Common use of Adjustment of Prices Clause in Contracts

Adjustment of Prices. (a) During the Initial Term, on an annual basis, Supplier will review and may adjust Product Prices to reflect changes in cost of production (including costs related to raw materials, labor (direct/indirect), equipment, maintenance, production systems, packaging, quality control, research and development, analytics, utilities, insurance, depreciation, building/rent, warehousing, waste disposal, environmental, health & safety, administrative overhead, order management, procurement, and general administration) for each of the Products. Supplier anticipates that such changes will become effective in January of each year during the term of the Agreement and will be communicated at least thirty (30) days prior to taking effect. Additionally, if the price of any component of the manufacturing or production cost of a Product has changed by at least ten percent (10%) relative to the price Supplier or any relevant Affiliate was paying at the time of the last price adjustment, Supplier will adjust such Product Price upon thirty (30) days’ prior written notice and not more than once in any calendar quarter. The adjusted Product Price will apply to any pending and accepted Orders. Supplier may include in any price adjustment of a Product made pursuant to this Section 6.2 such amount as allows Supplier to maintain the gross margin rate that was in place on the Effective Date. In connection with any adjustment to a Product Price, Supplier will provide Purchaser with a reasonable supporting explanation of the rationale for the adjustment.