Common use of OOS Option Clause in Contracts

OOS Option. (a) Oculus hereby grants to Ruthigen an exclusive option (the “OOS Option”), subject to receipt by Oculus of a written notice of OOS Option exercise and payment of the OOS License Fee (as defined below), to extend the Field in the Territory of the license granted to Ruthigen in Section 2.1(a) above to include the Indications. Oculus reserves the worldwide right to make, have made, use, sell, offer to sell, have sold and import products and services for the Indications in all fields (but not to authorize Third Parties to make, use, sell, have sold or import products and services for the Indications in the Field in the Territory. Ruthigen may exercise the OOS Option by delivering to Oculus a written notice of intent to exercise prior to the fifth (5th) anniversary of the Effective date, and such exercise shall be effective upon Oculus’ receipt of payment in full of the OOS License Fee. Upon exercise of the OOS Option, the Field shall automatically be extended to include the Indications and subject to the license set forth in Section 2.1(a), subject, however, to existing licenses and distribution arrangements as of such date of exercise. If and when Ruthigen exercises the OOS Option, Oculus shall cease all activities in respect of the Indications in the Field in the Territory. (b) The OOS Option License Fee shall be (i) at any time prior to the two-year anniversary of the Effective Date, ten million dollars ($10,000,000), and (ii) at any time after two years after the Effective Date and prior to the fifth (5th) anniversary of the Effective Date, Ruthigen shall pay ten million dollars ($10,000,000) plus all Out of Pocket Costs expended or incurred by Oculus in the development of one or more Products for any of the Indications until the date of exercise (the “OOS License Fee”). The OOS License Fee shall be payable by Ruthigen in cash within thirty (30) days after Ruthigen delivers the written notice of exercise to Oculus. For purposes of the OOS Option, “Out of Pocket Cost” means a cost or expense paid to non-employee service providers or providers of materials that can be completely attributed to the Development of a Product for any of the Indications and includes materials, outside labor and services and expenses, but excludes administrative expenses, overhead and depreciation.