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The Royalty Investment Agreement serves as a crucial document for structuring alternative financing arrangements in the UAE, providing companies with capital while offering investors ongoing returns tied to business performance. This agreement type is particularly relevant in the UAE's evolving business landscape, where traditional equity and debt financing may not always meet business needs. The document complies with UAE Federal Law No. 32 of 2021 and related regulations, detailing the investment structure, calculation of royalty payments, reporting obligations, and investor protections. It's commonly used when companies seek growth capital without diluting equity or taking on traditional debt, making it particularly attractive for businesses with strong revenue potential but limited assets for conventional security. The agreement typically includes provisions for regular payments based on revenue or profit metrics, information rights, and various protective covenants tailored to UAE legal requirements.

1. Parties: Identification of all parties to the agreement, including the investor(s) and the company/recipient

2. Background: Context of the agreement, nature of the business, and purpose of the royalty investment

3. Definitions and Interpretation: Detailed definitions of key terms and interpretation rules for the agreement

4. Investment Amount and Terms: Details of the investment amount, payment terms, and conditions precedent

5. Royalty Calculations and Payments: Formula for calculating royalties, payment periods, and reporting requirements

6. Revenue Definitions and Exclusions: Detailed definition of revenue base for royalty calculations and specific exclusions

7. Payment Terms and Mechanics: Specific procedures for making royalty payments, including timing, currency, and payment methods

8. Information Rights and Audit: Investor's rights to financial information and audit provisions

9. Representations and Warranties: Standard and specific representations and warranties from all parties

10. Covenants: Ongoing obligations of the parties, including business operation requirements

11. Events of Default: Circumstances constituting default and consequences thereof

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

13. Confidentiality: Protection of confidential information and trade secrets

14. Assignment and Transfer: Rules regarding transfer of rights and obligations under the agreement

15. Governing Law and Jurisdiction: Choice of UAE law and jurisdiction provisions

16. General Provisions: Standard boilerplate clauses including notices, amendments, and severability