Development Costs; Development Budget Clause Samples

Development Costs; Development Budget. (a) Each Party will be responsible for its costs incurred to perform the activities assigned to such Party in the Development Plan; provided that any Out-of-Pocket Costs incurred by either Party in the performance of such activity under the Development Plan will be shared by the Parties in accordance with Article 12 (Payments) (the “Shared Development Costs”), to the extent that such costs are set forth in the applicable Development Budget. (b) The Development Plan will include a written budget of any (i) Shared Development Costs, and (ii) Shared Prosecution Costs, Shared Out-Licensing Costs, Shared Regulatory Costs and Shared Insurance Costs expected to be incurred by each Party in connection with the Development Plan activities (the “Development Budget”). (c) Without limiting the foregoing, if either Party reasonably believes that its Out-of-Pocket Costs to perform the activities described in the then-current Development Plan will exceed the amounts set forth in the Development Budget included in such Development Plan (plus Allowable Overruns), then such Party may notify the JSC and propose modifications thereto in accordance with Section 6.3.2 (Initial Development Plan; Amendments to the Development Plan) (provided that, the Parties will use all reasonable efforts to mitigate any such Out-of-Pocket Costs) and the Parties will engage in good faith discussions through the JSC regarding (i) whether to increase the applicable amounts and (ii) if so, the amount of such increase. (d) In the event that the Parties, through the JSC, are unable to agree upon whether to increase the applicable amounts set forth in the Development Budget or the amount of said increase, then either Party may refer such matter to be resolved in accordance with Section 18.3 (Baseball Arbitration). In the event that an Expert resolves any such dispute with respect to the Development Budget by increasing the applicable amounts set forth in the Development Budget and such determination results in one Party not willing to bear such additional Out-of-Pocket Costs beyond the costs set forth in the then-current Development Budget (plus Allowable Overruns) (i.e., prior to such increase), then such Party will (i) have no obligation to perform the activities under the Development Plan that would cause its corresponding Out-of-Pocket Costs to exceed the applicable amounts in the then-current Development Budget (plus Allowable Overruns), and (ii) be deemed to have Opted-Out under Section 11.1.2 ...