Membership Interest Purchase Agreement
(IL LLC)

Summary

This membership interest purchase agreement template is for use in a transaction where a member of an Illinois limited liability company is selling its membership interest to an arm's length buyer, who becomes a member of the company by assignment. This template contains practical guidance, drafting notes, and alternate clauses. This template is generally applicable without regard to industry, however the specific nature of the assets of the company in which the membership interests are being acquired should be considered when preparing this template, and additional industry specific representations added as needed. Membership interest purchase agreements are generally prepared by the buyer's counsel, as such, this template is generally pro-buyer, but also includes drafting guidance for the seller. This template contemplates one member selling 100% of its interests in the company while there is still an additional member of the company. If the sale of the membership interests in the company is resulting in the sale of the company and being used as a structure to acquire an operating business or an asset sale, see Membership Interest Purchase Agreement (Long Form) (Pro-Buyer) (DE) which may be adapted for the sale of an Illinois limited liability company. The Illinois Limited Liability Company Act (IL LLCA) provides the default terms of formation, operation, dissolution, and other governance matters for limited liability companies. The IL LLCA allows many of these terms to be altered by a written operating agreement or other written documentation. See 805 Ill. Comp. Stat. Ann. 180/15-5. A member's distributional interest in an Illinois limited liability company may be transferred or assigned as provided in writing in the operating agreement. Unless otherwise provided in writing in the operating agreement, an assignment of a distributional interest does not entitle the assignee to become or to exercise any rights or powers of a member. An assignment of a limited liability company interest entitles the assignee to receive, to the extent transferred, only the distributions to which the assignor would be entitled. 805 Ill. Comp. Stat. Ann. 180/30-5. An assignee who has become a member has, to the extent assigned, the rights and powers, and is subject to the restrictions and liabilities, of a member under the operating agreement. It is important for counsel to review the terms of the operating agreement and other governing documents of the company to confirm the necessary internal approvals for this sale of the membership interests contemplated by this agreement have been obtained. For a consent template for an Illinois limited liability company that may be adapted for use in connection with a membership interest sale, see Written Consent of Members in Lieu of Organizational Meeting (Member-Managed) (IL LLC). For more information on membership interests in an Illinois LLC, see Ownership Interests (IL LLC).