LLC Agreement: Profits Interest Provisions
These Standard Clauses provide profits interest provisions for an LLC agreement. Profits interests are a popular form of equity compensation for service providers in entities taxed as partnerships. These clauses, which refer to profits interests as "Incentive Units," are designed to structure awards that grant a share in the future appreciation of the company. They address key aspects such as the authorization of units and distribution rights, including the concept of establishing a Profits Interest Hurdle to ensure favorable tax treatment. These Standard Clauses also detail important considerations related to a service provider's separation from the company, including a company call right to repurchase units.
Already a Practical Law customer? Sign in
Get access to this document with Practical Law
Why Practical Law?
Gain a built-in attorney network
Practical Law’s resources are written and maintained by over 650 dedicated, full-time attorney-editors globally. They’re highly qualified, having practiced at the world’s leading law firms, corporate law departments, and government agencies, so they understand the challenges you face. They dedicate themselves to creating resources to help you navigate the new legal realities, legislative changes, and practice areas impacting your clients or organization.
See how to leverage the expertise of Practical Law’s attorney-editors to help you practice more efficiently.
Expert guidance
650+ full-time, experienced attorney-editors keep you up to date globally
Total resources
118,000+ total resources across 17 practice areas ensure comprehensive coverage
Timely updates
150,000+ hours spent in 2025 maintaining and updating resources
.png){kind=logo}
