EVENTS CAUSING CESSATION OF MEMBERSHIP; WITHDRAWAL;

DEATH OR INCAPACITY

A. A member has the power to withdraw as a member at any time, rightfully or wrongfully. A withdrawal is wrongful if the operating agreement does not specifically grant to the member a right to withdraw or the member resigns from the member's managerial duties in a member-managed limited liability company. The wrongful withdrawal shall constitute a breach of the operating agreement and the limited liability company may recover from the withdrawing member damages, including the reasonable cost of replacing the services that the withdrawn member was obligated to perform. The limited liability company may offset its damages against the amount otherwise distributable to the member, in addition to pursuing any remedies provided for in the operating agreement or otherwise available under applicable law. The limited liability company shall not, however, be entitled to any equitable remedy that would prevent a member from exercising the power to withdraw if such power is permitted in the operating agreement withdrawing from the limited liability company. Unless the operating agreement otherwise provides, a member who has withdrawn shall be deemed an assignee with respect to the interest.

B. If a member who is an individual dies or a court of competent jurisdiction adjudges the member to be incompetent to manage the member's person or property, the member's personal representative shall have all of the rights of an assignee of the member's interest. If a member is a corporation, trust or other entity and is dissolved or terminated, the powers of that member may be exercised by its personal representative.

C. If the sole member of a limited liability company dies or dissolves, or a court of competent jurisdiction adjudges the member to be incompetent or otherwise lacking legal capacity, the member's personal representative accedes to the membership interest and possesses all rights, powers and duties associated with the interest for the benefit of the incompetent member or the deceased member's estate.

D. The operating agreement may provide for the expulsion of a member, with or without cause, which shall include reasonable provision for the buyout of the member's capital interest.

Added by Laws 1992, c. 148, § 37, eff. Sept. 1, 1992. Amended by Laws 1993, c. 366, § 20, eff. Sept. 1, 1993; Laws 1996, c. 226, § 26, eff. July 1, 1996; Laws 1997, c. 145, § 6, eff. Nov. 1, 1997; Laws 2004, c. 255, § 47, eff. Nov. 1, 2004; Laws 2017, c. 323, § 49, eff. Nov. 1, 2017.