Document:

Exhibit 10.55

 

AMYLIN PHARMACEUTICALS, INC.

 

 

AND

 

 

ELI LILLY AND COMPANY

 

 

SECURITY AGREEMENT

 

 

JUNE 30, 2003

 

 

Table of Contents

 

	
  Section 1.

  	
   

  	
  Definitions

  
	
   

  	
   

  	
   

  
	
  Section 2.

  	
   

  	
  Security Interest

  
	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Grant

  
	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  Events of Default/Remedies

  
	
   

  	
   

  	
   

  
	
  Section 3.

  	
   

  	
  Representations and Warranties; Covenants

  
	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  The
  Collateral

  
	
   

  	
   

  	
   

  
	
  3.2

  	
   

  	
  Perfection

  
	
   

  	
   

  	
   

  
	
  3.3

  	
   

  	
  Taxes and Assessments

  
	
   

  	
   

  	
   

  
	
  3.4

  	
   

  	
  Performance by Lilly of Amylin’s Agreements

  
	
   

  	
   

  	
   

  
	
  Section 4.

  	
   

  	
  Miscellaneous

  
	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Application of Sale Proceeds

  
	
   

  	
   

  	
   

  
	
  4.2

  	
   

  	
  Statutory
  Rights

  
	
   

  	
   

  	
   

  
	
  4.3

  	
   

  	
  Further
  Actions

  
	
   

  	
   

  	
   

  
	
  4.4

  	
   

  	
  Assignment

  
	
   

  	
   

  	
   

  
	
  4.5

  	
   

  	
  Notices

  
	
   

  	
   

  	
   

  
	
  4.6

  	
   

  	
  Amendment

  
	
   

  	
   

  	
   

  
	
  4.7

  	
   

  	
  Waiver

  
	
   

  	
   

  	
   

  
	
  4.8

  	
   

  	
  Counterparts

  
	
   

  	
   

  	
   

  
	
  4.9

  	
   

  	
  Titles and Subtitles

  
	
   

  	
   

  	
   

  
	
  4.10

  	
   

  	
  Governing
  Law

  
	
   

  	
   

  	
   

  
	
  4.11

  	
   

  	
  Severability

  

 

i

 

SECURITY AGREEMENT

 

This Security
Agreement is made and entered into as of the
30th day of June, 2003 (the “Effective Date”), by and between AMYLIN
PHARMACEUTICALS, INC., a Delaware corporation, having a principal
place of business at 9373 Towne Center Drive, San Diego,
California 92121 (“Amylin”), and ELI LILLY AND COMPANY, an
Indiana corporation having a principal place of business at Lilly Corporate
Center, Indianapolis, Indiana 46285 (“Lilly”). 
Amylin and Lilly are sometimes referred to herein individually as a “Party”
and collectively as the “Parties.”

 

RECITALS

 

Whereas,
Amylin and Lilly have entered into a Collaboration Agreement dated as of
September 19, 2002 (the “Collaboration Agreement”) and a Loan
Agreement dated as of September 19, 2002 (the “Loan Agreement”); and

 

Whereas,
pursuant to the terms of the Loan Agreement and to secure the Obligations (as
defined in the Loan Agreement), Amylin has agreed to grant to Lilly a first
priority security interest in all of Amylin’s right, title and interest in and
to the Collateral (as defined below), subject only to Permitted Liens (as
defined in the Loan Agreement) and to the terms and conditions of the Loan
Agreement.

 

AGREEMENT

 

NOW, THEREFORE,  in
consideration of the foregoing recitals and the mutual covenants and agreements
contained herein and in the Collaboration Agreement and the Loan Agreement, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties hereto, intending to be legally bound, do
hereby agree as follows:

 

Section 1.              DEFINITIONS

 

Except as
otherwise specified in this Agreement, all capitalized terms used herein shall
have the meanings assigned to them in the Loan Agreement or the Collaboration
Agreement.

 

“Agreement”
means this Security Agreement, as the same may from time to time be amended,
restated, modified or supplemented, and shall refer to this Agreement as the
same may be in effect at the time such reference becomes operative.

 

“Collateral”
means all right, title and interest of Amylin in, to and under the Amylin
Rights and all other personal property of Amylin, other than Excluded
Intellectual Property, now owned and existing or hereafter acquired or arising,
and wherever located including, without limitation, the following described
property of Amylin (each capitalized term used in this definition shall have in
this definition and in this Agreement the meaning given to it by the UCC):
Accounts, General Intangibles, Chattel Paper, Commercial Tort Claims,
Documents, Instruments, Investment Property, letters of credit and Letter-Of-Credit
Rights, Equipment, Inventory, Goods, Software, all cash, and Deposit Accounts
and all demand, time, savings, passbook and like accounts maintained by Amylin
with any bank, savings and loan association, credit union or like organization,
all books and records (including, without limitation, customer lists, credit
files, computer programs, printouts and other computer materials and records)
of

 

1

 

Amylin pertaining to any of the
foregoing personal property, and all Products of and Accessions to each and all
of the foregoing and all Proceeds of all and each of the foregoing.

 

“Excluded
Intellectual Property” means all Intellectual Property
of Amylin other than the Amylin Rights.

 

“Intellectual Property”
means (a) all inventions (whether patentable or unpatentable and whether
or not reduced to practice), all improvements thereto, and all rights arising
under or in connection with all Patents and Patent disclosures, (b) all
trademarks, service marks, trade dress, logos, slogans, trade names and
corporate names, together with all translations, adaptations, derivations and
combinations thereof (including all goodwill associated therewith), and all
applications, registrations and renewals in connection therewith, (c) all
copyrightable works, all copyrights and all applications, registrations and
renewals in connection therewith, (d) all trade secrets and confidential
business information (including, without limitation, ideas, research, know-how,
techniques, methods, data, clinical and regulatory strategies, customer lists,
and business and marketing plans and proposals), (e)  all computer
software (including data and related documentation), and (f) all copies
and tangible embodiments thereof (in whatever form or medium).

 

“Patent”
or “Patents”
means (a) patents and patent applications (including provisional
applications and applications for certificates of invention); (b) any
patents issuing from such patent applications (including certificates of
invention); (c) all patents and patent applications based on,
corresponding to, or claiming the priority date(s) of any of the foregoing;
(d) any reissues, substitutions, confirmations, registrations,
validations, re-examinations, additions, continuations, continued prosecution
applications, continuations-in-part, or divisions of or to any of the
foregoing; and (e) term extensions, supplementary protection certificates
and other governmental action which provide exclusive rights to a product
beyond the original patent expiration date.

 

“UCC”
means the Uniform Commercial Code as the same may, from time to time, be in
effect in the State of New York (NY-UCC §9-101 et  seq.); provided,
however, in the event that, by reason of mandatory provisions of law,
any or all of the attachment, perfection or priority of Lilly’s security
interest in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of New York, the term “UCC” shall
mean the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of definitions related to such provisions.

 

Section
2.              SECURITY INTEREST

 

2.1          Grant.  To secure the prompt and complete payment,
observance and performance of the Obligations, Amylin hereby grants to Lilly a
first and prior security interest in all of Amylin’s right, title and interest
in and to the Collateral, subject only to Permitted Liens and to the terms and
conditions of the Loan Agreement.

 

2

 

2.2          Events
of Default/Remedies. 
Time is of the essence with respect to this Agreement.  Upon the occurrence of any Event of Default
or at any time thereafter while such Event of Default is continuing:

 

(a)           Acceleration.  Lilly shall be entitled to declare all of
the Obligations to be due and payable immediately, whereupon the Obligations
shall become due and payable immediately, without presentation, demand,
protest, notice of protest or other notice of dishonor of any kind, all of
which are hereby expressly waived.

 

(b)           Remedies under
UCC.  Lilly shall have all of the
remedies of a secured party under the UCC and as otherwise provided by
applicable law, including, but not limited to, the following:

 

(i)                                    Lilly
may exercise any one or more of its rights under any of the Loan Documents in
satisfaction of all or part of the Obligations.

 

(ii)                                Lilly
may take possession of the Collateral. 
For purposes of taking possession, Lilly may enter upon any premises on
which the Collateral may be situated without legal process and remove the
Collateral.  Amylin releases Lilly from
any claims arising from such removal and shall hold Lilly harmless from any
liability resulting therefrom.  Lilly may
require Amylin to assemble the Collateral and make it available at a place to
be designated by Lilly which is reasonably convenient to the Parties.

 

(iii)                            Unless
the Collateral threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Lilly shall give Amylin at least ten
(10) days’ prior written notice of the time and place of any public sale
thereof or of the time after which any private sale or any other intended
disposition thereof is to be made.  Upon
any such sale, Lilly shall have the right to deliver, assign and transfer to
the purchaser thereof the Collateral so sold. 
Each purchaser at any such sale shall hold the Collateral so sold to it
absolutely and free from any claim or right of whatsoever kind, including any
equity or right of redemption of Amylin which may be waived, and Amylin, to the
extent permitted by law, hereby specifically waives all rights of redemption,
stay or appraisal which it has or may have under any law now existing or
hereafter adopted.

 

(iv)                               The
notice (if any) of a sale under Section 2.2(b)(iii) above shall include
the information set forth in Section 9-613(a) of the UCC, including
(a) a description of the debtor and the secured party, (b) a
description of the Collateral that is the subject of the intended disposition,
(c) a statement of the method of intended disposition, (d) a
statement that the debtor is entitled to an accounting of the unpaid
indebtedness and states the charge, if any, for an accounting, and (e) a statement
of the time and place of a public disposition or the time after which any other
disposition is to be made.  Amylin
agrees that such notice constitutes “reasonable

 

3

 

authenticated
notification of disposition” within the meaning of Section 9-611 of the
UCC.

 

(v)                                   Any
such public sale shall be held at such time or times within ordinary business
hours and at such place or places as Lilly may fix in the notice of such
sale.  At any such sale the Collateral
may be sold in one lot as an entirety or in separate parcels, as Lilly may
determine.  Lilly shall not be obligated
to make any such sale pursuant to any such notice.  Lilly may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for the sale, and such sale may be
made at any time or place to which the same may be so adjourned.

 

(vi)                               In
case of any sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by Lilly until the selling
price is paid by the purchaser thereof, but Lilly shall not incur any liability
in case of the failure of such purchaser to take up and pay for the Collateral
so sold and, in case of any such failure, such Collateral may again be sold
upon like notice.

 

(vii)                           Lilly,
instead of exercising the power of sale herein conferred upon it, may proceed
by a suit or suits at law or in equity to foreclose its security interest and
sell the Collateral, or any portion thereof, under a judgment or decree of a
court or courts of competent jurisdiction. 
The expenses of retaking, holding, preparing for sale, selling and the
like, and reasonable attorneys’ fees and expenses incurred by Lilly, may be
paid from the proceeds of the disposition. 
Lilly may obtain the appointment of a receiver respecting the Collateral
upon such notice as may be required by applicable law and without notice if
permitted by such law, and may obtain immediate possession thereof in replevin.

 

(viii)                       All
remedies of Lilly shall be cumulative to the full extent provided by law.  Pursuit by Lilly of certain judicial or
other remedies shall not abate nor bar resort to other remedies with respect to
the Collateral, and pursuit of certain remedies with respect to all or some of
the Collateral shall not bar other remedies with respect to the Obligations or
to other portions of the Collateral. 
Lilly may exercise its rights to the Collateral without resorting or
regard to other collateral or sources of security or reimbursement for the
Obligations.

 

Section 3.              REPRESENTATIONS
AND WARRANTIES; COVENANTS

 

Amylin hereby
represents and warrants to, and agrees with, Lilly as follows:

 

3.1          The
Collateral.

 

(a)           Title.  Amylin owns, or holds valid and enforceable
rights with respect to, all of the Collateral, free of all security interests,
liens or encumbrances other than those arising

 

4

 

under the Loan Documents and
Permitted Liens.  Amylin has the right
to subject the Collateral to the security interest granted by this
Agreement.  Except with respect to
Permitted Liens, no financing statement or similar document or instrument
covering all or any part of the Collateral is on file or of record in any
jurisdiction in which such filing or recording would be effective to perfect a
lien or security interest with respect to such Collateral.  Amylin shall not, except to the extent
expressly permitted by this Agreement, the Collaboration Agreement or the Loan
Agreement, grant to any third party any license of, or Lien on, any of the
Collateral without Lilly’s prior written consent.  Notwithstanding any other provisions of this Agreement, however,
so long as an Event of Default shall not have occurred and be continuing, in no
event shall Amylin be in any way restricted or limited from (a) the sale of
Inventory in the ordinary course of business, (b) the granting of licenses to
any and all Intellectual Property of Amylin, including without limitation the Amylin
Rights, that are not inconsistent with the licenses granted by Amylin pursuant
to the Collaboration Agreement, (c) the disposal of worn-out or obsolete
Equipment, (d) transfers of Collateral (other than Amylin Rights) in the
ordinary course of its business or for fair market value as determined by
Amylin in its good faith business judgment, and (e) taking any other action
useful or necessary to facilitate third party services to Amylin or Amylin’s
business partners in the ordinary course of business, other than any action
resulting in a license of, or Lien on, any Amylin Rights unless permitted by
the Collaboration Agreement.

 

(b)           Records.  Unless Lilly otherwise consents, Amylin will
maintain its business records relating to or evidencing any of the Collateral
at its principal place of business identified in the opening paragraph of this
Agreement, as Amylin may update from time to time by delivery of notice to
Lilly.

 

(c)           Corporate
Identity.  During the six (6) years
preceding the date of this Agreement, Amylin has not been known as or used any
corporate, fictitious or assumed name other than “Amylin Pharmaceuticals,
Inc.,” and has not acquired any operating business division or entity.  Amylin will provide Lilly at least thirty
(30) days’ written notice prior to any change in (i) the location of its
principal office, (ii) the location of any of the Collateral (if such
change would cause Lilly’s security interest to lapse or cease to be perfected
(either immediately or upon the movement thereof or after the passage of time),
except for changes in location in the ordinary course of business due to the
possession of such Collateral by a third party service provider to Amylin or to
Amylin’s business partners), or (iii) Amylin’s corporate name.

 

(d)           No Subsidiaries.  Except as disclosed in Amylin’s SEC Filings,
Amylin does not have any Affiliate that it “controls” within the meaning of the
definition of Affiliate included in the Collaboration Agreement.

 

3.2          Perfection.  Amylin will, from time to time, at its expense,
execute, deliver, file and record any statement, assignment, instrument,
document, agreement or other paper, and take any other action, that may be
necessary or that Lilly may reasonably request in order to create, preserve,
perfect, confirm, validate, or protect the security interests granted or
created pursuant to this Agreement or to enable Lilly to obtain the full
benefits of this Agreement, or to enable Lilly to exercise and enforce any of
its rights, powers and remedies hereunder with respect to any of the
Collateral.  To the extent permitted by
law, Amylin hereby authorizes Lilly to execute and file financing statements
and continuation statements without Amylin’s signature appearing thereon.  Amylin agrees that a carbon, photographic,
photostatic or other reproduction of this

 

5

 

Agreement or of a financing
statement is sufficient as a financing statement.  To the fullest extent permitted by law, Amylin authorizes Lilly
and grants to Lilly a power of attorney (which is coupled with an interest and
is irrevocable) to sign on Amylin’s behalf and file financing statements,
continuation statements, applications for certificates of title, notices,
affidavits, and other documents and amendments thereto that Lilly reasonably
deems necessary or desirable for the purpose of perfecting, protecting, and
preserving the lien and security interest of Lilly in the Collateral.  Lilly agrees to provide Amylin with a
carbon, photographic or photostatic copy of any financing or continuation
statement or other document concerning the Collateral filed by Lilly without
Amylin’s signature or signed by Lilly pursuant to the power of attorney granted
herein.  Amylin shall pay the reasonable
costs, fees and expenses of, or incidental to, the perfection, protection and
preservation of Lilly’s lien and security interest in the Collateral, including
without limitation any recording or filing fees, recording taxes, stamp taxes,
and certificate of title application fees incurred in connection with the
filing or recording of all financing and continuation statements and other
documents concerning the Collateral.

 

3.3          Taxes and
Assessments. 
Amylin will pay promptly when due all taxes, assessments and
governmental charges upon or against the Collateral, in each case before the
same become delinquent and before penalties accrue thereon, unless and to the
extent that the same are being contested in good faith by appropriate
proceedings and for which Amylin has established adequate reserves.  Amylin shall give written notice to Lilly of
all circumstances adversely affecting the Collateral, including, without
limitation, the creation or assertion of any lien or security interest against
any of the Collateral that is not a Permitted Lien.

 

3.4          Performance by Lilly of Amylin’s
Agreements.  Lilly
may, but shall have no duty to, perform any agreement of Amylin hereunder which
Amylin shall have failed to perform, and Amylin will forthwith reimburse Lilly
for any payment made or any expense incurred by Lilly in connection with such
performance.  Such payments and expenses
shall constitute a part of the Obligations and shall bear interest at the rate
of fourteen percent (14%) per annum.

 

Section 4.              MISCELLANEOUS

 

4.1          Application
of Sale Proceeds.  Amylin shall pay to Lilly on demand any and all expenses,
including reasonable attorneys’ fees, incurred or paid by Lilly in enforcing
its rights upon or under the Obligations or Collateral.  After deducting all of said expenses, the
residue of any proceeds of collection or sale of Collateral shall be applied to
the payment of the Obligations as Lilly may determine, and Amylin shall remain
fully liable for any deficiency.

 

4.2          Statutory
Rights.  Should
applicable law confer any rights or impose any duties inconsistent with or in
addition to any of the provisions of this Agreement, the affected provisions of
this Agreement shall be considered amended to conform to such law, but all
other provisions hereof shall remain in full force and effect without modification.

 

4.3          Further Actions.  Each Party agrees,
subsequent to the execution and delivery of this Agreement and without any
additional consideration, to execute, acknowledge and deliver such further
documents and instruments, and to do all such other acts, as may be necessary
or appropriate in order to carry out the purposes and intent of this Agreement.

 

6

 

4.4          Assignment.  This Agreement will inure to the benefit and
be binding upon each Party, its successors and assigns.  The 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 this 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.  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 will be void.

 

4.5          Notices.  All notices which are required or permitted
hereunder will be in writing and sufficient if delivered personally, sent by
facsimile or email to a current fax number or e-mail address for the recipient
(and promptly confirmed by personal delivery, registered or certified mail or
overnight courier), sent by nationally-recognized overnight courier or sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:

 

	
  if to
  Amylin, to:

  	
  Amylin
  Pharmaceuticals, Inc.

  9373 Towne Centre Drive, Suite 250

  San Diego, California  92121

  Attention:  Chairman and Chief
  Executive Officer

  Fax No.:  (858)  552-1936

  E-Mail:  jcook@amylin.com

  
	
   

  	
   

  
	
  with a copy
  to:

  	
  Attention:
  General Counsel

  Fax No.:  (858) 552-1936

  E-Mail:  lrowland@amylin.com

  
	
   

  	
   

  
	
  if to Lilly,
  to:

  	
  Eli Lilly
  and Company

  Lilly Corporate Center

  Indianapolis, IN 46285

  Attention:  General Counsel

  

 

or to such other address as the
Party to whom notice is to be given may have furnished to the other Party in
writing in accordance herewith. Any such notice will be deemed to have been
given when delivered if personally delivered or sent by facsimile on a business
day, on the business day after dispatch if sent by nationally-recognized
overnight courier and on the third business day following the date of mailing
if sent by mail.

 

4.6          Amendment.  No amendment, modification or supplement of
any provision of this Agreement shall be valid or effective unless made in
writing and signed by a duly authorized officer of each Party.

 

4.7          Waiver.  The waiver by either Party hereto of any
right hereunder, or the failure to perform, or a breach by the other Party will
not be deemed a waiver of any other right

 

7

 

hereunder or of any other
breach or failure by said other Party whether of a similar nature or otherwise.

 

4.8          Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same instrument.

 

4.9          Titles and
Subtitles.  The
titles of the sections and subsections of this Agreement are for convenience of
reference only and are not be considered in construing this Agreement.

 

4.10        Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.

 

4.11        Severability.  In case any provision of
this Agreement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

 

8

 

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

 

 

	
  ELI LILLY AND COMPANY

  	
  AMYLIN PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Printed:

  	
   

  	
   

  	
  Printed:

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
										

 

9***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.

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.

 

2

 

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.

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

 

3

 

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.  [...***...]

*Confidential Treatment
Request(ed)

 

9

 

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 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.

 

10

 

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, 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

 

11

 

in any material respect, and (iv) will have been
Manufactured in accordance with applicable Marketing Approvals.

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

 

*Confidential Treatment
Request(ed)

 

16

 

 

any 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

 

*Confidential Treatment Request(ed)

 

17

 

order, and (ii) the date Lilly makes such Devices available
for shipment.  Any 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

 

18

 

costs are a result of
Lilly’s gross negligence or willful misconduct, in which event Lilly 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

 

*Confidential Treatment
Request(ed)

 

19

 

 

Rejection Rate, and such cost shall not be included in the Cost of
Product Sold for resolution in accordance with 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.

 

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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.

 

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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 [...***...] 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:

 

*Confidential Treatment
Request(ed)

 

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.

 

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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

 

*Confidential Treatment
Request(ed)

 

29

 

compliance with any such
condition to allow such vendor to transact business with 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

 

*Confidential Treatment
Request(ed)

 

30

 

 

Collaboration Agreement by Lilly pursuant to
Section 12.3 thereof, the [...***...];

and

(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.

*Confidential Treatment
Request(ed)

 

31

 

ARTICLE 13

CONFIDENTIALITY

 

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

 

ARTICLE 14

ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES

 

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

14.2                        Commercially Reasonable
Efforts.  Except as
otherwise provided in this Agreement or the Collaboration Agreement, Lilly and
Amylin each hereby 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.

 

32

 

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 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

 

33

 

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. 
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.

 

34

 

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.  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

 

35

 

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 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

o                 Name, Title, Phone, and Fax

•                    Lilly

o                 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.            [...***...]

*Confidential Treatment
Request(ed)

 

39

 

 

B.            [...***...]

C.            [...***...]

D.            [...***...]

E.             [...***...]

Attachments/Appendix

[...***...]

[...***...]

[...***...]

[...***...]

[...***...]

[...***...]

[...***...]

[...***...]

*Confidential Treatment
Request(ed)

 

40

 

 

EXHIBIT C

 

TABLE OF CONTENTS GUIDELINE

QUALITY AGREEMENT TABLE OF CONTENTS

 

1.                                      [...***...]

2.                                      [...***...]

3.                                      [...***...]

4.                                      [...***...]

5.                                      [...***...]

6.                                      [...***...]

7.                                      [...***...]

8.                                      [...***...]

9.                                      [...***...]

10.                               [...***...]

11.                               [...***...]

12.                               [...***...]

(i)                                     [...***...]

(ii)                                  [...***...]

13.                               [...***...]

14.                               [...***...]

15.                               [...***...]

16.                               [...***...]

17.                               [...***...]

18.                               [...***...]

19.                               [...***...]

*Confidential Treatment
Request(ed)

 

41

 

 

20.          [...***...]

21.                               [...***...]

22.                               [...***...]

23.                               [...***...]

24.                               [...***...]

25.                               [...***...]

26.                               [...***...]

27.                               [...***...]

28.                               [...***...]

29.                               [...***...]

30.                               [...***...]

31.                               [...***...]

32.                               [...***...]

33.                               [...***...]

34.                               [...***...]

35.                               [...***...]

36.                               [...***...]

37.                               [...***...]

38.                               [...***...]

39.                               [...***...]

40.                               [...***...]

41.                               [...***...]

42.                               [...***...]

*Confidential Treatment
Request(ed)

 

42

 

 

43.                               [...***...]

44.                               [...***...]

*Confidential Treatment
Request(ed)

 

43

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