Profit Transfer Agreement: Definition, Terms, Example
Jump to Section
What is a Profit Transfer Agreement?
A profit transfer agreement is a contract between two companies where profits are transferred from a controlled company to a controlling company. This type of agreement is most commonly used when controlled companies experience financial struggles that threaten to put them out of business. To avoid this, they approach controlling companies for an investment in exchange for profit sharing on future income.
The purpose of the profit transfer agreement is to determine the rules and boundaries that both parties must abide by for the duration of their agreement. It also ensures that promises made are held legally binding.
Common Sections in Profit Transfer Agreements
Below is a list of common sections included in Profit Transfer Agreements. These sections are linked to the below sample agreement for you to explore.
Profit Transfer Agreement Sample
Exhibit 10.1
P LEASE NOTE THAT THIS TRANSLATION OF THE G ERMAN D OMINATION AND P ROFIT L OSS T RANSFER A GREEMENT IS FOR CONVENIENCE PURPOSES ONLY. IN CASE OF DISCREPANCIES BETWEEN THE G ERMAN ORIGINAL AND THE E NGLISH TRANSLATION ONLY THE G ERMAN VERSION SHALL PREVAIL. N EITHER S UPERIOR I NDUSTRIES I NTERNATIONAL G ERMANY AG NOR U NIWHEELS AG ASSUMES RESPONSIBILITY FOR ANY MISTAKES, OMISSIONS OR OTHER INACCURACIES CONTAINED IN THIS TRANSLATION.
“Domination and Profit Transfer Agreement
between
Superior Industries International Germany AG,
c/o Intertrust (Deutschland) GmbH, Grüneburgweg 58, 60322 Frankfurt am Main, registered
with the commercial register of the local court of Frankfurt am Main under HRB 107708
– hereinafter Superior –
and
UNIWHEELS AG,
Gustav-Kirchhoff-Straße 10-18, 67098 Bad Dürkheim, registered with the commercial register
of the local court of Ludwigshafen am Rhein under HRB 64198
– hereinafter UNIWHEELS –
Management Control
| 1.1 | UNIWHEELS submits the management control ( Leitung ) of itself to Superior. Thus, Superior is entitled to issue instructions ( Weisungen ) to the management board of UNIWHEELS regarding the management control of the company. Superior is not entitled to issue the instruction to the management board of UNIWHEELS to amend, maintain or terminate this agreement. |
| 1.2 | Instructions require text form ( Textform ). |
| 1.3 | The management board of UNIWHEELS is required to comply with the instructions of Superior according to Clause 1.1 and Clause 1.2 and Section 308 German Stock Corporation Act ( Aktiengesetz, “ AktG ”). |
Transfer of Profit
| 2.1 | UNIWHEELS undertakes to transfer its entire annual profit to Superior. Apart from any contribution to and any dissolution of reserves pursuant to Clause 2.2, UNIWHEELS shall transfer the maximum amount permissible under Section 301 AktG as amended from time to time. |
| 2.2 | UNIWHEELS may allocate parts of its annual profit to other profit reserves (Section 272 (3) German Commercial Code ( Handelsgesetzbuch, “ HGB ”)) if and to the extent that Superior approves it in text form and to the extent permissible under commercial law and as economically justified by sound commercial judgment. |
| 2.3 | Other profit reserves which have been established during the term of this agreement shall be dissolved if and to the extent that Superior requests it in text form and used to compensate any annual loss or the proceeds be transferred as profit. |
| 2.4 | Other reserves and profits carried forward from the period prior to the term of this agreement may neither be transferred as profit nor be used to compensate for any annual loss. |
| 2.5 | The obligation to transfer the annual profit applies for the first time to the entire profit generated in the financial year of UNIWHEELS beginning on 1 January 2018 or for whichever subsequent financial year of UNIWHEELS in which this agreement becomes effective according to Clause 7.2. The obligation becomes due upon the end of the financial year of UNIWHEELS ( balance sheet date ( Bilanzstichtag )) in each case. |
| 2.6 | Superior may request to transfer the expected profit in advance if and to the extent that UNIWHEELS can provide advance payments according to Section 59 AktG. |
Assumption of Losses
| 3.1 | Superior is obliged towards UNIWHEELS to assume any losses ( Verlustübernahme ) in accordance with the provisions of Section 302 AktG in its entirety as amended from time to time. |
| 3.2 | The obligation of Superior to assume any losses applies for the first time to the entire financial year of UNIWHEELS in which this agreement becomes effective according to Clause 7.2. The obligation becomes due upon the end of the financial year of UNIWHEELS (balance sheet date ( Bilanzstichtag )) in each case. |
Annual Compensation
| 4.1 | Superior undertakes to pay the outside shareholders of UNIWHEELS an adequate compensation by annual cash compensation in proportion to the shares in the share capital ( Ausgleichzahlung, “ Annual Compensation ”) from and including the financial year of UNIWHEELS in relation to which the claim of Superior for the transfer of the annual profit under Clause 2 takes effect, and for the further term of this agreement. |
| 4.2 | The Annual Compensation amounts to a gross sum of EUR 3.38 (“ Gross Annual Compensation Amount ”) for each full financial year (12 months) of UNIWHEELS for each bearer share with no par value of UNIWHEELS with a pro rata portion in the registered share capital of EUR 1.00 each (each individually “ UNIWHEELS Share ” and together “ UNIWHEELS Shares ”) minus the amount of any corporate income tax and solidarity surcharge in accordance with the respective tax rate applicable for these taxes for the relevant financial year, whereby this deduction is to be effected only on the portion of the Gross Annual Compensation Amount per UNIWHEELS Share resulting from profits which are subject to German corporate income tax. |
On the basis of the conditions applicable at the time of the conclusion of this agreement, 15% corporate income tax plus 5.5% solidary surcharge are to be deducted from the portion of the Gross Annual Compensation Amount in the amount of EUR 0.95 per UNIWHEELS Share resulting from profits which are subject to German corporate income tax, which results in EUR 0.15 per UNIWHEELS Share. Together with the remaining portion of the Gross Annual Compensation Amount of EUR 2.43 per UNIWHEELS Share resulting from profits which are not subject to German corporate income tax, this results on the basis of the conditions applicable at the time of the conclusion of this agreement in an Annual Compensation in aggregate amount of EUR 3.23 per UNIWHEELS Share for a full financial year of UNIWHEELS (“ Net Annual Compensation Amount ”).
| *Convenience Translation; the German text is legally binding. | 2 |
| 4.3 | The Annual Compensation is due on the third business day following the ordinary general meeting of UNIWHEELS for any respective preceding financial year but in any event within eight months following the expiration of the relevant financial year. |
| 4.4 | The Annual Compensation is granted for the first time for the full financial year of UNIWHEELS in which the claim of Superior for the transfer of the annual profit under Clause 2 takes effect. |
| 4.5 | If this agreement ends during a financial year of UNIWHEELS or if UNIWHEELS establishes a short financial year ( Rumpfgeschäftsjahr ) during the term of this agreement, the Gross Annual Compensation Amount is reduced pro rata temporis for the relevant financial year. |
| 4.6 | If the share capital of UNIWHEELS is increased from the reserves in exchange for the issuance of new shares, the Gross Annual Compensation Amount for each UNIWHEELS Share shall be reduced to such an extent that the total amount of the Gross Annual Compensation Amount remains unchanged. If the share capital of UNIWHEELS is increased against cash contributions and/or contributions in kind, the rights under this Clause 4 also apply for the shares subscribed to by outside shareholders in such capital increase. The beginning of each entitlement of the new shares pursuant to this Clause 4 corresponds to the dividend entitlement set by UNIWHEELS when issuing the new shares. |
| 4.7 | If an appraisal proceeding ( Spruchverfahren ) according to Section 1 no. 1 German Act on Appraisal Proceedings ( Spruchverfahrensgesetz, “ SpruchG ”) is initiated and the trial court adjudicates a higher Annual Compensation by non-appealable decision, the outside shareholders are entitled to demand a corresponding supplemental payment to the Annual Compensation even if they have already received the Consideration according to Clause 5. Likewise, all other outside shareholders will be treated equally if Superior undertakes to pay a higher Annual Compensation to an outside shareholder of UNIWHEELS in a settlement ( Vergleich ) for the purpose of avoiding or settling appraisal proceedings according to Section 1 no. 1 SpruchG. |
Consideration
| 5.1 | Superior undertakes upon demand of each outside shareholder of UNIWHEELS to purchase such shareholder’s UNIWHEELS Shares in exchange for a cash consideration in the amount of EUR 62.18 for each UNIWHEELS Share ( Abfindung, “ Consideration ”). |
| 5.2 | The obligation of Superior to purchase UNIWHEELS Shares is for a limited period of time. The time limitation period ends two months after the date on which the offer of the Consideration by Superior is announced, but at the earliest two months after the date on which the registration of the existence of this agreement in the commercial register ( Handelsregister ) of UNIWHEELS has been announced pursuant to Section 10 HGB. An extension of the time limitation period pursuant to Section 305 (4) sentence 3 AktG as a result of a motion for determining the Annual Compensation or Consideration by the court determined according to Section 2 SpruchG remains unaffected. In this case, the time limitation period ends two months after the date on which the decision on the last motion ruled on has been announced in the Federal Gazette ( Bundesanzeiger ). |
| *Convenience Translation; the German text is legally binding. | 3 |
| 5.3 | If the share capital in UNIWHEELS is increased from the reserves in exchange for the issuance of new shares prior to the expiration of the time limitation period set forth in Clause 5.2, the Consideration for each UNIWHEELS Share is reduced from this point in time to such an extent that the total amount of the Consideration for the shares not considered at this point in time remains unchanged. If the share capital of UNIWHEELS is increased prior to the expiration of the time limitation period set forth in Clause 5.2 against cash contributions and/or contributions in kind, the rights under this Clause 5 also apply for the shares subscribed to by the outside shareholders in such capital increase. |
| 5.4 | If an appraisal proceeding according to Section 1 no. 1 SpruchG is initiated and the trial court adjudicates a higher Consideration by non-appealable decision, the outstanding shareholders are entitled to demand a corresponding supplemental payment to the Consideration even if they have already received the Consideration according to this Clause 5. Likewise, all other outside shareholders will be treated equally if Superior undertakes to pay a higher Consideration to an outside shareholder of UNIWHEELS in a settlement ( Vergleich ) for the purpose of avoiding or settling appraisal proceedings according to Section 1 no. 1 SpruchG. |
| 5.5 | The transfer of the UNIWHEELS Shares for Consideration shall be without cost to the outstanding shareholders of UNIWHEELS. |
Right to Information
Superior is entitled to consult books and records of UNIWHEELS at all times. The management board of UNIWHEELS is obliged to provide Superior at any time with any information concerning all matters of UNIWHEELS which Superior requires. Without prejudice to the rights agreed above, UNIWHEELS is obliged to report to Superior on a continuous basis on the business development, in particular on important business transactions.
Entry into Effect and Term of the Agreement
| 7.1 | The agreement requires for its effectiveness the consent of the general meeting of UNIWHEELS and Superior in each case. |
| 7.2 | This agreement becomes effective upon registration of its existence in the commercial register of UNIWHEELS. It applies with respect to the obligation to transfer profit pursuant to Clause 2 and the obligation to assume losses pursuant to Clause 3 with retroactive effect as from the beginning of the financial year of UNIWHEELS in which the agreement becomes effective upon registration in the commercial register of UNIWHEELS. It shall in no case enter into effect before 1 January 2018. |
| 7.3 | This agreement is concluded for a fixed period of five time years starting with the beginning of the obligation of UNIWHEELS to transfer profit. It shall be subsequently extended by one year in each case, unless it is terminated in compliance with a notice period of six months prior to expiration of its term. |
| 7.4 | The right to terminate this agreement for good cause ( wichtiger Grund ) without compliance with any notice period remains unaffected. Good cause exists in particular if |
– good cause for purposes of German tax law for the termination of this agreement exists,
– Superior ceases to hold the majority of the voting rights arising from the shares in UNIWHEELS, or
| *Convenience Translation; the German text is legally binding. | 4 |
– a merger, demerger or liquidation of Superior or UNIWHEELS is being implemented.
| 7.5 | Any notice of termination must be in writing. |
| 7.6 | If the agreement is terminated, Superior shall provide security to the creditors of UNIWHEELS in accordance with Section 303 AktG. |
Letter of Comfort
Superior is an indirect 100% subsidiary of Superior Industries International, Inc. (“ Superior Inc. ”), a company established under the law of the U.S. State of Delaware with registered seat in 26600 Telegraph Road, Suite 400, Southfield, Michigan, USA, registration no. 5714194, its shares are admitted to trading at the New York Stock Exchange (NYSE: SUP). Without entering into this domination and profit transfer agreement as a contracting party, Superior Inc. has provided a letter of comfort by separated declaration dated 11 October 2017 which is attached to this agreement as Annex.
Final Provisions
| 9.1 | To the extent a provision of this agreement is or becomes invalid or impracticable in full or in part, or if this agreement is incomplete, the validity of the remaining provisions shall not be affected. Instead of the invalid or impracticable provision, or in order to remedy an omission, an appropriate provision shall be deemed to be agreed which corresponds as far as legally permissible to what the parties intended or would have intended in accordance with the intent and purpose of this agreement if they had been aware of this aspect. |
| 9.2 | Amendments and supplements of this agreement including this provision must be in writing for its validity. In other respects, Section 295 AktG applies. |
| 9.3 | The exclusive venue shall be Frankfurt am Main, Germany. |
| *Convenience Translation; the German text is legally binding. | 5 |
|
Superior Industries International Germany AG
Frankfurt am Main, 5 December 2017 |
||||
|
Place, date |
||||
|
/s/ Andreas Grundhöfer |
||||
|
Andreas Grundhöfer Management board
|
||||
|
UNIWHEELS AG
Bad Dürkheim, 5 December 2017 |
Bad Dürkheim, 5 December 2017 |
|||||
|
Place, date |
Place, date | |||||
|
/s/ Dr. Wolfgang Hiller |
/s/ Dr. Karsten Obenaus |
|||||
|
Dr. Wolfgang Hiller Member of the management board |
Dr. Karsten Obenaus Member of the management board” |
|||||
* * *
| *Convenience Translation; the German text is legally binding. | 6 |
Reference:
Security Exchange Commission - Edgar Database, EX-10.1 2 d481273dex101.htm EX-10.1, Viewed March 20, 2023, View Source on SEC.
Who Helps With Profit Transfer Agreements?
Lawyers with backgrounds working on profit transfer agreements work with clients to help. Do you need help with a profit transfer agreement?
Post a project in ContractsCounsel's marketplace to get free bids from lawyers to draft, review, or negotiate profit transfer agreements. All lawyers are vetted by our team and peer reviewed by our customers for you to explore before hiring.
ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
Meet some of our Profit Transfer Agreement Lawyers
Chris H.
Chris H.
As an attorney licensed in California and currently practicing remotely from Ohio, my primary focus is on drafting and reviewing prenuptial and postnuptial agreements. I offer help in drafting or navigating these agreements, ensuring they are tailored to each client's unique situation and needs. While my background includes experience in cybersecurity, my current legal services are centered around family law, particularly in the creation and revision of prenuptial and postnuptial agreements. Additionally, I provide services in wills and trusts, along with other legal areas, to offer comprehensive solutions to my clients.
"Excellent lawyer! Really appreciated his suggestions and reasonable pricing. Would definitely do business with him again!"
Brian W.
As a licensed AL lawyer with over 7 years of experience in the legal field, I have spent more than 15 years working in the business and finance sector. I am deeply passionate about immigration, contracts, & my expertise spans a wide range of projects. From handling ICOs & IPOs to navigating VCs, SaaS, OnlyFans, Wholesaler & Manufacturing Agreements, Prenups, Movie Finance, M & As, Visas, Green Cards and more. I have a comprehensive understanding of various contractual needs. Whatever your contract requirements may be, feel free to reach out to me—I can craft or work on any contract with precision and expertise.
"Brian was great to work with and delivered the work requested well before the deadline. He went above and beyond to provide what I needed for my project. Thanks, Brian!"
Nancy S.
Seasoned corporate, business and real estate attorney with 30 years experience managing private practice groups and in-house legal functions for publicly traded, privately held, and family companies.
"I had the pleasure of working with Nancy on a commercial lease for our Business, and I couldn’t be more satisfied with the experience. From our initial consultation to the final signing, her professionalism, deep knowledge of real estate law, and attention to detail were outstanding. What impressed me most was the clear and consistent communication. She took the time to walk me through all clause of the lease on which we had concerns, answered all my questions promptly, and made sure I fully understood my rights and obligations and also suggested modification which would help me as a Tenant. Her expertise helped negotiate favorable terms and avoid potential pitfalls I wouldn’t have caught on my own. If you're looking for a real estate attorney who combines strong legal skills with excellent client service, I highly recommend Nancy. She made a potentially stressful process feel smooth and secure."
Fabian G.
Fabian Garcia Villanueva is the Managing Attorney and Founder of GV Law PLLC, a premier boutique law firm delivering Big Law level representation to clients across corporate, transactional, and regulatory matters. At GV Law, Mr. Garcia leads a multidisciplinary team that advises business owners, investors, and professionals on complex transactions, strategic growth initiatives, and compliance across multiple sectors including healthcare, finance, real estate, technology, and international business. The firm handles everything from business formations and cross-border transactions to mergers and acquisitions, private offerings, commercial agreements, and ongoing legal operations support. Known for precision, strategic thinking, and relentless attention to detail, Mr. Garcia brings the rigor of top-tier law firms into a modern, agile practice. GV Law’s clients include emerging ventures, established corporations, and high-net-worth individuals seeking first-class legal partnership built on trust, efficiency, and results.
"Good work, on time, good communications - very smooth process."
Erik W.
Erik J. Washington completed his undergraduate studies at Florida A&M University, where he earned his Bachelor of Science degree in Business Administration with a concentration in Finance. Mr. Washington went on to earn his Juris Doctor from Florida A&M University College of Law. Upon receiving his J.D., Mr. Washington was admitted to The Florida Bar and the United States District Court, Middle District of Florida. Mr. Washington started his legal career by working with a boutique Orlando law firm where his practice concentrated on family law, bankruptcy, helping clients with estate planning and probate matters, and advising homeowner’s association boards on proper administration. After that experience Mr. Washington later joined another mid-size Orlando law firm where he would eventually become the Managing Consumer Bankruptcy Attorney where he oversaw the filing and administration of hundreds of chapter 7 and chapter 13 cases. Prior to starting the Washington Law Firm, Mr. Washington was an associate at a Central Florida Bankruptcy law firm working under the tutu ledge of a highly respected bankruptcy attorney with over 20 years of bankruptcy experience. Mr. Washington has learned that bankruptcy is a tool designed that not only benefits a person in debt but is also good for the economy as a whole. It is because this new beginning and fresh start that it becomes a means of not only helping a person in debt, but it gives that person once in debt the chance to reestablish good credit and yet again borrow money to spend. Mr. Washington focuses on consumer bankruptcy, real estate, probate, and auto accidents.
May 22, 2023
Christopher M.
Skilled and experienced business attorney with vast experience in a wide array of commercial contracts. Strong emphasis on the lodging and hospitality practice field, including real estate acquisition and disposition, management agreements, franchise agreements, design & construction contracting and finance.
Andy K.
Licensed in MI since 2010. Practiced SSDI appeals and auto negligence for over a decade until 12/2022 when I left largest personal injury firm In MI to open my own estate planning firm. Looking for part-time contract/remote work to supplement income as I build my own practice.
Find the best lawyer for your project
Browse Lawyers Now
Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.
View Trustpilot ReviewHow It Works
Financial lawyers by top cities
- Austin Financial Lawyers
- Boston Financial Lawyers
- Chicago Financial Lawyers
- Dallas Financial Lawyers
- Denver Financial Lawyers
- Houston Financial Lawyers
- Los Angeles Financial Lawyers
- New York Financial Lawyers
- Phoenix Financial Lawyers
- San Diego Financial Lawyers
- Tampa Financial Lawyers
Profit Transfer Agreement lawyers by city
- Austin Profit Transfer Agreement Lawyers
- Boston Profit Transfer Agreement Lawyers
- Chicago Profit Transfer Agreement Lawyers
- Dallas Profit Transfer Agreement Lawyers
- Denver Profit Transfer Agreement Lawyers
- Houston Profit Transfer Agreement Lawyers
- Los Angeles Profit Transfer Agreement Lawyers
- New York Profit Transfer Agreement Lawyers
- Phoenix Profit Transfer Agreement Lawyers
- San Diego Profit Transfer Agreement Lawyers
- Tampa Profit Transfer Agreement Lawyers
Contracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.
View Trustpilot Review
I never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.
View Trustpilot Review
I got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.
View Trustpilot Review