Waiver Agreement: Tag-Along Right
(LLC)

Summary

This Waiver Agreement: Tag-along Right (LLC) template can be used for a minority member of a limited liability company to waive its right to exit alongside a selling member’s (typically a founding or controlling member) sale of membership interests to a third party. This template contains practical guidance and drafting notes. A tag-along right prevents the controlling member from excluding the non-controlling, minority interest holders from the benefit of the sale by the controlling, majority member (which is the usual paradigm of a tag-along rights provision). Moreover, tag-along rights give the minority members the opportunity to share in any control premium offered to the controlling member by the prospective purchaser. A member’s waiver of its tag-along right commonly is deemed from its failure to exercise the right under the terms of the LLC agreement. By seeking to have the minority members execute a waiver agreement instead, a selling member or the company may side-step the usual procedures and time involved in the exercise of a tag-along right. See Tag-Along Rights Clause (Operating Agreement) (LLC) annotated clauses and the practice note Minority Securityholder Rights Protections — Tag-Along and Drag-Along Rights for detailed discussion. For information on LLC operating agreements including provisions that relate to minority member rights, see Current Legal Forms with Tax Analysis § 18A.23, Exit Provisions in Limited Liability Company Operating Agreements, and Key Provisions in Joint Venture Agreements. For information on limited liability company taxation issues, see Current Legal Forms with Tax Analysis § 18A.05, Membership Interest Acquisition Tax Issues (LLC), Entity-Level Tax Liabilities in Acquisitions of Partnership and LLC Interests, and Taxable Acquisition of C Corporation vs. LLC Tax Considerations Chart.