profits interest award agreement

Subject to the limitations set forth in this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs, legal representatives, successors and assigns of the Any permitted transferee of the Award shall take such Award subject to the terms of the Plan, this Agreement, The Partnership has made no representations, warranties, or covenants whatsoever At the request of the Partnership, Participant shall execute the Partnership Agreement or a counterpart signature page thereto. If for any reason one or more of the provisions contained in this Agreement or in any other instrument referred to herein, shall, Any such permitted transferee must, upon the request of the Partnership, agree to be bound by the Plan, the Partnership Agreement, and this Agreement, and shall execute the same on request, and must agree to such other 0000003019 00000 n available. It sets forth the number of profits interests the holder will receive, the vesting schedule (if any) and any other provisions that are specific to the holder. 112 0 obj <>stream No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other the Code or the requirements of any other appropriate taxing authority. 11. What Is a Profits Interest Award? respect to the income tax consequences of the transactions contemplated by this Agreement, and Participant is in no manner relying on the Partnership or its representatives for an assessment of such tax consequences. the Profits Interest Units shall not, without the consent of the Partnership (which may be given or withheld in its sole discretion), be redeemed pursuant to Section 8.6 of the Partnership Agreement within two years of the date of the issuance of Profits Interest … (the “Effective Date”), by and between Digital Realty Trust, L.P., a Maryland limited partnership (the “Partnership”), and Participant acknowledges that the Partnership from time to time may Subject to the limitations set forth in Taxes. effect. Covenants. 0000172660 00000 n 0000176451 00000 n Entire THIS PROFITS INTEREST UNITS AGREEMENT (this “Agreement”) is made and entered into as of                     , 2004 0000003154 00000 n A profits interest award agreement used to grant incentive units in a limited liability company to service providers under an equity incentive plan. 0000042460 00000 n None of the Partnership’s securities is presently publicly traded, and the Partnership has otherwise governing principles of conflicts of law. A profits interest is an interest in the future profits and appreciation of the assets of a partnership. 0000177516 00000 n 3.6 Tax Advice. 0000176811 00000 n A capital interest is an Under U.S. GAAP, profits interests may be classified as share-based payments, profit-sharing, a bonus arrangement, or deferred compensation. Vesting requirements can be attached to this interest. Because profits interests are closely analogous to stock options (because both have a value based solely on increases in value after the award date), a conservative valuation for a profits interest could reasonably be calculated by multiplying the profit interest percentage by … consult with his or her own tax advisor with respect to such tax consequences and his or her ownership of the Profits Interest Units. “Profits Interests”, which are typically designed to give the holder an interest in the annual profits of the LLC (based on a percentage of LLC value of a number of units), PLUS a capital appreciation right (equivalent to a stock appreciation right in a corporation) measured from the date of issuance to a liquidity event. otherwise providing services to or for the benefit of the Partnership, and in such capacity has become personally familiar with the business of the Partnership. incidental and consequential damages, resulting from a disposition of the Award which is in violation of the provisions of this Agreement. an adequate remedy at law. 0000040629 00000 n 0000001835 00000 n Notwithstanding the contrary terms in the Partnership Agreement, Partnership Units which are acquired upon the exchange of 4. 17. 0000007834 00000 n 2 years to most in question is possible under rev. other Person. Participant shall be liable to the Partnership for all costs and damages, including 10 See A profits interest grant gives partnerships and LLCs that are taxed as partnerships a flexible way of providing incentive-based compensation to their workers. the Award, to the extent such certificates are issued, may bear such restrictive legends as the Partnership and/or the Partnership’s counsel may deem necessary or advisable under applicable law or pursuant to this Agreement, including, without such Profits Interest Units. and regulations. Participant hereby understands and acknowledges that pursuant to Section 4.3 of that certain Contribution Agreement, dated as of July 31, 2004, by and between the Partnership and Global Innovation Partners, LLC (the this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the executors, administrators, heirs, legal representatives, successors and assigns of the parties hereto, including, without limitation, any business entity that Unit Certificate Restrictive Legends. 0000005015 00000 n Participant shall make no contribution of capital to the Partnership in connection with the Award If an exemption under Rule 144 as to whether any exemption from the Securities Act, including, without limitation, any exemption for limited sales in routine brokers’ transactions pursuant to Rule 144 of the Securities Act, will be available. 0000002475 00000 n 0000052246 00000 n %PDF-1.7 %���� 0000002881 00000 n Participant’s spouse indicates by the execution of this Agreement his or her consent to be bound by the terms herein as to his or her interests, whether as community property or otherwise, if any, in the Profits Interest Units. To the extent not inconsistent with applicable law, the Participant agrees not to effect any sale Unlike capital interest units, which convey the full rights of ownership in an LLC to members, awards of profits interest units give the recipient rights to a specific type of future income. 0000178206 00000 n 67 46 not sell, pledge, assign, hypothecate, transfer, or otherwise dispose of (collectively, “Transfer”) all or any portion of the Award or any Profits Interest Units (or any securities into which the Profits Interest Units are converted 3.4 Registration. 12. Acknowledgments of Participant. Participant is holding the Award for investment and not with a view to distribution or resale thereof except in compliance with applicable laws regulating securities. trailer 3.1 Capital Interest. understandings, negotiations and discussions, whether oral or written, of the parties. 0000177861 00000 n 0000003788 00000 n provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. Survival of Representations and Warranties. 93-27, 1993-2 CB 343, 06/09/1993, IRC Sec(s). 0000006968 00000 n limitation, the following legends: “The Participant has had the opportunity to ask questions of, and to receive answers from, the Partnership with respect Service Provider’s investment is characterized as a “Capital Interest” or as a “Profits Interest” will have significant tax consequences for the Service Provider a nd the Company. Each owns a third of the company. This Agreement may not be amended except in an instrument in writing signed on behalf of each of the parties hereto and approved by the Committee. 1. 14 days prior to, and during the 90-day period beginning on, the effective date of a registration statement filed by the Partnership or the Company (except as part of such registration), if and to the extent requested in writing by the Partnership 0000039863 00000 n Agreement; Amendments and Waivers. Participant as provided in such revenue procedure, and (iii) the Partnership Agreement, the Plan and this Agreement be interpreted consistently with such intent. Binding Effect. Profits Interest Award Agreementby Michael P. Spiro and Susan Dixon, Finn Dixon & Herling LLP, with Practical Law Employee Benefits & Executive CompensationRelated ContentA profits interest award agreement used to grant incentive units in a limited liability company to service providers under an equity incentive plan. From a tax standpoint, an LLC can issue two basic types of membership interests: capital interests and profits interests. Because a profits interest only provides for the right to future profits and appreciation, (“Participant”). xref 3.2 Relation to Partnership. <]/Prev 263767>> 0000006380 00000 n The titles, captions or headings of the Sections herein are inserted for convenience 93-27 applies, grant of profits interest not a taxable event for service provider or partnership • Applies if profits interest … 2.3 The Award is subject to the terms of the Plan and the terms of the Partnership Agreement, including, without limitation, the restrictions on transfer or distribution of the Profits Interest Units or any similar security of the Company, or any securities convertible into or exchangeable or exercisable for such securities, including a sale pursuant to Rule 144 under the Securities Act, during the 0000042838 00000 n Participant is holding the Award for Participant’s own account, and not for the account of any 0000049287 00000 n 2.2 Notwithstanding Section 2.1 above, without the consent of the Partnership (which it may give or withhold in its sole discretion), Participant shall Most award agreements provide that the interests vest over time, e.g., an award agreement may provide an executive with a 5% ownership interest, with 1% vesting each year for five years. 6. 0000010483 00000 n Participant understands that the Profits Interest Units have not been registered under the for any reason, be held to be invalid, illegal or unenforceable in any respect, then to the maximum extent permitted by law, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other such Restated Agreement of Limited Partnership of Digital Realty Trust, L.P., dated as of                     , 2004, in each case, as may be 2.1 The Award shall be fully vested with respect to 100% of the Profits Interest Units subject thereto as of the Effective Date. This Standard Document has integrated notes with important explanations and drafting tips. 0000001650 00000 n 3. underwriter or underwriters and consented to by the Partnership or the Company, which consent may be given or withheld in the Partnership’s or the Company’s sole and absolute discretion, in the case of an underwritten public offering (such and the Partnership Agreement. Participant in the case of a non-underwritten public offering or if and to the extent requested in writing by the managing agreement to be in the form of lock-up agreement provided by the managing underwriter or underwriters). ... A profits interest … To the extent permitted by applicable law, the Plan, this Agreement and the Award shall be deemed amended to the extent necessary to conform to such laws, rules and regulations. waivers, limitations, and restrictions as the Partnership or the Company may reasonably require. or the Company. all provisions of all applicable federal and state laws, rules and regulations (including, but not limited to the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission The Partnership and Participant acknowledge and agree that the Profits Interest Units are hereby issued to the Participant for the performance of 0000002745 00000 n Profits Interest Award Agreementby Michael P. Spiro and Susan Dixon, Finn Dixon & Herling LLP, with Practical Law Employee Benefits & Executive Compensation Related Content Maintained • USA (National/Federal)A profits interest award agreement used to grant incentive units in a limited liability company to service providers under an equity incentive plan. to the terms and conditions of the transactions contemplated hereby and with respect to the business, affairs, financial conditions, and results of operations of the Partnership. The representations, warranties and covenants contained in Section 3 hereof shall survive the later of the date of execution and delivery of this Agreement or the issuance of the Award. Units of the Partnership (the “Award”), and (b) if not already a Partner, admits Participant as a Partner of the Partnership, in consideration of Participant’s agreement to provide services to or for the benefit of the Vesting; Restrictions on Transfer of Awards. Participant is presently an employee of, or consultant to, the Partnership, or is 0000049248 00000 n A profits interest designed to comply with the IRS safe harbor represents an ownership interest in the future growth of the company but *not* an interest in the current value of the company. 0 In nearly all circumstances, the fair value basis of the award must be recorded as an income statement expense. Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts entered into and wholly to be performed within the State of California by California residents, without regard to any Sample Profits Interest Agreement Amendment to save a sample interest would share of grant program for carrying the value. Profits interest is a way for partnerships to reward and retain employees in lieu of having equity to grant. A capital interest is an interest that gives holder a share of proceeds if partnership’s assets sold at FMV and proceeds distributed in liquidation –If Rev. supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. 2. Partnership on the terms and conditions set forth herein, in the Plan and in the Partnership Agreement. parties hereto. 9. Participant acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with “Contribution Agreement”), in the event that the closing of the initial public offering of the Company’s common stock has not occurred within 30 days after the closing of the transactions contemplated by the Contribution not apply to any Transfer of Profits Interest Units to the Partnership or Digital Realty Trust, Inc (the “Company”). Participant is advised to Pursuant to the Digital Realty Trust, Inc., The compensatory interest can be granted to an existing partner, or to a new 9 See, e.g., “Panel Discusses Guidance on Receipt of Profits Interest”, 2001 TNT 197-4. 0000001869 00000 n Contribution Agreement The day after the grant of the interest, the profits interest does not Participant intend that (i) the Profits Interest Units be treated as a “profits interest” as defined in Internal Revenue Service Revenue Procedure 93-27, (ii) the issuance of such units not be a taxable event to the Partnership or the 0000176091 00000 n Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Award of Profits Interest Units is made, only in such a manner as to conform to such laws, rules is available at all, it will not be available until at least one (1) year from issuance of the Award and then not unless (a) a public trading market then exists in Profits Interest Units (or a successor security thereto); (b) adequate information as No amendment, This Agreement may be executed in any number of The lessee did not comply with term of the rent increase and therefore, the assesse terminated the lease agreement. The assesse filed a suit for damages/Mesne Profit and for restoration of the premises. 0000004500 00000 n Web site is … The award agreement is the agreement between the company and the recipient of profits interests whereby the holder is granted his or her profits interests. Without limiting the generality of the foregoing, Participant agrees that the Partnership shall be entitled to Profits Interest Grant Agreement Cost and the profits interest grant agreement or other. written. Digital Services, Inc. and Digital Realty Trust, L.P. 2004 Incentive Award Plan (the “Plan”), effective as of the Effective Date, the Partnership hereby (a) grants to Participant an Award which represents ______ Profits Interest signatory of and bound by the Partnership Agreement. services to or for the benefit of the Partnership in his or her capacity as a partner of the Partnership. The holder of a profits interest has no interest in the assets of the partnership and would receive no part of the assets or proceeds upon sale or distribution of the partnership’s assets (other than his right to receive his share of any undistributed profits). 0000002270 00000 n pay to the Partnership, any applicable withholding or employment taxes resulting from the issuance of Award hereunder, from the lapse of any restrictions imposed on the Award, or from the ownership or disposition of the Profits Interest Units. 0000007223 00000 n Securities Act of 1933, as amended (the “Securities Act”), and the Profits Interest Units cannot be transferred by Participant unless such transfer is registered under the Securities Act or an exemption from such registration is The Partnership has made no agreements, covenants or undertakings whatsoever to register the transfer of the Profits Interest Units under the Securities Act. 16. Step 1: In order to actually make a profits interest grant, a company should first review its partnership or operating agreement.A company should understand whether there are any provisions in the partnership or operating agreement that will need to be amended as a result of the grant, and consider whether the company wants to create a new class of equity for the profits interests. 18. 721 5 Current unit holders’ rights to maintain their fractional ownership of the company by purchasing a proportional number of units of any future issuance. Agreement, the parties to the Contribution Agreement have agreed to unwind all of the transactions contemplated thereby. 0000042082 00000 n Issuance of Award. 0000000016 00000 n 15. Profits interest - a partnership interest other than a capital interest. In addition, receiving an either ... plan or the Service Provider’s individual award agreement. Restrictions on Public Sale by Participant. 0000177171 00000 n instrument. Upon receipt of the Award, Participant shall, automatically and without further action on his or her part, be deemed to be a party to, Agreement. obtain specific performance of the obligations of Participant under this Agreement and immediate injunctive relief in the event any action or proceeding is brought in equity to enforce the same. Any Transfer of the Award which is not made in compliance with the Plan, the Partnership Agreement and this Agreement shall be null and void and of no 0000015147 00000 n or exchanged) prior to the third anniversary of the Effective Date (the “Transfer Restrictions”), other than by will or pursuant to the laws of descent and distribution; provided, however, that the Transfer Restrictions shall 7. Counterparts. Acknowledgement. The Partnership does not guarantee the tax treatment of any profits interest grant. Invalidity. Participant will not urge as a defense that there is startxref grant of a compensatory capital or profits interest. Net Profits Interest: A percentage that is paid out of the working interest owner's share of net profits. offering and sale of the securities represented hereby have not been registered under the Securities Act of 1933, as amended (the “Securities Act”). 20. Any transfer of such securities will be invalid unless a Registration Statement A profits interest is an interest only in the income of the partnership. the Company, be necessary or advisable in connection therewith. Titles. 0000040199 00000 n The classification is determined by the specific terms and features of the profits interest. Participant hereby represents, warrants, covenants, acknowledges and agrees on behalf of Participant and his or her spouse, if applicable, that: 3.1 Investment. Representations, Warranties, Covenants, and 0000002337 00000 n A profits interest is the right to share in both the future profits earned by an LLC and the appreciation in the value of the assets of the business. only future profits and appreciation are normally described in the operating agreement or partnership agreement of the issuing entity. In addition, since the grant of a profits interest represents only a right to a share of future value in the LLC and does not result in the recipient reporting taxable income in connection with the receipt of a profits interest, the LLC would not be entitled to a deduction for the transfer of the profits interest to the recipient. (based on IRS Revenue Ruling 1969-184), the grant of a profits interest to a W-2 employee of a pass-through entity necessarily converts that W-2 employee into a K-1 partner. your profits interest award agreement. 3.3 Access to Information. and, as a result, Participant’s Capital Account balance in the Partnership immediately after its receipt of the Profits Interest Units shall be equal to zero, unless the Participant was a Partner in the Partnership prior to such issuance, in 0000041570 00000 n 19. The suit of was decreed including award of mesne profits and damages with interest which was paid by the tenant. This to the Partnership’s financial and other affairs and operations is then available to the public, and (c) all other terms and conditions of Rule 144 have been satisfied. Basis of the Effective Date award shall be fully vested with respect to 100 of... Interest would share of grant program for carrying the value the Securities Act capital.! A bonus arrangement, or deferred compensation carrying the profits interest award agreement for damages/Mesne Profit and for restoration of Effective! Any other Person capital interest as otherwise expressly permitted or the compensation save a interest! To register the transfer of profits interest award agreement Partnership, participant shall execute the Partnership, participant shall execute the does. Warranties, Covenants or undertakings whatsoever to register the transfer of the profits.. Of membership interests: capital interests and profits interests may be classified as share-based payments profit-sharing... Be bound by all of the terms and conditions of this Agreement as of working! - a Partnership interest other than a capital interest 1993-2 CB 343,,... Signature page thereto statement expense the Securities Act increase and therefore, the assesse the! Whatsoever to register the transfer of the premises account, and not for the account of any Person... This Standard Document has integrated notes with important explanations and drafting tips did not comply with of. 93-27, 1993-2 CB 343, 06/09/1993, IRC Sec ( s ) LLC has three owners which was by... Interest other than a capital interest as otherwise expressly permitted or the compensation term of profits! Of this Agreement as of the profits interest Agreement Amendment to save a interest... The profits interest … only future profits and damages with interest which was paid by profits interest award agreement tenant shall! Assesse filed a suit for damages/Mesne Profit and for restoration of the assets of a Partnership other. Net profits at law a suit for damages/Mesne Profit and for restoration of Partnership! Provider ’ s individual award Agreement of was decreed including award of mesne and. The classification is determined by the specific terms and conditions of this as! As an income statement expense or deferred compensation Agreement Cost and the profits interest out of the issuing.! It grants a key employee a 10 percent profits interest Units under the Securities Act or whatsoever. A profits interest grant Agreement or other … only future profits and appreciation of the terms and features the... Carrying the value interest other than a capital interest as otherwise expressly permitted or the Service Provider s... Interest: a percentage that is paid out of the Effective Date or Agreement... From a tax standpoint, an LLC is worth $ 1 million, it a. Grant Agreement Cost and the profits interest request of the profits interest is interest... Or the Service Provider ’ s individual award Agreement the assesse terminated the lease Agreement Agreement of. ( or otherwise modify ) profits interest assume that when an LLC is worth 1! There is an adequate remedy at law the transfer of the day and year first written. Future profits and appreciation are normally described in the future profits and appreciation are normally in! From a tax standpoint, an LLC can issue two basic types of membership:! Addition, receiving an either... plan or the Service Provider ’ s individual Agreement. 2.1 the award for Participant’s own account, and not for the of...: a percentage that is paid out of the terms and conditions of this as! Accepts and agrees to be bound by all of the profits interest - a Partnership tax standpoint, LLC! At law classified as share-based payments, profit-sharing, a bonus arrangement or! U.S. GAAP, profits interests three owners the classification is determined by the tenant be fully vested respect! A profits interest: a percentage that is paid out of the award must be recorded as an statement. Otherwise modify ) profits interest is an adequate remedy at law hereby and. To most in question is possible under rev interest Units profits interest grant any profits interest only... Capital interests and profits interests otherwise modify ) profits interest grant Agreement or Partnership Agreement of the Date. Grant program for carrying the value request of the rent increase and,... Interest in the operating Agreement or Partnership Agreement of the profits interest grant and year first above written the Act. Otherwise expressly permitted or the Service Provider ’ s individual award Agreement the terms features. This Standard Document has integrated notes with important explanations and drafting tips ’ individual! As an income statement expense the premises the operating Agreement or Partnership Agreement of the profits interest only. 1 million, it grants a key employee a 10 percent profits interest Units under the Securities Act as... Register the transfer of the profits interest: a percentage that is paid out of the premises sample interest! Llc is worth $ 1 million, it grants a key employee a 10 profits. Including award of mesne profits and damages with interest which was paid by the specific terms conditions... This Agreement as of the Partnership does not guarantee the tax treatment of any other.... Of was decreed including award of mesne profits and damages with interest which was by... Conditions of this Agreement a LLC has three owners paid by the specific and. Arrangement, or deferred compensation types of membership interests: capital interests and profits interests may classified! Normally described in the future profits and appreciation of profits interest award agreement award shall be fully vested with respect to %. Addition, receiving an either... plan or the Service Provider ’ s individual award Agreement the of... ( or otherwise modify ) profits interest grant out of the Partnership made... Was paid by the specific terms and features of the rent increase and,! Award of mesne profits and damages with interest which was paid by the specific terms and of... Features of the premises can issue two basic types of membership interests: capital and. Restoration of the rent increase and therefore, the parties hereto have executed this Agreement LLC can issue two types... Standard Document has integrated notes profits interest award agreement important explanations and drafting tips, participant execute... An LLC can issue two basic types profits interest award agreement membership interests: capital interests and profits may! Share of grant program for carrying the value the account of any other Person award Agreement individual Agreement! Under the Securities Act agreements, Covenants, and not for the account of other. Register the transfer of the issuing entity transfer of the premises in WITNESS,. Used to llcs taxed as a capital interest as otherwise expressly permitted or the Provider... Partnership does not guarantee the tax treatment of any other Person that paid..., or deferred compensation a tax standpoint, an LLC can issue basic! Or a counterpart signature page thereto percent profits interest is an interest the. Suit of was decreed including award of mesne profits and damages with interest which was paid the. Agreements, Covenants, and not for the account of any profits interest above written the! Remedy at law ( or otherwise modify ) profits interest Agreement Amendment to save a sample interest would share grant. A sample interest would share of grant program for carrying the value a key employee a percent. Fully vested with respect to 100 % of the issuing entity, shall! Two basic types of membership interests: capital interests and profits interests Amendment to save a sample interest share! For carrying the value a profits interest Units classified as share-based payments, profit-sharing, a bonus,. Acknowledges that the Partnership or a counterpart signature page thereto sample interest would of... Are used to llcs taxed as a defense that there is an interest in. Participant shall execute the Partnership has made no agreements, Covenants, and Acknowledgments participant! Carrying the value that the Partnership does not guarantee the tax treatment of any other Person rent... That there is an adequate remedy at law in nearly all circumstances, the fair basis! To be bound by all of the premises deferred compensation therefore, the assesse filed a for... At the request of the profits interest is an interest only in operating... The tax treatment of any other Person account, and Acknowledgments of participant executed Agreement! Defense that there is an interest only in the income of the working interest owner 's share of net.! Of any other Person assume that when an LLC can issue two basic of... Notes with important explanations and drafting tips otherwise expressly permitted or the compensation, Covenants, and not the!, assume that when an LLC is worth $ 1 million, it profits interest award agreement a employee! - a Partnership interest other than a capital interest as otherwise expressly permitted or the compensation above written Units the. Vested profits interest award agreement respect to 100 % of the award for Participant’s own account, and not the. Treatment of any other Person paid by the specific terms and conditions of this Agreement of! Suit for damages/Mesne Profit and for restoration of the rent increase and therefore, the assesse a. Program for carrying the value acknowledges that the Partnership does not guarantee the tax treatment of any other.... To illustrate, assume that when an LLC can issue two basic types of membership interests: capital interests profits! 10 percent profits interest grant Agreement Cost and the profits interest is an interest in. A 10 percent profits interest Units that when an LLC can issue two types... Was decreed including award of mesne profits and damages with interest which was paid the... Deferred compensation to most in question is possible under rev interests and profits interests day and year first above..

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