AND THE QUALITY
AGREEMENT, AND NO TERMS OR CONDITIONS OF UNITED THERAPEUTICS' FORECASTS AND
PURCHASE ORDERS, LILLY'S ACKNOWLEDGEMENT FORMS OR INVOICES, OR ANY OTHER FORMS
SHALL BE APPLICABLE EXCEPT THOSE SPECIFYING QUANTITY ORDERED (SUBJECT TO THE
QUANTITY RESTRICTIONS) AND SHIPMENT LOCATIONS.
FOR CLARITY, NO TERM OR
CONDITION ADDED BY UNITED THERAPEUTICS TO A FORECAST OR PURCHASE ORDER OR BY
LILLY TO AN INVOICE SHALL BE BINDING ON LILLY OR UNITED THERAPEUTICS,
RESPECTIVELY, UNLESS SUCH TERM OR CONDITION IS SPECIFICALLY AGREED TO IN WRITING
BY A DULY AUTHORIZED OFFICER OF LILLY AND UNITED THERAPEUTICS.
IN THE EVENT OF
A CONFLICT BETWEEN THE TERMS OF THE MRD ON THE ONE HAND, AND THE TERMS OF THE
LICENSE AGREEMENT, THIS AGREEMENT, OR THE QUALITY AGREEMENT, ON THE OTHER, THE
TERMS OF THE LICENSE AGREEMENT, THIS AGREEMENT, OR THE QUALITY AGREEMENT, AS
APPLICABLE, SHALL GOVERN.
7.4
RAW MATERIALS.
(A)
REASONABLE
QUANTITIES OF UNIQUE COMPONENTS OR RAW MATERIALS, INCLUDING THE COMPOUND, THAT
ARE USED IN THE MANUFACTURE OF THE PRODUCT, SHALL BE PURCHASED OR MANUFACTURED
BY LILLY, AT ITS OWN COST AND EXPENSE, FOR USE IN SUPPLYING UNITED THERAPEUTICS'
REQUIREMENTS FOR THE PRODUCT UNDER THIS AGREEMENT BASED ON THE FORECAST.
IF
UNITED THERAPEUTICS' CHANGE TO THE QUANTITIES OF THE PRODUCT PREVIOUSLY
FORECASTED FOR A CALENDAR MONTH IN A FORECAST CAUSES ANY MATERIAL OBSOLESCENCE
OF ANY QUANTITIES OF THE PRODUCT, OR ANY SUCH COMPONENTS OR MATERIALS PURCHASED
BY LILLY AND ALLOCATED FOR THE SUPPLY OF SUCH PRODUCT TO UNITED THERAPEUTICS
HEREUNDER, AND SUCH COMPONENTS OR MATERIALS CANNOT REASONABLY BE USED BY LILLY
IN THE MANUFACTURE OF OTHER PRODUCTS, UNITED THERAPEUTICS SHALL BEAR THE
REASONABLE AND DIRECT COSTS AND EXPENSES ACTUALLY INCURRED BY THE PARTIES
ASSOCIATED WITH SUCH CHANGE (INCLUDING
15
any costs related to returning such components or material to the vendor or
otherwise disposing thereof). Lilly shall not make any claim under this
Section 7.4(a) for such costs and expenses until such costs and expenses exceed
twenty-five thousand Dollars ($25,000) in the aggregate in any Calendar Quarter.
Lilly shall keep United Therapeutics reasonably advised as to the quantities of
such excess unique components or materials used in the manufacture of the
Product that are purchased by Lilly.
(B)
IF THE AVAILABLE
SUPPLY OF THE COMPOUND OR OTHER INPUTS TO THE PRODUCT, INCLUDING PRODUCTION
TIME, FOR PURPOSES OF MANUFACTURING THE PRODUCT IS IN SHORT SUPPLY SUCH THAT
LILLY IS UNABLE TO FULFILL COMPLETELY UNITED THERAPEUTICS' OUTSTANDING PURCHASE
ORDERS, LILLY SHALL ALLOCATE SUCH AVAILABLE SUPPLY OF THE COMPOUND AND SUCH
OTHER INPUTS TO THE PRODUCT FOR: THE PRODUCT IN THE FIELD IN THE TERRITORY FOR
UNITED THERAPEUTICS; AND THE PRODUCT IN THE FIELD OUTSIDE THE TERRITORY FOR
LILLY; ON A PRO RATA BASIS BASED ON AGGREGATE UNIT SALES OF THE PRODUCT IN THE
TERRITORY AND OUTSIDE THE TERRITORY IN THE TWO MOST RECENT CALENDAR QUARTERS FOR
WHICH SUCH INFORMATION IS AVAILABLE. LILLY SHALL INFORM UNITED THERAPEUTICS OF
THE EXPECTED DURATION OF THE SHORTAGE OF THE COMPOUND OR OTHER INPUTS TO THE
PRODUCT AND SHALL KEEP UNITED