I am looking for advice in putting together a vesting agreement for bringing on a new partner into my LLC
that is currently a partnership
filing as a pass through entity in California.
The following is a chart I have put together as a starting point for vesting this partner into our firm. I'm wondering the implications of making such an agreement vis a vis our LLC partnership status and what we must do to account for the vesting. Does anything need to change until the 1 year cliff is reached? Also, since this new member cannot get health insurance under our group policy at a favorable price until he is on the legal documents as a part owner, there seems to be a conflict of approaches therein. The following is a chart I had drawn up. The top half is the standard unaccelerated vesting structure and the bottom half is with 6 acceleration triggers that, if met, would mean the new partner could vest before the 1 year cliff.
Is this start completely off the mark? What am I perhaps not taking into account? Thanks for your guidance.
Vesting Structure -- Without Meeting Triggers to Accelerate
End of Year 1 -- Option to buy 10% of company @ $7,500-$10,000
End of Year 2 -- Option to buy additional 7.5% at $7,500-$10,000 (total vested = 17.5%)
End of Year 3 -- Option to buy additional 7.5% at $7,500-$10,000 (total vested = 25%)
Triggers to Accelerate Dom's Vesting
1) Total Sales in 1 Quarter = $250,000
2) 10 Dealer Agreements in Place
3) Completed/Updated Business
Plan & Operating Agreement
4) Total Equipment Sales in 1 Quarter of $75,000
5) Health Insurance in Place for All 3 of Us
6) Buy/Sell Insurance Policy in Place to Protect Company
If These 6 Triggers are Met, Dominic Can Vest his 1st 10% Before 1 Year
Quarterly Vesting in Place After First 10% is Vested