exv10w31





Table of Contents






Exhibit 10.31




MANUFACTURING AND SUPPLY AGREEMENT




Between




GENENTECH, INC. and LONZA BIOLOGICS, INC.




Dated December 7,  2003






 









Table of Contents
















	 	 	 	 	 
	ARTICLE 1. DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2. COMMITMENT TO MANUFACTURE; PURCHASE
	 	 	6	 
	 
	 	 	 	 
	2.1 Commitment to Manufacture; Purchase
	 	 	6	 
	2.2 LB and Lonza Inc.
	 	 	6	 
	2.3 Execution of Tech Transfer Agreement and Quality Agreement
	 	 	6	 
	 
	 	 	 	 
	ARTICLE 3. MANAGEMENT OF PROJECT
	 	 	7	 
	3.1 Management
	 	 	7	 
	3.2 On-Site Participation of Genentech Personnel at the Lonza Facility
	 	 	10	 
	3.3 Lonza Personnel at the Lonza Facility
	 	 	10	 
	 
	 	 	 	 
	ARTICLE 4. TECHNOLOGY TRANSFER AND PROCESS IMPLEMENTATION
	 	 	10	 
	 
	 	 	 	 
	4.1 Technology Transfer and Manufacturing Process Implementation
	 	 	10	 
	4.2 Changes to Tech Transfer Agreement; Changes to the Manufacturing Process
	 	 	10	 
	4.3 Facility Modifications and Improvements
	 	 	10	 
	4.4 Initial Runs and Batches
	 	 	10	 
	4.5 Raw Materials and Suppliers
	 	 	12	 
	4.6 Regulatory Matters
	 	 	12	 
	4.7 Target Dates
	 	 	12	 
	4.8 Manufacturing, Documentation
	 	 	13	 
	4.9 Product Substitution
	 	 	13	 
	 
	 	 	 	 
	ARTICLE 5. RUNS; PRODUCTION AND SUPPLY; DELIVERIES
	 	 	13	 
	 
	 	 	 	 
	5.1 Commercial Production of Bulk Drug
	 	 	14	 
	5.2 Efforts
	 	 	14	 
	5.3 Production and Supply
	 	 	14	 
	5.4 Management of Product Manufacturing Forecast
	 	 	15	 
	5.5 Delivery Terms
	 	 	16	 
	5.6 Storing, Packaging and Shipping
	 	 	16	 
	5.7 Additional and New Capacity at the Lonza Facility
	 	 	16	 
	5.8 Regulatory Approval for Outside the United States
	 	 	18	 
	5.9 Sale of Lonza Facility
	 	 	18	 
	 
	 	 	 	 
	ARTICLE 6. PAYMENTS
	 	 	19	 
	 
	 	 	 	 
	6.1 Execution Fee
	 	 	19	 
	6.2 [Intentionally left blank]
	 	 	19	 
	6.3 Milestone Payments
	 	 	19	 
	6.4 Batch Pricing; Invoicing
	 	 	20	 
	6.5 Payment Method
	 	 	21	 
	6.6 Commercial Audit
	 	 	21	 
	 
	 	 	 	 
	ARTICLE 7. MANUFACTURER PRODUCT WARRANTIES
	 	 	21	 
	 
	 	 	 	 
	7.1 Product Warranties by Lonza
	 	 	21	 
	7.2 Lonza Facility
	 	 	21	 
	 
	 	 	 	 
	ARTICLE 8. SPECIFICATION AND MANUFACTURING — PROCESS CHANGES
	 	 	22	 
	 
	 	 	 	 
	8.1 Specification and Manufacturing — Process Changes
	 	 	22	 
	8.2 Procedure for Specification or Manufacturing Process Changes by Lonza
	 	 	23	 
	8.3 Vendor or Supplier Changes
	 	 	23	 
	 
	 	 	 	 
	ARTICLE 9. CLAIMS
	 	 	23	 
	 
	 	 	 	 
	9.1 Notice of Claims
	 	 	23	 






i









Table of Contents






	 	 	 	 	 
	 9.2 No Lonza Liability
	 	 	23	 
	 9.3 Lonza Liability; Replacement of Product
	 	 	23	 
	 9.4 Cooperation in Investigations, Disposition of Non-Conforming Bulk Drug
	 	 	24	 
	 
	 	 	 	 
	ARTICLE 10. MANUFACTURING AUDITS; CERTIFICATE OF COMPLIANCE; AND REGULATORY MATTERS
	 	 	24	 
	 
	 	 	 	 
	10.1 Manufacturing Audits
	 	 	24	 
	10.2 Certificates; Manufacturing Issues; Records
	 	 	24	 
	10.3 Complaints
	 	 	24	 
	10.4 Regulatory Correspondence
	 	 	24	 
	10.5 Inspections; Non-Compliance; Failure to Manufacture
	 	 	25	 
	 
	 	 	 	 
	ARTICLE 11. RECALLS
	 	 	25	 
	 
	 	 	 	 
	11.1 Recalls
	 	 	25	 
	 
	 	 	 	 
	ARTICLE 12. QUALITY ASSURANCE; QUALITY CONTROL; VALIDATION; STABILITY
	 	 	26	 
	 
	 	 	 	 
	12.1 Responsibility for Quality Assurance and Quality Control
	 	 	26	 
	12.2 Validation of Lonza Facility; Utilities and Equipment
	 	 	26	 
	12.3 Validation of Bulk Manufacturing Process
	 	 	26	 
	12.4 Change Control
	 	 	26	 
	12.5 Stability.
	 	 	26	 
	 
	 	 	 	 
	ARTICLE 13. MANUFACTURER’S OBLIGATIONS AS MANUFACTURER
	 	 	26	 
	 
	 	 	 	 
	13.1 Control of Working Cell Bank
	 	 	26	 
	13.2 Manufacturing Capabilities
	 	 	27	 
	13.3 Compliance with Law.
	 	 	27	 
	13.4 Lonza Facility.
	 	 	27	 
	13.5 Storage Facilities
	 	 	27	 
	13.6 Raw Materials
	 	 	27	 
	13.7 Subcontracting
	 	 	27	 
	13.8 Regulatory Documentation
	 	 	27	 
	13.9 Manufacturing Data
	 	 	27	 
	13.10 Retention and Reserve Samples
	 	 	27	 
	13.11 Analytical Testing
	 	 	27	 
	13.12 Accurate Documentation
	 	 	27	 
	13.13 Insurance
	 	 	38	 
	 
	 	 	 	 
	ARTICLE 14. LICENSES
	 	 	28	 
	 
	 	 	 	 
	14.1 License Grant to Genentech of Rights Existing as of the Effective Date
	 	 	28	 
	14.2 License Grant to Genentech of Rights Obtained after the Effective
Date; Option to Grant Sublicenses
	 	 	28	 
	14.3 No Implied Licenses
	 	 	29	 
	14.4 Survival
	 	 	29	 
	 
	 	 	 	 
	ARTICLE 15. OWNERSHIP OF INTELLECTUAL PROPERTY, MATERIALS AND EQUIPMENT
	 	 	29	 
	 
	 	 	 	 
	15.1 Inventorship, Existing Confidential Information, and Inventions
	 	 	29	 
	15.2 Ownership of Equipment
	 	 	30	 
	 
	 	 	 	 
	ARTICLE 16. REPRESENTATIONS AND WARRANTIES
	 	 	30	 
	 
	 	 	 	 
	16.1 Genentech
	 	 	30	 
	16.2 Lonza
	 	 	30	 
	 
	 	 	 	 
	ARTICLE 17. INDEMNIFICATION
	 	 	31	 
	 
	 	 	 	 
	17.1 Indemnification
	 	 	31	 
	17.2 Indemnification Procedures
	 	 	31	 
	17.3 Survival of Indemnification Obligations
	 	 	31	 






ii









Table of Contents






	 	 	 	 	 
	17.4 Disclaimer of Consequential Damages
	 	 	31	 
	 
	 	 	 	 
	ARTICLE 18. CONFIDENTIALITY
	 	 	32	 
	 
	 	 	 	 
	18.1 Confidentiality Obligations
	 	 	32	 
	18.2 Terms of Agreement
	 	 	32	 
	18.3 Exclusions
	 	 	32	 
	18.4 Notification of Mandatory Disclosure
	 	 	33	 
	18.5 No Licenses Maintenance of Confidentiality; Non-use Obligations
	 	 	33	 
	18.6 Survival of Confidentiality Obligations
	 	 	34	 
	18.7 Termination of Certain Prior Agreements
	 	 	34	 
	18.8 No Disclosure of Unrelated Information
	 	 	34	 
	 
	 	 	 	 
	ARTICLE 19. PRESS RELEASES;USE OF NAMES
	 	 	34	 
	 
	 	 	 	 
	19.1 Press
	 	 	34	 
	19.2 Use of Names
	 	 	34	 
	 
	 	 	 	 
	ARTICLE 20. TERM; TERMINATION
	 	 	34	 
	 
	 	 	 	 
	20.1 Term; Option to Extend
	 	 	34	 
	20.2 Termination
	 	 	34	 
	20.3 Consequences of Termination
	 	 	35	 
	 
	 	 	 	 
	ARTICLE 21. ASSIGNMENT
	 	 	37	 
	 
	 	 	 	 
	21.1 Assignment
	 	 	37	 
	 
	 	 	 	 
	ARTICLE 22. DISPUTE RESOLUTION
	 	 	37	 
	 
	 	 	 	 
	22.1 Exclusions.
	 	 	37	 
	22.2 Dispute Resolution
	 	 	37	 
	 
	 	 	 	 
	ARTICLE 23. FORCE MAJEURE
	 	 	38	 
	 
	 	 	 	 
	23.1 Effect of Force Majeure Event
	 	 	38	 
	23.2 Notice of Force Majeure.
	 	 	39	 
	23.3 Annual Minimum Campaign and Annual Minimum Runs
	 	 	39	 
	23.4 Target Dates and Milestones
	 	 	39	 
	23.5 Termination
	 	 	39	 
	 
	 	 	 	 
	ARTICLE 24. MISCELLANEOUS
	 	 	39	 
	 
	 	 	 	 
	24.1 Notices
	 	 	39	 
	24.2 Applicable Law
	 	 	40	 
	24.3 Headings
	 	 	40	 
	24.4 Exhibits
	 	 	40	 
	24.5 Severability
	 	 	40	 
	24.6 Independent Contractors.
	 	 	40	 
	24.7 Waiver
	 	 	40	 
	24.8 Counterparts
	 	 	40	 
	24.9 [This Section intentionally left blank.]
	 	 	41	 
	24.10 Harmful Products
	 	 	41	 
	24.11 Non-Solicitation
	 	 	41	 
	24.12 Injunctive Relief
	 	 	41	 
	24.13 Entirety; Amendments
	 	 	41	 
	24.14 Preference
	 	 	41	 
	 
	 	 	 	 
	Annual Minimums***
	 	 	43	 
	 
	 	 	 	 
	Campaign Maximums
	 	 	43	 






iii









Table of Contents










MANUFACTURING AND SUPPLY AGREEMENT



“THIS MANUFACTURING AND SUPPLY AGREEMENT (“Agreement”) is made effective as of December 7 2003, by
and between Lonza Biologics PLC, having its principal place of business at 228 Bath Road, Slough,
Berkshire SL1 4DX, England (“LB”), Lonza Biologics, Inc. having its principal place of business at
101 International Drive Portsmouth, New Hampshire 03801 (“Lonza Inc”) (collectively LB and Lonza
Inc, hereinafter “Lonza”), and Genentech, Inc., a Delaware corporation, having its principal place
of business at One DNA Way, South San Francisco, California 94080 (“Genentech”).




BACKGROUND



Genentech markets and sells a certain proprietary biological pharmaceutical product known as
Rituxan. Genentech desires to obtain additional supply of commercial quantities of Rituxan bulk
drug substance. Lonza has the experience and expertise necessary to perform the manufacturing and
related services needed to supply Rituxan bulk drug substance, and Lonza owns a facility that, with
some modifications, could be suitable for production of commercial quantities of Rituxan bulk drug
substance.



Genentech desires to retain Lonza as a nonexclusive manufacturer of commercial quantities of
Rituxan bulk drug substance and purchase commercial quantities of such product from Lonza, and
Lonza desires to perform such services and sell commercial quantities of such product to Genentech,
all on the terms and conditions set forth in this Agreement.



Within ten (10) business days after the Effective Date (or such other date as agreed to by the
Parties), Lonza and Genentech shall enter into a Tech Transfer Agreement and Quality Agreement
(each as defined below) for the purpose of further effectuating the intent of the Parties
hereunder.




AGREEMENT



NOW, THEREFORE, IN CONSIDERATION OF the mutual covenants set forth in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:








ARTICLE 1.



DEFINITIONS



The following terms, whether used in the singular or plural, shall have the meanings assigned to
them below for purposes of this Agreement.




     1.1 “Acquisition Cost”
means the actual invoiced price paid by Lonza to any Third
Party for acquiring any raw materials, packaging components and intermediates used exclusively in
the manufacture of the Product under this Agreement, including [*] in connection with the
acquisition of such materials, packaging components and intermediates.



     1.2 “Affiliate”
means, with respect to any Party, any other corporation or business
entity that directly, or indirectly through one or more intermediaries, controls, is controlled by
or is under common control with such Party. For purposes of this definition, the term “control”
means direct or indirect ownership of fifty percent (50%) or more of the securities or other
ownership interests representing the equity voting stock or general partnership or membership
interest of such entity or the power to direct or cause the direction of the management or policies
of such entity, whether through the ownership of voting securities, by contract, resolution or
otherwise. Notwithstanding the foregoing, Roche shall not be considered an Affiliate of Genentech.



     1.3 “Batch” or “Lot”
means the quantity of Bulk Drug produced from a single
Run, and refers to a Commercial Batch or Lot, a Development Batch or Lot, and/or a Qualification
Batch or Lot, as the context requires. A Run may result in more than one sub-batch or sub-lot due
to splitting into tanks downstream in the Manufacturing Process.



     1.4 “Batch Records”
shall have the meaning set forth in the Quality Agreement.



 









Table of Contents





     1.5 “Bulk Drug”
means the bulk form of the Product which has been manufactured by
Lonza pursuant to this Agreement, which has been purified to a concentrated form from one or more
Batches, and which has been manufactured in compliance with and conforms to cGMP, the Bulk Drug
Specifications, Target Yield and the warranties in Section 7.1.



     1.6 “Bulk Drug Commitment”
refers to the [*] of each binding rolling Product
Manufacturing Forecast (including all amendments thereto), and means a commitment by Lonza to
comply with and make available the Lonza Facility during the Campaign specified therein and perform
the number of Runs set forth therein (as described with more particularity in Section 5.3.1
hereof).



     1.7 Bulk Drug Specifications”
means specifications developed by Genentech for Bulk
Drug, including, without limitation, testing methods and acceptance criteria for each Batch
generated, a summary of which is attached to the Quality Agreement, as such specifications may be
amended from time to time in accordance with Article 8 hereof, including, without limitation, such
amendments as may be required to obtain and/or maintain Regulatory Approval in the Territory.



     1.8 “Campaign”
means a specified period of time in any calendar year (as further
defined in Exhibit A) during which Lonza shall ensure that the Lonza Facility ready and available
to perform Commercial Production.



     1.9 “cGMP”
means the regulatory requirements for current good manufacturing practices
promulgated by the FDA under the FD&C Act, 21 C.F.R. §§ 210, 211 and 600 et seq. and under the PHS
Act, 21 C.F.R. §§ 600-610, as the same may be amended from time to time and with respect to the
product, the corresponding or similar laws, rules and regulations of those jurisdictions in which
the Product is sold.



     1.10 “Cell Line” [*]



     1.11 “Certificate of Compliance”
means, as further specified in the Quality Agreement,
for each Batch, a document prepared by Lonza: (a) listing the manufacturing date, unique Batch
number, and quantity of Bulk Drug in such Batch, and (b) certifying that such Batch was
manufactured in accordance with cGMP, the Bulk Drug Specifications, Target Yield and the warranties
set forth in Section 7.1. The Parties shall from time to time agree upon a format or formats for
the Certificate of Compliance to be used under this Agreement.



     1.12 “Certificate of Testing”
means, as further specified in the Quality Agreement,
for each Batch, a document prepared by Lonza: (a) listing tests performed by Lonza, specifications,
and test results, and (b) certifying the accuracy of the foregoing. The Parties shall from time to
time agree upon a format or formats for the Certificate of Testing to be used under this Agreement.



     1.13 “Commercial Batch” or “Commercial Lot”
means a Batch or Lot produced from
a Commercial Run.



     1.14 “Commercial Run”
means a Run that is initiated following the commencement of
Commercial Production and is used to manufacture commercial Bulk Drug.



     1.15 “Commercially Reasonable Efforts”
means prompt efforts and resources consistent
with prudent business judgment.



     1.16 “Commercially Reasonable Best Efforts” [*]



     1.17 “Confidential Information”
means Genentech Confidential Information and/or Lonza
Confidential Information, as the context requires.



     1.18 “Development Batch”
means a Batch or Lot produced from a Development Run.



     1.19 “Development Run”
means a Run used for process demonstration and confirmation of
some or all of the Manufacturing Process steps, and is described in Section 4.4.1 hereof.



2









Table of Contents





     1.20 “Effective Date”
means December 7 2003, which is the date set forth in the first
paragraph of this Agreement and shall be the effective date of this Agreement.



     1.21 “EMEA”
means the European Medicines Evaluation Agency, or any successor agency.



     1.22 “Facility Modifications and Services Costs”
means the actual invoiced price paid
by Lonza to any Third Party for acquiring services, including, without limitation, design and
engineering services, and necessary equipment used exclusively to modify the Lonza Facility in
order to implement the Manufacturing Process at the Lonza Facility, all to the extent incurred in
accordance with the Tech Transfer Agreement.



     1.23 “Facility Validation”
shall have the meaning ascribed to it in the Tech Transfer
Agreement.



     1.24 “FD&C Act”
means the United States Federal Food, Drug and Cosmetic Act, as the
same may be amended from time to time.



     1.25 “FDA”
means the United States Food and Drug Administration, or any successor
agency thereto.



     1.26 “Finished Product”
means Bulk Drug which has been formulated, compounded, filled
into containers, and labeled, and placed in final commercial packaging.



     1.27 “For Cause Audit”
shall have the meaning set forth in the Quality Agreement.



     1.28 “Genentech Confidential Information”
means the Cell Line, Master Cell Bank,
Working Cell Bank, Manufacturing Documentation, Manufacturing Process, and Product, and all
technical and other information, whether patented or unpatented, relating thereto and/or to
Genentech processes, methods, operations, technologies, forecasts and business information that are
disclosed or supplied to Lonza by or on behalf of Genentech pursuant to this Agreement, the Tech
Transfer Agreement and/or the Quality Agreement, or of which Lonza may become aware of through the
presence of its employees or agents at Genentech offices or facilities or at other facilities that
manufacture the Product, including, without limitation, trade secrets, know-how, processes,
concepts, experimental methods and results and business and scientific plans and information and
facility layout and schematics. All documents and records describing or to the extent relating to
the Manufacturing Process at the Lonza Facility, including, without limitation, process trend and
variability data related to the Product, shall be deemed to be Genentech Confidential Information.



     1.29 “Lonza Confidential Information”
means all technical and other information,
whether patented or unpatented, relating to the Lonza Facility and/or Lonza processes, methods,
operations, technologies, forecasts and business information that are disclosed or supplied to, or
used on behalf of Genentech by Lonza pursuant to this Agreement, the Tech Transfer Agreement and/or
the Quality Agreement, or of which Genentech may become aware of through the presence of their
employees or agents at Lonza offices or at the Lonza Facility, including, without limitation, trade
secrets, know-how, processes, concepts, experimental methods and results and business and
scientific plans and information and facility layout and schematics.



     1.30 “Lonza Facility”
means Lonza’s commercial manufacturing facility located at
Portsmouth, New Hampshire.



     1.31 “Manufacturing Documentation”
means all documents and records describing or
otherwise related to the Manufacturing Process or any part of the Manufacturing Process provided to
Lonza by or on behalf of Genentech under this Agreement, the Tech Transfer Agreement or the Quality
Agreement, including, without limitation, documents and records consisting of or containing piping
and instrumentation diagrams, software logic and descriptions, batch records, standard operating
procedures, including, without limitation, standard operating procedures for in-process quality
control testing, facility layout schematics, equipment and instrumentation specifications and
process trend and variability data.



3









Table of Contents





     1.32 “Manufacturing Process”
means the production process for the manufacture of Bulk
Drug pursuant to this Agreement, as summarily described in the Quality Agreement and as described
in the Tech Transfer Agreement, as such process may be changed from time to time in accordance with
this Agreement.



     1.33 “Master Cell Bank” [*]



     1.34 “MHWJ
means the Ministry of Health and Welfare in Japan, or any successor
thereto.



     1.35 “Non-Conforming Bulk Drug”
means Bulk Drug that fails to conform to any of the
warranties set forth in Section 7.1 hereof.



     1.36 “Non-Portable Equipment”
means the Equipment (as defined in Section 15.2 hereof),
excluding any Portable Equipment. Components of the Non-Portable Equipment, such as valves, pumps
and agitators, shall also be deemed Non-Portable Equipment. Non-Portable Equipment includes the
related documentation regarding the design, validation, operation, calibration and maintenance of
such equipment.



     1.37 “PHS Act”
means the Public Health Service Act, Biological Products, as amended,
as the same may be amended from time to time.



     1.38 “Party” or “Parties”
means Lonza and/or Genentech, as the context
requires.



     1.39 “Portable Equipment”
means the portable equipment described with particularity in
the Tech Transfer Agreement and referred to in Section 5.5 hereof, including, without limitation,
the related documentation regarding the design, validation, operation, calibration, and maintenance
of such equipment. The Portable Equipment is a part of the Genentech Equipment, as defined in
Section 15.2 hereof. Components of the Portable Equipment, such as valves, pumps and agitators,
shall also be deemed Portable Equipment.



     1.40 “Product”
means any pharmaceutical formulation containing Rituxan, or pursuant to
Section 4.9 a substituted product, whether under development or approved by the appropriate
regulatory agencies.



     1.41 “Purchase Price”
means the Purchase Price to be paid by Genentech to Lonza for
Bulk Drug as determined in accordance with the terms of this Agreement.



     1.42 “Qualification Batch” or “Qualification Lot”
means a Batch or Lot
produced from a Qualification Run.



     1.43 “Qualification Run”
means a Run used to document the operability and
reproducibility of the Manufacturing Process at the Lonza Facility, and is described in Section
4.4.2 hereof.



     1.44 “Quality Agreement”
means the quality agreement entered into by and between the
Parties after the Effective Date and which refers to this Agreement.



     1.45 “Regulatory Approval”
means any approvals, licenses, registrations or
authorizations of any regional, national, federal, state or local regulatory agency, department,
bureau or other governmental entity, necessary for the manufacture and sale of the Product in each
regulatory jurisdiction in which the Product will be sold.



     1.46 “Rituxan”
means the proprietary anti-CD20 biological pharmaceutical product of
Genentech, more particularly described in Genentech’s BLA, including any successor or filing
thereto with the FDA, and any supplements to or amendments to any of the foregoing.



     1.47 “Roche”
means Roche Holdings, Inc., a Delaware corporation, and its “Affiliates”
(as hereinafter defined) other than Genentech and Genentech’s subsidiaries. With respect to Roche,
“Affiliates” means any other corporation or business entity that directly, or indirectly through
one or more intermediaries, controls, is controlled by or is under common control with Roche
Holdings, Inc.; and, for purposes of this definition, the term “control” means direct or indirect
ownership of fifty percent (50%) or more of the securities or other ownership interests
representing the equity voting stock or general partnership or membership interest of such entity
or the power to direct or cause the direction of



4









Table of Contents







the management or policies of such entity, whether through the ownership of voting securities,
by contract, resolution or otherwise.



     1.48 “Run”
means a single fermentation run of the Manufacturing Process commencing at
the [*] at the Lonza Facility and progressing through the [*], harvest, recovery, quality testing
and release, and refers to a Commercial Run, Development Run and/or Qualification Run, as the
context requires.



     1.49 “sBLA”
means a biologics license application for the Product, any equivalent
successor filing thereto with the FDA, and any supplements or amendments to any of the foregoing.



     1.50 “Successful”
means, with respect to a Run, success, as determined in accordance
with this Agreement, the Tech Transfer Agreement and the Quality Agreement, in achieving all
requirements for Bulk Drug produced from a single Run.



     1.51 “Target Yield”
shall have the meaning set forth in Exhibit C attached hereto and
incorporated herein by reference.



     1.52 “Tech Transfer Agreement”
means the technology transfer agreement and process
implementation plan entered into by and between the Parties after the Effective Date, which refers
to this Agreement, and which describes the agreement of the Parties regarding the transfer of
technology and implementation of the Manufacturing Process, test methods and testing at the Lonza
Facility, and the modifications to the Lonza Facility needed to implement the Manufacturing Process
at the Lonza Facility, including a timeline, budget and statement of work jointly developed by the
Parties, as the same may be amended from time to time by mutual written agreement of the Parties.



     1.53 “Territory”
means the entire world.



     1.54 “Third Party”
means any party other than Genentech, Lonza and their respective
Affiliates.



     1.55 “United States” or “U.S.”
means the United States of America, its
territories and possessions, and the Commonwealth of Puerto Rico.



     1.56 “Working Cell Bank” [*]



     1.57 Each of the following definitions are found in the body of this Agreement, or elsewhere,
as indicated below:



	 	 	 	 	 
	Defined Term	 	Section
	“Acceptance Date”

	 	5.4.6	 
	“Annual Minimum”

	 	Exhibit A

	“Annual Minimum Success Rate”

	 	Exhibit B

	[*]

	 	5.7.6(c)	 
	[*]

	 	4.5.1	 
	“Batch Record”

	 	Quality Agreement

	“Campaign Maximum”

	 	Exhibit A

	“Campaign Minimum”

	 	Exhibit A

	“Campaign Minimum Run”

	 	Exhibit A

	“Change of Control”

	 	20.2.5	 
	“Commercial Production”

	 	5.1	 
	“Consequential Damages”

	 	17.4.1	 
	“Delivery Date”

	 	5.4.2	 
	“Delivery Schedule”

	 	5.4.1	 
	“Designated Carrier”

	 	5.5	 
	“[*]

	 	4.5.1	 
	“Development Run Initiation”

	 	4.7.2	 
	“Effective Period”

	 	2.3	 






5









Table of Contents






	 	 	 	 	 
	Defined Term	 	Section
	“Equipment”

	 	15.2	 
	“Executive Steering Committee”

	 	3.1.1	 
	“FDA Approval”

	 	4.7.6	 
	“Force Majeure Event”

	 	23.1	 
	“Genentech Equipment”

	 	15.2	 
	“Indemnitee”

	 	17.2.1	 
	“Indemnitor”

	 	17.2.1	 
	“Joint Project Team” or “JPT”

	 	3.1.3	 
	“JQT” or “Joint Quality Team”

	 	Quality Agreement

	“Lead Quality Representative”

	 	Quality Agreement

	“Liabilities”

	 	17.1.1	 
	“Lonza Equipment”

	 	15.2	 
	“Lonza Release Documentation

	 	Quality Agreement

	“Notified Party”

	 	18.4.1	 
	“Notifying Party”

	 	18.4.1	 
	“Phase A Completion”

	 	4.7.1	 
	“Phase B Completion”

	 	4.7.4	 
	“Pre-Campaign/Campaign Requirements”

	 	 5.2.3	 
	“Product Manufacturing Forecast”

	 	5.3.1	 
	“Project Team Leader”

	 	3.1.3 (c)	 
	“Qualification Run Initiation”

	 	4.7.3	 
	“Records”

	 	6.6	 
	“sBLA Enablement”

	 	4.7.5	 
	“Supplemental Batch Payment”

	 	6.4.3 (b)	 
	“Technical Committee”

	 	3.1.2	 
	“Term”

	 	20.1	 
	“Warning Letter”

	 	Quality Agreement











ARTICLE 2.



COMMITMENT TO MANUFACTURE; PURCHASE








     2.1 Commitment to Manufacture; Purchase.
Subject to the terms and conditions set
forth in this Agreement, during the Term, Genentech shall retain Lonza as a non-exclusive
manufacturer of Bulk Drug, Lonza shall make the Lonza Facility available to Genentech for
manufacture of the Bulk Drug in accordance with the terms of this Agreement (including Exhibit A
and the Campaigns specified therein), and manufacture and supply exclusively for the benefit of
Genentech (and its designees) certain of Genentech’s requirements of Bulk Drug, and, as set forth
herein, Genentech shall purchase such Bulk Drug from Lonza.







     2.2 LB and Lonza Inc.
It is understood and agreed to by the Parties, that LB shall
have primary responsibility for Lonza’s obligations hereunder, but may subcontract with, and does
hereby subcontract with, Lonza Inc for actual performance of Lonza’s obligations hereunder;
provided, LB shall remain primarily responsible for, and guarantees the performance of, Lonza’s
obligations hereunder. It is further understood and agreed to by the Parties, that the foregoing
shall not (i) in any way relieve Lonza Inc, Lonza LB, or any of their Affiliates of any financial
and other obligations under this Agreement that can only be performed by such entity, or (ii) in
any way limit or prohibit Genentech from bringing any cause of action directly against LB and/or
Lonza Inc for either entity’s failure to perform any obligation due hereunder. It is further
understood and agreed that with respect to Article 18 herein, all Genentech Confidential
Information disclosed hereunder to Lonza shall remain at Lonza Inc, and shall not be transferred or
disclosed to any employee of LB or any Lonza Affiliate unless on a need to know basis in order to
perform an obligation of Lonza hereunder and only with prior written notice to Genentech specifying
the name of the employee to whom the disclosure is to be made, the information to be disclosed, and
the purpose of such disclosure.







     2.3 Execution of Tech Transfer Agreement and Quality Agreement.
It is understood and
agreed by the Parties, that in order to timely effectuate the intent of the Parties hereunder, it
is in both Parties’ interest to enter into and execute the Tech Transfer Agreement and Quality
Agreement as soon as practicable after the Effective Date. In the event the Tech Transfer
Agreement and Quality Agreement are not entered into and executed by the Parties within ten



6









Table of Contents







(10) business days following the Effective Date or such longer period as the Parties may
mutually agree in writing (the “Effective Period”), either Party may terminate this Agreement upon
written notice to the other Party. Such right to terminate may only be exercised by a Party within
ten (10) days after Effective Period, and such termination shall be effective immediately upon
receipt of such written notice by the receiving Party. Following any such termination, neither
Party shall have any rights or obligations hereunder, except as provided in Sections 20.3.4 and
20.3.5.







ARTICLE 3.



MANAGEMENT OF PROJECT








     3.1 Management.



          3.1.1  Executive Steering Committee.




               (a) Within thirty (30) days of the Effective Date, the Parties will establish an Executive
Steering Committee to oversee and manage the manufacture of Bulk Drug at the Lonza Facility. The
Executive Steering Committee will be composed of two representatives appointed by each of Lonza and
Genentech. All such representatives will be senior officers of Genentech or Lonza. Either Party
may replace any or all of its representatives at any time upon prior written notice to the other
Party. The Executive Steering Committee will meet at least once each calendar quarter, or more
frequently, as agreed by the Executive Steering Committee, and will operate by unanimous decision,
except as expressly set forth herein. If the Executive Steering Committee is unable to resolve a
dispute regarding any issue presented to it, such dispute shall be resolved in accordance with
Article 22 below.



               (b) The Executive Steering Committee shall perform the following functions:



                    (i) determine the overall strategy for the manufacture of Bulk Drug at the Lonza Facility in
the manner contemplated by this Agreement, including without limitation, overseeing and monitoring
the transfer and implementation of the Manufacturing Process, and the manufacture of Bulk Drug, at
the Lonza Facility;



                    (ii) establish a governance structure for the collaboration including overseeing the
establishment and organization of one or more operating committees, or other structure to implement
this Agreement. The establishment of certain operating committees is provided for in Sections
3.1.2 and 3.1.3 of this Agreement. Each operating committee contemplated by this Agreement shall
be subordinate to the Executive Steering Committee. If any operating committee contemplated by
this Agreement is not constituted or continued, any reference to such committee in this Agreement
shall be deemed to be a reference to the Executive Steering Committee or such other committees or
structures to which the Executive Steering Committee may delegate responsibility;



                    (iii) settle disputes or disagreements that are unresolved by an operating committee unless
otherwise indicated in this Agreement; and



                    (iv) perform such other functions as appropriate to further the purposes of this Agreement as
determined by the Parties.



          3.1.2 Technical Committee.




               (a) Within thirty (30) days of the Effective Date, the Parties will establish a Technical
Committee to oversee and control the transfer and implementation of the Manufacturing Process, and
the manufacture of Bulk Drug, at the Lonza Facility. The Technical Committee will be composed of
[*] representatives appointed by each of Lonza and Genentech. Each representative will have one
vote on all matters within the Technical Committee’s purview. Such representatives will include
Product Managers, Technical Product Managers/Leads, Directors of Quality Assurance/Regulatory,
Director of Manufacturing, or other individuals with expertise and responsibilities in the same
areas of manufacturing, process sciences, quality control or regulatory affairs. Either Party may
replace any or all of its representatives at any time upon written notice to the other Party. The
Technical Committee will meet at least once each calendar month, or more frequently, as agreed by
the Technical Committee. The Technical Committee will operate by



7









Table of Contents







unanimous decision, except as expressly set forth herein. If the Technical Committee is
unable to resolve a dispute regarding any issue presented to it, such dispute shall be resolved in
accordance with Section 3.1.4 below.



               (b) The Technical Committee shall: (i) oversee and manage the day to day activities of the
transfer and implementation of the Manufacturing Process; (ii) settle disputes or disagreements
that are unresolved by the Joint Project Team unless otherwise indicated in this Agreement; and;
(iii) report to and keep the Executive Steering Committee informed of the progress of the transfer
and implementation of the Manufacturing Process, and the manufacture of Development Lots and
Qualifications Lots, at the Lonza Facility; and (iv) perform such other tasks and undertake such
other responsibilities as may be specifically delegated to the Technical Committee by mutual
agreement of the Parties. Following commencement of Commercial Production, the Parties may elect
to change the name and function of the Technical Committee to serve other functions and
responsibilities, as mutually agreed by the Parties.



          3.1.3 Joint Project Team.




               (a) Within thirty (30) days of the Effective Date, the Parties will establish a Joint Project
Team (the “JPT”). The JPT shall be composed of [*] representatives appointed by each of Lonza and
Genentech. Each representative will have one vote on all matters within the JPT’s purview. Such
representatives will include the Product Manager, Technical Lead, Manufacturing Lead, Quality
Control Lead, Quality Assurance/Regulatory Lead, Raw Materials Lead, Supply Chain Lead and
Engineering Lead, or other individuals with expertise and responsibilities in the same areas of
manufacturing, process sciences, quality control or regulatory affairs. Either Party may replace
any or all of its representatives at any time upon written notice to the other Party; provided,
Lonza shall only appoint a new representative to succeed its prior representative with prior notice
to, and after good faith consultation with, Genentech, and provided further, any such new
representative shall be mutually agreed to by the Parties. Genentech shall not unreasonably
withhold its agreement to any such new representative proposed by Lonza. The JPT will meet at
least once each week, or more frequently, as agreed by the JPT. The JPT will operate by unanimous
decision, except as expressly set forth herein. If the JPT is unable to resolve a dispute
regarding any issue presented to it, such dispute shall be resolved in accordance with Section
3.1.4 below.



               (b) The purposes of the JPT shall be to (i) monitor, review and guide the transfer and
implementation of the Manufacturing Process, and the manufacture of Bulk Drug, at the Lonza
Facility, (ii) coordinate the activities of the Parties hereunder to ensure transfer and
implementation of the Manufacturing Process, and the manufacture of Bulk Drug, at the Lonza
Facility, including management of technical aspects of routine manufacture of the Bulk Drug; iii)
report to and keep the Technical Committee informed of the progress of the transfer and
implementation of the Manufacturing Process, and the manufacture of Bulk Drug, at the Lonza
Facility; and (iv) performing such other tasks and undertaking such other responsibilities as may
be specifically delegated to the JPT by mutual agreement of the Parties.



               (c) Appointment of Project Team Leader. Within thirty (30) days of the Effective
Date, each Party shall appoint a Project Team Leader (each, a “Project Team Leader”) to act as the
primary contact for such Party in connection with matters related to the implementation of the
Manufacturing Process, in connection with activities to be performed under the Tech Transfer
Agreement and/or Commercial Production of the Bulk Drug (as defined in Section 5.1 below). Each
such Project Team Leader, unless otherwise mutually agreed, shall serve as a member of the JPT.
The initial Project Team Leaders are:



     Genentech: [*]



     Lonza: [*]


A Party may replace its Project Team Leader at any time and from time to time for any reason by
providing written notice of the change to the other Party; [*].




          3.1.4 Decision-making.




               (a) All decisions of the Executive Steering Committee, the Technical Committee and the JPT,
except as expressly set forth herein (including without limitation Section 3.1.4(c) and (d) below),
shall be made by the unanimous agreement of all of its members or their designated representatives,
and shall be reflected in written



8









Table of Contents







meeting reports which summarily address topics discussed, delegation of work, schedules and
decisions of such committee or team, which shall be signed by the authorized representatives of the
Parties; provided no operating committee herein may materially amend this Agreement, including
without limitation the Campaign Minimums, Campaign Minimum Runs, Annual Minimum Success Rate,
Target Yield, target dates set forth in Section 4.7 or the milestones set forth in Section 6.3
without entering into a written agreement signed by both Parties that specifically states that the
Parties are amending this Agreement.



               (b) In the event that the JPT is unable, despite the good faith efforts of all members, to
resolve within five (5) business days a disputed issue that is within the purview of the JPT, the
disputed issue shall be referred immediately by the JPT to the Technical Committee. In the event
the Technical Committee is unable to resolve the disputed issue within an additional five (5)
business days, the disputed issue will be referred to, the Executive Steering Committee. If the
dispute cannot be resolved by the Executive Steering Committee within an additional five (5)
business days, the matter will be handled in accordance with Section 22.2 hereof.



               (c) Notwithstanding anything to the contrary in this Agreement, the Tech Transfer Agreement
and/or the Quality Agreement, with respect to any disagreement over issues relating to quality,
such issues shall be resolved in accordance with this Section 3.1.4(c)as follows: Each Party’s Lead
Quality Representative on the JQT (each, as defined in the Quality Agreement), or their respective
designees, will in good faith attempt to mutually resolve such disagreements in a timely fashion
(but in any event, in no more than five (5) days after such issue is referred to the JQT);
provided,



                    (1) With respect to issues relating to: (i) interpretation of quality or cGMP , (ii)
acceptability of validation results, (iii) acceptability of Product testing (including in-process
testing), results or procedures, (iv) disposition of Bulk Drug (including non-Conforming Bulk Drug)
and/or (v) changes to the Manufacturing Process and/or Bulk Drug Specifications, [*] (to the extent
not otherwise provided in this Agreement, the Tech Transfer Agreement, the Quality Agreement and/or
required by cGMP standards based on both industry precedents and Genentech’s standards), the
Parties will discuss in good faith and mutually agree on the costs to effect such implementation of
such decision and Genentech shall pay such mutually agreed costs; and



                    (2) With respect to all other issues relating to quality (not otherwise specified in Section
3.1.4(c)(1) above), including without limitation operation of quality systems, change control,
quality control issues, and/or quality control testing, in each case, if delay in making a decision
could jeopardize the quality of the Bulk Drug, including without limitation the testing or control
thereof, [*] such final decision shall be immediately referred to the Executive Steering Committee
for reconciliation; provided, if time does not allow, as soon as possible thereafter. The
Executive Steering Committee shall seek to reconcile such action within five (5) days in order to
ensure that such disagreement over such issue will not be repeated in the future. If the Executive
Steering Committee cannot reconcile such final decision within such five (5) day period, either
Party shall have the right to request that such final decision be referred to the dispute
resolution provisions of Article 22. [*] will result in additional cost to Lonza to implement (to
the extent not otherwise expressly provided in this Agreement, the Tech Transfer Agreement and/or
the Quality Agreement), the Parties will discuss in good faith and mutually agree on the timelines
and costs to effect such implementation of such decision (with the expectation that such
implementation shall be effected as soon as possible) and Genentech shall pay such mutually agreed
costs and Lonza shall use Commercially Reasonable Best Efforts to effect such implementation.



               (d) Notwithstanding anything to the contrary in this Agreement, the Quality Agreement and/or
the Tech Transfer Agreement (but subject to Section 3.1.4(c) above), with respect to any
disagreement over the implementation of the Manufacturing Process which could reasonably affect
Product quality or total outcome of the Campaign at the Lonza Facility (including any procurement,
engineering, installation, scale-up, testing and validation of the equipment and systems and other
modifications to the Lonza Facility required to implement the Manufacturing Process) and the
manufacture of the Product during each Campaign (including any related activities immediately
preceding or following each such Campaign), including without limitation the related management
processes and operations, control of production planning and scheduling, prioritization decisions,
allocation of resources, timing of in-process testing, oversight of auxiliary facilities (e.g.,
in-process tests that need to be conducted at the labs), all start-up, registration and
troubleshooting decisions, and any other related matters to manufacturing of the Product, the
Project Team Leaders (or their respective designees) will in good faith attempt to mutually resolve
such disagreement in a timely fashion; provided, if delay in making a decision could jeopardize the
manufacture of Bulk Drug, including without limitation a delay that could affect the ability of the
Parties to timely meet a target date and/or milestone set forth in



9









Table of Contents







Section 4.7 and/or 6.3 herein, [*] such final decision shall be immediately referred to the
Executive Steering Committee for reconciliation; provided, if time does not allow, as soon as
possible thereafter. The Executive Steering Committee shall seek to reconcile such action within 5
days in order to ensure that such disagreement will not be repeated in the future. If the
Executive Steering Committee cannot reconcile such final decision within such 5 day period, either
Party shall have the right to request that such final decision be referred to the dispute
resolution provisions of Article 22.







     3.2 On-Site Participation of Genentech Personnel at the Lonza Facility.



          3.2.1 Prior to Commercial Production. Pursuant to and as set forth in greater detail
in the Tech Transfer Agreement and Quality Agreement, in order to expedite the implementation of
the Tech Transfer Agreement and to coordinate, expedite and guide the Development Runs and
Qualification Runs, Genentech may elect at its discretion to have up to [*] of its personnel
on-site at the Lonza Facility, and such additional personnel in such numbers as may be agreed to by
the Parties or as otherwise required to implement a decision made pursuant to Section 3.1.4. All
such personnel will coordinate closely with Lonza in order to minimize impact on other Lonza
operations. Unless otherwise agreed by Lonza, such Genentech personnel shall have access only to
those portions of the Lonza Facility reasonably related to the technology transfer and
implementation of the Manufacturing Process, cafeterias, designated office space and public areas.




          3.2.2 After Commencement of Commercial Production. As further described in the
Quality Agreement, Genentech shall have the right to designate at its discretion up to [*] of its
personnel (and such additional personnel in such numbers as may be agreed to by the parties or as
otherwise required to implement a decision made pursuant to Section 3.1.4) to be present in the
Lonza Facility during all operational hours during the Term of this Agreement to coordinate,
expedite and guide the Commercial Runs and Lonza’s performance of its obligations under this
Agreement. While at the Lonza Facility, such representative of Genentech shall have access to all
areas as are relevant to the manufacture, storage and or quality testing of the Bulk Product,
cafeterias, designated office space and public areas, or as otherwise authorized by Lonza, and
shall comply with all applicable Lonza policies and procedures.




          3.2.3 Office Space. With respect to any Genentech personnel assigned by Genentech to
be present at the Lonza Facility, Lonza shall provide (a) reasonable access to the Lonza Facility
during all operational hours[*]








     3.3 Lonza Personnel at the Lonza Facility.
It is understood that Genentech is
entering into this Agreement, the Tech Transfer Agreement and the Quality Agreement in reliance
upon the commitment by Lonza to fully and adequately staff the Lonza Facility with all managers,
supervisors, engineers, technicians, inspectors, and other dedicated personnel necessary, and with
sufficient technical expertise and reasonably acceptable to Genentech, to perform its obligations
under this Agreement, the Tech Transfer Agreement and the Quality Agreement, including without
limitation the implementation of the Manufacturing Process, manufacture, storage and quality
testing of the Bulk Drug at the Lonza Facility. Without limiting any other provision of this
Agreement, so long as such personnel remain employed by Lonza, Lonza will use Commercially
Reasonable Best Efforts to provide that such individuals are available to perform the obligations,
as appropriate, to be provided by Lonza hereunder.







ARTICLE 4.



TECHNOLOGY TRANSFER AND PROCESS IMPLEMENTATION








     4.1 Technology Transfer and Manufacturing Process Implementation.



          4.1.1 Process Description and Tech Transfer Agreement. The Parties acknowledge that
in order to enable them to fulfill their respective obligations under this Agreement, they have
entered into the Tech Transfer Agreement and, pursuant thereto, jointly developed a plan for the
transfer of technology and implementation of the Manufacturing Process at the Lonza Facility.
Pursuant to this Agreement and the Tech Transfer Agreement, Genentech shall disclose to Lonza the
Manufacturing Process for the Bulk Drug and the Bulk Drug Specifications. The Tech Transfer
Agreement sets forth the specific responsibilities of the Parties in connection with technology
transfer and implementation of the Manufacturing Process at the Lonza Facility, and the
modifications to the Lonza Facility needed to implement the Manufacturing Process at the Lonza
Facility, including a timeline, budget and statement of work jointly developed by the Parties. The
Tech Transfer Agreement includes reasonable milestones for the transfer of technology,





10









Table of Contents





exchange of information, and implementation of the project, reasonable timelines for achieving
such milestones, and criteria for assessing the progress and success of the project as it
progresses.




          4.1.2 Commercially Reasonable Best Efforts; Cooperation; Tech Transfer Agreement.
Lonza shall use Commercially Reasonable Best Efforts to complete its responsibilities in a timely
manner under and in accordance with the Tech Transfer Agreement and Section 4.1 of this Agreement.
In addition, Lonza agrees to use Commercially Reasonable Best Efforts to cooperate with and assist
Genentech in its efforts to perform its obligations under the Tech Transfer Agreement and Section
4.1 of this Agreement.




          4.1.3 Delivery of Working Cell Bank. By not later than the applicable delivery
deadline set forth in the Tech Transfer Agreement, Genentech shall deliver to Lonza the Working
Cell Bank, which shall conform to Genentech’s applicable release criteria, as set forth in
Genentech’s Working Cell Bank specifications.








     4.2 Changes to Tech Transfer Agreement; Changes to the Manufacturing Process.
Prior to the commencement of Commercial Production of Bulk Drug under this Agreement, and subject to
Section 3.1.4 hereof, the JPT shall have the authority to modify or supplement attachments and
exhibits to the Tech Transfer Agreement as necessary to ensure implementation of the Manufacturing
Process in the Lonza Facility in a timely manner. In addition, Genentech may, in its sole
discretion, modify the Manufacturing Process as it deems appropriate or useful to ensure
implementation of the Manufacturing Process in the Lonza Facility in a timely manner. To the
extent such modifications are directed to implementing Genentech’s Manufacturing Process (as such
process existed as of the Effective Date) at the Lonza Facility, it is understood and agreed by the
Parties that such modifications are contemplated by the Tech Transfer Agreement and the Quality
Agreement and the payments set forth in Section 6.3 and 6.4 herein. To the extent Genentech elects
to make any other modifications to Genentech’s Manufacturing Process, and such modifications would
result in a material change and cost to the Parties to implement, such modifications shall be
subject to the provisions of Article 8.







     4.3 Facility Modifications and Improvements.
Lonza shall use Commercially Reasonable
Best Efforts to: (a) make facility modifications as required to conduct the Manufacturing Process
at the Lonza Facility, and (b) procure, engineer, install, scale-up, test and validate the
equipment and systems necessary to conduct the Manufacturing Process at the Lonza Facility, in each
case as described in, and in accordance with, the Tech ‘Transfer Agreement, in each as determined
by Genentech in its reasonable discretion.







     4.4 Initial Runs and Batches.



          4.4.1 Development Runs. Lonza shall use Commercially Reasonable Best Efforts to
perform Development Runs at such size and in such number sufficient to produce [*] as set forth in
the Tech Transfer Agreement. Lonza will provide the Product resulting from such Successful
Development Runs and Development Batches to Genentech, at no cost other than the cost specified in
Section 6.4.1 and in accordance with the delivery terms set forth in Section 5.5 hereof; provided,
Genentech shall have no obligation to pay Lonza for [*]. At Genentech’s election, Genentech may
make whatever further use of such Development Runs, including, without limitation, any Product
therefrom, as it shall determine, or direct Lonza, at Lonza’s cost, to dispose of the material from
such Development Runs. It is understood that if Lonza commences a Development Run, and delivers 3
Successful Development Runs prior to finishing such commenced Development Run, Genentech will pay
for such commenced Development Run (subject to not having to pay for more than four (4) Development
Runs).




          4.4.2 Validation and Qualification Batches. Once scale-up of the Manufacturing
Process is completed at the Lonza Facility, and Genentech has reviewed and approved the
deliverables specified in Section 4.4.1 above, Lonza shall use Commercially Reasonable Best Efforts
to perform all required process validation described in Section 12.3 and shall perform
Qualification Runs sufficient to produce, at commercial scale, [*] as set forth in the Tech
Transfer Agreement in order to document the operability and reproducibility of the Manufacturing
Process and permit the Parties to complete and file the regulatory documents described in Section
4.6 hereof. Lonza shall provide the Product and Bulk Drug resulting from such Qualification Runs
and Qualification Batches to Genentech, at no other costs than the cost specified in Section 6.4.2
(except as otherwise agreed by the Parties pursuant to Section 4.9 hereof) in accordance with the
delivery terms set forth in Section 5.5 hereof; provided, Genentech shall have [*] Genentech may
make whatever further use of such Qualification Batches, including, without limitation, any Product
therefrom, as it shall determine appropriate.




11









Table of Contents












     4.5 Raw Materials and Suppliers.



          4.5.1 Raw Materials. Genentech has developed specifications for the raw materials,
used in the Manufacturing Process. The raw material specifications [*] for raw materials will be
included in the Tech Transfer Agreement, which raw material specifications may be amended from time
to time by Genentech at its reasonable discretion[*] for raw materials used in the manufacture of
the Bulk Drug, then, during the Term, Genentech shall provide Lonza with [*]




          4.5.2 Raw Materials Management and Safety Stock. Subject to Section 6.4, Lonza shall
procure [*] maintain and store, such amounts of raw materials and components as required, including
as agreed by the Parties an adequate supply of safety stock, for the Development Runs and
Qualification Runs described in Section 4.4 above and the Commercial Runs described in Article 5.
Lonza will provide such raw materials and components and such procurement and management services
with no additional mark-up or administrative fees to Genentech; provided, to the extent Lonza is
unable to procure such raw materials from the Approved Suppliers for the Development Runs and
Qualification Runs, Genentech shall provide such raw materials and components to Lonza with no
additional mark-up or administrative fees.




          4.5.3 Raw Materials Testing. Lonza shall perform testing and evaluation of the raw
materials as required by the applicable raw material specifications or Bulk Drug Specifications and
cGMP, and otherwise in accordance with the Tech Transfer Agreement, the Quality Agreement and
standard operating procedures to be agreed upon in writing by the Parties.








     4.6 Regulatory Matters.
Lonza shall use Commercially Reasonable Best Efforts to
timely prepare, assist and enable Genentech to obtain and maintain all Regulatory Approvals that
are required to manufacture Bulk Drug at the Lonza Facility and that are required to market and
sell in the Territory the Product resulting from the Bulk Drug, including, without limitation, the
preparation, filing and maintenance of supplements to any Lonza existing FDA licenses’, and Lonza
shall reasonably assist Genentech to timely prepare, assist and enable Genentech to obtain all
Regulatory Approvals that are required to market and sell in the Territory the Product resulting
from the Manufacturing Process as carried out at the Lonza Facility, including, without limitation,
reasonably assisting with the preparation and review of the drafts of the chemistry, manufacturing
and controls sections of the sBLA to be filed by Genentech with FDA. Lonza shall also reasonably
assist Genentech in responding to requests and inquiries from the FDA prior to, during and after
regulatory review periods, including without limitation, providing all data, records and reports
requested by Genentech relevant to such review periods, and by attending meetings with such
regulatory authorities to the extent Genentech requests for Lonza to participate given its unique
knowledge or its status as manufacturer of Bulk Drug under this Agreement. Lonza personnel shall
also facilitate pre-approval inspection of the Lonza Facility conducted by such regulatory
authorities. The assistance to be provided by Lonza under this Section 4.6 shall be provided at no
additional cost to Genentech, except as otherwise provided in Sections 4.9 and 5.8 hereof.







     4.7 Target Dates.



          4.7.1 Target Date for Facility Modification Completion. Lonza agrees to use
Commercially Reasonable Best Efforts to complete the modifications specified under Section 4.3 and
make the Lonza Facility ready and available by [*] for Lonza to perform Development Runs and
manufacture Development Batches at such size and in such number as is set forth in the Tech
Transfer Agreement, as determined by Genentech in its reasonable discretion (the “Phase A
Completion”). If Phase A Completion is not achieved by [*], with respect to each Supplemental
Batch Payment to be paid by Genentech pursuant to Section 6.4.3(b), such amount shall be reduced by
an amount equal to [*] (i.e., amount to be paid shall equal to [*] and, if Phase A Completion is
not achieved by [*], each Supplemental Batch Payment to be paid by Genentech pursuant to Section
6.4.3(b) shall be reduced by an additional amount equal to [*] (i.e. [*] equals a total of [*]
(i.e., amount to be paid by Genentech shall equal to [*]




          4.7.2 Target Date for 1st Successful Development Run. In addition to the
foregoing, Lonza agrees to use Commercially Reasonable Best Efforts by [*] to manufacture at
commercial scale and fill the first (1st) Successful Development Lot, as further defined
in the Tech Transfer Agreement (the “Development Run Initiation”).




          4.7.3 Target Date for Commencement of Qualification Runs. In addition to the
foregoing, Lonza agrees to use Commercially Reasonable Best Efforts by [*] to commence manufacture
of the first (1st) Qualification




12









Table of Contents







Batch in at least a [*] as determined by achievement of certain criteria (such criteria to be
agreed upon by the Parties) specified in the Tech Transfer Agreement (the “Qualification Run
Initiation”).




          4.7.4 Target Date for Successful Qualification Runs. In addition to the foregoing,
Lonza agrees to use Commercially Reasonable Best Efforts by [*] to manufacture at commercial scale
and deliver to Genentech [*] produced from [*] including all appropriate data, records and reports
related thereof, as further described in the Tech Transfer Agreement (the “Phase B Completion”).
It is understood and agreed by the Parties, that so long as Lonza delivers to Genentech samples
from each of such Qualification Lots by the target date specified in Section 6.3.4, and uses its
Commercially Reasonable Best Efforts to deliver to Genentech all appropriate data, records and
reports related thereof as soon as possible thereafter (but in any event, no more than sixty (60)
days after such target date) and such Qualification Lots are thereafter determined to be
Successful, Lonza shall be deemed to have “delivered” such Successful Qualification Lots to
Genentech by such target date.




          4.7.5 Target Date for Enablement of sBLA Filing. In addition to the foregoing, Lonza
agrees to use Commercially Reasonable Best Efforts to prepare, assist and enable Genentech to file
the sBLA with the FDA by [*] as required in order to manufacture Bulk Drug at the Lonza Facility,
including without limitation, assisting with the preparation and review of the drafts of the
chemistry, manufacturing and control sections of the sBLA to be filed (the “sBLA Enablement”).




          4.7.6 Target Date for FDA Approval. Lonza agrees to use Commercially Reasonable Best
Efforts to prepare, assist and enable Genentech (including, without limitation, those obligations
of Lonza specified in Section 4.6) to obtain by [*] FDA approval for the manufacture of Bulk Drug
at the Lonza Facility (the “FDA Approval”).




          4.7.7 Termination for Failure to Achieve Certain Target Dates. Without limiting the
foregoing, if Phase B Completion is not achieved by [*], or if sBLA Enablement is not achieved by
[*] or FDA Approval of the Lonza Facility is not received by [*], Genentech shall also have the
right to terminate the Agreement in accordance with Section 20.2.3 hereof.








     4.8 Manufacturing, Documentation.
In accordance with the terms of the Tech Transfer
Agreement, Genentech shall, by the relevant date that is set forth in the Tech Transfer Agreement
as such date may be modified by the JPT, provide to Lonza the Manufacturing Documentation listed
within exhibits and schedules to the Tech Transfer Agreement, and shall, thereafter, from time to
time and in accordance with the timeline set forth in the Tech Transfer Agreement, provide to Lonza
such additional Manufacturing Documentation as Lonza shall reasonably require in order to implement
the Tech Transfer Agreement and the Manufacturing Process and otherwise perform its obligations
under this Agreement. In accordance with the terms of the Quality Agreement and cGMP, Lonza shall
maintain a process notebook which maintains a record of the Manufacturing Process as implemented at
the Lonza Facility, including, without limitation, the process trend and variability data (the
“Process Notebook”). Genentech shall have the right to review and copy any information in such
Process Notebook at any time during the Term. Genentech’s obligations under this Section 4.8 shall
be subject to obligations to Third Parties as set forth in written agreements in effect prior to
the Effective Date of this Agreement. In the event an obligation to a Third Party prohibits
Genentech from rendering such assistance, Genentech shall promptly seek from such Third Party
permission to render such assistance. Such Manufacturing Documentation and Process Notebook shall
be the sole property of Genentech, and shall be treated in all respects as Genentech Confidential
Information. The Process Notebook, including any copies or any portion thereof, shall be delivered
to Genentech upon expiration or termination of this Agreement.







     4.9 Product Substitution.
Genentech shall have the right at any time prior to [*] to
substitute for manufacture under this Agreement another product or products for the Bulk Drug;
provided (i) such substitute product is a cell culture derived protein produced with the use of
similar unit operations as are used for the Bulk Drug; and (ii) the Parties agree upon new dates,
deadlines and costs set forth in this Agreement to the extent impacted by such product
substitution.







ARTICLE 5.



RUNS; PRODUCTION AND SUPPLY; DELIVERIES




13









Table of Contents












     5.1 Commercial Production of Bulk Drug.
[*] that comply with cGMP and the Bulk Drug
Specifications, the Target Yield and the warranties in Section 7.1, and the execution and delivery
by Lonza of the related Certificates of Compliance and Certificates of Testing, “Commercial
Production” of Bulk Drug will commence under this Agreement, with the first Commercial Run
performed after Phase B Completion and prior to FDA Approval. After Commercial Production has
commenced, changes to the Manufacturing Process shall be made as set forth in Article 8 hereof and
the Quality Agreement or as the Parties may otherwise agree in writing. Issues relating to quality
of Product shall be resolved in accordance with the Quality Agreement.







     5.2 Efforts.



          5.2.1 Commercially Reasonable Best Efforts. Lonza shall use Commercially Reasonable
Best Efforts to conduct Commercial Production and deliver Bulk Drug in the amounts and time frame
specified in this Agreement.




          5.2.2 Minimum Runs and Campaign Period. Notwithstanding anything to the contrary in
this Article 5, but subject to the other terms of this Agreement, in each calendar year during the
Term, Lonza shall make available the Lonza Facility during each Campaign and perform at least the
number of Runs set forth in Exhibit A during such Campaign, as further defined as the “Campaign
Minimum “ and “Campaign Minimum Run” for such calendar quarter on Exhibit A attached hereto and
incorporated herein. For purposes of this Article 5, the term “Runs” refers to Commercial Runs,
and does not refer to Qualification Runs or Development Runs.




          5.2.3 Pre-Campaign/Campaign Requirements. It is understood that Genentech is entering
into this Agreement, the Tech Transfer Agreement and the Quality Agreement in reliance upon Lonza
being fully prepared and able to conduct manufacturing of the Bulk Drug during each Campaign. In
order to ensure such preparedness and ability, [*] such checklist to include without limitation,
the following requirements: (i) that the Lonza Facility is compliant with all regional, national,
federal, state and local regulations in the Territory; (ii) that the Lonza Facility is outfitted
with all tools, equipment and utility services necessary to perform Commercial Production; (iii)
that the Lonza Facility has been properly maintained and that any maintenance that is required to
be performed on equipment and tools within the Lonza Facility has been performed prior to such
Campaign; (iv) that the Lonza Facility is fully and adequately staffed with all supervisors,
engineers, technicians, inspectors, and other dedicated personnel necessary, and with sufficient
technical expertise and acceptable to Genentech, to perform Commercial Production, including any
quality testing of Bulk Drug produced (in addition, the Parties shall mutually agree upon each of
the primary and secondary Lonza key personnel to be assigned to perform the Commercial Production
during each Campaign, and once agreed, Lonza may not change such assignment without Genentech’s
mutual agreement); (v) that Lonza has adequate stock of raw materials on hand to perform all Runs
required during such Campaign; and (vi) that the Lonza Facility is accessible [*]




          5.2.4 Genentech Right of Review and Approval. In no event shall Genentech’s right to
review and/or approve an activity hereunder obligate Genentech to do so, nor shall its exercise or
failure to exercise such right constitute a basis of any claim by Lonza against Genentech.








     5.3 Production and Supply.



          5.3.1 Product Manufacturing Forecast. By not later than the Effective Date of this
Agreement and thereafter on a calendar quarter by calendar quarter basis of each year, beginning on
[*], for the remainder of the Term, Genentech shall provide to Lonza a rolling “Product
Manufacturing Forecast” which shall commence with the first day of the next calendar quarter and
establish, on a yearly basis, for the remainder of the Term, the dates on which Campaigns are to be
conducted, the number of Runs to be performed and the quantity of Bulk Drug reasonably expected to
be manufactured, released and supplied to Genentech, all within the ranges set forth in Exhibit A
hereto (except as otherwise agreed pursuant to Section 5.7 hereof). The Product Manufacturing
Forecast shall be used for joint planning purposes and shall be non-binding unless otherwise
specified herein, and may be amended by the Parties from time to time as the Parties deem
appropriate. Beginning [*] the anticipated commencement of Commercial Production (or such other
date as agreed upon by the Parties in writing), each Product Manufacturing Forecast shall be
binding for the first [*] of the next calendar quarter following such forecast, and non-binding for
the remainder of the Term, as further described below. Beginning with the initial binding Product
Manufacturing Forecast, the forecasts for Bulk Drug and Campaigns within the first [*] months of
the next calendar quarter following each such rolling Product Manufacturing




14









Table of Contents







Forecast shall constitute a Bulk Drug Commitment and shall be binding upon the Parties and
cannot be changed except upon mutual written consent of the Parties. By way of example only, when
the rolling Product Manufacturing Forecast for [*] is issued, the twelve (12)-month period covered
by such forecast shall commence on [*], and shall end on [*], and shall be binding for the period
[*]. The Bulk Drug Commitment shall include approximate harvest dates for each Commercial Run.
Concurrent with each Product Manufacturing Forecast, Genentech shall issue to Lonza a written
purchase order, consistent with the Bulk Drug Commitment for such Product Manufacturing Forecast,
and such purchase order shall be binding on both Parties.




          5.3.2 Weekly Meetings. The JPT shall participate in a weekly meeting (or at such
frequency as otherwise mutually agreed), in person or via telephone, to review and discuss
production, supply and logistics operations for the next three (3) month period, including: (i) the
dates on which Campaigns shall occur, (ii) dates or approximate dates on which Runs will start and
be performed; (iii) dates or approximate dates for Lonza’s and Genentech’s release of Bulk Drug;
(iv) size or approximate size of Batches; (v) dates or approximate dates for delivery of Batches;
(vi) destination for shipment of Batches; and (vii) status of Batches undergoing investigation, and
related matters, and to issue and, as appropriate, update the Product Manufacturing Forecast.








     5.4 Management of Product Manufacturing Forecast.



          5.4.1 Delivery. Genentech and Lonza will work together in good faith to determine
delivery dates and a shipping schedule for deliveries of Bulk Drug under this Agreement, and shall
establish a written “Delivery Schedule” as a part of the Product Manufacturing Forecast and the
related Bulk Drug Commitment.




          5.4.2 Delivery Dates. For each Run, the delivery date respectively set forth in the
Delivery Schedule will be the “Delivery Date” for such Run, unless the Parties agree on an
alternative delivery date; provided, however, that for purposes of Section 9.1 (a)(ii) hereof, the
“Delivery Date” for any particular Bulk Drug shall be later of the actual date on which such Bulk
Drug is delivered to Genentech’s Designated Carrier at Lonza’s Facility in accordance with Section
5.5 hereof, or the actual date of delivery to Genentech of the records specified in Section 10.2.1
for such Bulk Drug (e.g., Batch Records, Lonza’s Release Documentation, Certificate of Testing,
Certificate of Compliance, etc.).




          5.4.3 Purchase Quantities. Except as otherwise set forth in this Agreement
(including, without limitation, upon mutual agreement of the Parties under Section 4.9 or Section
5.8 hereof, Genentech shall purchase all Bulk Drug that complies with and conforms to cGMP, the
Bulk Drug Specifications, the Target Yield and the warranties set forth in Section 7.1 up to the
applicable Campaign Maximum set forth in Exhibit A hereto (except as otherwise agreed pursuant to
Section 5.7 hereof).




          5.4.4 Shortages; Shortfalls; Delivery Delays. If at any time during the Term, Lonza
is unable to fulfill the Bulk Drug Commitments on the related Delivery Date(s), then Lonza shall
(1) immediately notify Genentech in writing as to the reason for the shortfall, shortage and/or
delay, and provide an indication of the likely duration of the shortfall, shortage and/or delay,
and (2) at Genentech’s written request, use Commercially Reasonable Best Efforts to provide
Genentech with additional Commercial Runs to meet outstanding Bulk Drug Commitments under this
Agreement, including, without limitation, extending the then existing Campaign and/or scheduling
and conducting an additional Campaign within the next [*] in order to make-up such shortfall,
shortage or delay. In addition, Lonza shall also promptly notify Genentech in writing when any
such shortfall, shortage and/or delay is over. It is understood and agreed that nothing herein
this Section 5.4.4 shall release Lonza from its obligation to promptly supply Bulk Drug to
Genentech and/or their respective designee, as appropriate, to meet such Bulk Drug Commitments.




          5.4.5 Manufacturing Success Rate. If at any time during the Term, Lonza is unable to
meet the Annual Minimum Success Rate and/or Target Yield for a calendar quarter (as further
described on Exhibit B attached hereto and incorporated herein): (i) at Genentech’s request, Lonza
shall discuss in good faith with Genentech a reduction in the Purchase Price for all Commercial
Batches accepted by Genentech in accordance with Section 5.4.6 for such calendar quarter (the
determination of such reduction to be based upon the actual success rate achieved over such
calendar quarter, including without limitation the actual Target Yield achieved in each Commercial
Lot produced in such calendar quarter), and (ii) Genentech shall have the right to terminate the
Agreement in accordance with Section 20.2.4 hereof. Notwithstanding anything to the contrary,
nothing herein shall obligate Genentech to accept any Runs that do not conform to the cGMP, the
Bulk Drug Specifications, the Target Yield and the warranties in Section 7.1.




15









Table of Contents








          5.4.6 Acceptance of Bulk Drug. Lonza shall deliver to Genentech samples of all
Batches manufactured under this Agreement, as and when Batches are manufactured, and otherwise in
accordance with the Quality Agreement and applicable standard operating procedures approved by both
Parties. Lonza shall also provide the related Batch Record and other Batch documentation described
in the Quality Agreement for each Batch of Bulk Drug. Upon receipt of samples of a particular
Batch of Bulk Drug together with the related Batch Record and other Batch documentation (as set
forth in the Quality Agreement or as otherwise reasonably requested by Genentech), Genentech shall
perform release testing and review the Batch Record and other Batch documentation for each Batch,
in good faith, and, in the absence of an investigation for said Batch pursuant to the Quality
Agreement or Section 9.1 hereof, such testing and review shall be completed within [*] after
Genentech’s receipt of samples of such Batch together with the related Batch Record and other Batch
documentation. Any investigation shall be initiated and conducted in accordance with Genentech’s
applicable standard operating procedure. Subject to Genentech’s rights to make claims under
Article 9 hereof, a Batch shall be deemed to have been accepted by Genentech on the date (the
“Acceptance Date”) on which Lonza receives written notice from Genentech that such Batch has been
released by Genentech pursuant to applicable release testing standard operating protocols as
described in the Quality Agreement.








     5.5 Delivery Terms.
Lonza shall deliver Bulk Drug, suitably packed in agreed upon
shipping containers, to Genentech’s [*] at which time title to and risk of loss for the Bulk Drug
shall transfer to Genentech. Genentech shall have the right to designate the carrier. Genentech
shall undertake and arrange for shipment of Bulk Drug within [*] after the Acceptance Date related
thereto. Lonza shall provide storage for such Bulk Drug at no charge during this period. Prior to
shipping any Bulk Drug, Genentech shall obtain all appropriate approvals and consents of any
governmental authority necessary for the transportation or shipment of such Bulk Drug. Lonza shall
comply with all applicable laws and regulations regarding the packaging of Bulk Drug for shipment.
[*] Bulk Drug resulting from Development Runs and Qualification Runs (see Sections 4.4.1 and 4.4.2
hereof), and Non-Conforming Bulk Drug (see Section 9.4) shall also be subject to the delivery terms
set forth in this Section 5.5. Genentech shall procure, at Genentech’s cost, and provide to Lonza
sufficient quantities of freeze tanks for shipment of Bulk Drug from Lonza’s Facility to Genentech
Designated Carrier. Lonza shall maintain such freeze tanks in compliance with the terms of the
Quality Agreement. [*] Such freeze tanks shall be deemed to be “Portable Equipment” and shall be
subject to Section 15.2 hereof.







     5.6 Storing, Packaging and Shipping.
Lonza shall store, package, label and ship the
Bulk Drug according to the Bulk Drug Specifications and according to packaging procedures mutually
agreed upon by Genentech and Lonza in writing.







     5.7 Additional and New Capacity at the Lonza Facility.



          5.7.1 Additional Capacity Made Available In Calendar Year 2004. If at any time during
the [*] additional capacity becomes available at the Lonza Facility for commercial production,
Genentech shall [*] to utilize some or all of such additional capacity for Commercial Production,
for so long as such additional capacity is available during the Term, [*] to Genentech as provided
for under this Agreement.




          5.7.2 Additional Capacity Made Available After Calendar Year 2004. If at any time in
any year after the [*] and during the Term, additional capacity becomes available at the Lonza
Facility for commercial production, Genentech shall [*] to utilize some or all of the first [*]
Runs of such additional capacity, and [*]to utilize some or all of any Runs in excess of such first
[*] Runs of such additional capacity, for Commercial Production, for so long as such additional
capacity is available during the Term, and in each case, [*]to Genentech as provided for under this
Agreement.




          5.7.3 New Capacity. Each and every time in any year during the Term, if new capacity
becomes available at the Lonza Facility for commercial production, as a result of Lonza installing
additional bioreactors at the Lonza Facility (other than that capacity specified in the Tech
Transfer Agreement), Genentech [*]




          5.7.4 Notice. Lonza shall promptly notify Genentech in writing upon any such
additional or new capacity becoming available, and provide Genentech with all information
reasonably useful for Genentech to make a decision regarding such additional or new capacity.




16









Table of Contents








               (a) With respect to any additional capacity subject to Genentech’s [*] Genentech shall have
[*] days following its receipt of all such information to review such information and provide
written notification to Lonza regarding [*]



               (b) With respect to any additional or new capacity subject to Genentech’s [*] (i) if such
additional or new capacity will not be available until [*] after such notice from Lonza, Genentech
shall have [*] days following its receipt of all such information to review such information and
provide written notification to Lonza regarding its decision to negotiate with respect to such
additional or new capacity, or (ii) if such additional or new capacity will be available within
[*]of such notice from Lonza, Genentech shall have [*] days following its receipt of all such
information to review such information and provide written notification to Lonza regarding its
decision to[*] with respect to such additional or new capacity. With respect to any additional or
new capacity subject to [*], during said [*] or [*] day period, as applicable, Lonza shall be free
to talk to any Third Party, provided Lonza does not enter into a written agreement with any Third
During regarding such additional or new capacity until after the end of said [*] or [*] day period,
as applicable.



          5.7.5 With respect to that additional (or new) capacity which Genentech receives notice of
pursuant to Section 5.7.4 and is subject to:




               (a) Genentech’s [*] if written notice is given that Genentech does not want to accept such
additional capacity, or written notice is not given by Genentech within said [*] day period,
Genentech [*] such additional capacity (or, as applicable, that portion thereof that it specifies
in such written notice that it does not want to accept);



               (b) Genentech’s [*], if written notice is given that Genentech does not want to accept such
additional or new capacity, or written notice is not given by Genentech within said [*] or [*] day
period, as applicable, Genentech will have [*] for such additional or new capacity (or, as
applicable, that portion thereof that it specifies in such written notice that it does not want [*]


and in each case, Lonza will be free to provide such additional or new capacity to any Third Party,
subject to Section 5.7.6, and as long as the terms of such additional or new capacity are not [*]
to such Third Party than those last offered to [*], without first offering to enter into a written
agreement with Genentech on such terms.




          5.7.6 [*]. It is understood and agreed to by the Parties, if any existing capacity or new
capacity becomes available at the Lonza Facility during the Term, use of such capacity would first
be subject to the provisions of Section 5.7.5, and then subject to the provisions of this Section
5.7.6. [*]




               (a) Genentech Right of Last Refusal on Existing Capacity. Lonza agrees that during
the Term, Lonza shall not enter into a written agreement to use any existing capacity at the Lonza
Facility to manufacture for itself or any Affiliate or Third Party, any [*] Product, without first
providing written notice of and offering to enter into a written agreement with Genentech on such
terms. If, at any time(s) during the Term, Lonza receives and is ready to accept a bona-fide
written offer from a Third Party or Affiliate, negotiated in good faith and at arms-length and
which offer contains all material terms, to use any existing capacity at the Lonza Facility to
manufacture an [*] Product, Lonza shall provide written notification to Genentech of such offer and
all information reasonably useful for Genentech to make a decision regarding such capacity
(including without limitation, a copy of the agreed upon terms of such offer, redacted as necessary
to remove the name of the Third Party and the identity of the [*] Product). Genentech shall have
thirty (30) days following its receipt of all such information to review such information and
provide written notification to Lonza regarding its decision to accept such capacity. If Genentech
provides written notice to Lonza within such thirty (30) day period of its acceptance of such
capacity, Genentech shall have the right to use such capacity to manufacture Bulk Drug for so long
as such existing capacity is available during the Term and under the same terms and conditions of
this Agreement [*] shall prevail with respect to such capacity). If written notice is given that
Genentech does not want to accept such additional capacity, or written notice is not given by
Genentech within said thirty (30) day period, Genentech will have waived its right to accept such
capacity, and Lonza will be free to provide such capacity to such Third Party as long as the terms
of the written agreement with such Third Party are not [*] to such Third Party than the terms last
offered to [*], without first offering to enter into a written agreement with Genentech on such
terms.



               (b) Exclusivity on New Capacity.



17









Table of Contents





                    (i) If Lonza elects to build any new capacity at the Lonza Facility, Lonza agrees that during
the Term, Lonza shall not use such new capacity to manufacture, either for commercial supply or
clinical supply, for itself or any Affiliate or Third Party, any [*],Product. Notwithstanding the
foregoing, and subject to the other provisions of this Agreement, this Section 5.7.6(b) does not
prohibit Lonza from manufacturing the Product for ultimate sale by Roche outside the United States
and Canada in accordance with the terms of this Agreement, or for Roche as otherwise agreed upon in
writing by the Parties.



                    (ii) Subject to the foregoing, if, at any time(s) during the Term, Lonza receives a bona-fide
written offer from a Third Party or Affiliate, negotiated in good faith and at arms-length and
which offer contains all material terms, to use any new capacity at the Lonza Facility to
manufacture an [*] Product, Lonza may provide written notification to Genentech of such offer and
request that Genentech accept and use such capacity for manufacture of Genentech Products.
Concurrent with such notice, Lonza shall provide to Genentech all information reasonably useful for
Genentech to make a decision regarding such capacity (including without limitation, a copy of the
agreed upon terms of such offer, redacted as necessary to remove the name of the Third Party and
the identity of the [*] Product).



                    (iii) Genentech agrees to consider in good faith each such written request by Lonza for
Genentech to accept and use such capacity, and, in considering such request, Genentech shall take
into account the current business relationship of the Parties and the product life cycle stage of
its Product.



                    (iv) Subject to the foregoing, Genentech may, at its sole discretion, either elect or reject
such request to use such capacity, and (1) if Genentech elects to accept such request to use such
capacity, Genentech may use such capacity for so long as such new capacity is available during the
Term, and on terms and conditions [*]to Genentech as provided for under this Agreement ([*] of this
Agreement), or (2) if Genentech rejects such request to use such capacity, such capacity shall
remain subject to Section 5.7.6(b)(i).



               (c) Definition of [*] Products. As used herein, [*]. To the extent any
product is substituted for the Product pursuant to Section 4.9, such obligations under this Section
5.7.6 shall apply as well to any protein(s) or peptide(s) (including any fragment thereof) whose
mechanism of action is initiated by binding to the target that is the subject of such substituted
product.







     5.8 Regulatory Approval for Outside the United States.
Any time following Phase B
Completion, Genentech may request that Lonza seek EMEA, MHWJ, or other Regulatory Approval to
enable Bulk Drug to be sold outside of the United States by Genentech or its designee, including
without limitation, Roche and/or Zenyaku Kogyo Co. Ltd. Upon such request, the JPT will meet to
discuss timelines, activities and responsibilities necessary to obtain such Regulatory Approval.
The Parties understand that Roche is the license holder for the Product in Europe, and shall
discuss Roche’s role in such project; provided, however, that the Agreement shall remain between
the Parties, and Roche shall not be a Third Party beneficiary hereunder unless otherwise agreed to
in writing by the Parties. The supply, purchase and payment provisions of this Agreement would not
be affected by a decision to seek Regulatory Approval outside the United States for the Product
hereunder unless otherwise agreed to in writing by the Parties, and Genentech would continue to
purchase the Bulk Drug Commitment in accordance with the terms of this Agreement, at least up to
the applicable Campaign Maximum set forth in Exhibit A hereto.







     5.9 Sale of Lonza Facility.



          5.9.1 Right of First Notice. If at any time(s) during the Term, Lonza elects to sell
the Lonza Facility, including without limitation an election to solicit a Third Party, or an
election to consider a solicitation or other inquiry received from a Third Party, to purchase the
Lonza Facility, on each such occasion, Lonza shall promptly provide written notice to Genentech
thereof, and with such notice shall provide to Genentech all information reasonably useful for
Genentech to make a reasonably informed bid with respect to such proposed sale (but in any event,
no less than the same information that Lonza provides to any Third Party considering a bid with
respect to such proposed sale). Genentech shall have ninety (90) days to review such information
and provide written notification to Lonza regarding its decision to purchase the Lonza Facility,
and/or whether its needs additional information regarding such sale. During such ninety (90) day
period Lonza shall be free to talk to any Third Party with respect to such proposed sale of the
Lonza Facility, provided Lonza does not enter into a written agreement with any Third Party
regarding such proposed sale of the Lonza Facility until after the end of such ninety (90) day
period.




18









Table of Contents








          5.9.2 Effect of Notice. If written notice is given that Genentech desires to purchase
the Lonza Facility, the Parties shall negotiate in good faith the terms thereof. If written notice
is given that Genentech does not want to purchase the Lonza Facility, or written notice is not
given by Genentech within said ninety (90) day period, Genentech will have waived its right to
negotiate in good faith with Lonza and to submit a bid for the Lonza Facility and Lonza shall be
free to sell the Lonza Facility without restriction to any Third Party; provided, Lonza consummates
such sale within one (1) year of such written notice by Lonza to Genentech under Section 5.9.1. Any
final decision to sell the Lonza Facility will be based on economic and such other considerations
as determined by, and solely at the discretion of, Lonza Inc’s shareholders.




          5.9.3 Limitations. It is understood and agree that such right of first notice only
applies with respect to the sale of the Lonza Facility, and not with respect to any such sale that
is incidental to a proposed sale of Lonza Group Ltd.








ARTICLE 6.



PAYMENTS








     6.1 Execution Fee.
Genentech shall pay Lonza [*] within [*] business days of the
Effective Date.







     6.2 [Intentionally left blank]







     6.3 Milestone Payments.
For each Milestone I through VI set forth in this Section 6.3
that is completed by the deadline respectively described below, Genentech shall pay the related
milestone, within [*]business days of receipt of a correct, undisputed invoice, which may be
delivered on or after the date earned:



          6.3.1 Completion of Milestone I: Phase A Completion:




               (a) If Phase A Completion is achieved by [*]Genentech shall pay Lonza [*] or



               (b) If Phase A Completion is not achieved until after [*] but before [*], Genentech shall pay
Lonza [*] or



               (c) If Phase A Completion is not achieved until after [*] but before [*]Genentech shall pay
Lonza [*].



          6.3.2 Completion of Milestone II: Development Run Initiation. If Development Run
Initiation is achieved by [*], Genentech shall pay Lonza [*].




          6.3.3 Completion of Milestone III: Qualification Run Initiation. If Qualification Run
Initiation is achieved by [*], Genentech shall pay Lonza [*]




          6.3.4 Completion of Milestone IV: Phase B Completion:




               (a) If Phase B Completion is achieved by [*], Genentech shall pay Lonza [*] or



               (b) If Phase B Completion is not achieved until after [*], but before [*], Genentech shall pay
Lonza [*]



          6.3.5 Completion of Milestone V: sBLA Enablement. If sBLA Enablement is achieved by
[*], Genentech shall pay Lonza [*]




          6.3.6 Completion of Milestone VI: FDA Approval: If FDA Approval for the Lonza
Facility is achieved on or before [*] (or in the event sBLA Enablement is achieved prior to [*],
but Genentech elects to file the sBLA at a later date, then [*]after the date of such filing),
Genentech shall pay Lonza [*].




19









Table of Contents












     6.4 Batch Pricing; Invoicing.



          6.4.1 Development Batches. For each Development Batch [*]manufactured by not later
than [*]and in compliance with this Agreement, and conformance to cGMP, the Bulk Drug
Specifications, and the warranties in Section 7.1, Genentech shall pay Lonza an amount equal to [*]
per Batch and, subject to Section 4.5, the Acquisition Cost of raw materials used to manufacture
such Batch. Such amount shall be the Purchase Price for such Development Batches.




          6.4.2 Qualification Batches. For each Successful Qualification Batch [*] manufactured
by not later than [*]and in compliance with this Agreement and conformance to cGMP, the Bulk Drug
Specifications, the Target Yield, and the warranties provided in Section 7.1 hereof, Genentech
shall pay Lonza an amount equal to [*] per Batch and, subject to Section 4.5, the Acquisition Cost
of raw materials used to manufacture each such Batch. Such amount shall be the Purchase Price for
such Qualification Batches.




          6.4.3 Commercial Batches. Except as otherwise expressly set forth in this Agreement,
including, without limitation, in Article 8 and Section 9.1 hereof:




               (a) For each Successful Commercial Batch (up to the Campaign Maximum in a particular Campaign)
manufactured in compliance with this Agreement and in conformance with cGMP and the Bulk Drug
Specifications, the Target Yield, and the warranties provided in Section 7.1 hereof, Genentech
shall pay Lonza an amount equal to [*]. Such amount shall be the Purchase Price for such
Commercial Batches.



               (b) In addition to the foregoing, subject to Section 4.7.1, with respect to each such
Successful Commercial Batch under 6.4.3(a) above, up to a maximum of [*] such Successful Commercial
Batches, Genentech shall pay Lonza an amount equal to [*] (the “Supplemental Batch Payment”). It
is understood and agreed, that no such payment shall be due for any Successful Commercial Batches
in excess of such [*] Successful Commercial Batches, including without limitation any additional
Batches purchased during the Term, including any extension thereof.



               (c) In addition to the foregoing, Genentech shall reimburse Lonza, subject to Section 4.5, [*]
the Acquisition Cost of the raw materials utilized to produce such Successful Commercial Batches
(up to the Campaign Maximum in a particular Campaign).



               (d) In addition, Lonza shall also be entitled to receive: (i) a one-time additional payment of
(i) [*] upon delivery to Genentech of the [*] Successful Commercial Batch in [*], and (ii) a
one-time additional payment of [*] upon delivery to Genentech of the [*] Successful Commercial
Batch in [*] which such additional amounts shall be payable upon Genentech’s final release of the
[*] Commercial Batch in such calendar year. For the avoidance of doubt, such amounts shall in no
event be paid more than once each, and only on achievement of such milestone in [*]



          6.4.4 Invoicing Genentech for Batches. For amounts owed under:




               (a) Sections 6.4.1 and 6.4.2, invoices may be issued on or after the related Acceptance Date;
and



               (b) Section 6.4.3, invoices may be issued on or after the related Acceptance Date.


Such invoices shall reference the Acceptance Date, the Batch delivered and the total Purchase
Price. In addition, for invoices issued with respect to Section 6.4.2(c), such invoices shall also
reference a complete list of the Successful Commercial Batches produced, shipped and accepted by
Genentech during such calendar year. Amounts due under undisputed correct invoices shall be due
and payable in U.S. currency within thirty (30) days after receipt of such invoice.




20









Table of Contents












     6.5 Payment Method.
All payments due hereunder shall be made by wire transfer from a
bank in the United States in immediately available funds to a bank in the United States designated
by the Party to receive payment. All payments hereunder shall be made in U.S. dollars. [*]



     Genentech’s Designated U.S. Bank:



     [*]



     Lonza’s Designated U.S. Bank:



     [*]







     6.6 Commercial Audit.
For at least three (3) years after final payment under this
Agreement (or for such longer period of time as may be required by applicable laws and
regulations), Lonza shall maintain complete and accurate books, records, documents, and other
evidence of costs, expenses and allowances pertaining to this Agreement and/or the Tech Transfer
Agreement and the Facility Modifications and Services Costs (for purposes of this Section 6.6,
hereinafter collectively called “Records”) to the extent and in such detail as will properly
reflect all costs and expenses incurred by Lonza in connection with this Agreement and/or the Tech
Transfer Agreement. Genentech, acting through its independent public accountants of recognized
national standing selected by Genentech and reasonably acceptable to Lonza, shall have a right to
examine and audit such Records once per Campaign, upon at least twenty (20) days’ prior written
notice.







ARTICLE 7.



MANUFACTURER PRODUCT WARRANTIES








     7.1 Product Warranties by Lonza.
Lonza hereby warrants to Genentech that the Bulk
Drug, at the time of Delivery to Genentech’s Designated Carrier, shall:



               (a) conform to the Bulk Drug Specifications;



               (b) be manufactured in compliance with the requirements of cGMP;



               (c) be manufactured in compliance with the requirements of all applicable material national,
state and local laws, ordinances and governmental rules and regulations of the U.S.;



               (d) complies with Lonza’s standard operating procedures;



               (e) complies with Lonza’s standard operating procedures (as developed by Lonza and Genentech
and approved by Genentech based on the Genentech standard operating procedures provided by
Genentech to Lonza hereunder, in accordance with the Quality Agreement); and



               (f) be transferred free and clear of any liens or encumbrances of any kind to the extent
arising through or as a result of the acts or omissions of Lonza, its Affiliates or their
respective agents.







     7.2 Lonza Facility.
Lonza hereby warrants that it owns or lawfully controls the Lonza
Facility, and that, provided the Manufacturing Process is successfully implemented in accordance
with the Tech Transfer Agreement, it has sufficient manufacturing capacity to enable Lonza to
manufacture Bulk Drug throughout the Term in quantities sufficient to fulfill, in each calendar
year, the Campaign Minimums and Campaign Minimum Runs for such year as set forth in Exhibit A
hereto, in accordance with this Agreement. Lonza hereby covenants that it will use Commercially
Reasonable Best Efforts to ensure that the Lonza Facility shall be maintained in accordance with
cGMP and in such condition as will allow Lonza to manufacture the Bulk Drug in compliance with and
conformance to cGMP and the Bulk Drug Specifications.



21









Table of Contents





     7.3 OTHER THAN AS SET FORTH IN THIS ARTICLE 7 AND ARTICLE 16 HEREOF, ALL OTHER WARRANTIES,
BOTH EXPRESS AND IMPLIED, ARE HEREBY EXPRESSLY DISCLAIMED, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY OF MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE.







ARTICLE 8.



SPECIFICATION AND MANUFACTURING 3⁄4 PROCESS CHANGES








     8.1 Specification and Manufacturing — Process Changes.
Except as otherwise expressly
set forth to the contrary in the Quality Agreement, in the event that (i) Genentech is required, or
desires, to change the Bulk Drug Specifications or the Manufacturing Process Lonza shall use
Commercially Reasonable Best Efforts to accommodate such request, subject to the following:



               (a) Genentech shall promptly advise Lonza in writing of any such change(s), and provide
information reasonably necessary for Lonza to evaluate the effect of such change(s), and Lonza’
shall promptly advise Genentech as to scheduling changes, if any, which may result from such
change(s). The notification and approval procedure shall be in accordance with standard operating
procedures (i.e., change control procedures) agreed upon by the Parties from time to time. The
Parties shall hold a JPT meeting in a timely manner with appropriate advisors invited to discuss
such changes as appropriate.



               (b) Prior to implementation of any such material change(s) to the Bulk Drug Specifications or
Manufacturing Process, the Parties agree to negotiate in good faith in an attempt to reach
agreement on (i) the new Purchase Price (higher or lower) for any Bulk Drug manufactured under this
Agreement by Lonza which embodies such material change, giving due consideration to the effect of
such material change on Lonza’s direct manufacturing costs for Bulk Drug, and (ii) any other
amendments to this Agreement which may be necessitated by such material changes.



               (c) Prior to implementation of any such change(s), Lonza will provide Genentech with an
estimate of the reasonable and necessary expenses that would be incurred by Lonza as a result of
the implementation of any such change(s) to the Bulk Drug Specifications or Manufacturing Process,
including, but not limited to, its validation and analytical development costs, and capital
expenditure costs. If such change(s) are implemented, Genentech will reimburse Lonza for the
reasonable and necessary expenses as agreed upon in advance and incurred by Lonza as a result of
any such change(s) to the Bulk Drug Specifications or Manufacturing Process, including, but not
limited to, reimbursing Lonza for its validation and analytical development costs and capital
expenditure costs.



               (d) Lonza shall use Commercially Reasonable Best Efforts to promptly accommodate changes
described in Section 8.1 hereof in light of Lonza’s facilities and resource constraints and current
operations. Lonza shall cooperate with Genentech in good faith to implement all agreed upon
changes to the Bulk Drug Specifications or Manufacturing Process in accordance with the agreed upon
schedule. During the pendency of Lonza implementing any such changes to the Manufacturing Process
or Bulk Drug Specifications, Lonza shall, at Genentech’s written request, produce and Genentech
shall purchase Bulk Drug in accordance with the terms of the Agreement.



               (e) If any such changes to the Bulk Drug Specifications or Manufacturing Process renders
obsolete or unusable any raw materials, components or supplies used to manufacture the Bulk Drug,
and to the extent such materials may not be either returned to the appropriate vendor for a credit
or utilized by Lonza for its other manufacturing operations, Genentech shall purchase from Lonza,
at Lonza’s Acquisition Cost, that amount of inventory of such raw materials, components or
supplies, as the case may be, so rendered obsolete or unusable, not to exceed the amount of such
raw materials, components or supplies which would have been required for Lonza to manufacture and
supply the total quantity of Bulk Drug specified in Bulk Drug Commitments outstanding under this
Agreement.



               (f) The notification and formal approval procedure for those changes to the Bulk Drug
Specifications or Manufacturing Process approved by the Parties under this Section shall be in
accordance with the Quality Agreement and standard operating procedures (i.e., change control
procedures) agreed upon in writing by Genentech and Lonza from time to time.



22









Table of Contents









     8.2 Procedure for Specification or Manufacturing Process Changes by Lonza.
Notwithstanding anything to the contrary in this Agreement (including Section 3.1.4), the Quality
Agreement and/or the Tech Transfer Agreement, Lonza shall not change the Bulk Drug Specifications
or the Manufacturing Process except with Genentech’s prior written consent, which consent Genentech
may grant in its sole discretion.







     8.3 Vendor or Supplier Changes.
Notwithstanding anything to the contrary in this
Agreement (including Section 3.1.4), the Quality Agreement and/or the Tech Transfer Agreement,
Lonza shall not change any vendor or supplier of raw materials or analytical reagents used in the
manufacture or testing of Bulk Drug except with Genentech’s prior written consent.







ARTICLE 9.



CLAIMS








     9.1 Notice of Claims.
In the event that any Bulk Drug is Non-Conforming Bulk Drug,
Genentech may reject the same by giving written notice thereof to Lonza:



               (a) within seventy (70) days after the later of Genentech’s receipt of samples of such Batch
or the related Batch Record and other Batch documentation specified in Section 10.2.1 (e.g., Batch
Records, Lonza’s Release Documentation, Certificate of Testing, Certificate of Compliance, etc.),
Genentech will communicate in writing to Lonza their acceptance or rejection of the Batch. If the
decision is to reject the Batch, Genentech will have an additional five (5) days to write up and
communicate to Lonza its notice of rejection (for a total of 75 days) ; and



               (b) in the case of a latent defect, within one-hundred and twenty (120) days after discovery
of such latent defect, but in no event later than one (1) year after delivery to Genentech’s
Designated Facility, which notice shall specify the manner in which such Bulk Drug fails to conform
to any warranty and shall be accompanied by any test results or reports evidencing such
non-conformity.


Alternatively, rather than initially issuing a notice of rejection under Section 9.1(a) or (b)
above, Genentech may give written notice to Lonza within the applicable time period set forth in
this Section 9.1 of a Genentech decision to investigate whether a potentially Non-Conforming
shipment should be rejected. Within thirty (30) days following such notice to investigate,
Genentech shall provide to Lonza, for Lonza’s review and comment, a written plan for investigating
and resolving such potentially Non-Conforming shipment, which investigation shall be completed in
accordance with the procedures set forth in the Quality Agreement.








     9.2 No Lonza Liability.
If it is determined by agreement of the Parties (or in the
absence of such agreement, by a mutually acceptable qualified independent Third Party whose fees
shall be paid by the non-prevailing Party) that either (i) there is no nonconformity, in which case
Genentech shall pay to Lonza the Purchase Price for such Bulk Drug, or (ii) there is nonconformity
but the nonconformity was not caused by Lonza (or its agents), in which case Lonza shall have no
liability to Genentech with respect thereto, and Genentech shall pay to Lonza the Purchase Price
for such Bulk Drug.







     9.3 Lonza Liability; Replacement of Product.
If it is determined by agreement of the
Parties (or in the absence of such agreement, by a mutually acceptable qualified independent Third
Party whose fees shall be paid by the non-prevailing Party) that the nonconformity was caused by
Lonza (or its agents), at Genentech’s written request, Lonza shall as soon as practicable use
Commercially Reasonable Best Efforts to replace such Non-Conforming Bulk Drug with conforming Bulk
Drug, at no additional, cost to Genentech except for payment of the Purchase Price for the
replacement conforming Bulk Drug, which shall be payable as follows: if Genentech previously paid
the Purchase Price for the Non-Conforming Bulk Drug, then Lonza shall promptly and in any event
within thirty (30) days credit such amount to Genentech on the next invoice (or, at Genentech’s
option, Genentech may set off such amount against amounts owed to Lonza under this Agreement), and
Genentech shall pay the Purchase Price for the replacement conforming Bulk Drug; and, if Genentech
did not previously pay the Purchase Price for the Non-Conforming Bulk Drug, then Genentech shall
pay the Purchase Price for the replacement conforming Bulk Drug; provided, however, Genentech shall
have no obligation to pay Lonza for replacement Conforming Bulk Drug which is not delivered by a
date acceptable to



23









Table of Contents







Genentech (such date to be mutually agreed in writing by the parties following Genentech’s
written request to Lonza to replace such Non-Conforming Bulk Drug).







     9.4 Cooperation in Investigations, Disposition of Non-Conforming Bulk Drug.
If Genentech desires to make a claim against Lonza with respect to and reject a Batch of
Non-Conforming Bulk Drug pursuant to Section 9.3, Genentech agrees that it shall not dispose of or
allow such Bulk Drug to be disposed of without written prior notification to Lonza. Disposition of
Non-Conforming Bulk Drug shall be determined in accordance with the provisions of the Quality
Agreement.







ARTICLE 10.



MANUFACTURING AUDITS; CERTIFICATE OF COMPLIANCE;



AND REGULATORY MATTERS








     10.1 Manufacturing Audits.
Genentech shall have the right to perform, directly or
through its representatives, cGMP compliance audit [*] pre-approval inspection audits, For Cause
Audits, and additional follow-up audits Genentech reasonably believes is necessary as a result of
the findings of any of the foregoing audits, all in accordance with the audit provisions set forth
in the Quality Agreement. During such audits, personnel of Genentech or its representatives shall
have access only to all public areas (including cafeteria’s) and those areas that are directly
related to the performance of Lonza’s obligations under this Agreement, including the manufacture,
testing, storage and shipping of Bulk Drug. No more than a reasonable number of representatives
shall be permitted on Lonza’s premises for any such audit.







     10.2 Certificates; Manufacturing Issues; Records.



          10.2.1 Certificates; Manufacturing Issues. As soon as possible after manufacture and,
unless otherwise agreed by Genentech, in any event by not later than the date of each shipment of
Bulk Drug, Lonza shall furnish to Genentech the Batch Records and Lonza’s Release Documentation
described in the Quality Agreement, including, without limitation, a Certificate of Testing, a
Certificate of Compliance and a summary (in a format to be agreed upon by Genentech and Lonza) of
any deviations or investigations that occurred during the manufacturing or testing of the Bulk Drug
that is part of such shipment. The provisions set forth in the Quality Agreement regarding
deviations shall control whether a deviation results in Non-Conforming Bulk Drug.




          10.2.2 Records. Lonza shall maintain all of its manufacturing and analytical records,
all records of shipments of Bulk Drug and all validation data relating to Bulk Drug for the time
periods required by applicable laws and regulations of all regional, national, federal, state and
local regulatory agency in the jurisdictions where the Product will be sold. Lonza agrees that, in
response to any complaint, or in the defense by Genentech of any litigation, hearing, regulatory
proceeding or investigation relating to Bulk Drug, Lonza shall make available to Genentech such
Lonza employees and records reasonably necessary to permit the effective response to, defense of,
or investigation of such matters, subject to appropriate confidentiality protections.








     10.3 Complaints.
Genentech shall have sole responsibility for reporting any
complaints relating to the Product to the FDA and any other regulatory authorities, including, but
not limited to, complaints relating to the manufacture of the Product and adverse drug experience
reports. Genentech shall maintain complaint files in accordance with cGMP. Lonza shall provide
Genentech with a copy of any complaints received by Lonza with respect to the Product in accordance
with the Quality Agreement and standard operating procedures to be agreed upon by Genentech and
Lonza from time to time. Genentech shall have responsibility for responding to all complaints, and
for promptly providing Lonza with a copy of any responses to complaints relating to the manufacture
of the Product. Lonza shall use Commercially Reasonable Best Efforts to respond to requests from
Genentech for information in Lonza’s possession that is necessary for Genentech to respond to
complaints arising out of the manufacture of the Bulk Drug.







     10.4 Regulatory Correspondence.



          10.4.1 Notification to Other Parties of Regulatory Correspondence. Each Party shall
immediately and within at least three (3) business days notify the other Party in writing of, and
shall provide the other Party with




24









Table of Contents







copies of, any correspondence and other documentation received or prepared by such Party in
connection with any of the following events: (i) receipt of a regulatory letter, Warning Letter, or
similar item, from the FDA or any other regulatory authority directed to the manufacture,
packaging, and storage of Bulk Drug, by Lonza or in connection with any general cGMP inspections
applicable to any Lonza Facility to the extent associated with Lonza’s activities under this
Agreement; (ii) any recall, market withdrawal or correction of any Batch of Bulk Drug or resulting
Finished Product; and (iii) any regulatory comments related to the manufacture of Bulk Drug or
resulting Finished Product requiring a response or action by a Party.




          10.4.2 Regulatory Correspondence Requiring a Lonza Response. In the event Lonza
receives any regulatory letter or comments from any regional, national, federal, state or local
regulatory authority in the Territory directed to its manufacture of Bulk Drug requiring a response
or action by Lonza, including, but not limited to, receipt of a Form 483 (Inspectional
Observations) or a Warning Letter, Genentech will, to the extent within its control or possession,
promptly provide Lonza with any data or information required by Lonza in preparing any response
related to Lonza’s manufacture of Bulk Drug and will cooperate fully with Lonza in preparing such
response. Lonza shall provide Genentech with a copy of each such response (redacted to remove
information not related to the manufacture of Bulk Drug or Lonza’s other obligations under this
Agreement) for Genentech’s review and comment prior to Lonza’s submission of its detailed written
response. Lonza shall give all due consideration to any Genentech comments to each such proposed
Lonza response provided Genentech timely responds. Likewise, in the event Genentech receives any
regulatory letter or comments from any regional, national, federal, state or local regulatory
authority in the Territory directed to the manufacture of Bulk Drug at the Lonza Facility requiring
a response or action by Genentech, including, but not limited to, receipt of a Form 483
(Inspectional Observations) or a Warning Letter, Lonza will, to the extent within its control or
possession, promptly provide Genentech with relevant data or information sufficient for Genentech
to prepare any response related to the manufacture of Bulk Drug and will cooperate fully with
Genentech in preparing such response. Genentech shall provide Lonza with a copy of each such
response (redacted to remove information not related to the manufacture of Bulk Drug at Lonza’s
Facility or Genentech’s obligations under this Agreement) for Lonza’s review and comment prior to
Genentech’s submission of its detailed written response. Genentech shall give all due
consideration to any Lonza comments to each such proposed Genentech response provided Lonza timely
responds.








     10.5 Inspections; Non-Compliance; Failure to Manufacture.



          10.5.1 Inspections. In the event the Lonza Facility is inspected, or Lonza is
notified that the Lonza Facility will be inspected, by representatives of any regional, national,
federal, state or local regulatory agency in the Territory directed to Lonza’s manufacture of Bulk
Drug, Lonza shall notify Genentech within twenty-four (24) hours after receipt of notice of such
inspection, and shall supply Genentech with copies of any correspondence or portions of
correspondence which relate to Bulk Drug. Genentech may send, and upon the request of Lonza shall
send, representatives to the Lonza Facility to participate in any portion of such inspection which
is directed to Bulk Drug.




          10.5.2 Non-Compliance; Failure to Manufacture. In the event that any regional,
national, federal, state or local regulatory agency in the Territory shall determine, as a result
of an inspection described in Section 10.5.1 above, that Lonza is not in compliance with applicable
laws or regulations or otherwise not in compliance with cGMP with respect to the manufacture of
Bulk Drug, Lonza shall at its expense use Commercially Reasonable Best Efforts to cure any such
non-compliance as soon as practicable.








ARTICLE 11.



RECALLS








     11.1 Recalls.
Genentech shall notify Lonza promptly (and in any event within three
(3) business days of receipt of written notice) if any batch of Bulk Drug or resulting Finished
Product is the subject of a recall, market withdrawal or correction. Genentech shall (i) bear the
cost of and be responsible for conducting all recalls, market withdrawals or corrections of Bulk
Drug or Finished Product, (ii) remain obligated to pay Lonza the Purchase Price for the Bulk Drug
recalled or used to make such recalled Finished Product (as long as it is not Non-Conforming Bulk
Drug), and (iii) reimburse Lonza for its direct out-of-pocket expenses related to the recall, if
any. Notwithstanding the foregoing, to the extent such recall, market withdrawal or correction was
caused by Lonza’s breach of any of its warranties set forth in Article 7 hereof, Lonza shall credit
Genentech for all of the Purchase Price for the Bulk Drug recalled or used to make such recalled
Finished Product and shall reimburse Genentech for all of Genentech’s reasonable out-of-pocket
expenses directly related to the recall, if any. For the avoidance of doubt such expenses shall
not, except





25










Table of Contents






as provided in Section 17.4, include any Consequential Damages. As between the Parties,
Genentech or its agent shall make all decisions regarding, and in all events shall have sole
authority for, conducting any recalls, market withdrawals or corrections with respect to the
Product in the Territory.








ARTICLE 12.




QUALITY ASSURANCE; QUALITY CONTROL; VALIDATION; STABILITY








     12.1 Responsibility for Quality Assurance and Quality Control.
Responsibility for
quality assurance and quality control of Bulk Drug shall be allocated between Genentech and Lonza
as set forth in the Quality Agreement and in standard operating procedures agreed upon in writing
by Genentech and Lonza from time to time. In general, (a) Lonza shall be responsible for
performing certain in-process testing and selected acceptance testing on the Bulk Drug as set forth
in the Tech Transfer Agreement and the Quality Agreement, and (b) Genentech shall be responsible
for all final acceptance testing and authorizing final release of all Bulk Drug to the market.







     12.2 Validation of Lonza Facility; Utilities and Equipment.
Lonza shall maintain cGMP
validation status of the Lonza Facility, as well as the utilities and equipment used in the
manufacture of Bulk Drug at the Lonza Facility, and shall make relevant validation reports
applicable thereto (redacted to remove information not related to the manufacture of Bulk Drug)
available to Genentech for review at Genentech’s reasonable request.







     12.3 Validation of Bulk Manufacturing Process.
In accordance with the requirements of
and timelines set forth in the Tech Transfer Agreement and Quality Agreement, Genentech shall
provide Lonza with Manufacturing Documentation related to the validation of the Manufacturing
Process, as further described therein, including, without limitation, drafts of the product
comparability protocol and the process validation protocol related to the Manufacturing Process.
Lonza shall be responsible for performing all required process validation at the Lonza Facility and
Genentech shall review and approve all process validation protocols and reports. A Process
Qualification Plan (as defined in the Quality Agreement) to be developed by Lonza and approved by
Genentech will identify additional process validation related to the technology transfer to Lonza,
if required, at commercial scale. Lonza shall provide Genentech with copies of documentation
related to the validation of the Manufacturing Process, as implemented by Lonza, and validation
reports applicable thereto, to Genentech, at Genentech’s reasonable request, on a frequency and in
a format to be agreed upon by Lonza and Genentech.







     12.4 Change Control.
Any changes to the Lonza Facility, utilities, equipment or
processes used by Lonza in its performance under this Agreement, including those relating to the
manufacturing, storage, testing, shipping and cleaning procedures that are used by Lonza in the
manufacture of Bulk Drug under this Agreement, shall occur pursuant to change control procedures
agreed upon by Lonza and Genentech and as set forth in the Quality Agreement.







     12.5 Stability.
Genentech shall conduct all necessary stability testing to comply
with cGMP and other applicable regulatory guidelines. Such stability testing shall include testing
to validate the lead times for shipment, the shelf life of Bulk Drug and the Bulk Drug
Specifications applicable to shipment, storage and handling of Bulk Drug. Lonza shall prepare all
stability samples, and shall sublot stability samples and package and ship stability samples to
Genentech, all in accordance with timelines, protocols and procedures agreed upon by Lonza and
Genentech and set forth in the Quality Agreement.







ARTICLE 13.




MANUFACTURER’S OBLIGATIONS AS MANUFACTURER








     13.1 Control of Working Cell Bank.
Lonza shall maintain all portions of the Working
Cell Bank that it receives in safe and secure storage under its control in the Lonza Facility at
Portsmouth, New Hampshire, and shall not permit the transfer of the Working Cell Bank to any Lonza
Affiliate or any Third Party that is not specifically authorized in advance and in writing by
Genentech. Lonza shall comply with all applicable regulatory requirements relating to general
safety and compliance in handling the Working Cell Bank and any raw materials and components used
in manufacturing Product and Bulk Drug.



26









Table of Contents









     13.2 Manufacturing Capabilities.
Lonza shall at all relevant times throughout the
Term use Commercially Reasonable Best Efforts consistent with the terms of this Agreement to (a)
own or lawfully control all the necessary plant, equipment and facilities, and (b) have sufficient
numbers of appropriately qualified personnel, in each case to enable Lonza to manufacture Bulk Drug
in accordance with the Bulk Drug Specifications and in quantities sufficient to fulfill its
obligations to supply Bulk Drug under this Agreement.







     13.3 Compliance with Law.



     Lonza shall perform all work and services under this
Agreement in conformance with cGMP and in conformance with the substantive requirements of all
applicable material regional, national, state and local laws, ordinances and governmental rules or
regulations in the Territory, and shall have all applicable licenses and permits required to
perform the work and services hereunder, the absence of which would materially adversely affect the
marketability of the Bulk Drug.







     13.4 Lonza Facility.
Lonza will use Commercially Reasonable Best Efforts to ensure
that the Lonza Facility shall be maintained in accordance with cGMP and in such condition as will
allow Lonza to manufacture the Bulk Drug in accordance with the Bulk Drug Specifications.







     13.5 Storage Facilities.
Lonza shall provide sufficient and suitable cGMP storage
facilities that meet the Bulk Drug Specifications for storage of Bulk Drug and raw materials.







     13.6 Raw Materials.
Lonza shall maintain an adequate inventory of raw materials
necessary to meet the Bulk Drug Commitment. Lonza shall only use the raw materials [*] for
manufacture of Bulk Drug under this Agreement.







     13.7 Subcontracting.
Lonza shall not subcontract any of its obligations hereunder
without the prior written consent of Genentech.







     13.8 Regulatory Documentation.
     13.8.1 Lonza shall provide Genentech in a timely manner with a copy of any Lonza manufacturing
and control records for Bulk Drug which are required for any Genentech regulatory filings with
respect to the Product, which records shall be in Lonza’s standard formats unless otherwise agreed
upon by the Parties.




          13.8.2 Lonza shall provide Genentech promptly after the end of each annual reporting period
for the Product (as calculated consistent with appropriate regulations and guidelines) with such
information as is reasonably requested in writing by Genentech for the preparation of the annual
report with respect to the manufacturing and control of the Product for such annual reporting
period. Thereafter, Genentech shall provide to Lonza at least fifteen (15) days prior to
Genentech’s filing with the respective regulatory authorities a copy of such Genentech annual
report, and Genentech shall take into consideration any Lonza comments to such annual report with
respect to the manufacture of Product.








     13.9 Manufacturing Data.
Lonza shall collect data on the yield from each Batch, as
well as the date of manufacture of each such Batch and make reports of the same available to
Genentech in the form of a monthly manufacturing status report in Lonza’s standard format or in
such other format as may be agreed by the Parties. Lonza shall retain such manufacturing data in
accordance with the requirements of applicable laws, rules and regulations.







     13.10 Retention and Reserve Samples.
Lonza shall isolate, identify and, subject to
Section 20.3 hereof, retain retention and reserve samples of all raw materials and in-process
production steps used in the production of Bulk Drug as may be required by standard operating
procedures to be agreed upon in writing by Lonza and Genentech from time to time.







     13.11 Analytical Testing.
Except as otherwise contemplated by this Agreement or
expressly set forth in the Quality Agreement, Lonza shall not perform any analytical testing on
Bulk Drug unless agreed to by Lonza and Genentech.







     13.12 Accurate Documentation.
Each Party shall use diligent efforts to ensure all
records and documentation provided to the other Party in connection with the manufacture of Bulk
Drug shall be accurate in all material respects.



27









Table of Contents









     13.13 Insurance.



          13.13.1 Insurance. During the term of this Agreement, and thereafter for the period
of time required below, Lonza shall maintain:




               (i) Commercial General Liability insurance, including contractual liability, in the minimum
amount of [*] each occurrence combined single limit for bodily injury and property damage (“CGL”)
with an annual aggregate of [*]. This insurance shall include completed operations coverage; and



               (ii) Products Liability insurance, including contractual liability, with a minimum limit of
[*]each occurrence combined single limit for bodily injury and property damage with an annual
aggregate of [*] (“Products Liability”).



          13.13.2 Special Requirements.




            (a) Genentech shall be named as additional insureds under the above insurance policies.



            (b) The CGL and Products Liability insurance policies shall be under a “claims-made” policy
form and the CGL insurance coverage shall be maintained by Lonza for at [*] following termination
of this Agreement, and the Products Liability insurance, for [*] following termination of this
Agreement.



            (c) The CGL insurance shall provide coverage for Bulk Drug in Lonza’s care, custody and
control.



            (d) Each of the above insurance policies shall be primary insurance as respects Lonza’s
participation under this Agreement.



            (e) All of the above insurance coverage shall be maintained with an insurance company or
companies having an A.M. Best’s rating of “A-VII” or higher.



          13.13.3 Notice of Insurance. Within thirty (30) days from the execution of this
Agreement, Lonza shall provide Genentech a certificate insurance reflecting the above requirements.
Renewal certificates shall continue to be provided throughout the term of this Agreement, and in
case of cancellation or material change, a thirty (30) day notice shall be provided to Genentech.








ARTICLE 14.

LICENSES








     14.1 License Grant to Genentech of Rights Existing as of the Effective Date.
Lonza,
on behalf of itself and its Affiliates, hereby grants to Genentech and Genentech’s Affiliates a
non-exclusive, royalty-free license under Lonza Confidential Information, and under patent rights,
if any, owned or controlled by Lonza or its Affiliates as of the Effective Date, to make (and have
made), use, sell, offer for sale and import Product in the Territory, to the extent they relate to
(i) the Manufacturing Process in effect as of the Effective Date or at anytime during the Term,
(ii) the Product of the Manufacturing Process described in (i) above, or (iii) the importation,
use, sale or offer for sale of the Product of the Manufacturing Process described in (i) above.
This license shall apply with respect to any Product manufactured by or for Genentech under this
Agreement with the Manufacturing Process described in this Section 14.1. Genentech shall have the
right to grant sublicenses of the rights granted under this Section 14.1 to Product licensees and
contract manufacturers of Product, in all or part of the Territory.







     14.2 License Grant to Genentech of Rights Obtained after the Effective Date; Option to
Grant Sublicenses.



          14.2.1 In the event that Lonza or its Affiliates obtains any patent rights after the Effective
Date (whether by acquisition, in-licensing, or independent development) that relate to (i) the
Manufacturing Process in effect as of the Effective Date or at anytime during the Term, (ii) the
Product of the Manufacturing Process described in (i)


28









Table of Contents







above, or (iii) the importation, use, sale or offer for sale of the Product of the
Manufacturing Process described in (i) above, Lonza, on behalf of itself and its Affiliates, hereby
grants to Genentech and Genentech’s Affiliates a non-exclusive, royalty-free license under such
patent rights to make (and have made), use, sell, offer for sale and import Product in the
Territory.




          14.2.2 Option to Grant Sublicenses.




          Lonza also hereby grants to Genentech an option
to obtain the right to grant sublicenses to any Third Party under any rights granted under Section
14.2.1 above. If Genentech exercises such option, Lonza agrees to negotiate in good faith with
Genentech commercially reasonable terms under which Genentech would obtain such sublicense rights.








     14.3 No Implied Licenses.
Lonza acknowledges and agrees that no rights or licenses,
implied or otherwise, are granted to Lonza by Genentech related to the manufacture of Product under
this Agreement. This Agreement does not grant any right or license to Lonza, under any
intellectual property rights of Genentech, or otherwise. No other right or license is to be
implied or inferred from any provision of this Agreement or by the conduct of the Parties.







     14.4 Survival.
The obligations of the Parties set forth in this Article 14 shall
survive the expiration or termination of this Agreement and shall be binding upon and inure to the
benefit of the successors and assigns of the Parties.







ARTICLE 15.

OWNERSHIP OF INTELLECTUAL PROPERTY, MATERIALS AND EQUIPMENT








     15.1 Inventorship, Existing Confidential Information, and Inventions.



          15.1.1 Inventorship. Inventorship shall be determined in accordance with the rules of
inventorship of the United States of America. As between the Parties, (i) each Party shall solely
own any and all inventions or discoveries that are conceived or reduced to practice solely by such
Party or its employees or agents in the course of or resulting from this Agreement, the Tech
Transfer Agreement and/or the Quality Agreement, and (ii) the Parties shall jointly own inventions
or discoveries that are conceived or reduced to practice jointly by or on behalf of the Parties in
the course of or resulting from this Agreement, the Tech Transfer Agreement and/or the Quality
Agreement. The Parties hereby agree that neither Party shall be considered an “employee or agent”
of the other Party.




          15.1.2 Existing Confidential Information. As between the Parties, Genentech shall own
all Genentech Confidential Information existing as of the Effective Date, and Lonza shall own all
Lonza Confidential Information existing as of the Effective Date; provided, however, that the
foregoing shall not limit Genentech’ ownership of, or ability to use, the Cell Line, Master Cell
Bank, Working Cell Bank, and/or the Product, including, without limitation, aspects of Lonza
Confidential Information that result in or contribute to modifications to said Cell Line, Master
Cell Bank, Working Cell Bank, and/or the Product in the course of or resulting from this Agreement,
the Tech Transfer Agreement and/or the Quality Agreement, either by Genentech in an authorized
manner under said agreements or by Lonza.




          15.1.3 Inventions. Notwithstanding Section 15.1.1, as between the Parties: (a)
Genentech shall own all rights, including without limitation, all intellectual property rights, in
and title to the biological materials described as the Cell Line, the Master Cell Bank, and/or the
Working Cell Bank, the Manufacturing Process and/or the Product, and any and all improved or
enhanced versions of the foregoing that are created by either Party from their use thereof or in
the course of or resulting from this Agreement, the Tech Transfer Agreement and/or the Quality
Agreement, including, without limitation, any derivatives or variants of the foregoing created by
either Party from their use thereof or in the course of or resulting from this Agreement, the Tech
Transfer Agreement and/or the Quality Agreement, uses of such biological materials and methods of
manufacture using such biological materials; and (b) Lonza hereby assigns to Genentech its entire
interest in any and all patentable inventions, patentable and non-patentable, made from their use
thereof or in the course of or resulting from this Agreement, the Tech Transfer Agreement and/or
the Quality Agreement, solely by Lonza or its employees or agents, or jointly by the employees
and/or agents of each Party, and all intellectual property rights therein.




29









Table of Contents








          15.1.4 Survival. The terms of this Section 15.1 shall survive the expiration or
termination of this Agreement, and shall be binding upon and inure to the benefit of the successors
and assigns of the Parties. The Parties will continue to reasonably cooperate with each other to
perfect the rights granted in this Section.








     15.2 Ownership of Equipment.



          15.2.1 Genentech shall own all right, title and interest in and to any and all equipment,
materials, facilities improvements and other assets purchased by Genentech and provided to Lonza
for use under this Agreement, including, without limitation, the Portable Equipment specified in
Section 5.5 (collectively, the “Genentech Equipment”), free and clear of any right or claim of
Lonza. All Genentech Equipment shall be delivered in good working condition by Genentech and
maintained in good repair by Lonza.




          15.2.2 Lonza shall own all right, title and interest in and to any and all equipment,
materials, facilities improvements and other assets purchased by Lonza for use under this Agreement
(collectively, the “Lonza Equipment”), free and clear of any right or claim of Lonza. All Lonza
Equipment shall be maintained in good repair by Lonza.




          15.2.3 If Lonza fails to timely arrange for the removal of the Genentech Equipment from the
Lonza Facility, Genentech shall send written notice requesting such removal. If such removal has
not occurred within thirty (30) days of such notice, then Genentech shall be entitled to hire a
qualified Third Party at Lonza’s reasonable expense to enter the Lonza Facility with written notice
at least two (2) business days in advance and remove such Genentech Equipment, which shall be
removed in a reasonable manner without damage to the Lonza Facility. For clarification purposes,
removal of the Genentech Equipment shall not in and of itself be considered damage to the Lonza
Facility.








ARTICLE 16.

REPRESENTATIONS AND WARRANTIES








     16.1 Genentech. Genentech hereby represents and warrants to Lonza that:



          16.1.1 To Genentech’s knowledge as of the Effective Date: (a) Genentech is free to supply to
Lonza the Working Cell Bank, Genentech Confidential Information (including, without limitation, the
Manufacturing Documentation), and all information to be supplied by Genentech to Lonza under the
Tech Transfer Agreement; (b) there is no suit pending against Genentech in the Territory that
alleges patent infringement by the manufacture or sale of the Product; and (c) Genentech has not
received written notice alleging infringement of a Third Party patent by the manufacture or sale of
the Product; and




          16.1.2 Genentech has the corporate power and authority and the legal right to enter into this
Agreement and to perform its obligations under this Agreement.








     16.2 Lonza. Lonza hereby represents and warrants to Genentech that:



          16.2.1 To Lonza’s knowledge as of the Effective Date, Lonza is free to supply the Lonza
Confidential Information to Genentech;




          16.2.2 Lonza has the corporate power and authority and the legal right to enter into this
Agreement and to perform its obligations under this Agreement;




          16.2.3 Lonza owns or lawfully controls the Lonza Facility, and, to the best of its knowledge
after reasonable inquiry, has a sufficient number of employees with such expertise and experience
as is necessary or appropriate to produce Bulk Drug in accordance with the terms hereof and in
quantities sufficient to fulfill the Campaign Minimums and Campaign Minimum Runs set forth in
Exhibit A hereof;




          16.2.4 To Lonza’s knowledge as of the Effective Date, there is no additional capacity
available for commercial production at the Lonza Facility, and Lonza has not entered into written
agreements with any Third Party to


30









Table of Contents







conduct commercial production that would result in Lonza not being able to conduct the
commercial production it has committed to Genentech; and




          16.2.5 To Lonza’s knowledge as of the Effective Date, there are no patents owned or controlled
by Lonza relating to the (i) the Manufacturing Process in effect as of the Effective Date, (ii) the
Product of the Manufacturing Process described in (i) above, or (iii) the importation, use, sale or
offer for sale of the Product of the Manufacturing Process described in (i) above.








ARTICLE 17.

INDEMNIFICATION








     17.1 Indemnification.



          17.1.1 Indemnification by Genentech. Subject to and except to the extent of any
indemnification from Lonza pursuant to Section 17.2 below, Genentech shall indemnify, defend and
hold Lonza, its Affiliates, and their respective directors, officers, and employees harmless from
and against all losses, damages, liabilities, settlements, penalties, fines, costs and expenses
(including, without limitation, reasonable attorneys’ fees and expenses), (collectively, the
“Liabilities”) to the extent such Liabilities arise out of or result from any claim, lawsuit or
other action or threat by a Third Party arising out of [*]




          17.1.2 Indemnification by Lonza. Lonza shall indemnify, defend and hold Genentech,
and its Affiliates, directors, officers, and employees harmless from and against all Liabilities to
the extent such Liabilities arise out of or result from [*]








     17.2 Indemnification Procedures.



          17.2.1 Identification of Indemnitor and Indemnitee. An “Indemnitor” means Genentech
with respect to Section 17.1 hereof, and Lonza with respect to Section 17.2 hereof. An
“Indemnitee” means any of Lonza, its Affiliates, and their respective directors, officers, and
employees with respect to Section 17.1 hereof, and any of Genentech, and its respective Affiliates,
directors, officers and employees with respect to Section 17.2 hereof.




          17.2.2 Indemnification Procedures. An Indemnitee which intends to claim
indemnification under Section 17.1 or 17.2 hereof shall promptly notify the Indemnitor in writing
of any claim, lawsuit or other action in respect of which the Indemnitee, its Affiliates, or any of
their respective directors, officers, and employees intend to claim such indemnification. The
Indemnitee shall permit, and shall cause its Affiliates and their respective directors, officers,
and employees to permit, the Indemnitor, at its discretion, to settle any such claim, lawsuit or
other action and agrees to the complete control of such defense or settlement by the Indemnitor;
provided, however, such settlement does not adversely affect the Indemnitee’s rights under this
Agreement or impose any obligations on the Indemnitee in addition to those set forth herein in
order for the Indemnitor to exercise such rights. No such claim, lawsuit or other action shall be
settled without the prior written consent of the Indemnitor and the Indemnitor shall not be
responsible for any legal fees or other costs incurred other than as provided herein. The
Indemnitee, its Affiliates and their respective directors, officers, employees and agents shall
cooperate fully with the Indemnitor and its legal representatives in the investigation and defense
of any claim, lawsuit or other action covered by this indemnification, all at the reasonable
expense of the Indemnitor. The Indemnitee shall have the right, but not the obligation, to be
represented by counsel of its own selection and expense.








     17.3 Survival of Indemnification Obligations.
The provisions of this Article 17 shall
survive the termination or expiration of this Agreement







     17.4 Disclaimer of Consequential Damages. Except for claims arising from (i) the
intentional misuse or misappropriation of the other Party’s Confidential Information, (ii) any
willful breach by Lonza of its obligation hereunder to perform, in no event shall either Party be
liable to the other Party for incidental, indirect, special, punitive or consequential damages
arising from or related to breach of this Agreement, including, without limitation, any claims for
damages based upon lost profits for sales to Third Parties (collectively, “Consequential Damages”).



31









Table of Contents









ARTICLE 18.

CONFIDENTIALITY








     18.1 Confidentiality Obligations.



          18.1.1 Lonza Confidentiality Obligations. Lonza shall not disclose Genentech
Confidential Information to any Third Party other than:




               (a) its employees who are bound by similar obligations of confidentiality and nonuse and who
have a need to know such information in order to perform their duties in carrying out Lonza’s
obligations under this Agreement, the Tech Transfer Agreement and/or the Quality Agreement,



               (b) contractors who are bound by similar obligations of confidentiality and nonuse and who
have a need to know such information in order to provide direction to Lonza or Genentech regarding
their respective obligations under this Agreement, the Tech Transfer Agreement and/or the Quality
Agreement, or



               (c) regulatory authorities, for example, the FDA, that require such information in order to
review a BLA or sBLA for the Product or other regulatory filing.



          18.1.2 Genentech Confidentiality Obligations. Genentech shall not disclose any Lonza
Confidential Information to any Third Party (including, without limitation, Roche) other than:




               (a) employees, consultants, agents or contractors of Genentech or Genentech’s Affiliates who
are bound by similar obligations of confidentiality and nonuse and who have a need to know such
information in order to perform their duties in carrying out Genentech’s obligations under this
Agreement, the Tech Transfer Agreement and/or the Quality Agreement, or in order to provide
direction to Genentech regarding the subject matter of this Agreement, including, but not limited
to, production, testing, storage or quality of the Product or regulatory or compliance issues
related to the Product, or



               (b) regulatory authorities, for example, the FDA, that require such information in order to
review a BLA or sBLA for the Product or other regulatory filing.







     18.2 Terms of Agreement.
Subject to Sections 18.4 and 19.1 hereof, and except for any
disclosure as is deemed necessary, in the reasonable judgment of the responsible Party, to comply
with national, federal or state laws or regulations (including the rules and regulations of any
national stock exchange on which such Party’s securities are traded), neither Party shall, without
the prior written consent of the other Party, disclose in any manner to any Third Party the terms
and conditions of this Agreement; provided that this Section 18.2 shall not prohibit the disclosure
of this Agreement by Genentech to Roche (including any successor or assignee thereof).







     18.3 Exclusions.
The obligations of confidentiality and nonuse applicable hereunder
to Lonza with respect to Genentech Confidential Information and to Genentech with respect to Lonza
Confidential Information shall not apply to any information which:



               (a) at the time of disclosure, is known publicly or thereafter becomes known publicly through
no fault of the recipient, its Affiliates or agents;



               (b) becomes available to the recipient from a Third Party which is not legally prohibited from
disclosing such information, provided such information was not acquired directly or indirectly from
the disclosing Party;



               (c) was developed by the recipient independently of information obtained from the disclosing
Party as evidenced by written records;



32









Table of Contents





               (d) was already known to the recipient before receipt from the disclosing Party, as shown by
its prior written records, provided that such information was not acquired directly or indirectly
from the disclosing Party; or



               (e) is released with the prior written consent of the Party that had originally disclosed such
information to the other Party hereunder.



In determining whether or not the disclosing Party’s Confidential Information has entered the
public domain, the obligations of confidentiality shall no longer apply to only that portion of
said Confidential Information that has become public, and portions remaining confidential shall
retain their status as Confidential Information.







     18.4 Notification of Mandatory Disclosure.



          18.4.1 Notification and Consultation. In the event that a Party (in such case, the
“Notifying Party”) believes it is required by applicable statute or regulation (including the rules
and regulations of any national stock exchange on which such Party’s securities are traded), or by
judicial or administrative process to disclose any part of the other Party’s (in such case, the
“Notified Party”) Confidential Information which is disclosed to it under this Agreement, the
Notifying Party shall (i) promptly notify the Notified Party of each such requirement and identify
the documents so required thereby, so that the Notified Party may seek an appropriate protective
order or other remedy and/or waive compliance by the Notifying Party with the provisions of this
Agreement, and (ii) consult with the Notified Party on the advisability of taking legally available
steps to resist or narrow the scope of such requirement.




          18.4.2 Limited Disclosure. If, in the absence of such a protective order or such a
waiver by the Notified Party of the provisions of this Agreement, the Notifying Party is
nonetheless required by mandatory applicable law to disclose any part of the Notified Party’s
Confidential Information which is disclosed to it under this Agreement, the Notifying Party may
disclose such Confidential Information without liability under this Agreement, except that the
Notifying Party shall furnish only that portion of the Confidential Information which is legally
required.








     18.5 No Licenses Maintenance of Confidentiality; Non-use Obligations.



          18.5.1 No Licenses. Except as expressly provided in Articles 14 and 15 hereof, no
right or license, either express or implied, under any intellectual property right is granted under
this Agreement, the Tech Transfer Agreement, or the Quality Agreement, by virtue of the disclosure
of Confidential Information under this Agreement, the Tech Transfer Agreement, or the Quality
Agreement, or otherwise.




          18.5.2 Maintenance of Confidentiality. Each Party shall use reasonable and customary
precautions to safeguard the other Party’s Confidential Information, including ensuring that all
employees, consultants, agents or contractors who are provided access to such Confidential
Information are informed of the confidential and proprietary nature of such Confidential
Information and have contractual confidentiality and nonuse obligations that are at least as
restrictive as those contained in this Agreement.




          18.5.3 Non-use Obligations. Genentech Confidential Information shall not be utilized
by Lonza for any purpose other than performing its obligations under this Agreement, the Tech
Transfer Agreement, or the Quality Agreement, without first obtaining Genentech’s prior written
consent to each such utilization. Lonza Confidential Information shall not be utilized by
Genentech except as set forth in this Agreement, the Tech Transfer Agreement, or the Quality
Agreement, or except for the limited purpose of production, testing, storage or quality of the
Product or regulatory or compliance issues related to the Product, without first obtaining Lonza’s
prior written consent to each such utilization.




          18.5.4 Equitable Relief. Each Party agrees that the other Party and their respective
Affiliates would be irreparably injured by a material breach of the confidentiality and nonuse
provisions of this Agreement by the breaching Party or by its employees or the employees of its
Affiliates, consultants, agents or contractors, that monetary remedies would be inadequate to
protect the other Party against any actual or threatened material breach of the provisions of this
Article 18 by the breaching Party or by its employees or the employees of its Affiliates,
consultants, agents or contractors, and, without prejudice to any other rights and remedies
otherwise available to the other Party, the breaching Party agrees, upon proof of any such actual
or threatened material breach, to the granting of equitable relief,


33









Table of Contents







 including injunctive relief and specific performance, in the other Party’s favor without proof
of actual damages. It is further understood and agreed that no failure or delay by either Party in
exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder.








     18.6 Survival of Confidentiality Obligations.
The provisions of this Article 18 shall
survive the termination or expiration of this Agreement.







     18.7 Termination of Certain Prior Agreements. This Agreement supersedes all previous
agreements between the parties relating hereto, including without limitation the Confidential
Disclosure Agreement between the Parties dated July 1, 2003, the Agreement for Funding Purchase of
Long Lead Time Equipment of November 19, 2003 and the Material Transfer Agreement of November 24,
2003. All Confidential Information exchanged between the Parties under such previous agreements
shall be deemed Confidential Information under this Agreement (either Genentech Confidential
Information or Lonza Confidential Information, as the context requires) and shall be subject to the
terms of this Agreement.







     18.8 No Disclosure of Unrelated Information. Neither Party shall disclose
confidential information to the other Party that is not reasonably necessary for performance of a
Party’s obligations under this Agreement, the Tech Transfer Agreement and/or the Quality Agreement,
including but not limited to manufacturing processes for other products, marketing plans and
clinical development plans. Notwithstanding the foregoing, nothing in this provision shall limit
the confidentiality and non-use obligations and rights herein.







ARTICLE 19.

PRESS RELEASES;USE OF NAMES








     19.1 Press Releases. Following the Effective Date, the Parties shall agree upon a
joint press release to announce the execution of this Agreement together with a corresponding
Question & Answer outline for use in responding to inquiries about the Agreement. Such joint press
release shall be made on or before December 25, 2003, the timing of which such announcement shall
be mutually agreed by the Parties. Following the publication of such joint press release, each
Party shall be entitled to make or publish any public statement consistent with the contents of
such joint press release and Question & Answer outline without the need for further approval by the
other. Except as set forth in the preceding sentences of this Section, no press release, publicity
or other form of public written disclosure related to this Agreement shall be permitted by either
Party unless the other Party has indicated its consent to the form of the release in writing. This
Section shall not apply to any disclosure as is deemed necessary, in the reasonable judgment of the
responsible Party, to comply with regional, national, federal or state or local laws or regulations
in the Territory (including the rules and regulations of any national stock exchange on which such
Party’s securities are traded).







     19.2 Use of Names. No Party shall make use of the name of any other Party in any
advertising or promotional material, or otherwise, in connection with this Agreement or any related
agreements, without the prior written consent of such other Party; provided, however, either Party
may include the other Party on a general list of business partners or collaborations.







ARTICLE 20.

TERM; TERMINATION








     20.1 Term; Option to Extend.



     Unless sooner terminated pursuant to the terms of this
Agreement, the term of this Agreement (the “Term”) shall commence on the Effective Date and shall
continue until [*]; provided, however, Genentech shall have the one time right, at its sole
discretion, upon written notice to Lonza prior [*], to extend the Term for an additional period of
[*]. During any such extension, all terms of this Agreement, the Tech Transfer Agreement and the
Quality Agreement shall apply. As used herein “Term” shall mean the initial Term, including any
extension thereof.







     20.2 Termination.



34









Table of Contents





          20.2.1 Material Breach. This Agreement may be terminated in its entirety by either
Party (the “Nonbreaching Party”) upon written notice thereof to other Party (the “Breaching Party”)
in the event of a material breach by the Breaching Party which is not cured within [*] days after
receipt of written notice from the Nonbreaching Party to the Breaching Party, specifying in
reasonable detail the nature of such breach, or such longer period of time if the Breaching Party
delivers a certificate that such material breach is not reasonably capable of being cured within
such [*] days and that the Breaching Party is working diligently to cure such breach, but in no
event shall the time for curing such breach exceed an additional [*]days. Notwithstanding the
foregoing, if the material breach referred to in this Section 20.2.1 arises out of or consists of
the failure to pay Lonza amounts due under this Agreement in accordance with the terms hereof,
there shall be a single period of [*]days after notice of breach within which Genentech shall have
the right to cure such default by making payment in full of the amount then due and payable. In
the event such breach is not cured within such cure period, this Agreement shall terminate as set
forth in the Nonbreaching Party’s notice of breach and in accordance with the terms of this
Article; provided, however, that this Agreement shall not be terminated prior to the end of such
cure period. During the period in which Lonza is attempting to cure any Lonza material breach,
Genentech shall have no obligation to purchase Product.




          20.2.2 Withdrawal of Product. Genentech may terminate this Agreement in its sole
discretion, upon thirty (30) days prior written notice to Lonza, in the event the BLA for the
Product is withdrawn.




          20.2.3 Permissive Termination. Genentech may terminate this Agreement at any time for
any reason, upon twelve (12) months prior written notice to Lonza.




          20.2.4 Failure to Timely Achieve Key Milestones or Targeted Performance Criteria.
Genentech may, in its sole discretion, terminate this Agreement in its entirety upon [*]days prior
written notice to Lonza, if (i) Phase A Completion is not achieved [*] (ii) Phase B Completion is
not achieved [*], (iii) if the sBLA Enablement is not achieved by [*], (iv) FDA Approval is not
received by the later of [*], in the event sBLA Enablement is achieved [*], (v) the
Pre-Campaign/Campaign Requirements for a particular [*] are not met in [*] (unless such
non-compliance with such requirements is cured within the period specified in Section 5.2.3 [*],
and/or (vi) the Campaign Minimum Runs, Annual Minimum Success Rate and/or Target Yield for a [*]
are not met in such [*].




          20.2.5 Change of Control. In the event of a Change of Control of Lonza, Genentech
shall have the one time right, exercisable within [*] after such Change of Control (upon thirty
(30) days prior written notice to Lonza (or its successor)), to terminate this Agreement. As used
herein “Change of Control” means the merger, consolidation, sale of substantially all of the assets
or similar transaction or series of transactions, as a result of which Lonza’s shareholders before
such transaction or series of transactions, own less than fifty percent (50%) of the total number
of voting securities of the surviving entity immediately after such transaction or series of
transactions.








     20.3 Consequences of Termination.



          20.3.1 Payment of Amounts Due; Cumulative Remedies. Expiration or termination of this
Agreement for any reason shall not exempt any Party from paying to any other Party any amounts
owing to such Party at the time of such expiration or termination. Except as expressly stated
otherwise herein, remedies under this Agreement are cumulative, and nothing in this Agreement shall
prevent any Party, in the case of a material breach (after expiration of applicable cure period and
notice periods), from terminating this Agreement and seeking to enforce its rights under this
Agreement.




          20.3.2 Termination of Bulk Drug Commitment.




               (a) Upon termination of this Agreement in its entirety by Genentech pursuant to Section 20.2.1
(Lonza Material Breach) hereof, Genentech may, in its discretion, cancel, in whole or in part, any
Runs that were scheduled to be initiated on or after the effective date of such termination.
Likewise, upon termination of this Agreement in its entirety by Lonza pursuant to Section 20.2.1
(Genentech Material Breach) hereof, Lonza may, in its discretion, cancel, in whole or in part, any
Runs that were scheduled to be initiated on or after the effective date of such termination. Runs
that are in process [*] as of the effective date of any such termination shall not be cancelled
without the mutual agreement of the Parties, and the Agreement shall continue to survive with
respect to those in-process Runs.



35









Table of Contents





               (b) Upon the issuance of a notice of termination of this Agreement pursuant to Section 20.2.2
(Withdrawal of Product) or Section 23.4 (Termination for Force Majeure Event) hereof, all Runs
which were scheduled to be initiated after the date on which the notice of termination was issued
shall be automatically cancelled. Runs that are in process at the [*] on the date on which the
notice of termination was issued shall not be cancelled without the mutual agreement of the
Parties, and the Agreement shall continue to survive with respect to those in-process Runs.



               (c) Upon the termination of this Agreement pursuant to Section 20.2.3 (Permissive
Termination), Genentech may, in its discretion, cancel, in whole or in part, any Campaign’s and
Runs scheduled during such [*] period (as defined in the current Product Manufacturing Forecast);
provided, in the event of any such cancellation, if the amounts paid by Genentech to Lonza during
such [*] period for Successful Commercial Batches produced from such Campaigns and Runs amounts to
less than [*] Genentech agrees to pay Lonza the balance of such amount within [*]days following the
effective date of termination of this Agreement (i.e., [*] less the amounts paid for such
Successful Commercial Batches).



               (d) Upon the termination of this Agreement pursuant to Section 20.2.4 (Failure to Timely
Achieve Key Milestones or Targeted Performance Criteria) or Section 20.2.5 (Change of Control),
Lonza shall immediately stop all Bulk Drug manufacturing hereunder, other than completing testing
and release of Bulk Drug that has been fully manufactured as of the date of termination. Bulk Drug
that has been fully manufactured as of the date of termination but for which testing and release
has not been completed shall remain subject to the terms of this Agreement, and the Agreement shall
continue to survive with respect to such Bulk Drug.



          20.3.3 Raw Materials. Subject to Lonza’s obligation upon receipt of a notice of
termination to place no further orders for raw materials, intermediates or packaging components
except as may be necessary for completion of any portion of Lonza’s services hereunder that are not
immediately terminated:




               (a) Upon expiration of this Agreement or termination of this Agreement pursuant to Section
20.2.1 (Genentech Material Breach) hereof, Genentech shall purchase from Lonza, at the request of
Lonza, at Lonza’s Acquisition Cost, all remaining usable raw materials, intermediates and packaging
components acquired and paid for by Lonza for the manufacture and packaging of Bulk Drug under this
Agreement (provided such materials and/or intermediates have a shelf life remaining of at least six
(6) months); or



               (b) Upon termination of this Agreement pursuant to Section 20.2.2 (Withdrawal of Product), or
Section 20.2.3 (Permissive Termination), Section 20.2.4 (Failure to Timely Achieve Key Milestones
or Targeted Performance Criteria), Section 20.2.5 (Change of Control) or Section 23.4 (Termination
for Force Majeure Event) hereof, Genentech may purchase from Lonza, at the request of Lonza, at
Lonza’s Acquisition Cost, all remaining usable raw materials, intermediates and packaging
components acquired and paid for by Lonza for the manufacture and packaging of Bulk Drug under this
Agreement.



Notwithstanding the foregoing, Genentech shall not be obligated to purchase an amount of such raw
materials, intermediates and packaging components in excess of the amount reasonably necessary to
fulfill the outstanding Bulk Drug Commitment for Bulk Drug that are outstanding at the time of such
termination plus a reasonable safety stock.




          20.3.4 Return of Materials and of Genentech Confidential Information, Transfer of
Genentech Equipment. Upon expiration or termination of this Agreement, unless otherwise
directed by Genentech, Lonza shall promptly (i) return or, at Genentech’s election, destroy all
quantities of the Cell Line, Master Cell Bank, and Working Cell Bank received by Lonza under this
Agreement, the Tech Transfer Agreement or the Quality Agreement, with any such destruction to be
certified in writing to Genentech by an authorized Lonza officer, (ii) return all Genentech
Confidential Information to Genentech, and (iii) return to Genentech all retention and reserve
samples being held by Lonza pursuant to Section 13.8 hereof. In addition, if requested by
Genentech, Lonza shall transfer the Genentech Equipment to Genentech in accordance with Section
15.2 hereof.




          20.3.5 Return of Lonza Confidential Information. Upon expiration or termination of
this Agreement, and at Lonza’s written request, Genentech shall promptly return all Lonza
Confidential Information to Lonza.




36









Table of Contents








          20.3.6 Accrued Rights. Except as otherwise expressly set forth herein, any
termination or expiration of this Agreement shall be without prejudice to any right which shall
have accrued to the benefit of either Party and shall not relieve either Party of any obligation
which has accrued prior to the effective date of such termination or expiration, which obligations
shall remain in full force and effect for the period provided therein or, if no period is provided
therein, then such obligations shall remain in full force and effect indefinitely.








ARTICLE 21.

ASSIGNMENT








     21.1 Assignment.
This Agreement shall be binding upon the successors and assigns of
the Parties and the name of a Party appearing herein shall be deemed to include the names of its
successors and assigns. Neither Party may assign its interest under this Agreement without the
prior written consent of the other Party; provided, however, Genentech may assign its interest
under this Agreement, without the prior written consent of Lonza, (a) to an Affiliate, so long as
Genentech unconditionally guarantees the obligations of such Affiliate or (b) to a successor of
Genentech’s business by reason of merger, sale of all or substantially all of its assets or other
form of acquisition. Any purported assignment without a required consent shall be void. No
assignment shall relieve any Party of responsibility for the performance of any obligation that
accrued prior to the effective date of such assignment.







ARTICLE 22.

DISPUTE RESOLUTION








     22.1 Exclusions. Section 22.2 below shall not apply to any disputes arising under
Article 18 (Confidentiality) or Section 24.9 (Non-Competition).







     22.2 Dispute Resolution.



          22.2.1 Disputes. The Parties recognize that a bona fide dispute as to certain matters
may from time to time arise during the term of this Agreement that relates to a Party’s rights
and/or obligations under this Agreement. Unless otherwise specifically recited in this Agreement,
disputes among members of each operating committee will be resolved as recited in this Section
22.2. In the event of the occurrence of such a dispute, any Party may, by written notice to the
other Parties, have such dispute referred to their respective officers designated below, or their
respective designees, for attempted resolution by good faith negotiations within five (5) days
after such notice is received. Such designated officers are as follows:




     For Genentech — [*]



     For Lonza — [*]



In the event the designated officers, or their respective designees, are not able to resolve such
dispute within such five (5)-day period, or such other period of time as the Parties may mutually
agree in writing, either Party may, by written notice to the other, invoke the following provisions
of this Section 22.2 hereinafter.



          22.2.2 Arbitration. The Parties agree that, except as otherwise set forth in Section
22.1 above or Section 22.2.4 or 22.2.5 below, any dispute, controversy or claim arising out of or
relating to this Agreement, the Tech Transfer Agreement, or the Quality Agreement (other than
issues regarding disposition of Bulk Drug, which shall be resolved in accordance with the terms of
the Quality Agreement), or the breach, termination, or invalidity thereof, shall be resolved
through binding arbitration. If a dispute arises between the Parties, and if such dispute cannot
be resolved pursuant to Section 22.2.1 above, such dispute shall be finally resolved by binding
arbitration administered by the American Arbitration Association (unless otherwise agreed in
writing by the Parties) in accordance with its Commercial Arbitration Rules (unless otherwise
agreed in writing by the Parties), except as modified herein. Each Party shall select one
arbitrator and the two (2) arbitrators so selected shall choose a third arbitrator to resolve the
dispute. A reasoned arbitration decision shall be rendered in writing within thirty (30) days of
the conclusion of arbitration and shall be binding and not be appealable to any court in any
jurisdiction. Such arbitration shall be concluded within six (6) months following the filing of
the initial request for arbitration. The prevailing Party may enter


37









Table of Contents







such decision in any court having competent jurisdiction. Unless otherwise mutually agreed
upon by the Parties, the arbitration proceedings shall be conducted at San Francisco, California,
or such other location as may be agreed in writing by the Parties. The Parties agree that they
shall share equally the cost of the arbitration filing and hearing fees, and the cost of the
mediator/arbitrator. Each Party must bear its own attorneys’ fees and associated costs and
expenses. NOTWITHSTANDING THE FOREGOING TIME PERIODS IN THIS SECTION 22.2.2, THE PARTIES AND
ARBITRATOR SHALL USE ALL DILIGENT EFFORTS TO COMPLETE ANY ARBITRATION OF A CLAIM OR DISPUTE
DESCRIBED IN SECTION 3.1.4(C), 3.1.4(D) OR SECTION 17.4 WITHIN THIRTY (30) DAYS OF APPOINTMENT OF
THE ARBITRATOR TO RESOLVE THE DISPUTE, AND TO COMPLETE ANY ARBITRATION OF SUCH CLAIM OR DISPUTE
WITHIN NINETY (90) DAYS AFTER THE FILING OF THE INITIAL REQUEST FOR ARBITRATION.




          22.2.3 Jurisdiction. For the purposes of this Article 22, the Parties agree to accept
the jurisdiction of the federal courts located in the Northern District of California for the
purposes of enforcing awards entered on behalf of Genentech pursuant to this Article 22 and for
enforcing the agreements reflected in this Article, or to a state court in such jurisdiction if the
applicable rules of civil procedure preclude federal court jurisdiction.




          22.2.4 Determination of Patents and Other Intellectual Property. Notwithstanding the
foregoing, any dispute relating to the determination of validity of a Party’s patents or other
issues relating to a Party’s intellectual property shall be submitted exclusively to the federal
court located in the jurisdiction of the defendant, or to a state court in such jurisdiction if the
applicable rules of civil procedure preclude federal court jurisdiction, and the Parties hereby
consent to the jurisdiction and venue of such courts.




          22.2.5 Claims involving Consequential Damages. The Parties agree that, with respect
to any willful breach by Lonza of its obligation hereunder to perform, for which Genentech intends
to seek Consequential Damages from Lonza, prior to invoking the provisions of Section 22.2.2 to
resolve such dispute, controversy or claim, the following provisions shall apply:




               (a) Genentech shall provide Lonza with [*] days written notice of such breach specifying in
reasonable detail the nature of such breach and a statement that Genentech intends to seek
Consequential Damages from Lonza for such breach. If Lonza does not deliver to Genentech a written
plan for curing such breach and cure such breach within such [*] day period, or such longer period
of time if Lonza delivers to Genentech a certificate that such breach is not reasonably capable of
being cured within [*] days and that Lonza is using all Commercially Reasonable Best Efforts to
cure such breach as soon as possible, but in no event shall the time period for curing such breach
exceed an additional [*] days, at the end of such period, Genentech may seek to have such dispute
finally resolved by binding arbitration in accordance with Section 22.2.2 above.



               (b) If Genentech files a request for binding arbitration of such dispute, Genentech shall
provide Lonza with written copy of such filing including a statement that Genentech intends to seek
Consequential Damages from Lonza for such breach.



               (c) To the extent the arbitrator in its written decision awards Genentech any Consequential
Damages, Lonza shall have the right, at its discretion, to elect to [*] in lieu of paying to
Genentech such Consequential Damages; such election to be made by Lonza in writing to Genentech
within five (5) days of the arbitrator’s written notice to the Parties of such final decision. In
the event of such election: (i) [*] and (ii) Genentech hereby waives any Consequential Damages
awarded in such written decision of such arbitrator. If written notice is given by Lonza that it
does not wish to make such election, or written notice is not given to Genentech by Lonza within
such five (5) day period, Genentech shall be free to enter such decision in any court having
competent jurisdiction.







ARTICLE 23.

FORCE MAJEURE








     23.1 Effect of Force Majeure Event. No Party shall be in breach of this Agreement if
there is any failure of performance under this Agreement (except for payment of any amounts due
under this Agreement) occasioned by any reason beyond the control and without the fault or
negligence of the Party affected thereby, including an act of God, fire,



38









Table of Contents







act of government or state, war, civil commotion, insurrection, embargo, an infectious virus
which cannot be detected by testing and which causes a shutdown for a substantial period of a large
portion of the Lonza Facility that was used for the manufacture of the Product due to contamination
despite Commercially Reasonable Best Efforts by Lonza to prevent such occurrence, prevention from
or hindrance in obtaining energy or other utilities, a market shortage of raw materials or
necessary components (but only to the extent that Lonza has otherwise complied with the safety
stock requirements specified in Section 4.5), or labor disputes of whatever nature (a “Force
Majeure Event”). Nothing in this Section 23.13 shall, however, release such Party from using its
Commercially Reasonable Best Efforts to avoid or remove all such causes. Upon cessation of such
Force Majeure Event, the affected Party shall promptly resume performance under this Agreement.







     23.2 Notice of Force Majeure. Each Party agrees to give the other Party prompt
written notice of the occurrence of any Force Majeure Event, the nature thereof, and the extent to
which the affected Party will be unable fully to perform its obligations under this Agreement.
Each Party further agrees to use Commercially Reasonable Best Efforts to correct the Force Majeure
Event as quickly as practicable and to give the other Party prompt written notice when it is again
fully able to perform such obligations.







     23.3 Annual Minimum Campaign and Annual Minimum Runs. If a Force Majeure Event
prevents Lonza from manufacturing Bulk Drug under this Agreement in any calendar year, the parties
shall in good faith discuss and Lonza shall use Commercially Reasonable Best Efforts to schedule
and conduct an additional Campaign within the next six (6) months following correction of such
Force Majeure Event in order to make-up such shortfall, shortage or delay and/or increase
proportionately the Annual Minimum Campaign and Annual Minimum Runs in the subsequent calendar
year.







     23.4 Target Dates and Milestones. It is understood and agreed that nothing herein
this Article 23 shall entitle Lonza, or obligate Genentech, to extend any of the target dates
specified in Section 4.7 and/or the dates for completion of milestones set forth in Section 6.3.







     23.5 Termination. Genentech may terminate this Agreement if Lonza is unable to
perform pursuant to this Article 23 for a period of six (6) months.







ARTICLE 24.

MISCELLANEOUS








     24.1 Notices. Other than notices within the jurisdiction of the respective Project
Team Leaders, which shall be given to those individuals, any notice required or permitted to be
given under this Agreement by any Party shall be in writing and shall be (a) delivered personally,
(b) sent by registered mail, return receipt requested, postage prepaid, (c) sent by a
nationally-recognized courier service guaranteeing next-day or second day delivery, charges
prepaid, or (d) delivered by facsimile (with the original promptly sent by any of the foregoing
manners), to the addresses or facsimile numbers of the other Parties set forth below, or at such
other addresses as may from time to time be furnished by similar notice by any Party. The
effective date of any notice under this Agreement shall be the date of receipt by the receiving
Party.



If to Genentech: Corporate Secretary




	 	 	 
	 

	 	Genentech, Inc.

I DNA Way

South San Francisco, CA 94080

Fax: (650) 952-9881

Phone: (650) 225-1672

	 
	 	 
	with a copy to:

	 	Senior Vice President of Product Operations

Genentech, Inc.

1 DNA Way, MS 53

South San Francisco, CA 94080

Fax: (650) 225-5007

Phone: (650) 225-3978






39









Table of Contents






	 	 	 
	with a copy to:

	 	Vice President of Business & Commercial Development

Genentech, Inc.

1 DNA Way

South San Francisco, CA 94080 Phone: (650) 225-3705

Fax: (650) 225-3009
	 
	 	 
	If to Lonza:

	 	Lonza Biologics, Inc.

Chief Operating Officer

101 International Drive

Portsmouth, New Hampshire 03801

Fax: (603) 610-5050

Phone: (603) 610-4899
	 
	 	 
	with a copy to:

	 	Lonza Biologics, Inc.

Legal Advisor

101 International Drive

Portsmouth NH 03801

Fax: (603) 610-5050

Phone: (603) 610-5295

	 
	 	 
	with a copy to:

	 	Corporate Legal Counsel

Lonza Group Ltd

Muenchensteinerstrasse 38

CH-4002 Basel, Switzerland










     24.2 Applicable Law. This Agreement shall be construed, interpreted and enforced in
accordance with the internal substantive laws of the State of California, without reference to the
choice of law doctrine of such state.







     24.3 Headings. The table of contents and all headings in this Agreement are for
convenience of reference only and shall not affect the interpretation of this Agreement.







     24.4 Exhibits. All exhibits referred to herein form an integral part of this
Agreement and are incorporated into this Agreement by such reference.







     24.5 Severability. Each Party hereby expressly agrees that it has no intention to
violate any public policy, statutory or common laws, rules, regulations, treaty or decision of any
government agency or executive body thereof of any country or community or association of
countries; that if any word, sentence, paragraph, clause or combination thereof in this Agreement
is found by a court or executive body with judicial powers having jurisdiction over this Agreement
or any Party hereto, in a final unappealed order, to be in violation of any such provisions in any
country or community or association of countries, such words, sentences, paragraphs, clauses or
combination shall be inoperative in such country or community or association of countries and the
remainder of this Agreement shall remain binding upon the Parties, so long as enforcement of the
remainder does not violate the Parties’ overall intentions in this transaction.







     24.6 Independent Contractors. Each of the Parties is an independent contractor and
nothing herein contained shall be deemed to constitute the relationship of partners, joint
venturers, nor of principal and agent between the Parties. Neither Party shall hold itself out to
Third Parties as purporting to act on behalf of, or serving as the agent of, the other Party.







     24.7 Waiver. No waiver of any term, provision or condition of this Agreement whether
by conduct or otherwise in any one or more instances shall be deemed to be or construed as a
further or continuing waiver of any such term, provision or condition or of any other term,
provision or condition of this Agreement.







     24.8 Counterparts. This Agreement and any amendment hereto may be executed in any
number of counterparts, each of which shall for all purposes be deemed an original and all of which
shall constitute the same instrument. This Agreement shall be effective upon full execution by
facsimile or original, and a facsimile signature shall be deemed to be and shall be as effective as
an original signature.



40









Table of Contents









24.9 [This Section intentionally left blank.]








     24.10 Harmful Products. During the Term, Lonza agree that it shall not manufacture,
either for commercial supply or clinical supply, for itself or any Affiliate or Third Party, any
compound or composition of matter (including without limitation any viruses, antibiotics, or
microplasmas) which may put at risk Lonza’s efforts to obtain and maintain Regulatory Approval of
the Lonza Facility and/or to manufacture Bulk Drug in accordance with the terms of this Agreement.
In addition, Lonza agrees not to use any form of penicillin or cephalosporin in the Manufacturing
Process utilized at the Lonza Facility, without Genentech’s prior written consent.







     24.11 Non-Solicitation. The Parties recognize that each Party has a substantial
interest in preserving and maintaining confidential its Confidential Information hereunder. Each
Party recognizes that certain of the other Party’s employees, including those engaged in
manufacturing, validating and testing Product, may have access to such Confidential Information of
the other Party. The Parties therefore agree not to knowingly solicit or otherwise induce or
attempt to induce for purposes of employment, any employees from the other Party involved in the
manufacturing, validating or testing of any Product during the Term and for a period of two years
thereafter.







     24.12 Injunctive Relief. Lonza agrees that Genentech would be irreparably injured by
a material breach by Lonza or its employees of Lonza’s obligations under Article 4 and/or Article
5, and that monetary remedies would be inadequate to protect Genentech against any actual or
threatened material breach of the provisions of such Articles by Lonza or by its employees, and,
without prejudice to any other rights and remedies otherwise available to Genentech, Lonza agrees,
upon proof of any such actual or threatened material breach, to the granting of equitable relief,
including injunctive relief and specific performance, in Genentech’s favor without proof of actual
damages. It is further understood and agreed that no failure or delay by Genentech in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder.







     24.13 Entirety; Amendments. This Agreement, including any exhibits attached hereto
and referenced herein, constitutes the full understanding of the Parties and a complete and
exclusive statement of the terms of their agreement with respect to the specific subject matter
hereof (i.e., purchase and supply of Bulk Drug), and no terms, conditions, understandings or
agreements purporting to modify or vary the terms thereof shall be binding unless it is hereafter
made in writing and signed by each of the Parties. No modification to this Agreement shall be
effected by the acknowledgment or acceptance of any purchase order or shipping instruction forms or
similar documents containing terms or conditions at variance with or in addition to those set forth
herein. In the event of a conflict between this Agreement, the exhibits hereto, the Tech Transfer
Agreement or the Quality Agreement, the terms of this Agreement shall control (except, with respect
to issues of quality control, other than as specified in Section 3.1.4(c) of this Agreement, the
terms of the Quality Agreement shall control). This Agreement may be amended and supplemented only
by a written instrument signed by each of the Parties.







     24.14 Preference. Unless otherwise specifically provided for in the Quality Agreement
and/or Tech Transfer Agreement, the terms of this Agreement shall prevail in the event of a
conflict between this Agreement and any of the aforementioned agreements.



[the remainder of this page intentionally blank]




41









Table of Contents





IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the Effective Date.




	 	 	 	 	 	 	 
	GENENTECH, INC.

	 	 
	 	LONZA BIOLOGICS, INC.
	 	 
	 
	 	 	 	 	 	 
	By: /S/ Arthur D. Levinson

	 	 	 	By: /S/ Markus Gemuend	 	 
	 

	 	 	 	 	 	 
	Name: Arthur D. Levinson

Title: Chairman and CEO

	 	 	 	Name: Markus Gemuend

Title: Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	LONZA BIOLOGICS, PLC	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	By: /S/ Markus Gemuend

Name: Markus Gemuend

Title: Chief Executive Officer	 	 






42









Table of Contents







Exhibit A

Annual Minimums***




					
	 	 	 	 	 
	Calendar Year
	 	Campaign Minimum*
	 	Campaign Minimum Runs**






[*]




*Unless otherwise mutually agreed by the Parties, Lonza shall conduct the Campaign in each year in
[*] Any Runs started during a Campaign shall be completed, [*]




**When used in this Exhibit, the term “Runs” for purposes of defining the term [*] shall mean
commencement of a fermentation start of the Manufacturing Process at the [*], with the intent to
progress through the [*] and [*], harvest, recovery, quality testing and release.




***[*] it is understood and agreed that the Campaign Minimums and Campaign Minimum Runs shall be
adjusted accordingly to account for such [*]





Campaign Maximums




Calendar
Year                                                                                                                         
                                      Successful Commercial Batches




[*]




43









Table of Contents








Exhibit B

Annual Minimum Success Rate




	 	 	 
	Calendar Year	 	Minimum Successful Commercial Lots
	[*]

	 	[*]of Annual Minimum Runs
	 
	 	 
	[*]

	 	[*]of Annual Minimum Runs
	 
	 	 
	[*]

	 	[*]of Annual Minimum Runs
	 
	 	 
	[*]

	 	[*]of Annual Minimum Runs






44









Table of Contents






Exhibit C

Target Yield




1. The initial Target Yield is [*] with a standard deviation of +/- [*]. The initial Target Yield
is based on [*] data obtained by Genentech [*]for manufacture of the Bulk Drug (adjusted for the
Lonza Facility).




2. Following completion of all Successful Development Runs (as determined in accordance with the
Tech Transfer Agreement), the JPT shall review and revise as necessary the initial Target Yield
based on (i) the [*] data obtained by Genentech [*] for manufacture of the Bulk Drug and (ii) the
[*] data obtained by the Parties from the Successful Development Runs.




3. Following completion of all Successful Qualification Lots (as determined in accordance with the
Tech Transfer Agreement), the JPT shall review and revise as necessary the current Target Yield
based on (i) such [*] data obtained by Genentech [*] for manufacture of the Bulk Drug and (ii) the
[*] data obtained by the Parties from the Successful Development Runs and (iii) the [*] data
obtained by the Parties from the Successful Qualification Lots. Such Target Yield shall be the
Target Yield for Commercial Production of the Bulk Drug for the remainder of the Term, unless
otherwise agreed by the Parties in writing. It is understood that based on the current BLA for the
Product, the final Target Yield must be within [*]of the initial Target Yield.





45