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Royalty Purchase Agreement Template for Switzerland

A Royalty Purchase Agreement under Swiss law is a sophisticated commercial contract that facilitates the sale and purchase of rights to future royalty payments. Governed by Swiss contract law, particularly the Code of Obligations, this agreement enables rights holders to monetize their future royalty streams in exchange for an upfront payment. The document comprehensively addresses calculation methodologies, payment mechanics, representations and warranties, and compliance with Swiss regulatory requirements. It includes detailed provisions for information rights, audit procedures, and reporting obligations to protect the purchaser's interests in the acquired royalty stream.

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What is a Royalty Purchase Agreement?

A Royalty Purchase Agreement is utilized when a rights holder wishes to monetize future royalty streams by selling them to an investor or financial institution in exchange for an immediate lump-sum payment. This type of agreement is particularly relevant in Switzerland, a jurisdiction known for its robust intellectual property protection and sophisticated financial markets. The document typically includes detailed provisions about the nature of the royalty rights, calculation methodologies, payment mechanisms, and various protections for both parties. Under Swiss law, these agreements must comply with the Code of Obligations and relevant intellectual property regulations. They are commonly used in industries such as pharmaceuticals, technology, and entertainment, where significant royalty streams exist. The agreement should be carefully structured to address tax implications, regulatory requirements, and potential cross-border elements.

What sections should be included in a Royalty Purchase Agreement?

1. Parties: Identification of the seller (rights holder) and purchaser of the royalty rights

2. Background: Context of the royalty rights, including description of the underlying intellectual property or revenue stream

3. Definitions: Key terms used throughout the agreement, including 'Royalty Rights', 'Purchased Rights', 'Revenue Stream', etc.

4. Sale and Purchase: Core transaction terms including the rights being sold and purchase price

5. Calculation of Royalties: Detailed methodology for calculating the royalty payments

6. Payment Terms: Timing, currency, and mechanism for royalty payments

7. Seller's Representations and Warranties: Assurances regarding ownership, right to sell, no encumbrances, etc.

8. Purchaser's Representations and Warranties: Basic representations about capacity to enter agreement and pay

9. Information Rights: Purchaser's rights to receive information about the underlying revenue stream

10. Audit Rights: Right to audit relevant books and records

11. Term and Termination: Duration of the agreement and circumstances allowing early termination

12. Confidentiality: Protection of confidential information exchanged under the agreement

13. Governing Law and Jurisdiction: Specification of Swiss law and jurisdiction

14. Miscellaneous: Standard boilerplate provisions including notices, amendments, assignment

What sections are optional to include in a Royalty Purchase Agreement?

1. Security Arrangements: Include when additional security is required for the royalty payments

2. Third Party Consents: Include when assignment of royalty rights requires third party approval

3. Tax Gross-Up: Include when tax implications need specific allocation between parties

4. Currency Conversion: Include for international transactions with multiple currencies

5. Step-In Rights: Include when purchaser needs rights to take control of underlying asset in certain circumstances

6. Anti-Competition Provisions: Include when seller needs to be restricted from competing activities

7. Insurance Requirements: Include when specific insurance coverage is required for the underlying assets

What schedules should be included in a Royalty Purchase Agreement?

1. Schedule 1 - Royalty Rights Description: Detailed description of the royalty rights being purchased

2. Schedule 2 - Calculation Methodology: Detailed formula and examples of royalty calculations

3. Schedule 3 - Existing Agreements: List of relevant existing agreements affecting the royalty rights

4. Schedule 4 - Required Consents: List of required third party consents

5. Schedule 5 - Disclosure Schedule: Exceptions to representations and warranties

6. Appendix A - Form of Royalty Report: Template for periodic royalty reporting

7. Appendix B - Payment Details: Banking and payment processing information

8. Appendix C - Notice Details: Contact information for formal notices under the agreement

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Switzerland

Publisher

Genie AI

Document Type

Royalty Agreement

Sector

IP

Cost

Free to use

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