<PAGE>   1
                                                                 EXHIBIT 10.21




                            MEMBER CONTROL AGREEMENT

                                       OF

                               EVELETH MINES LLC
<PAGE>   2

                               TABLE OF CONTENTS

                                                                            Page

<TABLE>
<S>                                                                                                                    <C>
ARTICLE 1. ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1
     1.1     Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1
     1.2     Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1
     1.3     Initial Members  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1
     1.4     Principal Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2
     1.5     Registered Office  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2
     1.6     Liability of Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2
     1.7     Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2
     1.8     Business Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3

ARTICLE 2. GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4
     2.1     Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4
     2.2     Management Rights  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4
     2.3     Majority in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4
     2.4     Conflicts of Interest  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    5

ARTICLE 3. FISCAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6
     3.1     Fiscal Year  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6
     3.2     Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6
     3.3     Loans  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6
     3.4     Contracts  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6
     3.5     Large Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7

ARTICLE 4. MEMBERSHIP INTERESTS AND THEIR TRANSFER  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7
     4.1     Interests  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7
     4.2     Statement of Interest  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7
     4.3     Transfer of Financial Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7
     4.4     Transfer of Governance Rights  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    8
     4.5     Shares of Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    8

ARTICLE 5. BOOKS AND RECORDS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    8
     5.1     Books and Records  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    8
     5.2     Right of Inspection  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    8
     5.3     Financial Records  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    9

ARTICLE 6. BOARD OF GOVERNORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    9
     6.1     Management Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    9
     6.2     Qualification and Number of Governors  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    9
</TABLE>





                                       i
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<TABLE>
<S>                                                                                                                   <C>
     6.3     Election and Term of Office  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   10
     6.4     Resignation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   10
     6.5     Removal  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   10
     6.6     Vacancies  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   10
     6.7     Authority of Board of Governors
             to Bind the Company  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   10
     6.8     Actions of the Board of Governors  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   14
     6.9     Indemnification  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   14
     6.10    Appointment of Officers  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   15

ARTICLE 7. CONTRIBUTIONS AND CAPITAL ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    9
     7.1     Initial Capital Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   16
     7.2     Maintenance of Capital Accounts  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   16
     7.3     Disposition of Membership Interests  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   17
     7.4     Distribution of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   17
     7.5     Compliance with Section 704(b)
             of the Code  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   17

ARTICLE 8. ALLOCATIONS AND DISTRIBUTIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   18
     8.1     Allocations of Net Profits and
             Net Losses from Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   18
     8.2     Special Allocations  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   18
     8.3     Interim Distributions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   18
     8.4     Limitations on Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   18

ARTICLE 9. TAXES AND ACCOUNTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   19
     9.1     Elections  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   19
     9.2     Taxes of Taxing Jurisdictions  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   19
     9.3     Tax Matters Partner  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   19
     9.4     Tax Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   20 
     9.5     Method of Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   20

ARTICLE 10. TERMINATION OF INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   20
     10.1    Events of Termination  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   20
     10.2    Right to Purchase Terminating
             Member's Interest  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   20

ARTICLE 11. ADMISSION OF ADDITIONAL MEMBERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   21

ARTICLE 12. DISSOLUTION AND WINDING UP  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   21
     12.1    Dissolution  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   21
     12.2    Effect of Dissolution  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   22
</TABLE>





                                       ii
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<TABLE>
<S>                                                                                                                   <C>
     12.3    Distribution of Assets on Dissolution  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   22
     12.4    Winding Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   23

ARTICLE 13. MERGER AND CONSOLIDATION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   23
     13.1    Authority to Merge or Consolidate  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   23

ARTICLE 14. AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   24
     14.1    Amendment by Board of Governors  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   24
     14.2    Other Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   24
     14.3    Execution of Amendments  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   25

ARTICLE 15. MISCELLANEOUS PROVISIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   25
     15.1    Entire Agreement; Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   25
     15.2    No Partnership Intended for
                 Nontax Purposes  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   26
     15.3    Rights of Creditors and Third
                 Parties Under the Member Control Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   26
     15.4    Arbitration  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   27
     15.5    Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   27
     15.6    Governing Law  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   27
     15.7    Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   27
     15.8    Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   28
</TABLE>





                                      iii
<PAGE>   5


                            MEMBER CONTROL AGREEMENT

                                       OF

                               EVELETH MINES LLC

         The undersigned members ("Members"), having filed Articles of
Organization (the "Articles") for EVELETH MINES LLC, a Limited Liability
Company (the "Company") pursuant to Minnesota Statute Chapter 322B, (the "Act")
for the purpose of operating a Taconite mine and pelleting plant, do hereby
adopt this Member Control Agreement.

                                   ARTICLE 1.

                                  ORGANIZATION

         1.1     EFFECTIVE DATE.  This Member Control Agreement shall become
effective as of the date (the "Effective Date") of the filing and acceptance of
the Articles with the Secretary of State of Minnesota.

         1.2     TERM.  The Company shall be dissolved and its affairs wound up
in accordance with the Act or this Member Control Agreement after a term of
forty (40) years from the Effective Date, unless the term shall be extended by
amendment to the Articles, or unless the Company shall be sooner dissolved and
its affairs wound up in accordance with the Act or this Member Control
Agreement.

         1.3     INITIAL MEMBERS.  The names, address, initial capital
contributions and the percentage interest in the Company ("Percentage") number
of each initial Member are reflected on Exhibit A
<PAGE>   6

attached to and made a part of this Member Control Agreement.  A Member's
rights in the Company are collectively referred to as a "Membership Interest"
as more fully described in Section 4.1.

         1.4     PRINCIPAL OFFICE.  The principal office of the Company in the
State of Minnesota shall be located at N.W. U.S. Highway 53, Eveleth, Minnesota
55734.  The Company may have such other offices, either within or without the
state of Minnesota as the Members may designate or as the business of the
Company may from time to time require.

         1.5     REGISTERED OFFICE.  The registered office of the Company,
required by the Act to be maintained in the State of Minnesota need not be
identical with the Principal Office in the State of Minnesota.  The address of
the initial registered office of the Company is 1000 First Bank Plaza, 130 West
Superior Street, Duluth, Minnesota  55802-2094, and the initial registered
agent at such address is George J.  Anetakis, c/o Hanf, Fride, O'Brien,
Harries, Swelbar & Burns, P.A.  The registered office and the registered agent
may be changed from time to time by action of the Members and by filing the
prescribed form with the Secretary of State of Minnesota.

         1.6     LIABILITY OF MEMBERS.  Except for contributions specifically
required under this Member Control Agreement, the Members (solely in their
capacity as Members) shall have no obligation to contribute to the Company and
no liability for any Company obligations.  Any liability to return
distributions from the Company shall be limited to mandatory requirements of
the Act or of any other applicable law.

         1.7     REPRESENTATIONS AND WARRANTIES.  Each Member, and the
person(s) executing the Member Control Agreement on behalf of such Member,
hereby represents and warrants to the Company and each other Member that (a)
the Member is duly organized, validly existing, and in





                                      -2-
<PAGE>   7

good standing under the laws of its state of organization and that it has full
organizational power to execute and agree to the Member Control Agreement and
to perform its obligations hereunder, (b) the Member is acquiring its
Membership Interest in the Company for the Member's own account as an
investment and without an intent to distribute such Membership Interest, and
(c) the Member acknowledges that the Membership Interests have not been
registered under the Securities Act of 1933 or any state securities laws, and
may not be resold or transferred by the Member without appropriate registration
or the availability of an exemption from such requirements.

         1.8     BUSINESS PURPOSE.  The Company was formed to acquire all of
the business assets of that certain Taconite mine and pellet plant situated in
Eveleth, Minnesota, and known as Eveleth Mines, and to thereafter operate,
refinance and/or dispose of the same and to undertake any other business
permitted by the Act upon unanimous written consent of the Members.  The
business purposes of the Company shall be limited to such purposes and shall
not be changed and the business operations of the Company shall not be
terminated and substantially all of the business assets of the Company shall
not be sold or otherwise disposed of:

         (i)     within six years after the date hereof without the unanimous
                 written consent of the Members;

         (ii)    after the expiration of the period described in (i) and within
                 ten years after the date hereof without the written consent of
                 Members holding in the aggregate a Percentage of at least 85%;
                 and

         (iii)   more than ten years after the date hereof without the written
                 consent of Members holding a Majority in Interest.





                                      -3-
<PAGE>   8

                                   ARTICLE 2.

                                   GOVERNANCE

         2.1     BYLAWS.  Concurrent with the execution of this Member Control
Agreement, the Members are adopting bylaws ("Bylaws") for the regulation of the
Members and the Governors with respect to books and records of account, minutes
of proceedings, meetings, requirements for notices of meetings, computation of
time for notice, method of giving notice, quorum requirements, written action
in lieu of a meeting, waiver of notice, proxies, officers and other similar
matters related to the governance of the Company.  The Bylaws may be amended
from time to time by a written instrument upon the affirmative vote or written
consent of all of the Members.  The Bylaws shall be deemed to be part of this
Member Control Agreement.

         2.2     MANAGEMENT RIGHTS.  All Members who have not had a termination
of their continued membership shall be entitled to one vote per each whole
Percentage share of Membership Interest on any matter submitted to a vote or
consent of the Members.  Subject to any mandatory requirements of applicable
law, no Member shall have the right to take any part whatsoever in the
management and control of the ordinary business of the Company, sign for or
bind the Company, compel a sale or appraisal of Company assets or sell or
assign all or any part of its Membership Interest in the Company except as
provided in this Member Control Agreement.  Except as otherwise provided, all
actions submitted to a vote or consent of the Members shall require the
affirmative vote or written consent of a Majority in Interest of the Members.
The provisions of this Agreement which require Member consent other than by
Majority in Interest are as follows:





                                      -4-
<PAGE>   9

                 (a)      Section 1.8 regarding change of business purpose,
         termination of operations or sale of assets requires various levels of
         Member approval depending upon timing.

                 (b)      Section 2.1 regarding changes in the Bylaws requires
         unanimous Member consent.

                 (c)      Section 2.4(ii) regarding waiver of conflicts of
         interest by Members requires a vote of two-thirds of Membership
         Interests held by disinterested Members.

                 (d)      Section 3.5 regarding the approval of Large
         Expenditures requires unanimous Member consent.

                 (e)      Section 4.4 regarding transfer of governance rights
         requires unanimous Member consent.

                 (f)      Section 6.2 regarding change in the provision for
         appointing Governors requires unanimous Member consent.

                 (g)      Section 10.1 regarding approval of the termination of
         membership requires the same varying levels of Member consent as
         provided in Section 1.8.

                 (h)      Article 11 regarding the admission of additional
         Members requires unanimous Member consent.

                 (i)      Section 12.1(a) regarding dissolution of the Company
         requires the same varying levels of Member consent as provided in
         Section 1.8.

                 (j)      Section 12.1(c) regarding consent to continue without
         dissolution after a Member termination requires unanimous Member
         consent.





                                      -5-
<PAGE>   10

                 (k)      Article 13 regarding mergers or consolidations
         requires unanimous Member consent.

                 (l)      Section 14.2(a) regarding amending a provision of
         this Member Control Agreement which currently calls for unanimous
         Member consent also requires unanimous Member consent.

                 (m)      Section 14.2(b) regarding an amendment to this Member
         Control Agreement with a specified impact upon a particular Member
         requires at least the passive consent (i.e. not an objection) by such
         Member.

         2.3     MAJORITY IN INTEREST.  Whenever any matter is required or
allowed to be approved by a Majority in Interest of the Members or a Majority
of the remaining Members under the Act or this Member Control Agreement, such
matter shall be considered approved or consented to upon the receipt of the
affirmative approval or consent, either in writing or at a meeting of the
Members, of Members holding governance rights owning a majority of the profit
interests and a majority of the capital interests owned by all Members holding
governance rights.

         2.4     CONFLICTS OF INTEREST.  No contract, action or transaction
shall be void or voidable solely because it is between or affects the Company
and one or more Members, Governors or officers (each, an "Interested Party" or
collectively, the "Interested Parties"), or because it is between or affects
the Company and any other person or organization in which one or more of the
Interested Parties are directors, officers, members, shareholders or trustees
or have a financial or personal interest, or because one or more Interested
Parties participate in or vote at the meeting at which such contract, action or
transaction is authorized if any of the following applies:





                                      -6-
<PAGE>   11

         (i)     the contract, action or transaction is fair and reasonable to
                 the Company as of the time it is authorized or approved by the
                 Members or Governors; or

         (ii)    the material facts as to the Interested Parties' relationship
                 or interest and as to the contract, action or transaction are
                 disclosed or known to the Members or Governors, and the
                 Members or Governors authorize the contract, action or
                 transaction by the affirmative vote of two-thirds of the
                 voting power of the Membership Interests entitled to vote that
                 are owned by disinterested Members, even though the
                 disinterested Members or Governors constitute less than a
                 quorum;

         (iii)   the material facts as to the contract or transaction and as to
                 the Governor's interest are fully disclosed or known to the
                 Board of Governors or a committee and the Board of Governors
                 or committee authorizes, ratifies or approves the contract or
                 transaction by a majority of the Board of Governors or
                 committee, but the interested Governor is not counted in
                 determining the presence of a quorum and must not vote; and

         (iv)    the contract, action or transaction is otherwise authorized
                 pursuant to the Act.

         For purposes of this Section, a Member or Governor is not an
Interested Party solely because the subject of the contract, action or
transaction may involve or affect a change in control of the Company.





                                      -7-
<PAGE>   12

                                   ARTICLE 3.

                                 FISCAL MATTERS

         3.1     FISCAL YEAR.  The fiscal year of the Company shall begin on
the first day of January and end on the last day of December each year, unless
otherwise determined by resolution of the Members.

         3.2     DEPOSITS.  All funds of the Company shall be deposited from
time to time to the credit of the Company in such banks, trust companies or
other depositories as the Governors may select.

         3.3     LOANS.  Subject to Section 3.5, except in the ordinary course
of business no loan shall be contracted on behalf of the Company and no
evidence of indebtedness shall be issued in its name unless authorized by a
resolution of the Members.  Such authority may be general or confined to
specific instances.

         3.4     CONTRACTS.  Subject to Section 3.5, the Members may authorize
any Members or agent of the Company, in addition to the President, to enter
into any contract or execute any instrument in the name of and on behalf of the
Company, and such authority may be general or confined to specific instances.

         3.5     LARGE EXPENDITURES.  Unanimous approval of the Members shall
be required to:  (i) authorize the Company to incur capital expenditures in
excess of $7,000,000 per transaction or project, but not to exceed $10,000,000
in any fiscal year; (ii) borrow money, not exceeding $7,000,000 per transaction
or project, but not to exceed $10,000,000 in any fiscal year; (iii) lease
property valued at more than $7,000,000 per transaction but not to exceed
$10,000,000 in any fiscal year; or (iv) acquire, by lease or purchase or
otherwise, additional iron ore reserves.





                                      -8-
<PAGE>   13


                                   ARTICLE 4.

                    MEMBERSHIP INTERESTS AND THEIR TRANSFER

         4.1     INTERESTS.  A Membership Interest means a Member's interest in
the Company consisting of financial rights, as defined by the Act, governance
rights, as defined by the Act, and a Member's right to assign financial rights
and governance rights subject to this Agreement and the Act.

         4.2     STATEMENT OF INTEREST.  Any Member may request the Company to
provide such Member a written statement describing the Membership Interest
owned by such Member as of the time the Company makes the statement.

         4.3     TRANSFER OF FINANCIAL RIGHTS.  No Member shall make a transfer
of financial rights during the six year period following the date hereof.
Thereafter, a Member may make a transfer of financial rights only with the
affirmative vote of Members holding a Majority in Interest.  If a transfer of
financial rights is authorized pursuant to this Section 4.3 the transferee or
assignee of such transferred rights shall have no right to participate in the
management of the business and affairs of the Company or to become a successor
Member.  The transferee or assignee shall only be entitled to receive the share
of the profit and losses and distributions to which the assignor would
otherwise have been entitled.

         4.4     TRANSFER OF GOVERNANCE RIGHTS.  Governance rights may not be
assigned without the unanimous consent of the other Members.





                                      -9-
<PAGE>   14

                                   ARTICLE 5.

                               BOOKS AND RECORDS

         5.1     BOOKS AND RECORDS.  The books and records of the Company shall
be kept at the principal office of the Company or at such other places, within
or without the state of Minnesota, as the Members shall from time to time
determine which books and records shall inter alia reflect the capital
contributions and Membership Interest of each Member.

         5.2     RIGHT OF INSPECTION.  Any Member of record shall have the
right to examine, at any reasonable time or times for all purposes, the books
and records of account, minutes and records of Members and to make copies
thereof.  Such inspection may be made by any agent who may make copies thereof.
Upon the written request of any Member, the Company shall mail to such Member
its most recent financial statements, showing in reasonable detail its assets
and liabilities and the results of its operations.

         5.3     FINANCIAL RECORDS.  Except as otherwise provided herein,
financial records shall be maintained and reported based on United States
generally acceptable accounting principles. Capital accounts shall be
maintained in accordance with the provisions of Article 7.

                                   ARTICLE 6.

                               BOARD OF GOVERNORS

         6.1     MANAGEMENT AUTHORITY.  Except as reserved for the Members in
this Member Control Agreement, the Board of Governors of the Company shall be
vested with the full and exclusive authority to exercise, conduct, and control
the affairs of the Company.  By execution of





                                      -10-
<PAGE>   15

this Member Control Agreement, each Member consents to and acknowledges the
delegation of authority to the Board of Governors and to their actions and
decisions within the scope of their authority.  The Board of Governors shall be
permitted to delegate specified authority to officers, agents or committees
(the members of which need not be officers or Governors) from time to time as
the Board of Governors may deem appropriate.  The Board of Governors shall
appoint an Executive Committee from its members which shall act as authorized
by the Board.

         6.2     QUALIFICATION AND NUMBER OF GOVERNORS.  The Board of Governors
shall consist of five (5) Governors each of whom shall be a natural person.
Virginia Horn Taconite Company and Eveleth Taconite Company shall each appoint
two Governors and Ontario Eveleth Company shall appoint one Governor.  In the
event any Member's Membership Interest is transferred in whole to a third party
which party becomes a successor Member by the unanimous consent of the
remaining Members pursuant to Section 4.4, such successor Member shall have the
same rights to appoint Governors as its transferor Member.  In the event a
Member's shares of Membership Interest are transferred in part or are
transferred to two or more transferees or in the event a Member's transferee is
not approved as a successor Member, the remaining Members shall determine
unanimously how future Governors are to be appointed.  Cumulative voting shall
not be allowed.

         6.3     ELECTION AND TERM OF OFFICE.  No Governor shall have any
contractual right to such position.  Each Governor shall serve until the
Governor's successor is elected or the earlier of (a) the Resignation of such
Governor pursuant to Section 6.4 or (b) the Removal of such Governor pursuant
to Section 6.5.





                                      -11-
<PAGE>   16

         6.4     RESIGNATION.  Any Governor may resign by giving at least
thirty (30) days written notice to the Board of Governors by mailing or
delivering such notice of Resignation to the Principal Office of the Company.
At the expiration of said period, such resignation shall be effective without
need of acceptance by the Board of Governors.

         6.5     REMOVAL.  Any Governor may be removed, with or without cause,
by the action of the Member appointing such Governor.

         6.6     VACANCIES.  Any vacancy on the Board of Governors shall be
filled by the Member who appointed the Governor whose position is vacant.

         6.7     AUTHORITY OF BOARD OF GOVERNORS TO BIND THE COMPANY.  Only the
Board of Governors and authorized officers, agents or committees of the
Company, and not individual Governors or Members as such, shall have the
authority to bind the Company.  No Member shall take any action to bind the
Company, and each Member shall indemnify the Company for any costs or damages
incurred by the Company as a result of the unauthorized action of such Member.
Subject to the powers specifically reserved to the Members herein, the Board of
Governors has the power, on behalf of the Company, to do all things necessary
or convenient to carry out the business and affairs of the Company, including,
without limitation:

                 (a)      subject to Section 3.5, approve the annual operating
         and capital budgets, the mining plan and strategic plans of the
         Company;

                 (b)      appoint or remove any officer of the Company,
         establish compensation for each officer of the Company, and, subject
         to the Bylaws, establish, alter, or amend the power and authority of
         any officer of the Company;








                                      -12-
<PAGE>   17
                 (c)      subject to Section 3.5, authorize any commitment for
         a capital expenditure;

                 (d)      subject to Section 3.5, approve any obligation of the
         Company for borrowed money and make, issue, accept, endorse, and
         execute promissory notes, drafts, bills of exchange, letters of
         credit, guarantees and other instruments and evidences of indebtedness
         or of contingent liability and approve the granting of any security
         therefor, including, but not limited to mortgages of real property;

                 (e)      authorize any commitment relating to a loan by the
         Company to any person or a guarantee by the Company of any obligation
         of any person;

                 (f)      subject to Section 1.8, authorize any sale, lease,
         transfer or other disposition of any asset of the Company or any group
         of assets including the disposition of substantially all of the assets
         of the Company;

                 (g)      subject to Section 3.5, approve the acquisition of
         any business or a business division from any person whether by asset
         purchase, stock purchase, merger or other business combination
         including the creation and issuance of additional shares of any class
         of Membership Interests in connection therewith;

                 (h)      subject to Section 3.5, approve any purchase or lease
         of real property;

                 (i)      adopt, approve or terminate any individual or group
         employee retirement plan or any other welfare benefit plan or policy
         or any modifications thereto;

                 (j)      authorize the making, modification, amendment, or
         termination of any agreement with any Member or an affiliate of a
         Member;

                 (k)      authorize any distribution to Members;





                                      -13-
<PAGE>   18

                 (l)      change the fiscal year of the Company or make or
         modify any tax elections, accounting policy elections, as the Board of
         Governors believes to be in the best interests of the Company and the
         Members;

                 (m)      make any determination to indemnify any person as
         contemplated by the ByLaws;

                 (n)      subject to the Bylaws, establish, amend or modify
         rules for the operation of the Board of Governors;

                 (o)      subject to Section 3.5, authorize the creation of any
         subsidiaries or any other investment in, or the acquisition of stocks
         or bonds of, other persons or any equity interest in any other Person;

                 (p)      approve any change of the location of the
         headquarters of the Company;

                 (q)      approve any license or other grant of rights to or
         from the Company with respect to any patents, trademarks, trade names,
         service marks, know-how, trade secrets or other proprietary
         information;

                 (r)      open, conduct and close checking, savings, custodial
         and other accounts on behalf of the Company in such banks or other
         financial institutions as the Board of Governors may select from time
         to time;

                 (s)      negotiate, enter into, execute and exercise the
         Company's rights under any and all contracts necessary, desirable or
         convenient with respect to its business and affairs;

                 (t)      execute any notifications, statements, reports,
         returns, registrations or other filings that are necessary or
         desirable to be filed with any state or federal agency,





                                      -14-
<PAGE>   19

         commission, or authority, including, without limitation, any
         registration of securities with any state or federal securities
         commission, and appear before such agency, commission or authority on
         behalf of the Company;

                 (u)      purchase or bear the cost of any insurance covering
         the potential liabilities of the Company, Members, Governors, any
         officer or employee of the Company and any other person acting on
         behalf of the Company;

                 (v)      commence, defend or settle litigation pertaining to
         the Company, its business or assets, provided that the Company shall
         not bear the expenses of any litigation brought against any Member or
         Governor acting in that capacity, any officer or employee of the
         Company or any other person acting on behalf of the Company except as
         contemplated by this Member Control Agreement or the ByLaws;

                 (w)      employ accountants, attorneys, contractors, brokers,
         investment managers, engineers, consultants or other persons, firms,
         corporations or entities on such terms and for such compensation as it
         shall determine is proper, including, without limitation, persons and
         entities who may be Members or affiliates, or who perform services
         for, or have business, financial, family or other relationships with
         any Member, Governor, officer or employee;

                 (x)      make any donation to the public welfare or for
         religious, charitable, scientific, literary, or educational purposes;

                 (y)      enter into, make and perform such contracts,
         agreements and other undertakings, to execute, acknowledge and deliver
         such instruments, and to do such other acts, as it may deem necessary
         or advisable for, or as may be incidental to, the conduct of the





                                      -15-
<PAGE>   20

         business contemplated by this Section 6.7, including, without
         limitation, contracts, agreements, undertakings and transactions with
         any Member or Governor or with any other person, firm, or corporation
         which is an affiliate or which performs services for or has any
         business, financial, family, or other relationship with any Member or
         Governor.

         6.8     ACTIONS OF THE BOARD OF GOVERNORS.  The affirmative vote of
Governors appointed by Members holding a Majority in Interest present at any
regular or special meeting or the written consent executed by such Governors
representing a Majority in Interest of the Members, provided that such written
action is recorded in the minutes of the Board of Governors and a copy is
mailed to all other Governors who did not execute such action, shall constitute
the act or action of the Board of Governors.  The number of Governors appointed
by Members holding a Majority in Interest shall constitute a quorum.  No act of
a Member, Governor, officer or agent of the Company in contravention of a
decision or action of the Board of Governors shall bind the Company to persons
having knowledge of such Board's decision or action.  Notwithstanding such
Board decision, the act of a Governor for the purpose of apparently carrying on
in the usual way the business or affairs of the Company shall bind the Company
to persons without actual knowledge that such act is beyond the authority of
the Governor.

         6.9     INDEMNIFICATION.  The Company shall indemnify to the fullest
extent provided or allowed by the Act, as in effect on the date hereof, any
Governor, officer, employee or agent of the Company for all costs, losses,
liabilities, damages, fines and expenses (including attorneys' fees) suffered
or incurred by any such person solely because he or she is or was a Governor,
officer, employee or agent of the Company or is or was serving at the request
of the Company as a Member,





                                      -16-
<PAGE>   21

Governor, officer, director, trustee, partner, employee or agent of any other
organization, if such person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
Company with the care an ordinarily prudent person in a like position would
exercise under similar circumstances, and, in connection with any criminal
action or proceeding, had no reasonable cause to believe his or her conduct was
unlawful.  The Company shall acquire and maintain such liability insurance
coverage with respect to this obligation as directed by the Board.

         6.10 APPOINTMENT OF OFFICERS.  The Board of Governors shall appoint
one or more natural persons to exercise the functions of the offices of chief
manager and treasurer.  The Board of Governors  may, but shall not be required
to, appoint one or more individuals to serve in the following capacities as
officers of the Company:  one or more vice presidents and secretary.  The Board
of Governors may from time to time create such offices and appoint such other
officers, subordinate officers and assistant officers and assign powers and
duties to such officers as it may determine.  An officer need not be a Governor
of the Company. The Board of Governors shall have the right to set the
compensation of officers and remove and replace an officer then serving with or
without cause.  The Board of Governors may designate the person serving as chief
manager as president of the Company.

                                   ARTICLE 7.

                       CONTRIBUTIONS AND CAPITAL ACCOUNTS

         7.1     INITIAL CAPITAL CONTRIBUTION.   Each initial Member shall make
the initial capital contribution described for that Member on Exhibit A at the
time and on such terms as may be





                                      -17-
<PAGE>   22

specified on Exhibit A or otherwise agreed to among such Members.  The value of
the capital contribution and the Percentage of each Member shall be as set
forth on Exhibit A.  No interest shall accrue on any capital contribution and
no Member shall have the right to withdraw or be repaid any capital
contribution except as provided in this Member Control Agreement.  Except as
expressly provided in this Member Control Agreement, no Member shall have any
obligations to make any additional capital contributions or advance any funds
as a loan to the Company or to incur any liability or obligations of the
Company.

         7.2     MAINTENANCE OF CAPITAL ACCOUNTS.  The Company shall establish
and maintain capital accounts for each Member.  Each Member's capital account
shall be increased by (i) the amount of any money actually contributed by the
Member to the capital of the Company, (ii) the fair market value of any other
property contributed, as determined at the time of contribution (net of
liabilities assumed by the Company or subject to which the Company takes such
property, within the meaning of section 752 of the Internal Revenue Code (the
"Code")), and (iii) the Member's share of net profits and of any separately
allocated items of income or gain.  Each Member's capital account shall be
decreased by (iv) the amount of any money actually distributed by the Company,
(v) the fair market value of any other property distributed to the Member, as
determined at the time of distribution (net of liabilities of the Company
assumed by the Member or subject to which the Member takes such other property
within the meaning of section 752 of the Code), and (vi) the Member's share of
net losses and of any separately allocated items of deduction or loss
(including any loss or deduction allocated to the Member to reflect the
difference between the book value and tax basis of assets contributed by the
Member).





                                      -18-
<PAGE>   23

         7.3     DISPOSITION OF FINANCIAL RIGHTS.  In the event of a
disposition of some or all of a Member's financial rights, the capital account
of the such Member shall become the capital account of the assignee, to the
extent it relates to the financial rights transferred.

         7.4     DISTRIBUTION OF ASSETS.  If the Company at any time
distributes any of its assets in-kind to any Members, the capital account of
such Members shall be adjusted to reflect the unrealized gain, loss, and
deduction in such property as would be allocated among the Members if there had
been a taxable disposition of such property for fair market value as of the
date the distribution is made.

         7.5     COMPLIANCE WITH SECTION 704(b) OF THE CODE.  The provisions of
this Section 7 as they relate to the maintenance of the capital accounts are
intended, and shall be construed, and, if necessary, modified to cause the
allocations of profits, losses, income, gain, and credit pursuant to Section 8
to have substantial economic effect under the regulations promulgated under
section 704(b) of the Code, in light of the distributions made pursuant to
Sections 8 and 12.3 and the capital contributions made pursuant to Section 7.1.
Notwithstanding anything herein to the contrary, this Member Control Agreement
shall not be construed as creating a deficit restoration obligation or
otherwise personally obligating any Member to make a capital contribution in
excess of the initial capital contribution as provided for expressly in Section
7.1 of this Member Control Agreement.

                                   ARTICLE 8.

                         ALLOCATIONS AND DISTRIBUTIONS





                                      -19-
<PAGE>   24

         8.1     ALLOCATIONS OF NET PROFITS AND NET LOSSES FROM OPERATIONS.
Except as may be required by section 704(c) of the Code, and this Article 8,
net profits, net losses, and other items of income, gain, loss, deduction, and
credit shall be apportioned among the Members in proportion to their respective
Percentages.

         8.2     SPECIAL ALLOCATIONS.  The foregoing provisions of this Article
8 notwithstanding, to the extent necessary to validate the allocation of tax
items for federal income tax purposes, the Company shall comply with (i) the
allocations required by the "qualified income offset" provisions of Regulation
Section 1.704-1(b)(2)(ii)(d) (including the capital account adjustments set
forth therein); (ii) the allocations required by Regulation Section 1.704-2,
regarding allocations attributable to nonrecourse financing; (iii) the
allocations required by Regulation Section 1.704-3 regarding special allocation
of gain, loss and depreciation with respect to the contribution of appreciated
or depreciated property to the Company; and (iv) the allocations required by
Regulations as the result of any election to adjust the basis of Company assets
pursuant to Code section 754.

         8.3     INTERIM DISTRIBUTIONS.   From time to time, the Board of
Governors shall determine to what extent, if any, the Company's cash on hand
exceeds the current and anticipated needs, including, without limitation, needs
for operating expenses, debt service, acquisitions and reserves.  To the extent
such excess exists, the Board of Governors may make distributions to the
Members in accordance with their respective Percentages.

         8.4     LIMITATIONS ON DISTRIBUTIONS.  Notwithstanding the foregoing
provisions, no distribution shall be declared and paid unless, after the
distribution is made, the assets of the





                                      -20-
<PAGE>   25

Company are in excess of all liabilities of the Company, except liabilities to
Members on account of their capital accounts.

                                   ARTICLE 9.

                              TAXES AND ACCOUNTING

         9.1     ELECTIONS.  The Board of Governors may make any tax elections
for the Company allowed under the Code or the tax laws of the State of
Minnesota or any other taxing jurisdiction.

         9.2     TAXES OF TAXING JURISDICTIONS.  To the extent that the laws of
any taxing jurisdiction require, each Member requested to do so by the Board of
Governors shall submit an agreement indicating that the Member will make timely
income tax payments to the taxing jurisdiction and that the Member accepts
personal jurisdiction of the taxing jurisdiction with regard to the collection
of income taxes attributable to the Member's income and interest and penalties
assessed on such income.  If the Member fails to provide such agreement, the
Company may withhold and pay over to such taxing jurisdiction the amount of
tax, penalty, and interest determined under the laws of the taxing jurisdiction
with respect to such Member's income.  Any such payments with respect to the
income of a Member shall be treated as a distribution for purposes of this
Member Control Agreement.  The Board of Governors may, where permitted by the
rules of any taxing jurisdiction, file a composite, combined, or aggregate tax
return reflecting the income of the Company and pay the tax, interest, and
penalties of some or all of the Members on such income to the taxing
jurisdiction, in which case the Company shall inform the Members of the amount
of such tax, interest, and penalties so paid.





                                      -21-
<PAGE>   26


         9.3     TAX MATTERS PARTNER.  The Board of Governors shall designate
one of the Governors or, if there are no Governors eligible to act as tax
matters partner, any Member as the tax matters partner of the Company pursuant
to Section 6231(a)(7) of the Code.  Any Governor or Member designated as tax
matters partner shall take such action as may be necessary to cause each Member
to become a "notice partner" within the meaning of Section 6223 of the Code.
Any Member who is designated tax matters partner may not take any action
contemplated by Sections 6222 through 6232 of the Code without the consent of
the Board of Governors.

         9.4     TAX YEAR.  The records of the Company shall be maintained on a
calendar year basis.

         9.5     METHOD OF ACCOUNTING.  The records of the Company shall be
maintained on an accrual method of accounting.

                                  ARTICLE 10.

                            TERMINATION OF INTEREST

         10.1    EVENTS OF TERMINATION.  A Member shall cease to be Member upon
the occurrence of any event described in the Act as an event that terminates
the continued membership of a member in the Company but no Member shall have
the right to undertake any action which would terminate the continuation of
membership without the same level of Member approval required for termination
of Company business operations at such time pursuant to Section 1.8.  A Member
which exercises the power to terminate the continuation of its membership at a
time when it does not have the right to do so shall be liable to the Company
and the other Members for any damages caused by such wrongful termination.





                                      -22-
<PAGE>   27


         10.2    RIGHT TO PURCHASE TERMINATING MEMBER'S INTEREST.  If any
Member shall terminate its membership, the remaining Members shall have the
right, but not the obligation, to purchase and acquire a proportionate share
(or such other share as such remaining Members shall determine) of Membership
Interest of such terminating Member for the fair market value of such
Membership Interest as determined at the time of termination.  The purchase
price shall be payable in a reasonable time not to exceed six (6) months.  Any
dispute among the Members concerning the fair value of such withdrawing
Member's Shares shall be resolved by arbitration pursuant to Section 15.4.

                                  ARTICLE 11.

                        ADMISSION OF ADDITIONAL MEMBERS

         The admission of additional Members shall be made by the affirmative
vote or written consent of all current Members.  Each Member may grant or
withhold the approval of such admission in its sole and absolute discretion.
The additional Members shall execute an Admission Agreement negotiated by the
Board of Governors, which shall set forth the name and address of, and the
number of Shares owned by, such additional Member and the capital contribution
to be made by such additional Member for the acquisition of shares of
Membership Interest.  Upon approval of such admission by the Board of
Governors, the Admission Agreement shall be attached hereto and made a part of
this Member Control Agreement.

                                  ARTICLE 12.

                           DISSOLUTION AND WINDING UP





                                      -23-
<PAGE>   28


         12.1    DISSOLUTION.  The Company shall be dissolved and its affairs
wound up upon the first to occur of the following events (which, unless the
Members agree to continue the business as provided in paragraph (c) below,
shall constitute dissolution events):

                 (a)      The affirmative written consent to dissolve the
         Company or to discontinue its business operations by the requisite
         number of Members (depending upon the timing of such consent) as
         specified in Section 1.8.

                 (b)      Whenever there are fewer than two (2) Members.

                 (c)      The occurrence of an event that terminates the
         continued membership of a Member in the Company, unless the business
         of the Company is continued with the affirmative vote or written
         consent of all remaining Members within ninety (90) days after such
         event.

                 (d)      The expiration of the term described in Section 1.2.

                 (e)      The entry of a decree of judicial dissolution.

         Except as specifically stated in this Section 12.1, no event that
would cause a dissolution under the Act shall cause a dissolution of the
Company.

         12.2    EFFECT OF DISSOLUTION.  Upon dissolution, the Company shall
cease carrying on (as distinguished from the winding up and liquidation of) the
Company business.  The Company is not terminated upon dissolution, but
continues its existence until the winding up of the affairs of the Company is
completed and the business of the Company may be continued in order to maximize
its value as a going concern for eventual sale.





                                      -24-
<PAGE>   29


         12.3    DISTRIBUTION OF ASSETS ON DISSOLUTION.  Upon the winding up of
the Company and liquidation of its assets (to the extent determined by the
Board of Governors or liquidating trustee as applicable), the Company property
shall be distributed as set forth in the Articles:

                 (a)      To creditors, including Members who are creditors, to
         the extent permitted by law, in satisfaction of Company liabilities;

                 (b)      To establish any reserves deemed necessary by the
         Board of Governors; and

                 (c)      To Members in accordance with positive capital
         account balances taking into account all capital account adjustments
         for the Company's taxable year in which the liquidation occurs
         (including adjustments pursuant to Section 7.5.  Liquidation proceeds
         shall be paid within sixty (60) days after the end of the Company's
         taxable year or, if later, within ninety (90) days after the date of
         liquidation.  Such distributions shall be in money or other property
         (which need not be distributed proportionately) or partly in both, as
         determined by the Board of Governors.

         If any reserves are established in connection with the foregoing, the
Board of Governors may pay over the amounts reserved to an escrow agent to be
held by it for the purposes of disbursing the reserves in payment of any
contingencies which may arise and, at the expiration of any period as the Board
of Governors considers advisable, for distribution of the balance of the funds
in the same manner and with the same priorities as are provided in this Section
12.3.  The Members shall look solely to the assets of the Company for the
return of their capital contributions.

         12.4    WINDING UP.  The winding up of the Company shall be completed
when all debts, liabilities, and obligations of the Company have been paid and
discharged or reasonably adequate





                                      -25-
<PAGE>   30

provision therefor has been made, and all of the remaining property and assets
of the Company have been distributed to the Members.  If necessary or
appropriate to maximize the proceeds of liquidation of the Company, the Board
of Governors may transfer the assets of the Company to a liquidating trustee or
liquidating trustees selected by the Board or Governors.

                                  ARTICLE 13.

                            MERGER AND CONSOLIDATION

         13.1    AUTHORITY TO MERGE OR CONSOLIDATE.  The Company shall have the
authority to merge or consolidate with or into another limited liability
company, a limited partnership, a corporation or other entity domestic or
foreign, as permitted by the Act provided that the agreement of merger or
consolidation is approved by all of the Members.

                                  ARTICLE 14.

                                   AMENDMENT

         14.1    AMENDMENT BY BOARD OF GOVERNORS.  Except as otherwise
specifically provided in this Member Control Agreement, the Board of Governors
may adopt an amendment to this Member Control Agreement to do any one or more
of the following:

                 (a)      to implement or effectuate the provisions of any part
         of this Member Control Agreement or to continue the Company for the
         term provided herein under the laws of the State of Minnesota and of
         any state or jurisdiction in which it shall do business;





                                      -26-
<PAGE>   31


                 (b)      to take any action, on the advice of counsel to the
         Company, as may be necessary or appropriate to satisfy then current
         requirements of the Code with respect to partnerships or limited
         liability companies that have been structured to be classified as
         partnerships under the Code or any applicable laws or regulations; or

                 (c)      to cure any ambiguity, defect or inconsistency.

All Members shall be furnished with a copy of such amendment prior to its
adoption.  No amendment that is proposed to become effective under this Section
14.1 shall become effective without approval under Section 14.2 if Members with
governance rights holding Percentage aggregating 15% or more deliver to the
Company within 30 calendar days following delivery of the amendment to the
Members their written objection to the amendment.

         14.2    OTHER AMENDMENTS.  Except as specifically provided in Section
14.1 or otherwise in this Member Control Agreement:

                 (a)      An amendment to (i) a section of this Member Control
         Agreement that specifies that action under that section may only be
         taken upon the unanimous affirmative approval of Members (ii) Section
         8.1 or (iii) this Section 14.2(a) shall require the unanimous approval
         of the Members.

                 (b)      Any amendment that would increase a Member's
         obligation to make contributions to the capital of the Company or
         further limit a Member's ability to hold or make a transfer of its
         Membership Interest, shall be effective with respect to a Member only
         if the Member does not act to disapprove the amendment by returning to
         the Company,





                                      -27-
<PAGE>   32

         within 30 days after the request is made for adoption of the
         amendment, a notice indicating its disapproval of such amendment;

                 (c)      Any other amendment shall be effective if approved by
         Members with a Majority in Interest.

         14.3    EXECUTION OF AMENDMENTS.  Each Member shall execute all
documents and instruments necessary to evidence its approval of all actions,
including, without limitation, amendments to this Member Control Agreement,
taken or authorized by the Members with a Majority in Interest or otherwise as
provided in this Member Control Agreement.





                                      -28-
<PAGE>   33


                                  ARTICLE 15.

                            MISCELLANEOUS PROVISIONS

         15.1    ENTIRE AGREEMENT; INTERPRETATION.  This Member Control
Agreement represents the entire agreement among all the Members and between the
Members and the Company.  It is the express intention of the Members that this
Member Control Agreement, the Bylaws and any agreements expressly provided for
in this Member Control Agreement, shall be the sole source of agreement of the
parties with respect to the subject matter hereof, and, except to the extent
provisions of this Member Control Agreement expressly incorporate federal
income tax rules by reference to sections of the Code or Regulations or to the
extent any provision is expressly prohibited or ineffective under the Act, this
Member Control Agreement shall govern, even when inconsistent with, or
different from, the provisions of the Act or any other law or rule.  To the
extent any provision of this Member Control Agreement is prohibited or
ineffective under the Act, this Member Control Agreement shall be considered
amended to the smallest degree possible in order to make the Member Control
Agreement effective under the Act.  In the event the Act is subsequently
amended or interpreted in such way to make any provision of this Member Control
Agreement that was formerly invalid valid, such provision shall be considered
to be valid from the effective date of such interpretation or amendment.

         15.2    NO PARTNERSHIP INTENDED FOR NONTAX PURPOSES.  The Members have
formed the Company under the Act, and expressly do not intend hereby to form a
partnership under either the Minnesota Uniform Partnership Act or the Minnesota
Uniform Limited Partnership Act.  The Members do not intend to be partners one
to another, or partners as to any third party.  To the extent





                                      -29-
<PAGE>   34

any Member, by word or action, represents to another person that any other
Member is a partner or that the Company is a partnership, the Member making
such wrongful representation shall be liable to any other Member who incurs
personal liability by reason of such wrongful representation.

         15.3    RIGHTS OF CREDITORS AND THIRD PARTIES UNDER THE MEMBER CONTROL
AGREEMENT.  This Member Control Agreement is entered into among the Company and
the Members for the exclusive benefit of the Company, its Members, and their
successors and assignees.  This Member Control Agreement is expressly intended
not to benefit any creditor of the Company or any other person.  Except and
only to the extent provided by applicable statute, no such creditor or third
party shall have any rights under this Member Control Agreement or any
agreement between the Company and any Member with respect to any capital
contribution, loan or otherwise.

         15.4    ARBITRATION.  If any controversy or claim arising out of this
Member Control Agreement, the Articles or the Bylaws between the Members and/or
Governors (the "Parties") cannot be settled by the Parties, the controversy or
claim shall be settled by arbitration in the appropriate jurisdiction of the
Principal Office in accordance with the rules of the American Arbitration
Association then in effect, and judgment on any award of the arbitrator,
including attorneys fees, shall be allocated between the Parties as determined
by the arbitrator.

         15.5    NOTICE.  Service of all notices under this Member Control
Agreement shall be sufficient if given in writing, whether by mail, telefax
(with confirmation), electronic mail (with confirmation), or similar
communications equipment, to each member of the Board of Governors individually
or to Members at the addresses as indicated in the records of the Company, or
to the Members or Governors at such other addresses as any Member or Governor
may from time to time designate in writing to the Company.  Any notice if sent
by mail shall be deemed to be given as of





                                      -30-
<PAGE>   35

5:00 p.m. Eastern Standard Time on the second Business Day following the
posting of such notice, and if sent by telefax, electronic mail or similar
communications equipment shall be deemed given when such notice is sent.

         15.6    GOVERNING LAW.  This Member Control Agreement and any
amendments hereto shall be governed, interpreted and construed in accordance
with the laws of Minnesota, without regard to Minnesota choice of law
provisions.

         15.7    SUCCESSORS.  This Member Control Agreement and all terms and
provisions hereof and amendments hereto shall inure to the benefit of and be
binding on the successors and assigns of the Members.

         15.8    SEVERABILITY.  Each provision of this Member Control Agreement
shall be severable if unenforceable and the remainder of the Member Control
Agreement shall not be void for the unenforceability of any such provision(s).

         IN WITNESS WHEREOF, the Members, through their duly authorized
officers, have executed this Member Control Agreement on the date set forth
below their names.

                                        VIRGINIA HORN TACONITE COMPANY


                                        by   ________________________________

                                        its  ________________________________

                                             ________________________________
                                                       (date)





                                      -31-
<PAGE>   36


                                        EVELETH TACONITE COMPANY


                                        by   ________________________________

                                        its  ________________________________

                                             ________________________________
                                                          (date)

                                        ONTARIO EVELETH COMPANY


                                        by   _______________________________

                                        its  _______________________________

                                             _______________________________
                                                          (date)





                                      -32-
<PAGE>   37

                                   EXHIBIT A
                                INITIAL MEMBERS:

<TABLE>
<CAPTION>
                                                      INITIAL CAPITAL
MEMBER NAME AND ADDRESS                                CONTRIBUTION                           PERCENTAGE
-----------------------                               ---------------                         ----------
<S>                                                   <C>                                       <C>
Eveleth Taconite Company                              $1,800,000(1)                              45%

Virginia Horn Taconite Company                        $1,600,000(2)                              40%

Ontario Eveleth Company                               $  600,000(3)                              15%
</TABLE>





---------------
(1)  Eveleth Taconite Company, in exchange for its 45%  membership interest, has
agreed to contribute, in addition to the initial cash contribution listed on
this Exhibit A, (i) certain of its assets used in the operation of Eveleth Mines
and (ii) its pro rata share of the cash necessary for the initial operating
expenses of the Company, all as provided in the Assignment, Contribution and
Assumption Agreement  between ETCO and the Company effective as of December 1,
1996.

(2)  Virginia Horn Taconite Company, in exchange for its 40% membership
interest, has agreed to contribute, in addition to the initial cash contribution
listed on this Exhibit A, (i) its general partnership interest in Eveleth
Expansion Company ("EXCO") and (ii) its pro rata share of the cash necessary for
the initial operating expenses of the Company, all as provided in the 
Assignment, Contribution and Assumption agreement by and among Virginia Horn
Taconite Company, Ontario Eveleth Company and the Company effective as of
December 1, 1996.

(3)  Ontario Eveleth Company, in exchange for its 15% membership interest, has
agreed to contribute, in addition to the initial cash contribution listed on
this Exhibit A, (i) its general partnership interest in Eveleth Expansion
Company ("EXCO") and (ii) its pro rata share of the cash necessary for the
initial operating expenses of the Company, all as provided in the Assignment,
Contribution and Assumption agreement by and among Virginia Horn Taconite
Company, Ontario Eveleth Company and the Company effective as of December 1,
1996.