Common use of Component Costs Clause in Contracts

Component Costs. If Patheon incurs an increase in Component costs during the Year (for clarity, this excludes Client-Supplied Components), it may increase the Price for the next Year to pass through the additional Component costs at Patheon’s cost; provided, however, that in the event any proposed increase in the cost of a Component exceeds [***] of the cost for that Component upon which the most recent fee quote was based, and that a change of supplier is mutually agreed between Patheon and Client pursuant to Section 4.2(e), Patheon and Client will use commercially reasonable efforts to locate an equivalent alternative lower cost supplier for the applicable Component. If as a result of both parties’ efforts pursuant to Section 4.2(e) (but not if Patheon is acting alone) Patheon incurs a net decrease (including any rebates or discounts) in Component costs during the Year, the net cost savings will be [***] in accordance with Section 4.2(e) and it will decrease the Price for the next Year to pass through the additional Component cost savings allocated to Client (but not those allocated to Patheon). On or about [***] of each Year, Patheon will give Client information about the increase or decrease in Component costs which will be applied to the calculation of the Price for the next Year to reasonably demonstrate that any Price increase or decrease is in compliance with this Section 4.2(b). But Patheon will not be required to give information to Client that is subject to obligations of confidentiality between Patheon and its suppliers.