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Director Profit Sharing Agreement
"I need a Director Profit Sharing Agreement for our newly appointed Finance Director, offering a 5% share of annual net profits with quarterly payments, including good/bad leaver provisions and performance conditions linked to company growth targets."
1. Parties: Identifies the company and the director entering into the agreement
2. Background: Sets out the context of the agreement and director's appointment
3. Definitions: Defines key terms including 'Profits', 'Profit Share', 'Financial Year'
4. Profit Share Entitlement: Details the calculation method and percentage of profits
5. Payment Terms: Specifies when and how profit share payments will be made
6. Duration and Termination: Sets out the term of the agreement and termination provisions
7. Confidentiality: Obligations regarding confidential information and financial data
8. Tax Provisions: Treatment of tax obligations and responsibilities
9. General Provisions: Standard boilerplate clauses including governing law, notices, and entire agreement
1. Good/Bad Leaver Provisions: Defines circumstances affecting profit share rights upon departure - used when company wants to incentivize retention
2. Clawback Provisions: Allows recovery of payments in specified circumstances - typically used for risk management in larger companies
3. Non-Competition Clauses: Restricts director's ability to compete post-termination - used when protecting company interests is crucial
4. Change of Control: Provisions dealing with profit share arrangements in case of company sale or merger - used for larger companies or those planning exit
1. Schedule 1 - Profit Calculation Methodology: Detailed formula and accounting principles for calculating profit share
2. Schedule 2 - Performance Metrics: Specific KPIs or targets affecting profit share entitlement
3. Schedule 3 - Group Structure: If profit share includes multiple group companies, details their relationship
4. Schedule 4 - Excluded Items: List of items specifically excluded from profit calculations
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