Option Agreement for Purchase of Patent Rights

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									This Option Agreement for Purchase of Patent Rights document creates a legal
agreement between a current owner of a patent right and a party that wishes to
purchase the current owner's rights. This agreement gives the purchaser an option for
a certain amount of time to purchase the current owner's rights for agreed upon
compensation. This agreement may be modified to allow the option holder to pay
additional money for the right to extend the option time period. This document in its
draft form contains numerous of the standard clauses commonly used in these types of
agreements. This agreement should be used when purchasing the rights of a patent
from its current owner.
OPTION AGREEMENT FOR PURCHASE OF PATENT RIGHTS

THIS AGREEMENT made to be effective as of the ____ day of _______, 2_____.

BETWEEN:

               ________________________, [Instruction: Insert Owner’s name.] a company
duly incorporated
               under the laws of the State of ___________ [Instruction: Insert Owner’s state
of incorporation.]

                  (hereinafter referred to as the “Owner”)

                                                                                   OF THE FIRST PART,

                                         and

                                                        , [Instruction: Insert Purchaser’s name.] a
company duly incorporated
              under the laws of the State of _____________ [Instruction: Insert Purchaser’s
      state of incorporation.]

                  (hereinafter referred to as the “Purchaser”)

                                                                                OF THE SECOND PART,

        WHEREAS the Owner is the owner and inventor of a patent for _____________
[Instruction: Insert description or name of patented item.] (the “Patent”) registered as
registration number __________ on the ____ day of _______, 2___ with the __________
[Instruction: Insert applicable patent registration information.];

         AND WHEREAS the Owner has assigned all rights to use the Patent to the Purchaser;

        AND WHEREAS the Owner has agreed to grant the Purchaser an option to purchase all
rights in and to the Patent;

       NOWTHEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of
the mutual covenants and agreement herein contained, the sum of Two ($2.00) Dollars now paid
by each of the parties hereto to each other (the receipt and sufficiency of which is hereby
acknowledged), and in consideration of other good and valuable consideration, the parties hereto
covenant and agree with each other as follows:




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1.       OPTION

         In consideration of the payment to the Owner by the Purchaser of a total amount of
         _______________ ($_________) [Instruction: Insert amount paid to Owner.] United
         States Dollars to be paid to the Owner upon the execution of this Agreement by all
         parties, the Owner hereby grants to the Purchaser the sole, exclusive and irrevocable
         option to acquire all of the right, title and interest in and to the Patent. This option shall
         be effective during the period commencing on the Date of this Agreement and ending
         _____ [Instruction: Insert length of option period.] weeks/months thereafter (the
         "Option Period"). The payment for the Option Period shall be an advance against the
         purchase price referred to in Paragraph 4.1.

1.1      The Purchaser may in Purchaser's sole discretion extend the Option Period for up to ____
         additional consecutive _____ week/month periods (the "Option Extensions") by paying
         to the Owner the sum of ____________ ($_________) Dollars, for each ____
         week/month Option Extension, within _____ days after the expiration of the Option
         Period or the first Option Extension, as the case may be. [Instruction: Insert applicable
         terms.] The payments for any Option Extension shall not be an advance against the
         Purchase Price referred to in Paragraph 4.1.

2.       DEFINITIONS

2.1      In this Agreement the following definitions shall apply:

         a.       Date of this Agreement means the date written at the top of the first page of this
                  Agreement;

         b.       Patent means the patent for _____________ [Instruction: Insert description or
                  name of patented item.] (the “Patent”) registered as registration number
                  __________ on the ____ day of _______, 2___ with the __________
                  [Instruction: Insert applicable patent registration information.];

         c.       Patent Rights to use the Patent means the sole, exclusive, and perpetual rights in
                  all languages throughout the universe:

                      i.    to distribute, exhibit and otherwise exploit the Patent in all manner and
                            media, whether now known or hereafter devised;

                      ii. to exploit all ancillary rights which are related to the Patent Rights;

                      iii. to secure and register the Patent in the name of Purchaser or any other
                           party as the Purchaser may choose as permitted by this Agreement.

         Other terms may be defined within this Agreement.




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3.       RIGHTS AND RESTRICTIONS DURING THE OPTION PERIOD

3.1      During the Option Period and any Option Extensions, Purchaser may do any and all acts
         normally done by the Purchaser in relation to the use of the Patent, including but not
         limited to entering into agreements for financing.

4.       EXERCISE OF OPTION

4.1      Purchaser may exercise the option at any time during the Option Period or any Option
         Extension by delivery to the Owner of:

         a.       written notice of exercise of the option; and

         b.       payment to the Owner of ____ (__ %) percent of the purchase price under this
                  Agreement, subject to a minimum payment under this subparagraph 4.1(b) of
                  ____________ ($_________) Dollars and a maximum payment under this
                  subparagraph 4.1(b) of ___________ ($__________) [Instruction: Insert
                  applicable terms.] United States Dollars, and less the payment for the Option
                  Period under Paragraph 1 above.

         Upon the exercise of the option by the Purchaser, the Owner shall be deemed to have
         assigned to the Purchaser the Patent Rights.

5.       WARRANTIES REGARDING PATENT

5.1      The Owner warrants to the Purchaser that:

         a.       The Owner is the sole legal owner of all of the rights incident to the Patent and
                  has sole and complete authority to grant the rights in and to the Patent to the
                  Purchaser according to this Agreement;

         b.       The Patent does not contain material that infringes the copyright, privacy rights,
                  publicity rights or any other rights of any person or entity;

         c.       The Owner has not granted to any person or entity, or in any way encumbered,
                  any of the Patent Rights which would be granted to the Purchaser if the option is
                  exercised, and the Owner will not do so during the Option Period or any
                  extensions thereof, it being understood that Purchaser's rights are exclusive with
                  respect to the rights granted under this Agreement; and

         d.       The Owner is not aware of any legal proceedings or threat of such proceedings or
                  any claim by any third party concerning the Owner’s rights to the Patent, the
                  Patent or Patent Rights.

5.2      The Owner agrees to pay all costs and losses of the Purchaser arising out of any breach of
         any of the above warranties, as evidenced by a final decision of a tribunal or a court of
         competent jurisdiction, or any settlement to which the Owner has agreed in writing. If

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         there is any third party claim involving any alleged breach of any of the warranties of the
         Owner contained in the preceding paragraph, the Option Period and any extensions
         thereof will automatically be extended until any such claim is no longer outstanding.
         Purchaser shall have no obligation to pay for any such additional extension of the Option
         Period in such instance. If such claim cannot be resolved to the reasonable satisfaction of
         the Purchaser, the Purchaser may, in addition to any other rights and remedies it may
         have, rescind this Agreement.

5.3      The Purchaser agrees to indemnify the Owner for any third party claims arising out of the
         use or other exploitation of any of the Patent Rights by the Purchaser, as evidenced by a
         final decision of a tribunal or a court of competent jurisdiction, or any settlement to
         which the Purchaser has agreed in writing; except to the extent such matters are covered
         by the Owner’s indemnity in the preceding paragraph or are caused by any breach of this
         Agreement by the Owner or Owner's negligence.

6.       CONFIDENTIALITY

6.1      The Purchaser shall not at any time without the consent of the Owner make any
         disclosure or supply any information to the public or to any third party in relation to any
         financial matters arising under this Agreement, except to the Purchaser’s employees,
         associates, professional advisors, in connection with financing, the Owner and except as
         required by law. The Owner may disclose this Agreement and all details thereof to third
         parties as Owner reasonably requires.

7.       NOTICE

7.1      Any notice to be given under this Agreement shall be in writing and shall be delivered
         personally or sent by courier or by regular mail to the addresses shown below (or such
         changed address as provided in writing). Such notice shall be deemed to have been
         served immediately in the case of personal delivery or courier during business hours, and
         otherwise on the next business day, and in the case of regular mail, on the seventh
         business day after mailing.

         The address for Owner is:


         *
         [Instruction: Insert Owner’s address.]

         The address for Purchaser is:




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       *

       [Instruction: Insert Purchaser’s address.]

8.     REMEDIES

8.1    The Owner agrees that in the event of any default of any of the terms of this Agreement
       by the Owner, in addition to the Purchaser’s right to commence an action at law for
       monetary damages, the Purchaser shall also be entitled to rescind this Agreement.

9.     ASSIGNMENT

9.1    The Purchaser may at any time, without the consent of the Owner, assign this Agreement
       to any person or entity who assumes in writing any outstanding obligations to the Owner
       and the Purchaser shall promptly notify the Owner of any such assignment.

10.    ADDITIONAL DOCUMENTS

10.1   Upon the execution of this Agreement and if requested to do so by the Owner, the
       Purchaser and the Owner shall execute any and all necessary documents to effect the
       transaction contemplated herein.

10.2   If the option is exercised by the Owner in accordance with the terms hereof, and if
       requested to do so by the Owner, the Owner shall execute the Assignment attached as
       EXHIBIT "A" hereto.

10.3   If requested to do so by the Purchaser, the Owner agrees to execute all such copies of
       EXHIBIT "A" as are necessary for the Purchaser to register such documents in patent
       registries in Canada, the United States and elsewhere.

10.4   If the option is exercised under this Agreement, this Agreement shall constitute a valid
       assignment of all Patent Rights. If the Owner reasonably requires further documents to
       provide evidence of this assignment of Patent Rights, the Owner shall execute further
       documents as requested by the Purchaser, at the Purchaser’s expense.

11.    GENERAL MATTERS

11.1   All rights not expressly granted to the Purchaser under this Agreement are reserved to the
       Owner.

11.2   The Purchaser hereby undertakes and warrants to use all reasonable diligence and effort
       and proceed with all due dispatch to exploit the Patent Rights so as to be in a position to
       exercise the option under this Agreement in accordance with the terms of this Agreement.

11.3  All sums payable under this Agreement are exclusive of any applicable taxes payable
      thereon. All payments under this Agreement are in United States Dollars. [Comment:
      The funds may be changed, however this will need to be conformed throughout if
      not in United States Dollars.]
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11.4     This Agreement shall be governed by the laws of the State of __________ and all
         disputes under this Agreement shall be subject to the exclusive jurisdiction of the courts
         of __________. [Instruction: Insert state and jurisdiction.] No waiver under this
         Agreement is valid unless obtained in writing. If any provision of this Agreement is
         judged by a court or tribunal of competent jurisdiction to be illegal, invalid, or
         unenforceable, such a finding shall in no way affect the legality, validity or enforceability
         of the remainder of this Agreement. The headings to the paragraphs of this Agreement
         shall not affect the interpretation of this Agreement. This Agreement may be executed
         and delivered in counterparts and by fax or in digital form, and such copies shall be
         legally binding on the parties. This Agreement is not binding on any party until executed
         by all parties. This Agreement is not subject to any guild terms or the terms of any
         collective agreement.

12.      ENTIRE AGREEMENT

12.1     This Agreement constitutes the entire agreement between the parties and replaces and
         cancels all previous negotiations, representations, understandings and agreements
         between the parties either oral or written with respect to the subject matter of this
         Agreement. No variation of any of the terms of this Agreement shall be valid unless such
         variation is agreed to in writing by all parties.

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date and
year first written above.

                                                                 (OWNER)
                                                                 Per:

                                                                                                     c/s
                                                                 Name:
                                                                 Title:
                                                                 I have authority to bind the Company.


                                                                 (PURCHASER)
                                                                 Per:

                                                                                                     c/s
                                                                 Name:
                                                                 Title:
                                                                 I have authority to bind the Company.




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                                                 EXHIBIT "A"




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