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The Royalty Based Financing Agreement is a specialized financing instrument used when traditional debt or equity financing may not be suitable for a company's growth needs. This document, governed by Philippine law, provides an alternative financing structure where returns are tied to the company's performance through royalty payments, typically calculated as a percentage of revenue or income. It is particularly useful for companies with strong growth potential and predictable revenue streams but who may not want to dilute equity or take on traditional debt. The agreement must comply with Philippine regulatory requirements, including the Securities Regulation Code, tax laws, and foreign investment regulations if international parties are involved. This type of financing has gained popularity among growth-stage companies, particularly in sectors with recurring revenue models.

1. Parties: Identification of the financing party and the recipient company, including their complete legal names, addresses, and registration details

2. Background: Context of the financing arrangement, brief description of the recipient's business, and purpose of the funding

3. Definitions: Detailed definitions of key terms used throughout the agreement, including 'Royalty', 'Gross Revenue', 'Payment Period', etc.

4. Investment Amount: Details of the financing amount, disbursement schedule, and conditions precedent to funding

5. Royalty Payments: Structure of royalty payments, including calculation method, percentage rates, and payment frequency

6. Payment Terms: Specific terms regarding payment methods, currency, bank accounts, and payment verification procedures

7. Reporting Requirements: Financial reporting obligations, including frequency, format, and required content of reports

8. Audit Rights: Rights of the financing party to audit the recipient's books and records

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

10. Covenants: Ongoing obligations of the recipient company, including business conduct and financial management

11. Events of Default: Circumstances constituting default and corresponding remedies

12. Term and Termination: Duration of the agreement and circumstances for early termination

13. Confidentiality: Provisions regarding the protection of confidential information

14. Governing Law and Jurisdiction: Specification of Philippine law as governing law and jurisdiction for disputes

15. Miscellaneous: Standard boilerplate provisions including notices, amendments, and assignment