The Royalty Based Financing Agreement serves as an alternative financing instrument for companies seeking growth capital without traditional debt or equity dilution. This document type is particularly relevant in the Indian market where companies with predictable revenue streams seek flexible financing options. The agreement outlines the terms under which an investor provides upfront capital in exchange for future royalty payments tied to the company's revenue performance. It includes comprehensive provisions covering investment terms, royalty calculations, payment mechanics, reporting obligations, and investor protections, all structured in compliance with Indian corporate law, tax regulations, and where applicable, foreign exchange rules. The document is designed to balance the investor's need for reliable returns with the company's requirement for operational flexibility, making it suitable for businesses across various growth stages and sectors.

1. Parties: Identification of the financing party (investor) and the recipient company, including their registered addresses and company details

2. Background: Context of the financing arrangement, brief description of the 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, payment method, and conditions precedent to funding

5. Royalty Terms: Specification of royalty percentage, calculation basis, and payment frequency

6. Payment Mechanics: Procedures for royalty payments, including payment dates, method of payment, and bank account details

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

8. Audit Rights: Investor's rights to audit the company's books and records related to royalty calculations

9. Representations and Warranties: Standard company representations and specific declarations regarding business and financial condition

10. Covenants: Ongoing obligations of the company, including financial covenants and business operation requirements

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

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

13. Confidentiality: Obligations regarding confidential information shared between parties

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

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