Membership Interest Redemption Agreement

by Practical Law Corporate & Securities

A Standard Document for the redemption of a non-controlling, minority membership interest in a Delaware limited liability company (LLC). This Standard Document facilitates a transaction where a member sells its entire interest back to the company for a fixed purchase price, with provisions for a simultaneous signing and closing. It outlines the essential terms for the redemption and cancellation of the interest, specifies closing deliverables, and includes representations and warranties for both the selling member and the company. This agreement addresses crucial tax considerations, including the treatment of payments under Section 736 of the Internal Revenue Code (Code) and the allocation of income and loss for the closing year. It also provides optional clauses for mutual releases, post-closing restrictive covenants such as non-competition and non-solicitation, and detailed indemnification provisions to effectively allocate risk between the parties.