Grants a profits interest in an LLC to a service provider, entitling them to a share of future profits and appreciation above the hurdle value at the time of grant. No income tax at grant when properly structured.
The Profits Interest Grant Agreement (LLC) is a ready-to-use finance & investment template you can send for signature in minutes. It is written for 2 signers (company and recipient) and, by default, expires 30 days after it is sent if left unsigned. It covers profits interest, llc, equity compensation, partnership. Like every Abundera Sign template it is a convenience draft structured for ESIGN Act and UETA compliance, not a substitute for legal advice. Each signed copy is sealed with PAdES-LTA digital signatures, dual RFC 3161 timestamps, and a tamper-evident evidence package in WORM storage.
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# Profits Interest Grant Agreement (LLC) This Profits Interest Grant Agreement (this "Agreement") is entered into as of ___________ (the "Grant Date") by and between: **___________**, a ___________ limited liability company (the "Company"), and **___________**, an individual residing at ___________ (the "Recipient"). --- ## Background The Company desires to provide the Recipient with an economic interest in the future appreciation and profits of the Company as an incentive for continued service. The parties intend for this grant to constitute a "profits interest" within the meaning of Revenue Procedures 93-27 and 2001-43 (together, the "Revenue Procedures"), such that the Recipient recognizes no ordinary income at the time of grant. --- ## 1. Defined Terms - **"Capital Account"** has the meaning set forth in the Company's Operating Agreement. - **"Hurdle Amount"** means the hypothetical liquidating distribution the Recipient would receive with respect to the Profits Interest Units if the Company were liquidated for its Fair Market Value on the Grant Date, which the parties agree is **$___________** (or **$0.00** if this is intended to qualify as a profits interest with no current liquidation value). - **"Fair Market Value"** means the fair market value of the Company as determined in good faith by the Manager(s) or Managing Member(s) using a reasonable valuation method. - **"Profits Interest Units"** means the membership interest units granted under this Agreement, entitling the Recipient to a share of Company profits and appreciation above the Hurdle Amount, but not to any return of the existing members' capital contributions or current equity value. - **"Operating Agreement"** means the Company's Limited Liability Company Operating Agreement, as amended from time to time. - **"Separation from Service"** means the cessation of the Recipient's services to the Company in all capacities. - **"Cause"** means: ___________ --- ## 2. Grant of Profits Interest Units Subject to the terms of this Agreement and the Operating Agreement, the Company hereby grants to the Recipient **___________ Profits Interest Units** (the "PIUs"), representing a **___________%** profits interest in the Company (subject to dilution as provided herein and in the Operating Agreement). The PIUs entitle the Recipient only to a share of Company income, gain, loss, deduction, and distributions attributable to periods after the Grant Date and to appreciation above the Hurdle Amount. The Recipient has no right to any portion of existing capital or retained earnings of the Company as of the Grant Date. The Recipient's interest in the Company following this grant shall be as set forth in a revised Exhibit A (or equivalent schedule of members) to the Operating Agreement, which the Company shall update promptly following execution of this Agreement. --- ## 3. Admission as Member