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9.2 Option C Processing Fee. In addition to
the Processing Fee payable pursuant to Section 9.1
above, MedChem [P.R.] shall pay to Alcon [P.R.] an
Option C Processing Fee in connection with the
processing of Corium to Option C Flour pursuant to this
Agreement. The Option C Processing Fee shall be
determined in two steps. First, on or before December
31 of each year, Alcon [P.R.] shall determine the
Option C Processing Cost of the Option C Flour. The
Option C Processing Cost shall be composed of the
Option C Standard Cost less the cost of raw materials
owned by MedChem [P.R.] and supplied to Alcon [P.R.]
for processing and the depreciation on machinery and
equipment owned by MedChem [P.R.] and used in the
Conversion Process. Option C Standard Cost shall
consist of direct labor, direct materials, variable
overhead, fixed overhead and quality assurance cost,
and is defined in * * * [a referenced schedule].
Option C Standard Cost shall not include costs
associated with insurance provided by MedChem [P.R.],
freight or other costs which shall be separately billed
to MedChem [P.R.] by third parties. Option C Standard
Cost also shall not include any direct labor costs
incurred by MedChem [P.R.] in connection with the
provision of services by MedChem [P.R.] employees at
the Humacao Plant. The Option C Processing Cost plus
10% will then be used throughout the year for the
purposes of billing MedChem [P.R.] for the quantity of
Option C Flour produced each month.
The second step in determining the Option C
Processing Fee shall take place at the end of each
year. At that time, Alcon [P.R.] shall determine any
manufacturing and/or processing variances by comparing
the Option C Processing Cost for such year with the
actual cost and volumes of Option C Flour during such
year. If the variances indicate that the cost to Alcon
[P.R.] to process the Option C Flour was greater than
the Option C Processing Cost, then MedChem [P.R.] shall
pay to Alcon [P.R.] an amount of money equal to the
total amount of such variance plus 10% within 30 days
of MedChem[ P.R.]’s receipt of written notice setting
forth the amount of such variance. If the variance
indicates that the cost to Alcon [P.R.] was less than
the Option C Processing Cost, then MedChem [P.R.] shall
receive from Alcon [P.R.] an amount of money equal to
the total amount of such variance plus 10% within 30
days of the end of the year. MedChem [P.R.] shall have
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