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The Profit Sharing Loan Agreement (Partiarisches Darlehen) is commonly used in Germany as an alternative financing instrument that bridges the gap between pure debt and equity financing. This document is particularly relevant when traditional loan arrangements are not suitable or when parties seek to align their interests through profit participation. It's frequently used in growth-stage companies, real estate projects, and various commercial ventures where the lender sees potential in participating in the borrower's success. The agreement, governed by German law, must carefully balance regulatory requirements, tax implications, and commercial interests while clearly defining profit calculation methods, payment mechanisms, and information rights. It's essential for businesses seeking flexible financing solutions while maintaining control over their operations.

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

2. Background: Context of the loan arrangement and brief description of the borrower's business

3. Definitions: Key terms used throughout the agreement, including specific financial and accounting terms relevant to profit calculation

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

5. Term and Repayment: Duration of the loan and terms of repayment, including any early repayment provisions

6. Profit Sharing Mechanism: Detailed explanation of how profits are calculated, measured, and shared

7. Payment Terms: Timing and mechanics of profit share payments and principal repayment

8. Information Rights: Borrower's obligations to provide financial information and profit calculations

9. Representations and Warranties: Standard and specific declarations by both parties

10. Covenants: Ongoing obligations of the borrower, including financial covenants and business conduct

11. Events of Default: Circumstances constituting default and consequences

12. Taxes: Treatment of taxes on profit share payments and principal

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

14. Miscellaneous: Standard boilerplate provisions including severability, amendments, and notices