Exhibit 10.43

 

EXECUTION COPY

 

***Text Omitted and Filed Separately

with the Securities and Exchange Commission.

Confidential Treatment Requested

Under 17 C.F.R. Sections 200.80(b)(4)
and 240.24b-2

 

EXENATIDE ONCE WEEKLY SUPPLY AGREEMENT

 

This EXENATIDE ONCE WEEKLY SUPPLY AGREEMENT (“Agreement”) is entered into as of
October 16, 2008, by and between Amylin Pharmaceuticals, Inc. (“Amylin”), a
Delaware corporation, and Eli Lilly and Company (“Lilly”), a corporation
organized and existing under the laws of the State of Indiana. Amylin and Lilly
are sometimes referred to herein individually as a “Party” and collectively as
“Parties”. References to “Amylin” and “Lilly” and “Party” or “Parties” shall
include their respective Affiliates.

 

RECITALS

 

1.                                       Amylin and Lilly are parties to that
certain Collaboration Agreement, effective September 19, 2002, as amended to
date, pursuant to which Amylin and Lilly have agreed to cooperate in the
development, manufacturing and marketing of Exenatide Once Weekly (the “EQW
Product”, as defined below).

 

2.                                       Under the terms of the Collaboration
Agreement, Amylin is responsible for sale of EQW Product in the U.S. and Lilly
is responsible for the sale of EQW Product in the Territory outside the U.S.

 

3.                                       In furtherance of the goals set forth
in the Collaboration Agreement, the Parties desire to enter into this Agreement
whereby Lilly will agree to purchase from Amylin and Amylin will agree to supply
to Lilly the EQW Product in commercial quantities intended for commercial sale
in the Territory outside the U.S., all on the terms and conditions set forth
herein. In addition, the Parties desire to define how certain costs and expenses
will be applied and allocated for EQW Product intended for commercial sale in
the U.S.

 

1

--------------------------------------------------------------------------------

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained in this Agreement, the Parties hereby agree as follows:

 

ARTICLE 1
DEFINITIONS 

 

When used and capitalized in this Agreement (other than the headings of the
Articles and Sections), including the foregoing Recitals, the following terms
will have the meanings assigned to them in this Article 1 and include the plural
as well as the singular. Capitalized terms not otherwise defined herein will
have the meaning assigned to them in the Collaboration Agreement.

 

1.1                               “Actual Component Manufacturing Cost” means
those costs actually incurred by Amylin for the acquisition and release of
Components from Third Party Suppliers, including an appropriate allocation of
any overhead costs. Such costs include, but are not limited to:  (i) the landed
cost of purchased materials, including, without limitation, invoice price,
outside processing costs, freight, duties, storage fees and brokers fees (volume
or trade discounts will be reflected in the calculation); (ii) conversion costs
(including, without limitation, direct labor and direct overhead) directly
associated with the releasing and shipping of Components;  (iii) replacement
costs for Components that are determined to be defective or recalled during the
quality control process or for Components that are returned to Amylin from Lilly
or to Third Party Suppliers from Amylin; (iv) Component breakage, damage and
manufacturing losses; (v) obsolete Components; and (vi) to the extent
attributable to the acquisition of Components, any other costs considered
inventory costs or Costs of Products Sold under Generally Accepted Accounting
Principles. Amylin shall share details relating to the Actual Component
Manufacturing Cost in detail and frequency as Lilly may reasonably request.

 

1.2                               “Actual Manufacturing Cost” means those costs
actually incurred by Amylin or Lilly for the acquisition of materials from Third
Party Suppliers or Lilly, and Manufacture and conversion into EQW Product. Such
costs include, but are not limited to:

 

(A)                                  THE LANDED COST OF PURCHASED MATERIALS,
INCLUDING, WITHOUT LIMITATION, INVOICE PRICE, OUTSIDE PROCESSING COSTS, FREIGHT,
DUTIES, AND BROKERS FEES (VOLUME OR TRADE DISCOUNTS WILL BE REFLECTED IN THE
CALCULATION);

 

2

--------------------------------------------------------------------------------

 

(B)                                 CONVERSION COSTS DIRECTLY ASSOCIATED WITH
THE MANUFACTURE OF EQW PRODUCT AT THE FACILITY INCLUDING DIRECT LABOR AND DIRECT
OVERHEAD COSTS;

 

(C)                                  AN APPROPRIATE ALLOCATION OF THE ACTUAL
INDIRECT OVERHEAD COSTS DIRECTLY ASSOCIATED WITH THE MANUFACTURE OF EQW PRODUCT
INCURRED BY AMYLIN AT THE FACILITY;

 

(D)                                 AN APPROPRIATE ALLOCATION OF COSTS BASED ON
ACTUAL HEADCOUNT AND ACTUAL FTE RATE INCURRED BY AMYLIN  OUTSIDE OF THE FACILITY
BUT DIRECTLY ASSOCIATED WITH  THE MANUFACTURE OF EQW PRODUCT, INCLUDING BUT NOT
LIMITED TO THOSE ITEMS AS SET FORTH ON EXHIBIT A;

 

(E)                                  DEPRECIATION OF EQW PRODUCT-SPECIFIC
CAPITAL INVESTMENTS AT THE FACILITY (NOT INCLUDING THE FINANCING CHARGE FOR THE
INITIAL CAPITAL INVESTMENT OR DEPRECIATION OF CAPITALIZED INTEREST FOR THE
CAPITAL INVESTMENTS MADE AT THE FACILITY);

 

(F)                                    EQW PRODUCT BREAKAGE, DAMAGE AND
MANUFACTURING LOSSES;

 

(G)                                 AN ALLOCATION OF THE DEPRECIATION OF THOSE
CAPITAL INVESTMENTS NET OF CAPITALIZED INTEREST IN AND FOR AMYLIN’S SAN DIEGO
QUALITY CONTROL LABORATORY TO THE EXTENT SUCH CAPITAL INVESTMENTS DIRECTLY
SUPPORT MANUFACTURE OF THE EQW PRODUCT;

 

(H)                                 AN ALLOCATION OF DEPRECIATION OF THOSE
CAPITAL INVESTMENTS LOCATED AT THIRD PARTY SUPPLIERS BUT OWNED BY AMYLIN TO THE
EXTENT SUCH CAPITAL INVESTMENTS DIRECTLY SUPPORT MANUFACTURE OF THE EQW PRODUCT;

 

(I)                                     REPLACEMENT COSTS FOR EQW PRODUCT THAT
IS DETERMINED TO BE DEFECTIVE OR RECALLED DURING THE QUALITY CONTROL PROCESS OR
FOR EQW PRODUCT THAT IS RETURNED TO AMYLIN FROM LILLY OR ANY CUSTOMER OR TO
THIRD PARTY SUPPLIERS FROM AMYLIN;

 

(J)                                     AMORTIZATION OF ANY PRE-PAID ASSETS OF
AMYLIN AT A THIRD PARTY SUPPLIER IN ACCORDANCE WITH THE TERMS OF THE AGREEMENT
WITH ANY SUCH THIRD PARTY SUPPLIER, AS WELL AS AN APPROPRIATE CARRYING COST OF
SUCH PREPAID ASSETS CALCULATED IN ACCORDANCE WITH SECTION 1.2(L) BELOW;

 

(K)                                  TO THE EXTENT ATTRIBUTABLE TO THE
MANUFACTURE OF EQW PRODUCT, ANY OTHER COSTS CONSIDERED INVENTORY COSTS OR COSTS
OF PRODUCTS SOLD UNDER GENERALLY ACCEPTED ACCOUNTING PRINCIPLES;

 

(L)                                     AN APPROPRIATE CARRYING COST APPLIED TO
THE ENDING MONTHLY INVENTORY UTILIZING THE INTEREST RATE AGREED TO IN THE LETTER
AGREEMENT BETWEEN THE PARTIES DATED JUNE 12, 2006 (THE “LETTER AGREEMENT”); AND

 

3

--------------------------------------------------------------------------------

 

(M)                               AN ALLOCATION OF LILLY RESOURCES DIRECTLY
ASSOCIATED WITH  MANUFACTURE OF EQW PRODUCT CHARGED AT THE ACTUAL FTE RATE AND
ANY OTHER EXPENSES INCURRED BY LILLY DIRECTLY ASSOCIATED WITH THE MANUFACTURE OF
EQW PRODUCT AS AGREED TO IN ADVANCE BY THE PARTIES.

 

ALL OF THESE COSTS AND THE METHODOLOGY TO BE USED IN ALLOCATING INDIRECT OR
OVERHEAD COSTS AMONG MANUFACTURING OPERATIONS HEREUNDER AND OTHER AMYLIN
MANUFACTURING OPERATIONS, AND AMONG EQW PRODUCT MANUFACTURED PURSUANT TO THIS
AGREEMENT SHALL BE DETERMINED IN A MANNER CONSISTENT WITH GENERALLY ACCEPTED
ACCOUNTING PRACTICES, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR AS OTHERWISE
AGREED BY THE PARTIES. AMYLIN SHALL SHARE REASONABLE DETAILS RELATING TO THE
ACTUAL MANUFACTURING COST. THE PARTIES AGREE TO ANNUALLY REVIEW THE INTEREST
RATE SET FORTH IN THE LETTER AGREEMENT AND SECTION 1.2(L) ABOVE.

 

FOR THE AVOIDANCE OF ANY DOUBT, THE ACTUAL MANUFACTURING COSTS FOR EQW PRODUCT
SOLD EITHER IN THE U.S. OR IN THE TERRITORY OUTSIDE THE U.S. SHALL BE CALCULATED
USING THE SAME METHODOLOGY THROUGH THE NUDE VIAL STAGE OF PRODUCTION, WITH THE
EXCEPTION THAT ANY OUS-SPECIFIC COSTS (E.G., OUS-SPECIFIC ANALYTICAL TESTING)
WOULD BE CHARGED [***]% TO OUS PRODUCT. FOLLOWING THE NUDE VIAL STAGE OF
PRODUCTION, PRODUCT DESTINED FOR THE US MARKET WOULD INCUR ADDITIONAL COSTS
RELATED TO SUBSEQUENT STEPS IN THE MANUFACTURING PROCESS INCLUDING, BUT NOT
LIMITED TO, LABELING, PACKAGING, STORAGE AND DISTRIBUTION AND WOULD BE CHARGED
[***]% TO US PRODUCT. REVISIONS TO ALLOCATIONS AND METHODOLOGY WILL NOT BE MADE
DURING THE YEAR WITHOUT THE APPROVAL OF THE MSC.

 

Any incremental costs for the Manufacture of EQW Product for which the primary
benefit of such cost will be in a Territory outside the U.S. shall be attributed
[***]% to the Actual Manufacturing Cost for the EQW Product to be sold in the
Territory outside the U.S. and paid by Lilly hereunder if agreed to in advance
by the Parties. Likewise, any incremental costs for the Manufacture of EQW
Product for which the primary benefit of such cost will be the U.S. Territory,
such as packaging, shall be attributed one hundred percent ([***]%) to the
Actual Manufacturing Cost  for the EQW Product to be sold in the U.S. if agreed
to in advance by the Parties.

 

The foregoing definition of Actual Manufacturing Cost assumes all of the
manufacturing capacity of the Facility will be used to Manufacture EQW Product;
if at any time during the term of this Agreement this is not the case, then this
definition shall be modified as set forth in Section 4.9(b) below.

 

1.3                               “Applicable Laws” means all applicable U.S.
statutes, ordinances, regulations, rules or orders, including, without
limitation, the FD&C Act, the Regulatory Law, Prescription

 

***Confidential Treatment Requested

 

4

--------------------------------------------------------------------------------

 

Drug Marketing Act, Generic Drug Enforcement Act of 1992 (21 U.S.C. §3359, et.
seq.), Anti-Kickback Statute (42 U.S.C. §1320 a-7b, et. seq.), Resource
Conservation and Recovery Act, Clean Water Act, Clean Air Act, the Drug
Enforcement Act, Occupational Safety and Health Act and cGMP, as well as
comparable laws of the European Union, all as amended from time to time.

 

1.4                               “ASC” will have the meaning set forth in
Section 2.1 of this Agreement.

 

1.5                               “Cartridge Supply Agreement” means the
Cartridge Supply Agreement, by and between Amylin and Lilly, dated as of
April 20, 2007.

 

1.6                               “cGMP” will mean current Good Manufacturing
Practices as detailed in “The Rules Governing Medicinal Products in the European
Community (EC) — Volume IV: Guide to Good Manufacturing Practice for Medicinal
Products” and the “US Current Good Manufacturing Practices (cGMPs) for Finished
Pharmaceuticals: 21 Code of Federal Regulations (CFR) Parts 11, 210 and 211, all
as amended from time to time, and any additional cGMPs promulgated by any
regulatory authority not described above and provided to Amylin by Lilly and
mutually agreed to between the Parties.

 

1.7                               “Collaboration Agreement” means the
Collaboration Agreement set forth in the Recitals of this Agreement, as such
agreement may be amended from time to time.

 

1.8                               “Components” means diluent, needles, stoppers,
plungers, backstops, packaging materials, and any other items as may be agreed
to by the MSC.

 

1.9                               “Effective Date” will have the meaning set
forth in Section 16.17 of this Agreement.

 

1.10                        “EQW Manufacturing Development Costs” shall mean
those Development Costs specifically related to developing the ability to
Manufacture EQW Product, including, without limitation, Manufacturing process
development and Manufacturing and quality assurance technical support, until
such time as Manufacturing of EQW Product intended for commercial sale
commences. For purposes of clarification, EQW Manufacturing Development Costs
shall not include any Development Costs which are solely attributable to
clinical studies of EQW Product, but may include costs relating to manufacturing
development irrespective of where those costs were incurred. All Amylin and
Lilly personnel costs, including without limitation direct and indirect
personnel costs, will be charged at actual FTE cost.

 

1.11                        “EQW Product” means the Product (whether to be used
as trade, sample or clinical trial material) or placebo developed as a
fixed-dose injection of exenatide administered once per week for diabetes and
any other Indications for which such Product may be approved

 

5

--------------------------------------------------------------------------------

 

for use and Manufactured by Amylin in finished form or in nude vials, including
any components thereof and associated packaging components.

 

1.12                        “Facility” means the manufacturing facility
commissioned by Amylin and located at 8814, 8848 and 8874 Trade Port Drive, West
Chester, Ohio, as such facility may be from time to time approved, expanded or
altered in accordance with this Agreement.

 

1.13                        “Five-Year Forecast” will have the meaning set forth
in Section 5.1(a) of this Agreement.

 

1.14                        “Force Majeure” will have the meaning set forth in
Section 16.14 of this Agreement.

 

1.15                        “Forecast” will have the meaning set forth in
Section 5.1 (b) of this Agreement.

 

1.16                        “Initial Capital Investment” shall mean the capital
investment made, and planned to be made, as of the Effective Date by Amylin in
and for the Facility for the Manufacture of the first generation EQW Product.
The Initial Capital Investment is currently anticipated to be approximately $530
million; however, a precise number will not be available until the Facility is
complete. A detailed estimate of the Initial Capital Investment, including
anticipated costs of equipment and estimates of their related useful life, is
set forth on Exhibit B.

 

1.17                        “Latent Defect” means defects that cause the EQW
Product to fail to conform to the Specifications or otherwise fail to conform to
the warranties provided pursuant to Section 10.8 (hereof, which defects are not
discoverable upon reasonable physical inspection as provided in Section 5.8(a).

 

1.18                        “Manufacture”, “Manufacturing” or “Manufactured”
means all operations involved in the manufacturing, quality control testing
(including in-process, disposition and stability testing), disposition
(releasing or rejecting), packaging and shipping of the EQW Product as more
fully described in the MRD.

 

1.19                        “MRD” means the Manufacturing Responsibilities
Document, which sets forth written instructions regarding the Manufacture and
other technical matters including, without limitation, testing procedures and
supply of the EQW Product under this Agreement. The Table of Contents of a
sample MRD is attached for reference only as Exhibit C.

 

1.20                        “MSC” will have the meaning set forth in Section 2.1
of this Agreement.

 

1.21                        “Party” or “Parties” will have the meaning set forth
in the first paragraph of this Agreement.

 

6

--------------------------------------------------------------------------------

 

1.22                        “Purchase Order” will have the meaning set forth in
Section 5.4 of this Agreement.

 

1.23                        “QLT” will have the meaning set forth in Section 2.3
of this Agreement.

 

1.24                        “Quality Agreement” means the quality agreement, as
revised and amended from time to time between the Parties, that describes
certain quality expectations and responsibilities relating to the Manufacture,
release testing and supply of the EQW Product to Lilly. The Parties acknowledge
that, if they so elect, there will be one Quality Agreement applicable for EQW
Product intended to be Commercialized in the U.S. and another Quality Agreement
applicable for EQW Product intended to be Commercialized in the Territory
outside the U.S. Exhibit D sets forth the areas to be addressed by the Parties
in the Quality Agreement.

 

1.25                        “Quality Audit” will have the meaning set forth in
Section 4.5(b) of this Agreement.

 

1.26                        “QWT” will have the meaning set forth in Section 2.3
of this Agreement.

 

1.27                        “Regulatory Authority” will have the meaning set
forth in Section 1.97 of the Collaboration Agreement.

 

1.28                        “Regulatory Lead” will have the meaning set forth in
Section 5.2(a) of the Collaboration Agreement.

 

1.29                        “SCWT” will have the meaning set forth in
Section 2.2 of this Agreement.

 

1.30                        “Specifications” for EQW Product means the
specifications and quality control testing procedures for the development,
Manufacturing, final release and testing of EQW Product and labeling and
packaging requirements, which may cover one or more versions of the EQW Product
including, without limitation, EQW Product having different physical features as
set forth in the applicable Marketing Approvals, as the same may be modified
from time to time by the Parties in accordance with the terms of the Agreement.
The Specifications will be agreed to in accordance with the terms of the Quality
Agreement.

 

1.31                        “Standard Cost” means the planned EQW Product
Manufacturing costs for each SKU divided by the production volume for such SKU
as agreed to by the Parties as part of the annual plan.

 

1.32                        “Successor Manufacturer” will have the meaning set
forth in Section 11.4(e) of this Agreement.

 

7

--------------------------------------------------------------------------------

 

1.33                        “Third Party Supplier” shall have the meaning set
forth in Section 4.7 of this Agreement.

 

ARTICLE 2

GOVERNANCE

 

2.1                               Governance of Activities. Lilly acknowledges
that Amylin shall be responsible for day-to-day operational management of the
Facility within the agreed-upon annual plan. Governance of activities
contemplated by this Agreement will be effected through the governance structure
established by the Parties, including the SCWT, the QLT, the Manufacturing
Strategy Committee (the “MSC”) and the Alliance Steering Committee (the “ASC”).
The Parties intend that MSC shall be responsible for oversight of the Facility
and the complete EQW Product supply chain, including, but not limited to the
following items:

 

(A)                                  OUTPUT REQUIREMENTS OF THE FACILITY;

 

(B)                                 OPERATIONAL PERFORMANCE TO PLAN OR REVISED
FORECAST;

 

(C)                                  ESTABLISHING AND OVERSEEING SUB-COMMITTEES,
AS IT DEEMS NECESSARY;

 

(D)                                 MAJOR CAPITAL PROJECTS;

 

(E)                                  ANNUAL AND LONG RANGE PLANS FOR EQW PRODUCT
SUPPLY; AND

 

(F)                                    SOURCING AND SUPPLY AGREEMENTS.

 

The MSC shall also be responsible for reviewing and recommending for approval
annual budgets and capital investments to the ASC under the timing described for
Binding Budgets in the Collaboration Agreement. MSC shall meet no less than four
times per year with agendas and pre-reads due at least five days in advance of
the meeting or as directed by the MSC.

 

The MSC will establish governance processes which define how information
(financials, operational performance, inventories, capital spend, etc.) will be
reported and reviewed on a periodic basis (initially proposed to be monthly).
MSC will also define the types and magnitude of decisions that it will delegate
to SCWT or other sub-committees and which are required to be agreed upon by the
Parties through the MSC structure.

 

8

--------------------------------------------------------------------------------

 

In the event that the parties, through the SCWT or other sub-committees as
established by the MSC, are unable to resolve any dispute in connection with
this Agreement, the SCWT or sub-committee shall refer such dispute to the MSC.
In the event that the parties, through the MSC, are unable to resolve any
dispute in connection with this Agreement, the MSC shall refer such dispute to
the ASC which has been established by mutual understanding between the Parties
in performance of their obligations under other agreements between the Parties.
If the issue can not be resolved by the ASC, then it shall be escalated to the
Chief Executive Officer of Amylin and an Executive Committee Member from Lilly.

 

2.2                               SUPPLY CHAIN WORKING TEAM. THE PARTIES HAVE
ESTABLISHED A SUPPLY CHAIN WORKING TEAM FOR THE EQW PRODUCT (THE “SCWT”). THE
FUNCTION OF THE SCWT SHALL BE TO PLAN, COORDINATE AND MANAGE SUPPLY CHAIN
ACTIVITIES FOR EQW PRODUCT, DEVELOP A RISK MANAGEMENT PLAN RELATED TO ENSURING
SUPPLY OF EQW PRODUCT, REVIEW OPERATIONAL PERFORMANCE OF SUPPLY CHAIN
ACTIVITIES, ENGAGE IN APPROPRIATE ACTIVITIES TO REDUCE SUPPLY CHAIN COSTS,
ESTABLISH CUSTOMER SERVICE LEVELS, SERVE AS A FORUM FOR COMMUNICATION FOR ANY
SUPPLY CHAIN ISSUES, AND RESOLVE DISPUTES RELATED TO SUPPLY CHAIN ISSUES BETWEEN
THE PARTIES.

 

THE SCWT WILL MEET AT SUCH OTHER TIMES AS ARE AGREED TO BY THE PARTIES, BUT NO
LESS THAN ONCE EACH QUARTER. SUCH MEETINGS MAY BE IN-PERSON, VIA VIDEO
CONFERENCE, OR VIA TELEPHONE CONFERENCE. AT LEAST FIVE (5) BUSINESS DAYS PRIOR
TO EACH SCWT MEETING, EACH PARTY WILL PROVIDE WRITTEN NOTICE TO THE OTHER PARTY
OF AGENDA ITEMS PROPOSED BY SUCH PARTY FOR DISCUSSION OR DECISION AT SUCH
MEETING, TOGETHER WITH APPROPRIATE INFORMATION RELATED THERETO. WRITTEN MINUTES
WILL BE KEPT OF ALL SCWT MEETINGS AND WILL REFLECT, WITHOUT LIMITATION, MATERIAL
DECISIONS MADE AT SUCH MEETINGS. RESPONSIBILITY FOR KEEPING MINUTES WILL
ALTERNATE BETWEEN THE PARTIES.

 

2.3                               QUALITY GOVERNANCE. THE PARTIES HAVE
ESTABLISHED AN ALLIANCE QUALITY WORKING TEAM (THE “QWT”) THAT MEETS ON A REGULAR
BASIS TO DISCUSS AND RESOLVE QUALITY-RELATED ISSUES AND TO REVIEW DATA AND/OR
PERFORM THE ACTIVITIES OUTLINED IN THE QUALITY AGREEMENT. PURSUANT TO THE
QUALITY AGREEMENT, THE PARTIES HAVE ALSO ESTABLISHED AN ALLIANCE QUALITY LEAD
TEAM (THE “QLT”) RESPONSIBLE FOR STRATEGIC QUALITY ISSUES THAT ARISE WITH
RESPECT TO THE EQW PRODUCT. IN THE EVENT THAT THE QWT IS UNABLE TO RESOLVE ANY
QUALITY-RELATED DISPUTES, THE QWT SHALL REFER SUCH DISPUTE TO THE QLT. FURTHER,
IF THE QLT IS UNABLE TO RESOLVE SUCH DISPUTE, THE QLT SHALL REFER SUCH DISPUTE
TO THE HEAD OF EACH PARTY’S QUALITY

 

9

--------------------------------------------------------------------------------

 

DEPARTMENT FOR RESOLUTION. IF DESPITE THEIR BEST EFFORTS, THE HEAD OF EACH
PARTY’S QUALITY DEPARTMENT ARE UNABLE TO RESOLVE SUCH DISPUTE, THEY SHALL REFER
SUCH DISPUTE TO THE MSC FOR RESOLUTION.

 

ARTICLE 3

PAYMENT OF DEVELOPMENT EXPENSES, PURCHASE AND SUPPLY OF EQW PRODUCT AND
COMPONENTS AND LIMITATION OF AGREEMENT

 

3.1                               EQW Manufacturing Development Costs.
Notwithstanding anything to the contrary in the Collaboration Agreement or any
previous formal or informal agreements between the Parties, the Parties agree
that Lilly shall be responsible for [***]% of EQW Manufacturing Development
Costs incurred up until commercial Manufacture of EQW product commences and
Amylin shall be responsible for [***]% of EQW Manufacturing Development Costs
incurred up until commercial Manufacture of EQW product commences. Going
forward, the MSC shall determine if EQW Development Costs relate to developing
capabilities to Manufacture for the U.S. and OUS markets or solely for either
the US or OUS market.

 

3.2                               Purchase of EQW Product Requirements. Subject
to the terms and conditions of this Agreement, Amylin will Manufacture EQW
Product for worldwide distribution; provided, however, that Amylin will not have
any responsibility to package EQW Product for the territory outside of the U.S.
Lilly shall purchase from Amylin, and Amylin shall supply and deliver to Lilly,
Lilly’s requirements for the EQW Product for sale by Lilly in the territory
outside the U.S. in accordance with Article 5 of this Agreement. If at any time
Amylin is not able to provide Lilly with the quantity of EQW Lilly desires to
purchase in accordance herewith because of the capacity limitations of the
Facility, the Parties agree to discuss in good faith how best to provide such
additional quantities of EQW Product including, without limitation, increasing
the capacity of the Facility and/or securing a Third Party manufacturer
(including, without limitation, Lilly) for EQW Product.

 

3.3                               US EQW Cost. The Cost of Product Sold to be
allocated to Adjusted US Operating Profit/Loss for any quarter as contemplated
by Section 4.5(a) of the Collaboration Agreement for EQW Product shipped to
non-Amylin, US distribution sites shall be based on the Standard Cost plus any
US specific costs and the US pro-rata portion of any variances for such quarter.

 

***Confidential Treatment Requested

 

10

--------------------------------------------------------------------------------

 

3.4                               OUS EQW Product Purchase Price. Lilly shall
purchase EQW Product from Amylin at a price per unit equal to the Standard Cost
plus any OUS specific costs and the OUS pro-rata portion of any variances for
such quarter. The purchase price for EQW Product purchased by Lilly in each
quarter will be included as part of the periodic reconciliation of Operating
Profits or Loss for such quarter as contemplated in Section 4.9 of the
Collaboration Agreement.

 

3.5                               [***] True-Up.

 

(a)  Within [***] after the end of each [***], Amylin shall calculate [***]
Average Unit Cost”. The [***] Average Unit Cost for any [***] shall be the
quotient of (i) the Actual Manufacturing Costs up through the nude vial stage
minus any US or OUS-specific costs divided by (ii) the total number of EQW
Product units Manufactured in such [***]. To the extent the average purchase
price per unit for any [***] paid by Lilly pursuant to Section 3.4 differs from
the [***] Average Unit Cost plus OUS-specific costs for such [***], such
difference will be included in the periodic reconciliation of Operating Profits
or Loss for the [***] as contemplated in Section 4.9 of the Collaboration
Agreement.

 

(b)  In addition, within [***] after the end of each calendar year, the Parties
agree to true-up the inventory carrying costs for the previous [***] by
re-calculating each [***] ending EQW Product inventory balance for the previous
[***] utilizing the Actual Manufacturing Cost in lieu of the Standard Cost.

 

3.6                               Purchase of Components. Lilly will define
those components it chooses to purchase through Amylin for the OUS market. Upon
agreement at the SCWT and subject to the terms and conditions of this Agreement,
Lilly shall purchase from Amylin, and Amylin shall cause to be delivered by the
applicable Third-Party Supplier to Lilly, Lilly’s requirements for any
applicable Components needed for final packaging that are not included in the
EQW Product delivered to Lilly by Amylin, all for sale by Lilly in the territory
outside the U.S. and in accordance with Article 5 of this Agreement. If at any
time a Third-Party Supplier is not able to provide Lilly with the quantity of
Components Lilly desires to purchase in accordance herewith, the Parties will
allocate supply following the procedures set forth in Section 5.3, below.

 

3.7                               Component Purchase Price. Lilly shall purchase
any Components from Amylin at a price per unit of such Component equal to the
Actual Component Manufacturing Cost for such Component.

 

***Confidential Treatment Requested

 

11

--------------------------------------------------------------------------------

 

Purchase Orders, as defined below, for Components will be submitted by Lilly
within [***] after the beginning of each [***] using a price provided by Amylin
based upon Amylin’s good faith estimate of the Actual Component Manufacturing
Cost for such Components for such [***]. Actual Component Manufacturing Costs
for Components purchased by Lilly in each [***] will be included as part of the
periodic reconciliation of Operating Profits or Loss for such [***] as
contemplated in Section 4.9 of the Collaboration Agreement.

 

3.8                               Capital Investments. The Initial Capital
Investment made by Amylin for the capital assets will be depreciated and
included in the Actual Manufacturing Costs as set forth in Article 1, but such
depreciation will not include a financing charge or capitalized interest for the
investment in the Facility, but may include capitalized interest for investments
outside the Facility. Any additional capital investments beyond the Initial
Capital Investment for Manufacturing of the EQW Product will be based upon the
Forecast and the [***] Forecast discussed in Section 5.1, below, recommendations
of the SCWT and the MSC, and the approval of the ASC. Projects will be grouped
into two categories:  projects with a scope less than [***] each (collectively,
“Minor Projects”), and projects with a scope greater than or equal to [***] each
(collectively, “Major Projects”). Projects classified as Minor but with an
anticipated spend greater than [***] must be listed individually. Amylin may
spend money on Minor Projects included in the first year Budget Summary without
prior approval by MSC. Amylin at their sole discretion may make trade-off
decisions for Minor Projects not included in the Budget Summary provided (i) the
spend for Minor Projects does not exceed the total approved Minor Project Budget
amount for that [***] and (ii) the trade-off does not replace a capital asset
required to meet Regulatory requirements. Spend for Major Projects must be
approved by the MSC prior to initiation of the project regardless of whether the
Project was included in the Budget Summary or not. MSC will take action on such
requests for approvals on a timely basis.

 

3.9                               Reimbursement for Financing Charge. Exhibit E
sets forth the terms by which Lilly will reimburse Amylin for Lilly’s portion of
the financing charges Amylin has incurred or will incur in making the Initial
Capital Investment in preparation for the Manufacture of EQW Product at the
Facility.

 

3.10                        Impairment. To the extent any or all of the Facility
cannot be used for the Manufacture of EQW, the Parties shall meet to discuss the
potential impairment of the Facility and the capital investments made outside
the Facility for the Manufacture of EQW. Exhibit F sets forth the capital
investments outside the Facility for the Manufacture of EQW as of

 

***Confidential Treatment Requested

 

12

--------------------------------------------------------------------------------

 

the date hereof. If the Parties agree to take an impairment charge relating to
the Facility and/or the capital investments made outside the Facility for the
Manufacture of EQW, Lilly will pay to Amylin an amount equal to either (i) in
the event the impairment charge is taken prior to the True-Up Date (as defined
in Exhibit E), [***], or (ii) in the event the impairment charge is taken after
the True-Up Date, the Lilly Percentage (as defined in Exhibit E) of any
impairment charge determined in accordance with GAAP for all  non-depreciated
capital investments in and for the Facility and the Manufacture of EQW less: 
(a) such portion of the financing charge for the Initial Capital Investment that
has not yet been amortized in accordance with Exhibit G, (b) any amount due to
Lilly under the Loan Agreement, plus any and all outstanding interest thereon,
(c) any other amounts due and payable to Lilly from Amylin at the time of the
impairment charge; and (d) any amounts for any assets that can otherwise be
utilized for other uses by Amylin; plus any other amounts due and payable to
Amylin from Lilly at the time of impairment charge. In the event any amounts are
recovered by Amylin after the impairment charge, such amounts shall be allocated
between Lilly and Amylin in the same proportions as the impairment charge.

 

3.11                        Audits. Each Party will have the right to audit the
other Party’s financial books and records relating to this Agreement and the
calculation of Actual Manufacturing Cost under the same terms and in the same
manner as set forth in Section 4.9(e) of the Collaboration Agreement.
Notwithstanding the foregoing, any non-financial audit conducted by Lilly under
this Agreement shall not count towards the annual limitation of one (1) audit
per year set forth in Section 4.9(e) of the Collaboration Agreement.

 

3.12                        Reporting.

 

(a)                                  Estimate of Actual Manufacturing Costs.
Amylin will provide to Lilly a report containing a good faith estimate of the
Actual Manufacturing Cost, in a format similar to and with the similar detail as
set forth in Exhibit H, within [***] prior to the end of each [***].

 

(b)                                 Actual Manufacturing Costs. Amylin will
provide to Lilly a report containing the Actual Manufacturing Cost, in a format
similar to and with the similar detail set forth in Exhibit H, within [***]
after the end of each [***].

 

(c)                                  Budget and Long Range Plan. MSC will
establish and maintain business processes to develop and monitor budgets, plans
and long-range plans.

 

***Confidential Treatment Requested

 

13

--------------------------------------------------------------------------------

 

1.               Budget Summary. On an [***], a budget summary shall be
developed covering the following [***]. Such budget shall reflect Amylin’s plan
at the time such budget is created, but shall not be binding on Amylin. MSC
shall  review on no less than [***] the actual performance relative to the plan
and shall agree upon any actions needed.

 

2.              Long-Range Plan. On an [***], a long-range plan for anticipated
EQW Product demand, capital and manufacturing costs will be developed, reviewed
and approved by MSC.

 

ARTICLE 4
MANUFACTURING AND QUALITY

 

4.1                               Quality Agreement. No later than [***] after
the Effective Date, the parties shall prepare and adopt the Quality Agreement.
The Parties shall review the Quality Agreement at least once [***] and shall
modify it from time to time as necessary through issuance of a revised version
of the Quality Agreement signed on behalf of each of the Parties by an
authorized representative incorporating the modification and stating the
effective date and revision number of the modification. The Quality Agreement
will be subject to and not inconsistent with the terms of this Agreement, the
Collaboration Agreement and the Specifications. In the event the information in
the Quality Agreement on the one hand, and this Agreement, the Collaboration
Agreement or the Specifications, as applicable, on the other hand, conflict,
this Agreement, the Collaboration Agreement or the Specifications, as
applicable, will control; provided, however that the Quality Agreement shall
control for any cGMP compliance related issues.

 

4.2                               Development of MRD. No later than [***] after
the Effective Date, the Parties shall prepare and adopt the MRD. The Parties
shall review the MRD at least once [***] and shall modify it from time to time
as necessary through issuance of a revised version of the MRD signed on behalf
of each of the Parties by an authorized representative incorporating the
modification and stating the effective date and revision number of the
modification. The MRD will be subject to and not inconsistent with the terms of
this Agreement, the Collaboration Agreement, and the Quality Agreement. In the
event the information in the MRD, on the one hand, and this Agreement, the
Collaboration Agreement or the Quality Agreement, on the other hand, conflict,
the terms of the Collaboration Agreement, this Agreement or the Quality
Agreement, as applicable, will control.

 

***Confidential Treatment Requested

 

14

--------------------------------------------------------------------------------

 

4.3                               Manufacturing. Subject to the terms and
conditions of this Agreement, Amylin will use its Commercially Reasonable
Efforts to Manufacture and supply EQW Product to Lilly, at the times and in the
quantities set forth by Lilly in a purchase order and subject, however, to the
quantity restrictions set forth in this Agreement. Amylin will ensure that each
shipment of the EQW Product delivered to Lilly:  (i) will have been manufactured
in accordance with the Specifications and cGMP in effect at the time of
Manufacture, (ii) will not be adulterated or misbranded within the meaning of
the FD&C Act, (iii) will not have been Manufactured or sold in violation of any
Applicable Laws  in any material respect, and (iv) will have been Manufactured
in accordance with applicable Marketing Approvals and all regulatory
requirements as defined in the applicable EQW Product registration (e.g.
European dossier) as provided by Lilly to Amylin.

 

4.4                               Modifications. The Parties anticipate that the
Specifications will be modified from time to time to reflect improvements or
modifications to the EQW Product. Each Party will provide the other with
reasonable advance notice of any proposed material modification and will consult
with, and consider in good faith, the reasonable comments of such other Party
regarding such proposed material modification. Any proposed modification to the
Manufacturing process or Specifications shall be approved by the MSC or such
subcommittee appointed by the MSC (subject to Section 5.2 of the Collaboration
Agreement) prior to implementation or filing with any Regulatory Authority. Any
modifications to the Manufacturing process or Specifications required by a
Regulatory Authority other than the FDA or The European Medicines Agency (the
“EMEA”) shall be solely paid for by Lilly. Prior to any approved change in the
Manufacturing process or Specifications, the Parties shall identify, and, if
needed, allocate between U.S. and O.U.S., all costs and risks, including
development costs, resulting from the changes, and a timeline for implementing
the changes.

 

(A)                                  EITHER PARTY WILL NOTIFY THE OTHER AS SOON
AS PRACTICAL OF ANY CHANGES TO ANY SPECIFICATIONS OR PROCEDURES THAT ARE
REQUIRED BY THE FDA, A REGULATORY AUTHORITY OR APPLICABLE LAWS THAT COULD HAVE
AN IMPACT ON AMYLIN’S PERFORMANCE OF THIS AGREEMENT. AMYLIN SHALL UTILIZE ITS
COMMERCIALLY REASONABLE EFFORTS TO IMPLEMENT SUCH CHANGES.

 

(B)                                 IN NO EVENT WILL AMYLIN BE REQUIRED TO MAKE
A MODIFICATION TO THE EQW PRODUCT THAT IS PROHIBITED BY APPLICABLE LAWS OR
REGULATORY AUTHORITIES. IN NO EVENT WILL AMYLIN BE PROHIBITED FROM MAKING A
MODIFICATION TO THE EQW PRODUCT THAT IS REQUIRED BY APPLICABLE LAWS OR
REGULATORY AUTHORITIES; PROVIDED, HOWEVER, THAT AMYLIN SHALL CONSULT WITH LILLY
PRIOR TO MAKING ANY SUCH MODIFICATION, AND PROVIDED FURTHER THAT AMYLIN SHALL

 

15

--------------------------------------------------------------------------------

 

USE ITS COMMERCIALLY REASONABLE EFFORTS TO IMPLEMENT ANY SUCH MODIFICATION. ANY
MODIFICATIONS TO THE EQW PRODUCT WILL BE IN ACCORDANCE WITH THE TERMS OF THE
QUALITY AGREEMENT.

 

4.5                               Audit; Safety; Applicable Laws.

 

(a)                                  Quality Control and Assurance. Amylin will
perform quality control testing and quality oversight on the Product to be
delivered to Lilly hereunder in accordance with this Agreement, the Quality
Agreement, the MRD, Specifications and cGMP.

 

(b)                                 Quality Audit of the Facility by Lilly
Representatives. Lilly shall have the right, upon no less than thirty (30) days’
notice and in accordance with the Quality Agreement, to conduct an initial OUS
commercial readiness audit of the Facility during regular business hours for the
purpose of conducting a quality control inspection to assure cGMP compliance of
the Facility used in the Manufacturing of EQW Product to be delivered to Lilly
(the “Start-Up Quality Audit”). Following the Start-Up Quality Audit, upon no
less than thirty (30) days’ advance written notice to Amylin and in accordance
with the terms of the Quality Agreement, no more than one (1) time per Calendar
Year, Amylin will permit Lilly’s representatives (such representatives to be
reasonably acceptable to Amylin) to conduct an audit of the Facility during
regular business hours for the purpose of conducting a quality control
inspection to assure cGMP compliance of the Facility used in the Manufacturing
of EQW Product to be delivered to Lilly (the “Quality Audit”); provided,
however, that such restriction of one (1) such audit per Calendar Year shall not
apply in cases where Lilly attends an audit or inspection conducted by a
Regulatory Authority. In addition, Lilly representatives shall have the right to
re-inspect the Facility, upon reasonable advance written notice to Amylin and
during regular business hours: (i) to ensure appropriate remedial actions are
being taken in response to a significant adverse finding identified during a
prior Lilly Quality Audit of the Facility, (ii) if an audit of the Facility
conducted by a Regulatory Authority results in a critical finding, or (iii) if
any EQW Product is, or has the potential to be, recalled from the market by
either Amylin and/or Lilly due to Manufacturing issues. Lilly representatives
will be advised of the confidentiality obligations under this Agreement, and
will follow such security, safety and facility access procedures as are
reasonably designated by Amylin. Amylin may require that at all times the Lilly
representatives be accompanied by an Amylin representative to assure protection
of Amylin Information or confidential information of a Third Person, if
applicable. Amylin will respond in writing to any

 

16

--------------------------------------------------------------------------------

 

written audit observation provided by Lilly within sixty (60) days in the form
of a mutually agreed upon action plan.

 

Notwithstanding the above, Amylin shall provide Lilly with the right to conduct
pre-inspection assessments and reviews of the Facility prior to the date on
which a foreign regulatory agency will be conducting an EQW Product pre-approval
inspection. Amylin shall reasonably cooperate with Lilly to address any needed
actions identified.

 

(C)                                  SAFETY PROCEDURES. AMYLIN WILL HAVE
RESPONSIBILITY FOR DEVELOPING, ADOPTING AND ENFORCING SAFETY PROCEDURES FOR THE
HANDLING AND PRODUCTION OF EQW PRODUCT BY AMYLIN AND THE HANDLING AND DISPOSAL
OF ALL WASTE RELATING THERETO. AMYLIN’S RESPONSIBILITY FOR THE HANDLING OF ANY
PARTICULAR EQW PRODUCT WILL TERMINATE AS TO THAT PARTICULAR EQW PRODUCT UPON
DELIVERY THEREOF TO LILLY’S COMMON CARRIER.

 

(D)                                 APPLICABLE LAWS. LILLY AND AMYLIN WILL EACH
COMPLY WITH ALL APPLICABLE LAWS IN PERFORMING ITS OBLIGATIONS HEREUNDER,
INCLUDING, WITHOUT LIMITATION, LAWS WITH RESPECT TO THE PROTECTION OF THE
ENVIRONMENT.

 

4.6                               Access to the Facility by Lilly. Amylin will
permit Lilly to appoint one (1) or more employee(s) to be its person in the
plant at the Facility, who shall have reasonable access during normal business
hours. The scope of such person’s role in the Facility is set forth on
Exhibit I, and may be amended from time to time by MSC. The person in the plant
shall have access to information that impacts budget, operational performance,
and timelines. In addition, Amylin will permit a reasonable number of Lilly
employees reasonable access during normal business hours to the Facility in
order to observe and review the Manufacturing process. The parties acknowledge
that the foregoing access rights are not intended to permit Lilly any level of
audit rights in addition to those described in Section 4.5 above. Lilly will
comply with Amylin’s written instructions established to enhance the safety or
security of the Facility or of persons at or near the Facility.

 

4.7                               Third Party Suppliers. The Parties acknowledge
that Amylin will Manufacture the EQW Product and that certain materials,
including active pharmaceutical ingredient, diluents and component parts for the
EQW Product and certain testing services will be purchased by Amylin from third
party suppliers (“Third Party Suppliers”). The MSC shall be responsible for
overseeing negotiations for any supply agreements with Third Party Suppliers not
already in place as of the Effective Date (including any amendments,
modifications or extensions of those already in place) in accordance with the
Letter

 

17

--------------------------------------------------------------------------------

 

Agreement between Amylin and Lilly dated January 30, 2004 except that the
references to the Joint Commercialization Committee in the letter are hereby
replaced by MSC. Amylin shall use its Commercially Reasonable Efforts to cause
all Third Party Suppliers to fulfill their obligations under their agreements
with Amylin. The Parties agree that Amylin will not be liable to Lilly, its
Affiliates and their respective directors, officers, shareholders, employees or
agents for any Third Party Suppliers’ failure to deliver or failure of any EQW
Product as a result of materials or components manufactured by Third Party
Suppliers or the failure of such materials or components to comply with
applicable Specifications, any representations or warranties of such Third Party
Supplier or Applicable Laws. In the event Amylin receives any indemnification
payments or other recovery from Third Party Suppliers performing services on
behalf of Amylin, such amounts shall be divided between Amylin and Lilly in
proportion to their respective shares, at the time of the payment, of U.S. EQW
Gross Profit and OUS EQW Gross Profit (less any royalty obligation to Amylin
from Lilly) under the Collaboration Agreement, as amended. To the extent legally
or contractually permissible, Amylin shall obtain a written assignment of all
patent rights and know-how that such Third Party Suppliers may develop by reason
of work performed under this Agreement.

 

4.8                               Records. Each of the Parties shall keep
accurate records of its activities under this Agreement to the extent required
by Applicable Law and in accordance with the Quality Agreement. Access to such
records will be made available by Amylin to Lilly during normal business hours
upon Lilly’s reasonable written request. The provisions of this Section 4.8
shall not supersede the audit provisions set forth in Section 4.5  Amylin
further agrees to provide Lilly with such information regarding the Manufacture
and testing of EQW Product hereunder as may be required to obtain or maintain
Marketing Approval of EQW Product or as may otherwise be required or requested
by any Regulatory Authority.

 

4.9                               Use of Facility and Adjusted Costs.

 

(A)  USE OF FACILITY. AS OF THE DATE HEREOF, THE PARTIES ACKNOWLEDGE AND AGREE
THAT THE FACILITY HAS BEEN CONSTRUCTED FOR THE COMMERCIALIZATION AND PROJECTED
GROWTH OF EQW PRODUCT ON A WORLDWIDE-DEMAND BASIS. AT ANY FUTURE DATE, AMYLIN
MAY PROPOSE TO THE MSC THAT THE FACILITY BE USED FOR A NON-EQW PRODUCT PURPOSE.
IF THE PARTIES, THROUGH THE MSC, CANNOT COME TO AN AGREEMENT REGARDING SUCH
PROPOSAL, THEN THE MATTER SHALL BE ESCALATED USING THE DISPUTE RESOLUTION
PROCEDURE SET FORTH IN THE COLLABORATION AGREEMENT. IF THE PARTIES’ SENIOR
EXECUTIVES CANNOT MUTUALLY RESOLVE THE MATTER AFTER GOOD FAITH DUE

 

18

--------------------------------------------------------------------------------

 

DELIBERATION, THEN AMYLIN SHALL HAVE THE FINAL RIGHT TO DECIDE HOW TO USE THE
FACILITY SUBJECT TO SECTION 4.9(B), BELOW.

 

(B) ADJUSTED COSTS. PRIOR TO A FINAL DECISION BEING REACHED ON ANY ADDITIONAL
NON-EQW PRODUCT USE(S) OF THE FACILITY, THE PARTIES SHALL AGREE IN GOOD FAITH TO
MODIFY THE DEFINITION OF ACTUAL MANUFACTURING COST SET FORTH IN SECTION 1.2. ANY
SUCH MODIFICATION TO THE DEFINITION OF ACTUAL MANUFACTURING COST SHALL TAKE INTO
ACCOUNT, AMONG OTHER THINGS:  (1) THE ACTUAL COST OF THE PORTION OF THE EXISTING
FACILITY TO BE USED BY AMYLIN FOR ANY NON-EQW PRODUCT USE, (2) AN ALLOCATION OF
SITE-WIDE SUPPORT FACILITIES AND RESOURCES THAT TAKES INTO ACCOUNT THE PLANNED
NON-EQW PRODUCT USE OF THE FACILITY, AND (3) A PROSPECTIVE ADJUSTMENT TO THE
UP-FRONT FINANCING FEE LILLY HAS PAID CONCURRENT HEREWITH (AS DESCRIBED IN
SECTION 3.9). ALL CAPITAL EXPENSES AND COSTS ASSOCIATED WITH THE PLANNED NON-EQW
PRODUCT USE OF THE FACILITY SHALL BE AMYLIN’S SOLE RESPONSIBILITY

 

ARTICLE 5
PURCHASE OF EQW PRODUCT; FORECASTS

 

5.1                               Forecasts.

 

(a)                                  [***] Forecast. Lilly will submit to Amylin
no later than [***] after the Effective Date a [***] forecast (the “[***]
Forecast”) of Lilly’s anticipated purchase requirements of EQW Product for the
Territory outside the U.S.; provided, however, that while the [***] of the [***]
Forecast shall be in [***], [***] of the forecast shall be for [***].
Thereafter, Lilly shall [***] provide to Amylin a [***] Forecast as part of the
long-range planning process. The Parties agree that each [***] Forecast will be
used for planning purposes only and will not be binding on either Party.

 

(B)                                 ROLLING PRODUCTION FORECASTS. THE PARTIES,
THROUGH THE SCWT, WILL WORK TOGETHER TO DEVELOP FORECASTS, INVENTORY TARGETS,
AND PRODUCTION CAPACITY REQUIREMENTS FOR MANUFACTURE OF EQW PRODUCT AND SUBMIT
THE SAME TO THE AMYLIN SUPPLY OPERATIONS. NO LATER THAN [***] PRIOR TO THE
COMMENCEMENT OF EACH [***] FOLLOWING THE EFFECTIVE DATE, THE LILLY SCWT LEADER
OR DESIGNEE WILL PROVIDE TO THE AMYLIN SCWT LEADER OR DESIGNEE AN ESTIMATE OF
THE TOTAL QUANTITY OF EQW PRODUCT REQUIRED TO BE DELIVERED FOR THE FOLLOWING
[***] AND THE SUCCEEDING [***] (THE “FORECAST”). THE PARTIES AGREE THAT THE
FORECAST WILL BE FOR GENERAL PLANNING PURPOSES ONLY AND WILL NOT BE BINDING ON
EITHER PARTY. AMYLIN WILL MAINTAIN A LEVEL OF INVENTORY OF MATERIALS AND
COMPONENTS FOR THE MANUFACTURE OF EQW PRODUCT AS AGREED UPON BY THE SCWT.

 

***Confidential Treatment Requested

 

19

--------------------------------------------------------------------------------

 

5.2                               Safety Stock.  The SCWT shall mutually agree
upon the appropriate levels of safety stock of EQW Product and Components (as
applicable) to be maintained by each Party for its respective territory. After
the Effective Date, the SCWT shall review safety stock targets of EQW Product,
Components, and other critical raw materials to be used in the Manufacture of
EQW Product on at least [***] and review performance against such targets on at
least [***].

 

5.3                               Limitations of Supply.  Amylin will use its
Commercially Reasonable Efforts to make available at least [***] of the
Forecast.  If at any time Amylin anticipates that it will be unable to supply in
whole or in part the quantities of EQW Product set forth in a Lilly purchase
order for any reason, including without limitation, Force Majeure, Amylin will
inform Lilly as soon as possible via email of such anticipated shortfall. 
Amylin will also notify Lilly of the underlying reason for the shortfall,
proposed remedial measures, the date such inability to supply the full order of
EQW Product is expected to end, and a proposed amount of EQW Product to be
delivered to Lilly.  In the event fewer units of EQW Product are available than
the Parties desire to purchase, the Parties will allocate available EQW Product
on a pro rata basis based upon the Forecasts included in the most recent annual
business plan approved by unanimous vote of the ASC; provided, however, that if
a Party believes that a pro rata allocation based upon such Forecasts is not the
appropriate allocation method, such Party may request that the Parties meet to
discuss the issue, and the other Party shall agree to meet and consider in good
faith the reasonable comments of the other Party.  If after such meeting, the
Parties are unable to decide on the appropriate method for allocation, then the
matter shall be resolved in accordance with Section 3.1(e)(ii) of the
Collaboration Agreement.

 

(a)           Limitations of API.  In the event of a limitation of supply of
API, Amylin agrees that it shall not adversely impact the supply of EQW Product
to Lilly by unreasonably allocating such limited API disproportionately to any
other exenatide-containing product.

 

(b)           Limitations of Components.  In the event of a limitation of supply
of any Components, Amylin will inform Lilly as soon as possible via email of
such anticipated shortfall.  Amylin will also notify Lilly of the underlying
reason for the shortfall, proposed remedial measures, the date such inability to
supply the Component is expected to end, and the proposed amount of the
Component to be delivered to Lilly. In the event fewer units of the Component
are available than the Parties desire to purchase, the Parties will allocate
available Component on a pro rata basis based upon the Forecasts included in the
most recent annual business plan approved by unanimous vote of the ASC;

 

***Confidential Treatment Requested

 

20

--------------------------------------------------------------------------------

 

provided, however, that if a Party believes that a pro rata allocation based
upon such Forecasts is not the appropriate allocation method, such Party may
request that the Parties meet to discuss the issue, and the other Party shall
agree to meet and consider in good faith the reasonable comments of the other
Party.  If after such meeting, the Parties are unable to decide on the
appropriate method for allocation, then the matter shall be resolved in
accordance with Section 3.1(e)(ii) of the Collaboration Agreement.

 

5.4                               Purchase Orders.  Lilly will purchase EQW
Product solely by submitting to Amylin written purchase orders (“Purchase
Orders”).  Purchase Orders will be submitted by Lilly within [***] after the
beginning of each [***] using the Standard Cost.  The SCWT will establish a
reasonable minimum order size for EQW Product prior to submission of the first
Forecast, and Lilly shall not submit Purchase Orders for less than such minimum
order size unless otherwise agreed by the Parties.  The terms and conditions of
this Agreement will be controlling over any terms and conditions in any such
purchase orders, Amylin’s acknowledgement forms, or any other forms.  Upon
submission to Amylin in accordance with this Section 5.4, a Purchase Order shall
be deemed accepted by Amylin except to the extent it exceeds [***]% of the most
recent applicable Forecast; provided however, that acceptance of a Purchase
Order shall not guarantee that Amylin will have supply sufficient to fill such
Purchase Order at the time such Purchase Order is submitted, it being agreed
that Amylin shall fill such Purchase Order as soon as sufficient supply is
available.  Lilly will submit each such Purchase Order to Amylin at least [***]
in advance of the date specified in each Purchase Order by which delivery of the
EQW Product is required.  Notwithstanding the foregoing, Amylin will use
Commercially Reasonable Efforts, but will not be obligated, to meet any request
of Lilly for delivery of EQW Product in less than [***], and further, Amylin
will attempt, but will not be obligated, to accommodate any changes requested by
Lilly in delivery schedules for EQW Product following Amylin’s receipt of
Purchase Orders from Lilly in accordance with this Section 5.4.  Amylin will
notify Lilly in writing of its acceptance or rejection of a specific purchase
order within [***] of receipt thereof (e-mail notification is acceptable). 
Amylin shall not have the right to reject a Purchase Order submitted to Amylin
in accordance with this Section 5.4, except to the extent it exceeds the most
recent applicable Forecast by more than [***]%; provided however, that
acceptance of a Purchase Order shall not guarantee that Amylin will have supply
sufficient to fill such Purchase Order at the time such Purchase Order is
submitted, it being agreed that Amylin shall fill such Purchase Order as soon as
sufficient supply is available.  Upon receipt and acceptance of each Purchase
Order by Amylin hereunder, Amylin will use Commercially Reasonable Efforts to
supply the EQW Product in such quantities on the delivery dates specified in
such Purchase Order, unless otherwise mutually agreed to in writing by the
Parties, except to

 

***Confidential Treatment Requested

 

21

--------------------------------------------------------------------------------

 

the extent such purchase order exceeds the applicable Forecast by more than
[***]%.  Purchase Orders accepted by Amylin may not be cancelled except by
mutual agreement of the Parties.

 

5.5                               Title Transfer; Shipment of EQW Product. 
Shipment of EQW Product ordered by Lilly will be to one or more distribution
service providers designated by Lilly.  Amylin will not make direct shipments to
final customers in the Territory outside the U.S.  Lilly will select and pay the
carrier to be used.  EQW Product will be shipped FCA (Amylin Facility) Incoterms
2000 or as may otherwise be required pursuant to Applicable Laws.  Title and
risk of loss or damage to the EQW Product will remain with Amylin until the EQW
Product is delivered to the carrier, at which time title to EQW Product will
rest in, and risk of loss or damage to EQW Product will pass to Lilly.  Lilly
will cause EQW Product to be picked up at the Facility dock no later than [***]
after the later of (i) the delivery date specified in the applicable Purchase
Order, and (ii) the date Amylin makes such EQW Product available for shipment. 
Any discrepancies between quantity shipped from Amylin and quantity arriving at
Lilly will be jointly investigated.

 

5.6.                          Use of a Single Lot in both US and OUS.  EQW
Product from a single production batch or lot shall not be made available for
use by Amylin inside the U.S. and by Lilly outside the U.S without the prior
written consent of Amylin.  No later than [***] prior to the planned date of the
first application for marketing approval to a Regulatory Authority other than
the FDA, the Parties agree to discuss in good faith whether EQW Product from a
single production batch or lot shall be used both in the U.S. and outside the
U.S.  If the Parties agree that such split uses are appropriate, then the
Parties agree to work towards a procedure that will describe how EQW Product
from a single production batch or lot shall be made available for use by Amylin
inside the U.S. and by Lilly outside the U.S.  If the Parties are not able to
agree that such split uses are appropriate or are unable to agree upon such a
procedure, then Lilly shall be responsible for the first $[***] of losses per
[***] arising from any inventory rendered obsolete solely due to the fact that a
single production batch or lot was not available for use by Amylin inside the
U.S. and by Lilly outside the U.S.  The remainder of any such losses shall be
allocated in accordance with the last sentence of Section 5.9.

 

5.7.                            Taxes.  Lilly acknowledges it is responsible for
any Value Added Tax and sales taxes related to the purchase of EQW Product.

 

***Confidential Treatment Requested

 

22

--------------------------------------------------------------------------------

 

5.8                               Inspection; Rejection.

 

(a)           Lilly shall be allowed a maximum of [***] days from the date of
receipt of any shipment for inspection and provision of written notice to Amylin
of rejection of any portion or all of that shipment (“Inspection Period”).  If
Lilly does not deliver such written notice to Amylin within such Inspection
Period, Lilly shall be deemed to have accepted the shipment, except in the case
of Latent Defects.

 

(b)           Promptly following notice of rejection, Amylin and Lilly shall
mutually determine whether the rejected shipment conformed to the Specifications
and warranties and, if the rejected shipment did not so conform, in what ways
the rejected shipment did not so conform.  If the Parties cannot agree upon such
issue by the end of the Inspection Period, then the Head of Quality (or any
successor position) of Amylin and the Head of Quality  (or any successor
position) of Lilly shall mutually determine in good faith whether the rejected
shipment conformed to the Specifications and warranties, using such further
testing procedures as such individuals may agree, including, if such individuals
so determine, submitting the rejected items and Specifications to a mutually
acceptable, independent laboratory for determination of whether such items
conformed to the Specifications and warranties.  Lilly shall provide to Amylin
samples of rejected EQW Product, as Amylin shall reasonably request for the
purpose of performing additional testing pursuant to this Section 5.8.  The
non-prevailing Party shall bear all reasonable cost of such independent
laboratory assessment.

 

(c)           If it is determined that the rejected EQW Product was
non-conforming, then Amylin shall replace such EQW Product as promptly as
practicable.  The Actual Manufacturing Cost of the rejected EQW Product, the
Actual Manufacturing Cost of the replacement EQW Product and Lilly’s cost of
return or disposal of rejected, non-conforming EQW Product shall be included in
Cost of Product Sold for purposes of Article 4 of the Collaboration Agreement,
unless and to the extent that such costs are a result of Amylin’s gross
negligence or willful misconduct, in which event Amylin shall pay or reimburse
such costs to Lilly in full.  Rejected or non-conforming EQW Product shall be
returned to Amylin or disposed of, as directed by Amylin.

 

5.9                               Inventory Obsolescence.   With respect to EQW
Product and Components, Lilly will be responsible for the inventory loss for
lots intended for sale in the Territory outside the U.S., based on  purchase
orders submitted [***] in advance and accepted by Amylin under Section 5.4, that
are delivered to Lilly with the product dating agreed upon by the SCWT. 
Inventory obsolescence related to all other EQW Product and Components will be
shared by the Parties on a pro rata basis based on the forecasts included in the
most

 

***Confidential Treatment Requested

 

23

--------------------------------------------------------------------------------

 

recent [***] business plan approved by the ASC, with Lilly and Amylin equally
sharing the U.S. allocation and Lilly solely responsible for the OUS allocation.

 

ARTICLE 6

TRADE DRESS AND PACKAGING

 

6.1                               Trade Dress and Packaging.  Amylin will ensure
that the EQW Product that is delivered to Lilly hereunder is prepared and packed
for shipment in compliance with applicable Marketing Approvals and cGMP, and in
accordance with the MRD/Quality Agreement.  All trade dress and packaging for
EQW Product, including use of EQW Product Trademarks, Amylin Marks and Lilly
Marks shall be consistent with the requirements of Section 9.5 of the
Collaboration Agreement.

 

6.2                               Lot Numbering.  Amylin’s lot numbers will be
affixed on the containers for the EQW Product and on each shipping carton in
accordance with Applicable Laws.

 

6.3                               Release Testing.  The QLT will establish
procedures for release testing EQW Product Manufactured for Lilly to ensure that
EQW Product conforms to Applicable Laws.

 

ARTICLE 7

REGULATORY AND RECALL

 

7.1  Regulatory Responsibility.  All matters related to the Parties’ regulatory
responsibilities, including, without limitation, recall of EQW Product,
regulatory communications, cooperation between the Parties, quality assurance
and manufacturing audits, will be as set forth in this Agreement, the Quality
Agreement and the Collaboration Agreement.  The QLT will also coordinate
contacts with Regulatory Authorities with respect to the EQW Product, it being
anticipated that each Party shall have the right to participate in key
regulatory decisions and meetings.  If any Regulatory Authority requires the
Regulatory Lead to have the ability to institute recalls unilaterally in a
particular Regulatory Jurisdiction, then the Regulatory Lead shall have such
right.  All costs of recall incurred by the Parties in accordance herewith will
be shared by the Parties in proportion to their respective shares, at the time
of the recall, of U.S. EQW Gross Profit and OUS EQW Gross Profit under the
Collaboration Agreement, as amended, except to the extent due to a Party’s gross
negligence or willful misconduct, in which case that Party will be solely
responsible for such costs of recall

 

***Confidential Treatment Requested

 

24

--------------------------------------------------------------------------------

 

ARTICLE 8

INTELLECTUAL PROPERTY

 

Pursuant to the Collaboration Agreement, the Parties have each granted to the
other all licenses to patents, know-how or other intellectual property necessary
for the performance of the Parties’ obligations under the Collaboration
Agreement.  Any inventions resulting from the activities contemplated by this
Agreement shall also be governed by the provisions of the Collaboration
Agreement, except to the extent Amylin’s rights to license certain intellectual
property may be limited by its Development and License Agreement with Alkermes
Controlled Therapeutics Inc. II, dated May 15, 2000, as amended.

 

ARTICLE 9
REPRESENTATIONS AND WARRANTIES OF LILLY

 

Lilly hereby represents and warrants to Amylin that, as of the Effective Date
hereof:

 

9.1                               Organization and Standing. Lilly is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Indiana.

 

9.2                               Power and Authority. Lilly has all requisite
corporate power and authority to execute, deliver, and perform this Agreement
and to consummate the transactions contemplated herein.  The execution,
delivery, and performance of this Agreement by Lilly does not, and the
consummation of the transactions contemplated hereby will not, violate any
provisions of Lilly’s organizational documents, bylaws, or any Applicable Law
applicable to Lilly, or any material agreement, mortgage, lease, instrument,
order, judgment, or decree to which Lilly is a party or by which Lilly is bound.

 

9.3                               Corporate Action; Binding Effect. Subject to
Section 16.17, below, Lilly has duly and properly taken all action required by
law, its organizational documents, or otherwise, to authorize the execution,
delivery, and performance of this Agreement and the other instruments to be
executed and delivered by it pursuant hereto and the consummation of the
transactions contemplated hereby and thereby.  Subject to Section 16.17, below,
this Agreement has been duly executed and delivered by Lilly and constitutes,
and the other instruments contemplated hereby when duly executed and delivered
by Lilly will constitute, legal, valid, and binding obligations of Lilly
enforceable against it in accordance with its respective terms, except as
enforcement may be affected by bankruptcy, insolvency, or other similar laws.

 

25

--------------------------------------------------------------------------------

 

9.4                               Governmental Approval.  Except as contemplated
by this Agreement, no consent, approval, waiver, order or authorization of, or
registration, declaration or filing with, any Regulatory Authority or any other
Third Person is required in connection with the execution, delivery and
performance of this Agreement, or any agreement or instrument contemplated by
this Agreement, by Lilly or the performance by Lilly of its obligations
contemplated hereby and thereby.

 

9.5                               Brokerage.  No broker, finder or similar agent
has been employed by or on behalf of Lilly, and no Person with which Lilly has
had any dealings or communications of any kind is entitled to any brokerage
commission, finder’s fee or any similar compensation, in connection with this
Agreement or the transactions contemplated hereby.

 

9.6                               Litigation.  There are no pending or, to
Lilly’s knowledge, threatened judicial, administrative or arbitral actions,
claims, suits or proceedings pending as of the date hereof against Lilly
relating to the subject matter of this Agreement, which, either individually or
together with any other, will have a material adverse effect on the ability of
Lilly to perform its obligations under this Agreement or any agreement or
instrument contemplated hereby.

 

9.7                               Not Debarred.  Lilly is not debarred and has
not and will not use in any capacity the services of any Person debarred under
subsections 306(a) or (b) of the Generic Drug Enforcement Act of 1992.  If at
any time this representation and warranty is no longer accurate, Lilly will
notify Amylin of such fact.

 

9.8                               Applicable Laws.  Lilly will comply with
Applicable Laws relating to its distributing, marketing, promoting and selling
of the EQW Product.

 

9.9                               Implied Warranties.  EXCEPT AS EXPRESSLY
PROVIDED IN THIS ARTICLE 9, LILLY MAKES NO REPRESENTATION OR WARRANTY, EXPRESS
OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND
LILLY SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED OR STATUTORY WARRANTIES,
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY, WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE AND WARRANTY OF NONINFRINGEMENT.

 

26

--------------------------------------------------------------------------------

 

ARTICLE 10
REPRESENTATIONS AND WARRANTIES OF AMYLIN

 

Amylin represents and warrants to Lilly that, as of the Effective Date hereof:

 

10.1                        Organization and Standing. Amylin is a company duly
organized, validly existing, and in good standing under the laws of Delaware.

 

10.2                        Power and Authority. Amylin has all requisite
corporate power and authority to execute, deliver, and perform this Agreement
and to consummate the transactions contemplated herein.  The execution,
delivery, and performance of this Agreement by Amylin does not, and the
consummation of the transactions contemplated hereby will not, violate any
provisions of Amylin’s organizational documents, bylaws, or any Applicable Laws
applicable to Amylin, or any material agreement, mortgage, lease, instrument,
order, judgment, or decree to which Amylin is a party or by which Amylin is
bound.

 

10.3                        Corporate Action; Binding Effect. Amylin has duly
and properly taken all action required by law, its organizational documents, or
otherwise, to authorize the execution, delivery, and performance of this
Agreement and the other instruments to be executed and delivered by it pursuant
hereto and the consummation of the transactions contemplated hereby and
thereby.  This Agreement has been duly executed and delivered by Amylin and
constitutes, and the other instruments contemplated hereby when duly executed
and delivered by Amylin will constitute, legal, valid, and binding obligations
of Amylin enforceable against it in accordance with its respective terms, except
as enforcement may be affected by bankruptcy, insolvency, or other similar laws.

 

10.4                        Governmental Approval.  Except as contemplated by
this Agreement, no consent, approval, waiver, order or authorization of, or
registration, declaration or filing with, any Regulatory Authority or any other
Third Person is required in connection with the execution, delivery and
performance of this Agreement, or any agreement or instrument contemplated by
this Agreement, by Amylin or the performance by Amylin of its obligations
contemplated hereby and thereby.

 

10.5                        Brokerage.  No broker, finder or similar agent has
been employed by or on behalf of Amylin, and no Person with which Amylin has had
any dealings or communications of any kind is entitled to any brokerage
commission, finder’s fee or any similar compensation, in connection with this
Agreement or the transactions contemplated hereby.

 

27

--------------------------------------------------------------------------------

 

10.6                        Litigation.  There are no pending or, to Amylin’s
knowledge, threatened judicial, administrative or arbitral actions, claims,
suits or proceedings pending as of the date hereof against Amylin relating to
the subject matter of this Agreement, which, either individually or together
with any other, will have a material adverse effect on the ability of Amylin to
perform its obligations under this Agreement or any agreement or instrument
contemplated hereby.

 

10.7                        Not Debarred. Amylin is not debarred and has not and
will not use in any capacity the services of any Person debarred under
subsections 306(a) or (b) of the Generic Drug Enforcement Act of 1992.  If at
any time this representation and warranty is no longer accurate, Amylin will
immediately notify Lilly of such fact.

 

10.8                        EQW Product Specifications.  Amylin will ensure that
as of the date of delivery, EQW Product delivered by Amylin to Lilly hereunder:
(i) will conform to the Specifications in effect at the time of manufacture,
(ii) will have been Manufactured in accordance with cGMP and cQSR, as
applicable, in effect at the time of manufacture, (iii) will not be adulterated
or misbranded by Amylin within the meaning of the FD&C Act, and (iv) will not
have been knowingly manufactured or sold in violation of any Applicable Laws of
the U.S in any material respect (collectively “EQW Product Warranty”).  Upon
delivery to Lilly, FCA (Amylin’s Facility) Incoterms 2000, Amylin will convey
good title to the EQW Product to Lilly as of the date of shipment, free and
clear of any lien or encumbrance.

 

10.9                        Applicable Laws.  Amylin will comply with Applicable
Laws relating to its supply of the EQW Product.

 

10.10                 Implied Warranties.  EXCEPT AS EXPRESSLY PROVIDED IN THIS
ARTICLE 10, AMYLIN MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND AMYLIN
SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED OR STATUTORY WARRANTIES, INCLUDING
ANY IMPLIED WARRANTY OF MERCHANTABILITY, WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE AND WARRANTY OF NONINFRINGEMENT.

 

ARTICLE 11
TERM OF AGREEMENT; TERMINATION

 

11.1                        Term of Agreement.  Unless earlier terminated in
accordance with this Article 11, this Agreement will take effect and commence on
the Effective Date and will expire at such

 

28

--------------------------------------------------------------------------------

 

time as the Collaboration Agreement expires.  In the event of termination of the
Collaboration Agreement prior to its expiration, this Agreement shall continue
in effect unless terminated at the option of either Party as provided in
Section 11.2(c) below.  This Agreement may also be terminated by mutual
agreement of the Parties.

 

11.2                        Termination for Cause.  In addition to the Parties’
right to terminate by mutual agreement under Section 11.1 above, this Agreement
may be terminated as follows:

 

(A)           A PARTY MAY TERMINATE THIS AGREEMENT IMMEDIATELY BY PROVIDING
WRITTEN NOTICE TO THE OTHER PARTY IF THE OTHER PARTY IS DECLARED INSOLVENT OR
BANKRUPT BY A COURT OF COMPETENT JURISDICTION, OR A VOLUNTARY PETITION OF
BANKRUPTCY IS FILED IN ANY COURT OF COMPETENT JURISDICTION BY THE OTHER PARTY OR
AN INVOLUNTARY PETITION FOR RELIEF UNDER THE UNITED STATES BANKRUPTCY CODE IS
FILED IN A COURT OF COMPETENT JURISDICTION AGAINST THE OTHER PARTY WHICH IS NOT
DISMISSED WITHIN THIRTY (30) DAYS OF ITS FILING, OR THE OTHER PARTY MAKES OR
EXECUTES ANY ASSIGNMENT FOR THE BENEFIT OF CREDITORS.

 

(B)           EITHER PARTY MAY TERMINATE THIS AGREEMENT IN THE EVENT OF A
MATERIAL BREACH OF THIS AGREEMENT BY THE OTHER; PROVIDED THAT IF THE BREACHING
PARTY CURES SUCH MATERIAL BREACH WITHIN THE CURE PERIOD PROVIDED IN
SECTION 11.3, THEN THE OTHER PARTY WILL BE OBLIGATED TO CONTINUE TO PERFORM ITS
OBLIGATIONS UNDER THIS AGREEMENT, AND THIS AGREEMENT WILL CONTINUE IN FULL FORCE
AND EFFECT.

 

(C)           EITHER PARTY MAY TERMINATE THIS AGREEMENT IMMEDIATELY IN THE EVENT
THE COLLABORATION AGREEMENT IS TERMINATED FOR ANY REASON.

 

11.3                        Procedures for Termination for Material Breach.  A
termination of this Agreement pursuant to Section 11.2(b) shall not be effective
unless the terminating Party complies with the following procedures:

 

THE TERMINATING PARTY WILL GIVE THE OTHER PARTY PRIOR WRITTEN NOTICE THEREOF,
SPECIFYING IN REASONABLE DETAIL THE ALLEGED MATERIAL BREACH, AND IF SUCH ALLEGED
MATERIAL BREACH OR MATERIAL DEFAULT CONTINUES UNREMEDIED FOR A PERIOD OF THIRTY
(30) DAYS AFTER THE DATE OF RECEIPT OF THE NOTIFICATION OR, IF THE MATERIAL
BREACH REASONABLY CANNOT BE CORRECTED OR REMEDIED WITHIN THIRTY (30) DAYS, THEN
IF (I) THE DEFAULTING PARTY HAS NOT COMMENCED REMEDYING SAID MATERIAL BREACH
WITHIN SAID THIRTY (30) DAYS AND IS NOT DILIGENTLY PURSUING COMPLETION OF SAME,
OR (II) SAID MATERIAL BREACH OR MATERIAL DEFAULT HAS NOT BEEN CORRECTED OR
REMEDIED WITHIN ONE-HUNDRED TWENTY (120) DAYS, THEN SUCH TERMINATING PARTY MAY
IMMEDIATELY TERMINATE THIS AGREEMENT BY AGAIN PROVIDING WRITTEN NOTIFICATION TO
THE DEFAULTING PARTY AND SUCH TERMINATION SHALL BE EFFECTIVE AS OF THE DATE THAT
SUCH NOTICE WAS

 

29

--------------------------------------------------------------------------------

 

DELIVERED TO THE OTHER PARTY.  THIS SECTION 11.3 WILL NOT BE EXCLUSIVE AND WILL
NOT BE IN LIEU OF ANY OTHER REMEDIES AVAILABLE TO A PARTY HERETO FOR ANY BREACH
OR DEFAULT HEREUNDER ON THE PART OF THE OTHER PARTY.

 

11.4                        Effect of Termination.

 

(a)           Upon termination of this Agreement for any reason (whether due to
breach of either Party or otherwise), Amylin will furnish to Lilly a complete
written inventory of all work in progress and an inventory of all finished EQW
Product.  Unless otherwise agreed to between the Parties, all stock on hand as
of the effective date of any termination of this Agreement will be dealt with
promptly as follows:

 

1.              EQW PRODUCT MANUFACTURED AND PACKAGED PURSUANT TO PURCHASE
ORDERS FROM LILLY AND ACCEPTED BY AMYLIN WILL BE DELIVERED BY AMYLIN TO LILLY,
WHEREUPON LILLY WILL PAY AMYLIN THEREFORE IN ACCORDANCE WITH THE TERMS HEREOF.

 

2.              WORK IN PROGRESS COMMENCED BY AMYLIN AGAINST ACCEPTED PURCHASE
ORDERS FROM LILLY WILL BE COMPLETED BY AMYLIN AND DELIVERED TO LILLY, WHEREUPON
LILLY WILL PAY AMYLIN THEREFORE IN ACCORDANCE WITH THE TERMS HEREOF.

 

(b)           In the event of termination of this Agreement by Amylin for
Lilly’s material breach or termination of this Agreement in the event of
termination of the Collaboration Agreement by Amylin for Lilly’s material
breach, Lilly shall be solely responsible for any wind down costs incurred by
the Parties that cannot be reasonably avoided.  In the event of termination of
this Agreement by Lilly for Amylin’s material breach or termination of this
Agreement in the event of termination of the Collaboration Agreement by Lilly
for Amylin’s material breach, Amylin shall be solely responsible for any wind
down costs incurred by the Parties that cannot be reasonably avoided.  In the
event of termination of this Agreement by mutual agreement of the Parties or for
any other reason, including Force Majeure,  the Parties shall share in any wind
down costs incurred by the Parties that cannot be reasonably avoided as
follows:  Lilly shall be responsible for an amount equal to either (i) in the
event termination occurs prior to the True-Up Date (as defined in Exhibit E)
[***]% or (ii) in the event the termination occurs after the True-Up Date, the
Lilly Percentage (as defined in Exhibit E) and Amylin shall be

 

***Confidential Treatment Requested

 

30

--------------------------------------------------------------------------------

 

responsible for the balance.  Wind down costs shall include, without limitation,
commitments to Third Party Suppliers that cannot be reasonably avoided.

 

(c)           With respect to any EQW Product-specific capital investments
incurred as part of EQW Product Manufacturing made by either Party that have a
remaining undepreciated amount at the time Amylin ceases to Manufacture EQW
Product in accordance with this Article 11:

 

1.               IF THE COLLABORATION AGREEMENT IS IN EFFECT IMMEDIATELY
FOLLOWING TERMINATION OF THIS AGREEMENT, THEN: (I) IN THE EVENT OF TERMINATION
OF THIS AGREEMENT BY LILLY FOR AMYLIN’S BREACH, AMYLIN WILL BE SOLELY
RESPONSIBLE FOR SUCH UNDEPRECIATED AMOUNTS, REGARDLESS OF WHETHER SUCH CAPITAL
INVESTMENTS ARE USABLE BY AMYLIN; AND (II) IN THE EVENT OF TERMINATION OF THIS
AGREEMENT BY AMYLIN FOR LILLY’S BREACH, LILLY WILL BE SOLELY RESPONSIBLE FOR
SUCH UNDEPRECIATED AMOUNTS FOR CAPITAL INVESTMENTS THAT ARE NOT READILY USABLE
BY AMYLIN LESS SALVAGE VALUE, AND AMYLIN WILL BE SOLELY RESPONSIBLE FOR SUCH
UNDEPRECIATED AMOUNTS FOR CAPITAL INVESTMENTS THAT ARE READILY USABLE BY AMYLIN;
AND (III) IN THE EVENT OF TERMINATION OF THIS AGREEMENT OTHER THAN FOR BREACH BY
A PARTY,  THE PARTIES SHALL SHARE SUCH UNDEPRECIATED AMOUNTS AS FOLLOWS:  LILLY
SHALL BE RESPONSIBLE FOR AN AMOUNT EQUAL TO EITHER (I) IN THE EVENT TERMINATION
OCCURS PRIOR TO THE TRUE-UP DATE (AS DEFINED IN EXHIBIT E), [***] ([***]%.), OR
(II) IN THE EVENT TERMINATION OCCURS AFTER THE TRUE-UP DATE, THE LILLY
PERCENTAGE (AS DEFINED IN EXHIBIT E) LESS (A) SUCH PORTION OF THE FINANCING
CHARGE FOR THE INITIAL CAPITAL INVESTMENT THAT HAS NOT YET BEEN AMORTIZED IN
ACCORDANCE WITH EXHIBIT G, (B) ANY AMOUNT DUE TO LILLY UNDER THE LOAN AGREEMENT,
PLUS ANY AND ALL OUTSTANDING INTEREST THEREON, (C) ANY OTHER AMOUNTS DUE AND
PAYABLE TO LILLY FROM AMYLIN AT THE TIME OF TERMINATION; AND (D) ANY AMOUNTS FOR
ANY ASSETS THAT CAN OTHERWISE BE UTILIZED FOR OTHER USES BY AMYLIN; PLUS ANY
OTHER AMOUNTS DUE AND PAYABLE TO AMYLIN FROM LILLY AT THE TIME OF TERMINATION.

 

***Confidential Treatment Requested

 

31

--------------------------------------------------------------------------------

 

2.               IF THIS AGREEMENT EXPIRES IN ACCORDANCE WITH SECTION 11.1 OR IS
TERMINATED PURSUANT TO SECTION 11.2(C) OF THIS AGREEMENT AS A RESULT OF
TERMINATION OF THE COLLABORATION AGREEMENT, THEN: (I) IN THE EVENT OF
TERMINATION OF THE COLLABORATION AGREEMENT BY LILLY PURSUANT TO SECTION 12.3
THEREOF OR EXPIRATION OF THIS AGREEMENT IN ACCORDANCE WITH SECTION 11.1 HEREOF,
THE PARTIES SHALL SHARE SUCH UNDEPRECIATED AMOUNTS AS FOLLOWS:  LILLY SHALL BE
RESPONSIBLE FOR AN AMOUNT EQUAL TO EITHER (I) IN THE EVENT TERMINATION OCCURS
PRIOR TO THE TRUE-UP DATE (AS DEFINED IN EXHIBIT E), [***] PERCENT ([***]%.), OR
(II) IN THE EVENT TERMINATION OCCURS AFTER THE TRUE-UP DATE, THE LILLY
PERCENTAGE (AS DEFINED IN EXHIBIT E) LESS (A) SUCH PORTION OF THE FINANCING
CHARGE FOR THE INITIAL CAPITAL INVESTMENT THAT HAS NOT YET BEEN AMORTIZED IN
ACCORDANCE WITH EXHIBIT G, (B) ANY AMOUNT DUE TO LILLY UNDER THE LOAN AGREEMENT,
PLUS ANY AND ALL OUTSTANDING INTEREST THEREON, (C) ANY OTHER AMOUNTS DUE AND
PAYABLE TO LILLY FROM AMYLIN AT THE TIME OF THE TERMINATION; AND (D) ANY AMOUNTS
FOR ANY ASSETS THAT CAN OTHERWISE BE UTILIZED FOR OTHER USES BY AMYLIN; PLUS ANY
OTHER AMOUNTS DUE AND PAYABLE TO AMYLIN FROM LILLY AT THE TIME OF TERMINATION;
(III) IN THE EVENT OF TERMINATION OF THE COLLABORATION AGREEMENT BY LILLY FOR
AMYLIN’S BREACH, AMYLIN WILL BE SOLELY RESPONSIBLE FOR SUCH UNDEPRECIATED
AMOUNTS; AND (IV) IN THE EVENT OF TERMINATION OF THE COLLABORATION AGREEMENT BY
AMYLIN FOR LILLY’S BREACH, LILLY WILL BE SOLELY RESPONSIBLE FOR SUCH
UNDEPRECIATED AMOUNTS WHICH ARE NOT READILY USABLE BY AMYLIN, LESS SALVAGE
VALUE.

 

(d)           To the extent that a Party is responsible for all or any portion
of undepreciated amounts for a capital investment made by the other Party as
described above, such Party shall reimburse the other Party for its share of
such undepreciated amounts within an agreed-upon number of days, but in no event
longer than ninety (90) days, after the date on which Amylin ceases to
Manufacture EQW Product in accordance with this Article 11; provided, however
the Parties agree to apply appropriate offsets as described in Section 3.10
hereof. 

 

***Confidential Treatment Requested

 

32

--------------------------------------------------------------------------------

 

(e)           In addition, upon expiration of this Agreement or termination of
this Agreement for any reason (whether due to breach of this Agreement by either
Party, Force Majeure, or otherwise), in the event Lilly has the right to, and
intends to continue to commercialize EQW Product:

 

1.               PROMPTLY FOLLOWING TERMINATION OF THIS AGREEMENT, AND AS SOON
AS PRACTICABLE GIVEN AMYLIN’S CONTINUING OBLIGATION TO SUPPLY EQW PRODUCT UNTIL
THE TRANSFER DESCRIBED IN THIS SECTION 11.4(E) IS COMPLETE, TO THE EXTENT
PERMISSIBLE UNDER ITS AGREEMENTS WITH ALKERMES, AMYLIN WILL TRANSFER TO A THIRD
PARTY MANUFACTURER DESIGNATED BY LILLY AND APPROVED BY AMYLIN, SUCH APPROVAL NOT
TO BE UNREASONABLY WITHHELD OR DELAYED (THE “SUCCESSOR MANUFACTURER”), SUCH
AMYLIN RIGHTS, AMYLIN INFORMATION, MANUFACTURING RECORDS AND EQW
PRODUCT-SPECIFIC EQUIPMENT AND TEST OR CONTROL PROCEDURES WITH RESPECT TO THE
MANUFACTURE OF EQW PRODUCT AS IS REASONABLY NECESSARY TO PERMIT THE SUCCESSOR
MANUFACTURER TO MANUFACTURE EQW PRODUCT MEETING THE SPECIFICATIONS ON BEHALF OF
THE PARTIES OR LILLY, AND WILL PROVIDE LILLY WITH A COPY (OR ACCESS TO) SUCH
AMYLIN RIGHTS, LILLY AMYLIN INFORMATION, MANUFACTURING RECORDS, EQUIPMENT AND
TEST OR CONTROL PROCEDURES FOR USE BY THE SUCCESSOR MANUFACTURER AND LILLY
SOLELY IN RELATION TO MANUFACTURE OF EQW PRODUCT.  THE PARTIES SHALL PROVIDE THE
SUCCESSOR MANUFACTURER WITH COMMERCIALLY REASONABLE TECHNICAL AND OTHER
ASSISTANCE IN CONNECTION WITH THE USE OF SUCH AMYLIN RIGHTS AND AMYLIN
INFORMATION FOR THE MANUFACTURE OF EQW PRODUCT AND WITH THE SCALE-UP AND
VALIDATION TO APPLICABLE REGULATORY STANDARDS OF THE SUCCESSOR MANUFACTURER FOR
THE MANUFACTURE OF EQW PRODUCT IN ACCORDANCE WITH THE SPECIFICATIONS.  EACH
PARTY SHALL USE ITS COMMERCIALLY REASONABLE EFFORTS TO ENABLE THE SUCCESSOR
MANUFACTURER TO MANUFACTURE EQW PRODUCT IN ACCORDANCE WITH THE SPECIFICATIONS ON
A COMMERCIAL SCALE SUFFICIENT TO FULFILL REASONABLE ANTICIPATED SALES OF EQW
PRODUCT AS SOON AS REASONABLY PRACTICABLE.  AT LILLY’S REQUEST,

 

33

--------------------------------------------------------------------------------

 

AMYLIN WILL INTRODUCE LILLY AND THE SUCCESSOR MANUFACTURER TO AMYLIN’S VENDORS
OF RAW MATERIALS OR COMPONENTS USED IN THE MANUFACTURE OF EQW PRODUCT, AND WILL
PROVIDE REASONABLE ASSISTANCE TO LILLY AND/OR THE SUCCESSOR MANUFACTURER, AS
APPLICABLE, IN ITS EFFORTS TO ENTER INTO SUPPLY RELATIONSHIPS WITH SUCH
VENDORS.  IF ANY SUCH VENDOR SUPPLIES AMYLIN WITH ANY SUCH RAW MATERIALS OR
COMPONENTS ON AN EXCLUSIVE BASIS, AMYLIN SHALL WAIVE COMPLIANCE WITH ANY SUCH
CONDITION TO ALLOW SUCH VENDOR TO TRANSACT BUSINESS WITH LILLY AND/OR THE
SUCCESSOR MANUFACTURER, AS APPLICABLE SOLELY IN RELATION TO THE MANUFACTURE OF
EQW PRODUCT;

 

2.               THE COSTS AND EXPENSES INCURRED BY AMYLIN IN EFFECTING THE
TECHNOLOGY TRANSFER AND PROVIDING THE ASSISTANCE DESCRIBED IN
SECTION 11.4(E)(1) (COLLECTIVELY, THE “TECHNOLOGY TRANSFER”) WILL BE BORNE
SOLELY BY AMYLIN IN THE EVENT OF (I) TERMINATION OF THIS AGREEMENT BY LILLY FOR
AMYLIN’S BREACH, OR (II) TERMINATION OF THIS AGREEMENT BY EITHER PARTY IN THE
EVENT OF TERMINATION OF THE COLLABORATION AGREEMENT EITHER BY LILLY FOR AMYLIN’S
BREACH THEREOF OR BY AMYLIN PURSUANT TO SECTION 12.3 THEREOF.  IN THE EVENT OF
TERMINATION OF THIS AGREEMENT BY AMYLIN FOR LILLY’S BREACH, OR VOLUNTARY
TERMINATION OF THIS AGREEMENT BY LILLY PURSUANT TO SECTION 11.2 OF THIS
AGREEMENT, OR TERMINATION OF THIS AGREEMENT BY EITHER PARTY IN THE EVENT OF
TERMINATION OF THE COLLABORATION AGREEMENT BY AMYLIN FOR LILLY’S BREACH THEREOF,
LILLY WILL REIMBURSE AMYLIN IN FULL FOR AMYLIN’S REASONABLE AND DOCUMENTED COSTS
AND EXPENSES OF PERFORMING THE TECHNOLOGY TRANSFER WITHIN THIRTY (30) DAYS OF
INVOICE BY AMYLIN (SUCH INVOICES TO BE DELIVERED MONTHLY).

 

11.5                        Supply Following Termination.  In the event this
Agreement is terminated for any reason other than termination of this Agreement
by Amylin pursuant to Section 11.2(b), Amylin shall, if Lilly so requests in
writing, continue to use its Commercially Reasonable Efforts to supply EQW
Product to Lilly pursuant to this Agreement until such time as the Successor
Manufacturer is able to Manufacture EQW Product on a commercial scale

 

34

--------------------------------------------------------------------------------

 

sufficient to fulfill reasonable anticipated sales of EQW Product and obtain or
maintain required Marketing Approvals, except that in the case of termination of
this Agreement by either Party pursuant to Section 11.2(c) hereof Amylin shall
supply EQW Product to Lilly for no longer than thirty-six  (36) months from
termination of this Agreement. Amylin will supply such EQW Product to Lilly, and
Lilly shall obtain such EQW Product from Amylin, in accordance with the terms
and conditions of this Agreement.

 

11.6                        Continuing Obligations.  Termination of this
Agreement for any reason will not relieve the Parties of any obligation accruing
prior thereto or any antecedent breach of the provisions of this Agreement, and
will be without prejudice to the rights and remedies of either Party with
respect to any antecedent breach of the provisions of this Agreement.  Without
limiting the generality of the foregoing and in addition to the foregoing, no
termination of this Agreement, whether by lapse of time or otherwise, will serve
to terminate the rights and obligations of the Parties hereto under Articles 1,
7, 8, 9, 10, 11, 12, 13, 14, 15 and 16, and Sections 3.5, 3.9, 3.10, 3.11, 4.3,
4.6, 4.8 and 5.9, or rights and obligations which otherwise expressly survive
the termination of this Agreement and Sections which are necessary to give
effect to rights and obligations which expressly survive the expiration or
termination of this Agreement.

 

11.7                        Non-Exclusive Remedies.  The remedies set forth in
this Article 11 or elsewhere in this Agreement will be in addition to, and will
not be to the exclusion of, any other remedies available to the Parties at law,
in equity or under this Agreement.

 

11.8                        Mitigation of Damages.  In the event of any breach
of this Agreement by Amylin or Lilly, the other Party shall take reasonable
actions to mitigate its damages.

 

ARTICLE 12

DISPUTE RESOLUTION

 

Disputes between the Parties concerning either Party’s rights or obligations
under this Agreement shall be resolved as set forth in the Collaboration
Agreement.

 

35

--------------------------------------------------------------------------------

 

ARTICLE 13
CONFIDENTIALITY

 

Confidentiality, nondisclosure and nonuse of information and publication
relating to the activities contemplated by this Agreement shall be governed by
the provisions of the Collaboration Agreement.

 

ARTICLE 14
ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES

 

14.1                        Compliance with Law.  Each of the Parties will
comply with all Applicable Laws relating to its obligation hereunder.

 

14.2                        Commercially Reasonable Efforts.  Except as
otherwise provided in this Agreement or the Collaboration Agreement, Lilly and
Amylin each hereby agree to use all Commercially Reasonable Efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
reasonably necessary or proper to make effective the transactions contemplated
by this Agreement, including such actions as may be reasonably necessary to
obtain approvals and consents of any Regulatory Authority and other Persons;
provided, however, that no Party will be required to (i) pay money (other than
as expressly required pursuant to this Agreement or the Collaboration Agreement
or as implicitly required in order for a  Party to carry out its obligations
hereunder), or (ii) assume any other material obligation not otherwise required
to be assumed by this Agreement or the Collaboration Agreement.

 

14.3                        Further Assurances.  The Parties intend that this
Agreement contain all consents, licenses and authorizations from one Party to
the other necessary to enable each Party to perform its obligations hereunder. 
In the event any further such consents, licenses or authorizations are
necessary, each Party agrees to take such further actions and execute such
further agreements as may be reasonably necessary to carry out the intent and
purposes of this Agreement.

 

ARTICLE 15
INDEMNIFICATION; LIMITATION OF LIABILITY; INSURANCE

 

15.1                        Indemnification.  Indemnification obligations of the
Parties will be provided as set forth in the Collaboration Agreement.

 

36

--------------------------------------------------------------------------------

 

15.2                        Limitation of Liability. NOTWITHSTANDING ANYTHING IN
THIS AGREEMENT TO THE CONTRARY, IN NO EVENT WILL EITHER PARTY BE LIABLE FOR
INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL (INCLUDING LOST PROFITS) OR
PUNITIVE DAMAGES, HOWEVER CAUSED OR UPON ANY THEORY OF LIABILITY (INCLUDING A
PARTY’S OWN NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT (OR THE
NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A PARTY’S EMPLOYEES,
AGENTS CONTRACTORS OR SUBCONTRACTORS)). NOTHING IN THIS SECTION IS INTENDED TO
LIMIT OR RESTRICT INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY UNDER
THE INDEMNIFICATION PROVISIONS OF THIS AGREEMENT.

 

15.3                        Insurance. The Parties will each, throughout the
Term of this Agreement, maintain at its own cost and expense from a qualified
insurance company, comprehensive general liability insurance and product
liability insurance in an amount that is customary in the pharmaceutical and
device industries.

 

ARTICLE 16
MISCELLANEOUS PROVISIONS

 

16.1                        Successors and Assigns. This Agreement will be
binding upon and will inure to the benefit of the Parties hereto and their
respective successors and assigns. This Agreement may not be assigned or
otherwise transferred, nor, except as expressly provided hereunder, may any
right or obligation hereunder be assigned or transferred by either Party without
the prior written consent of the other Party; provided, however, that either
Party may, without such consent, assign the Agreement and its rights and
obligations hereunder to an Affiliate or in connection with the transfer or sale
of all or substantially all of its assets or business to which this Agreement
relates, or in the event of its merger or consolidation or change in control or
similar transaction. In the event of such transaction, however, intellectual
property rights of the acquiring party to such transaction (if other than one of
the Parties to this Agreement) shall not be included in any technology licensed
hereunder. The rights and obligations of the Parties under this Agreement shall
be binding upon and inure to the benefit of the successors and permitted assigns
of the Parties. Any attempted assignment not in accordance with this
Section 16.1 will be void.

 

37

--------------------------------------------------------------------------------

 

16.2                        Notices. Unless otherwise stated in this Agreement
as to the method of delivery, all notices or other communications required or
permitted to be given hereunder will be as set forth in Section 14.6 of the
Collaboration Agreement.

 

16.3                        Waiver. Any term or provision of this Agreement may
be waived at any time by the Party entitled to the benefit thereof only by a
written instrument executed by such Party. Except as otherwise provided in this
Agreement no delay on the part of Lilly or Amylin in exercising any right, power
or privilege hereunder will operate as a waiver thereof, nor will any waiver on
the part of either Lilly or Amylin of any right, power or privilege hereunder
operate as a waiver of any other right, power or privilege hereunder nor will
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder

 

16.4                        Entire Agreement. This Agreement, the Collaboration
Agreement and Related Agreements, each of their appendices, exhibits, schedules
and certificates, and all documents and certificates delivered or contemplated
in connection herewith and therewith constitute the entire agreement between the
Parties with respect to the subject matter hereof and supersede all prior
agreements or understandings of the Parties relating thereto.

 

16.5                        Amendment. This Agreement may be modified or amended
only by written agreement of the Parties hereto signed by authorized
representatives of the Parties.

 

16.6                        Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original but all of
which together will constitute a single instrument.

 

16.7                        Governing Law. This Agreement will be governed and
construed in accordance with the laws of the State of New York excluding any
choice of law rules that may direct the application of the law of another state.

 

16.8                        Headings. All section titles or headings contained
in this Agreement and in any exhibit, schedule or certificate referred to herein
or attached to this Agreement are for convenience only, will not be deemed a
part of this Agreement and will not affect the meaning or interpretation of this
Agreement.

 

16.9                        No Third Person Rights. No provision of this
Agreement will be deemed or construed in any way to result in the creation of
any rights or obligations in any Person not a Party to this Agreement.

 

38

--------------------------------------------------------------------------------

 

16.10                 Construction. This Agreement will be deemed to have been
drafted by both Lilly and Amylin and will not be construed against either Party
as the draftsperson hereof. Whenever this Agreement refers to a number of days,
such number shall refer to calendar days unless business days are specified.

 

16.11                 Appendices, Exhibits, Schedules and Certificates. Each
attachment and exhibit attached hereto is incorporated herein by reference and
made a part of this Agreement.

 

16.12                 No Joint Venture. Nothing contained in this Agreement will
be deemed to create any joint venture or partnership between the Parties hereto,
and, except as is expressly set forth herein, neither Party will have any right
by virtue of this Agreement to bind the other Party in any manner whatsoever.

 

16.13                 Severability. If any provision of this Agreement is held
to be illegal, invalid, or unenforceable under present or future laws effective
while this Agreement remains in effect, the legality, validity and
enforceability of the remaining provisions will not be affected thereby. In the
event a part or provision of this Agreement is held to be illegal, invalid or
unenforceable, the Parties agree to negotiate in good faith an amendment of such
part or provision in a manner consistent with the intention of the Parties.

 

16.14                 Force Majeure. If either Party is prevented from
complying, either totally or in part, with any of the terms or provisions set
forth herein by reason of an event of Force Majeure, including, by way of
example and not of limitation, fire, flood, explosion, storm, strike, lockout or
other labor dispute, riot, war, rebellion, accidents, terrorist acts, acts of
God, acts of governmental agencies or instrumentalities, inability to obtain
materials from suppliers, or any other similar or dissimilar cause, in each case
to the extent beyond its reasonable control (“Force Majeure”), such Party will
provide written notice of such event to the other Party. Said notice will be
provided within five (5) business days of the occurrence of such event and will
identify the requirements of this Agreement or such of its obligations as may be
affected, and, to the extent so affected, said obligations will be suspended
during the period of such disability. The Party prevented from performing
hereunder will use Commercially Reasonably Efforts to remove such disability as
promptly as possible and will continue performance whenever such causes are
removed. The Party so affected will give to the other Party a good faith
estimate of the continuing effect of the Force Majeure condition and the
duration of the affected Party’s nonperformance. If the period of any previous
actual nonperformance of a Party because of Force Majeure conditions plus the
anticipated future period of such Party’s nonperformance because of such
conditions will exceed an aggregate of one

 

39

--------------------------------------------------------------------------------

 

hundred twenty (120) days within any one year period, the other Party may
terminate this Agreement by prior written notice to the nonperforming Party.

 

16.15                 Fundamental Principle of Good Faith and Fair Dealing. In
entering into this Agreement, Lilly and Amylin each acknowledge and agree that
all aspects of the business relationship and dealings between Lilly and Amylin
contemplated by this Agreement shall be governed by the fundamental principle of
good faith and fair dealing.

 

16.16                 Interpretation. In the event of any conflict between this
Agreement and the Collaboration Agreement, the terms of this Agreement shall
control.

 

16.17                 Effective Date. This Agreement shall become effective upon
the date approved by Lilly’s Board of Directors (the “Effective Date”). Lilly
agrees to cause its management to recommend approval of this Agreement to its
Board of Directors on or before October 20, 2008, and shall promptly notify
Amylin of the Lilly Board decision regarding this Agreement.

 

[signature page to follow]

 

40

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
date first above written.

 

 

 

ELI LILLY AND COMPANY

 

 

 

 

 

By:

/S/ JOHN C. LECHLEITER

 

Printed Name:

John C. Lechleiter

 

Title:

President and Chief Executive Officer

 

 

 

 

 

AMYLIN PHARMACEUTICALS, INC.

 

 

 

 

 

By:

/S/ MARK G. FOLETTA

 

Printed Name:

Mark G. Foletta

 

Title:

Senior Vice President, Finance and Chief Financial Officer

 

41

--------------------------------------------------------------------------------

 

EXHIBIT A

 

DEFINITION OF ALLOCATION OF SERVICE FOR

ACTUAL MANUFACTURING COST CALCULATION

 

“Actual Manufacturing Cost” will include Amylin’s costs for allocation of
service, in addition to other cost elements. Calculation of the Actual
Manufacturing Cost will be consistent with the usual methodology utilized by
Amylin to calculate Amylin’s Cost of Products Sold in accordance with U.S. GAAP.

 

Allocation of services is the cost of the indirect materials, indirect labor and
all other expenses incurred in the support of production and for the acquisition
of materials related to production of the EQW Product. The labor related charges
included in the Allocation of Services would be calculated using the actual FTE
Rate. To the extent the costs above are not directly traceable to production of
the EQW Product, Amylin in good faith will apply reasonable allocation methods
to such costs. Examples of items that are incorporated as part of the Allocation
of Services include:

 

(1)         repair and maintenance;

(2)          on-going qualification/validation/in process testing/ stability
testing and investigations;

(3)          manufacturing equipment and manufacturing support equipment
calibration costs;

(4)          utilities;

(5)          depreciation and amortization;

(6)          material testing;

(7)          pre-inspection approval costs (including validation costs), which
consists of Amylin’s internal labor and any out-of-pocket costs on an actual
dollar for dollar basis;

(8)          Prorated costs for manufacturing administration such as complaint
handling, customer service, technical stewardship, logistics, production
planning, regulatory support, training and development, procedure coordination,
procurement, finance and IT support, and

(9)          Other costs that are required to support the manufacture of EQW
Product in accordance with U.S. GAAP

 

The costs of general corporate expenses that are not related to the Manufacture
of EQW Product, are not included in the Allocation of Services.

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

ESTIMATED TOTAL INITIAL CAPITAL INVESTMENT FOR EQW MANUFACTURING ($MM)

 

 

 

Estimated Total

 

 

 

Investment

 

Project: Stage I Ohio

 

 

 

[***]

 

$

[***]

 

[***]

 

 

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

 

 

 

 

TOTAL

 

$

[***]

 

 

 

 

 

Project: Stage II Ohio

 

 

 

[***]

 

 

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

 

 

 

 

TOTAL

 

$

[***]

 

 

 

 

 

Project: Westchester Site

 

 

 

[***]

 

$

[***]

 

 

 

 

 

TOTAL

 

$

[***]

 

 

 

 

 

SUBTOTAL - FACILITY CAPITAL

 

$

[***]

 

 

 

***Confidential Treatment Requested

 

--------------------------------------------------------------------------------

 

EQW-Dedicated Capital Outside of Westchester

 

 

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

 

 

 

 

SUBTOTAL - CAPITAL OUTSIDE OF THE FACILITY

 

$

[***]

 

 

 

 

 

TOTAL ESTIMATED INITIAL CAPITAL INVESTMENT

 

$

[***]

 

 

Notes:

[***]

[***]

 

All estimates subject to change, including [***].

Does not include [***].

 

Does not include approximately $[***], which will be used in part to [***].

 

Does not include approximately $[***] that could be used for [***].

 

***Confidential Treatment Requested

 

--------------------------------------------------------------------------------

 

EXHIBIT C

 

MANUFACTURING RESPONSIBILITIES DOCUMENT

 

Table of Contents

 

I.

[***]

2

II.

[***]

6

III.

[***]

7

IV.

[***]

8

V.

[***]

9

VI.

[***]

10

VII.

[***]

11

VIII.

[***]

11

IX.

[***]

12

X.

[***]

16

XI.

[***]

16

XII.

[***]

18

XIII.

[***]

20

 

***Confidential Treatment Requested

 

--------------------------------------------------------------------------------

 

EXHIBIT D

 

QUALITY AGREEMENT

Table of Contents

 

I.                                         [***]

II.                                     [***]

III.                                 [***]

IV.                                 [***]

1.    [***]

2.    [***]

3.    [***]

4.    [***]

5.    [***]

6.    [***]

7.    [***]

8.    [***]

9.    [***]

10.  [***]

11.  [***]

12.  [***]

13.  [***]

14.  [***]

15.  [***]

16.  [***]

17.  [***]

18.  [***]

19.  [***]

20.  [***]

21.  [***]

22.  [***]

23.  [***]

24.  [***]

25.  [***]

26.  [***]

27.  [***]

28.  [***]

29.  [***]

30.  [***]

31.  [***]

32.  [***]

33.  [***]

34.  [***]

V.                               [***]

VI.                           [***]

VII.                       [***]

 

***Confidential Treatment Requested

 

--------------------------------------------------------------------------------

 

 

EXHIBIT E

 

REIMBURSEMENT AGREEMENT

 

This REIMBURSEMENT AGREEMENT (this “Agreement”) is Exhibit E to the Exenatide
Once Weekly Supply Agreement entered into as of October 16, 2008 by and between
ELI LILLY AND COMPANY, a corporation organized and existing under the laws of
the State of Indiana, whose principal place of business is Lilly Corporate
Center, Indianapolis, Indiana, 46285, United States of America (“Lilly”) and
AMYLIN PHARMACEUTICALS, INC., a corporation organized and existing under the
laws of the State of Delaware, whose principal place of business is 9360 Towne
Centre Drive, San Diego, California 92121, United States of America (“Amylin”). 
Capitalized terms used but not otherwise defined herein shall have the meanings
provided in the Collaboration Agreement (defined below).

 

WHEREAS, Lilly and Amylin are a party to that certain Collaboration Agreement,
dated September 19, 2002, as amended (the “Collaboration Agreement”);

 

WHEREAS, the Collaboration Agreement provides that the Parties will share
certain Development Costs and may agree in writing to share certain equipment
and capital expenditures related to the Collaboration; and

 

WHEREAS, the Parties now wish to enter into this Agreement to set forth the
terms upon which (i) Lilly will reimburse Amylin for certain capital
expenditures related to the Collaboration and (ii) the Parties will share
certain Development Costs related to EQW Product (as defined below).

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Lilly and Amylin agree as follows:

 

1.                                      Defined Terms.  The following terms
shall have the meanings set forth below:

 

(a)                                  “EQW Cost of Product Sold” means, solely
for purposes of calculating U.S. EQW Gross Profit and OUS EQW Gross Profit under
this Agreement and for no other purpose, the Average Actual Manufacturing Cost
as defined in the Exenatide Once Weekly Supply Agreement between Amylin Ohio LLC
and Lilly of even date herewith (the “Supply Agreement”).

 

(b)                                  “EQW Manufacturing Development Costs” shall
mean those Development Costs specifically related to developing the ability to
Manufacture EQW Product, including, without limitation, Manufacturing process
development and Manufacturing and quality assurance

 

1

--------------------------------------------------------------------------------

 

technical support, until such time as Manufacturing of EQW Product intended for
commercial sale commences.  For purposes of clarification, EQW Manufacturing
Development Costs shall not include any Development Costs which are solely
attributable to clinical studies of EQW Product, but may include costs relating
to manufacturing development irrespective of where those costs were incurred. 
All Facility personnel costs will be charged at actual FTE cost.

 

(c)                                  “EQW Next Generation Pen” shall mean the
disposable injection system(s) being developed by the Parties for administering
EQW Product, including any components thereof, the cartridge, and all associated
manufacturing, labeling, filling, and packaging components, individually or
incorporated into sub-assemblies.

 

(d)                                  “EQW Product” shall mean the Product
developed as a fixed-dose injection of exenatide administered once per week for
diabetes and any other Indications for which such Product may be approved for
use.

 

(e)                                  “Facility” means that certain manufacturing
facility being built by Amylin Ohio LLC and located at 8814 Trade Point Drive,
West Chester, Ohio, as such facility may from time to time be improved, expanded
or altered.

 

(f)                                    “OUS EQW Anniversary Date” means the date
that is 5 years after the Product Launch of the EQW Product in any of the United
Kingdom, France, Germany, Italy, Spain or Japan.

 

(g)                                 “OUS EQW Gross Profit” means, for any
period, the Net Sales of the EQW Product Manufactured at the Facility and sold
outside the U.S.  less the sum of (a) EQW Cost of Product Sold for such EQW
Product and (b) Lilly’s actual costs (calculated in accordance with U.S. GAAP)
for labeling and packaging EQW Product Manufactured at the Facility and sold
outside the U.S.  For sake of clarification, for purposes of this Agreement, OUS
EQW Gross Profits shall not include any royalty payments to Amylin.

 

(h)                                 “Total EQW Gross Profit” means, for any
period, the U.S. EQW Gross Profit plus the OUS EQW Gross Profit.

 

(i)                                    “True Up Date” shall mean the last day of
the [***] in which the OUS EQW Anniversary Date falls.

 

(j)                                    “U.S. EQW Gross Profit” means, for any
period, the Net Sales of the EQW Product Manufactured at the Facility and sold
in the U.S., less the EQW Cost of Product Sold for such EQW Product.

 

2.                                      Financing Payment.  Within five business
days after the Effective Date, Lilly shall pay to Amylin a total of
$125,000,000, representing the amount agreed upon by Amylin and Lilly (subject
to the terms of this Agreement) as an appropriate financing charge for Lilly’s
share of the portion of the Initial Capital Investment for the Facility, which
for purposes of this Exhibit E is currently anticipated to be $510 million.

 

3.                                      EQW Gross Profit Calculations.  Within
[***] after the True Up Date, Amylin shall prepare a report of U.S. EQW Gross
Profit and Lilly shall prepare a report of OUS EQW Gross

 

***Confidential Treatment Requested

 

2

--------------------------------------------------------------------------------

 

Profit, in each case covering the [***] period preceding the True Up Date.  Such
reports prepared by one Party may be audited by the other Party pursuant to the
provisions of Section 4.9(e) of the Collaboration Agreement (which audits shall
not count towards any maximum number of audits otherwise permitted pursuant to
Section 4.9(e) of the Collaboration Agreement).  Upon completion of such
reports, the Parties shall determine the percentage of Total EQW Gross Profit
made up of OUS EQW Gross Profit and US EQW Gross Profit for the [***] period
covered by the reports (such percentages, the “Current OUS EQW Percentage” and
the “Current US EQW Percentage,” respectively).  Promptly following the True Up
Date the Parties shall also attempt in good faith to agree on an a projection of
the percentage of Total EQW Gross Profits that OUS EQW Gross Profits and US EQW
Gross Profits will make up over the [***] period following the True Up Date
(such percentages, the “Projected OUS EQW Percentage” and the “Projected US EQW
Percentage,” respectively).  If the Parties are unable to agree upon the
Projected OUS EQW Percentage and the Projected US EQW Percentage within 30 days
following the True Up Date, the Projected OUS EQW Percentage and the Projected
US EQW Percentage shall be derived from the last global revenue forecast
approved by either the Alliance Steering Committee (ASC) or the Global
Development and Commercialization Committee (GDCC) (or their successor
committees, if applicable), as appropriate.  The average of the Current OUS EQW
Percentage and the Projected OUS EQW Percentage shall be the “Actual OUS EQW
Percentage.”  The average of the Current US EQW Percentage and the Projected US
EQW Percentage shall be the “Actual US EQW Percentage.”  The sum of (a) [***]%
of the Actual OUS EQW Percentage and (b) an amount equal to [***]% of the Actual
U.S. EQW Percentage shall be the “Lilly Percentage.”

 

4.                                      True Up Payment.

 

(a)                                  If the Lilly Percentage is less than
[***]%, then promptly after the Lilly Percentage is finally determined pursuant
to Section 3 hereof (including resolution of any audits), Amylin shall pay to
Lilly an amount equal to $[***], minus (ii) the Actual OUS EQW Percentage
multiplied by $[***], plus simple interest calculated at [***]% per year from
the Effective Date to the True Up Date.

 

(b)                                  If the Lilly Percentage is more than
[***]%, then promptly after the Lilly Percentage is finally determined pursuant
to Section 3 hereof (including resolution of any audits), Lilly shall pay to
Amylin an amount equal to (i) the Actual OUS EQW Percentage multiplied by
$[***], minus (ii) $[***] plus simple interest calculated at [***]% per year
from the Effective Date to the True Up Date.

 

(c)                                  In the event the portion of the Initial
Capital Investments in the Facility is [***]% more or less than $[***] then the
$[***] amount set forth in Sections 4(a) and 4(b) above shall be appropriately
adjusted.

 

5.                                      EQW Manufacturing Development Costs. 
Within five Business Days after the Effective Date, Lilly shall make a payment
to Amylin equal to [***]% of the aggregate EQW Manufacturing Development Costs
from [***] through [***].  Beginning with the [***] settlement between the
Parties for the [***] ended [***], Lilly will pay [***]% of EQW Manufacturing
Development Costs for each [***] subsequent to the [***] ended [***].  Lilly may
audit the capital expenditures allocated to the Facility, as well as the EQW
Manufacturing

 

***Confidential Treatment Requested

 

3

--------------------------------------------------------------------------------

 

Development Costs, pursuant to the provisions of Section 4.9(e) of the
Collaboration Agreement (which audits shall not count towards any maximum number
of audits otherwise permitted pursuant to Section 4.9(e) of the Collaboration
Agreement).

 

6.                                      EQW Next Generation Pen and Device
Development and Manufacturing Agreement.  Promptly after the Effective Date the
Parties agree to negotiate in good faith to provide for the treatment of
investments required for the EQW Next Generation Pen and to provide for the
treatment of reimbursement issues to Lilly for investments made by Lilly and not
reimbursed by Amylin under that certain Device Development and Manufacturing
Agreement dated July 1, 2003 and (b) Amylin for investments made by Amylin
directly attributable to exenatide and not reimbursed by Lilly in accordance
with the Collaboration Agreement.  The resolution of such issues shall occur
within 180 days of the Effective Date and shall either result in a reimbursement
structure substantially similar to that applied to the Facility and contemplated
by this Agreement, or shall result in the Parties paying their respective
portions of the Development Costs and capital investments related to the EQW
Next Generation Pen which shall incorporate a credit for investments previously
made by Lilly on behalf of the Collaboration under such Device Development and
Manufacturing Agreement, including reimbursement of financing charges incurred
by Lilly.

 

7.                                      Entire Agreement.  This Agreement, the
Supply Agreement, and the Collaboration Agreement embody the entire
understanding of the Parties and shall supersede all previous agreements,
communications, representations and understandings, whether oral, written or
otherwise, between the Parties relating to the subject matter hereof.  Except as
specifically set forth in this Agreement, the terms and conditions of the
Collaboration Agreement shall remain in full force and effect.

 

8.                                      Governing Law.  This Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of New York, excluding its conflicts of laws principles.

 

9.                                      Counterparts.  This Agreement may be
executed in counterparts, each of which shall be deemed an original document,
and all of which, together with this writing, shall be deemed one instrument.

 

[Signature Page Follows]

 

4

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Parties hereto have duly executed this Reimbursement
Agreement as of the Effective Date.

 

 

ELI LILLY AND COMPANY

 

AMYLIN PHARMACEUTICALS, INC.

 

 

 

By:

/S/ JOHN C. LECHLEITER

 

By:

/S/ MARK G. FOLETTA

 

 

 

Name:

John C. Lechleiter

 

Name:

Mark G. Foletta

 

 

 

Title:

President and Chief Executive Officer

 

Title:

Senior Vice President, Finance and Chief Financial Officer

 

--------------------------------------------------------------------------------

 

EXHIBIT F

 

ESTIMATED EQW MANUFACTURING INITIAL CAPITAL INVESTMENT - OUTSIDE OF THE FACILITY

 

EQW-Dedicated Capital Outside of the Facility

 

 

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

 

 

 

 

TOTAL

 

$

[***]

 

 

Notes:

 

Does not include approximately $[***], which will be used in part to [***].

 

***Confidential Treatment Requested

 

--------------------------------------------------------------------------------

 

EXHIBIT G

 

INTEREST AMORTIZATION SCHEDULE

 

 

 

Balance

 

Cumulative
Amort

 

Dec-05

 

$

[ ***]

 

$

[ ***]

 

Jan-06

 

$

[ ***]

 

$

[ ***]

 

Feb-06

 

$

[ ***]

 

$

[ ***]

 

Mar-06

 

$

[ ***]

 

$

[ ***]

 

Apr-06

 

$

[ ***]

 

$

[ ***]

 

May-06

 

$

[ ***]

 

$

[ ***]

 

Jun-06

 

$

[ ***]

 

$

[ ***]

 

Jul-06

 

$

[ ***]

 

$

[ ***]

 

Aug-06

 

$

[ ***]

 

$

[ ***]

 

Sep-06

 

$

[ ***]

 

$

[ ***]

 

Oct-06

 

$

[ ***]

 

$

[ ***]

 

Nov-06

 

$

[ ***]

 

$

[ ***]

 

Dec-06

 

$

[ ***]

 

$

[ ***]

 

Jan-07

 

$

[ ***]

 

$

[ ***]

 

Feb-07

 

$

[ ***]

 

$

[ ***]

 

Mar-07

 

$

[ ***]

 

$

[ ***]

 

Apr-07

 

$

[ ***]

 

$

[ ***]

 

May-07

 

$

[ ***]

 

$

[ ***]

 

Jun-07

 

$

[ ***]

 

$

[ ***]

 

Jul-07

 

$

[ ***]

 

$

[ ***]

 

Aug-07

 

$

[ ***]

 

$

[ ***]

 

Sep-07

 

$

[ ***]

 

$

[ ***]

 

Oct-07

 

$

[ ***]

 

$

[ ***]

 

Nov-07

 

$

[ ***]

 

$

[ ***]

 

Dec-07

 

$

[ ***]

 

$

[ ***]

 

Jan-08

 

$

[ ***]

 

$

[ ***]

 

Feb-08

 

$

[ ***]

 

$

[ ***]

 

Mar-08

 

$

[ ***]

 

$

[ ***]

 

Apr-08

 

$

[ ***]

 

$

[ ***]

 

May-08

 

$

[ ***]

 

$

[ ***]

 

Jun-08

 

$

[ ***]

 

$

[ ***]

 

Jul-08

 

$

[ ***]

 

$

[ ***]

 

Aug-08

 

$

[ ***]

 

$

[ ***]

 

Sep-08

 

$

[ ***]

 

$

[ ***]

 

Oct-08

 

$

[ ***]

 

$

[ ***]

 

Nov-08

 

$

[ ***]

 

$

[ ***]

 

Dec-08

 

$

[ ***]

 

$

[ ***]

 

Jan-09

 

$

[ ***]

 

$

[ ***]

 

Feb-09

 

$

[ ***]

 

$

[ ***]

 

Mar-09

 

$

[ ***]

 

$

[ ***]

 

Apr-09

 

$

[ ***]

 

$

[ ***]

 

May-09

 

$

[ ***]

 

$

[ ***]

 

Jun-09

 

$

[ ***]

 

$

[ ***]

 

Jul-09

 

$

[ ***]

 

$

[ ***]

 

Aug-09

 

$

[ ***]

 

$

[ ***]

 

Sep-09

 

$

[ ***]

 

$

[ ***]

 

Oct-09

 

$

[ ***]

 

$

[ ***]

 

Nov-09

 

$

[ ***]

 

$

[ ***]

 

Dec-09

 

$

[ ***]

 

$

[ ***]

 

Jan-10

 

$

[ ***]

 

$

[ ***]

 

Feb-10

 

$

[ ***]

 

$

[ ***]

 

Mar-10

 

$

[ ***]

 

$

[ ***]

 

Apr-10

 

$

[ ***]

 

$

[ ***]

 

May-10

 

$

[ ***]

 

$

[ ***]

 

Jun-10

 

$

[ ***]

 

$

[ ***]

 

Jul-10

 

$

[ ***]

 

$

[ ***]

 

Aug-10

 

$

[ ***]

 

$

[ ***]

 

Sep-10

 

$

[ ***]

 

$

[ ***]

 

Oct-10

 

$

[ ***]

 

$

[ ***]

 

Nov-10

 

$

[ ***]

 

$

[ ***]

 

Dec-10

 

$

[ ***]

 

$

[ ***]

 

Jan-11

 

$

[ ***]

 

$

[ ***]

 

Feb-11

 

$

[ ***]

 

$

[ ***]

 

Mar-11

 

$

[ ***]

 

$

[ ***]

 

Apr-11

 

$

[ ***]

 

$

[ ***]

 

May-11

 

$

[ ***]

 

$

[ ***]

 

Jun-11

 

$

[ ***]

 

$

[ ***]

 

Jul-11

 

$

[ ***]

 

$

[ ***]

 

Aug-11

 

$

[ ***]

 

$

[ ***]

 

Sep-11

 

$

[ ***]

 

$

[ ***]

 

Oct-11

 

$

[ ***]

 

$

[ ***]

 

Nov-11

 

$

[ ***]

 

$

[ ***]

 

Dec-11

 

$

[ ***]

 

$

[ ***]

 

Jan-12

 

$

[ ***]

 

$

[ ***]

 

Feb-12

 

$

[ ***]

 

$

[ ***]

 

Mar-12

 

$

[ ***]

 

$

[ ***]

 

Apr-12

 

$

[ ***]

 

$

[ ***]

 

May-12

 

$

[ ***]

 

$

[ ***]

 

Jun-12

 

$

[ ***]

 

$

[ ***]

 

Jul-12

 

$

[ ***]

 

$

[ ***]

 

Aug-12

 

$

[ ***]

 

$

[ ***]

 

Sep-12

 

$

[ ***]

 

$

[ ***]

 

Oct-12

 

$

[ ***]

 

$

[ ***]

 

Nov-12

 

$

[ ***]

 

$

[ ***]

 

Dec-12

 

$

[ ***]

 

$

[ ***]

 

Jan-13

 

$

[ ***]

 

$

[ ***]

 

Feb-13

 

$

[ ***]

 

$

[ ***]

 

Mar-13

 

$

[ ***]

 

$

[ ***]

 

Apr-13

 

$

[ ***]

 

$

[ ***]

 

May-13

 

$

[ ***]

 

$

[ ***]

 

Jun-13

 

$

[ ***]

 

$

[ ***]

 

Jul-13

 

$

[ ***]

 

$

[ ***]

 

Aug-13

 

$

[ ***]

 

$

[ ***]

 

Sep-13

 

$

[ ***]

 

$

[ ***]

 

Oct-13

 

$

[ ***]

 

$

[ ***]

 

Nov-13

 

$

[ ***]

 

$

[ ***]

 

Dec-13

 

$

[ ***]

 

$

[ ***]

 

Jan-14

 

$

[ ***]

 

$

[ ***]

 

Feb-14

 

$

[ ***]

 

$

[ ***]

 

Mar-14

 

$

[ ***]

 

$

[ ***]

 

Apr-14

 

$

[ ***]

 

$

[ ***]

 

May-14

 

$

[ ***]

 

$

[ ***]

 

Jun-14

 

$

[ ***]

 

$

[ ***]

 

Jul-14

 

$

[ ***]

 

$

[ ***]

 

Aug-14

 

$

[ ***]

 

$

[ ***]

 

Sep-14

 

$

[ ***]

 

$

[ ***]

 

Oct-14

 

$

[ ***]

 

$

[ ***]

 

Nov-14

 

$

[ ***]

 

$

[ ***]

 

Dec-14

 

$

[ ***]

 

$

[ ***]

 

Jan-15

 

$

[ ***]

 

$

[ ***]

 

Feb-15

 

$

[ ***]

 

$

[ ***]

 

Mar-15

 

$

[ ***]

 

$

[ ***]

 

Apr-15

 

$

[ ***]

 

$

[ ***]

 

May-15

 

$

[ ***]

 

$

[ ***]

 

Jun-15

 

$

[ ***]

 

$

[ ***]

 

Jul-15

 

$

[ ***]

 

$

[ ***]

 

Aug-15

 

$

[ ***]

 

$

[ ***]

 

Sep-15

 

$

[ ***]

 

$

[ ***]

 

Oct-15

 

$

[ ***]

 

$

[ ***]

 

Nov-15

 

$

[ ***]

 

$

[ ***]

 

Dec-15

 

$

[ ***]

 

$

[ ***]

 

Jan-16

 

$

[ ***]

 

$

[ ***]

 

Feb-16

 

$

[ ***]

 

$

[ ***]

 

Mar-16

 

$

[ ***]

 

$

[ ***]

 

Apr-16

 

$

[ ***]

 

$

[ ***]

 

May-16

 

$

[ ***]

 

$

[ ***]

 

Jun-16

 

$

[ ***]

 

$

[ ***]

 

Jul-16

 

$

[ ***]

 

$

[ ***]

 

Aug-16

 

$

[ ***]

 

$

[ ***]

 

Sep-16

 

$

[ ***]

 

$

[ ***]

 

Oct-16

 

$

[ ***]

 

$

[ ***]

 

Nov-16

 

$

[ ***]

 

$

[ ***]

 

Dec-16

 

$

[ ***]

 

$

[ ***]

 

Jan-17

 

$

[ ***]

 

$

[ ***]

 

Feb-17

 

$

[ ***]

 

$

[ ***]

 

Mar-17

 

$

[ ***]

 

$

[ ***]

 

Apr-17

 

$

[ ***]

 

$

[ ***]

 

May-17

 

$

[ ***]

 

$

[ ***]

 

Jun-17

 

$

[ ***]

 

$

[ ***]

 

Jul-17

 

$

[ ***]

 

$

[ ***]

 

Aug-17

 

$

[ ***]

 

$

[ ***]

 

Sep-17

 

$

[ ***]

 

$

[ ***]

 

Oct-17

 

$

[ ***]

 

$

[ ***]

 

Nov-17

 

$

[ ***]

 

$

[ ***]

 

Dec-17

 

$

[ ***]

 

$

[ ***]

 

Jan-18

 

$

[ ***]

 

$

[ ***]

 

Feb-18

 

$

[ ***]

 

$

[ ***]

 

Mar-18

 

$

[ ***]

 

$

[ ***]

 

Apr-18

 

$

[ ***]

 

$

[ ***]

 

May-18

 

$

[ ***]

 

$

[ ***]

 

Jun-18

 

$

[ ***]

 

$

[ ***]

 

Jul-18

 

$

[ ***]

 

$

[ ***]

 

Aug-18

 

$

[ ***]

 

$

[ ***]

 

Sep-18

 

$

[ ***]

 

$

[ ***]

 

Oct-18

 

$

[ ***]

 

$

[ ***]

 

Nov-18

 

$

[ ***]

 

$

[ ***]

 

Dec-18

 

$

[ ***]

 

$

[ ***]

 

Jan-19

 

$

[ ***]

 

$

[ ***]

 

Feb-19

 

$

[ ***]

 

$

[ ***]

 

Mar-19

 

$

[ ***]

 

$

[ ***]

 

Apr-19

 

$

[ ***]

 

$

[ ***]

 

May-19

 

$

[ ***]

 

$

[ ***]

 

Jun-19

 

$

[ ***]

 

$

[ ***]

 

Jul-19

 

$

[ ***]

 

$

[ ***]

 

Aug-19

 

$

[ ***]

 

$

[ ***]

 

Sep-19

 

$

[ ***]

 

$

[ ***]

 

Oct-19

 

$

[ ***]

 

$

[ ***]

 

Nov-19

 

$

[ ***]

 

$

[ ***]

 

Dec-19

 

$

[ ***]

 

$

[ ***]

 

Jan-20

 

$

[ ***]

 

$

[ ***]

 

Feb-20

 

$

[ ***]

 

$

[ ***]

 

Mar-20

 

$

[ ***]

 

$

[ ***]

 

Apr-20

 

$

[ ***]

 

$

[ ***]

 

May-20

 

$

[ ***]

 

$

[ ***]

 

Jun-20

 

$

[ ***]

 

$

[ ***]

 

Jul-20

 

$

[ ***]

 

$

[ ***]

 

Aug-20

 

$

[ ***]

 

$

[ ***]

 

Sep-20

 

$

[ ***]

 

$

[ ***]

 

Oct-20

 

$

[ ***]

 

$

[ ***]

 

Nov-20

 

$

[ ***]

 

$

[ ***]

 

Dec-20

 

$

[ ***]

 

$

[ ***]

 

 

***Confidential Treatment Requested

 

--------------------------------------------------------------------------------

 

EXHIBIT H

 

ESTIMATE OF ACTUAL MANUFACTURING COSTS TEMPLATE

 

Section 1.1 & 1st 3.3 Exhibit

Actual Manufacturing Costs

Q1 2XXX

 

 

 

US

 

OUS

 

 

 

 

 

 

 

Headcount

 

 

 

 

 

Contractors

 

 

 

 

 

 

 

 

 

 

 

Compensation & Benefits

 

 

 

 

 

Depreciation

 

 

 

 

 

Maintenance/Repair/Utilities

 

 

 

 

 

Purchased Services/Professional/Contractors

 

 

 

 

 

Supplies & Materials

 

 

 

 

 

Other Site Expenses

 

 

 

 

 

San Diego QC Lab & Depr of sites in Exh X

 

 

 

 

 

Other San Diego Allocations In

 

 

 

 

 

Packaging Depr & Other Related Exp

 

 

 

 

 

Factory & Inventory Losses

 

 

 

 

 

Other Variances/PPV/Use Yield

 

 

 

 

 

Royalty Expense

 

 

 

 

 

Total Expense

 

 

 

 

 

 

 

 

 

 

 

Production Volumes

 

 

 

 

 

 

 

 

 

 

 

Per Unit COPS:

 

 

 

 

 

Raw Materials Excluding Delivery Device

 

 

 

 

 

Device Delivery

 

 

 

 

 

Packaging Materials & Expense

 

 

 

 

 

Labor

 

 

 

 

 

Depreciation

 

 

 

 

 

Overhead

 

 

 

 

 

Total Pen Cost

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT I

 

SCOPE OF THE RULE OF LILLY’S PERSON IN THE PLANT

 

Premise: The relationship between Lilly and Amylin is as collaborative partners.
Amylin is responsible for the day to day manufacturing operations at the Ohio
Site and Lilly will have access and rights that would be expected under a
typical collaborative agreement.

 

1. The Lilly Partner in the Plant (the “PIP”) shall be a member of the Facility
senior staff and subsequently involved in meetings where EQW is discussed. The
PIP may elect to involve Lilly subject matter experts (“SMEs”) and secure their
attendance at key meetings in order to resolve issues or create improvements.
Typical use of SMEs may include areas such as supply chain, technical/process,
finance, Quality, etc.

 

2. The PIP shall have complete exposure to all EQW subjects and information.
Said exposure and information shall be open and immediate between the Parties.

 

3. The PIP will not be involved in Non-EQW activities or topics such as Human
Resources and/or Amylin internal business activities that do not impact EQW.

 

4. The PIP will abide with all Facility policies, practices and procedures at
all times. Amylin will be responsible to assure that Facility policies,
practices and procedures do not conflict with this Agreement.

 

5. The PIP will have access to all EQW processes or functions in so far as said
access does not jeopardize personal safety or process integrity. Amylin and
Lilly agree that the PIP will not direct Amylin employees.

 

6. It is the PIP’s responsibility to engage and discuss all significant concerns
regarding EQW with Amylin’s Facility General Manager (the “GM”) prior to
discussing with the Facility senior staff.

 

7. Lilly acknowledges the GM’s responsibility of providing direction and
accountability of for the Facility. As such, the GM is expected to have decision
making responsibility aligned with meeting the approved annual plan and other
objectives for the Facility. If the GM and the PIP are not aligned on a
significant decision and/or direction, each of them will seek to involve
appropriate SMEs and use of other tools (such as the decision making tool) to
further inform the decision as appropriate. If the GM and the PIP are still
unable to reach alignment on decision/direction, then they will take the issue
to the MSC chairs for resolution. Lilly and Amylin agree that action will not be
taken on the disputed decision/direction until agreement can be reached.

 

If Product Quality and/or personnel safety would be jeopardized due to a delay
in the decision/direction, then the GM has the responsibility to make the
decision and will notify the PIP and the MSC chairs of the decision immediately.
All efforts will be taken to resolve time-sensitive issues in an expedient
manner.

 

8. It is understood that the management of the Facility is and will be governed
by the good relationship of the Parties. The parties agree that appointing the
appropriate individuals into the GM and the PIP roles that are adept at working
collaborative partnerships will be critical to the future success of the
Facility.

 

While all the above are words to try and indicate the best behaviors between
partners; they are only as strong as the good will and intentions of the
partners to do the best for their company’s and their patients.

 

--------------------------------------------------------------------------------