Membership Interest Purchase Agreement (Pro-Buyer Long Form; Disregarded Entity)

by Practical Law Corporate & Securities, with environmental provisions by Andrew N. Davis, Ph.D. and Aaron D. Levy, Shipman & Goodwin LLP.

A Standard Document that is a long-form Membership Interest Purchase Agreement for the acquisition of all outstanding membership interests in a private US limited liability company (LLC). Drafted to be pro-buyer, this agreement is structured for a transaction involving a single buyer and a single seller, where the target company is a disregarded entity for US federal income tax purposes. Because this Standard Document assumes a deferred closing, it includes extensive pre-closing covenants, closing conditions, and termination rights. Key provisions address a detailed purchase price adjustment mechanism based on working capital, indebtedness, and transaction expenses, featuring an estimated adjustment at closing and a final post-closing true-up. It also establishes an escrow fund to secure the seller's post-closing obligations, including indemnification. This Standard Document contains robust seller representations and warranties covering areas such as intellectual property, environmental matters, and employee benefits, along with post-closing non-competition and non-solicitation covenants and a detailed tax article.