Membership Interest Purchase Agreement (Pro-Seller Long Form)

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 provides a long-form agreement for the purchase and sale of all outstanding membership interests in a private US limited liability company (LLC). Drafted in favor of the seller, this agreement is a critical tool for sellers controlling the initial draft, such as in an auction setting. This Standard Document is structured for transactions with a single buyer and seller, where the signing and closing are not simultaneous, and assumes the target LLC is treated as a C-corporation for federal income tax purposes. It addresses key stages of an M&A transaction, setting forth detailed seller and buyer representations and warranties, extensive pre- and post-closing covenants, and specific conditions to closing. This Standard Document also outlines a post-closing purchase price adjustment mechanism based on working capital, indebtedness, and transaction expenses. It contains pro-seller frameworks for indemnification, including survival periods and limitations, and navigates complex issues related to environmental liabilities, intellectual property, and employee benefits.