Profit Sharing Agreement

PREPARED FOR
[Company 2 Name] 

PREPARED BY
[Company 1 Name] 

Profit Sharing Agreement

This Profit Sharing Agreement (hereinafter referred to as the "Agreement") is made and shall be effective as of [Agreement Effective Date] (hereinafter referred to as the "Effective Date"),
 
By and Between 
 
[Company 1 Name] (hereinafter referred to as "Party A"), residing at [Company 1 Address], and entitled to [Company 1_Profit Sharing Percentage] profit and; 
 
[Company 2 Name] (hereinafter referred to as "Party B"), residing at [Company 2 Address], and entitled to [Company 2_Profit Sharing Percentage] profit.
 
Both Party A and Party B shall hereinafter be referred to as the "Parties" and, individually, as a "Party."
 
This Profit Sharing Agreement sets forth the purpose of both Parties coming together with the common goal of conducting the business of [Business Name] (hereinafter referred to as "Business") located at [Business Address].
 
Both Parties are strongly advised to thoroughly review all terms and conditions of this Agreement, as they define the rules and regulations governing the Business of both Parties.

TERMS AND CONDITIONS.

The Parties hereby agree to the following terms and conditions that shall define and govern the relevant aspects of this Profit Sharing Agreement.

1. PURPOSE.

The prime purpose of this Profit Sharing Agreement is to set guidelines and describe a method for sharing business revenues among the Parties that is fair, workable, and acceptable to both Parties.

2. TERM.

This Profit Sharing Agreement shall commence on [Agreement Commencement Date] and remain in full force and effect for an initial period of [Agreement Term]. After the initial term, this Agreement will automatically renew every [Agreement Renewal Term] (each termed a “Renewal Term”) unless otherwise terminated by either of the Parties in writing and in accordance with the termination terms stated in this Agreement.

3. RESPONSIBILITIES. 

Both Parties are hereby responsible for ensuring and performing the following duties:

(a) Maintaining coordination and fulfilling other prospecting duties towards each other; 

(b) Ensuring the timely completion of paperwork essential for the seamless operation of the Business;

(c) Carrying out all duties and services assigned by either Party to accomplish the aims of this Agreement in the time, place, and manner deemed appropriate by the mutual consent of the Parties.

(d) [Additional responsibilities]

4. PROFIT-SHARING.

Regarding the duties performed by both Parties, Party A, that is, [Company 1 Name], shall be entitled to [Company 1_Profit Sharing Percentage] of the profits generated from the Business.
 
Considering the duties performed by both Parties, Party B, that is, [Company 2 Name], shall be entitled to [Company 2_Profit Sharing Percentage] of the profits generated from the Business.
 
For an activity to be considered a “direct result” of either Party's efforts, that particular Party should have made all the customer interactions leading to a sale. However, initial contact and interaction at the point of sale shall also be considered.
 
“Profits” shall be calculated by the selling price, less any expenses paid by the Business on behalf of both Parties in furtherance of the sale and the cost of goods sold.

5. PAYOUTS.

The following shall be the standard responsibilities of the Parties regarding payouts and profit sharing, listed in the order of financial distribution for each project or job. No payouts shall be issued until the respective project or job balance is paid in full.

Business	Percentage of Total Profit
[Project/Job Name]	[Profit Percentage]%
[Project/Job Name]	[Profit Percentage]%

6. LIABILITY.

(a) Each Party acknowledges that it shall be responsible for any loss, cost, damage, claim, or other charges resulting from or caused by its actions.
 
(b) Neither Party shall be held liable for any loss, cost, damage, and/or claims arising from or caused by the actions of the other Party.
 
(c) Joint and several liabilities do not apply to the Parties; no Party is accountable for the actions of any other Party and is solely responsible for the tasks assigned and outlined in the Agreement.
 
(d) The Parties agree that consequential or punitive damages may be applicable or awarded concerning any dispute arising between or among them concerning this Agreement.

7. INDEPENDENT CONTRACTOR.

Both Parties agree they are independent contractors, not agents, employees, partners, or joint venturers of each other, and no employer-employee relationship exists for tax or any other purpose. Neither Party has authority to make statements, representations, commitments, or take binding actions on behalf of the other except as expressly authorized in writing, and each shall comply with applicable laws in their respective jurisdictions.

8. CONFIDENTIALITY.

Neither Party involved in this Profit Sharing Agreement shall, in any manner, either directly or indirectly :

(a) Disclose or communicate to a third party any information relating to the Business of the Parties, including but not limited to customer lists, price points, marketing plans (the “Confidential Information”), yearly revenues, or any other private information.

(b) Duplicate any form of Confidential Information.

(c) Use any of the Confidential Information except solely for the benefit of the Business.

9. EXPENDITURES.

Neither of the Parties shall be entitled to reimbursement for any expenses except those that have been pre-approved in writing by both Parties. Should the Business require the representative of either of the Parties to travel, then that particular Party shall reimburse its employee for the travel expenses, along with reasonable lodging and meal expenses, upon presentation of receipts for such expenditures.

10. TERMINATION.

Either Party shall have the right to terminate this Agreement, effective as of the end of the initial term or any Renewal Term, by providing the other with written notice of termination at least [Termination Notice Period in Days] day(s) prior to the end of such initial term or Renewal Term. Neither Party shall have the right to terminate this Agreement at any other time unless mutually agreed upon by both Parties. The profit-sharing among the Parties shall cease upon termination of this Agreement, provided that the termination rules are followed and the termination is executed.

11. TAXATION.

Each Party will be fully responsible for its own taxation and will provide a declaration that the funds shall not be used for any illicit or illegal activities in violation of any existing law. Notable inclusions include money laundering, violations of international law, and violations of money transfer policies to avoid debt. No Party to this Agreement shall be liable for any tax payments required by any governing authorities on behalf of any other participating Party. 

12. NON-EXCLUSIVITY CLAUSES.

The relationship between the Parties is non-exclusive, meaning that no Party is under any obligation to submit transaction opportunities to the other Party under this Agreement for the procurement of financing, resale, or presentation to a Buyer. Each transaction shall be managed on a case-by-case basis. Once the Parties agree to enter into a transaction jointly, that particular transaction shall be considered exclusive to this joint venture. The Parties will confirm any such transaction in writing as an amendment to the transaction. 

13. ARBITRATION.

In the event of any dispute arising in and out of this Agreement between the Parties, it shall be resolved through arbitration. There shall be [Number of Arbitrators] arbitrator(s) who shall be appointed by [Arbitration Appointing Party Name]. The venue of arbitration shall be [Location of Arbitration], and the Seat shall be [State of Seat]. The arbitrators' decision shall be final and binding on both Parties. 

14. SEVERABILITY.

Suppose any provision of this Agreement is deemed invalid or unenforceable, in whole or in part. In that case, that part shall be severed from the remainder of this Agreement, and all other provisions shall remain in full force and effect as valid and enforceable.

15. GOVERNING LAW.

This Agreement shall be governed by and construed in accordance with the laws of [Governing Law] without regard to conflict of law principles.

16. NOTICES.

Any notices required or permitted by this Agreement shall be in writing and delivered by certified mail or courier to the mentioned address.

17. FORCE MAJEURE.

No Party shall be liable or responsible to the other for any loss or damage or for any delays or failure to perform under this Agreement due to causes beyond its reasonable control, including, but not limited to, acts of God, employee strikes, epidemics, war, riots, flood, fire, sabotage, terrorist acts or any other circumstances of like character.

18. ENTIRE AGREEMENT.

This Agreement represents the full understanding of the Parties and shall supersede all previous oral or written agreements regarding the subject matter herein.

19. MODIFICATION.

No modification of this Agreement shall be valid unless in writing and signed by both Parties.

ACCEPTANCE AND SIGNATURE.

IN WITNESS WHEREOF, each Party has executed, accepted, and agreed to this Agreement by their respective duly authorized officers, on the effective date.

[Company 2 Name]  	

[Company 1 Name]  

Name:

Name:   

Signature:                                                  			

Signature: 

Date: 

Date:                                             				 	

Profit Sharing Agreement Template

Define profit distribution clearly with a profit-sharing agreement. Mention distribution ratios, responsibilities, and terms to ensure fair and transparent profit allocation among parties.

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