Common use of Profits Interest Clause in Contracts

Profits Interest. (a) It is the intention of the parties to this Agreement that distributions and allocations to any holder of an interest designated by the Managing Member, upon the unanimous consent of the Members, as a “profits interest” shall be limited to the extent necessary so that each such interest constitutes a Profits Interest. In furtherance of the foregoing, and notwithstanding anything to the contrary in this Agreement, the Managing Member shall, if necessary, limit distributions and allocations to any holder of such an interest so that such distributions and allocations do not exceed the available profits in respect of such holder’s related Profits Interest. If any Member’s distributions and allocations are reduced pursuant to the preceding sentence, an amount equal to such excess distributions and allocations shall be treated as instead apportioned to the other Members pro rata in accordance with their Sharing Percentages, and the Managing Member shall make adjustments to future distributions and allocations to the Members as promptly as practicable so that the Members are distributed and allocated on a cumulative basis the amount to which they would have been entitled if this Section 4.10 had not been in effect; provided, that any future distributions and allocations pursuant to this sentence shall continue to be further subject to the provisions of this Section 4.10. (b) In furtherance of the above, Profits Interests issued as part of any incentive compensation programs or otherwise offered for services rendered or to be rendered to the Company shall be “future profits interests” within the meaning of IRS Rev. Proc. 93-27 and such recipient shall not receive any credit to such recipient’s Capital Account on the date the Profits Interests are issued unless the recipient pays money or property for such Profits Interests. If IRS Rev. Proc. 93-27 is replaced by the Safe Harbor Regulations, the Company and the Members agree that the Company shall be authorized and directed to make the Safe Harbor Election and the Company and each Member (including any person to whom a Profits Interest is transferred in connection with the performance of services) agrees to comply with all requirements of the Safe Harbor with respect to all Profits Interests in the Company transferred in connection with the performance of services while the Safe Harbor Election remains effective. The Managing Member is authorized to (and shall) prepare, execute and file the Safe Harbor Election. (c) If IRS Rev. Proc. 93-27 is replaced or withdrawn but not with the Safe Harbor Regulations in materially the current form, the Company and the Members shall, to the extent possible, endeavor to treat the Profits Interests issued in connection with the performance of services in a manner consistent with the tax treatment noted above, including, determining the fair market value of the Profits Interests issued in connection with the performance of services as being equal to the liquidation value of such Profits Interests on the date the Profits Interests (i) are transferrable or not subject to (or deemed not subject to) a substantial risk of forfeiture within the meaning of Code Section 83 (including by reason of filing an election under Code Section 83(b)), whichever occurs earlier; or (ii) the date of issuance if it is determined that Section 83 does not apply to the issuance of Profits Interests, as the case may be. The Company and the Members (including any Person to whom the Profits Interests are transferred in connection with the performance of services) shall execute and file any tax election or statement necessary to effectuate the treatment of the Profits Interests as provided in this paragraph and shall not take any position on their tax returns that is inconsistent with such treatment. (d) Any Person receiving Profits Interests in connection with the performance of services shall take all steps necessary (including filing a Code Section 83(b) election if necessary) to cause such Profits Interest to be taxed at the time of issuance as if vested for federal income tax purposes and such Person to be treated as a member in the Company for purposes of receiving allocations of profits and losses and distributions for federal income tax purposes. (e) For purposes of this Agreement, (i) “Safe Harbor Regulations” means Proposed Treasury Regulations Section 1.83-3(1), issued on May 19, 2005, (ii) “Safe Harbor” means the election described in the Safe Harbor Regulation, pursuant to which a company and all of its members may elect to treat the fair market value of a Profits Interest in the company that is transferred in connection with the performance of services as being equal to the liquidation value of that Profits Interest; and (iii) “Safe Harbor Election” means the election by a company and its members to apply the Safe Harbor, as described in the Safe Harbor Regulation and Internal Revenue Service Notice 2005-43.

Profits Interest. (a) It is the intention of the parties to this Agreement that distributions and allocations to any holder of an interest designated by the Managing Member, upon the unanimous consent of the Members, as a “profits interest” shall be limited to the extent necessary so that each such interest constitutes a Profits Interest. In furtherance of the foregoing, and notwithstanding anything to the contrary in this Agreement, the Managing Member shall, if necessary, limit distributions and allocations to any holder of such an interest so that such distributions and allocations do not exceed the available profits in respect of such holder’s related Profits Interest. If any Member’s distributions and allocations are reduced pursuant to the preceding sentence, an amount equal to such excess distributions and allocations shall be treated as instead apportioned to the other Members pro rata in accordance with their Sharing Percentages, and the Managing Member shall make adjustments to future distributions and allocations to the Members as promptly as practicable so that the Members are distributed and allocated on a cumulative basis the amount to which they would have been entitled if this Section 4.10 had not been in effect; provided, that any future distributions and allocations pursuant to this sentence shall continue to be further subject to the provisions of this Section 4.10. (b) In furtherance of the above, Profits Interests issued as part of any incentive compensation programs or otherwise offered for services rendered or to be rendered to the Company shall be “future profits interests” within the meaning of IRS Rev. Proc. 93-27 and such recipient shall not receive any credit to such recipient’s Capital Account on the date the Profits Interests are issued unless the recipient pays money or property for such Profits Interests. If IRS Rev. Proc. 93-27 is replaced by the Safe Harbor Regulations, the Company and the Members agree that the Company shall be authorized and directed to make the Safe Harbor Election and the Company and each Member (including any person to whom a Profits Interest is transferred in connection with the performance of services) agrees to comply with all requirements of the Safe Harbor with respect to all Profits Interests in the Company transferred in connection with the performance of services while the Safe Harbor Election remains effective. The Managing Member is authorized to (and shall) prepare, execute and file the Safe Harbor Election. (c) If IRS Rev. Proc. 93-27 is replaced or withdrawn but not with the Safe Harbor Regulations in materially the current form, the Company and the Members shall, to the extent possible, endeavor to treat the Profits Interests issued in connection with the performance of services in a manner consistent with the tax treatment noted above, including, determining the fair market value of the Profits Interests issued in connection with the performance of services as being equal to the liquidation value of such Profits Interests on the date the Profits Interests (i) are transferrable or not subject to (or deemed not subject to) a substantial risk of forfeiture within the meaning of Code Section 83 (including by reason of filing an election under Code Section 83(b)), whichever occurs earlier; or (ii) the date of issuance if it is determined that Section 83 does not apply to the issuance of Profits Interests, as the case may be. The Company and the Members (including any Person to whom the Profits Interests are transferred in connection with the performance of services) shall execute and file any tax election or statement necessary to effectuate the treatment of the Profits Interests as provided in this paragraph and shall not take any position on their tax returns that is inconsistent with such treatment. (d) Any Person receiving Profits Interests in connection with the performance of services shall take all steps necessary (including filing a Code Section 83(b) election if necessary) to cause such Profits Interest to be taxed at the time of issuance as if vested for federal income tax purposes and such Person to be treated as a member in the Company for purposes of receiving allocations of profits and losses and distributions for federal income tax purposes. (e) For purposes of this Agreement, (i) “Safe Harbor Regulations” means Proposed Treasury Regulations Section 1.83-3(1), issued on May 19, 2005, (ii) “Safe Harbor” means the election described in the Safe Harbor Regulation, pursuant to which a company and all of its members may elect to treat the fair market value of a Profits Interest in the company that is transferred in connection with the performance of services as being equal to the liquidation value of that Profits Interest; and (iii) “Safe Harbor Election” means the election by a company and its members to apply the Safe Harbor, as described in the Safe Harbor Regulation and Internal Revenue Service Notice 2005-43.

Profits Interest. (a) It is the intention of the parties to this Agreement that distributions and allocations to any holder of an interest designated by the Managing MemberGeneral Partner, upon the unanimous consent of the MembersPartners, as a “profits interest” shall be limited to the extent necessary so that each such interest constitutes a Profits Interest. In furtherance of the foregoing, and notwithstanding anything to the contrary in this Agreement, the Managing Member General Partner shall, if necessary, limit distributions and allocations to any holder of such an interest so that such distributions and allocations do not exceed the available profits in respect of such holder’s related Profits Interest. If any MemberPartner’s distributions and allocations are reduced pursuant to the preceding sentence, an amount equal to such excess distributions and allocations shall be treated as instead apportioned to the other Members Partners pro rata in accordance with their Sharing Percentages, and the Managing Member General Partner shall make adjustments to future distributions and allocations to the Members Partners as promptly as practicable so that the Members Partners are distributed and allocated on a cumulative basis the amount to which they would have been entitled if this Section 4.10 had not been in effect; provided, that any future distributions and allocations pursuant to this sentence shall continue to be further subject to the provisions of this Section 4.10. (b) In furtherance of the above, Profits Interests issued as part of any incentive compensation programs or otherwise offered for services rendered or to be rendered to the Company shall be “future profits interests” within the meaning of IRS Rev. Proc. 93-27 and such recipient shall not receive any credit to such recipient’s Capital Account on the date the Profits Interests are issued unless the recipient pays money or property for such Profits Interests. If IRS Rev. Proc. 93-27 is replaced by the Safe Harbor Regulations, the Company Partnership and the Members Partners agree that the Company Partnership shall be authorized and directed to make the Safe Harbor Election and the Company Partnership and each Member Partner (including any person to whom a Profits Interest is transferred in connection with the performance of services) agrees to comply with all requirements of the Safe Harbor with respect to all Profits Interests in the Company Partnership transferred in connection with the performance of services while the Safe Harbor Election remains effective. The Managing Member General Partner is authorized to (and shall) prepare, execute and file the Safe Harbor Election. (c) If IRS Rev. Proc. 93-27 is replaced or withdrawn but not with the Safe Harbor Regulations in materially the current form, the Company Partnership and the Members Partners shall, to the extent possible, endeavor to treat the Profits Interests issued in connection with the performance of services in a manner consistent with the tax treatment noted above, including, determining the fair market value of the Profits Interests issued in connection with the performance of services as being equal to the liquidation value of such Profits Interests on the date the Profits Interests (i) are transferrable or not subject to (or deemed not subject to) a substantial risk of forfeiture within the meaning of Code Section 83 (including by reason of filing an election under Code Section 83(b)), whichever occurs earlier; or (ii) the date of issuance if it is determined that Section 83 does not apply to the issuance of Profits Interests, as the case may be. The Company Partnership and the Members Partners (including any Person to whom the Profits Interests are transferred in connection with the performance of services) shall execute and file any tax election or statement necessary to effectuate the treatment of the Profits Interests as provided in this paragraph and shall not take any position on their tax returns that is inconsistent with such treatment. (d) Any Person receiving Profits Interests in connection with the performance of services shall take all steps necessary (including filing a Code Section 83(b) election if necessary) to cause such Profits Interest to be taxed at the time of issuance as if vested for federal income tax purposes and such Person to be treated as a member partner in the Company Partnership for purposes of receiving allocations of profits and losses and distributions for federal income tax purposes. (e) For purposes of this Limited Partnership Agreement, (i) “Safe Harbor Regulations” means Proposed Treasury Regulations Section 1.83-3(1), issued on May 19, 2005, (ii) “Safe Harbor” means the election described in the Safe Harbor Regulation, pursuant to which a company partnership and all of its members partners may elect to treat the fair market value of a Profits Interest in the company partnership that is transferred in connection with the performance of services as being equal to the liquidation value of that Profits Interest; and (iii) “Safe Harbor Election” means the election by a company partnership and its members partners to apply the Safe Harbor, as described in the Safe Harbor Regulation and Internal Revenue Service Notice 2005-43.