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Royalty Purchase Agreement Template for United States

A Royalty Purchase Agreement is a legal document governed by U.S. federal and state laws that facilitates the transfer of royalty rights from one party to another. This agreement outlines the terms and conditions of the sale, including purchase price, payment structure, representations and warranties, and ongoing obligations of both parties. It is subject to various regulations including securities laws, the UCC, and industry-specific requirements depending on the type of royalty being transferred.

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What is a Royalty Purchase Agreement?

The Royalty Purchase Agreement serves as a critical instrument for monetizing future revenue streams from various types of intellectual property, natural resources, or other assets generating royalty payments. This document type is commonly used when rights holders wish to receive immediate capital in exchange for future royalty streams. Under U.S. jurisdiction, these agreements must comply with federal and state securities laws, UCC provisions, and relevant industry regulations. The agreement typically includes detailed provisions for valuation, payment terms, representations about the underlying rights, and mechanisms for ensuring proper administration of the royalty stream post-transfer.

What sections should be included in a Royalty Purchase Agreement?

1. Parties: Identification of seller and purchaser of royalty rights

2. Background: Context of the royalty rights and reason for transfer

3. Definitions: Key terms used throughout the agreement including royalty rights, purchase price, and payment terms

4. Purchase and Sale: Core transaction terms including price and rights transferred

5. Representations and Warranties: Statements of fact by both parties regarding ownership, authority, and validity of rights

6. Payment Terms: Structure and timing of payments, including calculation methods

7. Term and Termination: Duration of the agreement and conditions for termination

8. General Provisions: Standard contractual provisions including governing law, notices, and amendments

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

1. Security Interest: Terms of any security interest granted when purchase price is paid in installments

2. Right of First Refusal: Seller's rights to repurchase the royalty rights under specified conditions

3. Audit Rights: Purchaser's rights to verify royalty calculations and examine relevant records

4. Confidentiality: Provisions governing the treatment of confidential information exchanged during the transaction

What schedules should be included in a Royalty Purchase Agreement?

1. Schedule A - Description of Royalty Rights: Detailed description of royalty rights being transferred including source and calculation method

2. Schedule B - Payment Schedule: Detailed payment terms, calculations, and timing of payments

3. Schedule C - Due Diligence Materials: List of documents provided during due diligence process

4. Schedule D - Existing Agreements: List of relevant existing agreements affecting the royalty rights

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

United States

Publisher

Ƶ

Document Type

Royalty Agreement

Sector

IP

Cost

Free to use

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