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The Profit Sharing Loan Agreement is commonly used in Switzerland for business financing arrangements where traditional debt or equity financing alone may not be suitable. This hybrid instrument, governed by Swiss law, particularly the Code of Obligations, allows lenders to participate in the borrower's business success while maintaining creditor rights. It is particularly valuable for growth companies, real estate projects, or business expansions where the borrower prefers flexible financing terms and the lender seeks enhanced returns. The agreement typically includes comprehensive provisions on profit calculation methods, payment mechanics, information rights, and security arrangements, while ensuring compliance with Swiss banking, tax, and financial regulations. This structure is often chosen for its tax efficiency and ability to align the interests of both parties.

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

2. Background: Context of the agreement and purpose of the profit-sharing loan

3. Definitions and Interpretation: Definitions of key terms and interpretation rules

4. Loan Amount and Purpose: Specification of the loan amount and permitted use of funds

5. Profit Sharing Mechanism: Detailed structure of how profits will be calculated and shared

6. Payment Terms: Repayment schedule, profit distribution timing, and payment mechanics

7. Conditions Precedent: Conditions that must be met before the loan is advanced

8. Representations and Warranties: Standard and specific declarations by the borrower

9. Covenants: Ongoing obligations of the borrower, including financial covenants

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

11. Events of Default: Circumstances constituting default and consequences

12. Taxes: Treatment of taxes on profit shares and loan payments

13. Term and Termination: Duration of the agreement and termination provisions

14. Notices: Communication procedures between parties

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