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Membership Interest Sales Agreement for the United States

Membership Interest Sales Agreement Template for United States

A Membership Interest Sales Agreement is a legal document governed by U.S. federal and state laws that facilitates the transfer of ownership interests in a Limited Liability Company (LLC) from a seller to a buyer. This agreement outlines the terms and conditions of the sale, including purchase price, representations and warranties, and closing conditions, while ensuring compliance with applicable securities laws and operating agreement requirements.

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What is a Membership Interest Sales Agreement?

The Membership Interest Sales Agreement is essential when transferring ownership stakes in an LLC. This document, governed by U.S. state and federal laws, is used to document the terms of sale, protect both parties' interests, and ensure compliance with securities regulations and LLC operating agreements. The agreement typically includes detailed provisions about the transaction structure, purchase price, representations and warranties, and closing conditions. It's particularly important to consider state-specific LLC laws and any transfer restrictions in the existing operating agreement.

What sections should be included in a Membership Interest Sales Agreement?

1. Parties: Identifies the seller(s) and buyer(s) of the membership interests

2. Background/Recitals: Sets forth the context of the transaction and basic information about the LLC

3. Definitions: Defines key terms used throughout the agreement

4. Purchase and Sale: Details the membership interests being sold and purchase price

5. Closing: Specifies closing date, deliverables, and mechanics

6. Representations and Warranties of Seller: Seller's statements about the membership interests and LLC

7. Representations and Warranties of Buyer: Buyer's statements about their ability to purchase

8. Covenants: Ongoing obligations of the parties

What sections are optional to include in a Membership Interest Sales Agreement?

1. Purchase Price Adjustments: Mechanisms for adjusting price post-closing based on future events

2. Earn-out Provisions: Additional payments based on future performance metrics

3. Non-compete: Restrictions on seller's future competitive activities to protect business value

What schedules should be included in a Membership Interest Sales Agreement?

1. Disclosure Schedules: Exceptions to representations and warranties

2. Operating Agreement: Current LLC operating agreement

3. Financial Statements: Recent financial statements of the LLC

4. Member Consent: Written consent of other members if required

5. Transfer Documents: Assignment and transfer instruments

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

United States

Publisher

Ƶ

Cost

Free to use
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Industries

Securities Act of 1933 and 1934: Federal laws governing securities transactions, which may apply if the membership interests are classified as securities. Includes registration requirements and anti-fraud provisions.

Internal Revenue Code: Federal tax legislation governing the tax implications and treatment of membership interest transfers, including capital gains considerations and tax reporting requirements.

Federal Trade Commission Act: Federal legislation concerning antitrust and competition considerations, particularly relevant for larger transactions that may impact market competition.

State Limited Liability Company Acts: State-specific laws governing the formation, operation, and transfer of LLC interests, including requirements for membership interest transfers.

Blue Sky Laws: State-specific securities laws that regulate the offering and sale of securities within each state's jurisdiction.

State Contract Laws: State-specific laws governing contract formation, enforcement, and interpretation, which form the basic framework for the agreement.

State Commercial Codes: State-specific commercial regulations that may affect business transactions and transfers of ownership interests.

State Business Corporation Acts: State laws governing business entities, which may have implications for membership interest transfers even in LLC contexts.

SEC Regulations: Federal regulatory requirements imposed by the Securities and Exchange Commission, particularly relevant if the transaction involves regulated securities.

FINRA Regulations: Regulatory requirements that apply when broker-dealers are involved in facilitating the membership interest transfer.

UCC Article 8: Uniform Commercial Code provisions governing investment securities, applicable if membership interests are certificated.

Fraudulent Transfer Laws: State laws protecting creditors' rights and preventing transfers made to defraud creditors.

Operating Agreement Provisions: Internal company document provisions that may restrict or regulate the transfer of membership interests.

Buy-Sell Agreements: Existing contractual arrangements between members that may affect or restrict the transfer of membership interests.

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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