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Membership Unit Purchase Agreement
"I need a Membership Unit Purchase Agreement for the acquisition of 25% ownership in a Canadian technology startup, with specific provisions for tag-along rights and an earn-out mechanism based on 2025 revenue targets."
1. Parties: Identification of the seller(s) and purchaser(s) of the membership units
2. Background: Context of the transaction, including description of the company and the membership units being sold
3. Definitions: Key terms used throughout the agreement
4. Purchase and Sale: Core transaction terms including number of units, purchase price, and payment terms
5. Closing: Timing and mechanics of the closing, including conditions precedent and deliverables
6. Representations and Warranties of Seller: Seller's confirmations regarding ownership, authority, and company status
7. Representations and Warranties of Purchaser: Purchaser's confirmations regarding authority, financial capacity, and investment intent
8. Covenants: Ongoing obligations of the parties before and after closing
9. Indemnification: Terms for compensating parties for losses arising from breaches or misrepresentations
10. Confidentiality: Provisions regarding non-disclosure of transaction and company information
11. Notices: Process and addresses for formal communications between parties
12. General Provisions: Standard legal provisions including governing law, amendments, and severability
1. Right of First Refusal: Used when existing members have rights to purchase units before third parties
2. Tag-Along Rights: Include when minority members have the right to join in sales by majority members
3. Drag-Along Rights: Include when majority members can force minority members to join in a sale
4. Non-Competition: Used when seller is restricted from competing with the company post-sale
5. Tax Matters: Include detailed tax provisions when transaction has significant tax implications
6. Regulatory Approvals: Required when transaction needs government or regulatory approval
7. Employee Matters: Include when seller has ongoing employment relationship with company
8. Earn-Out Provisions: Used when portion of purchase price is contingent on future performance
1. Schedule A - Description of Membership Units: Detailed description of units being purchased including class, rights, and restrictions
2. Schedule B - Purchase Price Calculation: Breakdown of purchase price and payment terms
3. Schedule C - Closing Deliverables: List of documents and items to be delivered at closing
4. Schedule D - Company Financial Statements: Recent financial statements of the company
5. Schedule E - Disclosure Schedule: Exceptions to representations and warranties
6. Schedule F - Required Consents: List of third-party consents needed for the transaction
7. Appendix 1 - Form of Transfer Power: Form for transferring membership units
8. Appendix 2 - Form of Release: Form of mutual release between parties
Authors
Technology
Manufacturing
Professional Services
Real Estate
Healthcare
Retail
Financial Services
Energy
Agriculture
Mining
Transportation
Construction
Entertainment
Hospitality
Legal
Finance
Corporate Development
Mergers & Acquisitions
Tax
Compliance
Executive Leadership
Board of Directors
Investment
Corporate Secretariat
Chief Executive Officer
Chief Financial Officer
Corporate Lawyer
General Counsel
Business Development Manager
Investment Manager
Corporate Secretary
Managing Director
Private Equity Manager
Venture Capital Manager
Mergers & Acquisitions Director
Compliance Officer
Tax Director
Finance Director
Board Member
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