33.7   control agreement is also to relieve that person of liability 
 33.8   imposed by law for acts and omissions in the possession or 
 33.9   exercise of that authority and responsibility and to impose that 
 33.10  liability on the person or persons possessing the authority and 
 33.11  responsibility under the agreement. 
 33.12     Subd. 5.  [OTHER AGREEMENTS.] This section does not apply 
 33.13  to, limit, or restrict agreements otherwise valid, nor is the 
 33.14  procedure set forth in this section the exclusive method of 
 33.15  agreement among members or between the members and the limited 
 33.16  liability company with respect to any of the matters described.  
 33.17     Sec. 39.  Minnesota Statutes 1998, section 322B.383, 
 33.18  subdivision 1, is amended to read: 
 33.19     Subdivision 1.  [ACTIONS CREATING DISSENTERS' RIGHTS.] 
 33.20  Subject to a member control agreement under section 322B.37, a 
 33.21  member of a limited liability company may dissent from, and 
 33.22  obtain payment for the fair value of the member's membership 
 33.23  interests in the event of, any of the following limited 
 33.24  liability company actions:  
 33.25     (1) an amendment of the articles of organization that, but 
 33.26  not an amendment to a member control agreement, which materially 
 33.27  and adversely affects the rights or preferences of the 
 33.28  membership interests of the dissenting member in that it:  
 33.29     (i) alters or abolishes a preferential right of the 
 33.30  membership interests; 
 33.31     (ii) creates, alters, or abolishes a right in respect of 
 33.32  the redemption of the membership interests, including a 
 33.33  provision respecting a sinking fund for the redemption or 
 33.34  repurchase of the membership interests; 
 33.35     (iii) alters or abolishes a preemptive right of the owner 
 33.36  of the membership interests to make a contribution; 
 34.1      (iv) excludes or limits the right of a member to vote on a 
 34.2   matter, or to cumulate votes, except as the right may be 
 34.3   excluded or limited through the acceptance of contributions or 
 34.4   the making of contribution agreements pertaining to membership 
 34.5   interests with similar or different voting rights; 
 34.6      (v) changes a member's right to resign or retire; 
 34.7      (vi) establishes or changes the conditions for or 
 34.8   consequences of expulsion; 
 34.9      (vii) changes a statement that was required under section 
 34.10  322B.115, subdivision 1, regarding the power of remaining 
 34.11  members to avoid dissolution by giving dissolution avoidance 
 34.12  consent, if the statement was required under the law when the 
 34.13  articles of organization were executed; 
 34.14     (viii) changes a statement that was required under section 
 34.15  322B.115, subdivision 1, regarding the power of members to enter 
 34.16  into a business continuation agreement, if the statement was 
 34.17  required under the law when the articles of organization were 
 34.18  executed; or 
 34.19     (2) a sale, lease, transfer, or other disposition of all or 
 34.20  substantially all of the property and assets of the limited 
 34.21  liability company, but not including a transaction permitted 
 34.22  without member approval in section 322B.77, subdivision 1, or a 
 34.23  disposition in dissolution described in section 322B.813, 
 34.24  subdivision 4, or a disposition pursuant to an order of a court, 
 34.25  or a disposition for cash on terms requiring that all or 
 34.26  substantially all of the net proceeds of disposition be 
 34.27  distributed to the members in accordance with their respective 
 34.28  membership interests within one year after the date of 
 34.29  disposition; 
 34.30     (3) a plan of merger to which the limited liability company 
 34.31  is a party, except as provided in section 322B.873, subdivision 
 34.32  2, clause (1)(i) and subject to section 322B.873, subdivision 
 34.33  3 constituent organization; 
 34.34     (4) a plan of exchange to which the limited liability 
 34.35  company is a party as the organization whose ownership interests 
 34.36  will be acquired by the acquiring organization, if the 
 35.1   membership interests being acquired are entitled to be voted on 
 35.2   the plan; or 
 35.3      (5) any other limited liability company action taken 
 35.4   pursuant to a member vote with respect to which the articles of 
 35.5   organization, a member control agreement, the operating 
 35.6   agreement, or a resolution approved by the board of governors 
 35.7   directs that dissenting members may obtain payment for their 
 35.8   membership interests; or 
 35.9      (6) a resolution of the board of governors under section 
 35.10  322B.873, subdivision 2, to implement a business continuation 
 35.11  agreement.  
 35.12     Sec. 40.  Minnesota Statutes 1998, section 322B.386, 
 35.13  subdivision 1, is amended to read: 
 35.14     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
 35.15  section, the terms defined in this subdivision have the meanings 
 35.16  given them.  
 35.17     (b) "Limited liability company" means a limited liability 
 35.18  company whose members have obtained rights to dissent under 
 35.19  section 322B.383, subdivision 1, and includes any successor by 
 35.20  merger.  
 35.21     (c) "Fair value of the membership interests" means the 
 35.22  value of the membership interests of a limited liability company 
 35.23  immediately before the effective date of the limited liability 
 35.24  company action referred to in section 322B.383, subdivision 1. 
 35.25     (d) "Interest" means interest beginning five days after the 
 35.26  effective date of the limited liability company action referred 
 35.27  to in section 322B.383, subdivision 1, up to and including the 
 35.28  date of payment, calculated at the rate provided in section 
 35.29  549.09 for interest on verdicts and judgments.  
 35.30     (e) "Member" includes a former member when dissenters' 
 35.31  rights exist because:  
 35.32     (1) the membership of that former member has terminated 
 35.33  causing dissolution; and 
 35.34     (2) the dissolved limited liability company has then either 
 35.35  entered into a winding up merger under section 322B.81, 
 35.36  subdivision 3, or has disposed of its assets pursuant to a 
 36.1   business continuation agreement under section 322B.873, 
 36.2   subdivision 2.  
 36.3      Sec. 41.  Minnesota Statutes 1998, section 322B.386, 
 36.4   subdivision 2, is amended to read: 
 36.5      Subd. 2.  [NOTICE OF ACTION.] If a limited liability 
 36.6   company calls a member meeting at which any action described in 
 36.7   section 322B.383, subdivision 1, is to be voted upon, the notice 
 36.8   of the meeting must inform each member of the right to dissent 
 36.9   and must include a copy of section 322B.383 and this section, 
 36.10  and if applicable, sections 322B.873, subdivisions 2 and 3, and 
 36.11  a brief description of the procedure to be followed under these 
 36.12  sections.  For members who have assigned some or all of their 
 36.13  financial rights, the description must also include the 
 36.14  procedures under subdivision 9.  
 36.15     Sec. 42.  Minnesota Statutes 1998, section 322B.386, 
 36.16  subdivision 4, is amended to read: 
 36.17     Subd. 4.  [NOTICE OF PROCEDURE.] (a) After the proposed 
 36.18  action has been approved by the board of governors and, if 
 36.19  necessary, the members, the limited liability company shall send 
 36.20  to all members who have complied with subdivision 3 and to all 
 36.21  members entitled to dissent if no member vote was required, a 
 36.22  notice that contains: 
 36.23     (1) the address to which a demand for payment must be sent 
 36.24  in order to obtain payment and the date by which the demand must 
 36.25  be received; 
 36.26     (2) a form to be used to certify the date on which the 
 36.27  member acquired the membership interests and to demand payment; 
 36.28  and 
 36.29     (3) a copy of section 322B.383, and this section and, if 
 36.30  applicable, section 322B.873, subdivisions 2 and 3, and a brief 
 36.31  description of the procedures to be followed under these 
 36.32  sections.  
 36.33     (b) In order to receive the fair value of the membership 
 36.34  interests, a dissenting member must demand payment within 30 
 36.35  days after the notice required by paragraph (a) was given, but 
 36.36  the dissenter retains all other rights of a member until the 
 37.1   proposed action takes effect. 
 37.2      Sec. 43.  Minnesota Statutes 1998, section 322B.386, 
 37.3   subdivision 5, is amended to read: 
 37.4      Subd. 5.  [PAYMENT.] (a) After the limited liability 
 37.5   company action takes effect, or after the limited liability 
 37.6   company receives a valid demand for payment, whichever is later, 
 37.7   the limited liability company shall remit to each dissenting 
 37.8   member who has complied with subdivisions 3 and 4 the amount the 
 37.9   limited liability company estimates to be the fair value of the 
 37.10  membership interests, plus interest, accompanied by:  
 37.11     (1) the limited liability company's closing balance sheet 
 37.12  and statement of income for a fiscal year ending not more than 
 37.13  16 months before the effective date of the limited liability 
 37.14  company action, together with the latest available interim 
 37.15  financial statements; 
 37.16     (2) an estimate by the limited liability company of the 
 37.17  fair value of the membership interests and a brief description 
 37.18  of the method used to reach the estimate; and 
 37.19     (3) a copy of section 322B.383, and this section, and, if 
 37.20  applicable, section 322B.873, subdivisions 2 and 3, and a brief 
 37.21  description of the procedure to be followed in demanding 
 37.22  supplemental payment.  
 37.23     (b) The limited liability company may withhold the 
 37.24  remittance described in paragraph (a) from a person who was not 
 37.25  a member on the date the action dissented from was first 
 37.26  announced to the public.  If the dissenter has complied with 
 37.27  subdivisions 3 and 4, the limited liability company shall 
 37.28  forward to the dissenter the materials described in paragraph 
 37.29  (a), a statement of the reason for withholding the remittance, 
 37.30  and an offer to pay to the dissenter the amount listed in the 
 37.31  materials if the dissenter agrees to accept that amount in full 
 37.32  satisfaction.  The dissenter may decline the offer and demand 
 37.33  payment under subdivision 6.  Failure to do so entitles the 
 37.34  dissenter only to the amount offered.  If the dissenter makes 
 37.35  demand, subdivisions 7 and 8 apply.  
 37.36     Sec. 44.  Minnesota Statutes 1998, section 322B.40, 
 38.1   subdivision 1, is amended to read: 
 38.2      Subdivision 1.  [BOARD OF GOVERNORS MAY AUTHORIZE.] Subject 
 38.3   to any restrictions in the articles of organization or a member 
 38.4   control agreement and only when authorized by the board of 
 38.5   governors or pursuant to a member control agreement, a limited 
 38.6   liability company may accept contributions under subdivisions 2 
 38.7   and 3, make contribution agreements under section 322B.42, and 
 38.8   make contribution allowance agreements under section 322B.43.  
 38.9      Sec. 45.  Minnesota Statutes 1998, section 322B.40, 
 38.10  subdivision 5, is amended to read: 
 38.11     Subd. 5.  [TERMS OF MEMBERSHIP INTERESTS.] All the 
 38.12  membership interests of a limited liability company must:  
 38.13     (1) be of one class, without series, unless the articles of 
 38.14  organization or a member control agreement establish, or 
 38.15  authorize the board of governors to establish, more than one 
 38.16  class or series within classes; 
 38.17     (2) be ordinary membership interests entitled to vote as 
 38.18  provided in section 322B.356, and have equal rights and 
 38.19  preferences in all matters not otherwise provided for by the 
 38.20  board of governors unless and to the extent that the articles of 
 38.21  organization or a member control agreement have fixed the 
 38.22  relative rights and preferences of different classes and series; 
 38.23  and 
 38.24     (3) share profits and losses as provided in section 
 38.25  322B.326, and be entitled to distributions as provided in 
 38.26  sections 322B.50, 322B.51, and 322B.873, subdivision 1, clause 
 38.27  (3). 
 38.28     Sec. 46.  Minnesota Statutes 1998, section 322B.40, 
 38.29  subdivision 6, is amended to read: 
 38.30     Subd. 6.  [PROCEDURE FOR FIXING TERMS.] (a) Subject to any 
 38.31  restrictions in the articles of organization or a member control 
 38.32  agreement, the power granted in subdivision 5 may be exercised 
 38.33  by a resolution or resolutions establishing a class or series, 
 38.34  setting forth the designation of the class or series, and fixing 
 38.35  the relative rights and preferences of the class or series.  Any 
 38.36  of the rights and preferences of a class or series established 
 39.1   in the articles of organization, in a member control agreement, 
 39.2   or by resolution of the board of governors:  
 39.3      (1) may be made dependent upon facts ascertainable outside 
 39.4   the articles of organization, or outside the resolution or 
 39.5   resolutions establishing the class or series, if the manner in 
 39.6   which the facts operate upon the rights and preferences of the 
 39.7   class or series is clearly and expressly set forth in the 
 39.8   articles of organization or in the resolution or resolutions 
 39.9   establishing the class or series; and 
 39.10     (2) may incorporate by reference some or all of the terms 
 39.11  of any agreements, contracts, or other arrangements entered into 
 39.12  by the limited liability company in connection with the 
 39.13  establishment of the class or series if the limited liability 
 39.14  company retains at its principal executive office a copy of the 
 39.15  agreements, contracts, or other arrangements or the portions 
 39.16  incorporated by reference.  
 39.17     (b) A statement setting forth the name of the limited 
 39.18  liability company and the text of the resolution and certifying 
 39.19  the adoption of the resolution and the date of adoption must be 
 39.20  filed with the secretary of state before the acceptance of any 
 39.21  contributions for which the resolution creates rights or 
 39.22  preferences not set forth in the articles of organization or a 
 39.23  member control agreement.  However, where the members have 
 39.24  received notice of the creation of membership interests with 
 39.25  rights or preferences not set forth in the articles of 
 39.26  organization or a member control agreement before the acceptance 
 39.27  of the contributions with respect to the membership interests, 
 39.28  the statement may be filed any time within one year after the 
 39.29  acceptance of contributions.  The resolution is effective when 
 39.30  the statement has been filed with the secretary of state; or, if 
 39.31  it is not required to be filed with the secretary of state 
 39.32  before the acceptance of contributions, on the date of its 
 39.33  adoption by the governors.  
 39.34     (c) A statement filed with the secretary of state in 
 39.35  accordance with paragraph (b) is not considered an amendment of 
 39.36  the articles of organization for purposes of sections 322B.155 
 40.1   and 322B.383.  
 40.2      Sec. 47.  Minnesota Statutes 1998, section 322B.41, 
 40.3   subdivision 3, is amended to read: 
 40.4      Subd. 3.  [RESTATEMENT AS TO THE PARTICULAR SERIES OR CLASS 
 40.5   TO WHICH THE NEW CONTRIBUTION PERTAINS.] Unless otherwise 
 40.6   provided in the articles of organization or a member control 
 40.7   agreement, this subdivision states the method of restating the 
 40.8   value of old contributions that pertain to the same series or 
 40.9   class to which the new contribution pertains:  
 40.10     (1) state the value the limited liability company has 
 40.11  accorded to the new contribution under section 322B.40, 
 40.12  subdivision 3, clause (1); 
 40.13     (2) determine what percentage the value stated under clause 
 40.14  (1) will constitute, after the restatement required by this 
 40.15  subdivision, of the total value of all contributions that 
 40.16  pertain to the particular series or class to which the new 
 40.17  contribution pertains; 
 40.18     (3) divide the value stated under clause (1) by the 
 40.19  percentage determined under clause (2), yielding the total 
 40.20  value, after the restatement required by this subdivision, of 
 40.21  all contributions pertaining to the particular series or class; 
 40.22     (4) subtract the value stated under clause (1) from the 
 40.23  value determined under clause (3), yielding the total value, 
 40.24  after the restatement required by this subdivision, of all the 
 40.25  old contributions pertaining to the particular series or class; 
 40.26     (5) subtract the value, as reflected in the required 
 40.27  records before the restatement required by this subdivision, of 
 40.28  the old contributions from the value determined under clause 
 40.29  (4), yielding the value to be allocated among and added to the 
 40.30  old contributions pertaining to the particular series or class; 
 40.31  and 
 40.32     (6) allocate the value determined under clause (5) 
 40.33  proportionally among the old contributions pertaining to the 
 40.34  particular series or class, add the allocated values to those 
 40.35  old contributions, and change the required records accordingly.  
 40.36     The values determined under clause (5) and allocated and 
 41.1   added under clause (6) may be positive, negative, or zero.  
 41.2      Sec. 48.  Minnesota Statutes 1998, section 322B.41, 
 41.3   subdivision 4, is amended to read: 
 41.4      Subd. 4.  [RESTATEMENT METHOD FOR OTHER SERIES OR CLASSES.] 
 41.5   Unless otherwise provided in the articles of organization or a 
 41.6   member control agreement, this subdivision states the method of 
 41.7   restating the value of old contributions that do not pertain to 
 41.8   the same series or class to which the new contribution pertains; 
 41.9      (1) determine the percentage by which the restatement under 
 41.10  subdivision 3 has changed the total contribution value reflected 
 41.11  in the required records for the series or class to which the new 
 41.12  contribution pertains; and 
 41.13     (2) as to each old contribution that does not pertain to 
 41.14  the same series or class to which the new contribution pertains, 
 41.15  change the value reflected in the required records by the 
 41.16  percentage determined under clause (1).  The percentage 
 41.17  determined under clause (1) may be positive, negative, or zero.  
 41.18     Sec. 49.  Minnesota Statutes 1998, section 322B.42, 
 41.19  subdivision 5, is amended to read: 
 41.20     Subd. 5.  [RESTRICTIONS ON ASSIGNMENT.] Unless otherwise 
 41.21  provided in the articles of organization or a member control 
 41.22  agreement, a would-be contributor's rights under a contribution 
 41.23  agreement may not be assigned, in whole or in part, to a person 
 41.24  who was not a member at the time of the assignment, unless all 
 41.25  the members approve the assignment by unanimous written consent. 
 41.26     Sec. 50.  Minnesota Statutes 1998, section 322B.43, 
 41.27  subdivision 1, is amended to read: 
 41.28     Subdivision 1.  [AGREEMENTS PERMITTED.] Subject to any 
 41.29  restrictions in the articles of organization or a member control 
 41.30  agreement, a limited liability company may enter into 
 41.31  contribution allowance agreements under the terms, provisions, 
 41.32  and conditions fixed by the board of governors.  
 41.33     Sec. 51.  Minnesota Statutes 1998, section 322B.43, 
 41.34  subdivision 3, is amended to read: 
 41.35     Subd. 3.  [RESTRICTIONS ON ASSIGNMENT.] Unless otherwise 
 41.36  provided in the articles of organization or a member control 
 42.1   agreement, a would-be contributor's rights under a contribution 
 42.2   allowance agreement may not be assigned in whole or in part to a 
 42.3   person who was not a member at the time of the assignment, 
 42.4   unless all the members approve the assignment by unanimous 
 42.5   written consent.  
 42.6      Sec. 52.  Minnesota Statutes 1998, section 322B.50, is 
 42.7   amended to read: 
 42.8      322B.50 [SHARING OF DISTRIBUTIONS.] 
 42.9      Unless otherwise provided in the articles of organization, 
 42.10  or a member control agreement, or by the board of governors 
 42.11  under section 322B.40, subdivisions 5 and 6, distributions of 
 42.12  cash or other assets of a limited liability company, including 
 42.13  distributions on termination of the limited liability company, 
 42.14  must be allocated in proportion to the value of the 
 42.15  contributions of the members reflected in the required records. 
 42.16     Sec. 53.  Minnesota Statutes 1998, section 322B.51, is 
 42.17  amended to read: 
 42.18     322B.51 [INTERIM DISTRIBUTIONS.] 
 42.19     Except as provided in the articles of organization or a 
 42.20  member control agreement, a member is entitled to receive 
 42.21  distributions before the limited liability company's termination 
 42.22  only as specified in the operating agreement or by the act of 
 42.23  the board of governors.  
 42.24     Sec. 54.  Minnesota Statutes 1998, section 322B.52, is 
 42.25  amended to read: 
 42.26     322B.52 [DISTRIBUTION IN KIND.] 
 42.27     Except as provided in the articles of organization or a 
 42.28  member control agreement, a member, regardless of the nature of 
 42.29  the member's contribution, has no right to demand and receive 
 42.30  any distribution from a limited liability company in any form 
 42.31  other than cash.  Except as provided in the articles of 
 42.32  organization or a member control agreement, a member may not be 
 42.33  compelled to accept a distribution of any asset in kind from a 
 42.34  limited liability company to the extent that the percentage of 
 42.35  the asset distributed to the member exceeds a percentage of that 
 42.36  asset that is equal to the percentage in which the member shares 
 43.1   in distributions from the limited liability company.  
 43.2      Sec. 55.  Minnesota Statutes 1998, section 322B.54, 
 43.3   subdivision 1, is amended to read: 
 43.4      Subdivision 1.  [WHEN DISTRIBUTIONS ARE PERMITTED.] (a) The 
 43.5   board of governors may authorize and cause the limited liability 
 43.6   company to make a distribution only if the board of governors 
 43.7   determines, in accordance with subdivision 2, that the limited 
 43.8   liability company will be able to pay its debts in the ordinary 
 43.9   course of business after making the distribution and the board 
 43.10  of governors does not know before the distribution is made that 
 43.11  the determination was or has become erroneous. 
 43.12     (b) The limited liability company may make the distribution 
 43.13  if it is able to pay its debts in the ordinary course of 
 43.14  business after making the distribution.  
 43.15     (c) The effect of a distribution on the ability of the 
 43.16  limited liability company to pay its debts in the ordinary 
 43.17  course of business after making the distribution must be 
 43.18  measured in accordance with subdivision 3.  
 43.19     (d) The right of the board of governors to authorize, and 
 43.20  the limited liability company to make, distributions may be 
 43.21  prohibited, limited, or restricted by the articles of 
 43.22  organization, a member control agreement, or operating agreement 
 43.23  or an agreement. 
 43.24     Sec. 56.  Minnesota Statutes 1998, section 322B.56, 
 43.25  subdivision 1, is amended to read: 
 43.26     Subdivision 1.  [LIABILITY.] In addition to any other 
 43.27  liabilities, a governor who is present at a meeting and fails to 
 43.28  vote against, or who consents in writing to, a distribution made 
 43.29  in violation of section 322B.54, subdivision 1 or 4, or a 
 43.30  restriction contained in the articles of organization, a member 
 43.31  control agreement, or operating agreement or an agreement, and 
 43.32  who fails to comply with the standard of conduct provided in 
 43.33  section 322B.663, is liable to the limited liability company, 
 43.34  its receiver or any other person winding up its affairs jointly 
 43.35  and severally with all other governors so liable and to other 
 43.36  governors under subdivision 3, but only to the extent that the 
 44.1   distribution exceeded the amount that properly could have been 
 44.2   paid under section 322B.54.  
 44.3      Sec. 57.  Minnesota Statutes 1998, section 322B.603, is 
 44.4   amended to read: 
 44.5      322B.603 [OPERATING AGREEMENT BYLAWS.] 
 44.6      Subdivision 1.  [GENERALLY.] A limited liability company 
 44.7   may, but need not, have bylaws, which may, but need not, be 
 44.8   known as an operating agreement.  The operating agreement may 
 44.9   contain any provision relating to the management of the business 
 44.10  or the regulation of the affairs of the limited liability 
 44.11  company not inconsistent with law or the articles of 
 44.12  organization.  An act of the board under subdivision 2 and of 
 44.13  the members under subdivision 3 will be considered part of the 
 44.14  operating agreement only if the act expressly states that it is 
 44.15  intended to constitute or revise the operating agreement. 
 44.16     Subd. 2.  [POWER OF BOARD OF GOVERNORS.] An initial 
 44.17  operating agreement may be adopted pursuant to section 322B.60 
 44.18  by the organizers or by the first board of governors.  Unless 
 44.19  reserved by the articles of organization or a member control 
 44.20  agreement to the members, the power to adopt, amend, or repeal 
 44.21  the operating agreement is vested in the board of governors.  
 44.22  The power of the board of governors is subject to the power of 
 44.23  the members, exercisable in the manner provided in subdivision 
 44.24  3, to adopt, amend, or repeal the operating agreement adopted, 
 44.25  amended, or repealed by the board of governors.  After the 
 44.26  adoption of the initial operating agreement, the board of 
 44.27  governors shall not adopt, amend, or repeal an operating 
 44.28  agreement provision fixing a quorum for meetings of members, 
 44.29  prescribing procedures for removing governors or filling 
 44.30  vacancies in the board of governors, or fixing the number of 
 44.31  governors or their classifications, qualifications, or terms of 
 44.32  office, but may adopt or amend an operating agreement provision 
 44.33  to increase the number of governors. 
 44.34     Subd. 3.  [POWER OF MEMBERS AND PROCEDURE.] If a member or 
 44.35  members owning three percent or more of the voting power of the 
 44.36  members entitled to vote propose a resolution for action by the 
 45.1   members to adopt, amend, or repeal operating agreement 
 45.2   provisions adopted, amended, or repealed by the board of 
 45.3   governors and the resolution sets forth the provision or 
 45.4   provisions proposed for adoption, amendment, or repeal, the 
 45.5   limitations and procedures for submitting, considering, and 
 45.6   adopting the resolution are the same as provided in section 
 45.7   322B.15, subdivisions 2 to 4, for amendment of the articles of 
 45.8   organization.  
 45.9      Sec. 58.  Minnesota Statutes 1998, section 322B.606, 
 45.10  subdivision 1, is amended to read: 
 45.11     Subdivision 1.  [BOARD OF GOVERNORS TO MANAGE.] The 
 45.12  business and affairs of a limited liability company is to be 
 45.13  managed by or under the direction of a board of governors, 
 45.14  subject to the provisions of subdivision 2 and section 322B.37. 
 45.15  The first board of governors may be named in the articles of 
 45.16  organization or a member control agreement or elected by the 
 45.17  organizers pursuant to section 322B.60 or by the members. 
 45.18     Sec. 59.  Minnesota Statutes 1998, section 322B.61, is 
 45.19  amended to read: 
 45.20     322B.61 [NUMBER.] 
 45.21     The board of governors consists of one or more governors.  
 45.22  The number of governors must be fixed by or in the manner 
 45.23  provided in the articles of organization, a member control 
 45.24  agreement, or the operating agreement.  The number of governors 
 45.25  may be increased or, subject to section 322B.636, decreased at 
 45.26  any time by amendment to or in the manner provided in the 
 45.27  articles, a member control agreement, or operating agreement.  
 45.28     Sec. 60.  Minnesota Statutes 1998, section 322B.613, is 
 45.29  amended to read: 
 45.30     322B.613 [QUALIFICATIONS AND ELECTION.] 
 45.31     Governors must be natural persons.  The method of election 
 45.32  and any additional qualifications for governors may be imposed 
 45.33  by or in the manner provided in the articles, a member control 
 45.34  agreement, or operating agreement.  
 45.35     Sec. 61.  Minnesota Statutes 1998, section 322B.616, is 
 45.36  amended to read: 
 46.1      322B.616 [TERMS.] 
 46.2      Unless fixed terms are provided for in the articles, a 
 46.3   member control agreement, or operating agreement, a governor 
 46.4   serves for an indefinite term that expires at the next regular 
 46.5   meeting of the members.  A fixed term of a governor must not 
 46.6   exceed five years.  A governor holds office for the term for 
 46.7   which the governor was elected and until a successor is elected 
 46.8   and has qualified, or until the earlier death, resignation, 
 46.9   removal, or disqualification of the governor.  
 46.10     Sec. 62.  Minnesota Statutes 1998, section 322B.623, is 
 46.11  amended to read: 
 46.12     322B.623 [COMPENSATION.] 
 46.13     Subject to any limitations in the articles, a member 
 46.14  control agreement, or operating agreement, the board of 
 46.15  governors may fix the compensation of governors.  
 46.16     Sec. 63.  Minnesota Statutes 1998, section 322B.626, is 
 46.17  amended to read: 
 46.18     322B.626 [CLASSIFICATION OF GOVERNORS.] 
 46.19     Governors may be divided into classes as provided in the 
 46.20  articles, a member control agreement, or operating agreement. 
 46.21     Sec. 64.  Minnesota Statutes 1998, section 322B.63, 
 46.22  subdivision 1, is amended to read: 
 46.23     Subdivision 1.  [VOTING RIGHTS.] Unless the articles of 
 46.24  organization or a member control agreement provide that there is 
 46.25  no cumulative voting, and except as provided in section 
 46.26  322B.636, subdivision 5, each member entitled to vote for 
 46.27  governors has the right to cumulate voting power in the election 
 46.28  of governors by giving written notice of intent to cumulate 
 46.29  voting power to any manager of the limited liability company 
 46.30  before the meeting, or to the presiding manager at the meeting 
 46.31  at which the election is to occur at any time before the 
 46.32  election of governors at the meeting, in which case: 
 46.33     (1) the presiding manager at the meeting shall announce, 
 46.34  before the election of governors, that members shall cumulate 
 46.35  their voting power; and 
 46.36     (2) each member shall cumulate that voting power either by 
 47.1   casting for one candidate the amount of voting power equal to 
 47.2   the number of governors to be elected multiplied by the voting 
 47.3   power represented by the membership interests owned by that 
 47.4   member, or by distributing all of that voting power on the same 
 47.5   principle among any number of candidates.  
 47.6      Sec. 65.  Minnesota Statutes 1998, section 322B.636, 
 47.7   subdivision 1, is amended to read: 
 47.8      Subdivision 1.  [MODIFICATION.] The provisions of this 
 47.9   section apply unless modified by the articles of organization, a 
 47.10  member control agreement, or the operating agreement.  
 47.11     Sec. 66.  Minnesota Statutes 1998, section 322B.636, 
 47.12  subdivision 3, is amended to read: 
 47.13     Subd. 3.  [REMOVAL BY MEMBERS.] Except as provided in 
 47.14  subdivision 4, any one or all of the governors may be removed at 
 47.15  any time, with or without cause, by the affirmative vote of the 
 47.16  owners of the proportion a majority of the voting power of the 
 47.17  all membership interests of the classes or series the governor 
 47.18  represents sufficient to elect them, except as provided in 
 47.19  subdivision 4 entitled to vote at an election of governors; 
 47.20  provided that if a governor has been elected solely by the 
 47.21  holders of a class or series of membership interests, as stated 
 47.22  in the articles, any member control agreement, or bylaws, then 
 47.23  that governor may be removed only by the affirmative vote of the 
 47.24  holders of a majority of the voting power of all membership 
 47.25  interests of that class or series entitled to vote at an 
 47.26  election of that governor. 
 47.27     Sec. 67.  Minnesota Statutes 1998, section 322B.64, is 
 47.28  amended to read: 
 47.29     322B.64 [VACANCIES.] 
 47.30     Unless different rules for filling vacancies are provided 
 47.31  for in the articles, a member control agreement, or operating 
 47.32  agreement:  
 47.33     (1)(i) vacancies on the board of governors resulting from 
 47.34  the death, resignation, removal, or disqualification of a 
 47.35  governor may be filled by the affirmative vote of a majority of 
 47.36  the remaining governors, even though less than a quorum; and 
 48.1      (ii) vacancies on the board of governors resulting from 
 48.2   newly created governorships may be filled by the affirmative 
 48.3   vote of a majority of the governors serving at the time of the 
 48.4   increase; and 
 48.5      (2) each governor elected under this section to fill a 
 48.6   vacancy holds office until a qualified successor is elected by 
 48.7   the members at the next regular or special meeting of the 
 48.8   members.  
 48.9      Sec. 68.  Minnesota Statutes 1998, section 322B.643, 
 48.10  subdivision 1, is amended to read: 
 48.11     Subdivision 1.  [TIME AND PLACE.] Meetings of the board of 
 48.12  governors may be held from time to time as provided in the 
 48.13  articles of organization, a member control agreement, or 
 48.14  operating agreement at any place within or without the state 
 48.15  that the board of governors may select or by any means described 
 48.16  in subdivision 2.  If the board of governors fails to select a 
 48.17  place for a meeting, the meeting must be held at the principal 
 48.18  executive office, unless the articles, a member control 
 48.19  agreement, or operating agreement provide otherwise. 
 48.20     Sec. 69.  Minnesota Statutes 1998, section 322B.643, 
 48.21  subdivision 3, is amended to read: 
 48.22     Subd. 3.  [CALLING MEETINGS AND NOTICE.] Unless the 
 48.23  articles of organization, a member control agreement, or 
 48.24  operating agreement provide for a different time period, a 
 48.25  governor may call a board meeting by giving at least ten days' 
 48.26  notice or, in the case of organizational meetings under section 
 48.27  322B.60, subdivision 2, at least three days' notice to all 
 48.28  governors of the date, time, and place of the meeting.  The 
 48.29  notice need not state the purpose of the meeting unless the 
 48.30  articles, a member control agreement, or operating agreement 
 48.31  require it.  
 48.32     Sec. 70.  Minnesota Statutes 1998, section 322B.643, 
 48.33  subdivision 4, is amended to read: 
 48.34     Subd. 4.  [PREVIOUSLY SCHEDULED MEETINGS.] If the day or 
 48.35  date, time, and place of a board of governors meeting have been 
 48.36  provided in the articles, a member control agreement, or 
 49.1   operating agreement, or announced at a previous meeting of the 
 49.2   board of governors, no notice is required.  Notice of an 
 49.3   adjourned meeting need not be given other than by announcement 
 49.4   at the meeting at which adjournment is taken.  
 49.5      Sec. 71.  Minnesota Statutes 1998, section 322B.646, is 
 49.6   amended to read: 
 49.7      322B.646 [ABSENT GOVERNORS.] 
 49.8      If the articles of organization, a member control 
 49.9   agreement, or operating agreement so provide, a governor may 
 49.10  give advance written consent or opposition to a proposal to be 
 49.11  acted on at a board of governors meeting.  If the governor is 
 49.12  not present at the meeting, consent or opposition to a proposal 
 49.13  does not constitute presence for purposes of determining the 
 49.14  existence of a quorum, but consent or opposition must be counted 
 49.15  as the vote of a governor present at the meeting in favor of or 
 49.16  against the proposal and must be entered in the minutes or other 
 49.17  record of action at the meeting, if the proposal acted on at the 
 49.18  meeting is substantially the same or has substantially the same 
 49.19  effect as the proposal to which the governor has consented or 
 49.20  objected.  
 49.21     Sec. 72.  Minnesota Statutes 1998, section 322B.65, is 
 49.22  amended to read: 
 49.23     322B.65 [QUORUM.] 
 49.24     A majority, or a larger or smaller proportion or number 
 49.25  provided in the articles of organization, a member control 
 49.26  agreement, or operating agreement, of the governors currently 
 49.27  holding office is a quorum for the transaction of business.  In 
 49.28  the absence of a quorum, a majority of the governors present may 
 49.29  adjourn a meeting from time to time until a quorum is present.  
 49.30  If a quorum is present when a duly called or held meeting is 
 49.31  convened, the governors present may continue to transact 
 49.32  business until adjournment, even though the withdrawal of a 
 49.33  number of governors originally present leaves less than the 
 49.34  proportion or number otherwise required for a quorum.  
 49.35     Sec. 73.  Minnesota Statutes 1998, section 322B.653, is 
 49.36  amended to read: 
 50.1      322B.653 [ACT OF THE BOARD OF GOVERNORS.] 
 50.2      The board of governors shall take action by the affirmative 
 50.3   vote of the greater of (1) a majority of governors present at a 
 50.4   duly held meeting at the time the action is taken, or (2) a 
 50.5   majority of the minimum proportion of or number of governors 
 50.6   that would constitute a quorum for the transaction of business 
 50.7   at the meeting, except where this chapter or, the articles, or a 
 50.8   member control agreement require the affirmative vote of a 
 50.9   larger proportion or number.  If the articles or a member 
 50.10  control agreement require a larger proportion or number than is 
 50.11  required by this chapter for a particular action, the 
 50.12  articles or member control agreement control.  
 50.13     Sec. 74.  Minnesota Statutes 1998, section 322B.656, 
 50.14  subdivision 1, is amended to read: 
 50.15     Subdivision 1.  [METHOD.] An action required or permitted 
 50.16  to be taken at a board of governors meeting may be taken by 
 50.17  written action signed by all of the governors.  If the 
 50.18  articles or a member control agreement so provide, any action, 
 50.19  other than an action requiring member approval, may be taken by 
 50.20  written action signed by the number of governors that would be 
 50.21  required to take the same action at a meeting of the board of 
 50.22  governors at which all governors were present.  
 50.23     Sec. 75.  Minnesota Statutes 1998, section 322B.66, 
 50.24  subdivision 2, is amended to read: 
 50.25     Subd. 2.  [MEMBERSHIP.] Committee members must be natural 
 50.26  persons.  Unless the articles, or a member control agreement, or 
 50.27  operating agreement provide for a different membership or manner 
 50.28  of appointment, a committee consists of one or more persons, who 
 50.29  need not be governors, appointed by affirmative vote of a 
 50.30  majority of the governors present. 
 50.31     Sec. 76.  Minnesota Statutes 1998, section 322B.663, 
 50.32  subdivision 4, is amended to read: 
 50.33     Subd. 4.  [ELIMINATION OR LIMITATION OF LIABILITY.] A 
 50.34  governor's personal liability to the limited liability company 
 50.35  or its members for monetary damages for breach of fiduciary duty 
 50.36  as a governor may be eliminated or limited in the articles of 
 51.1   organization or a member control agreement.  Neither the 
 51.2   articles nor a member control agreement may not eliminate or 
 51.3   limit the liability of a governor:  
 51.4      (1) for any breach of the governor's duty of loyalty to the 
 51.5   limited liability company or its members; 
 51.6      (2) for acts or omissions not in good faith or that involve 
 51.7   intentional misconduct or a knowing violation of law; 
 51.8      (3) under section 80A.23 or 322B.56; 
 51.9      (4) for any transaction from which the governor derived an 
 51.10  improper personal benefit; or 
 51.11     (5) for any act or omission occurring before the date when 
 51.12  the provision in the articles of organization or a member 
 51.13  control agreement eliminating or limiting liability becomes 
 51.14  effective. 
 51.15     Sec. 77.  Minnesota Statutes 1998, section 322B.666, 
 51.16  subdivision 1, is amended to read: 
 51.17     Subdivision 1.  [CONFLICT AND PROCEDURE WHEN CONFLICT 
 51.18  ARISES.] A contract or other transaction between a limited 
 51.19  liability company and one or more of its governors, or between a 
 51.20  limited liability company and an organization in or of which one 
 51.21  or more of its governors are governors, directors, managers, 
 51.22  officers, or legal representatives or have a material financial 
 51.23  interest, is not void or voidable because the governor or 
 51.24  governors or the other organizations are parties or because the 
 51.25  governor or governors are present at the meeting of the members 
 51.26  or the board of governors or a committee at which the contract 
 51.27  or transaction is authorized, approved, or ratified, if:  
 51.28     (1) the contract or transaction was, and the person 
 51.29  asserting the validity of the contract or transaction sustains 
 51.30  the burden of establishing that the contract or transaction was, 
 51.31  fair and reasonable as to the limited liability company at the 
 51.32  time it was authorized, approved, or ratified; 
 51.33     (2) the material facts as to the contract or transaction 
 51.34  and as to the manager's governor's or managers' governors' 
 51.35  interest are fully disclosed or known to the members and the 
 51.36  contract or transaction is approved in good faith by (i) the 
 52.1   owners of two-thirds of the voting power of the membership 
 52.2   interests entitled to vote that are owned by persons other than 
 52.3   the interested governor or governors, or (ii) the unanimous 
 52.4   affirmative vote of all members, whether or not entitled to 
 52.5   vote; 
 52.6      (3) the material facts as to the contract or transaction 
 52.7   and as to the governor's or governors' interest are fully 
 52.8   disclosed or known to the board of governors or a committee, and 
 52.9   the board of governors or committee authorizes, approves, or 
 52.10  ratifies the contract or transaction in good faith by a majority 
 52.11  of the board of governors or committee, but the interested 
 52.12  governor or governors are not counted in determining the 
 52.13  presence of a quorum and must not vote; or 
 52.14     (4) the contract or transaction is a distribution described 
 52.15  in section 322B.54, subdivision 1, or a merger or exchange 
 52.16  described in section 322B.70, subdivision 1 or 2. 
 52.17     Sec. 78.  Minnesota Statutes 1998, section 322B.673, 
 52.18  subdivision 1, is amended to read: 
 52.19     Subdivision 1.  [PRESUMPTION AND MODIFICATION.] Unless the 
 52.20  articles of organization, a member control agreement, or the 
 52.21  operating agreement provide otherwise, the chief manager and 
 52.22  treasurer have the duties specified in this section.  
 52.23     Sec. 79.  Minnesota Statutes 1998, section 322B.673, 
 52.24  subdivision 2, is amended to read: 
 52.25     Subd. 2.  [CHIEF MANAGER.] The chief manager shall:  
 52.26     (1) have general active management of the business of the 
 52.27  limited liability company; 
 52.28     (2) when present, preside at all meetings of the board of 
 52.29  governors and of the members; 
 52.30     (3) see that all orders and resolutions of the board of 
 52.31  governors are carried into effect; 
 52.32     (4) sign and deliver in the name of the limited liability 
 52.33  company any deeds, mortgages, bonds, contracts or other 
 52.34  instruments pertaining to the business of the limited liability 
 52.35  company, except in cases in which the authority to sign and 
 52.36  deliver is required by law to be exercised by another person or 
 53.1   is expressly delegated by the articles, a member control 
 53.2   agreement, or operating agreement or the board of governors to 
 53.3   some other manager or agent of the limited liability company; 
 53.4      (5) maintain records of and, whenever necessary, certify 
 53.5   all proceedings of the board of governors and the members; and 
 53.6      (6) perform other duties prescribed by the board of 
 53.7   governors.  
 53.8      Sec. 80.  Minnesota Statutes 1998, section 322B.676, is 
 53.9   amended to read: 
 53.10     322B.676 [OTHER MANAGERS.] 
 53.11     The board of governors may elect or appoint, in a manner 
 53.12  set forth in the articles of organization, a member control 
 53.13  agreement, or operating agreement or in a resolution approved by 
 53.14  the affirmative vote of a majority of the governors present, any 
 53.15  other managers or agents the board of governors considers 
 53.16  necessary for the operation and management of the limited 
 53.17  liability company.  Each of these managers and agents has the 
 53.18  powers, rights, duties, responsibilities, and terms in office 
 53.19  provided for in the articles, a member control agreement, or 
 53.20  operating agreement or determined by the board of governors.  
 53.21     Sec. 81.  Minnesota Statutes 1998, section 322B.686, 
 53.22  subdivision 3, is amended to read: 
 53.23     Subd. 3.  [VACANCY.] A vacancy in an office because of 
 53.24  death, resignation, removal, disqualification, or other cause 
 53.25  may, or in the case of a vacancy in the office of chief manager 
 53.26  or treasurer must, be filled for the unexpired portion of the 
 53.27  term in the manner provided in the articles, a member control 
 53.28  agreement, or operating agreement, or determined by the board of 
 53.29  governors, or pursuant to section 322B.68.  
 53.30     Sec. 82.  Minnesota Statutes 1998, section 322B.689, is 
 53.31  amended to read: 
 53.32     322B.689 [DELEGATION.] 
 53.33     Unless prohibited by the articles, a member control 
 53.34  agreement, or operating agreement or by a resolution approved by 
 53.35  the affirmative vote of a majority of the governors present, a 
 53.36  manager elected or appointed by the board of governors may, 
 54.1   without the approval of the board, delegate some or all of the 
 54.2   duties and powers of an office to other persons.  A manager who 
 54.3   delegates the duties or powers of an office remains subject to 
 54.4   the standard of conduct for a manager with respect to the 
 54.5   discharge of all duties and powers so delegated. 
 54.6      Sec. 83.  Minnesota Statutes 1998, section 322B.699, 
 54.7   subdivision 4, is amended to read: 
 54.8      Subd. 4.  [PROHIBITION OR LIMIT ON INDEMNIFICATION OR 
 54.9   ADVANCES.] The articles of organization, a member control 
 54.10  agreement, or operating agreement either may prohibit 
 54.11  indemnification or advances of expenses otherwise required by 
 54.12  this section or may impose conditions on indemnification or 
 54.13  advances of expenses in addition to the conditions contained in 
 54.14  subdivisions 2 and 3 including, without limitation, monetary 
 54.15  limits on indemnification or advances of expenses, if the 
 54.16  conditions apply equally to all persons or to all persons within 
 54.17  a given class.  A prohibition or limit on indemnification or 
 54.18  advances may not apply to or affect the right of a person to 
 54.19  indemnification or advances of expenses with respect to any acts 
 54.20  or omissions of the person occurring before the effective date 
 54.21  of a provision in the articles of organization, a member control 
 54.22  agreement, or the date of adoption of a provision in the 
 54.23  operating agreement establishing the prohibition or limit on 
 54.24  indemnification or advances.  
 54.25     Sec. 84.  Minnesota Statutes 1998, section 322B.72, 
 54.26  subdivision 1, is amended to read: 
 54.27     Subdivision 1.  [GOVERNING BOARD APPROVAL AND NOTICE TO 
 54.28  OWNERS.] A resolution containing the plan of merger or exchange 
 54.29  must be approved by the affirmative vote of a majority of the 
 54.30  board members present at a meeting of the governing board of 
 54.31  each constituent organization and must then be submitted at a 
 54.32  regular or a special meeting to the owners of: 
 54.33     (1) each constituent organization, in the case of a plan of 
 54.34  merger; and 
 54.35     (2) the organization whose ownership interests will be 
 54.36  acquired by the acquiring organization in the exchange, in the 
 55.1   case of a plan of exchange. 
 55.2   The plan of merger or exchange may require that it be submitted 
 55.3   to the owners whether or not the governing board determines at 
 55.4   any time after the governing board's initial approval of the 
 55.5   plan that the plan is no longer advisable and recommends that 
 55.6   the owners reject it.  If owners owning any class or series 
 55.7   of stock ownership interest of an organization are entitled to 
 55.8   vote on the plan of merger or exchange pursuant to this section, 
 55.9   written notice must be given to every owner of that 
 55.10  organization, whether or not entitled to vote at the meeting, 
 55.11  not less than 14 days nor more than 60 days before the meeting, 
 55.12  in the manner provided in section 302A.435 for notice of 
 55.13  meetings of shareholders in the case of a domestic corporation 
 55.14  and in the manner provided in section 322B.34 for notice of 
 55.15  meetings of members in the case of a limited liability company.  
 55.16  The written notice must state that a purpose of the meeting is 
 55.17  to consider the proposed plan of merger or exchange.  A copy or 
 55.18  short description of the plan of merger or exchange must be 
 55.19  included in or enclosed with the notice. 
 55.20     Sec. 85.  Minnesota Statutes 1998, section 322B.72, 
 55.21  subdivision 2, is amended to read: 
 55.22     Subd. 2.  [APPROVAL BY OWNERS.] (a) At the meeting a vote 
 55.23  of the owners must be taken on the proposed plan.  The plan of 
 55.24  merger or exchange is adopted when approved by the affirmative 
 55.25  vote of the owners of a majority of the voting power of all 
 55.26  ownership interests entitled to vote.  Except as provided in 
 55.27  paragraph (b) or a member control agreement, a class or series 
 55.28  of ownership interests of the organization is entitled to vote 
 55.29  as a class or series if any provision of the plan would, if 
 55.30  contained in a proposed amendment to the articles of 
 55.31  organization entitle the class or series of ownership interests 
 55.32  to vote as a class or series and, in the case of an exchange, if 
 55.33  the class or series is included in the exchange.  
 55.34     (b) A class or series of ownership interests of the 
 55.35  organization is not entitled to vote as a class or series solely 
 55.36  because the plan of merger effects a cancellation of the 
 56.1   ownership interests of the class or series if the plan of merger 
 56.2   effects a cancellation of all ownership interests of the 
 56.3   organization of all classes and series that are existing 
 56.4   immediately before the merger and owners of ownership interests 
 56.5   of that class or series are entitled to obtain payment for the 
 56.6   fair value of their shares under section 322B.383 in the event 
 56.7   of the merger. 
 56.8      Sec. 86.  Minnesota Statutes 1998, section 322B.80, 
 56.9   subdivision 1, is amended to read: 
 56.10     Subdivision 1.  [DISSOLUTION EVENTS.] A limited liability 
 56.11  company dissolves upon the occurrence of any of the following 
 56.12  events:  
 56.13     (1) when the period, if any, fixed in the articles of 
 56.14  organization for the duration of the limited liability company 
 56.15  expires, or if the limited liability company's term expires 
 56.16  pursuant to section 322B.20, subdivision 2, paragraph (a); 
 56.17     (2) by order of a court pursuant to sections 322B.833 and 
 56.18  322B.843; 
 56.19     (3) by action of the organizers pursuant to section 
 56.20  322B.803; 
 56.21     (4) by action of the members pursuant to section 322B.806; 
 56.22     (5)(i) for limited liability companies whose existence 
 56.23  begins before the effective date of this act, except as 
 56.24  otherwise provided in the articles of organization or a member 
 56.25  control agreement, upon the occurrence of an event that 
 56.26  terminates the continued membership of a member in the limited 
 56.27  liability company, including: 
 56.28     (i) death of any member; 
 56.29     (ii) retirement of any member; 
 56.30     (iii) resignation of any member; 
 56.31     (iv) redemption of a member's complete membership interest; 
 56.32     (v) assignment of a member's governance rights under 
 56.33  section 322B.313 which leaves the assignor with no governance 
 56.34  rights; 
 56.35     (vi) a buy-out of a member's membership interest under 
 56.36  section 322B.833 that leaves that member with no governance 
 57.1   rights; 
 57.2      (vii) expulsion of any member; 
 57.3      (viii) bankruptcy of any member; 
 57.4      (ix) dissolution of any member; 
 57.5      (x) a merger in which the limited liability company is not 
 57.6   the surviving organization; 
 57.7      (xi) an exchange in which the limited liability company is 
 57.8   not the acquiring organization; or 
 57.9      (xii) the occurrence of any other event that terminates the 
 57.10  continued membership of a member in the limited liability 
 57.11  company, 
 57.12  but the limited liability company is not dissolved and is not 
 57.13  required to be wound up by reason of any event that terminates 
 57.14  the continued membership of a member if (A) there is at least 
 57.15  one remaining member and the existence and business of the 
 57.16  limited liability company is continued by the consent of all the 
 57.17  remaining members obtained no later than 90 days after the 
 57.18  termination of the continued membership, or (B) if the 
 57.19  membership of the last or sole member terminates and the legal 
 57.20  representative of that last or sole member causes the limited 
 57.21  liability company to admit at least one member; or 
 57.22     (ii) for limited liability companies whose existence begins 
 57.23  on or after the effective date of this act, upon the occurrence 
 57.24  of an event that terminates the continued membership of a member 
 57.25  in the limited liability company, but only if:  (A) the articles 
 57.26  of organization or a member control agreement specifically 
 57.27  provide that the termination causes dissolution and in that 
 57.28  event only as provided in the articles or member control 
 57.29  agreement; or (B) if the membership of the last or sole member 
 57.30  terminates and the legal representative of that last or sole 
 57.31  member does not cause the limited liability company to admit at 
 57.32  least one member within 180 days after the termination; 
 57.33     (6) a merger in which the limited liability company is not 
 57.34  the surviving organization; or 
 57.35     (7) when terminated by the secretary of state according to 
 57.36  section 322B.960. 
 58.1      Sec. 87.  Minnesota Statutes 1998, section 322B.813, 
 58.2   subdivision 3, is amended to read: 
 58.3      Subd. 3.  [COLLECTION AND PAYMENT.] When a notice of 
 58.4   dissolution has been filed with the secretary of state, the 
 58.5   board of governors, or the managers acting under the direction 
 58.6   of the board of governors, shall proceed as soon as possible: 
 58.7      (1) to give notice to creditors and claimants under section 
 58.8   322B.816 or to proceed under section 322B.82; 
 58.9      (2) subject to any business continuation agreement, to 
 58.10  collect or make provision for the collection of all known debts 
 58.11  due or owing to the limited liability company, including 
 58.12  unperformed contribution agreements; and 
 58.13     (3) except as provided in sections 322B.816, 322B.82, and 
 58.14  322B.863, to pay or make provision for the payment of all known 
 58.15  debts, obligations, and liabilities of the limited liability 
 58.16  company according to their priorities under section 322B.873. 
 58.17     Sec. 88.  Minnesota Statutes 1998, section 322B.816, 
 58.18  subdivision 4, is amended to read: 
 58.19     Subd. 4.  [CLAIMS AGAINST LIMITED LIABILITY COMPANIES THAT 
 58.20  GIVE NOTICE.] (a) A limited liability company that gives notice 
 58.21  to creditors and claimants has 30 days from the receipt of each 
 58.22  claim filed according to the procedures set forth by the limited 
 58.23  liability company on or before the date set forth in the notice 
 58.24  to accept or reject the claim by giving written notice to the 
 58.25  person submitting it.  A claim not expressly rejected in this 
 58.26  manner is considered accepted.  
 58.27     (b) A creditor or claimant to whom notice is given and 
 58.28  whose claim is rejected by the limited liability company has 60 
 58.29  days from the date of rejection, 180 days from the date the 
 58.30  limited liability company filed with the secretary of state the 
 58.31  notice of dissolution, or 90 days after the date on which notice 
 58.32  was given to the creditor or claimant, whichever is longer, to 
 58.33  pursue any other remedies with respect to the claim.  
 58.34     (c) A creditor or claimant to whom notice is given who 
 58.35  fails to file a claim according to the procedures set forth by 
 58.36  the limited liability company on or before the date set forth in 
 59.1   the notice is barred from suing the dissolved limited liability 
 59.2   company on that claim or otherwise realizing upon or enforcing 
 59.3   it against the dissolved limited liability company, except as 
 59.4   provided in section 322B.863.  If the dissolved limited 
 59.5   liability company gave the additional information referred to in 
 59.6   subdivision 3, nothing in this section bars the creditor or 
 59.7   claimant from seeking to enforce its rights against the 
 59.8   successor organization.  
 59.9      (d) A creditor or claimant whose claim is rejected by the 
 59.10  limited liability company under paragraph (b) is barred from 
 59.11  suing on that claim or otherwise realizing upon or enforcing it 
 59.12  whether against the dissolved limited liability company or any 
 59.13  successor organization, if the creditor or claimant does not 
 59.14  initiate legal, administrative, or arbitration proceedings with 
 59.15  respect to the claim within the time provided in paragraph (b).  
 59.16     Sec. 89.  Minnesota Statutes 1998, section 322B.833, 
 59.17  subdivision 2, is amended to read: 
 59.18     Subd. 2.  [BUY-OUT ON MOTION.] In an action under 
 59.19  subdivision 1, clause (2), in which one or more of the 
 59.20  circumstances described in that clause is established, the court 
 59.21  may, upon motion of a limited liability company or a member, 
 59.22  order the sale by a plaintiff or a defendant of all membership 
 59.23  interests of the limited liability company held by the plaintiff 
 59.24  or defendant to either the limited liability company or the 
 59.25  moving members, whichever is specified in the motion, if the 
 59.26  court determines in its discretion that an order would be fair 
 59.27  and equitable to all parties under all of the circumstances of 
 59.28  the case.  
 59.29     The purchase price of any membership interest so sold must 
 59.30  be the fair value of the membership interest as of the date of 
 59.31  the commencement of the action or as of another date found 
 59.32  equitable by the court.  If the articles of organization, or a 
 59.33  member control agreement or business continuation agreement 
 59.34  states a price for the redemption or buy-out of membership 
 59.35  interests, the court shall order the sale for the price and on 
 59.36  the terms set forth in them, unless the court determines that 
 60.1   the price or terms are unreasonable under all the circumstances 
 60.2   of the case.  
 60.3      Within five days after the entry of the order, the limited 
 60.4   liability company shall provide each selling member with the 
 60.5   information it is required to provide under section 322B.386, 
 60.6   subdivision 5, paragraph (a).  
 60.7      If the parties are unable to agree on fair value within 40 
 60.8   days of entry of the order, the court shall determine the fair 
 60.9   value of the membership interests under the provisions of 
 60.10  section 322B.386, subdivision 7, may allow interest or costs as 
 60.11  provided in section 322B.386, subdivisions 1 and 8, and may 
 60.12  allocate payment among the member whose membership interest is 
 60.13  being sold and any assignees of the financial rights of that 
 60.14  member.  
 60.15     The purchase price must be paid in one or more installments 
 60.16  as agreed on by the parties, or, if no agreement can be reached 
 60.17  within 40 days of entry of the order, as ordered by the court.  
 60.18  Upon entry of an order for the sale of a membership interest 
 60.19  under this subdivision and provided that the limited liability 
 60.20  company or the moving members post a bond in adequate amount 
 60.21  with sufficient sureties or otherwise satisfy the court that any 
 60.22  full purchase price of the membership interest, plus the 
 60.23  additional costs, expenses, and fees awarded by the court, will 
 60.24  be paid when due and payable, the selling member shall no longer 
 60.25  have any rights or status as a member, manager, or governor, 
 60.26  except the right to receive the fair value of the membership 
 60.27  interest plus other amounts as might be awarded. 
 60.28     Sec. 90.  Minnesota Statutes 1998, section 322B.833, 
 60.29  subdivision 5, is amended to read: 
 60.30     Subd. 5.  [CONSIDERATIONS AS TO DISSOLUTION.] In 
 60.31  determining what relief to order, the court shall take into 
 60.32  account that any relief that results in the termination of a 
 60.33  member's membership interest will may cause dissolution of the 
 60.34  limited liability company.  If the court orders relief that 
 60.35  results in dissolution of the limited liability company, the 
 60.36  court shall make appropriate orders providing for the winding up 
 61.1   and termination of the dissolved limited liability company. 
 61.2      Sec. 91.  Minnesota Statutes 1998, section 322B.833, 
 61.3   subdivision 6, is amended to read: 
 61.4      Subd. 6.  [LIQUIDATION REMEDY.] In deciding whether to 
 61.5   order winding up through liquidation, the court shall consider 
 61.6   whether lesser relief suggested by one or more parties, or 
 61.7   provided in a business continuation member control agreement, 
 61.8   such as any form of equitable relief, or a buy-out or partial 
 61.9   liquidation coupled with the continuation of the business of the 
 61.10  dissolved limited liability company through a successor 
 61.11  organization, would be adequate to permanently relieve the 
 61.12  circumstances established under subdivision 1, clause (2) or 
 61.13  (3).  Lesser relief may be ordered in any case where it would be 
 61.14  appropriate under all the facts and circumstances of the case.  
 61.15     Sec. 92.  Minnesota Statutes 1998, section 322B.843, 
 61.16  subdivision 2, is amended to read: 
 61.17     Subd. 2.  [NOTICE TO LIMITED LIABILITY COMPANY AND 
 61.18  CORRECTION.] An action must not be commenced under this section 
 61.19  until 30 days after notice to the limited liability company by 
 61.20  the attorney general of the reason for the filing of the 
 61.21  action.  If the reason for filing the action is an act that the 
 61.22  limited liability company has done, or omitted to do, and the 
 61.23  act or omission may be corrected by an amendment of the articles 
 61.24  of organization, a member control agreement, or the operating 
 61.25  agreement or by performance of or abstention from the act, the 
 61.26  attorney general shall give the limited liability company 30 
 61.27  additional days in which to effect the correction before filing 
 61.28  the action.  
 61.29     Sec. 93.  Minnesota Statutes 1998, section 322B.873, 
 61.30  subdivision 1, is amended to read: 
 61.31     Subdivision 1.  [DISPOSITION UPON LIQUIDATION.] Subject to 
 61.32  subdivision 4, except when the business of a dissolved limited 
 61.33  liability company is being continued under subdivision 2 or when 
 61.34  the dissolved limited liability company is being wound up and 
 61.35  terminated under section 322B.81, subdivision 3, the assets of 
 61.36  the dissolved limited liability company must be disposed of to 
 62.1   satisfying liabilities according to the following priorities:  
 62.2      (1) to creditors, including members who are creditors, to 
 62.3   the extent otherwise permitted by law, in satisfaction of 
 62.4   liabilities of the limited liability company other than 
 62.5   liabilities for interim distributions to members under section 
 62.6   322B.51 or termination distributions under section 322B.50; 
 62.7      (2) unless otherwise provided in the articles of 
 62.8   organization or a member control agreement, to members and 
 62.9   former members of the limited liability company in satisfaction 
 62.10  of liabilities for distributions under section 322B.50 or 
 62.11  322B.51; and 
 62.12     (3) unless otherwise provided in the articles of 
 62.13  organization or a member control agreement, to members first for 
 62.14  a return of their contributions, as restated from time to time 
 62.15  under section 322B.41, and secondly respecting their membership 
 62.16  interests in the proportions in which the members share in 
 62.17  distributions. 
 62.18     Sec. 94.  Minnesota Statutes 1998, section 322B.873, 
 62.19  subdivision 4, is amended to read: 
 62.20     Subd. 4.  [DAMAGES AND OFFSETS FOR WRONGFUL DISSOCIATION 
 62.21  AND BREACH OF A MEMBER CONTROL AGREEMENT.] A member who 
 62.22  wrongfully resigns or retires is liable to the limited liability 
 62.23  company for any damages caused by the member's wrongful 
 62.24  resignation or retirement.  Any member who breaches a member 
 62.25  control agreement is liable to the limited liability company for 
 62.26  any damages caused by the breach.  Any payment due a member 
 62.27  under this section, including payments, if any, to dissenters 
 62.28  due to winding up merger under section 322B.81, subdivision 3, 
 62.29  is subject to offset these damages. 
 62.30     Sec. 95.  [REPEALER.] 
 62.31     Minnesota Statutes 1998, sections 322B.03, subdivisions 4, 
 62.32  5, 9, and 16; 322B.363, subdivision 8; 322B.366, subdivision 2; 
 62.33  322B.816, subdivision 3; and 322B.873, subdivisions 2 and 3, are 
 62.34  repealed. 
 62.35     Sec. 96.  [REVISOR INSTRUCTION.] 
 62.36     The revisor of statutes shall change the term "operating 
 63.1   agreement" or similar term to "bylaws" or similar term wherever 
 63.2   it appears in Minnesota Statutes, chapter 322B, except in the 
 63.3   first sentence of section 322B.603, subdivision 1. 
 63.4      Sec. 97.  [EFFECTIVE DATE; APPLICATION.] 
 63.5      Sections 1 to 96 are effective August 1, 1999, and unless 
 63.6   otherwise specified apply to all limited liability companies in 
 63.7   existence on or after that date. 
 63.8                              ARTICLE 3
 63.9                       RUPA CONFORMING CHANGES
 63.10     Section 1.  Minnesota Statutes 1998, section 319B.02, 
 63.11  subdivision 10, is amended to read: 
 63.12     Subd. 10.  [MINNESOTA FIRM.] "Minnesota firm" includes a 
 63.13  corporation organized under chapter 302A or 317A, limited 
 63.14  liability company organized under chapter 322B, and limited 
 63.15  liability partnership registered under section 323.44, and 
 63.16  limited liability partnership that has an effective statement of 
 63.17  qualification under section 323A.10-01. 
 63.18     Sec. 2.  Minnesota Statutes 1998, section 319B.02, 
 63.19  subdivision 12, is amended to read: 
 63.20     Subd. 12.  [ORGANIZATIONAL DOCUMENT.] "Organizational 
 63.21  document" means: 
 63.22     (1) with respect to a corporation organized under chapter 
 63.23  302A or 317A, that corporation's articles of incorporation; 
 63.24     (2) with respect to a limited liability company organized 
 63.25  under chapter 322B, that limited liability company's articles of 
 63.26  organization; and 
 63.27     (3) with respect to a limited liability partnership 
 63.28  registered under section 323.44, that limited liability 
 63.29  partnership's registration and any notice filed under section 
 63.30  323.44, subdivision 9, in connection with that registration; and 
 63.31     (4) with respect to a limited liability partnership that 
 63.32  has an effective statement of qualification under section 
 63.33  323A.10-01, that statement of qualification. 
 63.34     Sec. 3.  Minnesota Statutes 1998, section 319B.02, 
 63.35  subdivision 21, is amended to read: 
 63.36     Subd. 21.  [STATEMENT OF FOREIGN QUALIFICATION.] "Statement 
 64.1   of foreign qualification" means,: 
 64.2      (1) with respect to a foreign firm that is a limited 
 64.3   liability partnership, the and has filed a statement of 
 64.4   qualification required under section 323.49, that statement of 
 64.5   qualification and any notice filed under section 323.49, 
 64.6   subdivision 9, in connection with that registration.; and 
 64.7      (2) with respect to a limited liability partnership that 
 64.8   has an effective statement of foreign qualification under 
 64.9   section 323A.11-02, that statement of foreign qualification. 
 64.10     Sec. 4.  Minnesota Statutes 1998, section 319B.02, 
 64.11  subdivision 22, is amended to read: 
 64.12     Subd. 22.  [UPDATE.] "Update" means: 
 64.13     (1) with respect to a Minnesota professional firm that is 
 64.14  either a Minnesota corporation or a Minnesota limited liability 
 64.15  company, amend the organizational document; 
 64.16     (2) with respect to a Minnesota professional firm that is a 
 64.17  Minnesota limited liability partnership registered under section 
 64.18  323.44, file a notice under section 323.44, subdivision 9, in 
 64.19  connection with the Minnesota limited liability partnership's 
 64.20  registration; 
 64.21     (3) with respect to a foreign professional firm that is a 
 64.22  foreign corporation, file a notice under section 303.115 in 
 64.23  connection with the foreign corporation's certificate of 
 64.24  authority; 
 64.25     (4) with respect to a foreign firm that is a limited 
 64.26  liability company, file a notice under section 322B.92, clause 
 64.27  (3), in connection with the foreign limited liability company's 
 64.28  certificate of authority; and 
 64.29     (5) with respect to a foreign professional firm that is a 
 64.30  foreign limited liability partnership and has filed a statement 
 64.31  of qualification under section 323.49, file a notice under 
 64.32  section 323.49, subdivision 9, in connection with the foreign 
 64.33  limited liability partnership's that statement of qualification 
 64.34  .; 
 64.35     (6) with respect to a Minnesota professional firm that is a 
 64.36  limited liability partnership and has an effective statement of 
 65.1   qualification under section 323A.10-01, amend that statement of 
 65.2   qualification; and 
 65.3      (7) with respect to a foreign professional firm that is a 
 65.4   limited liability partnership and has an effective statement of 
 65.5   foreign qualification under section 323A.11-02, amend that 
 65.6   statement of foreign qualification. 
 65.7      Sec. 5.  Minnesota Statutes 1998, section 319B.04, 
 65.8   subdivision 2, is amended to read: 
 65.9      Subd. 2.  [ELECTION TO INVOKE AUTHORITY UNDER THIS ACT.] To 
 65.10  elect to become a foreign professional firm and be authorized to 
 65.11  furnish professional services according to sections 319B.01 to 
 65.12  319B.12, a foreign firm must in its certificate of authority or 
 65.13  statement of foreign qualification: 
 65.14     (1) state that the firm elects to operate under sections 
 65.15  319B.01 to 319B.12; 
 65.16     (2) acknowledge that the firm is subject to those sections; 
 65.17     (3) state that, to the extent its generally applicable 
 65.18  governing law conflicts or differs with those sections, the 
 65.19  foreign firm has made the necessary changes to the agreements 
 65.20  and other documents controlling its structure, governance, 
 65.21  operations, and internal affairs so as to comply with those 
 65.22  sections; and 
 65.23     (4) specify from the list stated in section 319B.02, 
 65.24  subdivision 19, the category or categories of professional 
 65.25  services the foreign firm is authorized to provide within 
 65.26  Minnesota. 
 65.27     The statements, acknowledgment, and specification may be 
 65.28  made when the foreign firm initially files for a certificate of 
 65.29  authority or statement of foreign qualification or may be added 
 65.30  at a later time by updating that document. 
 65.31     Sec. 6.  Minnesota Statutes 1998, section 319B.04, 
 65.32  subdivision 3, is amended to read: 
 65.33     Subd. 3.  [RESCISSION AND AMENDMENT OF ELECTION.] (a) A 
 65.34  foreign firm may rescind its election by updating its 
 65.35  certificate of authority or statement of foreign qualification 
 65.36  to delete the statements, acknowledgment, and specification 
 66.1   required by subdivision 2. 
 66.2      (b) A foreign firm may update its certificate of authority 
 66.3   or statement of foreign qualification to change the 
 66.4   specification required by subdivision 2, clause (4). 
 66.5      Sec. 7.  Minnesota Statutes 1998, section 319B.08, 
 66.6   subdivision 1, is amended to read: 
 66.7      Subdivision 1.  [ACQUISITION OF INTERESTS OR AUTOMATIC LOSS 
 66.8   OF PROFESSIONAL FIRM STATUS.] (a) If an owner dies or becomes 
 66.9   disqualified to practice all the pertinent professional 
 66.10  services, then either: 
 66.11     (1) within 90 days after the death or the beginning of the 
 66.12  disqualification, all of that owner's ownership interest must be 
 66.13  acquired by the professional firm, by persons permitted by 
 66.14  section 319B.07 to own the ownership interest, or by some 
 66.15  combination; or 
 66.16     (2) at the end of the 90-day period, the firm's election 
 66.17  under section 319B.03, subdivision 2, or 319B.04, subdivision 2, 
 66.18  is automatically rescinded, the firm loses its status as a 
 66.19  professional firm, and the authority created by that election 
 66.20  and status terminates.  
 66.21     An acquisition satisfies clause (1) if all right and title 
 66.22  to the deceased or disqualified owner's interest are acquired 
 66.23  before the end of the 90-day period, even if some or all of the 
 66.24  consideration is paid after the end of the 90-day period.  
 66.25  However, payment cannot be secured in any way that violates 
 66.26  sections 319B.01 to 319B.12. 
 66.27     (b) If automatic rescission does occur under paragraph (a), 
 66.28  the firm must immediately and accordingly update its 
 66.29  organizational document, certificate of authority, or statement 
 66.30  of foreign qualification.  Even without that updating, however, 
 66.31  the rescission, loss of status, and termination of authority 
 66.32  provided by paragraph (a) occur automatically at the end of the 
 66.33  90-day period. 
 66.34     Sec. 8.  Minnesota Statutes 1998, section 319B.10, 
 66.35  subdivision 2, is amended to read: 
 66.36     Subd. 2.  [EFFECT ON PARTICIPATING PROFESSIONAL FIRM.] (a) 
 67.1   If a professional firm participates in and survives a 
 67.2   reorganization but the reorganization causes the surviving firm 
 67.3   to be out of compliance with section 319B.07 or 319B.09, or both:
 67.4      (1) the surviving firm's election under section 319B.03, 
 67.5   subdivision 2, or 319B.04, subdivision 2, is automatically 
 67.6   rescinded; 
 67.7      (2) the surviving firm immediately loses its status as a 
 67.8   professional firm and the authority created by that election and 
 67.9   status terminates; and 
 67.10     (3) the surviving firm must immediately and accordingly 
 67.11  update its organizational document, certificate of authority, or 
 67.12  statement of foreign qualification.  Even without that 
 67.13  amendment, however, the rescission, loss of status, and 
 67.14  termination of authority occur automatically when the 
 67.15  reorganization takes effect. 
 67.16     (b) If, before a reorganization takes effect, the 90-day 
 67.17  deadline established in section 319B.07, subdivision 1, has been 
 67.18  triggered but has not yet elapsed with regard to an ownership 
 67.19  interest in a professional firm participating in the 
 67.20  reorganization, the surviving firm is not out of compliance with 
 67.21  sections 319B.07 and 319B.09 merely because the reorganization 
 67.22  accords a comparable ownership interest in the surviving firm to 
 67.23  the disqualified owner or the representative of the deceased 
 67.24  owner's estate.  The original 90-day deadline applies to the 
 67.25  comparable ownership interest and the surviving firm. 
 67.26     Sec. 9.  Minnesota Statutes 1998, section 319B.11, 
 67.27  subdivision 3, is amended to read: 
 67.28     Subd. 3.  [FILING OF ORGANIZATIONAL DOCUMENT AND REPORT 
 67.29  INFORMATION.] (a) No professional firm may furnish professional 
 67.30  services within Minnesota until the firm files with each board 
 67.31  having jurisdiction over the pertinent professional services: 
 67.32     (1) a copy of the firm's organizational document, 
 67.33  certificate of authority, or statement of foreign qualification; 
 67.34     (2) a report containing the same information as required by 
 67.35  subdivision 4; and 
 67.36     (3) except as stated in paragraph (b), a fee of $100. 
 68.1      (b) If a firm has previously been organized under sections 
 68.2   319A.01 to 319A.22, that firm is not required to pay the filing 
 68.3   fee under paragraph (a).  
 68.4      Sec. 10.  Minnesota Statutes 1998, section 319B.11, 
 68.5   subdivision 4, is amended to read: 
 68.6      Subd. 4.  [ANNUAL REPORT.] (a) Every professional firm must 
 68.7   file annually on or before January 1 with the board or boards 
 68.8   having jurisdiction over the pertinent professional services a 
 68.9   report containing the following: 
 68.10     (1) the name and address of the professional firm; 
 68.11     (2) the contents of any amendment made to the firm's 
 68.12  organizational document, certificate of authority, or statement 
 68.13  of foreign qualification since the filing of the most recent 
 68.14  report under subdivision 3 or this subdivision; 
 68.15     (3) a designation of the position or positions within the 
 68.16  firm that have governance authority; 
 68.17     (4) the name and address of each owner of an ownership 
 68.18  interest and each person occupying a position with governance 
 68.19  authority; 
 68.20     (5) a statement as to whether all employees, agents, and 
 68.21  independent contractors furnishing professional services within 
 68.22  Minnesota on behalf of the professional firm are professionals 
 68.23  authorized to furnish at least one category of the pertinent 
 68.24  professional services; 
 68.25     (6) except in the case of a professional firm that is 
 68.26  organized under chapter 317A or the nonprofit corporation 
 68.27  statute of another state, a statement as to whether all owners 
 68.28  and persons occupying a position with governance authority are 
 68.29  professionals authorized to furnish at least one category of the 
 68.30  pertinent professional services; 
 68.31     (7) in the case of a professional firm that is organized 
 68.32  under chapter 317A or the nonprofit corporation statute of 
 68.33  another state, a statement as to whether at least one person 
 68.34  occupying a position with governance authority is a professional 
 68.35  authorized to furnish at least one category of the pertinent 
 68.36  professional services; and 
 69.1      (8) any additional information as the board may by rule 
 69.2   prescribe as appropriate to assist in determining whether a 
 69.3   professional firm is complying with sections 319B.01 to 319B.12. 
 69.4      The statement required by clauses (5), (6), and (7) must be 
 69.5   made and signed under oath by a professional who is an owner or 
 69.6   employee of the professional firm, licensed in at least one 
 69.7   category of the pertinent professional services and duly 
 69.8   authorized to make the statement on behalf of the professional 
 69.9   firm. 
 69.10     (b) For filing each annual report under paragraph (a), each 
 69.11  firm must pay a fee of $25 to each board with which the report 
 69.12  is filed. 
 69.13     Sec. 11.  Minnesota Statutes 1998, section 319B.11, 
 69.14  subdivision 8, is amended to read: 
 69.15     Subd. 8.  [INVOLUNTARY DISSOLUTION AND RESCISSION OF 
 69.16  PROFESSIONAL FIRM STATUS.] A board, through the attorney 
 69.17  general, may institute proceedings in a district court of this 
 69.18  state or a contested case proceeding under chapter 14 to 
 69.19  involuntarily rescind a professional firm's election under 
 69.20  section 319B.03, subdivision 2, or 319B.04, subdivision 2, to 
 69.21  impose restrictions or conditions on that election or to 
 69.22  reprimand the professional firm due to a violation of sections 
 69.23  319B.01 to 319B.12, the relevant licensing statute as listed in 
 69.24  section 319B.02, subdivision 19, or the rules of the board.  A 
 69.25  board, through the attorney general, may institute proceedings 
 69.26  in a district court of this state to have a Minnesota 
 69.27  professional firm involuntarily dissolved, or a foreign 
 69.28  professional firm's certificate of authority or statement of 
 69.29  foreign qualification revoked on those grounds, as well as on 
 69.30  any other grounds provided by Minnesota law.  A board may seek 
 69.31  reprimands, restrictions, conditions, involuntary rescission, 
 69.32  and, as appropriate, dissolution or revocation within a single 
 69.33  proceeding in a district court of this state.  After a court 
 69.34  enters a decree imposing rescission, dissolution, or revocation 
 69.35  upon a professional firm, a board shall cause a certified copy 
 69.36  of the decree to be filed with the secretary of state.  The 
 70.1   secretary of state shall not charge a fee for filing the 
 70.2   decree.  A board's claim against a professional firm for 
 70.3   involuntary dissolution or revocation does not abate simply 
 70.4   because the professional firm has rescinded its election under 
 70.5   section 319B.03, subdivision 2, or 319B.04, subdivision 2.  A 
 70.6   voluntary rescission does abate a board's claim to obtain 
 70.7   reprimands, restrictions, conditions, or involuntary rescission. 
 70.8      Sec. 12.  Minnesota Statutes 1998, section 322A.02, is 
 70.9   amended to read: 
 70.10     322A.02 [NAME.] 
 70.11     (a) The name of each limited partnership as set forth in 
 70.12  its certificate of limited partnership: 
 70.13     (1) shall contain the words "limited partnership" or the 
 70.14  abbreviation "LP" or "L.P." or in the case of a limited 
 70.15  liability limited partnership shall contain: 
 70.16     (i) the words "limited liability limited partnership" or 
 70.17  the abbreviation "LLLP" or "L.L.L.P."; or 
 70.18     (ii) the words "limited partnership" or the abbreviation 
 70.19  "LP" or "L.P." plus the words "Registered Limited Liability 
 70.20  Partnership" or "Limited Liability Partnership" or the 
 70.21  abbreviation "R.L.L.P.," "L.L.P.," "RLLP," or "LLP"; 
 70.22     (2) may not contain the name of a limited partner unless 
 70.23  (i) it is also the name of a general partner or the corporate 
 70.24  name of a corporate general partner, or (ii) the business of the 
 70.25  limited partnership had been carried on under that name before 
 70.26  the admission of that limited partner; 
 70.27     (3) must be distinguishable from the name of a domestic 
 70.28  corporation or limited partnership, whether profit or nonprofit, 
 70.29  or a foreign corporation or limited partnership authorized or 
 70.30  registered to do business in this state, whether profit or 
 70.31  nonprofit, a limited liability company, whether domestic or 
 70.32  foreign, a limited liability partnership, whether domestic or 
 70.33  foreign, or a name the right to which is reserved or provided 
 70.34  for in the manner provided for in sections 302A.117, 322A.03, 
 70.35  322B.125, or 333.001 to 333.54, unless there is filed with the 
 70.36  certificate a written consent, court decree of prior right, or 
 71.1   affidavit of nonuse, of the kind required by section 302A.115, 
 71.2   subdivision 1, paragraph (d); and 
 71.3      (4) may not contain the following words:  corporation, 
 71.4   incorporated. 
 71.5      The secretary of state shall determine whether a name is 
 71.6   "distinguishable" from another name for purposes of this section 
 71.7   and section 322A.03.  This section does not abrogate or limit 
 71.8   the law of unfair competition or unfair practices, nor sections 
 71.9   333.001 to 333.54, nor the laws of the United States with 
 71.10  respect to the right to acquire and protect copyrights, 
 71.11  trademarks, service names, service marks, or any other rights to 
 71.12  the exclusive use of names or symbols, nor derogate the common 
 71.13  law or principles of equity.  
 71.14     (b) A person doing business in this state may contest the 
 71.15  subsequent registration of a name with the office of the 
 71.16  secretary of state as provided in section 5.22. 
 71.17     Sec. 13.  Minnesota Statutes 1998, section 322A.87, is 
 71.18  amended to read: 
 71.19     322A.87 [RULES FOR CASES NOT PROVIDED FOR IN SECTIONS 
 71.20  322A.01 TO 322A.87.] 
 71.21     In any case not provided for in sections 322A.01 to 322A.87 
 71.22  the provisions of chapter 323, the Uniform Partnership Act 
 71.23  govern. (a) Before January 1, 2002, for any case not provided 
 71.24  for in sections 322A.01 to 322A.87 the governing law is as 
 71.25  follows: 
 71.26     (1) for limited partnerships formed after December 31, 
 71.27  1998, chapter 323A governs; 
 71.28     (2) for limited partnerships formed before January 1, 1999; 
 71.29     (i) if the limited partnership has filed a statement of 
 71.30  qualification under section 322A.88 or has amended its 
 71.31  certificate of limited partnership to state that the limited 
 71.32  partnership is subject to chapter 323A, chapter 323A governs; 
 71.33     (ii) if subparagraph (i) does not apply, chapter 323 
 71.34  governs. 
 71.35     (b) Beginning January 1, 2002, for any case not provided 
 71.36  for in sections 322A.01 to 322A.87, chapter 323A governs. 
 72.1      Sec. 14.  Minnesota Statutes 1998, section 322A.88, is 
 72.2   amended to read: 
 72.3      322A.88 [LIMITED LIABILITY LIMITED PARTNERSHIP.] 
 72.4      (a) A limited partnership may become a limited liability 
 72.5   limited partnership by: 
 72.6      (1) obtaining approval of the terms and conditions under 
 72.7   which the limited partnership elects limited liability limited 
 72.8   partnership status by the vote necessary to amend the limited 
 72.9   partnership agreement except, in the case of a limited 
 72.10  partnership agreement that expressly considers contribution 
 72.11  obligations, the vote necessary to amend those provisions; 
 72.12     (2) filing a statement of qualification under section 
 72.13  323A.10-01(c) of the Uniform Partnership Act (1994); and 
 72.14     (3) complying with the name requirements of section 
 72.15  323A.10-02 of the Uniform Partnership Act (1994) 322A.02, 
 72.16  paragraph (a), clause (1), as those requirements pertain to a 
 72.17  limited liability limited partnership.  
 72.18     (b) A limited liability limited partnership continues to be 
 72.19  the same entity that existed before the filing of a statement of 
 72.20  qualification under section 323A.10-01(c) of the Uniform 
 72.21  Partnership Act (1994). 
 72.22     (c) Sections 323A.3-06(c) and 323A.3-07(d) of the Uniform 
 72.23  Partnership Act (1994) apply to both general and limited 
 72.24  partners of a limited liability limited partnership. 
 72.25     Sec. 15.  Minnesota Statutes 1998, section 323A.10-01, is 
 72.26  amended to read: 
 72.27     323A.10-01 [STATEMENT OF QUALIFICATION.] 
 72.28     (a) A partnership may become a limited liability 
 72.29  partnership pursuant to this section. 
 72.30     (b) The terms and conditions on which a partnership becomes 
 72.31  a limited liability partnership must be approved by the vote 
 72.32  necessary to amend the partnership agreement except, in the case 
 72.33  of a partnership agreement that expressly considers obligations 
 72.34  to contribute to the partnership, the vote necessary to amend 
 72.35  those provisions. 
 72.36     (c) After the approval required by subsection (b), a 
 73.1   partnership may become a limited liability partnership by filing 
 73.2   a statement of qualification.  The statement must contain: 
 73.3      (1) the name of the partnership; 
 73.4      (2) the street address, including the zip code, of the 
 73.5   partnership's chief executive office and, if different, the 
 73.6   street address, including the zip code, of an office in this 
 73.7   state, if any; 
 73.8      (3) if the partnership does not have an office in this 
 73.9   state, the name and street address, including the zip code, of 
 73.10  the partnership's agent for service of process; 
 73.11     (4) a statement that the partnership elects to be a limited 
 73.12  liability partnership; and 
 73.13     (5) a deferred effective date, if any. 
 73.14     (d) The agent of a limited liability partnership for 
 73.15  service of process must be an individual who is a resident of 
 73.16  this state or other person authorized to do business in this 
 73.17  state. 
 73.18     (e) The status of a partnership as a limited liability 
 73.19  partnership is effective on the later of the filing of the 
 73.20  statement or a date specified in the statement.  The status 
 73.21  remains effective, regardless of changes in the partnership, 
 73.22  until it is canceled pursuant to section 323A.1-05(d) or revoked 
 73.23  pursuant to section 323A.10-03. 
 73.24     (f) The status of a partnership as a limited liability 
 73.25  partnership and the liability of its partners is not affected by 
 73.26  errors or later changes in the information required to be 
 73.27  contained in the statement of qualification under subsection (c).
 73.28     (g) The filing of a statement of qualification establishes 
 73.29  that a partnership has satisfied all conditions precedent to the 
 73.30  qualification of the partnership as a limited liability 
 73.31  partnership. 
 73.32     (h) An amendment or cancellation of a statement of 
 73.33  qualification is effective when it is filed or on a deferred 
 73.34  effective date specified in the amendment or cancellation.  
 73.35     (i) A statement of qualification may include the 
 73.36  information necessary to make an election under section 319B.03, 
 74.1   subdivision 2, and to update that information as provided in 
 74.2   section 319B.03, subdivision 3. 
 74.3      Sec. 16.  Minnesota Statutes 1998, section 323A.11-02, is 
 74.4   amended to read: 
 74.5      323A.11-02 [STATEMENT OF FOREIGN QUALIFICATION.] 
 74.6      (a) Before transacting business in this state, a foreign 
 74.7   limited liability partnership must file a statement of foreign 
 74.8   qualification.  The statement must contain: 
 74.9      (1) the name of the foreign limited liability partnership 
 74.10  which satisfies the requirements of the state or other 
 74.11  jurisdiction under whose law it is formed and ends with 
 74.12  "Registered Limited Liability Partnership," "Limited Liability 
 74.13  Partnership," "R.L.L.P.," "L.L.P.," "RLLP," or "LLP;" 
 74.14     (2) the street address, including the zip code, of the 
 74.15  partnership's chief executive office and, if different, the 
 74.16  street address, including the zip code, of an office of the 
 74.17  partnership in this state, if any; 
 74.18     (3) if there is no office of the partnership in this state, 
 74.19  the name and street address, including the zip code, of the 
 74.20  partnership's agent for service of process; and 
 74.21     (4) a deferred effective date, if any. 
 74.22     (b) The agent of a foreign limited liability company for 
 74.23  service of process must be an individual who is a resident of 
 74.24  this state or other person authorized to do business in this 
 74.25  state. 
 74.26     (c) The status of a partnership as a foreign limited 
 74.27  liability partnership is effective on the later of the filing of 
 74.28  the statement of foreign qualification or a date specified in 
 74.29  the statement.  The status remains effective, regardless of 
 74.30  changes in the partnership, until it is canceled pursuant to 
 74.31  section 323A.1-05(d) or revoked pursuant to section 323A.10-03. 
 74.32     (d) An amendment or cancellation of a statement of foreign 
 74.33  qualification is effective when it is filed or on a deferred 
 74.34  effective date specified in the amendment or cancellation. 
 74.35     (e) A statement of foreign qualification may include the 
 74.36  information necessary to make an election under section 319B.04, 
 75.1   subdivision 2, and to update that information as provided in 
 75.2   section 319B.04, subdivision 3. 
 75.3      Sec. 17.  [REVISOR INSTRUCTION.] 
 75.4      Effective January 1, 2002, the revisor of statutes shall 
 75.5   remove from Minnesota Statutes, chapter 319B, all references to 
 75.6   Minnesota Statutes, chapter 323. 
 75.7      Sec. 18.  [EFFECTIVE DATE.] 
 75.8      Sections 1 to 16 are effective retroactive to January 1, 
 75.9   1999.