Legal Templates
Sale Of LLC Interest Agreement

Sale Of LLC Interest Agreement for the United States

Sale Of LLC Interest Agreement Template for United States

A Sale of LLC Interest Agreement is a legal document used in the United States to facilitate and document the transfer of ownership interests in a Limited Liability Company from a seller to a buyer. This agreement outlines the terms and conditions of the sale, including purchase price, representations and warranties, and any conditions precedent to closing. It is governed by both federal and state laws, particularly the state where the LLC is registered, and must comply with applicable securities regulations and the LLC's operating agreement.

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What is a Sale Of LLC Interest Agreement?

The Sale of LLC Interest Agreement is a crucial document used when a member of an LLC wishes to sell their ownership stake to another party. This agreement is essential in U.S. business transactions to ensure proper documentation of the transfer, compliance with state and federal regulations, and protection of all parties' interests. The document typically includes detailed information about the interest being sold, purchase price, payment terms, representations and warranties, and any conditions that must be met before closing. It's particularly important to ensure compliance with the existing LLC operating agreement and obtain necessary approvals from other members if required.

What sections should be included in a Sale Of LLC Interest Agreement?

1. Parties: Identification of seller, buyer, and LLC entity

2. Background: Context of the transaction and current ownership structure

3. Definitions: Key terms used throughout the agreement

4. Purchase and Sale: Core transaction terms including interest being sold and purchase price

5. Closing: Timing and mechanics of the transaction completion

6. Representations and Warranties: Statements of fact by both parties regarding their capacity, authority, and the LLC interest

7. Covenants: Ongoing obligations of the parties

8. Indemnification: Terms regarding how parties will protect each other from losses related to the transaction

9. Governing Law: Jurisdiction and applicable law governing the agreement

What sections are optional to include in a Sale Of LLC Interest Agreement?

1. Non-Compete: Restrictions on seller's future business activities and competition

2. Earn-Out Provisions: Additional payment terms based on future performance metrics

3. Tag-Along Rights: Rights of other members to join in the sale under similar terms

4. Drag-Along Rights: Rights to force other members to join in the sale

5. Dispute Resolution: Specific procedures for resolving disputes between parties

What schedules should be included in a Sale Of LLC Interest Agreement?

1. Schedule A - Description of LLC Interest: Detailed description of the membership interest being transferred

2. Schedule B - Purchase Price Calculation: Breakdown of purchase price components and payment terms

3. Schedule C - Existing Encumbrances: List of any liens, obligations, or restrictions attached to the interest

4. Schedule D - Required Consents: List of third-party approvals needed for the transfer

5. Schedule E - Transfer Documents: Forms and filings required to complete the transfer

Authors

Alex Denne

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

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Jurisdiction

United States

Publisher

Genie AI

Document Type

Security Agreement

Sector

Investment

Cost

Free to use
Industries

Internal Revenue Code: Federal tax regulations governing the tax implications of LLC interest transfer, including potential capital gains, basis calculations, and tax reporting requirements

Securities Acts (1933 & 1934): Federal securities laws that may apply if the LLC interest qualifies as a security, governing registration, disclosure requirements, and anti-fraud provisions

UCC Article 9: Uniform Commercial Code provisions regarding security interests and secured transactions that might affect the transfer of LLC interests

State LLC Act: State-specific legislation governing LLC formation, operation, and transfer of interests, including any required state filings or approvals

Blue Sky Laws: State-specific securities laws that regulate the offering and sale of securities within the state, including registration and exempt transaction requirements

State Contract Laws: State-specific laws governing contract formation, enforcement, and interpretation that will apply to the sale agreement

State Tax Laws: State-specific tax regulations that may impose additional tax obligations or filing requirements on the transfer of LLC interests

Operating Agreement: The LLC's existing operating agreement provisions regarding transfer restrictions, approval requirements, and procedures for transferring membership interests

Buy-Sell Agreements: Any existing agreements between LLC members that govern the process and terms for buying and selling membership interests

Third-Party Consents: Requirements for obtaining consent from other members, managers, lenders, or contractual parties before completing the transfer

Transfer Restrictions: Any existing restrictions on transfer, including right of first refusal, tag-along rights, or drag-along rights

Fiduciary Duties: Legal obligations and responsibilities of members and managers in relation to the transfer of LLC interests

Due Diligence Requirements: Legal requirements for verifying authority to transfer, checking for liens or encumbrances, and reviewing outstanding obligations affecting the transfer

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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