Entrustment Fee Clause Samples
The Entrustment Fee clause defines the payment required for a party to delegate certain responsibilities or assets to another party for management or execution. Typically, this fee is paid by the party seeking to have their assets or tasks managed, and it may be calculated as a fixed amount or as a percentage of the value of the assets entrusted. The clause ensures that the party taking on the entrusted duties is compensated for their services, thereby clarifying financial expectations and reducing the risk of disputes over payment.
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Entrustment Fee. 1.5.1 In consideration of the services to be provided by Party B, Party A shall pay to Party B each quarter a management consulting fee equal to all pre-tax profits, if any, of Party A for that quarter (such pre-tax profits are referred to herein as the “Profits”).
1.5.2 Such fees that Party A shall pay (or cause to be paid) to Party B are to be paid in the following manner: during the term of this Agreement: the Profits for each quarter shall be computed no later than 45 days after the end of each quarter, except that in the case of the final quarter of a fiscal year the period for calculating the Profits shall be 90 days. Once such computation is completed, but in all events within 45 days of the end of each fiscal quarter (90 days in the case of the fourth quarter), 100% of all Profits for that quarter shall be paid to Party B. If the Profits for any quarter are zero or negative, meaning that Party A had a loss for such quarter, Party A will not pay Party B a management consulting fee for that quarter, and any loss for a quarter shall be deducted from the management consulting fee for the following quarters; provided further, if at any time Party A shall request that Party B pay to it the amount of any loss that has not been offset against a Profit, Party B will do so within thirty days of such request.
1.5.3 Should Party A fail to pay all or any part of the fees due to Party B under this Agreement within the time stipulated, Party A shall pay to Party B interest on the amount overdue based at an adjustable rate equal to the three (3) month lending rate for RMB announced from time to time by the People’s Bank of China from the date due until the date paid in full.
1.5.4 Following the end of each fiscal year of Party A, the parties shall conduct an examination and verification of the management consulting fees paid by Party A based upon the Profits of Party A for each of the quarters during such fiscal year as confirmed by the audit report by the CPA firm retained by Party A and make appropriate adjustments within fifteen (15) business days following the issuance of such audit report, so that any overcharge will be refunded or any deficiency will be compensated for. Party A covenants and warrants to Party B that it will provide all necessary materials and assistance to such CPA firm and cause the preparation and issuance to the parties of the foregoing audit report by such CPA firm within ninety (90) days following the end of each fiscal year of Party.
Entrustment Fee. Party B will not receive any compensation from Party A during the entrustment period.