Common use of Safety Stock Clause in Contracts

Safety Stock. As requested by NeurogesX from time to time and at NeurogesX’s cost (in accordance with a budget agreed upon by the Parties in advance), LTS shall procure and maintain an additional quantity of Active Ingredient and other Raw Materials as a safety stock for its production of Patches hereunder (“Safety Stock”) subject to LTS’ available storage capacity. LTS shall [***] report to NeurogesX as requested, regarding the expenses incurred in procuring and maintaining the Safety Stock (documented and itemized in accordance with the budget), and the levels of inventory and use of such safety stock. LTS agrees to manage such levels of inventory and use of the Safety Stock in accordance with the reasonable requests of NeurogesX, and in any event LTS shall use the Safety Stock for the sole purpose of producing Patches for NeurogesX hereunder and shall use [***] to minimize expenses and wastage. When any unit of Safety Stock purchased at the expense of NeurogesX (“NeurogesX Stock”) is used in the production of Patches hereunder, NeurogesX shall receive a credit, in the amount of the price paid by NeurogesX for such unit of Safety Stock excluding the Active Ingredient and excluding any storage costs incurred by LTS with respect thereto, which may be applied against (i) the Transfer Price for the Patch or (ii) at NeurogesX’s option, the costs of procuring replacement NeurogesX Stock. ***Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.