Yield Reconciliation Clause Samples
The Yield Reconciliation clause establishes the process for comparing actual production yields to expected or contractual yields in a transaction. Typically, this involves periodic reviews of output data, adjustments for discrepancies, and may require one party to compensate the other if the actual yield falls short or exceeds agreed benchmarks. Its core function is to ensure transparency and fairness in transactions where output quantities can vary, thereby minimizing disputes and aligning financial outcomes with real-world results.
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Yield Reconciliation. (a) During its performance of the Manufacturing Services, on an annual basis Patheon is expected to produce a certain yield of Product using Client-Supplied Material (the “Expected Yield”). The initial Expected Yield shall be calculated and mutually agreed by the Parties after the first [***] batches of commercial Product Manufactured by Patheon. Pending such agreement, the Expected Yield shall be [***], but shall not be contractually binding and the Parties acknowledge that this may not be attainable due to the limited experience that Patheon will have in Manufacturing commercial Product. Accordingly the Yield Reimbursement Payment and credit set out in Section 2.9(c) shall not apply to the first [***] batches of commercial Product Manufactured by Patheon.
(b) On a [***] basis during the Term, Patheon shall provide Client with a report in respect of the previous [***] and [***] to date showing:
(i) the number of vials of Products released to be delivered to Client in accordance with the terms of this Agreement in the applicable periods;
(ii) Patheon’s inventory of Client-Supplied Materials, quantity of Client-Supplied Materials that complies with Section 2.2(k) received at the Facility, Quantity Dispensed, Quantity Converted, and such additional information as the Parties may agree; and
(iii) the Achieved Yield in [***] and year to date, where “Achieved Yield” shall be calculated pursuant to an equation to be agreed by the Steering Committee taking into account Client-Supplied Materials that have expired as a result of a Patheon act or omission and any Client-Supplied Materials lost in the warehouse prior to and during Manufacture, but excluding (i) Client-Supplied Materials retained by Patheon as samples; (ii) Client-Supplied Materials contained in Product retained as samples; (iii) Client-Supplied Materials used in testing (if applicable); (iv) any agreed yield reductions arising from specific market related requirements such as visual inspection of the Product that are not part of normal processing and (v) Client-Supplied Materials received and used by Patheon pursuant to the Technical Transfer Agreement.
(c) In the event the Achieved Yield in any year after the date of Manufacture of the [***] of commercial Product is more than [***]% lower than the then-current Expected Yield for such year, (i) Patheon and Client will engage in good faith discussions to agree a remediation plan describing the steps to be taken to achieve the then-current Expected Yie...
Yield Reconciliation. On a quarterly basis, Manufacturer will provide Purchaser with consigned Material reconciliation reports for any consigned Material in the format of Exhibit 2.4 (f). On an annual basis, the average Production Yield Percentage will be compared to the Target Production Yield Percentage. Annually, if the average Production Yield Percentage is more than two percentage points (2%) below the Target Production Yield Percentage, Manufacturer shall reimburse Purchaser 100% of the value of Excess Yield Loss as set forth in Example 1 on Schedule A attached hereto. Manufacturer shall reimburse Purchaser accordingly for the Materials’ value based on Purchaser’s costs (as set forth on Schedule A). Annually, if the average Production Yield Percentage is more than two percentage points (2%) above the Target Production Yield Percentage, then Purchaser will pay or credit Manufacturer for 50% of the value of the Excess Yield Gain as set forth in Example 2 on Schedule A. Purchaser shall pay Manufacturer accordingly for the Materials’ value based on Purchaser’s costs (as set forth on Schedule A). Schedule A shall be amended annually by the Parties according to any cost change communicated by Purchaser to Manufacturer. For the avoidance of doubt, the yield reconciliation process shall not apply to the first ten (10) Batches supplied for new products under this Agreement. Annual financial obligations under this Section 2.4(f) will be calculated within sixty (60) days of the end of each year of the Term.