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Revenue Based Financing Agreement Template for Hong Kong

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Key Requirements PROMPT example:

Revenue Based Financing Agreement

"I need a Revenue Based Financing Agreement for my Hong Kong SaaS company to secure HKD 5 million in funding, with a 5% revenue share until reaching a 1.8x return cap, including specific provisions for international revenue streams and early buyout options."

Document background
This Revenue Based Financing Agreement is designed for use in Hong Kong's business environment where companies seek alternative financing solutions that bridge the gap between traditional debt and equity funding. It is particularly relevant for businesses with predictable revenue streams who prefer financing that scales with their growth without diluting ownership. The document incorporates Hong Kong's regulatory requirements, including compliance with the Money Lenders Ordinance and Securities and Futures Ordinance where applicable. It details the financing structure, revenue sharing mechanics, reporting obligations, and investor protections while maintaining flexibility to accommodate various business models and growth trajectories. This agreement type has gained popularity among technology companies and digital businesses in Hong Kong's growing innovation ecosystem.
Suggested Sections

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

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

3. Definitions and Interpretation: Key terms used in the agreement, including 'Revenue', 'Qualifying Revenue', 'Payment Period', and calculation methodologies

4. Amount and Purpose: The financing amount and specified use of funds

5. Revenue Share Calculation: Formula and methodology for calculating the revenue share payments

6. Payment Terms: Payment frequency, method, and procedures for revenue share payments

7. Reporting Requirements: Financial reporting obligations and revenue verification procedures

8. Representations and Warranties: Standard and specific declarations by both parties

9. Company Covenants: Ongoing obligations of the company regarding business operations and compliance

10. Events of Default: Circumstances constituting default and consequences

11. Confidentiality: Protection of confidential information and trade secrets

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

13. General Provisions: Standard clauses including notices, amendments, governing law, and dispute resolution

Optional Sections

1. Security: Include when additional security or guarantees are required for the financing

2. Intellectual Property Rights: Include for technology companies or when IP is crucial to revenue generation

3. Change of Control: Include when restrictions on ownership changes are needed

4. Minimum Payment Guarantee: Include when a minimum return is guaranteed regardless of revenue performance

5. Early Buyout Option: Include when allowing the company to terminate the agreement early through a predetermined payment

6. International Payments: Include when revenue is generated in multiple jurisdictions

7. Data Protection: Include when sensitive personal or business data processing is involved

8. Subordination: Include when the financing needs to be subordinated to other debt

Suggested Schedules

1. Revenue Calculation Methodology: Detailed explanation of revenue calculations, inclusions, and exclusions

2. Form of Revenue Report: Template for periodic revenue reporting

3. Payment Procedures: Detailed payment mechanics and bank account information

4. Financial Covenants: Specific financial metrics and thresholds to be maintained

5. Permitted Indebtedness: List of approved existing and future debt obligations

6. Required Insurance: Details of insurance coverage requirements

7. Form of Compliance Certificate: Template for periodic compliance certification

8. Initial Business Plan: Company's business plan and financial projections

Authors

Alex Denne

Head of Growth (Open Source Law) @ ºÚÁÏÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions

























































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Relevant Industries

Technology

E-commerce

Software as a Service (SaaS)

Digital Marketing

Online Retail

Subscription Services

Manufacturing

Food and Beverage

Professional Services

Healthcare Technology

Digital Entertainment

Financial Technology

Relevant Teams

Finance

Legal

Treasury

Compliance

Revenue Operations

Corporate Development

Business Development

Tax

Risk Management

Company Secretarial

Relevant Roles

Chief Financial Officer

Finance Director

Chief Executive Officer

Financial Controller

Treasury Manager

Corporate Counsel

Legal Director

Investment Manager

Business Development Director

Revenue Operations Manager

Compliance Officer

Company Secretary

Head of Finance

Commercial Director

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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