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Option Agreement template
Option Agreement sample


What is Option Agreement?

Option Agreement Grants the right to purchase or lease assets in the future, specifying the option price, duration, and exercise conditions.



Sample template:



OPTION AGREEMENT


This Option Agreement (hereinafter referred to as the "Agreement") is made and entered into on [Date], by and between Metropolitan Properties Holdings INC, a corporation incorporated under the laws of the United States, with its principal place of business at [Address] (hereinafter referred to as the "Seller") and Capital Ventures Partners LLC, a limited liability company incorporated under the laws of the United States, with its principal place of business at [Address] (hereinafter referred to as the "Option Holder").

1. GRANT OF OPTION

1.1. Option Rights


The Seller hereby grants to the Option Holder an exclusive and irrevocable right and option (the "Option") to purchase all or any part of the real property, together with all improvements thereon, legally described as [Property Description] (the "Property"), upon the terms and conditions set forth in this Agreement.



1.2. Option Price


The purchase price for the Property, if the Option is exercised, shall be [Option Price] (the "Option Price"), subject to any changes or adjustments as provided in this Agreement.



1.3. Option Duration


The Option shall be exercisable at any time during [Option Duration] (the "Option Period"), commencing on the date of this Agreement and terminating at 11:59 PM on the last day of the Option Period, unless the parties mutually agree, in writing, to extend the Option Period. In the event the Option Holder does not exercise the Option within the Option Period, the Option shall automatically and without notice be deemed to have expired and become null and void.



2. EXERCISE OF OPTION

2.1. Exercise Notice


To exercise the Option, the Option Holder shall deliver to the Seller a written notice (the "Exercise Notice"), specifying the Option Holder's election to exercise the Option, the purchase price of the Property, and the proposed closing date, which date shall be no earlier than [30] days, and no later than [60] days, from the date of the Exercise Notice.



2.2. Payment of Exercise Price


Upon exercising the Option, the Option Holder shall pay the Option Price to the Seller by wire transfer of immediately available funds, cashier's check, or other method mutually acceptable to the parties within the timeframe specified in the Exercise Notice.



2.3. Closing


The closing of the sale of the Property pursuant to the exercise of the Option (the "Closing") shall occur on the date specified in the Exercise Notice, or such other date as the parties may mutually agree. At the Closing, the Seller shall deliver to the Option Holder a duly executed and acknowledged deed conveying the Property, free and clear of all encumbrances, except as otherwise provided in this Agreement, and the Option Holder shall pay the balance of the Option Price, as adjusted according to the terms of this Agreement.



3. REPRESENTATIONS AND WARRANTIES

The Seller and the Option Holder hereby represent and warrant to each other that:



  1. They have the full power and authority to enter into this Agreement and to perform their respective obligations hereunder;

  2. This Agreement has been duly executed and delivered by them and constitutes a legal, valid, and binding obligation, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, or other similar laws affecting creditors' rights generally and the exercise of judicial discretion in accordance with general principles of equity;

  3. There are no pending or, to their knowledge, threatened claims, litigations, or proceedings against either of them that could impair or adversely affect their performance under this Agreement.



4. GOVERNING LAW AND DISPUTE RESOLUTION

This Agreement shall be governed by and construed in accordance with the laws of the United States. Any dispute arising out of or in connection with this Agreement shall be finally settled by arbitration in accordance with the Rules of the American Arbitration Association, by one or more arbitrators appointed in accordance with the said Rules.



5. MISCELLANEOUS

5.1. Entire Agreement


This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof, and supersedes all prior understandings and agreements, whether oral or written, between the parties relating to the subject matter hereof.



5.2. Amendments and Waivers


No amendment or waiver of any provision of this Agreement shall be valid unless in writing and signed by both parties hereto. No waiver by any party hereto of any breach of any provision of this Agreement shall be deemed a waiver of any other breach of the same or any other provision of this Agreement.



5.3. Counterparts


This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.



5.4. Headings


The headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.



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

Metropolitan Properties Holdings INC
By: ____________________
Name: ___________________
Title: ____________________

Capital Ventures Partners LLC
By: ____________________
Name: ___________________
Title: ____________________

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Common Sections of an Option Agreement


In this Option Agreement, you will see the following sections:

  1. Grant of Option
  2. Exercise of Option
  3. Representations and Warranties
  4. Governing Law and Dispute Resolution
  5. Miscellaneous


Analysis/Summary of each section

  1. Grant of Option : This section explains that the Seller is giving the Option Holder the exclusive right to buy the property at a specified price during a certain time frame. Think of it like a reservation at a restaurant: the Option Holder has a guaranteed spot to buy the property if they choose to do so within the given time.

  2. Exercise of Option : This part outlines the steps the Option Holder must take to actually buy the property, such as sending a written notice and paying the agreed-upon price. It also discusses the closing process, where the property is officially transferred to the Option Holder. It's like finalizing the purchase of a car: you've agreed on the price and now you're signing the paperwork and handing over the money.

  3. Representations and Warranties : In this section, both parties promise that they have the authority to enter into the agreement and that there are no legal issues that would prevent them from fulfilling their obligations. It's like a seller assuring a buyer that the car they're selling is in good condition and they have the right to sell it.

  4. Governing Law and Dispute Resolution : This part states that the agreement is governed by the laws of the United States and that any disputes will be settled through arbitration. It's like agreeing to play a game by a specific set of rules and having a referee to resolve any disagreements.

  5. Miscellaneous : This section covers various additional terms, such as stating that the agreement is the entire understanding between the parties and that any changes must be in writing. It also covers how the agreement can be signed in multiple copies and that the headings are for reference only. Think of it as the "fine print" that clarifies and ties up any loose ends in the agreement.

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