***Text
  Omitted and Filed Separately

  
	
   

  	
   

  	
  Confidential
  Treatment Requested

  
	
   

  	
   

  	
  Under
  17 C.F.R. 200.80(b)(4)

  And 240.24b-2

  



 


Exhibit 10.56


 


DEVICE DEVELOPMENT AND MANUFACTURING AGREEMENT


 


This DEVICE DEVELOPMENT AND
MANUFACTURING AGREEMENT (“Agreement”) is entered into as of July 1, 2003 (the
“Effective Date”), by and between Amylin Pharmaceuticals, Inc. (“Amylin”), a
corporation organized and existing under the laws of Delaware, 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 is developing Compound for the prevention and
treatment of diabetes and obesity and potentially other indications.  Pursuant to the terms of a Collaboration
Agreement effective September 19, 2002, Lilly and Amylin have agreed to
cooperate in the development and marketing of a drug Product that includes a
Device as part of the Product.


 


2.             In furtherance of the goals set forth in the
Collaboration Agreement, the Parties desire to enter into this Agreement
whereby Lilly will agree to develop, Manufacture and supply a Device as a
component of the drug Product containing the Compound.


 


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 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 Manufacturing Cost” means those costs actually incurred by Lilly
for the acquisition of materials and their conversion into salable
Devices.  Such costs include:  (i) 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); (ii) conversion costs (including, without limitation, direct
labor and direct overhead) directly associated with the manufacturing of a
Device;  (iii) replacement costs for
Devices that are determined to be defective or recalled during the quality
control process or for Devices that are returned to Lilly from Amylin or the
customer; (iv) an appropriate allocation of service and administrative
departments performing functions which support Manufacturing operations
directly associated with the Manufacturing of Devices, including those items as
set forth on Exhibit A ; (v) depreciation of Device specific capital
investments; (vi) depreciation of an allocation of general manufacturing
equipment and facilities directly associated with Manufacturing of Devices;
(vii) Device breakage; (viii) obsolete Devices; and (ix) to the extent
attributable to the Manufacture of Devices, any other costs considered
inventory costs or Costs of Products Sold under Generally Accepted Accounting
Principles.  All of these costs, and the
methodology to be used in allocating indirect or overhead costs among
Manufacturing operations hereunder and other Lilly manufacturing operations,
shall be determined in a manner consistent with the internal methods used by
Lilly for other products and consistent with Generally Accepted Accounting
Practices in the U.S.  The foregoing
definition of Actual Manufacturing Cost assumes that Lilly uses Dedicated
Capacity for primary equipment for the Manufacture of Devices.  In the event that Lilly does not use
Dedicated Capacity for primary equipment for the Manufacture of Devices, the
Parties shall agree in good faith upon an appropriate allocation of costs
associated with the Manufacture of Devices based on relative usage.


 


1.2                               “Applicable Laws” means all applicable statutes, ordinances,
regulations, rules or orders of any kind whatsoever of any Governmental
Authority, including, without limitation, the FD&C Act, the Regulatory Law,
Prescription 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, cGMP,
cQSR and any comparable laws of any foreign jurisdiction, all as amended from
time to time.


 


2

















 


1.3                               “cQSR” means the then current Quality System
Regulations as defined in the United States code of Federal Regulations, 21 CFR
Part 820 and, in the case of foreign jurisdictions, comparable regulatory
standards.


 


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


 


1.5                               “Commencement Date” means the earlier of the following:  (i) the date upon which all development
activities with respect to Devices have been completed as reasonably determined
by the DWT or (ii) the date upon which any Regulatory Authority grants either
Party Marketing Approval of Product in the U.S.


 


1.6                               “Committee” means (a) the JDC for so long as the JDC has
responsibility for manufacturing matters pursuant to the Collaboration
Agreement and (b) the JCC from and after such time as responsibility for
manufacturing matters is transferred from the JDC to the JCC pursuant to the
Collaboration Agreement.


 


1.7                               “Dedicated Capacity” means capacity that is designated to be used
solely for the Device, including any component or part used solely in relation
to the Product.


 


1.8                               “Device” means a mechanical injection pen for daily
use, including any components thereof and all associated labeling and packaging
components, individually or incorporated into sub-assemblies, which meets the
applicable Specifications, and is assembled with a pre-filled cartridge
containing Compound and uses Lilly’s Infinity pen platform, including
improvements thereto as from time to time incorporated into the applicable
Specifications.


 


1.9                               “Device Development” means the conduct of all activities
consistent with the Device Development Plan that are reasonably required to
complete development of the Device including: (i) regulatory affairs,
pre-clinical studies and clinical trials in accordance with the cGLPs, cGCPs,
cGMPs, and cQSRs or other designated quality standards and Applicable Laws; and
(ii) all activities relating to developing the ability to Manufacture Devices
to be used for the delivery of Compound, including, without limitation,
delivery technologies related to Devices and components thereof, industrial and
mechanical design, and Manufacturing and quality assurance technical support,
until such time as Manufacturing of Devices intended for commercial sale of
Product commences and thereafter to the extent required under applicable law
for continued commercial sale of Product.


 


3

















 


1.10                        “Device Development Costs” means those costs and expenses incurred by a
Party or for its account for Device Development calculated in accordance with
Section 4.3 of the Collaboration Agreement to the extent consistent with the
Device Development Plan, and any costs incurred for Device Development pursuant
to the Collaboration Agreement prior to the Effective Date of this Agreement to
the extent consistent with the Development Plan.  Device Development Costs include those costs incurred for FTEs
(as defined in the Collaboration Agreement), Product specific Third Party
costs, depreciation of Device specific capital investments, and depreciation of
an allocation of general Device Development equipment directly associated with
the Device Development.  Product
specific Third Party costs include, but are not limited to, [***].


 


1.11                        “Device Development Plan” will have the meaning set forth in Section
2.2.


 


1.12                        “DHF” means
the Design History File that Lilly will establish and maintain for the Device
that will contain or reference all records and submissions necessary to
demonstrate that the design was developed in accordance with the approved
Device Development Plan.


 


1.13                        “Effective Date” will have the meaning set forth in the first paragraph of this
Agreement.


 


1.14                        “Five-Year Forecast” will have the meaning set forth in Section
5.1(a).


 


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


 


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


 


1.17                        “Inspection Period” will have the meaning set forth in Section 5.6(a) of this Agreement.


 


1.18                        “Latent Defect” means defects that cause the Devices to fail to conform to the
Specifications or otherwise fail to conform to the warranties provided pursuant
to Section 9.7 hereof, which defects are not discoverable upon reasonable
physical inspection as provided in Section 5.6(a).


 


1.19                        “Manufacture”, “Manufacturing” or
“Manufactured” means all operations involved in the manufacturing,
quality control testing (including in-process, release and stability testing),
assembling, releasing, labeling, packaging and shipping of the Devices as more
fully described in the MRD.


 


*
CONFIDENTIAL TREATMENT REQUEST(ED)


 


4

















 


1.20                        “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 Devices under this
Agreement.  The Table of Contents of a
sample MRD is attached for reference only as Exhibit B.


 


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


 


1.22                        “QA” means
the Quality Agreement between the Parties which describes certain quality
expectations and responsibilities relating to the development, Manufacture,
release testing and supply of the Devices and final assembled Products
(assembled pen and cartridge containing Compound) to Amylin.  If the Parties so select, there may be
separate QAs for the U.S. and in the Territory outside the U.S.  The Table of Contents of a sample QA is
attached for reference only as Exhibit C.


 


1.23                        “Quality Audit” has the meaning provided in Section 4.6(b) of this Agreement.


 


1.24                        “Regulatory Authority” means, in a particular country or
jurisdiction, any applicable government regulatory authority involved in
granting Marketing Approval and/or, to the extent required in such country or
jurisdiction, including without limitation, the FDA and any other applicable
governmental or regulatory authority in the U.S. having jurisdiction over the
Devices, and any successor government authority having substantially the same function,
and any foreign equivalent thereof.


 


1.25                        “Shared Capacity” means capacity that is designated to be used in part for the Devices,
including components or parts thereof, and in part for other purposes.


 


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


 


1.27                        “Successor Manufacturer” shall have the meaning set forth in Section
11.5.4 of this Agreement.


 


5

















 


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


 


ARTICLE 2

GOVERNANCE


 


2.1                               Governance of Activities. 
Governance of the activities contemplated by this Agreement will be
effected through the governance structure established in the Collaboration
Agreement for Manufacture of Product, except as otherwise specifically provided
in this Agreement.


 


2.2                               Device Working Team.  The
Parties will establish the Device Working Team (“Device Working Team” or “DWT”)
which will be responsible for development activities with respect to the
Device, including development of the Specifications, and any subsequent
modifications thereto, and development of assembly and packaging requirements
and capacity and ongoing technical support for Device Manufacturing
operations.  All Specifications shall be
approved by the Committee.  Each Party
shall be responsible for obtaining all necessary approvals of the
Specifications from such Party’s internal committees prior to the time that the
Specifications are submitted to the Committee. 
The DWT shall develop a Device Development Plan (the “Device Development
Plan”) that will set forth in detail the Device Development activities to be
undertaken, the roles and responsibilities of the Parties with respect thereto,
and the timeline for Device Development activities.  The DWT will also prepare a device development budget which will
be included within the Device Development Plan.  The Committee shall approve the Device Development Plan.


 


(a)           Membership.  The DWT shall be comprised of no more than
three (3) representatives of each Party. 
The Committee shall have principal responsibility for overseeing the
activities of the DWT.  Each Party may
change its DWT members at any time by written notice to the other.  Such notice may be delivered at a scheduled
meeting of the DWT.  The DWT will be
chaired by Lilly and the role of the Chairman shall be to convene and preside
at the meetings of the DWT.  The
Chairman shall not be entitled to prevent items from being discussed or to cast
a tie-breaking vote.


 


6

















 


(b)           Meetings.  The DWT will hold an in-person
organizational meeting at Lilly’s offices in Indianapolis, Indiana, to
establish the DWT’s operating procedures. 
After such initial meeting, the DWT will meet at such other times as are
agreeable to a majority of the DWT members, but no less than once each
quarter.  Such meetings may be
in-person, via video conference, or via telephone conference.  After the initial meeting, the locations of
the in-person meetings will be agreed upon by the Parties.  Each Party will bear the expense of its
respective DWT members’ participation in DWT meetings.  At least five (5) business days prior to
each DWT 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.  Material decisions reached at a meeting will
be documented and signed by both Parities before the meeting ends.  Written minutes will be kept of all DWT
meetings and will reflect, without limitation, material decisions made at such
meetings.  Responsibility for keeping
minutes will alternate between the Parties, beginning with Lilly.  Meeting minutes will be sent to each member
of the DWT for review and approval within five (5) business days after a
meeting and deemed approved unless a member of the DWT objects to the accuracy
of such minutes within ten (10) business days of receipt.


 


(c)           Decisions.  The DWT shall act by unanimous
vote, and each Party shall have one vote regardless of the number of its
representatives serving on the DWT.  In
the event of a dispute on any matter within the responsibilities of the DWT,
then the matter shall be referred to the Committee for resolution.   If the Committee is unable by mutual agreement
to decide or resolve any matter properly presented to it for action, then the
matter shall be referred to the Steering Committee for resolution.  Except as otherwise set forth in this
Agreement, it is agreed that if the Steering Committee is unable to resolve the
issue, it shall be resolved in accordance with the Collaboration Agreement.


 


2.3                               Internal Committees of a
Party.  Each Party will provide the other Party with
reasonable advance notice of any internal committee of such Party that has
oversight responsibility for Devices incorporating and delivering
pharmaceutical products of such Party and its alliance partners where a
decision is expected for matters of significance related to Device Development
and Manufacture of Devices.  Each Party
shall have the right (but not the obligation) to make an appropriate
presentation at the other Party’s internal committee meeting regarding such
matter or to participate in the meeting in a manner that provides such Party
with appropriate input into the proceedings. 
A Party’s internal committee will make no determinations binding on the
other Party, but may make


 


7

















 


determinations
with respect to itself and its exercise of its rights under this Agreement and
the Collaboration Agreement.


 


ARTICLE 3

PAYMENT OF DEVELOPMENT EXPENSES, 

PURCHASE OF PRODUCT AND LIMITATION OF AGREEMENT


 


3.1                               Payment of Device
Development Costs.  Except as otherwise set forth in Section
3.3, all Device Development Costs incurred by either Party pursuant to the
Device Development Plan or otherwise approved by the Parties shall be shared
equally by the Parties, except that  Lilly
shall bear eighty percent (80%) of the incremental Device Development Costs for
development of Devices in the Territory outside the U.S. and Amylin shall pay
twenty percent (20%) of the incremental Device Development Costs.  It shall be presumed that the Device
Development Costs are for the U.S., unless (i) the incremental change is
specifically required by a Territory outside the U.S., and (ii) the incremental
change will not benefit the U.S.  If
Amylin believes that the incremental Device Development Costs relating to the
change substantially outweighs the benefit of such change to the U.S. market,
Amylin shall have the right to submit its concerns to the Committee for
discussion and resolution.  If the
parties are unable to determine whether the Device Development Costs are for
the U.S. or outside the U.S. (“O.U.S.”), then such Device Development Costs
shall be deemed [***] U.S. Device Development Costs and [***] O.U.S. Device
Development Costs.  Any Device
Development Costs incurred by the Parties with the knowledge and approval of
the other Party prior to the Effective Date, which have not been paid prior to
the Effective Date, shall be included in the first reconciliation of expenses
occurring after the Effective Date.


 


3.2                               Purchase of
Requirements.  Subject to the terms and conditions of this
Agreement, Lilly will be the exclusive Manufacturer of Devices for worldwide
distribution of Product pursuant to the terms of the Collaboration Agreement,
including, without limitation, Devices for purchase by Amylin for sale of
Product in the U.S. market.  Amylin
shall purchase its entire requirements for Devices from Lilly.  Lilly shall also Manufacture Devices for its
own account for sale by Lilly of Product in the Territory outside the U.S. as
contemplated by the Collaboration Agreement. 
In the event of any termination of this Agreement by Amylin, and for so
long as the Collaboration Agreement continues in full force and effect, Lilly
shall have the continued right to Manufacture Devices for sale by Lilly in the
Territory outside the U.S., unless Lilly’s continued Manufacture of Devices
prevents it from fulfilling its obligation to continue to supply Devices to
Amylin pursuant


 


*
CONFIDENTIAL TREATMENT REQUEST(ED)


 


8

















 


to
Section 11.6 until such time as the transfer described in Article 11 of this
Agreement is complete.  The [***] shall
be included in the Cost of Product Sold as part of the periodic reconciliation
of Operating Profits or Losses contemplated in Section 4.5 of the Collaboration
Agreement.  Except as expressly
permitted by Article 8 hereof, Amylin shall have no right to Manufacture
Devices itself, or to use the Devices for any purpose other than delivery of
Product pursuant to the Collaboration Agreement.  The Parties agree that this Agreement is not intended to cover
the supply of pens in relation to clinical trials of the Product prior to
approval by Regulatory Authorities.


 


3.3                               Sales for Other
Purposes.  The Device is intended to be developed based
in part on an existing injection pen platform previously developed by
Lilly.  Lilly shall be free to continue
to use current versions of the Lilly injection pen platform for any purpose,
including, without limitation, the delivery of various drugs, and to develop
new injection pens that are derived from or incorporate functionality,
features, component parts or other aspects of the existing Lilly injection pen
platform and/or the Device. If any future injection pen of Lilly incorporates
any material functionality, feature, component part or other aspect of the
Device that was developed as part of the joint Device Development activities
contemplated by this Agreement, then Lilly shall (i) ensure that the future
injection pen is reasonably distinguishable in appearance (e.g., shape, color,
lettering font, or labeling, etc.) from the Device, and (ii) ensure that
manufacture of the future injection pen will not detract from the ability of
Lilly, or any material supplier of Lilly, to produce the Device or components
thereof.  In consideration of Amylin’s
agreement to permit development of future injection pens incorporating functionality,
features, component parts or other aspects of the Device, Lilly agrees to bear
[***] of the Device design costs to be paid to [***].  In addition, in the event Lilly sells to a Third Party for
delivery of any drug not marketed or promoted by Lilly, any future injection
pen of Lilly incorporating any material functionality, feature, component part
or other aspect of the Device, and such material functionality, features,
component parts or other aspects of the Device was developed as part of the joint
Device Development activities contemplated by this Agreement, Lilly shall pay
to Amylin a royalty equal to [***] of net sales by Lilly of such injection pen,
up to a maximum amount equal to the Device Development Costs paid by Amylin,
increased by an amount equal to interest at the rate of [***] compounded
annually.


 


3.4                               Purchase Price.  Amylin shall purchase Devices from Lilly [***] as contemplated in
Section 3.2 of this Agreement.  [***]
incurred will be included in Cost of Product Sold as part of the periodic
reconciliation of Operating Profits or Losses contemplated in Section 4.5


 


* CONFIDENTIAL TREATMENT
REQUEST(ED)


 


9

















 


of
the Collaboration Agreement.  Lilly has
provided Amylin with the current cost estimate of Devices dated May 8,
2003.  Lilly shall provide Amylin with
periodic updates to such cost estimate as they become available.  Lilly will not make any changes to its Manufacturing
processes that Lilly anticipates would materially increase the Actual
Manufacturing Costs of the Device without first obtaining the Committee’s
agreement to such changes.


 


3.5                               Capital Investments.  Capital investments for development or Manufacturing of the Devices
will be made by the Parties based upon the Forecast and Five-Year Forecast
discussed in Section 5.1 and recommendations of the Committee.  In the event that capital investments for
the Devices are incurred by either Party, relying on such information, and the
actual Device quantity requirements are less than anticipated leading to idle
equipment, the Parties will equally share in the cost of this equipment to the
extent that it cannot be utilized for other uses by Lilly.  Lilly will initially fund all capital costs
related to its activities under this Agreement. The initial investment made by
Lilly for the capital assets will be depreciated and included in the Actual
Manufacturing Costs or Device Development Costs as contemplated in Article 1 of
this Agreement.


 


3.6                               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 Device Development
Costs and Actual Manufacturing Cost under the same terms and in the same manner
as set forth in Section 4.9(e) of the Collaboration Agreement.


 


3.7                               Other Supply Chain
Arrangements.  The Parties agree that this Agreement is
intended only to establish the Parties’ responsibilities related to the
development, Manufacture, and purchase of the Devices.  It is anticipated that separate agreements
will address supply of the prefilled cartridge.


 


ARTICLE 4

DEVELOPMENT, MANUFACTURING AND QUALITY


 


4.1                               Development. 
Subject to the terms and conditions of this Agreement, each Party shall
use its Commercially Reasonable Efforts to fulfill its obligations under the
Device Development Plan.


 


4.2                               Development of QA.  No
later than six (6) months after the Effective Date, the Parties shall prepare
and adopt the Quality Agreement.  The
Parties shall, at least annually,


 


10

















 


review
the Quality Agreement and shall modify it from time to time as necessary
through issuance of a revised section 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 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.


 


4.3                               Development of MRD.  No
later than nine (9) months after the Effective Date, the Parties shall prepare
and adopt the MRD.  The Parties shall,
at least annually, review the MRD and shall modify it from time to time as
necessary through issuance of a revised section 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.


 


4.4                               Manufacturing. 
Subject to the terms and conditions of this Agreement, Lilly will use
its Commercially Reasonable Efforts to Manufacture Devices for Amylin from
Lilly’s facilities, or the facilities of any agent of Lilly approved by Amylin
(such approval may not be unreasonably withheld or delayed), at the times and
in the quantities set forth by Amylin in a purchase order and subject, however,
to the quantity restrictions set forth in this Agreement.  Lilly shall establish Dedicated Capacity for
the Manufacture of Devices in accordance with the Device Development Plan or as
otherwise directed by the Committee. 
Lilly will use its Commercially Reasonable Efforts to ensure that each
shipment of Devices:  (i) will have been
manufactured in accordance with the Specifications, cGMP and cQSR in effect at
the time of Manufacture, (ii) will not be adulterated or misbranded within the
meaning of the FD&C Act by Lilly or any of its agents, (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.


 


11

















 


4.5                               Modifications.  The
Parties anticipate that the Specifications will be modified from time to time
to reflect improvements or modifications to the Device.  Any proposed modification to the
Specifications shall be approved by the Committee (subject to Section 5.2 of
the Collaboration Agreement) prior to implementation or filing with any
Regulatory Authority.  At the time of
any approved change in Specifications, the Parties shall identify all costs and
risks, including Device Development Costs, resulting from the changes, and a
timeline for implementing the changes.


 


(a)           Amylin acknowledges that the Device
will be developed based, in part, upon Lilly’s existing injection pen platform
and utilize Manufacturing procedures based in part upon those that Lilly
utilizes for pen devices for delivery of other drugs.   Accordingly, Lilly may from time to time request changes to the
Specifications or seek to modify its Manufacturing process for the Devices in
order to facilitate production of pen devices for delivery of other drugs.  Amylin shall agree to any requested changes
provided such modifications do not materially impair the functionality of the
Device, increase Actual Manufacturing Costs payable by Amylin or otherwise have
a material negative impact on the Device or Amylin.  Lilly will provide Amylin with reasonable advance notice of any
proposed material modification and will consult with, and consider in good
faith the reasonable comments of Amylin regarding such proposed material
modification.  Except for a change
required by subsection (c) below, Lilly will be solely responsible for the
costs of any such changes requested by it to the extent that such changes do
not result in off setting benefit to the Device including costs, quality,
performance, or safety, as reasonably agreed by the Parties.


 


(b)           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 Lilly’s performance of this Agreement.  Lilly shall utilize its Commercially Reasonable Efforts to
implement such changes.


 


(c)           In no event will Lilly be required to
make a modification that is prohibited by Applicable Laws or Regulatory
Authorities.  In no event will Lilly be
prohibited from making a modification that is required by Applicable Laws or
Regulatory Authorities under this Section; provided, however, that Lilly shall
consult with Amylin prior to making any such modification; and provided further
that Lilly shall use its Commercially Reasonable Efforts to implement any such
modification.


 


12

















 


4.6                               Quality Control and
Assurance; cGMP Audit.


 


(a)           Quality Control and Assurance.  Lilly will use its Commercially Reasonable
Efforts to Manufacture the Devices in compliance with the Specifications.  Lilly will perform quality control testing
and quality oversight on the Devices to be delivered to Amylin hereunder in
accordance with the MRD, Quality Agreement, Specifications, cGMP and cQSRs.


 


(b)           Access to Lilly Facilities by
Amylin Representatives.  Upon no
less than forty-five (45) days’ advance written notice to Lilly and, no more
than two (2) times each Calendar Year, except in the case of Amylin attendance
at inspections by Regulatory Authorities or Quality Audits (defined below) by
Amylin that are required by Applicable Laws, Lilly will permit Amylin’s
representatives (such representatives to be reasonably acceptable to Lilly) to
conduct an audit of Lilly’s facilities during regular business hours for the
purpose of making quality control inspections to assure cGMP compliance of the
facilities used in the Manufacturing of the Devices for Amylin (the “Quality
Audit”).  Amylin representatives shall
have the right to reinspect such facilities upon reasonable advance written
notice to Lilly, at a time to be agreed by the Parties in the event of
significant adverse findings during an Amylin Quality Audit or Regulatory
Audit, or Product recalls requiring resolution by the Parties.  Amylin 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
Lilly.


 


Lilly may require that at all times the Amylin
representatives be accompanied by a Lilly representative to assure protection
of Lilly Information or confidential information of a Third Person.  Lilly will respond in writing to any written
audit observations provided by Amylin within sixty (60) days in the form of a
mutually agreed upon action plan.


 


(c)           Safety Procedures.  Lilly will have responsibility for
developing, adopting and enforcing safety procedures for the handling and
production of Devices by Lilly and the handling and disposal of all waste
relating thereto.  Lilly’s
responsibility for the handling of any particular Device will terminate as to
that particular Device upon delivery thereof to Amylin’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.


 


13

















 


4.7                               Third Party Suppliers.  The
Parties contemplate that Lilly will assemble, package and label the Devices
(“Final Assembly Activities”) and that component parts for the Devices will be
provided to Lilly by Third Party suppliers (“Third Party Suppliers”).  The Committee shall be responsible for
overseeing negotiations for additional supply contracts with Third Party
Suppliers where the Third Party Supplier will be material to the Collaboration,
and Lilly shall provide Amylin with the opportunity to review such contracts
reasonably in advance of execution, provided that Lilly may redact confidential
information unrelated to the supply of component parts for the Devices from the
copies of such contracts it provides to Amylin.  Lilly shall use its Commercially Reasonable Efforts to cause
Third Party Suppliers to fulfill their obligations under their agreements with
Lilly and to make available component parts for the Devices to the
Collaboration as contemplated by this Agreement.  The Parties agree that Lilly will not be liable to Amylin, its
Affiliates or their respective directors, officers, shareholders, employees or
agents for any Third Party Suppliers’ failure to deliver or failure of any
Device as a result of components of the Device manufactured by Third Party
Suppliers or the failure of such components to comply with applicable
Specifications, any representations or warranties of such Third Party Supplier
or Applicable Laws, except to the extent such failure to comply is the result
of Lilly’s gross negligence or willful misconduct.  In the event Lilly receives any indemnification payments or other
recovery from Third Parties performing services on behalf of Lilly for
Manufacture of Devices containing Product, such amounts shall be shared equally
by the Parties.  To the extent legally
or contractually permissible, Lilly shall obtain a written assignment of all
patent rights and know-how that such Third Parties may develop by reason of
work performed under this Agreement. 
Pre-filled cartridges containing drug shall be provided by a supplier
mutually acceptable to the Parties, and Lilly shall have no liability under
this Agreement for any delay in the availability of cartridges or any defect in
the cartridge or drug.


 


4.8                               Subcontracting. 
Lilly may, in its sole discretion, subcontract all or a portion of its
Final Assembly Activities, and to the extent that Lilly does subcontract any
portion of such Final Assembly Activities, Lilly shall be responsible for such
Final Assembly Activities to the same extent as if Lilly had performed such
Final Assembly Activities itself.


 


Amylin may not sublicense any
of its rights or obligations under this Agreement to any Third Person except as
provided under Section 9.2 of the Collaboration Agreement (only to the extent
Amylin could assign such rights or delegate such duties under this Agreement)
or as expressly provided under Article 8 hereof.


 


14

















 


4.9                               Records.  Each
of the Parties shall keep accurate records of its activities under this
Agreement.  Lilly will, with respect to
each lot of Devices produced by it hereunder, for the longer of (i) any period
required by Applicable Laws, or (ii) a period of one (1) year after the expiry
of the expiration dating of such lot, keep accurate records of the Manufacture
and testing of the Devices produced by it hereunder, including, without
limitation, all such records which are required under Applicable Laws and the
DHF for Devices.  Access to such records
will be made available by Lilly to Amylin during normal business hours upon
Amylin’s reasonable written request. 
Lilly further agrees to provide Amylin with such information regarding
the Manufacture and testing of Devices hereunder as may be required to obtain
or maintain Marketing Approval of Product or as may otherwise be required or
requested by any Regulatory Authority.


 


ARTICLE 5

PURCHASE OF DEVICES; FORECASTS


 


5.1                               Forecasts.


 


(a)           Five-Year Forecast.  The Committee will submit to DWT no later
than the Effective Date an initial five-year forecast in quarters (the
“Five-Year Forecast”) of Amylin’s anticipated purchase requirements of Devices
for the U.S. and Lilly’s anticipated requirements for the Territory outside the
U.S.  Thereafter, the Committee will
deliver to Lilly on an annual basis, a good faith forecast in quarters of the quantity
of Devices Amylin expects to receive from Lilly during the Term of this
Agreement.  The Parties agree that the
Five-Year Forecast will be used for planning purposes only and will not be
binding on either Party.


 


(b)           Rolling Production Forecasts.  The Parties will work together to develop forecasts,
inventory targets, and production capacity requirements for Manufacture of
Devices and submit the same to the Committee. 
No later than forty-five (45) days prior to the commencement of each
Calendar Quarter following the Commencement Date, the Committee will provide to
Lilly an estimate of the total quantity of Devices required to be delivered for
the following Calendar Quarter and the succeeding eight Calendar Quarters (the
“Forecast”).  The Parties agree that the
Forecast will be for general planning purposes only and will not be binding on
Lilly or Amylin.  Lilly will maintain a reasonable level of inventory of
components and raw materials for the Manufacture of Devices in accordance with
its internal practices for products of a similar nature.


 


15

















 


5.2                               Safety Stock.  At least ten (10) months before the anticipated launch of Product, the
Parties shall mutually agree upon the appropriate levels of safety stock of
Devices to be maintained by each Party for its respective territory, which
shall in no event be planned to be less than [***] of forward demand cover held
as finished stock.  Safety stocks of
cartridges and filled cartridges will also be agreed by the parties.  After the Commencement Date, the Parties
shall review safety stock levels on at least a quarterly basis.


 


5.3                               Limitations of Supply.  Lilly will use its Commercially Reasonable Efforts to make available at
least [***] of the Forecast using Dedicated Capacity.  If at any time Lilly anticipates that it will be unable to supply
in whole or in part the quantities of Devices set forth in an Amylin purchase
order for any reason, including without limitation, Force Majeure, Lilly will
notify Amylin in writing as soon as possible of such anticipated
shortfall.  Lilly will also notify
Amylin of the underlying reason for the shortfall, proposed remedial measures,
the date such inability to supply the full order of Devices is expected to end,
and a proposed amount of Devices to be delivered to Amylin.  In the event fewer Devices are available
than the Parties desire to purchase, Lilly will allocate available Devices on a
pro rata basis based upon the Forecasts included in the most recent annual
business plan approved by unanimous vote of the JSC; 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. In the event of any manufacturing capacity constraints or raw
material shortages affecting the Manufacture of Devices or components thereof
to be Manufactured on behalf of Amylin, Lilly may, in its sole discretion, but
with no obligation, agree to utilize Non-Dedicated Capacity to Manufacture
Devices or components thereof on behalf of Amylin in an effort to supply all or
a portion of the quantity of Devices constituting the shortfall of the quantity
set forth in Amylin’s purchase order.


 


5.4                               Purchase Orders. 
Amylin will purchase Devices solely by written purchase orders.  The Committee will establish a reasonable
minimum order size for Devices prior to submission of the first Forecast, and
Amylin 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


 


* CONFIDENTIAL TREATMENT
REQUEST(ED)


 


16

















 


such
purchase orders, Lilly’s acknowledgement forms, or any other forms.  Upon submission to Lilly in accordance with
this Section 5.4, a purchase order shall be deemed accepted by Lilly except to
the extent it exceeds [***] of the most recent applicable Forecast; provided
however, that acceptance of a purchase order shall not guarantee that Lilly
will have supply sufficient to fill such purchase order at the time such
purchase order is submitted, it being agreed that Lilly shall fill such
purchase order as soon as sufficient supply is available.  Amylin will submit each such written
purchase order to Lilly at least ninety (90) days in advance of the date
specified in each purchase order by which delivery of the Devices is
required.  Notwithstanding the foregoing,
Lilly will use Commercially Reasonable Efforts, but will not be obligated, to
meet any request of Amylin for delivery of Devices in less than ninety (90)
days, and further, Lilly will attempt, but will not be obligated, to
accommodate any changes requested by Amylin in delivery schedules for Devices
following Lilly’s receipt of purchase orders from Amylin in accordance with
this Section 5.4.  Lilly will provide
written notice to Amylin of its acceptance or rejection of a specific purchase
order within five (5) business days of receipt thereof, provided that Lilly
shall not have the right to reject a purchase order submitted to Lilly 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 Lilly will have supply
sufficient to fill such purchase order at the time such purchase order is
submitted, it being agreed that Lilly shall fill such purchase order as soon as
sufficient supply is available.  Upon receipt and acceptance of
each purchase order by Lilly hereunder, Lilly will use Commercially Reasonable
Efforts to supply the Devices in such quantities on the delivery dates
specified in such purchase order, unless otherwise mutually agreed to in
writing by the Parties, except to the extent such purchase order exceeds the
applicable Forecast by more than [***].


 


5.5                               Shipment of Devices.  Shipment of Devices ordered by Amylin will be to one or more
distribution service providers designated by Amylin.  Lilly will not make direct shipments to final customers in the
U.S.  Amylin will select and pay the
carrier to be used.  Devices will be
shipped FCA Lilly’s Manufacturing facility Incoterms 2000 or as may otherwise
be required pursuant to Applicable Laws. 
Title and risk of loss or damage to the Devices will remain with Lilly
until the Devices are delivered to the carrier, at which time title to the
Devices will rest in, and risk of loss or damage to the Devices will pass to
Amylin.  Amylin will cause Devices to be
picked up at Lilly’s dock no later than fifteen (15) business days after the
later of (i) the delivery date specified in the applicable purchase order, and
(ii) the date Lilly makes such Devices available for shipment.  Any


 


* CONFIDENTIAL TREATMENT
REQUEST(ED)


 


17

















 


discrepancies
between quantity shipped from Lilly and quantity arriving at Amylin will be
jointly investigated.


 


5.6                               Inspection; Rejection.


 


(a)           Any Devices shipped hereunder shall
be received by Amylin subject to inspection and testing by Amylin in accordance
with a mutually agreed upon protocol to ensure, to the extent possible, that
such Devices meet the Specifications and otherwise comply with the warranties
provided in Section 9.7 of this Agreement. 
Amylin shall be allowed a maximum of forty-five (45) days from the date
of receipt of any shipment for inspection and provision of written notice to
Lilly of rejection of any portion or all of that shipment (“Inspection
Period”).  If Amylin does not deliver
such written notice to Lilly within such Inspection Period, Amylin shall be
deemed to have accepted the shipment, except in the case of Latent Defects.


 


(b)           Promptly following notice of
rejection, Lilly and Amylin 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 Executive
Director, Global Delivery Services (or any successor position) of Lilly and the
Vice President, Product Development (or any successor position) of Amylin 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.  Amylin
shall provide to Lilly any samples of rejected Devices, as Lilly shall
reasonably request for the purpose of performing any additional testing
pursuant to this Section 5.6.  The
non-prevailing Party shall bear all reasonable costs of such independent
laboratory assessment.


 


(c)           If it is determined that the rejected
Devices were non-conforming, then Lilly shall replace such Devices as promptly
as practicable. Except as set forth in Section 5.7 below, the Actual
Manufacturing Cost of the rejected Devices, the Actual Manufacturing Cost of
the replacement Devices and Amylin’s costs of return or disposal of rejected,
non-conforming Devices 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 Lilly’s gross negligence or willful misconduct, in which
event Lilly


 


18

















 


shall pay or reimburse such
costs to Amylin in full. Rejected or non-conforming Devices shall be returned
to Lilly or disposed of, as directed by Lilly.


 


5.7                             Excessive Rejections


 


(a)           The DWT shall review the number of
non-conforming Devices rejected by Amylin on a quarterly basis.  Beginning [***] following the date on which
Lilly commences the Manufacture of Devices for commercial use, the Parties
shall from time to time, as requested by Amylin, review the number of Devices properly
rejected by Amylin, both on a cumulative basis from the date that is [***]
after such manufacturing line was placed into service (the “Rejection
Measurement Date”) and on a per-batch basis. 
The Parties shall meet to discuss the rejection rate and determine an
appropriate course of action if the cumulative number of Devices properly
rejected by Amylin exceeds (i) [***] of the total volume of Devices shipped by
Lilly to Amylin until such time as Lilly has shipped [***] to Amylin, and (ii)
[***] of the total volume of Devices shipped by Lilly to Amylin thereafter (the
“Cumulative Rejection Rate”).  Unless
the Parties agree to a different course of action, the Committee or its
designee shall develop a Manufacturing Action Plan intended to reduce the rejection
rate to a level below the above-mentioned rates (the “Manufacturing Action
Plan”).  The Manufacturing Action Plan
shall specify in detail the steps to be taken and an appropriate timetable for
action.  All costs of implementing the
changes called for in the Manufacturing Action Plan shall be included in Actual
Manufacturing Costs, or Development Costs, as appropriate.


 


(b)           Lilly shall use its Commercially
Reasonable Efforts to implement the Manufacturing Action Plan within the
timeline established by the Manufacturing Action Plan.  If Lilly fails to utilize Commercially
Reasonable Efforts to implement the Manufacturing Action Plan, and as a result
the number of Devices rejected by Amylin after the date on which the
Manufacturing Action Plan should have been implemented continues to exceed the
applicable Cumulative Rejection Rate stated in Section 5.7(a) above over a
[***], then (i) Lilly shall bear the costs of replacing rejected Devices to the
extent the number of such Devices exceeds such Cumulative Rejection Rate, and
such cost shall not be included in the Cost of Product Sold for resolution in
accordance with


 


*
CONFIDENTIAL TREATMENT REQUEST(ED)


 


19

















 


Article 4 of the
Collaboration Agreement, and (ii) Amylin shall have the right to terminate this
Agreement for material breach pursuant to Section 11.3(b).


 


(c)           If Lilly places in service more than
one assembly line, or replaces an existing line with a new line, the provisions
above shall be applied separately as to each line based upon the production of
that line, with the first review to occur [***] after such new or replacement
line is put in service.


 


(d)           Notwithstanding the foregoing, Lilly
shall not be responsible under this Agreement for the cost of any Devices that
are rejected as a result of defects caused by the actions of a person other
than Lilly (e.g., defects caused by the drug cartridge or components provided
by a Third Party Supplier, Devices that are defective because they are out of
date).


 


ARTICLE 6

LABELING AND TRADE DRESS


 


6.1                               Labeling, Trade Dress and
Packaging.  Lilly will use its Commercially Reasonable
Efforts to ensure that the Devices are labeled, 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 Devices, including use of 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. 
Lilly’s lot numbers will be affixed on the containers for the Devices
and on each shipping carton in accordance with Applicable Laws.


 


6.3                               Release Testing.  The  DWT will establish
procedures for release testing of Devices Manufactured by Lilly to ensure that
such Devices conform to Applicable Laws.


 


*
CONFIDENTIAL TREATMENT REQUEST(ED)


 


20

















 


ARTICLE 7

REGULATORY AND RECALL


 


7.1                               Regulatory
Responsibility.  All matters related to the Parties’
regulatory responsibilities, including, without limitation, recall of Devices,
regulatory communications, cooperation between the Parties, quality assurance
and manufacturing audits, will be as set forth in the Collaboration Agreement.  The DWT will also coordinate contacts with
Regulatory Authorities with respect to the Device, 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 equally by
the Parties, 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.


 


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 this Agreement.  Any inventions resulting from the activities
contemplated by this Agreement shall also be governed by the provisions of the
Collaboration Agreement, except that, in the case of inventions jointly made by
the Parties that relate to Devices (“Joint Inventions”), Lilly shall have the
right without the consent of Amylin to license or sublicense such Joint Inventions,
and in the case of any invention made solely by Amylin (an “Amylin Invention”),
Lilly shall have a nonexclusive license to such Amylin Invention.  In addition, if this Agreement is terminated
for any reason, then effective upon such termination, Lilly shall, and it
hereby does, grant to Amylin a non-exclusive, irrevocable, perpetual,
royalty-free license, with the right to sublicense, under intellectual property
rights of Lilly claiming the Manufacture, use or sale of Devices solely, to
make, have made, use, sell, have sold, offer for sale and import Product in the
Territory, subject to the rights of Lilly under the Collaboration Agreement.


 


21

















 


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. 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.  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.


 


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.


 


22

















 


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 mater 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                               Devices Specifications. 
Lilly will use Commercially Reasonable Efforts to ensure that as of the
date of delivery, all Devices delivered by Lilly to Amylin hereunder:  (i) will conform, in all material respects,
to the Specifications in effect at the time of manufacture, (ii) will have been
Manufactured in accordance with cGMP and cQSR in effect at the time of
manufacture, (iii) will not be adulterated or misbranded by Lilly 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, the “Product Warranty”). 
Upon delivery to Amylin, FCA Lilly’s Manufacturing facility Incoterms
2000, Lilly will convey good title to such Devices to Amylin as of the date of
shipment, free and clear of any lien or encumbrance.


 


9.8                               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.


 


9.9                               Applicable Laws.  Lilly will comply with all Applicable Laws relating to its Manufacture
of the Devices.


 


9.10                        Intellectual Property.  To the best of
Lilly’s knowledge, as of the Effective Date, the use of Lilly’s existing pen
platform in performance of Device Development as contemplated hereunder does
not infringe or misappropriate any valid and enforceable intellectual property
rights owned by any Third Party.


 


9.11                        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.


 


23

















 


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.


 


24

















 


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                        Applicable Laws. 
Amylin will comply
with Applicable Laws relating to its distributing, marketing, promoting and
selling of the Devices.


 


10.9                        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 MANUFACTURING AGREEMENT; TERMINATION


 


11.1                        Term of Manufacturing 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 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 11.3(c) below.


 


11.2                        Termination Without Cause.   
After the second anniversary date of the Commencement Date, either Party
may terminate this Agreement by providing the other Party forty-eight (48)
months advance written notice of such termination.


 


11.3                        Termination For Cause.  In
addition to each Party’s right to terminate under Section 11.2 above, this
Agreement may be terminated as follows:


 


25

















 


(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 11.4, 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.


 


11.4                        Procedures for Termination for Material Breach.  A
termination of this Agreement pursuant to Section 11.3(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 delivered to the other
Party.  This Section 11.4 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.


 


26

















 


11.5                        Effect of Termination.


 


11.5.1              Upon
termination of this Agreement for any reason (whether due to breach of either
Party or otherwise), Lilly will furnish to Amylin a complete written inventory
of all work in progress and an inventory of all finished Devices.  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:


 


(a)           Devices Manufactured and packaged
pursuant to purchase orders from Amylin and accepted by Lilly will be delivered
by Lilly to Amylin, whereupon Amylin will pay Lilly therefore in accordance
with the terms hereof.


 


(b)           Work in progress commenced by Lilly
against accepted purchase orders from Amylin will be completed by Lilly and
delivered to Amylin, whereupon Amylin will pay Lilly therefore in accordance
with the terms hereof.


 


11.5.2              In
the event of termination of this Agreement by Lilly for Amylin’s material
breach, voluntary termination of this Agreement by Amylin pursuant to Section
11.2 hereof 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 Lilly that cannot be reasonably avoided. 
In the event of termination of this Agreement by mutual agreement of the
Parties, the Parties shall share in any wind down costs incurred by Lilly that
cannot be reasonably avoided.  Wind down
costs shall include, without limitation, costs of completing the transition of
the manufacturing process to a Successor Manufacturer (defined below), and
commitments to Third Parties that cannot be reasonably avoided.  In all other cases of termination, Lilly
shall be solely responsible for such wind-down costs.


 


11.5.3              With
respect to any Device-specific capital investments incurred as part of Device
Development or Manufacturing made by either Party that have a remaining
undepreciated amount at the time Lilly ceases to Manufacture Devices in
accordance with this Article 11:


 


(a)           if the Collaboration Agreement is in
effect immediately following termination of this Agreement, then: (i) in the
event of termination of this Agreement by Amylin for Lilly’s breach, Lilly will
be solely responsible for such undepreciated amounts of the Parties, regardless
of whether such capital investments are usable by Lilly; (ii) in the event of
termination of this Agreement by Lilly for Amylin’s breach, Amylin will be


 


27

















 


solely responsible for such
undepreciated amounts for capital investments that are not readily usable by
Lilly, and Lilly will be solely responsible for such undepreciated amounts for
capital investments that are readily usable by Lilly; (iii) in the event of
termination of this Agreement other than for breach by a Party, and other than
by Amylin pursuant to section 11.2, the Parties will use Commercially Reasonable
Efforts to transfer to the Successor Manufacturer (defined below) any such
capital investments, at the time feasible, given any continuing obligation of
Lilly to supply Devices, that are not readily usable by Lilly, and Lilly will
be solely responsible for undepreciated amounts for capital investments that
the Parties are unable to transfer to the Third Party (whether or not such
capital investments are readily usable by Lilly); and (iv) in the event of a
voluntary termination of this Agreement by Amylin pursuant to Section 11.2 of
this Agreement, Amylin will be solely responsible for such undepreciated
amounts for capital investments that are not readily usable by Lilly, and Lilly
will be responsible for such undepreciated amounts for capital investments that
are readily usable by Lilly; and


 


(b)           if this Agreement expires in
accordance with Section 11.1 or is terminated pursuant to Section 11.3(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 in
proportion to their respective shares of Adjusted U.S. Operating Profit and
Adjusted OUS Operating Profit under the Collaboration Agreement (i.e., 50%/50% for the U.S. and 80%/20% for
outside the U.S.), with such capital investments allocated between Products for
sale in the U.S. and Products for sale outside the U.S. in proportion to
projected sales of Products in and outside of the U.S. in the next calendar
year following such termination (provided that if no such sales are projected,
such undepreciated amounts will be shared equally by the Parties); (ii) in the
event of termination of the Collaboration Agreement by Amylin for Lilly’s
breach, Lilly will be solely responsible for such undepreciated amounts; and
(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.


 


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 thirty (30) days of the date on which Lilly ceases to
Manufacture Devices in accordance with this Article 11.  For example, assume that a Device specific capital
investment made by Lilly


 


28

















 


has
an initial cost of one million dollars ($1,000,000) and that prior to cessation
of Manufacture of Devices under this Article 11, depreciation costs of six
hundred thousand dollars ($600,000) have been recognized.  Accordingly, in the event of termination of
this Agreement pursuant to Section 11.3(c) of this Agreement as a result of
termination of the Collaboration Agreement by Lilly pursuant to Section 12.3
thereof, the Parties would [***] the remaining undepreciated base of four
hundred thousand dollars ($400,000) by requiring Amylin to reimburse Lilly for
[***] within thirty (30) days of the date on which Lilly ceases to Manufacture
Devices in accordance with this Article 11.


 


11.5.4              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 or
otherwise):


 


(a)           Promptly following termination of
this Agreement, and as soon as practicable given Lilly’s continuing obligation
to supply Devices until the transfer described in this Section 11.5.4 is
complete, Lilly will transfer to a Third Party manufacturer designated by
Amylin and approved by Lilly, such approval not to be unreasonably withheld or
delayed (the “Successor Manufacturer”), such Lilly Rights, Lilly Information,
manufacturing records and Product-specific equipment and test or control
procedures with respect to the Manufacture of Devices as is reasonably
necessary to permit the Successor Manufacturer to Manufacture Devices meeting
the Specifications on behalf of the Parties or Amylin, and will provide Amylin
with a copy (or access to) such Lilly Rights, Lilly Information, manufacturing
records, equipment and test or control procedures for use by the Successor Manufacturer
and Amylin solely in relation to Manufacture of Devices.  The Parties shall provide the Successor
Manufacturer with commercially reasonable technical and other assistance in
connection with the use of such Lilly Rights and Lilly Information for the
Manufacture of Devices and with the scale-up and validation to applicable
regulatory standards of the Successor Manufacturer for the Manufacture of
Devices in accordance with the Specifications. 
Each Party shall use its Commercially Reasonable Efforts to enable the
Successor Manufacturer to Manufacture Devices in accordance with the
Specifications on a commercial scale sufficient to fulfill reasonable
anticipated sales of Product as soon as reasonably practicable.  At Amylin’s request, Lilly will introduce
Amylin and the Successor Manufacturer to Lilly’s vendors of raw materials or
components used in the Manufacture of Devices, and will provide reasonable
assistance to Amylin and/or the Successor Manufacturer, as applicable, in its
efforts to enter into supply relationships with such vendors.  If any such vendor supplies Lilly with any
such raw materials or components on an exclusive basis, Lilly shall waive
compliance with any such condition to allow such vendor to transact business
with


 


*
CONFIDENTIAL TREATMENT REQUEST(ED)


 


29

















 


Amylin and/or the Successor
Manufacturer, as applicable solely in relation to the Manufacture of Devices;


 


(b)           The costs and expenses incurred by
Lilly in effecting the technology transfer and providing the assistance
described in Section 11.5.4(b) (collectively, the “Technology Transfer”) will
be borne solely by Lilly in the event of (i) termination of this Agreement by
Amylin for Lilly’s breach, (ii) termination of this Agreement by Lilly without
cause, or (iii) termination of this Agreement by either Party in the event of
termination of the Collaboration Agreement either by Amylin for Lilly’s breach
thereof or by Lilly pursuant to Section 12.3 thereof.  In the event of termination of this Agreement by Lilly for
Amylin’s breach, or voluntary termination of this Agreement by Amylin 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 Lilly for
Amylin’s breach thereof, Amylin will reimburse Lilly in full for Lilly’s
reasonable and documented costs and expenses of performing the Technology
Transfer within thirty (30) days of invoice by Lilly (such invoices to be
delivered monthly).


 


11.6                        Supply Following Termination.  In
the event this Agreement is terminated for any reason, Lilly shall, if Amylin
so requests in writing, continue to use its Commercially Reasonable Efforts to
supply Devices to Amylin pursuant to this Agreement until such time as the
Successor Manufacturer is able to Manufacture Devices in accordance with the
Specifications on a commercial scale sufficient to fulfill reasonable
anticipated sales of Product and obtain or maintain required Marketing
Approvals, except that in the case of termination of this Agreement by either
Party pursuant to Section 11.3(c) hereof or voluntary termination of this
Agreement by Amylin pursuant to Section 11.2 hereof, Lilly shall supply Devices
to Amylin for no longer than [***] from termination of this Agreement.  Lilly will supply such Devices to Amylin in
accordance with the Quality Agreement and upon terms and conditions customary
for comparable Third Party device manufacturing arrangements, except that the
purchase price of such Devices shall be:


 


(a)           in the case of (i) termination of
this Agreement by Amylin pursuant to Section 11.2, (ii) termination of this
Agreement by Lilly for Amylin’s breach, (iii) termination of this Agreement
pursuant to Section 11.3(c) as a result of termination of the Collaboration
Agreement by Lilly for Amylin’s breach thereof, or (iv) termination of this
Agreement pursuant to Section 11.3(c) as a result of termination of the
Collaboration Agreement by Lilly pursuant to Section 12.3 thereof, the [***];
and


 


*
CONFIDENTIAL TREATMENT REQUEST(ED)


 


30

















 


(b)           in the case of (i) termination of
this Agreement by Lilly pursuant to Section 11.2, (ii) termination of this
Agreement by Amylin for Lilly’s breach, or (iii) termination of this Agreement
pursuant to Section 11.3(c) as a result of termination of the Collaboration
Agreement by Amylin for Lilly’s breach thereof, the [***].


 


11.7                        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, 12, 13, 15 and 16 and Sections 3.3, 4.6(b), 11.5,
11.6, 11.7, 11.8 and 11.9 hereof, 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.


 


11.8                        Non-Exclusive  Remedies.  The remedies set forth in this Section 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.


 


11.9                        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.


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.


 


*
CONFIDENTIAL TREATMENT REQUEST(ED)


 


31

















 


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 agrees 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 (including, without limitation, all applicable
device listing and notifications to the FDA identifying Amylin as a distributor
of the Devices); 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.


 


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


 


32

















 


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.


 


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.


 


33

















 


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.


 


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.


 


34

















 


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


 


35

















 


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


 


 


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


 


 


	
   

  	
  ELI LILLY
  AND COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Pedro P. Granadillo

  
	
   

  	
   

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
  AMYLIN
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
							



 


36

















 


EXHIBIT A


 


DEFINITION OF ALLOCATION OF SERVICE FOR

ACTUAL MANUFACTURING COST CALCULATION


 


“Actual Manufacturing Cost” will include Lilly’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 Lilly to calculate Lilly’s Cost of Products Sold.


 


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 Devices.  The labor related charges included in the
Allocation of Services would be calculated using the then current FTE Rate.  To the extent the costs above are not directly
traceable to production of the Device, Lilly 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;

  
	
  (3)

  	
  manufacturing equipment
  and manufacturing support equipment calibration costs;

  
	
  (4)

  	
  utilities;

  
	
  (5)

  	
  depreciation and
  amortization;

  
	
  (6)

  	
  raw material testing;

  
	
  (7)

  	
  pre-inspection approval
  costs (including validation costs), which consists of Lilly’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 Device in accordance with Generally
  Accepted Accounting Principles.

  



 


The
costs of general corporate expenses that are not related to the Manufacturing
of Devices are not included in the Allocation of Services.


 


37

















 


EXHIBIT B


 


TABLE OF CONTENTS GUIDELINE


 


MRD TABLE OF CONTENTS


 


I.  Introductions


 


A.  [***]


 


B.  [***]


 


C.  [***]


 


II.  Administration


 


A.  [***]


 


B.  [***]


 


C.  [***]


 


III.  Primary contacts for the MRD


 


IV.
Customer Satisfaction Measurement


 


A.  [***]


 


B.  [***]


 


C.  [***]


 


D.  [***]


 


V.  Key Contacts
(Direct and Support Personnel)


 


•                  Amylin


•                  Name, Title, Phone, and Fax


•                  Lilly


•                  Name, Title, Phone, and Fax


 


*
CONFIDENTIAL TREATMENT REQUEST(ED)


 


38

















 


VI.  Organizational Charts


 


A.  Amylin including support group charts


 


B.  Lilly including support group charts


 


VII. Supply
Chain Diagram (Physical
flow of device, subassembly, and components including subcontracts as required)


 


VIII.  Material Planning, Forecasting, and
Inventory Policy


 


A.  [***]


 


B.  [***]


 


C.  [***]


 


D.  [***]


 


E.  [***]


 


F.  [***]


 


G.  [***]


 


IX.  Shipping and Receiving of Finished Goods


 


A.  [***]


 


B.  [***]


 


C.  [***]


 


D.  [***]


 


E.  [***]


 


F.  [***]


 


X.  Financial


 


A.
[***]


 


B.  [***]


 


C.  [***]


 


*
CONFIDENTIAL TREATMENT REQUEST(ED)


 


39

















 


D.  [***]


 


E.  [***]


 


Attachments/Appendix


 


[***]


 


* CONFIDENTIAL TREATMENT REQUEST(ED)


 


40

















 


EXHIBIT C


 


TABLE OF CONTENTS GUIDELINE


 


QUALITY AGREEMENT TABLE OF CONTENTS


[***]


 


*
CONFIDENTIAL TREATMENT REQUEST(ED)


 


41