A Profit Participating Loan Agreement is utilized when parties seek to establish a financing arrangement that combines characteristics of both debt and equity financing. This document type is particularly relevant under German law, where such instruments (Genussrechte) have specific legal, tax, and accounting implications. The agreement is commonly used for medium to long-term financing where traditional debt instruments may not be suitable or where the lender seeks potential upside in the borrower's performance. It must comply with German regulatory requirements, including the German Banking Act (KWG) if applicable, and addresses crucial aspects such as profit calculation methods, participation rights, and risk allocation. The document typically includes detailed provisions on financial reporting, information rights, and profit distribution mechanisms, while considering German corporate law requirements and accounting standards.

1. Parties: Identification of the lender and borrower with full legal details

2. Background: Context of the loan agreement and purpose of the financing

3. Definitions and Interpretation: Definitions of key terms used throughout the agreement and interpretation rules

4. Loan Amount and Disbursement: Specification of the loan principal amount and disbursement conditions

5. Profit Participation: Detailed mechanism for calculating and distributing profit participation

6. Interest and Fees: Base interest rate (if any) and other fees payable under the agreement

7. Payment Terms: Payment dates, calculation periods, and payment mechanics

8. Conditions Precedent: Conditions that must be satisfied before loan disbursement

9. Representations and Warranties: Statements of fact and assurances from the borrower

10. Information Rights: Borrower's obligations to provide financial and other information

11. Covenants: Positive and negative obligations of the borrower during the loan term

12. Events of Default: Circumstances constituting default and consequences

13. Tax Provisions: Treatment of taxes and withholding requirements

14. Term and Termination: Duration of the agreement and termination rights

15. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction