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                            CHAPTER 361-H.F.No. 1704 
                  An act relating to commerce; making various technical 
                  and conforming changes related to limited liability 
                  companies; regulating investment securities; amending 
                  Minnesota Statutes 1994, sections 322B.105; 322B.115, 
                  subdivisions 2, 3, and 4; 322B.125, subdivision 1; 
                  322B.135, subdivision 3; 322B.145; 322B.15, 
                  subdivisions 1, 3, and 4; 322B.155; 322B.175; 322B.20, 
                  subdivision 2; 322B.30, subdivision 3; 322B.313, 
                  subdivision 2; 322B.33, subdivisions 4 and 9; 322B.34, 
                  subdivisions 1 and 3; 322B.346, subdivision 2; 
                  322B.36, subdivisions 2 and 3; 322B.363, subdivision 
                  1; 322B.373, subdivision 2; 322B.376; 322B.383, 
                  subdivision 1; 322B.386, subdivisions 4 and 7; 
                  322B.40, subdivision 6; 322B.42, subdivisions 2 and 4; 
                  322B.54, subdivision 1; 322B.56, subdivision 1; 
                  322B.60, subdivision 2; 322B.643, subdivision 3; 
                  322B.646; 322B.653; 322B.666, subdivision 2; 322B.693, 
                  subdivision 1; 322B.699, subdivision 6; 322B.72, 
                  subdivisions 2 and 3; 322B.75, subdivision 1; 322B.77, 
                  subdivision 1; 322B.803, subdivisions 1 and 2; 
                  322B.813, subdivision 5; 322B.833, subdivisions 1, 2, 
                  and 4; 323.14, subdivision 4; Minnesota Statutes 1995 
                  Supplement, sections 322B.12, subdivision 1; 
                  336.8-103; and 336.8-603. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1994, section 322B.105, is 
        amended to read: 
           322B.105 [ORGANIZERS.] 
           One or more natural persons of full at least 18 years of 
        age may act as organizers of a limited liability company by 
        filing with the secretary of state articles of organization for 
        the limited liability company. 
           Sec. 2.  Minnesota Statutes 1994, section 322B.115, 
        subdivision 2, is amended to read: 
           Subd. 2.  [STATUTORY PROVISIONS THAT MAY BE MODIFIED ONLY 
        IN ARTICLES OF ORGANIZATION.] The following provisions govern a 
        limited liability company unless modified in the articles of 
        organization or a member control agreement under section 322B.37:
           (1) a limited liability company has general business 
        purposes (section 322B.10); 
           (2) a limited liability company has certain powers (section 
        322B.20); 
           (3) the power to adopt, amend, or repeal the operating 
        agreement is vested in the board of governors (section 
        322B.603); 
           (4) a limited liability company must allow cumulative 
        voting for governors (section 322B.63); 
           (5) the affirmative vote of a majority of governors present 
        is required for an action of the board of governors (section 
        322B.653); 
           (6) a written action by the board of governors taken 
        without a meeting must be signed by all governors (section 
        322B.656); 
           (7) the board may accept contributions, make contribution 
        agreements, and make contribution allowance agreements (sections 
        322B.40, subdivision 1; 322B.42; and 322B.43); 
           (8) all membership interests are ordinary membership 
        interests entitled to vote and are of one class with no series 
        (section 322B.40, subdivision 5, clauses (1) and (2)); 
           (9) all membership interests have equal rights and 
        preferences in all matters not otherwise provided for by the 
        board of governors (section 322B.40, subdivision 5, clause (2)); 
           (10) the restatement of value of previous contributions is 
        to be determined according to a specified process (section 
        322B.41, subdivisions 3 and 4); 
           (11) a member has certain preemptive rights, unless 
        otherwise provided by the board of governors (section 322B.33); 
           (12) the affirmative vote of the owners of a majority of 
        the voting power of the membership interests present and 
        entitled to vote at a duly held meeting is required for an 
        action of the members, except where this chapter requires the 
        affirmative vote of a majority of the voting power of all 
        membership interests entitled to vote (section 322B.35, 
        subdivision 1); 
           (13) the voting power of each membership interest is in 
        proportion to the value reflected in the required records of the 
        contributions of the members (section 322B.356); 
           (14) members share in distributions in proportion to the 
        value reflected in the required records of the contributions of 
        members (section 322B.50); 
           (15) members share profits and losses in proportion to the 
        value reflected in the required records of the contributions of 
        members (section 322B.326); 
           (16) a written action by the members taken without a 
        meeting must be signed by all members (section 322B.35); 
           (17) members have no right to receive distributions in kind 
        and the limited liability company has only limited rights to 
        make distributions in kind (section 322B.52); 
           (18) a member is not subject to expulsion (section 
        322B.306, subdivision 2); 
           (19) unanimous consent is required for the transfer of 
        governance rights to a person not already a member (section 
        322B.313, subdivision 2); and 
           (20) unanimous consent is required to avoid dissolution 
        (section 322B.80, subdivision 1, clause (5)(B)). 
           Sec. 3.  Minnesota Statutes 1994, section 322B.115, 
        subdivision 3, is amended to read: 
           Subd. 3.  [STATUTORY PROVISIONS THAT MAY BE MODIFIED EITHER 
        IN ARTICLES OF ORGANIZATION OR IN THE OPERATING AGREEMENT.] The 
        following provisions govern a limited liability company unless 
        modified either in the articles of organization, a member 
        control agreement under section 322B.37 or in the operating 
        agreement: 
           (1) governors serve for an indefinite term that expires at 
        the next regular meeting of members (section 322B.616); 
           (2) the compensation of governors is fixed by the board of 
        governors (section 322B.623); 
           (3) a certain method must be used for removal of governors 
        (section 322B.636); 
           (4) a certain method must be used for filling board of 
        governor vacancies (section 322B.64); 
           (5) if the board of governors fails to select a place for a 
        board meeting, it must be held at the principal executive office 
        (section 322B.643, subdivision 1); 
           (6) a governor may call a board of governors meeting, and 
        the notice of the a board of governors meeting need not state 
        the purpose of the meeting (section 322B.643, subdivision 3); 
           (7) a majority of the board of governors is a quorum for a 
        board meeting (section 322B.65); 
           (8) a committee consists of one or more persons, who need 
        not be governors, appointed by affirmative vote of a majority of 
        the governors present (section 322B.66, subdivision 2); 
           (9) the board may establish a special litigation committee 
        (section 322B.66); 
           (10) the chief manager and treasurer have specified duties, 
        until the board of governors determines otherwise (section 
        322B.673); 
           (11) managers may delegate some or all of their duties and 
        powers, if not prohibited by the board of governors from doing 
        so (section 322B.689); 
           (12) regular meetings of members need not be held, unless 
        demanded by a member under certain conditions (section 
        322B.333); 
           (13) in all instances where a specific minimum notice 
        period has not otherwise been fixed by law, not less than ten 
        days' notice is required for a meeting of members (section 
        322B.34, subdivision 2); 
           (14) for a quorum at a members' meeting there is required a 
        majority of the voting power of the membership interests 
        entitled to vote at the meeting (section 322B.353); 
           (15) the board of governors may fix a date up to 60 days 
        before the date of a members' meeting as the date for the 
        determination of the members entitled to notice of and entitled 
        to vote at the meeting (section 322B.356, subdivision 1); 
           (16) indemnification of certain persons is required 
        (section 322B.699); 
           (17) the board of governors may authorize, and the limited 
        liability company may make, distributions not prohibited, 
        limited, or restricted by an agreement (section 322B.54, 
        subdivision 1); and 
           (18) members have no right to interim distributions except 
        as provided through the operating agreement or an act of the 
        board of governors (section 322B.51).  
           Sec. 4.  Minnesota Statutes 1994, section 322B.115, 
        subdivision 4, is amended to read: 
           Subd. 4.  [OPTIONAL PROVISIONS AND SPECIFIC SUBJECTS.] The 
        following provisions relating to the management of the business 
        or the regulation of the affairs of a limited liability company 
        may be included either in the articles of organization, a member 
        control agreement under section 322B.37 or, except for naming 
        persons to serve as the first board of governors, fixing a 
        greater than majority governor or member vote, establishing the 
        rights and priorities for distributions and the rights to share 
        in profits and losses, or giving or prescribing the manner of 
        giving voting rights to persons other than members otherwise 
        than pursuant to the articles of organization, or eliminating or 
        limiting a governor's personal liability, in the operating 
        agreement: 
           (1) the persons to serve as the first board of governors 
        may be named in the articles of organization (section 322B.606, 
        subdivision 1); 
           (2) a manner for increasing or decreasing the number of 
        governors may be provided (section 322B.61); 
           (3) additional qualifications for governors may be imposed 
        (section 322B.613); 
           (4) governors may be classified (section 322B.626); 
           (5) the day or date, time, and place of board of governors 
        meetings may be fixed (section 322B.643, subdivision 1); 
           (6) absent governors may be permitted to give written 
        consent or opposition to a proposal (section 322B.646); 
           (7) a larger than majority vote may be required for board 
        of governor action (section 322B.653); 
           (8) authority to sign and deliver certain documents may be 
        delegated to a manager or agent of the limited liability company 
        other than the chief manager (section 322B.673, subdivision 2); 
           (9) additional managers may be designated (section 
        322B.676); 
           (10) additional powers, rights, duties, and 
        responsibilities may be given to managers (section 322B.679 
        322B.676); 
           (11) a method for filling vacant offices may be specified 
        (section 322B.686, subdivision 3); 
           (12) the day or date, time, and place of regular member 
        meetings may be fixed (section 322B.333, subdivision 3); 
           (13) certain persons may be authorized to call special 
        meetings of members (section 322B.336, subdivision 1); 
           (14) notices of member meetings may be required to contain 
        certain information (section 322B.34, subdivision 3); 
           (15) a larger than majority vote may be required for member 
        action (section 322B.346); 
           (16) voting rights may be granted in or pursuant to the 
        articles of organization to persons who are not members (section 
        322B.356, subdivision 3); 
           (17) limited liability company actions giving rise to 
        dissenter rights may be designated (section 322B.386, 
        subdivision 1, paragraph (e)); and 
           (18) a governor's personal liability to the limited 
        liability company or its members for monetary damages for breach 
        of fiduciary duty as a governor may be eliminated or limited in 
        the articles (section 322B.663, subdivision 4). 
           Sec. 5.  Minnesota Statutes 1995 Supplement, section 
        322B.12, subdivision 1, is amended to read: 
           Subdivision 1.  [REQUIREMENTS AND PROHIBITIONS.] The 
        limited liability company name must: 
           (1) be in the English language or in any other language 
        expressed in English letters or characters; 
           (2) contain the words "limited liability company," or must 
        contain the abbreviation "LLC" or, in the case of an 
        organization formed pursuant to section 319A.03, must meet the 
        requirements of section 319A.07 applicable to a limited 
        liability company; 
           (3) not contain the word corporation or incorporated and 
        must not contain the abbreviation of either or both of these 
        words; 
           (4) not contain a word or phrase that indicates or implies 
        that it is organized for a purpose other than a legal business 
        purpose; and 
           (5) be distinguishable upon the records in the office of 
        the secretary of state from the name of a each domestic limited 
        liability company, limited liability partnership, corporation, 
        or and limited partnership, whether profit or nonprofit, or a 
        and each foreign limited liability company, limited liability 
        partnership, corporation, or and limited partnership authorized 
        or registered to do business in this state, whether profit or 
        nonprofit, or a and each name the right to which is, at the time 
        of organization, reserved or as provided for in sections 
        302A.117, 317A.117, 322A.03, 322B.125, or 333.001 to 333.54, 
        unless there is filed with the articles of organization one of 
        the following: 
           (i) the written consent of the domestic limited liability 
        company, limited liability partnership, corporation, or limited 
        partnership or the foreign limited liability company, limited 
        liability partnership, corporation, or limited partnership 
        authorized or registered to do business in this state or the 
        holder of a reserved name or a name filed by or registered with 
        the secretary of state under sections 333.001 to 333.54 having a 
        name that is not distinguishable; 
           (ii) a certified copy of a final decree of a court in this 
        state establishing the prior right of the applicant to the use 
        of the name in this state; or 
           (iii) the applicant's affidavit that the limited liability 
        company, corporation, or limited partnership with the name that 
        is not distinguishable has been organized, incorporated, or on 
        file in this state for at least three years prior to the 
        affidavit, if it is a domestic limited liability company, 
        corporation, or limited partnership, or has been authorized or 
        registered to do business in this state for at least three years 
        prior to the affidavit, if it is a foreign limited liability 
        company, corporation, or limited partnership, or that the holder 
        of a name filed or registered with the secretary of state under 
        sections 333.001 to 333.54 filed or registered that name at 
        least three years prior to the affidavit, and that the limited 
        liability company, corporation, or limited partnership or holder 
        has not during the three-year period filed any document with the 
        secretary of state; that the applicant has mailed written notice 
        to the limited liability company, corporation, or limited 
        partnership or the holder of a name filed or registered with the 
        secretary of state under sections 333.001 to 333.54 by certified 
        mail, return receipt requested, properly addressed to the 
        registered office of the limited liability company or 
        corporation or in care of the agent of the limited partnership, 
        or the address of the holder of a name filed or registered with 
        the secretary of state under sections 333.001 to 333.54, shown 
        in the records of the secretary of state, stating that the 
        applicant intends to use a name that is not distinguishable and 
        the notice has been returned to the applicant as undeliverable 
        to the addressee limited liability company, corporation, or 
        limited partnership or holder of a name filed or registered with 
        the secretary of state under sections 333.001 to 333.54; that 
        the applicant, after diligent inquiry, has been unable to find 
        any telephone listing for the limited liability company, 
        corporation, or limited partnership with the name that is not 
        distinguishable in the county in which is located the registered 
        office of the limited liability company or, corporation, or 
        limited partnership shown in the records of the secretary of 
        state or has been unable to find any telephone listing for the 
        holder of a name filed or registered with the secretary of state 
        under sections 333.001 to 333.54 in the county in which is 
        located the address of the holder shown in the records of the 
        secretary of state; and that the applicant has no knowledge that 
        the limited liability company, corporation, or limited 
        partnership or holder of a name filed or registered with the 
        secretary of state under sections 333.001 to 333.54 is currently 
        engaged in business in this state. 
           Sec. 6.  Minnesota Statutes 1994, section 322B.125, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [WHO MAY RESERVE.] The exclusive right to 
        the use of a limited liability company name otherwise permitted 
        by section 322B.12 may be reserved by: 
           (1) a person doing business in this state under that name; 
           (2) a person intending to organize under this chapter; 
           (3) a domestic limited liability company intending to 
        change its name; 
           (4) a foreign limited liability company intending to make 
        application for a certificate of authority to transact business 
        in this state; 
           (5) a foreign limited liability company authorized to 
        transact business in this state and intending to change its 
        name; 
           (6) a person intending to organize a foreign limited 
        liability company and intending to have the foreign limited 
        liability company make application for a certificate of 
        authority to transact business in this state; or 
           (7) a foreign limited liability company doing business 
        under that name or a name deceptively similar to not 
        distinguishable from that name in one or more states other than 
        this state and not described in clause (4), (5), or (6). 
           Sec. 7.  Minnesota Statutes 1994, section 322B.135, 
        subdivision 3, is amended to read: 
           Subd. 3.  [CHANGE OF BUSINESS ADDRESS OR NAME OF AGENT.] If 
        the business address or name of a registered agent changes, the 
        agent shall change the address of the registered office or the 
        name of the registered agent, as the case may be, of each 
        limited liability company represented by that agent by filing 
        with the secretary of state a statement as required in 
        subdivision 1, except that it need be signed only by the 
        registered agent, need not be responsive to clause (3) or (6), 
        and must state that a copy of the statement has been mailed to 
        each of those limited liability companies or to the legal 
        representative of each of those limited liability companies. 
           Sec. 8.  Minnesota Statutes 1994, section 322B.145, is 
        amended to read: 
           322B.145 [PROCEDURE FOR AMENDMENT BEFORE CONTRIBUTION.] 
           Before any contribution is reflected in the required 
        records of a limited liability company, the articles of 
        organization may be amended pursuant to section 322B.60 by the 
        organizers or by the board of governors.  The articles of 
        organization may also be amended by the board of governors to 
        change or cancel a statement pursuant to section 322B.40, 
        subdivision 6, establishing or fixing the rights and preferences 
        of a class or series of membership interests before any 
        contribution pertaining to that class or series is reflected in 
        the required records of the limited liability company by filing 
        articles of amendment or a statement of cancellation, as 
        appropriate, with the secretary of state. 
           Sec. 9.  Minnesota Statutes 1994, section 322B.15, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [MANNER OF AMENDMENT.] Except as otherwise 
        set forth in section 322B.145, after any contribution has been 
        reflected in the required records of a limited liability 
        company, the articles of organization may be amended in the 
        manner set forth in this section. 
           Sec. 10.  Minnesota Statutes 1994, section 322B.15, 
        subdivision 3, is amended to read: 
           Subd. 3.  [NOTICE.] Written notice of the members' meeting 
        setting forth the substance of the proposed amendment must be 
        given to each member entitled to vote in the manner provided in 
        section 322B.34 for the giving of notice of meetings of members. 
           Sec. 11.  Minnesota Statutes 1994, section 322B.15, 
        subdivision 4, is amended to read: 
           Subd. 4.  [APPROVAL BY MEMBERS.] (a) The proposed amendment 
        is adopted when approved by the affirmative vote of the owners 
        of a majority of the voting power of the members present and 
        entitled to vote members required by section 322B.346, except as 
        provided in paragraphs (b) and (c), and subdivision 5. 
           (b) For a closely held limited liability company, if the 
        articles of organization provide for a specified proportion 
        equal to or larger than the majority necessary to transact a 
        specified type of business at a meeting, or if it is proposed to 
        amend the articles to provide for a specified proportion equal 
        to or larger than the majority necessary to transact a specified 
        type of business at a meeting, the affirmative vote necessary to 
        add the provision to, or to amend an existing provision in, the 
        articles of organization is the larger of: 
           (1) the specified proportion or, in the absence of a 
        specific provision, the affirmative vote necessary to transact 
        the type of business described in the proposed amendment at a 
        meeting immediately before the effectiveness of the proposed 
        amendment; or 
           (2) the specified proportion that would, upon effectiveness 
        of the proposed amendment, be necessary to transact the 
        specified type of business at a meeting. 
           (c) For limited liability companies other than closely held 
        limited liability companies, if the articles provide for a 
        larger proportion to transact a specified type of business at a 
        meeting, the affirmative vote of that larger proportion is 
        necessary to amend the articles to decrease the proportion 
        necessary to transact the business. 
           Sec. 12.  Minnesota Statutes 1994, section 322B.155, is 
        amended to read: 
           322B.155 [CLASS OR SERIES VOTING ON AMENDMENTS.] 
           The owners of the outstanding membership interests of a 
        class or series are entitled to vote as a class or series upon a 
        proposed amendment, whether or not entitled to vote on the 
        amendment by the provisions of the articles of organization, if 
        the amendment would: 
           (1) effect an exchange, reclassification, or cancellation 
        of all or part of the membership interests of the class or 
        series; 
           (2) effect an exchange, or create a right of exchange, of 
        all or any part of the membership interests of another class or 
        series for the membership interests of the class or series; 
           (3) change the rights or preferences of the membership 
        interests of the class or series; 
           (4) change the membership interests of the class or series 
        into the same or a different number of membership interests of 
        the same or another class or series; 
           (5) create a new class or series of membership interests 
        having rights and preferences prior and superior to the 
        membership interests of that class or series, or increase the 
        rights and preferences or the number of membership interests, of 
        a class or series having rights and preferences prior or 
        superior to the membership interests of that class or series; 
           (6) divide the membership interests of the class into 
        series and determine the designation of each series and the 
        variations in the relative rights and preferences between the 
        membership interests of each series or authorize the board of 
        governors to do so; 
           (7) limit or deny any existing preemptive rights of the 
        membership interests of the class or series; or 
           (8) cancel or otherwise affect distributions on the 
        membership interests of the class or series. 
           Sec. 13.  Minnesota Statutes 1994, section 322B.175, is 
        amended to read: 
           322B.175 [EFFECTIVE DATE OF ARTICLES OF ORGANIZATION.] 
           Articles of organization are effective and limited 
        liability company existence begins when the articles of 
        organization are filed with the secretary of state accompanied 
        by a payment of $135, which includes a $100 organization fee in 
        addition to the $35 filing fee required by section 322B.03, 
        subdivision 18.  Articles of amendment and articles of merger 
        are effective when filed with the secretary of state or at 
        another time within 30 days after filing if the articles of 
        amendment so provide.  Articles of merger must be accompanied by 
        a fee of $60, which includes a $25 merger fee in addition to the 
        $35 filing fee required by section 322B.03, subdivision 18.  
           Sec. 14.  Minnesota Statutes 1994, section 322B.20, 
        subdivision 2, is amended to read: 
           Subd. 2.  [DURATION.] A limited liability company has a 
        limited duration of 30 years from the date the articles of 
        organization are filed with the secretary of state, unless the 
        articles of organization state a shorter or longer period of 
        duration.  
           Sec. 15.  Minnesota Statutes 1994, section 322B.30, 
        subdivision 3, is amended to read: 
           Subd. 3.  [GRANT OF A SECURITY INTEREST.] Notwithstanding 
        any law to the contrary, For the purpose of any law relating to 
        security interests, a membership interest, governance rights, 
        and financial rights are each a general intangible, as defined 
        in section 336.9-106, and not a certificated security as defined 
        in section 336.8-102(1)(a) and not an uncertificated security as 
        defined in section 336.8-102(1)(b) and not chattel paper as 
        defined in section 336.9-105(1)(b) and not an instrument as 
        defined in section 336.9-105(1)(i) and not an account as defined 
        in section 336.9-106 to be characterized as provided in section 
        336.8-103, paragraph (c). 
           Sec. 16.  Minnesota Statutes 1994, section 322B.313, 
        subdivision 2, is amended to read: 
           Subd. 2.  [WHEN UNANIMOUS CONSENT REQUIRED.] Subject to 
        subdivision 6, a member may, without the consent of any other 
        member, assign governance rights, in whole or in part, to 
        another person already a member at the time of the 
        assignment.  Except as otherwise set forth in the articles of 
        organization, any other assignment of any governance rights is 
        effective only if all the members, other than the member seeking 
        to make the assignment, approve the assignment by unanimous 
        written consent, unless the articles of organization provide for 
        written consent by fewer than all members.  Subject to 
        subdivision 6, a member may grant a security interest in a 
        complete membership interest or governance rights without 
        obtaining the consent required by this subdivision.  However, a 
        secured party may not take or assign ownership of governance 
        rights without first obtaining the consent required by this 
        subdivision.  If a secured party has a security interest in both 
        a member's financial rights and governance rights, including a 
        security interest in a complete membership interest, this 
        subdivision's requirement that the secured party obtain consent 
        applies only to taking or assigning ownership of the governance 
        rights and does not apply to taking or assigning ownership of 
        the financial rights. 
           Sec. 17.  Minnesota Statutes 1994, section 322B.33, 
        subdivision 4, is amended to read: 
           Subd. 4.  [EXEMPTIONS.] Unless otherwise provided in the 
        articles of organization, no preemptive rights according to this 
        section arise as to contributions to be accepted from others or 
        as to contribution allowance agreements to be made with others 
        when the contribution is:  
           (1) to be made in a form other than money; 
           (2) to be made or reflected pursuant to a plan of merger or 
        exchange; 
           (3) to be made or reflected pursuant to an employee or 
        incentive benefit plan approved at a meeting by the affirmative 
        vote of the owners of a majority of the voting power of all 
        membership interests entitled to vote; 
           (4) to be made pursuant to a previously made contribution 
        allowance agreement; or 
           (5) to be made or reflected pursuant to a plan of 
        reorganization approved by a court of competent jurisdiction 
        pursuant to a statute of this state or of the United States.  
           Sec. 18.  Minnesota Statutes 1994, section 322B.33, 
        subdivision 9, is amended to read: 
           Subd. 9.  [MODIFICATION.] If the members of a limited 
        liability company are entitled to cumulative voting in the 
        election of governors, no amendment to the articles of 
        organization that has the effect of denying, limiting, or 
        modifying the preemptive rights provided in this section shall 
        be adopted if the votes of a proportion of the voting power 
        sufficient to elect a governor at an election of the entire 
        board of governors under cumulative voting are cast against the 
        amendment.  
           Sec. 19.  Minnesota Statutes 1994, section 322B.34, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TO WHOM GIVEN.] Except as otherwise 
        provided in this chapter, notice of all meetings of members must 
        be given to every owner of membership interests entitled to 
        vote, unless:  
           (1) the meeting is an adjourned meeting to be held not more 
        than 120 days after the date fixed for the original meeting and 
        the date, time, and place of the meeting were announced at the 
        time of the original meeting or any adjournment of the original 
        meeting; or 
           (2) the following have been mailed by first class mail to a 
        member at the address in the limited liability company records 
        and returned undeliverable:  
           (i) two consecutive annual meeting notices and notice of 
        any special meetings held during the period between the two 
        annual meetings; and 
           (ii) all payment of distributions sent during a 12-month 
        period, provided there are at least two sent during a the 
        12-month period.  
           If notice of an adjourned meeting is required under clause 
        (1), then the date for determination of members entitled to 
        notice of, and entitled to vote at, the adjourned meeting must 
        comply with section 322B.356, subdivision 1, except that if the 
        date of the meeting is set by court order, the court may provide 
        that the original date of determination will continue in effect 
        or may fix a new date. 
           An action or meeting that is taken or held without notice 
        under clause (2) has the same force and effect as if notice was 
        given.  If the member delivers a written notice of the member's 
        current address to the limited liability company, the notice 
        requirement is reinstated.  
           Sec. 20.  Minnesota Statutes 1994, section 322B.34, 
        subdivision 3, is amended to read: 
           Subd. 3.  [CONTENTS.] The notice must contain the date, 
        time, and place of the meeting, the information with respect to 
        dissenters' rights required by section 322B.386, subdivision 2, 
        if applicable, and any other information required by this 
        chapter.  In the case of a special meeting, the notice must 
        contain a statement of the purposes of the meeting.  The notice 
        may also contain any other information required by the articles 
        of organization or operating agreement or considered necessary 
        or desirable by the board of governors or by any other person or 
        persons calling the meeting.  
           Sec. 21.  Minnesota Statutes 1994, section 322B.346, 
        subdivision 2, is amended to read: 
           Subd. 2.  [VOTING BY CLASS OR SERIES.] In any case where a 
        class or series of membership interests is entitled by this 
        chapter, the articles of organization, the operating agreement, 
        or the terms of the membership interests to vote as a class or 
        series, the matter being voted upon must also receive the 
        affirmative vote of the owners of the same proportion of the 
        membership interests present of that class or series, or of the 
        total outstanding membership interests of that class or series, 
        as the proportion required pursuant to subdivision 1, unless the 
        articles require a larger proportion.  Unless otherwise stated 
        in the articles or operating agreement in the case of voting as 
        a class or series, the minimum percentage of the total voting 
        power of membership interests of the class or series that must 
        be present is equal to the minimum percentage of all membership 
        interests entitled to vote required to be present under section 
        322B.353.  
           Sec. 22.  Minnesota Statutes 1994, section 322B.36, 
        subdivision 2, is amended to read: 
           Subd. 2.  [MEMBERSHIP INTERESTS HELD BY SUBSIDIARY.] Except 
        as provided in subdivision 3, membership interests of a limited 
        liability company reflected in the required records as being 
        owned by a subsidiary are not entitled to vote be voted on any 
        matter. 
           Sec. 23.  Minnesota Statutes 1994, section 322B.36, 
        subdivision 3, is amended to read: 
           Subd. 3.  [MEMBERSHIP INTERESTS CONTROLLED IN A FIDUCIARY 
        CAPACITY.] Membership interests of a limited liability company 
        in the name of, or under the control of, the limited liability 
        company or a subsidiary in a fiduciary capacity are not entitled 
        to vote be voted on any matter, except to the extent that the 
        settlor or beneficiary possesses and exercises a right to vote 
        or gives the limited liability company or, with respect to 
        membership interests in the name of or under control of a 
        subsidiary, the subsidiary, binding instructions on how to vote 
        the membership interests.  
           Sec. 24.  Minnesota Statutes 1994, section 322B.363, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [AUTHORIZATION.] A member may cast or 
        authorize the casting of a vote by filing a written appointment 
        of a proxy with a manager of the limited liability company at or 
        before the meeting at which the appointment is to be effective.  
        A written appointment of a proxy may be signed by the member or 
        authorized by the member by transmission of a telegram, 
        cablegram, or other means of electronic transmission.  The 
        telegram, cablegram, or other means of electronic transmission 
        must set forth or be submitted with information from which it 
        can be determined, provided that the limited liability company 
        has no reason to believe that the telegram, cablegram, or other 
        electronic transmission was not authorized by the member.  Any 
        reproduction of the writing or transmission may be substituted 
        or used in lieu of the original writing or transmission for any 
        purpose for which the original transmission could be used, if 
        the copy, facsimile telecommunication, or other reproduction is 
        a complete and legible reproduction of the entire original 
        writing or transmission.  An appointment of a proxy for 
        membership interests owned jointly by two or more members is 
        valid if signed or otherwise authorized by any one of them, 
        unless the limited liability company receives from any one of 
        those members written notice either denying the authority of 
        that person to appoint a proxy or appointing a different proxy. 
           Sec. 25.  Minnesota Statutes 1994, section 322B.373, 
        subdivision 2, is amended to read: 
           Subd. 2.  [RIGHT TO INSPECT.] (a) A member of a limited 
        liability company has an absolute right, upon written demand, to 
        examine and copy, in person or by a legal representative, at any 
        reasonable time, and the limited liability company shall make 
        available within ten days after receipt by a manager of the 
        limited liability company of the written demand, all documents 
        referred to in subdivision 1. 
           (b) A member of a limited liability company has a right, 
        upon written demand, to examine and copy, in person or by a 
        legal representative, other limited liability company records at 
        any reasonable time only if the member demonstrates a proper 
        purpose for the examination.  
           (c) For purposes of this section, a "proper purpose" is one 
        reasonably related to the person's interest as a member of the 
        limited liability company.  
           Sec. 26.  Minnesota Statutes 1994, section 322B.376, is 
        amended to read: 
           322B.376 [FINANCIAL STATEMENTS.] 
           (a) A limited liability company shall, upon written request 
        by a member, furnish annual financial statements, 
        including prepare annual financial statements within 180 days 
        after the close of the limited liability company's fiscal year.  
        The financial statements must include at least a balance sheet 
        as of the end of each fiscal year and a statement of income for 
        the fiscal year, prepared on the basis of accounting methods 
        reasonable in the circumstances.  The financial statements may 
        be consolidated statements of the limited liability company and 
        one or more of its subsidiaries.  In the case of statements 
        audited by a public accountant, each copy must be accompanied by 
        a report setting forth the opinion of the accountant on the 
        statements; in other cases, each copy must be accompanied by a 
        statement of the treasurer or other person in charge of the 
        limited liability company's financial records stating the 
        reasonable belief of the person that the financial statements 
        were prepared in accordance with accounting methods reasonable 
        in the circumstances, describing the basis of presentation, and 
        describing any respects in which the financial statements were 
        not prepared on a basis consistent with those prepared for the 
        previous year.  
           (b) Upon written request by a member, a limited liability 
        company shall furnish its most recent annual financial 
        statements as required under paragraph (a) no later than ten 
        business days after receipt of a member's written request.  
        "Furnish" for purposes of this paragraph means that the limited 
        liability company shall deliver or mail, postage prepaid, the 
        financial statements to the address specified by the requesting 
        member. 
           Sec. 27.  Minnesota Statutes 1994, section 322B.383, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ACTIONS CREATING DISSENTERS' RIGHTS.] 
        Subject to a member control agreement under section 322B.37, a 
        member of a limited liability company may dissent from, and 
        obtain payment for the fair value of the member's membership 
        interests in the event of, any of the following limited 
        liability company actions:  
           (1) an amendment of the articles of organization that 
        materially and adversely affects the rights or preferences of 
        the membership interests of the dissenting member in that it:  
           (i) alters or abolishes a preferential right of the 
        membership interests; 
           (ii) creates, alters, or abolishes a right in respect of 
        the redemption of the membership interests, including a 
        provision respecting a sinking fund for the redemption or 
        repurchase of the membership interests; 
           (iii) alters or abolishes a preemptive right of the owner 
        of the membership interests to make a contribution; 
           (iv) excludes or limits the right of a member to vote on a 
        matter, or to cumulate votes, except as the right may be 
        excluded or limited through the acceptance of contributions or 
        the making of contribution agreements pertaining to membership 
        interests with similar or different voting rights; 
           (v) changes a member's right to resign or retire; 
           (vi) establishes or changes the conditions for or 
        consequences of expulsion; 
           (vii) changes the statement required under section 
        322B.115, subdivision 1, clause (5); 
           (viii) changes the statement required under section 
        322B.115, subdivision 1, clause (6); or 
           (2) a sale, lease, transfer, or other disposition of all or 
        substantially all of the property and assets of the limited 
        liability company not made in the usual or regular course of its 
        business, but not including a transaction permitted without 
        member approval in section 322B.77, subdivision 1, or a 
        disposition in dissolution described in section 322B.813, 
        subdivision 4, or a disposition pursuant to an order of a court, 
        or a disposition for cash on terms requiring that all or 
        substantially all of the net proceeds of disposition be 
        distributed to the members in accordance with their respective 
        membership interests within one year after the date of 
        disposition; 
           (3) a plan of merger to which the limited liability company 
        is a party, except as provided in section 322B.873, subdivision 
        2, clause (1)(i) and subject to section 322B.873, subdivision 3; 
           (4) a plan of exchange to which the limited liability 
        company is a party as the organization whose ownership interests 
        will be acquired by the acquiring organization, if the 
        membership interests being acquired are entitled to be voted on 
        the plan; 
           (5) any other limited liability company action taken 
        pursuant to a member vote with respect to which the articles of 
        organization, the operating agreement, or a resolution approved 
        by the board of governors directs that dissenting members may 
        obtain payment for their membership interests; or 
           (6) a resolution of the board of governors under section 
        322B.873, subdivision 2, to implement a business continuation 
        agreement.  
           Sec. 28.  Minnesota Statutes 1994, section 322B.386, 
        subdivision 4, is amended to read: 
           Subd. 4.  [NOTICE OF PROCEDURE.] (a) After the proposed 
        action has been approved by the board of governors and, if 
        necessary, the members, the limited liability company shall send 
        to all members who have complied with subdivision 3 and to all 
        members entitled to dissent if no member vote was required, a 
        notice that contains: 
           (1) the address to which a demand for payment must be sent 
        in order to obtain payment and the date by which the demand must 
        be received; 
           (2) a form to be used to certify the date on which the 
        member acquired the membership interests and to demand payment; 
        and 
           (3) a copy of section 322B.383, this section and, if 
        applicable, section 322B.873, subdivisions 2 and 3, and a brief 
        description of the procedures to be followed under these 
        sections.  
           (b) In order to receive the fair value of the membership 
        interests, a dissenting member must demand payment within 30 
        days after the notice required by paragraph (a) was given, but 
        the dissenter retains all other rights of a member until the 
        proposed action takes effect. 
           Sec. 29.  Minnesota Statutes 1994, section 322B.386, 
        subdivision 7, is amended to read: 
           Subd. 7.  [PETITION AND DETERMINATION.] If the limited 
        liability company receives a demand under subdivision 6, it 
        shall, within 60 days after receiving the demand, either pay to 
        the dissenter the amount demanded or agreed to by the dissenter 
        after discussion with the limited liability company or file in 
        court a petition requesting that the court determine the fair 
        value of the membership interests, plus interest.  The petition 
        must be filed in the county in which the registered office of 
        the limited liability company is located, except that a 
        surviving foreign corporation that receives a demand relating to 
        the membership interests of a constituent limited liability 
        company shall file the petition in the county in this state in 
        which the last registered office of the constituent limited 
        liability company was located.  The petition must name as 
        parties all dissenters who have demanded payment under 
        subdivision 6 and who have not reached agreement with the 
        limited liability company.  The limited liability company shall, 
        after filing the petition, serve all parties with a summons and 
        copy of the petition under the rules of civil procedure.  
        Nonresidents of this state may be served by registered or 
        certified mail or by publication as provided by law.  Except as 
        otherwise provided, the rules of civil procedure apply to this 
        proceeding.  The jurisdiction of the court is plenary and 
        exclusive.  The court may appoint appraisers, with powers and 
        authorities the court considers proper, to receive evidence on 
        and recommend the amount of the fair value of the membership 
        interests.  The court shall determine whether the member or 
        members in question have fully complied with the requirements of 
        this section, and shall determine the fair value of the 
        membership interests, taking into account any and all factors 
        the court finds relevant, computed by any method or combination 
        of methods that the court, in its discretion, sees fit to use, 
        whether or not used by the limited liability company or by a 
        dissenter.  The fair value of the membership interests as 
        determined by the court is binding on all members, wherever 
        located.  A dissenter is entitled to judgment in cash for the 
        amount by which the fair value of the membership interests as 
        determined by the court, plus interest, exceeds the amount, if 
        any, remitted under subdivision 5, but is not liable to the 
        limited liability company for the amount, if any, by which the 
        amount, if any, remitted to the dissenter under subdivision 5 
        exceeds the fair value of the membership interests as determined 
        by the court, plus interest.  
           Sec. 30.  Minnesota Statutes 1994, section 322B.40, 
        subdivision 6, is amended to read: 
           Subd. 6.  [PROCEDURE FOR FIXING TERMS.] (a) Subject to any 
        restrictions in the articles of organization, the power granted 
        in subdivision 5 may be exercised by a resolution or resolutions 
        establishing a class or series, setting forth the designation of 
        the class or series, and fixing the relative rights and 
        preferences of the class or series.  Any of the rights and 
        preferences of a class or series established in the articles of 
        organization or by resolution of the board of governors:  
           (1) may be made dependent upon facts ascertainable outside 
        the articles of organization, or outside the resolution or 
        resolutions establishing the class or series, if the manner in 
        which the facts operate upon the rights and preferences of the 
        class or series is clearly and expressly set forth in the 
        articles of organization or in the resolution or resolutions 
        establishing the class or series; and 
           (2) may incorporate by reference some or all of the terms 
        of any agreements, contracts, or other arrangements entered into 
        by the limited liability company in connection with the 
        establishment of the class or series if the limited liability 
        company retains at its principal executive office a copy of the 
        agreements, contracts, or other arrangements or the portions 
        incorporated by reference.  
           (b) A statement setting forth the name of the limited 
        liability company and the text of the resolution and certifying 
        the adoption of the resolution and the date of adoption must be 
        filed with the secretary of state before the acceptance of any 
        contributions for which the resolution creates rights or 
        preferences not set forth in the articles of organization.  
        However, where the members have received notice of the creation 
        of membership interests with rights or preferences not set forth 
        in the articles of organization before the acceptance of the 
        contributions with respect to the membership interests, the 
        statement may be filed any time within one year after the 
        acceptance of contributions.  The resolution is effective when 
        the statement has been filed with the secretary of state; or, if 
        it is not required to be filed with the secretary of state 
        before the acceptance of contributions, on the date of its 
        adoption by the governors.  
           (c) A statement filed with the secretary of state in 
        accordance with paragraph (b) is not considered an amendment of 
        the articles of organization for purposes of sections 322B.155 
        and 322B.383.  
           Sec. 31.  Minnesota Statutes 1994, section 322B.42, 
        subdivision 2, is amended to read: 
           Subd. 2.  [IRREVOCABLE PERIOD.] Unless otherwise provided 
        in the contribution agreement, or unless all of the would-be 
        contributors and, if in existence, the limited liability 
        company, consent to a shorter or longer period, a contribution 
        agreement is irrevocable for a period of six months, unless the 
        contribution agreement provides for, or unless all other 
        would-be contributors who are a party to a contribution consent 
        to, an earlier revocation.  
           Sec. 32.  Minnesota Statutes 1994, section 322B.42, 
        subdivision 4, is amended to read: 
           Subd. 4.  [FAILURE TO PAY REMEDIES.] (a) Unless otherwise 
        provided in the contribution agreement, in the event of default 
        in the payment or performance of an installment or call when 
        due, the limited liability company may proceed to collect the 
        amount due in the same manner as a debt due the limited 
        liability company, or, if the amount due remains unpaid for a 
        period of 20 days after written notice of demand for payment has 
        been given to the delinquent would-be contributor, the board of 
        governors may declare a forfeiture of the contribution agreement 
        or cancel it in accordance with this subdivision.  If a would-be 
        contributor does not make a required contribution of property or 
        services, the limited liability company shall require the 
        would-be contributor to contribute cash equal to that portion of 
        the value, as stated in the limited liability company required 
        records, of the contribution that has not been made.  
           (b) Upon forfeiture of a contribution agreement, If the 
        amount due under a contribution agreement remains unpaid for a 
        period of 20 days after written notice of demand for payment has 
        been given to the delinquent would-be contributor, the 
        membership interests that were subject to the contribution 
        agreement may be offered for sale by the limited liability 
        company for a price in money equaling or exceeding the sum of 
        the full balance owed by the delinquent would-be contributor 
        plus the expenses incidental to the sale.  Any excess of net 
        proceeds realized by the limited liability company over the sum 
        of the amount owed by the delinquent would-be contributor plus 
        the expenses incidental to the sale must be paid to the 
        delinquent would-be contributor or to a legal representative.  
        The payment must not exceed the amount of contribution actually 
        made by the delinquent would-be contributor.  
           If the membership interests that were subject to the 
        contribution agreement are sold according to this paragraph, the 
        limited liability company shall pay to the delinquent would-be 
        contributor or to the delinquent would-be contributor's legal 
        representative the lesser of (i) the excess of net proceeds 
        realized by the limited liability company over the sum of the 
        amount owed by the delinquent would-be contributor plus the 
        expenses incidental to the sale, and (ii) the amount actually 
        paid by the delinquent would-be contributor.  If the membership 
        interests that were subject to the contribution agreement are 
        not sold according to this paragraph, the limited liability 
        company may collect the amount due in the same manner as a debt 
        due the limited liability company or cancel the contribution 
        agreement according to paragraph (c). 
           (c) If, within 20 days after the limited liability company 
        offers to sell If the amount due under a contribution agreement 
        remains unpaid for a period of 20 days after written notice of 
        demand for payment has been given to the delinquent would-be 
        contributor and the membership interests that were subject to 
        the defaulted contribution agreement, no prospective purchaser 
        offers to purchase the membership interests for a money price 
        sufficient to pay the sum of the full balance owed by the 
        delinquent would-be contributor plus the expenses incidental to 
        the sale, or if the limited liability company has refunded to 
        the would-be contributor or a legal representative a have not 
        been sold according to paragraph (b), the limited liability 
        company may cancel the contribution agreement, the limited 
        liability company may retain the portion of the contribution 
        agreement price actually paid, the contribution agreement may be 
        canceled that does not exceed ten percent of the contribution 
        agreement, and the limited liability company may retain 
        the shall refund to the delinquent would-be contributor or the 
        delinquent would-be contributor's legal representatives that 
        portion of the contribution agreement price actually paid 
        that does not exceed exceeds ten percent of the contribution 
        agreement price.  
           Sec. 33.  Minnesota Statutes 1994, section 322B.54, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [WHEN DISTRIBUTIONS ARE PERMITTED.] (a) The 
        board of governors may authorize and cause the limited liability 
        company to make a distribution only if the board of governors 
        determines, in accordance with subdivision 2, that the limited 
        liability company will be able to pay its debts in the ordinary 
        course of business after making the distribution and the board 
        of governors does not know before the distribution is made that 
        the determination was or has become erroneous, and. 
           (b) The limited liability company may make the distribution 
        if it is able to pay its debts in the ordinary course of 
        business after making the distribution.  
           (c) The effect of a distribution on the ability of the 
        limited liability company to pay its debts in the ordinary 
        course of business after making the distribution must be 
        measured in accordance with subdivision 3.  
           (d) The right of the board of governors to authorize, and 
        the limited liability company to make, distributions may be 
        prohibited, limited, or restricted by the articles of 
        organization or operating agreement or an agreement. 
           Sec. 34.  Minnesota Statutes 1994, section 322B.56, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [LIABILITY.] In addition to any other 
        liabilities, a governor who is present at a meeting and fails to 
        vote against, or who consents in writing to, a distribution made 
        in violation of section 322B.54, subdivision 1 or 4, or a 
        restriction contained in the articles of organization or 
        operating agreement or an agreement, and who fails to comply 
        with the standard of conduct provided in section 322B.663, is 
        liable to the limited liability company, its receiver or any 
        other person winding up its affairs jointly and severally with 
        all other governors so liable and to other governors under 
        subdivision 3, but only to the extent that the distribution 
        exceeded the amount that properly could have been paid under 
        section 322B.54.  
           Sec. 35.  Minnesota Statutes 1994, section 322B.60, 
        subdivision 2, is amended to read: 
           Subd. 2.  [MEETING.] After the issuance of the 
        certificate filing of articles of organization, the organizers 
        or the governors named in the articles of organization shall 
        either hold an organizational meeting at the call of a majority 
        of the organizers or of the governors named in the articles, or 
        take written action, for the purposes of transacting business 
        and taking actions necessary or appropriate to complete the 
        organization of the limited liability company, including, 
        without limitation, amending the articles, electing governors, 
        adopting an operating agreement, electing managers, adopting 
        banking resolutions, authorizing or ratifying the purchase, 
        lease, or other acquisition of suitable space, furniture, 
        furnishings, supplies, and materials, approving a limited 
        liability company seal, adopting a fiscal year for the limited 
        liability company, contracting to receive and accept 
        contributions, and making any appropriate tax elections.  If a 
        meeting is held, the person or persons calling the meeting shall 
        give at least three days notice of the meeting to each organizer 
        or governor named, stating the date, time, and place of the 
        meeting.  Organizers and governors may waive notice of an 
        organizational meeting in the same manner that a governor may 
        waive notice of meetings of the board under section 322B.643, 
        subdivision 5. 
           Sec. 36.  Minnesota Statutes 1994, section 322B.643, 
        subdivision 3, is amended to read: 
           Subd. 3.  [CALLING MEETINGS AND NOTICE.] Unless the 
        articles of organization or operating agreement provide for a 
        different time period, a governor may call a board meeting by 
        giving at least ten days notice or, in the case of 
        organizational meetings under section 322B.60, subdivision 2, at 
        least three days notice to all governors of the date, time, and 
        place of the meeting.  The notice need not state the purpose of 
        the meeting unless the articles or operating agreement require 
        it.  
           Sec. 37.  Minnesota Statutes 1994, section 322B.646, is 
        amended to read: 
           322B.646 [ABSENT GOVERNORS.] 
           If the articles of organization or operating agreement so 
        provide, a governor may give advance written consent or 
        opposition to a proposal to be acted on at a board of governors 
        meeting.  If the governor is not present at the meeting, consent 
        or opposition to a proposal does not constitute presence for 
        purposes of determining the existence of a quorum, but consent 
        or opposition must be counted as a the vote of a governor 
        present at the meeting in favor of or against the proposal and 
        must be entered in the minutes or other record of action at the 
        meeting, if the proposal acted on at the meeting is 
        substantially the same or has substantially the same effect as 
        the proposal to which the governor has consented or objected.  
           Sec. 38.  Minnesota Statutes 1994, section 322B.653, is 
        amended to read: 
           322B.653 [ACT OF THE BOARD OF GOVERNORS.] 
           The board of governors shall take action by the affirmative 
        vote of the greater of (1) a majority of governors present at a 
        duly held meeting at the time the action is taken, or (2) a 
        majority of the minimum proportion of number of governors that 
        would constitute a quorum for the transaction of business at the 
        meeting, except where this chapter or the articles require the 
        affirmative vote of a larger proportion or number.  If the 
        articles require a larger proportion or number than is required 
        by this chapter for a particular action, the articles control.  
           Sec. 39.  Minnesota Statutes 1994, section 322B.666, 
        subdivision 2, is amended to read: 
           Subd. 2.  [MATERIAL FINANCIAL INTEREST.] For purposes of 
        this section:  
           (1) a governor does not have a material financial interest 
        in a resolution fixing the compensation of the a governor or 
        fixing the compensation of another governor as a governor, 
        manager, employee, or agent of the limited liability company, 
        even though the first governor is also receiving compensation 
        from the limited liability company is not void or voidable or 
        considered to be a contract or other transaction between a 
        limited liability company and one or more of its governors for 
        purposes of this section even though the governor receiving the 
        compensation fixed by the resolution is present and voting at 
        the meeting of the board or a committee at which the resolution 
        is authorized, approved, or ratified or even though other 
        governors voting upon the resolution are also receiving 
        compensation from the limited liability company; and 
           (2) a governor has a material financial interest in each 
        organization in which the governor, or the spouse, parents, 
        children and spouses of children, brothers and sisters and 
        spouses of brothers and sisters, and the brothers and sisters of 
        the spouse of the governor, or any combination of them have a 
        material financial interest.  For purposes of this section, a 
        contract or other transaction between a limited liability 
        company and the spouse, parents, children and spouses of 
        children, brothers and sisters, spouses of brothers and sisters, 
        and the brothers and sisters of the spouse of a governor, or any 
        combination of them, is considered to be a transaction between 
        the limited liability company and the governor. 
           Sec. 40.  Minnesota Statutes 1994, section 322B.693, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [PREREQUISITES.] A limited liability 
        company may lend money to, guarantee an obligation of, become a 
        surety for, or otherwise financially assist a person, if the 
        transaction, or a class of transactions to which the transaction 
        belongs, is approved by the affirmative vote of a majority of 
        the governors present and:  
           (1) is in the usual and regular course of business of the 
        limited liability company; 
           (2) is with, or for the benefit of, a related organization, 
        an organization in which the limited liability company has a 
        financial interest, an organization with which the limited 
        liability company has a business relationship, or an 
        organization to which the limited liability company has the 
        power to make donations, any of which relationships constitute 
        consideration sufficient to make the loan, guarantee, 
        suretyship, or other financial assistance so approved 
        enforceable against the limited liability company; 
           (3) is with, or for the benefit of, a member who provides 
        services to the limited liability company, or a manager or other 
        employee of the limited liability company or a subsidiary, 
        including a member, manager, or employee who is a governor of 
        the limited liability company or a subsidiary, and may 
        reasonably be expected, in the judgment of the board of 
        governors, to benefit the limited liability company; or 
           (4) whether or not any separate consideration has been or 
        promised to the limited liability company, has been approved by 
        the owners of two-thirds of the voting power of persons other 
        than the interested person or persons, or the unanimous 
        affirmative vote of all members, whether or not ordinarily 
        entitled to vote.  
           Sec. 41.  Minnesota Statutes 1994, section 322B.699, 
        subdivision 6, is amended to read: 
           Subd. 6.  [DETERMINATION OF ELIGIBILITY.] (a) All 
        determinations whether indemnification of a person is required 
        because the criteria set forth in subdivision 2 have been 
        satisfied and whether a person is entitled to payment or 
        reimbursement of expenses in advance of the final disposition of 
        a proceeding as provided in subdivision 3 must be made:  
           (1) by the board of governors by a majority of a quorum.  
        If the governors who are, at the time, parties to the proceeding 
        are not counted for determining either a majority or the 
        presence of a quorum; 
           (2) if a quorum under clause (1) cannot be obtained, by a 
        majority of a committee of the board of governors, consisting 
        solely of two or more governors not at the time parties to the 
        proceeding, duly designated to act in the matter by a majority 
        of the full board of governors including governors who are 
        parties; 
           (3) if a determination is not made under clause (1) or (2), 
        by special legal counsel, selected either by a majority of the 
        board of governors or a committee by vote pursuant to clause (1) 
        or (2) or, if the requisite quorum of the full board of 
        governors cannot be obtained and the committee cannot be 
        established, by a majority of the full board of governors 
        including governors who are parties; 
           (4) if a determination is not made under clauses (1) to 
        (3), by the members, excluding the votes of but the membership 
        interests held by parties to the proceeding must not be counted 
        in determining the presence of a quorum and are not considered 
        to be present and entitled to vote on the determination; or 
           (5) if an adverse determination is made under clauses (1) 
        to (4) or under paragraph (b), or if no determination is made 
        under clauses (1) to (4) or under paragraph (b) within 60 days 
        after (i) the later to occur of the termination of a proceeding 
        or a written request for indemnification to the limited 
        liability company or after a (ii) a written request for an 
        advance of expenses, as the case may be, by a court in this 
        state, which may be the same court in which the proceeding 
        involving the person's liability took place, upon application of 
        the person and any notice the court requires.  The person 
        seeking indemnification or payment or reimbursement of expenses 
        pursuant to this clause has the burden of establishing that the 
        person is entitled to indemnification or payment or 
        reimbursement or expenses. 
           (b) With respect to a person who is not, and was not at the 
        time of the acts or omissions complained of in the proceedings, 
        a governor, manager, or person possessing, directly or 
        indirectly, the power to direct or cause the direction of the 
        management or policies of the limited liability company, the 
        determination whether indemnification of this person is required 
        because the criteria set forth in subdivision 2 have been 
        satisfied and whether this person is entitled to payment or 
        reimbursement of expenses in advance of the final disposition of 
        a proceeding as provided in subdivision 3 may be made by an 
        annually appointed committee of the board of governors, having 
        at least one member who is a governor.  The committee shall 
        report at least annually to the board of governors concerning 
        its actions. 
           Sec. 42.  Minnesota Statutes 1994, section 322B.72, 
        subdivision 2, is amended to read: 
           Subd. 2.  [APPROVAL BY OWNERS.] (a) At the meeting a vote 
        of the owners must be taken on the proposed plan.  The plan of 
        merger or exchange is adopted when approved by the affirmative 
        vote of the owners of a majority of the voting power of all 
        ownership interests entitled to vote.  Except as provided in 
        paragraph (b), a class or series of ownership interests of the 
        organization is entitled to vote as a class or series if any 
        provision of the plan would, if contained in a proposed 
        amendment to the articles of organization or articles of 
        incorporation, as the case may be, entitle the class or series 
        of ownership interests to vote as a class or series and, in the 
        case of an exchange, if the class or series is included in the 
        exchange.  
           (b) A class or series of ownership interests of the 
        organization is not entitled to vote as a class or series solely 
        because the plan of merger or exchange effects a cancellation of 
        the ownership interests of the class or series if the plan of 
        merger or exchange effects a cancellation of all ownership 
        interests of the organization of all classes and series that are 
        existing immediately before the merger or exchange and owners of 
        ownership interests of that class or series are entitled to 
        obtain payment for the fair value of their shares under section 
        322B.383 or 302A.471, as the case may be, in the event of the 
        merger or exchange. 
           Sec. 43.  Minnesota Statutes 1994, section 322B.72, 
        subdivision 3, is amended to read: 
           Subd. 3.  [WHEN APPROVAL BY SHAREHOLDERS OF A SURVIVING 
        CORPORATION IS NOT REQUIRED.] Notwithstanding subdivisions 1 and 
        2, submission of a plan of merger to a vote at a meeting of 
        shareholders of a surviving corporation is not required if:  
           (1) the articles of the corporation will not be amended in 
        the transaction; 
           (2) each holder of shares of the corporation that were 
        outstanding immediately before the effective date time of the 
        transaction will hold the same number of shares with identical 
        rights immediately after that date; 
           (3) the number of voting power of the outstanding shares of 
        the corporation entitled to vote immediately after the merger, 
        plus the number of voting power of the shares of the corporation 
        entitled to vote issuable on conversion of securities other than 
        shares or on the exercise of rights to purchase, securities 
        issued by virtue of the terms of in the transaction, will not 
        exceed by more than 20 percent, the number of voting power of 
        the outstanding shares of the corporation entitled to vote 
        immediately before the transaction; and 
           (4) the number of participating shares of the corporation 
        immediately after the merger, plus the number of participating 
        shares of the corporation issuable on conversion, or on the 
        exercise of rights to purchase, securities issued in the 
        transaction, will not exceed by more than 20 percent, the number 
        of participating shares of the corporation immediately before 
        the transaction.  "Participating shares" are outstanding shares 
        of the corporation that entitle their holders to participate 
        without limitation in distributions by the corporation.  
           Sec. 44.  Minnesota Statutes 1994, section 322B.75, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [EFFECTIVE DATE OR TIME.] A merger or 
        exchange is effective when the articles of merger or exchange 
        are filed with the secretary of state or on a later date or at a 
        later time specified in the articles of merger or exchange.  
           Sec. 45.  Minnesota Statutes 1994, section 322B.77, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [MEMBER APPROVAL AND WHEN NOT REQUIRED.] A 
        limited liability company may, by affirmative vote of a majority 
        of the governors present, may sell, lease, transfer, or 
        otherwise dispose of all or substantially all of its property 
        and assets in the usual and regular course of its business and 
        grant a mortgage of or security interest in and otherwise 
        encumber and assign for purposes of security all or 
        substantially all of its property and assets whether or not in 
        the usual and regular course of its business, upon those terms 
        and conditions and for those considerations, which may be money, 
        securities, or other instruments for the payment of money or 
        other property, as the board of governors considers expedient, 
        in which case no and without member approval is required: 
           (1) sell, lease, transfer, or otherwise dispose of all or 
        substantially all of its property and assets in the usual and 
        regular course of its business; 
           (2) grant a security interest in all or substantially all 
        of its property and assets whether or not in the usual and 
        regular course of its business; or 
           (3) transfer any or all of its property to a corporation 
        all the shares of which are owned by the limited liability 
        company.  
           Sec. 46.  Minnesota Statutes 1994, section 322B.803, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [MANNER.] A limited liability company that 
        has not accepted contributions may be dissolved and terminated 
        by the organizers or governors in the manner set forth in this 
        section.  
           Sec. 47.  Minnesota Statutes 1994, section 322B.803, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ARTICLES OF DISSOLUTION AND TERMINATION.] (a) A 
        majority of the organizers or governors shall sign articles of 
        dissolution and termination containing:  
           (1) the name of the limited liability company; 
           (2) the date of organization; 
           (3) a statement that contributions have not been accepted; 
           (4) a statement that no debts remain unpaid.  
           (b) The articles of dissolution and termination shall be 
        filed with the secretary of state. 
           Sec. 48.  Minnesota Statutes 1994, section 322B.813, 
        subdivision 5, is amended to read: 
           Subd. 5.  [DISTRIBUTION TO MEMBERS.] All tangible or 
        intangible property, including money, remaining after the 
        discharge of, or after making adequate provision for the 
        discharge of, the debts, obligations, and liabilities of the 
        limited liability company must be distributed to the members in 
        accordance with sections 322B.52 and 322B.873. 
           Sec. 49.  Minnesota Statutes 1994, section 322B.833, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [WHEN PERMITTED.] A court may grant any 
        equitable relief it considers just and reasonable in the 
        circumstances or may dissolve, wind up, and terminate a limited 
        liability company:  
           (1) in a supervised winding up and termination pursuant to 
        section 322B.83; 
           (2) in an action by a member when it is established that:  
           (i) the governors or the persons having the authority 
        otherwise vested in the board of governors are deadlocked in the 
        management of the affairs of the limited liability company and 
        the members are unable to break the deadlock; 
           (ii) the governors or those in control of the limited 
        liability company have acted fraudulently, illegally, or in a 
        manner unfairly prejudicial toward one or more members in their 
        capacities as members, or governors of any limited liability 
        company, or as managers, or as employees of a closely held 
        limited liability company; 
           (iii) the members of the limited liability company are so 
        divided in voting power that, for a period that includes the 
        time when two consecutive regular meetings were held, they have 
        failed to elect successors to governors whose terms have expired 
        or would have expired upon the election and qualification of 
        their successors; 
           (iv) the limited liability company assets are being 
        misapplied or wasted; or 
           (v) an event of dissolution has occurred under section 
        322B.80, subdivision 1, clause (1), (4) or (5) but the limited 
        liability company is not acting to wind up its affairs; 
           (3) in an action by a creditor when:  
           (i) the claim of the creditor has been reduced to judgment 
        and an execution on the judgment has been returned unsatisfied; 
        or 
           (ii) the limited liability company has admitted in writing 
        that the claim of the creditor is due and owing and it is 
        established that the limited liability company is unable to pay 
        its debts in the ordinary course of business; or 
           (4) in an action by the attorney general to dissolve the 
        limited liability company in accordance with section 322B.843 
        when it is established that a decree of termination is 
        appropriate.  
           Sec. 50.  Minnesota Statutes 1994, section 322B.833, 
        subdivision 2, is amended to read: 
           Subd. 2.  [BUY-OUT ON MOTION.] In an action under 
        subdivision 1, clause (2), involving a closely held limited 
        liability company at the time the action is commenced and in 
        which one or more of the circumstances described in that clause 
        is established, the court may, upon motion of a limited 
        liability company or a member, order the sale by a plaintiff or 
        a defendant of all membership interests of the limited liability 
        company held by the plaintiff or defendant to either the limited 
        liability company or the moving members, whichever is specified 
        in the motion, if the court determines in its discretion that an 
        order would be fair and equitable to all parties under all of 
        the circumstances of the case.  
           The purchase price of any membership interest so sold must 
        be the fair value of the membership interest as of the date of 
        the commencement of the action or as of another date found 
        equitable by the court.  If the articles of organization, a 
        member control agreement or business continuation agreement 
        states a price for the redemption or buy-out of membership 
        interests, the court shall order the sale for the price and on 
        the terms set forth in them, unless the court determines that 
        the price or terms are unreasonable under all the circumstances 
        of the case.  
           Within five days after the entry of the order, the limited 
        liability company shall provide each selling member with the 
        information it is required to provide under section 322B.386, 
        subdivision 5, paragraph (a).  
           If the parties are unable to agree on fair value within 40 
        days of entry of the order, the court shall determine the fair 
        value of the membership interests under the provisions of 
        section 322B.386, subdivision 7, may allow interest or costs as 
        provided in section 322B.386, subdivisions 1 and 8, and may 
        allocate payment among the member whose membership interest is 
        being sold and any assignees of the financial rights of that 
        member.  
           The purchase price must be paid in one or more installments 
        as agreed on by the parties, or, if no agreement can be reached 
        within 40 days of entry of the order, as ordered by the court.  
        Upon entry of an order for the sale of a membership interest 
        under this subdivision and provided that the limited liability 
        company or the moving members post a bond in adequate amount 
        with sufficient sureties or otherwise satisfy the court that any 
        full purchase price of the membership interest, plus the 
        additional costs, expenses, and fees awarded by the court, will 
        be paid when due and payable, the selling member shall no longer 
        have any rights or status as a member, manager, or governor, 
        except the right to receive the fair value of the membership 
        interest plus other amounts as might be awarded. 
           Sec. 51.  Minnesota Statutes 1994, section 322B.833, 
        subdivision 4, is amended to read: 
           Subd. 4.  [CONSIDERATIONS IN GRANTING RELIEF INVOLVING 
        CLOSELY HELD LIMITED LIABILITY COMPANIES.] In determining 
        whether to order relief under this section and in determining 
        what particular relief to order, the court shall take into 
        consideration the duty that all members in a closely held 
        limited liability company owe one another to act in an honest, 
        fair, and reasonable manner in the operation of the limited 
        liability company and the reasonable expectations of the all 
        members as they exist at the inception and develop during the 
        course of the members' relationship with the limited liability 
        company and with each other.  For purposes of this section, any 
        written agreements, including employment agreements and buy-sell 
        agreements, between or among members or between or among one or 
        more members and the limited liability company are presumed to 
        reflect the parties' reasonable expectations concerning matters 
        dealt with in the agreements. 
           Sec. 52.  Minnesota Statutes 1994, section 323.14, 
        subdivision 4, is amended to read: 
           Subd. 4.  [LIMITED LIABILITY AFTER DISSOLUTION.] (a) 
        Subject to section 323.44, subdivision 7, the limited liability 
        described in subdivisions 2 and 3 continues in full force for 
        the dissolved partnership regardless of any dissolution, winding 
        up, and termination of a limited liability partnership. 
           (b) If a limited liability partnership dissolves and its 
        business is continued by a successor general partnership under 
        section 323.37, then the limited liability described in 
        subdivisions 2 and 3 and 4 also applies to that successor 
        partnership until the expiration of the registration that the 
        dissolved partnership had in effect under section 323.44 at the 
        moment of dissolution.  The successor general partnership may at 
        any time file its own registration under section 323.44. 
           Sec. 53.  Minnesota Statutes 1995 Supplement, section 
        336.8-103, is amended to read: 
           336.8-103 [RULES FOR DETERMINING WHETHER CERTAIN 
        OBLIGATIONS AND INTERESTS ARE SECURITIES OR FINANCIAL ASSETS.] 
           (a) A share or similar equity interest issued by a 
        corporation, business trust, joint stock company, or similar 
        entity is a security. 
           (b) An "investment company security" is a security.  
        "Investment company security" means a share or similar equity 
        interest issued by an entity that is registered as an investment 
        company under the federal investment company laws, an interest 
        in a unit investment trust that is so registered, or a 
        face-amount certificate issued by a face-amount certificate 
        company that is so registered.  Investment company security does 
        not include an insurance policy or endowment policy or annuity 
        contract issued by an insurance company. 
           (c) An interest in a partnership or limited liability 
        company is a general intangible and is not a security or a 
        financial asset, except as follows: 
           (1) An interest in a partnership or limited liability 
        company is not a security unless and is not a general intangible 
        if it is dealt in or traded on a securities exchanges exchange 
        or in a securities markets market, its terms expressly provide 
        that it is a security governed by this article, or it is an 
        investment company security.  However, 
           (2) An interest in a partnership or limited liability 
        company is a financial asset and is not a general intangible if 
        it is held in a securities account. 
           (d) A writing that is a security certificate is governed by 
        this article and not by article 3, even though it also meets the 
        requirements of that article.  However, a negotiable instrument 
        governed by article 3 is a financial asset if it is held in a 
        securities account. 
           (e) An option or similar obligation issued by a clearing 
        corporation to its participants is not a security, but is a 
        financial asset. 
           (f) A commodity contract, as defined in section 336.9-115, 
        is not a security or a financial asset. 
           Sec. 54.  Minnesota Statutes 1995 Supplement, section 
        336.8-603, is amended to read: 
           336.8-603 [SAVINGS CLAUSE.] 
           (a) Laws 1995, chapter 194, does not affect an action or 
        proceeding commenced before January 1, 1996. 
           (b) If a security interest in a security is perfected on 
        January 1, 1996 December 31, 1995, and the action by which the 
        security interest was perfected would suffice to perfect a 
        security interest under Laws 1995, chapter 194 this act, no 
        further action is required to continue perfection.  If a 
        security interest in a security is perfected at January 1, 1996 
        on December 31, 1995, but the action by which the security 
        interest was perfected would not suffice to perfect a security 
        interest under Laws 1995, chapter 194 in the same property under 
        this act, the security interest remains perfected for a period 
        of four months after January 1, 1996 during the period through 
        December 31, 1996, so long as the security interest could have 
        remained perfected under the law in effect on December 31, 1995, 
        if that law continued in effect after December 31, 1995, and 
        continues perfected thereafter if appropriate action to perfect 
        under Laws 1995, chapter 194, this act is taken within that 
        period during the one-year period from January 1, 1996 to 
        December 31, 1996.  If a security interest is perfected at 
        January 1, 1996 on December 31, 1995, and the security interest 
        can be perfected by filing under Laws 1995, chapter 194 this 
        act, a financing statement signed by the secured party instead 
        of the debtor may be filed within that period to continue 
        perfection or thereafter to perfect. 
           Sec. 55.  [EFFECTIVE DATE.] 
           Sections 15, 53, and 54 are effective retroactive to 
        January 1, 1996. 
           Presented to the governor March 19, 1996 
           Signed by the governor March 21, 1996, 2:15 p.m.