North Dakota Security Agreement regarding Member Interests in Limited Liability Company

• Category: Contracts - Security
• State: Multi-State
• Control #: US-1033BG
• Format: Word; Rich Text

Description

A Limited Liability Company ("LLC") is a separate legal entity that can conduct business just like a corporation with many of the advantages of a partnership. It is taxed as a partnership. Its owners are called members and receive income from the LLC just as a partner would. There is no tax on the LLC entity itself. The members are not personally liable for the debts and obligations of the entity like partners would be. Basically, an LLC combines the tax advantages of a partnership with the limited liability feature of a corporation. Management of an LLC is vested in its members. An operating agreement is executed by the members and operates much the same way a partnership agreement operates. Profits and losses are shared according to the terms of the operating agreement. Most, if not all, major loans involve creating a lien on the property. A lien on real estate would take the form of a mortgage or a deed of trust. A lien on all other property would be covered by a security agreement. In this agreement, the borrower in a loan transaction would give a security interest in personal property in order to secure payment of his loan or credit obligation. Article 9 of the Uniform Commercial Code deals with secured transactions. A creditor who complies with the requirements of Article 9 can create a security interest that protects him against the debtor's default by allowing the creditor to recover by selling the goods covered by the security interest.

The North Dakota Security Agreement regarding Member Interests in Limited Liability Company is a legal contract designed to protect the rights and interests of a member in a limited liability company (LLC). This agreement outlines the terms and conditions agreed upon by the member and the LLC, ensuring that the member's ownership interest remains secure. In North Dakota, there are two main types of Security Agreements that can be used in relation to member interests in an LLC: 1. Perfection Security Agreement: This type of agreement is drafted to ensure the perfection of a security interest in the member's interests within the LLC. By filing this agreement with the appropriate authorities, the member's interest is protected against third-party claims or challenges. This agreement is crucial when a member plans to leverage or use their LLC interests as collateral for obtaining loans or other financing options. 2. Pledge Security Agreement: The Pledge Security Agreement is used when a member pledges their LLC interests as collateral for a loan or other financial obligation. This agreement grants the lender certain rights and remedies if the member fails to fulfill their obligations. In a Pledge Security Agreement, the member retains the ownership and voting rights to their LLC interests but transfers certain rights to the lender as collateral. When drafting a North Dakota Security Agreement regarding member interests in an LLC, certain keywords and discussions should be included: 1. Member Information: The agreement should include the complete details of the member, such as their name, address, contact information, and percentage of ownership interest in the LLC. 2. Purpose: Define the purpose of the agreement, highlighting that it is designed to protect the member's interest and secure any collateralized financial obligations. 3. Security Interest: Detail the member's interest, including the number of units or percentage of ownership held in the LLC. 4. Perfection or Pledge Agreement: Clearly state whether the agreement is a Perfection Security Agreement or a Pledge Security Agreement, describing the respective rights and obligations of the parties involved. 5. Terms and Conditions: Outline the terms and conditions of the agreement, including provisions for default, remedies, and enforcement. This section should also explain the steps required for a member to release their interests from the security agreement and any consequences for non-compliance. 6. Governing Law: Clearly identify that the agreement is governed by North Dakota state law and include any jurisdiction or venue clauses. 7. Signature and Date: Finally, the agreement should provide space for the member and any other relevant parties to sign and date the document, acknowledging their acceptance and commitment to the terms outlined. It is important to note that while this description provides a general overview of the North Dakota Security Agreement regarding member interests in an LLC, it is crucial to consult with legal professionals or utilize expert guidance for creating an agreement specific to your unique circumstances.