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The Royalty Financing Agreement serves as an alternative financing instrument for companies seeking growth capital without diluting equity or taking on traditional debt. This document, governed by Dutch law, is particularly suitable for companies with predictable revenue streams or valuable intellectual property who prefer to align financing costs with their business performance. The agreement typically includes detailed provisions for calculating and paying royalties, reporting requirements, audit rights, and various protective covenants. It's commonly used in scale-up situations, expansion projects, or when companies want to monetize future revenue streams. The document must comply with Dutch financial regulations, corporate law, and where applicable, intellectual property laws.

1. Parties: Identification of the financing party (investor) and the recipient company, including full legal names and registered addresses

2. Background: Context of the agreement, including the company's business, purpose of the financing, and basic structure of the royalty arrangement

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 terms, and conditions precedent to funding

5. Royalty Calculations: Formula and methodology for calculating royalty payments, including the percentage rate and revenue base

6. Payment Terms: Timing and method of royalty payments, currency, payment instructions, and late payment consequences

7. Information Rights: Company's obligations to provide financial statements and other information necessary for royalty calculations

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

9. Representations and Warranties: Standard and specific representations by both parties regarding their capacity, authority, and business

10. Covenants: Ongoing obligations of the company, including operational requirements and restrictions

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

12. Term and Termination: Duration of the agreement, termination events, and consequences of termination

13. Confidentiality: Obligations regarding confidential information shared between parties

14. Assignment and Transfer: Rights and restrictions regarding transfer of rights under the agreement

15. Governing Law and Jurisdiction: Specification of Dutch law as governing law and jurisdiction for disputes

16. General Provisions: Standard boilerplate provisions including notices, amendments, and severability