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Revenue Royalty Agreement for the United States

Revenue Royalty Agreement Template for United States

A Revenue Royalty Agreement is a legally binding contract under U.S. law that establishes the terms and conditions for revenue-based payments from one party to another. The agreement defines how royalties are calculated based on specified revenue streams, sets payment terms and schedules, and outlines reporting and audit requirements. It includes provisions for dispute resolution and termination, complying with both federal and state regulations regarding revenue sharing and securities laws where applicable.

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What is a Revenue Royalty Agreement?

The Revenue Royalty Agreement serves as a fundamental instrument for structuring revenue-sharing arrangements in the United States. This document is particularly useful when one party wishes to receive ongoing payments based on another party's revenue generation, without taking an equity position. It's commonly used in various contexts, from intellectual property commercialization to business financing alternatives. The agreement must comply with U.S. federal and state securities laws, tax regulations, and commercial codes, particularly when the arrangement could be construed as a security offering.

What sections should be included in a Revenue Royalty Agreement?

1. Parties: Identifies all parties to the agreement with their full legal names and addresses

2. Background/Recitals: Explains the context and purpose of the agreement

3. Definitions: Defines key terms used throughout the agreement, including 'Gross Revenue', 'Net Revenue', 'Royalty Rate'

4. Royalty Calculation and Payment: Details the method of calculating royalties, payment frequency, and payment mechanisms

5. Reporting Requirements: Specifies the financial reporting obligations and timeframes

6. Audit Rights: Establishes the right to audit financial records and the process for conducting audits

7. Term and Termination: Specifies duration of agreement and conditions for termination

8. Governing Law: Specifies the jurisdiction and applicable law

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

1. Minimum Guaranteed Payments: Establishes minimum payment thresholds - use when the royalty recipient requires income certainty

2. International Payments: Provisions for cross-border payments and currency conversion - use when parties are in different countries

3. Intellectual Property Rights: Provisions regarding IP ownership and licensing - use when royalties are tied to IP exploitation

4. Change of Control: Provisions for handling ownership changes - use when stability of ownership is important

What schedules should be included in a Revenue Royalty Agreement?

1. Schedule A - Revenue Calculation Methodology: Detailed breakdown of revenue calculation formula

2. Schedule B - Reporting Template: Standard format for periodic revenue reports

3. Schedule C - Audit Procedures: Detailed procedures for conducting financial audits

4. Schedule D - Excluded Revenue Sources: List of revenue streams excluded from royalty calculations

5. Appendix 1 - Form of Revenue Report: Template for regular revenue reporting

Authors

Alex Denne

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

Jurisdiction

United States

Publisher

Genie AI

Document Type

Royalty Agreement

Sector

IP

Cost

Free to use

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