The Profit Participating Loan Agreement serves as a hybrid financing instrument that bridges the gap between conventional debt and equity financing under Australian law. This document is typically used when companies seek alternative financing structures that align the interests of lenders and borrowers more closely than traditional loans. It's particularly valuable for growth-stage companies, real estate developments, or projects where cash flow may be irregular but profit potential is substantial. The agreement includes comprehensive provisions for loan terms, profit-sharing mechanisms, financial covenants, and reporting requirements, all structured to comply with Australian regulatory requirements including the Corporations Act 2001 and relevant tax legislation. The profit participation element requires careful structuring to address tax implications and ensure clarity in calculation and payment mechanisms.

1. Parties: Identification of the lender and borrower, including full legal names and addresses

2. Background: Context of the agreement, relationship between parties, and purpose of the loan

3. Definitions and Interpretation: Definitions of key terms including 'Profit', 'Calculation Period', 'Participation Rate', and interpretation clauses

4. Loan Facility: Core loan terms including principal amount, purpose, and drawdown conditions

5. Interest and Profit Participation: Structure of interest payments and profit participation calculations, including payment periods and calculation methods

6. Repayment Terms: Repayment schedule, prepayment provisions, and mandatory prepayment events

7. Conditions Precedent: Conditions that must be satisfied before the loan becomes available

8. Representations and Warranties: Standard and specific representations by the borrower regarding their business and financial condition

9. Covenants: Financial and operational covenants, including information rights and profit verification mechanisms

10. Events of Default: Circumstances constituting default and consequences

11. Information Rights and Audit: Lender's rights to financial information and audit provisions for profit verification

12. Payments and Calculations: Payment mechanics, calculation periods, and profit participation determination process

13. Assignment and Transfer: Rights and restrictions regarding transfer of the agreement or rights under it

14. Confidentiality: Protection of confidential information shared during profit calculations

15. Notices: Communication methods and contact details for formal notices

16. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, and amendments