Common use of Cost Overruns and Discretionary Funding Clause in Contracts

Cost Overruns and Discretionary Funding. If a Party believes that it shall need to incur Development Costs or Research Costs, to complete a particular task assigned to such Party in the Research Program or a Development Program, in excess of the budget allocated to such Party for such task in the Research Program or a Development Program (as applicable), such Party shall raise such cost-overrun issue with the JSC as soon as practicable, including the cause of such cost-overrun. The JSC shall discuss such issue promptly and determine if the cost-overrun would be caused by a matter outside such Party’s control, in which case the JSC shall amend the applicable budget to cover a reasonable amount of additional Development Cost or Research Cost to be incurred by such Party in completing such task. If the JSC determines in good faith that such cost-overrun would not be caused by a matter outside the Party’s control (that is, results or will result from such Party’s fault), then such Party shall be required to bear at its sole expense the extent of such cost-overrun (that is, the amount of costs beyond the established budget that are required to complete such task), and such cost-overrun costs shall not be included in the shared Development Costs or shared Research Costs. Further, a Party may, at its reasonable discretion, elect to incur and expend costs or expenses in conducting its activities under the Research Program or a Development Program that are in excess of the budget set forth therein, provided that such Party bears all such additional “discretionary” costs or expenses at its sole expense and does not include them in the shared Development Costs or Research Costs (unless otherwise agreed by the JSC or the other Party in writing). For clarity, the issue of cost-overruns, and the adjustment of any budget to address cost-overruns, shall be resolved by arbitration pursuant to Section 10.7 and shall not be subject to Astellas’s final decision-making at the JSC under Section 2.1.4.