A privilege accorded to the holder of each unit of an existing security to purchase new securities. Generally rights must be exercised within a short time, and the new security is offered at a price under the existing market. See WARRANTS. Royalty: A payment made (1) for the use of a patent, (2) to the owner of oil or gas lands by those extracting oil or gas therefrom, or (3) to the author of a book, play, etc.