Membership Interest Purchase Agreement — Buyer-Protective Extended Form

For Informational Purposes Only

Buyer-side LLC interest purchase agreement with comprehensive representations, partnership tax provisions, seller representative mechanics, and full indemnification framework. Form ID FMA-004 · Version 1.1.0

Download Template (.docx)

Matter Completion Sheet — Not Part of the Agreement

Complete every row before releasing an execution copy. Enter the selected term, document name, date, amount, or responsible person in the final column. Do not leave a row blank. If an item does not apply, enter “N/A” and the reason. A checked drafting box means only that the drafting input is complete; it is not legal approval.

A. Parties, ownership, and timing

Status	Required completion	Matter-specific input, owner, or approval
☐	Confirm Company, Buyer, each Seller, and Seller Representative legal name, entity type, jurisdiction, good standing, authority, and signatory capacity.	[COMPLETE]
☐	Reconcile the LLC Agreement, interest ledger, capitalization table, capital accounts, classes, profits interests, options, warrants, SAFEs, notes, phantom rights, transfer restrictions, and distribution waterfall.	[COMPLETE]
☐	State the exact interests and fully diluted percentage sold, rollover or retained interests, post-Closing ownership, admission mechanics, resignations, and LLC Agreement amendment or termination.	[COMPLETE]
☐	Select simultaneous or deferred Closing; complete consents, drag and waiver mechanics, regulatory filings, interim covenants, no-shop, Outside Date, and consequences of failure to close.	[COMPLETE]

B. Economics and founder outcomes

Status	Required completion	Matter-specific input, owner, or approval
☐	Approve enterprise value, Cash, Debt, Transaction Expenses, Target Working Capital, Closing payment, escrows, representative fund, holder-level allocation, and no-double-count funds flow.	[COMPLETE]
☐	Attach accounting principles, line items, sample calculation, estimate and objection procedures, expert limits, post-Closing conduct rule, and recovery source.	[COMPLETE]
☐	Complete earnout, rollover, seller note, employment, consulting, retention, restrictive covenant, release, D&O, and founder liquidity/governance terms in identified documents.	[COMPLETE]
☐	Approve Tax classification, partnership allocation, Section 754 election, Section 751 hot-asset treatment, Section 1060 if applicable, withholding, 280G, 409A, Section 1202, and any Section 338 or 336(e) election.	[TAX COUNSEL / DATE]

C. Diligence, schedules, and closing record

Status	Required completion	Matter-specific input, owner, or approval
☐	Complete Disclosure Schedules; reconcile them to the data room, cap table, LLC records, financial statements, and each representation; select whether later updates cure a breach.	[COMPLETE]
☐	Complete IP chain-of-title, PIIA, open-source, AI model/data, privacy, cybersecurity, employment, benefits, trade controls, permits, real property, environmental, product, and regulatory diligence.	[COMPLETE]
☐	Confirm holder approvals, appraisal or dissenter rights if any, release and power-of-attorney mechanics, payoff and lien releases, cancelled instruments, and proceeds entitlements.	[COMPLETE]
☐	Finalize the Closing checklist, interest assignments, consents, certificates, resignations, amended LLC Agreement, consideration schedule, final data-room index and archive, funds flow, and verified wires.	[COMPLETE]

D. Risk allocation and remedies

Status	Required completion	Matter-specific input, owner, or approval
☐	Select Knowledge Persons and inquiry standard; Material Adverse Effect; bring-down standard; materiality scrape; sandbagging; survival; basket; cap; special indemnities; Fraud; and several or joint liability.	[COMPLETE]
☐	Select traditional indemnity, RWI, or hybrid recovery; state retention, exclusions, subrogation, underwriting cooperation, recovery order, setoff limits, and escrow source.	[COMPLETE]
☐	Complete Seller Representative authority, fund, reliance, replacement, conflict, liability, information, and allocation mechanics; test authority against the LLC Agreement and holder approvals.	[COMPLETE]
☐	Confirm transaction-privilege treatment, D&O protection, governing law, forum, jury waiver, equitable relief, notices, assignment, and financing or limited-guaranty terms.	[COMPLETE]

E. Review and release control

Status	Required completion	Matter-specific input, owner, or approval
☐	Corporate lead completed the bracket, election, defined-term, cross-reference, capitalization, waterfall, schedule, exhibit, signature, and funds-flow checks.	[LAWYER / DATE]
☐	Required specialists approved their sections: Tax; benefits; employment; antitrust; CFIUS; IP; privacy; cyber; environmental; real estate; industry regulation.	[LAWYER(S) / DATE OR N/A—REASON]
☐	Counterparty-position review completed; each nonstandard protection is necessary, obtainable, specific, and tied to a remedy or closing condition.	[LAWYER / DATE]
☐	Execution copy released only after all open items are resolved or listed in a written release memorandum approved by the responsible lawyer.	[RELEASED BY / DATE / VERSION]

MEMBERSHIP INTEREST PURCHASE AGREEMENT

This Membership Interest Purchase Agreement (this “Agreement”) is entered into as of [DATE] by and among each Person listed as a seller on Schedule I (each a “Seller” and together, “Sellers”), [BUYER], a [JURISDICTION] [ENTITY TYPE] (“Buyer”), [TARGET COMPANY], a [JURISDICTION] limited liability company (the “Company”), and [SELLER REPRESENTATIVE], solely in that capacity (“Seller Representative”).

Recitals

A. Sellers own the issued and outstanding membership interests shown on Schedule I (the “Purchased Interests”).

B. The Purchased Interests constitute [all / ___%] of the outstanding equity interests of the Company on a fully diluted basis.

C. Buyer desires to purchase, and Sellers desire to sell, the Purchased Interests on the terms below.

The parties agree as follows.

1. Definitions and Interpretation

“Accounting Principles” means the specific accounting hierarchy, policies, line items, reserves, and sample calculation in Exhibit A.

“Cash” means Company cash and cash equivalents determined under Exhibit A, net of outstanding checks and restricted or customer funds, plus deposits in transit, without duplication.

“Closing Working Capital” means the Company’s included current assets minus included current liabilities, using only Exhibit A line items and excluding Cash, Debt, Transaction Expenses, and current or deferred income-Tax items.

“Company Securities” means membership interests, units, profits interests, options, warrants, phantom equity, appreciation rights, SAFEs, convertible notes, other convertible or exchangeable instruments, and every right to acquire or receive value measured by Company equity.

“Debt” means, without duplication, indebtedness for borrowed money, notes, bonds, drawn letters of credit, finance leases, deferred acquisition price, declared but unpaid distributions, unpaid change-in-control amounts not included in Transaction Expenses, hedging termination amounts, guarantees, and accrued interest and prepayment costs, as specifically refined in Exhibit A.

“Fully Diluted Interests” means all outstanding Company Securities, assuming exercise, conversion, exchange, vesting, and settlement, whether or not then vested or exercisable, but excluding only instruments expressly cancelled for no consideration before Closing.

“Fraud” means actual common-law fraud under the governing law committed by a Seller with respect to that Seller’s Seller Representation or by an identified Company Knowledge Person with respect to a Company Representation. It excludes constructive or equitable fraud, negligent misrepresentation, and imputed fraud, except as nonwaivable law requires.

“Knowledge of the Company” means actual knowledge of the individuals on Schedule 1 after reasonable inquiry of their direct reports with primary responsibility for the matter.

“Material Adverse Effect” means a change that has had or would reasonably be expected to have a material adverse effect on the Company and its Subsidiaries, taken as a whole, or on the ability to consummate the transaction, excluding general market, industry, economic, political, legal, pandemic, cyber, war, or disaster conditions; failure to meet projections; announcement effects; and actions required by this Agreement or Buyer, except for materially disproportionate effects.

“Seller Pro Rata Share” means the percentage opposite a Seller’s name on the Closing Consideration Schedule after giving effect to the distribution waterfall, cancellation or exercise of Company Securities, and any different allocation required by the LLC Agreement.

“Transaction Expenses” means unpaid Company or Seller expenses incurred in connection with the transaction, including legal, banker, accounting, quality-of-earnings, data-room, representative, transaction bonus, retention, change-in-control, employer payroll-Tax, equity-cancellation, and plan-termination amounts, excluding any item included in Debt or Working Capital.

The Disclosure Schedules qualify a representation only where they provide reasonable detail and the relevance is reasonably apparent. A Seller’s disclosure concerning title to that Seller’s Purchased Interests qualifies only that Seller’s Seller Representations unless stated otherwise. “Including” is nonexclusive, “or” is inclusive, and no drafting presumption applies.

2. Purchase and Sale of Interests

2.1 Sale and transfer

At Closing, each Seller will sell, assign, transfer, and deliver to Buyer all of that Seller’s Purchased Interests, free and clear of all liens, pledges, options, proxies, voting agreements, transfer restrictions, and other encumbrances other than restrictions under applicable securities law. Buyer will purchase the Purchased Interests and pay the consideration under Article 3.

2.2 Ownership; fully diluted capitalization

Schedule 2.2 must show every Company Security, holder, class, number, percentage, capital account if relevant, vesting status, exercise or conversion price, liquidation or distribution rights, and Closing treatment. Immediately after Closing, Buyer will own [100% / stated percentage] of the Company Securities, and no Person will have a right to acquire or receive Company equity or transaction consideration except as listed on the final Closing Consideration Schedule.

2.3 LLC agreement; admission; resignation

At Closing, Sellers and the Company will deliver all consents and waivers required under the LLC Agreement, admit Buyer as a member with the purchased rights, amend and restate or terminate the existing LLC Agreement as Buyer directs, update the interest ledger, and cause each resigning manager, officer, or authorized person identified on Schedule 2.3 to resign without severance or other liability except as disclosed.

2.4 No retained interest or Company claim

Except for expressly documented rollover equity, no Seller retains an economic, voting, information, distribution, capital-account, or other interest in the Company after Closing. The Company will not owe a Seller a distribution, redemption amount, loan repayment, expense reimbursement, or other related-party amount except as included in the funds flow or expressly assumed.

3. Purchase Price; Waterfall; Adjustment

3.1 Enterprise-to-equity bridge

The aggregate purchase price equals $[ENTERPRISE VALUE], plus Closing Cash, minus Closing Debt, minus Transaction Expenses, plus or minus the difference between Closing Working Capital and Target Working Capital, minus the Adjustment Escrow, Indemnity Escrow, Representative Fund, and other agreed holdbacks, plus any separate amount expressly stated on Schedule 3.1 (the “Purchase Price”).

3.2 Closing Consideration Schedule

At least [five] Business Days before Closing, the Company and Seller Representative will deliver a Closing Consideration Schedule showing: each Company Security and its treatment; the enterprise-to-equity bridge; each Seller Pro Rata Share; Tax withholding; escrow and representative-fund contributions; debt and expense payoffs; rollover or reinvestment amounts; option or profits-interest payments; and the net amount and legal payment character for each payee. Buyer may rely on the final schedule absent manifest error. Sellers, not Buyer or the Company after Closing, bear claims arising from an inaccurate allocation.

3.3 Closing payments

Buyer will pay the estimated Purchase Price according to the verified funds-flow memorandum. Payment to Seller Representative, the paying agent, escrow agent, creditor, or other designated recipient discharges Buyer to that extent. Each Seller is responsible for accurate wire and Tax documentation. Wire changes require independent callback verification.

3.4 Final adjustment

Within [90] days after Closing, Buyer will deliver its calculation with supporting workpapers. Seller Representative has [30] days to object in reasonable detail and may review relevant records. Unobjected items are final. Unresolved accounting items go to [ACCOUNTING FIRM] as an expert limited to the Parties’ asserted range and required to follow Exhibit A. Fees are allocated in inverse proportion to success. Buyer may recover an amount owed from the Adjustment Escrow first and then severally from Sellers according to Seller Pro Rata Shares [subject to stated limits].

3.5 No double count; post-closing conduct

No item may be counted as Debt, Transaction Expense, Working Capital, indemnifiable Loss, or another price component more than once. The adjustment excludes purchase accounting, Buyer’s post-Closing financing or integration, events after Closing that do not provide evidence of Closing facts, and liabilities caused by Buyer. The specific definitions and sample calculation control.

3.6 Earnout, rollover, and founder arrangements

Schedule 3.6 identifies each earnout, seller note, rollover, employment, consulting, retention, restrictive covenant, and release arrangement. Separate consideration must have an identified legal and Tax basis and may not distort the Seller Pro Rata Shares required by the LLC Agreement or applicable law. An earnout exhibit must include objective metrics, accounting rules, operational covenants, reporting and audit rights, shared-cost allocation, treatment of acquisitions and dispositions, successor assumption, acceleration, setoff rules, and examples. Rollover documents must address securities-law compliance, investor representations, governance, transfer, drag/tag, information, tax, and forfeiture terms.

3.7 Withholding

Buyer, the Company, paying agent, and escrow agent may withhold amounts required by law. Buyer will give reasonable notice when practicable and cooperate with valid exemption documentation. Withheld amounts treated as paid to the applicable payee will be remitted and reported as required.

4. Closing

Closing occurs remotely on [DATE] or the [third] Business Day after conditions are satisfied or waived. Sellers, the Company, and Seller Representative will deliver interest assignments, member and manager consents, LLC Agreement amendments, ledger updates, resignations, payoff and lien-release documents, officer and secretary certificates, good-standing certificates, FIRPTA and other Tax documentation, escrow and paying-agent documents, completed Disclosure Schedules, IP and credential transfers, equity cancellation evidence, and all items on Schedule 4. Buyer will deliver the payments, its approvals and certificates, and executed transaction documents. Deliveries are simultaneous.

5. Company Representations and Warranties

Except as disclosed, the Company represents to Buyer as of signing and Closing:

5.1 Organization; qualification; subsidiaries

The Company and each Subsidiary are duly organized, validly existing, and in good standing where applicable, are qualified where failure would be material, and have power to own assets and operate the business. Schedule 5.1 lists every jurisdiction, Subsidiary, assumed name, predecessor, and equity interest in another Person.

5.2 Authority; no conflict; approvals

The Company has authorized the transaction and this Agreement is enforceable against it subject to customary limitations. The transaction does not violate organizational documents, applicable law, or a Material Contract; cause an acceleration; create a lien; or require consent, except as disclosed.

5.3 Capitalization; LLC agreement; distributions

Schedule 5.3 is a complete and accurate capitalization table on an issued, outstanding, and fully diluted basis. All Company Securities were duly authorized and validly issued and, where applicable, fully paid; issuances complied with the LLC Agreement, applicable securities law, and preemptive or similar rights. No undisclosed option, warrant, SAFE, note, profits interest, phantom right, voting agreement, proxy, transfer restriction, redemption, distribution, capital call, or commitment exists. Capital accounts and tax allocations have been maintained as disclosed. All required distributions and Tax distributions have been made or accrued.

5.4 Financial statements; controls; liabilities

The scheduled financial statements were prepared from the books and records, fairly present in all material respects the financial position and results for the periods shown, and use the stated accounting basis consistently, subject in interim statements to normal adjustments and omitted notes. The Company has no liabilities required to be reflected under that basis except those shown, incurred in the ordinary course since the balance-sheet date, or disclosed. The books, controls, bank accounts, payment systems, and Tax records are accurate in all material respects and sufficient for the stated basis.

5.5 Absence of changes

Since [DATE], no Material Adverse Effect has occurred; the business has operated in the ordinary course; and the Company has not taken an action Section 8.2 prohibits without Buyer’s consent.

5.6 Assets; real property; sufficiency

The Company has good title to, or valid leasehold or license rights in, all material assets, free of liens other than Permitted Liens. The assets constitute all property reasonably necessary to conduct the business immediately after Closing in substantially the manner then conducted. Schedule 5.6 identifies owned and leased real property, material equipment, and encumbrances. Tangible assets are in operating condition, ordinary wear and disclosed maintenance excepted.

5.7 Contracts; customers; suppliers

Schedule 5.7 lists Material Contracts by objective category and threshold, including revenue, supplier, lease, debt, IP, cloud, data, AI, open-source, employment, benefit, related-party, exclusivity, MFN, change-of-control, partnership, and government agreements. Each is in force; neither the Company nor, to Company Knowledge, its counterparty is in material breach; and no unresolved termination or default notice exists. Schedule 5.7 identifies material customer or supplier losses, reductions, and disputes.

5.8 Intellectual property; open source; AI

Schedule 5.8 identifies registered and material unregistered Company IP, material software and repositories, inbound and outbound licenses, source-code escrow, open-source components, and material AI systems, models, agents, tools, datasets, and model-provider terms. The Company owns or has valid rights to use all Company IP and operate the business. Personnel who created material Company IP executed present-assignment and confidentiality obligations, subject to disclosed exceptions. The Company has taken reasonable steps to protect trade secrets.

The business does not knowingly infringe, misappropriate, or violate another Person’s IP, and no written claim is pending or threatened. Open-source use has not triggered an undisclosed obligation to disclose, license, or distribute proprietary source code. For material AI systems, Schedule 5.8 describes provenance and permitted use of training, fine-tuning, retrieval, and evaluation data; ownership and use restrictions; output review; security; customer disclosures; and known infringement, privacy, bias, or safety claims. The Company has not knowingly used data without a reasonably documented right or lawful basis.

5.9 Privacy; cybersecurity; data rights

The Company materially complies with applicable privacy, data-protection, cybersecurity, marketing, communications, biometric, and data-broker laws, contracts, and published notices. It maintains a written security program proportionate to risk, including access control, encryption where appropriate, vendor diligence, logging, backup, incident response, vulnerability management, and secure development. Schedule 5.9 lists material incidents, notifications, investigations, penetration-test findings, insurance claims, and unresolved remediation. No undisclosed incident required notice. The transaction and post-Closing use of Company data are permitted or the required consents and restrictions are disclosed.

5.10 Employees; contractors; benefits

Schedule 5.10 lists employees and material service providers, location, compensation, accrued leave, classification, visa status, and leave status; benefit plans; labor matters; and all transaction, retention, severance, bonus, equity, profits-interest, or change-in-control obligations. The Company materially complies with employment, wage, hour, classification, discrimination, harassment, retaliation, leave, immigration, labor, benefits, and WARN-type laws. Schedule 5.10 identifies Section 280G and 409A arrangements and provides the data needed for any waiver and vote. Schedule 5.10 also identifies each written or, to the Company’s Knowledge, substantiated allegation during the prior [five] years that a founder, manager, director, executive officer, or senior employee engaged in sexual harassment, sexual assault, or material workplace misconduct, and states the disposition and any related settlement, confidentiality, or separation obligation.

5.11 Taxes; tax classification

The Company and Subsidiaries have timely filed material Tax returns and paid Taxes due, subject to disclosed contests and reserves; materially complied with withholding, payroll, sales, use, and information reporting; and are not subject to undisclosed audits, assessments, liens, closing agreements, or nexus claims. Schedule 5.11 states the federal, state, and foreign Tax classification of each entity for all relevant periods; elections under Sections 754 or comparable law; partnership representative; capital-account method; built-in-gain, disguised-sale, debt-allocation, and withholding matters; and prior conversions or reorganizations. No representation guarantees a Seller’s Section 1202 or other personal Tax treatment absent a separate express certificate.

5.12 Compliance; permits; trade controls

The Company materially complies with applicable law and holds material permits. Schedule 5.12 lists written violation notices, investigations, settlements, and required permit or regulatory approvals. The Company maintains policies reasonably designed for anti-corruption, sanctions, export controls, government contracting, and regulated-business obligations and has not knowingly made a prohibited payment or transacted with a sanctioned Person.

5.13 Litigation; insurance; environmental; product

Schedule 5.13 lists pending or threatened proceedings, orders, product or service claims, recalls, environmental matters, and material insurance policies and claims. No proceeding would reasonably be expected to prevent Closing. The Company has not received an unresolved written allegation of material product defect, personal injury, environmental release, or uninsured loss except as disclosed.

5.14 Related parties; bank accounts; brokers

Schedule 5.14 identifies Contracts, loans, distributions, compensation, IP, property, services, and other arrangements with Sellers, founders, managers, officers, employees, family members, or Affiliates. At Closing, each terminates without Company liability except as expressly continuing. The schedule lists all bank and payment accounts and authorized signers. No broker engaged by a Seller or the Company creates post-Closing liability for Buyer or the Company except as a Transaction Expense.

6. Seller Representations

Each Seller severally, only as to that Seller, represents that: the Seller has capacity and authority; this Agreement is enforceable against the Seller; the Seller owns the Purchased Interests shown for that Seller, free of encumbrances other than securities-law restrictions; the Seller has not transferred, promised, or granted voting or economic rights in those interests except as disclosed; the transaction does not violate the Seller’s binding agreement or order; the Seller has not engaged a broker creating liability for Buyer or the Company; and the Seller’s payment and Tax information is accurate. No Seller is liable for another Seller’s Seller Representation.

7. Buyer Representations

Buyer represents that it is duly organized and validly existing, has authorized the transaction, this Agreement is enforceable against it subject to customary limitations, the transaction does not violate its organizational documents or applicable law, it has sufficient funds without a financing condition, its acquisition complies with applicable securities-law exemptions, and no broker engaged by Buyer creates liability for Sellers. Buyer acknowledges no representation exists beyond the express Company and Seller Representations, without limiting Fraud or express covenants.

8. Covenants

8.1 Access

Before Closing, the Company will provide reasonable access to records, systems, personnel, property, and advisers, subject to privilege, law, privacy, safety, and contractual restrictions. Clean-team, aggregation, or redaction procedures will be used for sensitive information. Buyer will not contact employees, customers, suppliers, landlords, or regulators without consent.

8.2 Conduct before Closing

The Company will operate in the ordinary course and preserve business relationships, personnel, assets, insurance, and security. Without Buyer consent, it will not issue or redeem Company Securities; amend organizational documents; make distributions outside agreed Tax distributions; incur Debt; create liens; enter, amend, or terminate Material Contracts; change compensation or benefits; hire or terminate senior personnel; settle material claims; make material Tax elections; acquire or dispose of assets; change accounting; or materially change source code, models, datasets, privacy practices, or cybersecurity architecture.

8.3 Approvals and regulatory efforts

The parties will use [reasonable best efforts] to obtain approvals and close. Buyer is not required to divest, litigate, accept behavioral remedies, or agree to a material restriction unless Schedule 8.3 says so. HSR, CFIUS, foreign direct investment, sectoral, securities, and other filings will be coordinated with appropriate privilege and clean-team protections.

8.4 Equity and founder cleanup

Before Closing, the Company and Sellers will complete the approved treatment of every Company Security, consent, transfer restriction, capital account, distribution right, and related-party balance. They will deliver releases and cancellation instruments and complete any required Section 280G waiver and equityholder vote. No holder may retain a claim against Buyer or the Company other than a right expressly shown in the funds flow or separate signed instrument.

8.5 Founder, employee, and D&O arrangements

Founder employment, consulting, rollover, retention, restrictive-covenant, release, and equity documents are separate agreements and do not amend this Agreement without express reference. [Buyer / Company] will obtain a [six]-year D&O tail and preserve pre-Closing indemnification and advancement rights to the extent stated on Schedule 8.5. Those rights do not cover Fraud or an express founder covenant.

8.6 Confidentiality; announcements; transition

The existing NDA remains effective until Closing and as otherwise stated. Announcements require mutual approval except for legally required disclosure after consultation. Sellers will transfer all Company records, domains, repositories, credentials, code-signing keys, cloud tenants, certificates, models, data stores, and vendor accounts under a secure transition plan. At Closing, the Company will deliver a fixed, indexed archive of the final electronic data room, with access logs and a certification of the last date on which materials could be added or altered. Sellers will not retain Company data except as law or this Agreement permits.

8.7 Exclusivity; acquisition proposals

[Include only for a deferred Closing.] Until Closing or termination, the Company and Sellers will not solicit, initiate, knowingly encourage, or enter an agreement concerning a competing acquisition of the Company or a material portion of its assets or equity. They will stop existing discussions and promptly notify Buyer of a material unsolicited proposal. Any response required by a nonwaivable fiduciary duty must follow the information, notice, matching-right, expense, and termination procedure in Schedule 8.7.

8.8 Disclosure Schedule updates

The Company will notify Buyer promptly of a fact arising after signing that makes a Company Representation inaccurate or would require a new disclosure. Unless Schedule 8.8 expressly selects a cure right for a stated category, an update does not cure a signing-date breach, reset survival, or waive a closing condition. Buyer’s signed acceptance may waive only the identified condition or claim and does not amend another provision unless it says so expressly.

8.9 Transaction communications and privilege

Schedule 8.9 states who owns and may assert privilege after Closing over communications concerning negotiation, documentation, and consummation of the transaction; identifies joint representations and conflict waivers; and states which files transfer or may be retained. This allocation does not cover ordinary-course legal advice concerning operation of the Company unless Schedule 8.9 states that result expressly. Inadvertent production does not waive privilege if the receiving party stops review and follows the return or destruction protocol promptly.

9. Closing Conditions and Termination

Buyer’s conditions include accuracy of fundamental and other representations under the negotiated standards and materiality scrape, covenant performance, no Material Adverse Effect, required approvals and consents, no injunction, delivery of transaction documents, complete capitalization and lien cleanup, and [if applicable] RWI binding. Sellers’ conditions include Buyer representation accuracy, covenant performance, no injunction, and payment and deliverables. Only the benefited party may waive a condition.

Before Closing, the Agreement may terminate by mutual consent, outside-date failure not caused by the terminating party, final legal prohibition, or uncured material breach causing a condition failure. Termination preserves confidentiality, publicity, expenses, governing law, and liability for willful material breach or Fraud.

10. Indemnification

10.1 Indemnifying parties

Sellers, severally according to Seller Pro Rata Shares and not jointly, indemnify Buyer and the Company for breach of Company Representations, Company pre-Closing covenants, specified pre-Closing Taxes, Closing Consideration Schedule inaccuracies, and special indemnities. Each Seller separately indemnifies for that Seller’s Seller Representations, covenants, title, payment directions, and Fraud.

10.2 Survival; baskets; caps

General Company Representations survive [18] months and are subject to a [tipping / deductible] basket of $[AMOUNT] and cap of $[AMOUNT OR %]. Fundamental and capitalization representations, Seller title representations, Taxes, special indemnities, covenants, and Fraud have the periods and limits in Schedule 10.2. Materiality qualifiers are disregarded [for breach and Loss / for Loss only]. No Seller’s aggregate liability exceeds that Seller’s proceeds except for that Seller’s Fraud or obligation expressly stated otherwise.

10.3 RWI and recovery order

Schedule 10.3 states whether recovery proceeds first against escrow, RWI, Sellers, or another source; responsibility for retention; excluded matters; underwriting and claims cooperation; and residual Seller liability. Buyer will preserve the insurer’s waiver of subrogation against Sellers except for the actual common-law Fraud of the Seller from whom recovery is sought, to the extent finally determined, and will not amend, waive, or replace the policy in a manner that expands Seller recourse. Buyer may not recover twice and must credit insurance and other actual recoveries net of costs. Policy exclusions do not automatically become Seller liabilities.

10.4 Claims procedure

Buyer will give prompt, reasonably detailed notice; delay reduces recovery only to the extent of material prejudice. Sellers may control a third-party defense through Seller Representative if coverage is acknowledged, qualified counsel is used, the claim seeks money within limits, and no conflict, admission, injunctive relief, or material business relationship is at risk. Settlement requires a full release and Buyer consent under the stated standard.

10.5 Exclusive remedy; sandbagging; setoff

Except for Fraud, equitable relief, purchase-price adjustment, and separate transaction-document claims, this Article is the exclusive monetary remedy. Buyer’s investigation or knowledge does not waive an express representation claim unless Buyer signed a specific waiver before Closing. Buyer may set off finally determined claims against an earnout or seller note only if the applicable instrument permits; no setoff applies to wages, protected compensation, or rollover equity.

11. Tax Matters

The parties will determine whether the Company is treated as a partnership, disregarded entity, S corporation subsidiary, or corporation and conform the agreement accordingly. Schedule 11 must address the tax year closing, allocation of income and loss, partnership representative, Section 754 election, Section 751 hot assets, debt allocations, withholding, transfer Taxes, Tax distributions, pre-Closing audits, amended returns, refunds, elections, and access to records. If an election under Section 338 or 336(e), or deemed asset-sale treatment, is contemplated, the allocation and indemnity articles must be conformed. No Party may rely on a generic provision for Section 1202, 280G, 409A, FIRPTA, or state pass-through-entity Tax treatment.

12. Seller Representative

Each Seller appoints Seller Representative as exclusive agent for post-Closing notices, adjustment objections, escrow instructions, claims, settlements, and other matters within the seller joinder. Seller Representative may retain advisers and use the Representative Fund. It has no liability except for its fraud, gross negligence, or willful misconduct and is indemnified severally by Sellers from distributed proceeds. It may not increase a Seller’s cap, admit that Seller’s Fraud, or change that Seller’s separate consideration without consent.

13. Miscellaneous

Notices must be written and sent to Schedule 13 addresses. Each party bears its own expenses except as stated. Sellers may not assign; Buyer may assign to an Affiliate, financing source, or successor but remains liable unless released. Indemnified parties and protected former managers and officers are intended beneficiaries only of the provisions that name them. This Agreement and identified transaction documents are the entire agreement; amendments and waivers require signed writings. Invalid provisions are narrowed or severed only as law permits.

This Agreement is governed by [STATE] law, without conflicts rules. The parties submit to exclusive jurisdiction in [COUNTY, STATE]. EACH PARTY KNOWINGLY WAIVES JURY TRIAL TO THE MAXIMUM EXTENT LAWFUL. Specific performance may be available subject to equitable defenses and negotiated remedy limits. Counterparts and electronic signatures are effective.

Signature Page

BUYER — [LEGAL NAME] By: ______________________________ Name / Title: [COMPLETE]	COMPANY — [LEGAL NAME] By: ______________________________ Name / Title: [COMPLETE]
SELLER REPRESENTATIVE, solely in that capacity By: ______________________________ Name / Title: [COMPLETE]	EACH SELLER executes a counterpart or Seller Joinder in the form of Exhibit [ ].

Schedules and Exhibits

• Schedule I — Sellers, Purchased Interests, Company Securities, Pro Rata Shares, and Consideration

• Schedule 1 — Definitions, Knowledge Parties, and Permitted Liens

• Schedule 2.2 — Fully Diluted Capitalization and Closing Treatment

• Schedule 2.3 — Consents, LLC Agreement Actions, and Resignations

• Schedules 3.1–3.6 — Price, Funds Flow, Escrows, and Founder Arrangements

• Schedule 4 — Closing Deliverables

• Schedules 5.1–5.14 — Company Disclosure Schedules

• Schedule 8.3 — Regulatory-Risk Allocation

• Schedule 8.5 — Founder, Employee, and D&O Matters

• Schedules 8.7–8.9 — Exclusivity, Disclosure Updates, and Transaction Privilege

• Schedules 10.2–10.3 — Survival, Caps, Special Indemnities, RWI, and Recovery Waterfall

• Schedule 11 — Tax Matters and Elections

• Schedule 13 — Notices

• Exhibit A — Accounting Principles and Sample Adjustment

• Exhibit B — Interest Assignment and Seller Joinder

• Exhibit C — Amended and Restated LLC Agreement or Termination

• Exhibit D — Escrow Agreement

• Exhibit E — Officer and Secretary Certificates

• Exhibit F — Earnout, Rollover, or Seller Note, if applicable

• Exhibit G — Founder Employment, Restrictive Covenant, and Release Forms, if applicable

Website Posting README — Not Part of the Agreement

Purpose. This buyer-protective extended form covers acquisition of LLC membership interests while keeping the target entity, and therefore its assets and liabilities, in place. It adds an interest-ledger, LLC-agreement, fully diluted capitalization, capital-account, and pass-through Tax layer that an asset or corporate stock form does not supply.

Use when. Use for a negotiated purchase of all or a controlling block of private-company LLC interests where the buyer needs robust Company representations, seller title protections, founder economics, adjustment mechanics, and post-closing remedies.

Do not use when. Do not relabel a corporate stock form. Confirm the LLC agreement, state LLC statute, transfer/admission mechanics, tax classification, capital accounts, profits interests, debt allocations, elections, and consent rights. Do not use for a merger or asset acquisition without restructuring it.

Founder-critical decisions. Reconcile every unit, profits interest, option, warrant, SAFE, note, phantom right, capital account, distribution right, rollover, earnout, and employment payment; make the proceeds waterfall auditable; define founder personal exposure; and coordinate D&O, release, 280G, 409A, IP/AI/data, restrictive-covenant, securities, and Tax treatment.

Customization checklist. Complete all schedules and the fully diluted cap table; conform the LLC Agreement; select the Tax and indemnity structure; validate the price bridge and sample calculation; add industry and jurisdiction modules; and delete the control sheet, banner, alternatives, and this README before execution.

Public-use disclaimer. This practitioner master is for educational and drafting-reference purposes. It is not legal advice, does not create an attorney-client relationship, and requires transaction, tax, benefits, employment, regulatory, and other specialist review for the live matter.

Need help customizing this template for your business? Contact Montague Law to schedule a consultation and get this document reviewed by our team.

This template is provided by Montague Law for informational and educational purposes only and does not constitute legal advice. Consult a qualified attorney licensed in your jurisdiction before using any legal document.