Common use of Guardrails Clause in Contracts

Guardrails. 12.1 In order to avoid significant cost incurrence or loss by the Distributor or its Affiliates, and for purposes of maintaining adequate service levels and the Pre-Effective Date Distribution Form hereunder, and to retain the pricing terms set forth in Section 11 (which are in part based on space and resource requirements at current volumes), Supplier shall, and shall cause its Affiliates to, at all times during the term, ensure the volumes of all Products maintained in each Facility during each month of the Term, on a Facility-by-Facility basis, are within plus-or-minus twenty percent (+/- 20%) of the average inventory stock of the Products in such Facility over the twelve (12) month period immediately preceding the Commencement Date (with respect to each such Facility, the “Guardrail”). For the avoidance of doubt, the “Suzhou 3” manufacturing plant will be the sole exception, with no guardrails in place with regards to minimum or maximum volume, in accordance with the agreement in place with respect to the “Suzhou 3” manufacturing plant. Without limiting the foregoing, if the Supplier becomes aware of circumstances (including, for clarity, inventory-level management) that could result in such volumes of Products at any Facility exceeding the applicable Guardrail therefor, Supplier will promptly notify Distributor thereof and the Parties will discuss in good faith potential operational adjustments to be mutually agreed in an effort to accommodate such volumes, provided that (i) the Supplier will bear all fees and costs associated therewith, which shall be deemed to be “Reimbursable Costs” hereunder and paid to Distributor in accordance with Section 11, (ii) such adjustments shall not create volume or space limitations on or otherwise adversely affect Distributor’s or its Affiliates’ businesses, and (iii) the Guardrail shall continue to apply except as and to the extent specifically agreed otherwise by the Parties in writing; provided further that, without limiting the foregoing clause (i), both Parties will use commercially reasonable efforts to mitigate any cost or loss that they may suffer or incur. For the avoidance of doubt, the Distributor shall not be obligated to place any purchase order for stocks or store or warehouse or hold buffer stocks that would exceed the Guardrail unless mutually agreed upon by both Parties. 12.2 For each Territory, Supplier shall provide to Distributor, on the Commencement Date, a detailed written assessment of volumes of Products and all storage requirements therefor with respect to each Facility, together with a written forecast of such volumes, reflecting Supplier’s reasonable and good faith projections, with respect to each month during the initial twelve (12) months following the Commencement Date. Supplier shall update such forecast in writing to Distributor on a quarterly basis, reflecting Supplier’s reasonable and good faith projections, with respect to each month during the twelve (12) months following the date of such update. Without limiting the foregoing, Supplier shall reasonably promptly notify Distributor in writing if Supplier plans to shift any material portion of volumes (i.e., twenty percent (20%) or greater) of Product from any Territory to a different Territory or from any Facility to a different Facility. 12.3 For purposes of this Section 12, “Facility” shall mean each warehouse, distribution center or other facility used in connection with any Products hereunder.

Guardrails. 12.1 In order to avoid significant cost incurrence or loss by the Distributor Service Provider or its Affiliates, and for purposes of maintaining adequate service levels and the Pre-Effective Date Distribution Service Form hereunder, and to retain the pricing terms set forth in Section 11 (which are in part based on space and resource requirements at current volumes), Supplier Service Recipient shall, and shall cause its Affiliates to, at all times during the term, ensure the volumes of all Products maintained in each Facility during each month of the Term, on a Facility-by-Facility basis, are within plus-or-minus twenty percent (+/- 20%) of the average inventory stock of the Products in such Facility over the twelve (12) month period immediately preceding the Commencement Region Effective Date (with respect to each such Facility, the “Guardrail”). For the avoidance of doubt, the “Suzhou 3” manufacturing plant will be the sole exception, with no guardrails in place with regards to minimum or maximum volume, in accordance with the agreement in place with respect to the “Suzhou 3” manufacturing plant. Without limiting the foregoing, if the Supplier Service Recipient becomes aware of circumstances (including, for clarity, inventory-level management) that could result in such volumes of Products at any Facility exceeding the applicable Guardrail therefor, Supplier Service Recipient will promptly notify Distributor Service Provider thereof and the Parties will discuss in good faith potential operational adjustments to be mutually agreed in an effort to accommodate such volumes, ; provided that (i) the Supplier Service Recipient will bear all fees and costs associated therewith, which shall be deemed to be “Reimbursable Costs” hereunder and paid to Distributor Service Provider in accordance with Section 1111.2.2, (ii) such adjustments shall not create volume or space limitations on or otherwise adversely affect DistributorService Provider’s or its Affiliates’ businesses, and (iii) the Guardrail shall continue to apply except as and to the extent specifically agreed otherwise by the Parties in writing; provided further that, without limiting the foregoing clause (i), both Parties will use commercially reasonable efforts to mitigate any cost or loss that they may suffer or incur. For Any adjustment to the avoidance Guardrail for any portions of doubtthe Term will be subject to the mutual written agreement of the Parties; provided that, for clarity, the Distributor Guardrail shall not be obligated continue to place apply without any purchase order for stocks or store or warehouse or hold buffer stocks that would exceed the Guardrail adjustment unless mutually agreed upon by both Partiesand until such adjustment is so agreed. 12.2 For each TerritoryRegion, Supplier Service Recipient shall provide to DistributorService Provider, on the Commencement Region Effective Date, a detailed written assessment of volumes of Products and all storage requirements therefor with respect to each Facility, together with a written forecast of such volumes, reflecting SupplierService Recipient’s reasonable and good faith projections, with respect to each month during the initial twelve (12) months following the Commencement Region Effective Date. Supplier Service Recipient shall update such forecast in writing to Distributor Service Provider on a quarterly basis, reflecting SupplierService Recipient’s reasonable and good faith projections, with respect to each month during the twelve (12) months following the date of such update. Without limiting the foregoing, Supplier Service Recipient shall reasonably promptly notify Distributor Service Provider in writing if Supplier Service Recipient plans to shift any material portion of volumes (i.e., twenty percent (20%) or greater) of Product from any Territory Region to a different Territory Region or from any Facility to a different Facility. 12.3 For purposes of this Section 12, “Facility” shall mean each warehouse, distribution center or other facility used in connection with any Products hereunder. 12.4 Without limiting the foregoing, (i) to the extent Service Provider requires a narrower Guardrail with respect to any Facility operated by Service Provider than the plus-or-minus twenty percent (+/- 20%) threshold described above, such narrower Guardrail shall apply to such Facility, and (ii) Service Recipient shall reasonably cooperate to ensure that all volume, packaging, size and other similar requirements are adhered to and the same pricing tiers applicable immediately prior to the Region Effective Date remain applicable at all times during the Term, taking into account the combined volumes of Products and any products of Service Provider or its Affiliates that are stored at or pass through the relevant Facility.