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Royalty Based Financing Agreement
"Need a Royalty Based Financing Agreement for our Singapore-based SaaS company to secure $2M in financing from a venture capital firm, with royalty payments set at 3% of monthly recurring revenue until March 2025."
1. Parties: Identification and details of the financing party and recipient
2. Background: Context of the financing arrangement and business relationship
3. Definitions: Key terms used throughout the agreement
4. Royalty Structure: Calculation method, rates, and payment terms for royalties
5. Payment Terms: Timing, method, and currency of payments
6. Reporting Requirements: Financial reporting obligations and audit rights
7. Term and Termination: Duration of agreement and termination provisions
8. Representations and Warranties: Standard declarations about the business, financial condition, and authority to enter agreement
9. Covenants: Ongoing obligations of the parties during the term of the agreement
10. Events of Default: Circumstances constituting default and consequences
11. Miscellaneous: Standard boilerplate provisions including notices, amendments, governing law
1. Security Arrangements: Required if additional security or collateral is provided for the financing
2. International Payments: Currency conversion and cross-border payment terms when parties are in different jurisdictions
3. Intellectual Property Rights: IP ownership and licensing provisions when royalties are tied to IP exploitation
4. Change of Control: Provisions dealing with changes in ownership or control of the recipient company
5. Minimum Guaranteed Payments: Terms for minimum royalty payments if applicable
1. Calculation Schedule: Detailed methodology for calculating royalties including formulas and examples
2. Reporting Template: Standard format for periodic financial reports and royalty calculations
3. Security Documents: Details of any security arrangements or guarantees provided
4. Business Plan: Projected financials and business strategy of the recipient
5. Key Financial Metrics: Definition and calculation of financial metrics used for royalty calculations
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