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Royalty Purchase Agreement Template for India

A comprehensive legal agreement governed by Indian law that facilitates the sale and purchase of royalty rights or revenue streams. The document outlines the terms and conditions for transferring future royalty payments from the seller to the purchaser, including payment mechanisms, calculation methodologies, and reporting requirements. It incorporates provisions compliant with Indian contract law, intellectual property regulations, and relevant tax implications, while establishing clear rights, obligations, and remedies for all parties involved in the transaction.

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What is a Royalty Purchase Agreement?

The Royalty Purchase Agreement is utilized when a party holding rights to future royalty payments wishes to monetize these rights by selling them to an investor or financial institution. This document, governed by Indian law, enables the rights owner to receive immediate capital in exchange for future revenue streams. It's commonly used in sectors such as pharmaceuticals, natural resources, technology, and entertainment, where recurring royalty payments are common. The agreement must comply with Indian contract law, intellectual property regulations, and tax requirements while addressing key aspects such as payment calculations, reporting obligations, and risk allocation. This type of agreement has become increasingly important in India's growing intellectual property and innovation landscape, particularly as companies seek alternative financing methods and investors look for stable, long-term revenue streams.

What sections should be included in a Royalty Purchase Agreement?

1. Parties: Identification of the seller (royalty owner) and purchaser with full legal names and addresses

2. Background: Context of the royalty rights, their origin, and the purpose of the agreement

3. Definitions: Detailed definitions of key terms used throughout the agreement

4. Sale and Purchase: Core terms of the transaction including the rights being sold and purchase price

5. Payment Terms: Structure, timing, and method of payments, including any adjustments or deductions

6. Calculation of Royalties: Formula and methodology for calculating royalty payments

7. Representations and Warranties: Statements of fact and assurances from both parties

8. Covenants: Ongoing obligations of both parties during the agreement term

9. Reporting and Audit Rights: Requirements for financial reporting and right to audit royalty calculations

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

11. Indemnification: Obligations to protect against losses and liability allocation

12. Confidentiality: Protection of sensitive information shared during the agreement

13. Dispute Resolution: Process for resolving disagreements between parties

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

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

What sections are optional to include in a Royalty Purchase Agreement?

1. Security Arrangements: Required when additional security or collateral is provided for the royalty payments

2. International Payment Provisions: Needed when parties are in different countries, addressing currency conversion and foreign exchange

3. Tax Gross-Up: Used when parties agree to adjust payments to account for tax implications

4. Step-In Rights: Included when purchaser requires right to take control of underlying assets in specific circumstances

5. Minimum Guarantee: Optional provision for minimum guaranteed royalty payments

6. Expert Determination: Specific procedure for technical disputes requiring expert evaluation

7. Change of Control: Provisions dealing with change in ownership of either party

8. Force Majeure: Required when parties want specific provisions for unforeseeable circumstances

9. Anti-corruption Provisions: Required for international transactions or when dealing with public entities

What schedules should be included in a Royalty Purchase Agreement?

1. Schedule 1 - Royalty Rights Description: Detailed description of the royalty rights being purchased

2. Schedule 2 - Calculation Methodology: Detailed formula and examples of royalty calculations

3. Schedule 3 - Form of Reports: Template for periodic royalty reports

4. Schedule 4 - Underlying Agreements: List and copies of agreements generating the royalty stream

5. Schedule 5 - Historical Data: Historical royalty payment information and projections

6. Schedule 6 - Security Documents: Forms of any security documents required

7. Schedule 7 - Completion Requirements: List of conditions precedent and required documentation

8. Appendix A - Power of Attorney: If required for specific actions on behalf of either party

9. Appendix B - Bank Account Details: Payment account information for both parties

Authors

Alex Denne

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

Jurisdiction

India

Publisher

Ƶ

Document Type

Payment Agreement

Sector

Banking

Cost

Free to use

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