Common use of Option Grant and Exercise Clause in Contracts

Option Grant and Exercise. 3.1 University hereby grants to Company an option (the “Option”) to negotiate a royalty- bearing, limited term, world-wide exclusive license, with the right to sublicense, in the Field under the Patent Rights (“Option Rights”). During the term of this Agreement, Company will have the right to use the Patent Rights for research and development purposes only. 3.2 This exclusive option shall extend for a period of (_) [year/months] from the date of execution of this Agreement (“Option Period”). Until the end of this Option Period, University shall not offer these rights to any third party. 3.3 Company may exercise this Option by informing University of the identity of at least one (1) product or process in the Field, and by providing a written statement, reasonably satisfactory to University, of its intention and ability to develop such product or process under such Patent Rights for public use as soon as practicable, consistent with sound and reasonable business practices and judgment. 3.4 Upon exercise of the Option and for a reasonable period not to exceed ( ) [days/months], University agrees to negotiate in good faith to establish the terms of a license agreement granting Company exclusive rights to make, have made, use, and sell Licensed Products in the Field under terms customary in the trade. Such license agreement shall include at least the following provisions: license fees, royalty payments, the right to grant sublicenses, a commitment by Company and any sublicensee of Company to exert their best efforts to introduce the Licensed Products into public use as rapidly as practicable, the right of University to terminate the license should Company not meet specified due-diligence milestones, and indemnity provisions satisfactory to University. Before receiving such a license, Company shall outline for University its and/or its sublicensee’s capability and/or plans to introduce such Licensed Products into public use.