The Royalty Based Financing Agreement serves as an alternative financing instrument in the UAE market, offering businesses access to capital without traditional debt or equity dilution. This document is particularly useful for companies with strong growth potential and predictable revenue streams seeking flexible financing options. The agreement, governed by UAE law, typically includes detailed provisions for royalty calculations, payment mechanisms, financial reporting requirements, and security arrangements. It must comply with UAE Federal Law No. 8 of 2021, Central Bank regulations, and other relevant UAE legislation. The document is commonly used in growth-stage companies, intellectual property-rich businesses, and enterprises seeking non-dilutive growth capital, while ensuring alignment with both UAE commercial practices and Shariah principles where required.

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

2. Background: Context of the financing arrangement, business purpose, and general intent of the parties

3. Definitions: Detailed definitions of key terms including Royalty, Gross Revenue, Payment Period, and other technical terms

4. Financing Amount and Purpose: Details of the financing amount, disbursement conditions, and permitted use of funds

5. Royalty Calculations: Formula and methodology for calculating royalty payments, including basis (e.g., revenue, profits) and percentages

6. Payment Terms: Payment schedule, method, currency, and mechanics of royalty payments

7. Minimum Guarantees: Minimum payment obligations and any guaranteed return provisions

8. Information Rights: Requirements for financial reporting, audit rights, and access to information

9. Representations and Warranties: Standard and specific representations regarding business, ownership, and compliance

10. Covenants: Ongoing obligations including business operation requirements and restrictions

11. Events of Default: Circumstances constituting default and consequences

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

13. Governing Law and Jurisdiction: UAE law as governing law and jurisdiction provisions

14. General Provisions: Standard boilerplate clauses including notices, amendments, and assignment