The Royalty Based Financing Agreement is designed for situations where traditional debt or equity financing may not be suitable, particularly for companies with strong recurring revenue streams but potentially limited assets for collateral. This agreement type, governed by Malaysian law, provides an alternative financing structure where the return to the financing party is tied to the recipient's business performance through royalty payments, typically calculated as a percentage of revenue. It is commonly used for growth-stage companies seeking expansion capital without diluting equity or taking on conventional debt obligations. The document addresses key aspects including financing terms, royalty calculations, payment mechanics, information rights, and compliance with Malaysian regulatory requirements, while providing appropriate protections for all parties involved.

1. Parties: Identification of the financing party and the recipient company

2. Background: Context of the financing arrangement and brief description of the business

3. Definitions and Interpretation: Key terms used throughout the agreement including financial metrics and calculation methodologies

4. Amount and Purpose of Financing: Specifies the financing amount and its intended use

5. Royalty Payments: Details of how royalties are calculated, including the percentage, basis of calculation, and revenue definition

6. Payment Terms: Timing, method, and currency of royalty payments, including payment procedures and bank details

7. Conditions Precedent: Conditions that must be satisfied before the financing is provided

8. Representations and Warranties: Standard and specific warranties about the business, its operations, and financial condition

9. Covenants: Ongoing obligations of the recipient company, including financial covenants and reporting requirements

10. Information Rights: Requirements for financial reporting and access to information

11. Events of Default: Circumstances constituting default and consequences

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

13. Confidentiality: Protection of confidential information exchanged under the agreement

14. Governing Law and Jurisdiction: Specification of Malaysian law and jurisdiction

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