Substituted member

(1) Unless otherwise provided in the operating agreement, in the event a member transfers all or any part of such member’s interest in the company in compliance with section 54(1) of this Act or such interest is transferred because of an act or event described in section 59 of the Act, the transferee of such member’s interest shall not have the right to become a substituted member of the limited liability company unless, 50 (a) for a transfer to be in compliance with section 54(1) of this Act, a duly executed and acknowledged written instrument of transfer must be delivered to the company setting forth the intention of the transferor that the transferee become a substituted member in his place; (b) such transferee pays all reasonable expenses connected with such substitution; (c) the non-transferring members unanimously consent, in writing, to the substitution of such transferee as a substituted member, the granting or denial of such consent being within the sole and absolute discretion of the non-transferring members; and (d) a written instrument is duly executed by the transferee agreeing to be bound by the terms of the limited liability company’s operating (2) Upon admission to the limited liability company as a substituted member, such transferee shall have the same member interest, the same rights in and to all distributions made by the company in liquidation or otherwise, the same including without to make contributions to the capital of the company, and the same share of the company’s capital, profits, losses and other distributive items, if any, as the transferring member had, prior to such transfer, with respect to the transferred interest in the company. (3) Unless otherwise agreed in the operating agreement, upon the transfer and substitution of the transferring member’s interest in a limited liability company during any fiscal year, net profits, net losses, and each item thereof attributable to the transferred member interest for such period shall be divided and allocated between the transferring member and the transferee by taking into account their varying member interests during the period, using any conversion permitted by law and approved by the members. All distributions on or before the date of such transfer shall be made to the transferring member and all distributions thereafter shall be made to the transferee. (4) Solely for purposes of making such allocations and distributions, a limited liability company shall recognize such transfer not later than the end of the calendar month during which the members consented to such transfer, provided that if the company does not receive a notice stating the date such interest was transferred and such other information as the members may require within thirty (30) days after the end of the accounting period during which the transfer occurs, then all such items shall be allocated, and all distributions shall be made, to the person who, according to the books and records of the company, on the last day of the accounting period during which the transfer occurs, was the owner of the member interest. Neither the company nor any other member shall incur any liability for making allocations and distributions in accordance with the provisions of this section, whether or not any member or the company had knowledge of any transfer of ownership of any member interest. (5) Upon substitution of a member in compliance with this section, the substituted member shall have all the rights, duties and responsibilities that the transferor had prior to the substitution. Upon the substitution of a member, the transferor shall have none of the rights of a member, but his duty to maintain confidential information shall not abate. (6) Unless otherwise provided in the operating agreement, in the event a member voluntarily or involuntarily transfers, all or any part of such member’s interest in the limited liability company in violation of any of the provisions of this Part or an operating agreement, the transferor shall remain a member for all purposes other than in relation to distribution rights. The 52 transferee of such member’s interest shall have the status of an assignee and nothing more.