Restricted Membership Unit Agreement (Employee)
About This Document
This Restricted Membership Unit Agreement outlines the terms under which an individual (typically an employee) is granted restricted membership units in a Limited Liability Company (LLC).
It governs vesting, forfeiture, transfer restrictions, and the treatment of equity in connection with employment, aligning incentives between the company and its key contributors.
Who Should Use This Template
LLCs granting equity compensation to employees, consultants, or advisors
Startups offering profits interests or membership units to early team members
Businesses formalizing vesting schedules and forfeiture provisions tied to continued service
Companies preparing for future investment rounds where clean equity records are critical
What the Template Includes
Grant of a specified number of Restricted Units representing a profits interest in the LLC
Clear vesting schedule, typically over time with possible cliff vesting (e.g., 1-year cliff, 36-month monthly vesting thereafter)
Provisions for automatic forfeiture of unvested units upon termination of employment
Conditions for accelerated vesting in cases of termination without cause or for good reason (optional)
Transfer restrictions, prohibiting transfer of unvested units
Requirement for the recipient to become a party to the LLC’s Operating Agreement
Encouragement and instructions for making a Section 83(b) Election
Definitions of important terms like Cause, Good Reason, Disability, and Fair Market Value
Dispute resolution clauses (Delaware law, waiver of jury trial, court jurisdiction)
Remedies available to enforce agreement terms (specific performance and injunctive relief)
Editable Word format for flexible customization
Instructions for Completing the Template
Fill in:
Company Name, State of Formation, and Employee/Recipient’s Name
Number of Units granted and the percentage interest they represent
Effective Date of the grant
Vesting Schedule details, including the cliff and monthly vesting periods
Definitions for Cause and Good Reason tailored to the company's policies
Fair Market Value calculation method, if not using the Operating Agreement defaults
Attach and complete Exhibit A (Section 83(b) Election Form).
Ensure the recipient understands the 83(b) filing timeline (within 30 days of the grant date).
Have both the Company and the Employee sign and date the agreement.
Retain a fully executed copy in your equity administration and HR files.
Important Reminder
This document is provided as a template to assist with standard restricted membership unit grants in LLCs.
It does not constitute legal advice. You should consult a qualified attorney to tailor this Agreement to your company’s Operating Agreement, tax strategy, and intended incentive structure — particularly to ensure the profits interest structure complies with IRS regulations and safe harbors.
About This Document
This Restricted Membership Unit Agreement outlines the terms under which an individual (typically an employee) is granted restricted membership units in a Limited Liability Company (LLC).
It governs vesting, forfeiture, transfer restrictions, and the treatment of equity in connection with employment, aligning incentives between the company and its key contributors.
Who Should Use This Template
LLCs granting equity compensation to employees, consultants, or advisors
Startups offering profits interests or membership units to early team members
Businesses formalizing vesting schedules and forfeiture provisions tied to continued service
Companies preparing for future investment rounds where clean equity records are critical
What the Template Includes
Grant of a specified number of Restricted Units representing a profits interest in the LLC
Clear vesting schedule, typically over time with possible cliff vesting (e.g., 1-year cliff, 36-month monthly vesting thereafter)
Provisions for automatic forfeiture of unvested units upon termination of employment
Conditions for accelerated vesting in cases of termination without cause or for good reason (optional)
Transfer restrictions, prohibiting transfer of unvested units
Requirement for the recipient to become a party to the LLC’s Operating Agreement
Encouragement and instructions for making a Section 83(b) Election
Definitions of important terms like Cause, Good Reason, Disability, and Fair Market Value
Dispute resolution clauses (Delaware law, waiver of jury trial, court jurisdiction)
Remedies available to enforce agreement terms (specific performance and injunctive relief)
Editable Word format for flexible customization
Instructions for Completing the Template
Fill in:
Company Name, State of Formation, and Employee/Recipient’s Name
Number of Units granted and the percentage interest they represent
Effective Date of the grant
Vesting Schedule details, including the cliff and monthly vesting periods
Definitions for Cause and Good Reason tailored to the company's policies
Fair Market Value calculation method, if not using the Operating Agreement defaults
Attach and complete Exhibit A (Section 83(b) Election Form).
Ensure the recipient understands the 83(b) filing timeline (within 30 days of the grant date).
Have both the Company and the Employee sign and date the agreement.
Retain a fully executed copy in your equity administration and HR files.
Important Reminder
This document is provided as a template to assist with standard restricted membership unit grants in LLCs.
It does not constitute legal advice. You should consult a qualified attorney to tailor this Agreement to your company’s Operating Agreement, tax strategy, and intended incentive structure — particularly to ensure the profits interest structure complies with IRS regulations and safe harbors.
About This Document
This Restricted Membership Unit Agreement outlines the terms under which an individual (typically an employee) is granted restricted membership units in a Limited Liability Company (LLC).
It governs vesting, forfeiture, transfer restrictions, and the treatment of equity in connection with employment, aligning incentives between the company and its key contributors.
Who Should Use This Template
LLCs granting equity compensation to employees, consultants, or advisors
Startups offering profits interests or membership units to early team members
Businesses formalizing vesting schedules and forfeiture provisions tied to continued service
Companies preparing for future investment rounds where clean equity records are critical
What the Template Includes
Grant of a specified number of Restricted Units representing a profits interest in the LLC
Clear vesting schedule, typically over time with possible cliff vesting (e.g., 1-year cliff, 36-month monthly vesting thereafter)
Provisions for automatic forfeiture of unvested units upon termination of employment
Conditions for accelerated vesting in cases of termination without cause or for good reason (optional)
Transfer restrictions, prohibiting transfer of unvested units
Requirement for the recipient to become a party to the LLC’s Operating Agreement
Encouragement and instructions for making a Section 83(b) Election
Definitions of important terms like Cause, Good Reason, Disability, and Fair Market Value
Dispute resolution clauses (Delaware law, waiver of jury trial, court jurisdiction)
Remedies available to enforce agreement terms (specific performance and injunctive relief)
Editable Word format for flexible customization
Instructions for Completing the Template
Fill in:
Company Name, State of Formation, and Employee/Recipient’s Name
Number of Units granted and the percentage interest they represent
Effective Date of the grant
Vesting Schedule details, including the cliff and monthly vesting periods
Definitions for Cause and Good Reason tailored to the company's policies
Fair Market Value calculation method, if not using the Operating Agreement defaults
Attach and complete Exhibit A (Section 83(b) Election Form).
Ensure the recipient understands the 83(b) filing timeline (within 30 days of the grant date).
Have both the Company and the Employee sign and date the agreement.
Retain a fully executed copy in your equity administration and HR files.
Important Reminder
This document is provided as a template to assist with standard restricted membership unit grants in LLCs.
It does not constitute legal advice. You should consult a qualified attorney to tailor this Agreement to your company’s Operating Agreement, tax strategy, and intended incentive structure — particularly to ensure the profits interest structure complies with IRS regulations and safe harbors.
