What is a Royalty Agreement?
Whether you're a designer, writer or industrial engineer, you want to make sure you get your fair share when someone is making money off your ideas. A Royalty Agreement lets you determine how you property will be used and for how long. Of course, royalties are at the center of the agreement, and you need to decide on how to structure them: how much you'll be paid, and when. If you want to use someone else's property, approach them from the right angle. By suggesting a formal royalty contract, you'll show them you're trustworthy, responsible, and professional.. That means you have a much better chance of getting their permission. A Royalty Agreement helps everyone get what they want.
When to use a Royalty Agreement:
- You are the owner of a property interest (copyright, patent, other property interest) and you would like to grant the right to use of such property interest to another party for a limited period of time.
- You would like to contract the use of certain property from the company or individual who owns the property rights.
This Royalty Agreement (Agreement) is made on by and between , , , , (hereinafter referred to as "Grantor") and , , , , (hereinafter referred to as "Grantee").
Whereas Grantor owns and has the right to grant an interest in (hereinafter referred to as the "Property").
Whereas Grantor's right was issued to Grantor on , by .
Whereas Grantee desires to make use of Grantor's property for a specific period by paying a percentage of Grantee's profits as Royalty to Grantor apart from the lump sum payment Grantee pays Grantor for the permission to use the Property.
It is therefore agreed between the Parties as follows:
|GRANTING OF RIGHTS. Grantor hereby grants to Grantee the rights and license, in the United States of America and its territories, to use the Property for a period of .
|GRANTOR'S REPRESENTATIONS AND WARRANTIES.
|Grantor represents and warrants that it owns the Property; that it has the right to grant any license or permission for using the Property for which Grantor exercises its option hereunder; and that it has the right to enter into this Agreement.
|Substantially contemporaneously with the signing of this Agreement, Grantor shall deliver to Grantee all relevant documents which are necessary for the use of the Property.
|Grantor shall indemnify and hold Grantee harmless from all losses, claims, damages and expenses resulting from the breach of its representations and warranties.
|GRANTEE'S REPRESENTATIONS AND WARRANTIES.
|Grantee shall, for a period of from the effective date of this Agreement, maintain the Property in confidence, exercising the same degree of care Grantee exercises with respect to Grantee's own proprietary information.
|In the event Grantee becomes aware of any act or event which has or may have the effect of compromising the confidentiality with regard to the Property, such as a Court Order requiring Grantee to produce documentation with regard to the Property, Grantee shall promptly notify Grantor thereof and consult with Grantor with respect to the manner in which such compromise can be mitigated.
|To the extent that Grantee's negligence is the cause of any personal injury or property damage suffered by Grantee, any of its affiliates or subsidiaries and/or any of their respective employees in the course of using the Property hereunder, Grantee hereby indemnifies Grantor and shall hold Grantor harmless against any such claims, demands or losses for personal injury or property damage in the course of using the Property, provided that Grantee is given prompt written notice of any such claim and has the right to control the defense of any such claim including the right to compromise any such claim on such terms as Grantee deems reasonable.
|ROYALTY. As full consideration for the rights and licenses granted to Grantee hereunder, Grantee agrees to pay Grantor:
|as lump sum at the time of execution of this Agreement; and
|percent of the Grantee's Net Profits.
|NET PROFITS. "Net Profits" shall mean the total revenue received by Grantee from the use of the Property, less:
|all direct manufacturing and marketing expenses, including commissions payable to third parties;
|all direct overhead and general administrative expenses, excluding taxes; and
|all other amounts agreed to be excluded by written approval of Grantor.
|PAYMENT OF ROYALTIES. The Grantee shall keep an accurate account of the revenue generated by using the Property under the scope of the right granted hereunder and shall render a statement in writing to Grantor within 30 days after the end of each calendar quarter during the term of this Agreement, and shall, concurrently with the rendering of such statement, pay to Grantor the amount of the Royalties accrued during the corresponding calendar quarter. Grantor shall have the right, not more often than once in any calendar year, to have an independent certified public accountant acceptable to Grantee examine the books of Grantee to verify the Royalty statements and Royalties due to Grantor pursuant to this Agreement. The cost of such examination shall be borne by Grantor, unless such examination determines that Grantee has underpaid the Royalties due hereunder; in which event, Grantee shall pay the cost of such examination.
|If Grantee fails to render statements or to make payment of Royalties as herein provided, Grantor may, upon 30 days' written notice to Grantee, terminate this Agreement and the rights and license granted hereunder. If such default is not cured within such 30 days, this Agreement shall thereafter terminate upon the date set in such notice without prejudice, however, to the Royalties due to Grantor hereunder.
|If Grantee shall abandon the exploitation of the Property by failing for a period of one calendar year to pay Grantor a minimum royalty of , Grantor may, upon 30 days' written notice to Grantee, terminate this Agreement and the rights granted hereunder without prejudice, unless Grantee, during said 30-day period, pays Grantor the difference between the minimum Royalty amount and the Royalties actually paid. Any termination by Grantor hereunder shall be without prejudice to the Royalties due to Grantor hereunder.
|INDEMNITY. Except for any breach of this Agreement, neither party hereto shall be liable for any claims for personal injury or property damage suffered by the other party hereto or any third party resulting from any activity of either of the parties under or relating to this Agreement.
|CONFIDENTIALITY. Grantee and its employees, agents, or representatives will not at any time or in any manner, either directly or indirectly, use for the personal benefit of Grantee, or divulge, disclose, or communicate in any manner, any information that is proprietary to Grantor and its employees, agents, and representatives and will protect such information and treat it as strictly confidential. The parties' obligations of confidentiality hereunder shall not apply to information either party possessed on the effective date of this Agreement and was not previously received from the other party hereto. This provision will continue to be effective after the termination of this Agreement.
|TERMINATION. Grantee may terminate this Agreement by giving notice thereof to Grantor if:
|Grantor makes a general assignment of substantially all of its assets for the benefit of creditors; or,
|A petition in bankruptcy or under any insolvency law is filed by or against Grantor and such petition is not dismissed within sixty (60) days after it has been filed; or,
|Grantor commits a breach of a material obligation hereunder; provided, however:
|In the case of a breach by Grantor which is capable of being cured, Grantee may not terminate this Agreement unless and until Grantor shall have failed to correct such breach within thirty (30) days after it shall have been served with a notice specifying the breach, requiring that such breach be corrected, and stating Grantee's intention to terminate the Agreement if the breach is not corrected within such thirty (30) day period; and,
|If the breach is not one which can reasonably be corrected within thirty (30) days, Grantee may not terminate this Agreement unless Grantor fails to begin diligent efforts to correct such breach within such thirty (30) day period and such breach is not completely corrected within one hundred eighty (180) days after service of the foregoing notice.
|ASSIGNMENT. This Agreement may not be assigned by either party without the prior written consent of the other party.
|SEVERABILITY. This Agreement shall be severable. In the event any provision(s) of this Agreement is deemed by any court of competent jurisdiction to be unenforceable, illegal or contrary to public policy, the provision found to be unenforceable, illegal or contrary to public policy shall be stricken and the remainder of the Agreement shall remain in force.
|WAIVER. Failure of either party at any time or from time to time to exercise any right under this Agreement shall not be deemed a waiver of such right, nor shall it prevent the party from subsequently asserting or exercising such right.
|GOVERNING LAW. This Agreement shall be construed and governed according to the laws of the State of .
|GOVERNING LAW. This Agreement shall be construed and governed according to the laws of the Commonwealth of .
|GOVERNING LAW. This Agreement shall be construed and governed according to the laws of the .
|NOTICE. Any notices to be given under this Agreement by either party to the other may be effected either by personal delivery in writing or by mail, registered or certified, postage prepaid with return receipt requested. Mailed notices must be addressed to the addresses of the parties as they appear in the introductory paragraph of this Agreement, but each party may change address by written notice in accordance with this paragraph.
|ENTIRE AGREEMENT. This Agreement and any attachments hereto constitute the entire agreement and understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, whether oral or written. No modification or claimed waiver of any of the provisions hereof shall be valid unless in writing and signed by the parties against whom such modification or waiver is sought to be enforced.
|OTHER RIGHTS. Nothing contained in this Agreement shall be construed as conferring by implication, estoppels, or otherwise upon either party any license or other right except the licenses and rights expressly granted hereunder to that party.
|ACCEPTANCE. Each party hereby accepts the licenses and rights granted to it by a party under this Agreement subject to all of the terms and conditions of this Agreement.
|In witness whereof the parties have executed this Agreement.
Final Checklist for Royalty Agreement
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Next Steps: Make it Legal
|Look over the Royalty Agreement to ensure it matches your intentions. If you need to make changes to the Agreement outside of the interview, you will be able to make changes online or in Word format in the Document Manager at the end of the process.
|Use the easy e-signature service to sign electronically without having to print, sign and deliver hard copies. Or, print and sign hard copies of your Agreement.
|Share or deliver a copy of the Agreement to the other Party.
|Keep a copy of all documents for your own records and in case there is a problem.
|Keep an original signed copy of the Royalty Agreement. Your copy should be kept in a safe place. If you signed a paper copy of your document, you can use Rocket Lawyer to store and share it. Safe and secure in your Rocket Lawyer account, you can access it any time from any computer, as well as share it for future reference.
Members can always consult an attorney at no extra cost!
|If you have quick questions or wish to review this document with an attorney, you can do so for free. Rocket Lawyer's On Call® service makes it fast and easy to speak with a local attorney. Get started by visiting the Find a Lawyer tab on our site, or calling (866) 243-2183.