Common use of Component Supply Clause in Contracts

Component Supply. 6.1 Active Drug Substance and Compressil. CEPHALON will provide free of charge, and deliver to CATALYTICA at its designated production facility not less than sixty (60) days in advance of the delivery date of Product, appropriate quantities of Active Drug Substance and Compressil which meet the specifications established in Schedule A. Following such delivery, CATALYTICA shall assume full responsibility for the safekeeping and safe handling, and shall bear all risk of loss (subject to the agreed yield loss as described below), of all such Active Drug Substance and Compressil that is in its possession. Legal title to all Active Drug Substance and Compressil will remain with CEPHALON, provided however, that CATALYTICA shall reimburse CEPHALON for the actual documented replacement cost of any Active Drug Substance and Compressil that is lost, contaminated, or destroyed while in the possession of CATALYTICA (subject to the agreed yield loss as described below). CATALYTICA will use its commercially reasonable best efforts to obtain maximum yield of Product from the Active Drug Substance provided by CEPHALON in connection with the formulation and packaging services provided hereunder. The parties anticipate that the combined yield loss suffered in the course of formulating and packaging the Product in any given lot will not exceed [**]. Yield loss is defined as: Yield Loss = 100 (modafinil - (tablets)(dose))/modafinil where modafinil = starting modafinil amount in granulation, gram tablets = total number of tablets produced = (total packages) (quantity per package) or for bulk tablets: = (total tablet weight, gram) / (nominal tablet weight, gram) [**] [**] Notwithstanding the above, if the yield loss over any given twelve-month period during the term hereof exceeds [ ], then CATALYTICA will reimburse CEPHALON for its actual documented costs for that amount of Active Drug Substance lost that exceeds the aforementioned [**] maximum threshold.