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**Exhibit 10.31****MANUFACTURING AND SUPPLY AGREEMENT****Between****GENENTECH, INC. and LONZA BIOLOGICS, INC.****Dated December 7,  2003**
 

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     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 
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      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 EffectiveDate; 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 
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     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 
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**MANUFACTURING AND SUPPLY AGREEMENT**“THIS MANUFACTURING AND SUPPLY AGREEMENT (“Agreement”) is made effective as of December 7 2003, byand 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 at101 International Drive Portsmouth, New Hampshire 03801 (“Lonza Inc”) (collectively LB and LonzaInc, hereinafter “Lonza”), and Genentech, Inc., a Delaware corporation, having its principal placeof business at One DNA Way, South San Francisco, California 94080 (“Genentech”).**BACKGROUND**Genentech markets and sells a certain proprietary biological pharmaceutical product known asRituxan. Genentech desires to obtain additional supply of commercial quantities of Rituxan bulkdrug substance. Lonza has the experience and expertise necessary to perform the manufacturing andrelated services needed to supply Rituxan bulk drug substance, and Lonza owns a facility that, withsome modifications, could be suitable for production of commercial quantities of Rituxan bulk drugsubstance.Genentech desires to retain Lonza as a nonexclusive manufacturer of commercial quantities ofRituxan bulk drug substance and purchase commercial quantities of such product from Lonza, andLonza 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 theParties), 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 Partieshereunder.**AGREEMENT**NOW, THEREFORE, IN CONSIDERATION OF the mutual covenants set forth in this Agreement, and for othergood and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, theParties hereby agree as follows:**ARTICLE 1.****DEFINITIONS**The following terms, whether used in the singular or plural, shall have the meanings assigned tothem below for purposes of this Agreement.     1.1 “Acquisition Cost”means the actual invoiced price paid by Lonza to any ThirdParty for acquiring any raw materials, packaging components and intermediates used exclusively inthe manufacture of the Product under this Agreement, including [*] in connection with theacquisition of such materials, packaging components and intermediates.     1.2 “Affiliate”means, with respect to any Party, any other corporation or businessentity that directly, or indirectly through one or more intermediaries, controls, is controlled byor 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 otherownership interests representing the equity voting stock or general partnership or membershipinterest of such entity or the power to direct or cause the direction of the management or policiesof such entity, whether through the ownership of voting securities, by contract, resolution orotherwise. 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 singleRun, and refers to a Commercial Batch or Lot, a Development Batch or Lot, and/or a QualificationBatch or Lot, as the context requires. A Run may result in more than one sub-batch or sub-lot dueto splitting into tanks downstream in the Manufacturing Process.     1.4 “Batch Records”shall have the meaning set forth in the Quality Agreement.
 

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     1.5 “Bulk Drug”means the bulk form of the Product which has been manufactured byLonza pursuant to this Agreement, which has been purified to a concentrated form from one or moreBatches, and which has been manufactured in compliance with and conforms to cGMP, the Bulk DrugSpecifications, Target Yield and the warranties in Section 7.1.     1.6 “Bulk Drug Commitment”refers to the [*] of each binding rolling ProductManufacturing Forecast (including all amendments thereto), and means a commitment by Lonza tocomply with and make available the Lonza Facility during the Campaign specified therein and performthe number of Runs set forth therein (as described with more particularity in Section 5.3.1hereof).     1.7 Bulk Drug Specifications”means specifications developed by Genentech for BulkDrug, including, without limitation, testing methods and acceptance criteria for each Batchgenerated, a summary of which is attached to the Quality Agreement, as such specifications may beamended from time to time in accordance with Article 8 hereof, including, without limitation, suchamendments 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 furtherdefined in Exhibit A) during which Lonza shall ensure that the Lonza Facility ready and availableto perform Commercial Production.     1.9 “cGMP”means the regulatory requirements for current good manufacturing practicespromulgated by the FDA under the FD&C Act, 21 C.F.R. §§ 210, 211 and 600 et *seq.*and under the PHSAct, 21 C.F.R. §§ 600-610, as the same may be amended from time to time and with respect to theproduct, the corresponding or similar laws, rules and regulations of those jurisdictions in whichthe 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 Batchnumber, and quantity of Bulk Drug in such Batch, and (b) certifying that such Batch wasmanufactured in accordance with cGMP, the Bulk Drug Specifications, Target Yield and the warrantiesset forth in Section 7.1. The Parties shall from time to time agree upon a format or formats forthe 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 totime 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 froma Commercial Run.     1.14 “Commercial Run”means a Run that is initiated following the commencement ofCommercial Production and is used to manufacture commercial Bulk Drug.     1.15 “Commercially Reasonable Efforts”means prompt efforts and resources consistentwith prudent business judgment.     1.16 “Commercially Reasonable Best Efforts” [*]     1.17 “Confidential Information”means Genentech Confidential Information and/or LonzaConfidential 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 ofsome or all of the Manufacturing Process steps, and is described in Section 4.4.1 hereof.
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     1.20 “Effective Date”means December 7 2003, which is the date set forth in the firstparagraph 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 paidby Lonza to any Third Party for acquiring services, including, without limitation, design andengineering services, and necessary equipment used exclusively to modify the Lonza Facility inorder to implement the Manufacturing Process at the Lonza Facility, all to the extent incurred inaccordance with the Tech Transfer Agreement.     1.23 “Facility Validation”shall have the meaning ascribed to it in the Tech TransferAgreement.     1.24 “FD&C Act”means the United States Federal Food, Drug and Cosmetic Act, as thesame may be amended from time to time.     1.25 “FDA”means the United States Food and Drug Administration, or any successoragency thereto.     1.26 “Finished Product”means Bulk Drug which has been formulated, compounded, filledinto 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 alltechnical and other information, whether patented or unpatented, relating thereto and/or toGenentech processes, methods, operations, technologies, forecasts and business information that aredisclosed or supplied to Lonza by or on behalf of Genentech pursuant to this Agreement, the TechTransfer Agreement and/or the Quality Agreement, or of which Lonza may become aware of through thepresence of its employees or agents at Genentech offices or facilities or at other facilities thatmanufacture the Product, including, without limitation, trade secrets, know-how, processes,concepts, experimental methods and results and business and scientific plans and information andfacility layout and schematics. All documents and records describing or to the extent relating tothe Manufacturing Process at the Lonza Facility, including, without limitation, process trend andvariability 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, orused on behalf of Genentech by Lonza pursuant to this Agreement, the Tech Transfer Agreement and/orthe Quality Agreement, or of which Genentech may become aware of through the presence of theiremployees or agents at Lonza offices or at the Lonza Facility, including, without limitation, tradesecrets, know-how, processes, concepts, experimental methods and results and business andscientific plans and information and facility layout and schematics.     1.30 “Lonza Facility”means Lonza’s commercial manufacturing facility located atPortsmouth, New Hampshire.     1.31 “Manufacturing Documentation”means all documents and records describing orotherwise related to the Manufacturing Process or any part of the Manufacturing Process provided toLonza by or on behalf of Genentech under this Agreement, the Tech Transfer Agreement or the QualityAgreement, including, without limitation, documents and records consisting of or containing pipingand instrumentation diagrams, software logic and descriptions, batch records, standard operatingprocedures, including, without limitation, standard operating procedures for in-process qualitycontrol testing, facility layout schematics, equipment and instrumentation specifications andprocess trend and variability data.
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     1.32 “Manufacturing Process”means the production process for the manufacture of BulkDrug pursuant to this Agreement, as summarily described in the Quality Agreement and as describedin the Tech Transfer Agreement, as such process may be changed from time to time in accordance withthis Agreement.     1.33 “Master Cell Bank” [*]     1.34 “MHWJmeans the Ministry of Health and Welfare in Japan, or any successorthereto.     1.35 “Non-Conforming Bulk Drug”means Bulk Drug that fails to conform to any of thewarranties 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, pumpsand agitators, shall also be deemed Non-Portable Equipment. Non-Portable Equipment includes therelated documentation regarding the design, validation, operation, calibration and maintenance ofsuch 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 contextrequires.     1.39 “Portable Equipment”means the portable equipment described with particularity inthe Tech Transfer Agreement and referred to in Section 5.5 hereof, including, without limitation,the related documentation regarding the design, validation, operation, calibration, and maintenanceof such equipment. The Portable Equipment is a part of the Genentech Equipment, as defined inSection 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 toSection 4.9 a substituted product, whether under development or approved by the appropriateregulatory agencies.     1.41 “Purchase Price”means the Purchase Price to be paid by Genentech to Lonza forBulk Drug as determined in accordance with the terms of this Agreement.     1.42 “Qualification Batch” or “Qualification Lot”means a Batch or Lotproduced from a Qualification Run.     1.43 “Qualification Run”means a Run used to document the operability andreproducibility of the Manufacturing Process at the Lonza Facility, and is described in Section4.4.2 hereof.     1.44 “Quality Agreement”means the quality agreement entered into by and between theParties after the Effective Date and which refers to this Agreement.     1.45 “Regulatory Approval”means any approvals, licenses, registrations orauthorizations 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 eachregulatory jurisdiction in which the Product will be sold.     1.46 “Rituxan”means the proprietary anti-CD20 biological pharmaceutical product ofGenentech, more particularly described in Genentech’s BLA, including any successor or filingthereto 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 throughone or more intermediaries, controls, is controlled by or is under common control with RocheHoldings, Inc.; and, for purposes of this definition, the term “control” means direct or indirectownership of fifty percent (50%) or more of the securities or other ownership interestsrepresenting the equity voting stock or general partnership or membership interest of such entityor the power to direct or cause the direction of
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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 atthe [*] at the Lonza Facility and progressing through the [*], harvest, recovery, quality testingand release, and refers to a Commercial Run, Development Run and/or Qualification Run, as thecontext requires.     1.49 “sBLA”means a biologics license application for the Product, any equivalentsuccessor 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 accordancewith this Agreement, the Tech Transfer Agreement and the Quality Agreement, in achieving allrequirements for Bulk Drug produced from a single Run.     1.51 “Target Yield”shall have the meaning set forth in Exhibit C attached hereto andincorporated herein by reference.     1.52 “Tech Transfer Agreement”means the technology transfer agreement and processimplementation plan entered into by and between the Parties after the Effective Date, which refersto this Agreement, and which describes the agreement of the Parties regarding the transfer oftechnology and implementation of the Manufacturing Process, test methods and testing at the LonzaFacility, and the modifications to the Lonza Facility needed to implement the Manufacturing Processat the Lonza Facility, including a timeline, budget and statement of work jointly developed by theParties, 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 respectiveAffiliates.     1.55 “United States” or “U.S.”means the United States of America, itsterritories 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 
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     **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 setforth in this Agreement, during the Term, Genentech shall retain Lonza as a non-exclusivemanufacturer of Bulk Drug, Lonza shall make the Lonza Facility available to Genentech formanufacture of the Bulk Drug in accordance with the terms of this Agreement (including Exhibit Aand the Campaigns specified therein), and manufacture and supply exclusively for the benefit ofGenentech (and its designees) certain of Genentech’s requirements of Bulk Drug, and, as set forthherein, 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 shallhave primary responsibility for Lonza’s obligations hereunder, but may subcontract with, and doeshereby 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’sobligations hereunder. It is further understood and agreed to by the Parties, that the foregoingshall not (i) in any way relieve Lonza Inc, Lonza LB, or any of their Affiliates of any financialand other obligations under this Agreement that can only be performed by such entity, or (ii) inany way limit or prohibit Genentech from bringing any cause of action directly against LB and/orLonza Inc for either entity’s failure to perform any obligation due hereunder. It is furtherunderstood and agreed that with respect to Article 18 herein, all Genentech ConfidentialInformation disclosed hereunder to Lonza shall remain at Lonza Inc, and shall not be transferred ordisclosed to any employee of LB or any Lonza Affiliate unless on a need to know basis in order toperform an obligation of Lonza hereunder and only with prior written notice to Genentech specifyingthe name of the employee to whom the disclosure is to be made, the information to be disclosed, andthe purpose of such disclosure.     2.3 Execution of Tech Transfer Agreement and Quality Agreement.It is understood andagreed by the Parties, that in order to timely effectuate the intent of the Parties hereunder, itis in both Parties’ interest to enter into and execute the Tech Transfer Agreement and QualityAgreement as soon as practicable after the Effective Date. In the event the Tech TransferAgreement and Quality Agreement are not entered into and executed by the Parties within ten
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(10) business days following the Effective Date or such longer period as the Parties maymutually agree in writing (the “Effective Period”), either Party may terminate this Agreement uponwritten notice to the other Party. Such right to terminate may only be exercised by a Party withinten (10) days after Effective Period, and such termination shall be effective immediately uponreceipt of such written notice by the receiving Party. Following any such termination, neitherParty shall have any rights or obligations hereunder, except as provided in Sections 20.3.4 and20.3.5.**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 ExecutiveSteering Committee to oversee and manage the manufacture of Bulk Drug at the Lonza Facility. TheExecutive Steering Committee will be composed of two representatives appointed by each of Lonza andGenentech. All such representatives will be senior officers of Genentech or Lonza. Either Partymay replace any or all of its representatives at any time upon prior written notice to the otherParty. The Executive Steering Committee will meet at least once each calendar quarter, or morefrequently, 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 adispute regarding any issue presented to it, such dispute shall be resolved in accordance withArticle 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 inthe manner contemplated by this Agreement, including without limitation, overseeing and monitoringthe transfer and implementation of the Manufacturing Process, and the manufacture of Bulk Drug, atthe Lonza Facility;                    (ii) establish a governance structure for the collaboration including overseeing theestablishment and organization of one or more operating committees, or other structure to implementthis Agreement. The establishment of certain operating committees is provided for in Sections3.1.2 and 3.1.3 of this Agreement. Each operating committee contemplated by this Agreement shallbe subordinate to the Executive Steering Committee. If any operating committee contemplated bythis Agreement is not constituted or continued, any reference to such committee in this Agreementshall be deemed to be a reference to the Executive Steering Committee or such other committees orstructures to which the Executive Steering Committee may delegate responsibility;                    (iii) settle disputes or disagreements that are unresolved by an operating committee unlessotherwise indicated in this Agreement; and                    (iv) perform such other functions as appropriate to further the purposes of this Agreement asdetermined by the Parties.          3.1.2 Technical Committee.               (a) Within thirty (30) days of the Effective Date, the Parties will establish a TechnicalCommittee to oversee and control the transfer and implementation of the Manufacturing Process, andthe 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 onevote on all matters within the Technical Committee’s purview. Such representatives will includeProduct Managers, Technical Product Managers/Leads, Directors of Quality Assurance/Regulatory,Director of Manufacturing, or other individuals with expertise and responsibilities in the sameareas of manufacturing, process sciences, quality control or regulatory affairs. Either Party mayreplace any or all of its representatives at any time upon written notice to the other Party. TheTechnical Committee will meet at least once each calendar month, or more frequently, as agreed bythe Technical Committee. The Technical Committee will operate by
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unanimous decision, except as expressly set forth herein. If the Technical Committee isunable to resolve a dispute regarding any issue presented to it, such dispute shall be resolved inaccordance with Section 3.1.4 below.               (b) The Technical Committee shall: (i) oversee and manage the day to day activities of thetransfer and implementation of the Manufacturing Process; (ii) settle disputes or disagreementsthat 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 transferand implementation of the Manufacturing Process, and the manufacture of Development Lots andQualifications Lots, at the Lonza Facility; and (iv) perform such other tasks and undertake suchother responsibilities as may be specifically delegated to the Technical Committee by mutualagreement of the Parties. Following commencement of Commercial Production, the Parties may electto change the name and function of the Technical Committee to serve other functions andresponsibilities, 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 ProjectTeam (the “JPT”). The JPT shall be composed of [*] representatives appointed by each of Lonza andGenentech. Each representative will have one vote on all matters within the JPT’s purview. Suchrepresentatives will include the Product Manager, Technical Lead, Manufacturing Lead, QualityControl Lead, Quality Assurance/Regulatory Lead, Raw Materials Lead, Supply Chain Lead andEngineering Lead, or other individuals with expertise and responsibilities in the same areas ofmanufacturing, process sciences, quality control or regulatory affairs. Either Party may replaceany 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 noticeto, and after good faith consultation with, Genentech, and provided further, any such newrepresentative shall be mutually agreed to by the Parties. Genentech shall not unreasonablywithhold its agreement to any such new representative proposed by Lonza. The JPT will meet atleast once each week, or more frequently, as agreed by the JPT. The JPT will operate by unanimousdecision, except as expressly set forth herein. If the JPT is unable to resolve a disputeregarding any issue presented to it, such dispute shall be resolved in accordance with Section3.1.4 below.               (b) The purposes of the JPT shall be to (i) monitor, review and guide the transfer andimplementation of the Manufacturing Process, and the manufacture of Bulk Drug, at the LonzaFacility, (ii) coordinate the activities of the Parties hereunder to ensure transfer andimplementation of the Manufacturing Process, and the manufacture of Bulk Drug, at the LonzaFacility, 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 andimplementation of the Manufacturing Process, and the manufacture of Bulk Drug, at the LonzaFacility; and (iv) performing such other tasks and undertaking such other responsibilities as maybe specifically delegated to the JPT by mutual agreement of the Parties.               (c) Appointment of Project Team Leader. Within thirty (30) days of the EffectiveDate, each Party shall appoint a Project Team Leader (each, a “Project Team Leader”) to act as theprimary contact for such Party in connection with matters related to the implementation of theManufacturing Process, in connection with activities to be performed under the Tech TransferAgreement and/or Commercial Production of the Bulk Drug (as defined in Section 5.1 below). Eachsuch 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 byproviding 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
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meeting reports which summarily address topics discussed, delegation of work, schedules anddecisions of such committee or team, which shall be signed by the authorized representatives of theParties; provided no operating committee herein may materially amend this Agreement, includingwithout 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 6.3without entering into a written agreement signed by both Parties that specifically states that theParties are amending this Agreement.               (b) In the event that the JPT is unable, despite the good faith efforts of all members, toresolve within five (5) business days a disputed issue that is within the purview of the JPT, thedisputed issue shall be referred immediately by the JPT to the Technical Committee. In the eventthe 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 thedispute 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 Agreementand/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 LeadQuality Representative on the JQT (each, as defined in the Quality Agreement), or their respectivedesignees, 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-processtesting), 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 extentnot otherwise provided in this Agreement, the Tech Transfer Agreement, the Quality Agreement and/orrequired by cGMP standards based on both industry precedents and Genentech’s standards), theParties will discuss in good faith and mutually agree on the costs to effect such implementation ofsuch decision and Genentech shall pay such mutually agreed costs; and                    (2) With respect to all other issues relating to quality (not otherwise specified in Section3.1.4(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 decisioncould jeopardize the quality of the Bulk Drug, including without limitation the testing or controlthereof, [*] such final decision shall be immediately referred to the Executive Steering Committeefor reconciliation; provided, if time does not allow, as soon as possible thereafter. TheExecutive Steering Committee shall seek to reconcile such action within five (5) days in order toensure that such disagreement over such issue will not be repeated in the future. If the ExecutiveSteering Committee cannot reconcile such final decision within such five (5) day period, eitherParty shall have the right to request that such final decision be referred to the disputeresolution provisions of Article 22. [*] will result in additional cost to Lonza to implement (tothe extent not otherwise expressly provided in this Agreement, the Tech Transfer Agreement and/orthe Quality Agreement), the Parties will discuss in good faith and mutually agree on the timelinesand costs to effect such implementation of such decision (with the expectation that suchimplementation shall be effected as soon as possible) and Genentech shall pay such mutually agreedcosts 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/orthe Tech Transfer Agreement (but subject to Section 3.1.4(c) above), with respect to anydisagreement over the implementation of the Manufacturing Process which could reasonably affectProduct 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 othermodifications to the Lonza Facility required to implement the Manufacturing Process) and themanufacture of the Product during each Campaign (including any related activities immediatelypreceding or following each such Campaign), including without limitation the related managementprocesses 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 andtroubleshooting decisions, and any other related matters to manufacturing of the Product, theProject Team Leaders (or their respective designees) will in good faith attempt to mutually resolvesuch disagreement in a timely fashion; provided, if delay in making a decision could jeopardize themanufacture of Bulk Drug, including without limitation a delay that could affect the ability of theParties to timely meet a target date and/or milestone set forth in
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Section 4.7 and/or 6.3 herein, [*] such final decision shall be immediately referred to theExecutive Steering Committee for reconciliation; provided, if time does not allow, as soon aspossible thereafter. The Executive Steering Committee shall seek to reconcile such action within 5days in order to ensure that such disagreement will not be repeated in the future. If theExecutive Steering Committee cannot reconcile such final decision within such 5 day period, eitherParty shall have the right to request that such final decision be referred to the disputeresolution 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 detailin the Tech Transfer Agreement and Quality Agreement, in order to expedite the implementation ofthe Tech Transfer Agreement and to coordinate, expedite and guide the Development Runs andQualification Runs, Genentech may elect at its discretion to have up to [*] of its personnelon-site at the Lonza Facility, and such additional personnel in such numbers as may be agreed to bythe Parties or as otherwise required to implement a decision made pursuant to Section 3.1.4. Allsuch personnel will coordinate closely with Lonza in order to minimize impact on other Lonzaoperations. Unless otherwise agreed by Lonza, such Genentech personnel shall have access only tothose portions of the Lonza Facility reasonably related to the technology transfer andimplementation of the Manufacturing Process, cafeterias, designated office space and public areas.          3.2.2 After Commencement of Commercial Production. As further described in theQuality Agreement, Genentech shall have the right to designate at its discretion up to [*] of itspersonnel (and such additional personnel in such numbers as may be agreed to by the parties or asotherwise required to implement a decision made pursuant to Section 3.1.4) to be present in theLonza 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 thisAgreement. While at the Lonza Facility, such representative of Genentech shall have access to allareas 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, andshall comply with all applicable Lonza policies and procedures.          3.2.3 Office Space. With respect to any Genentech personnel assigned by Genentech tobe present at the Lonza Facility, Lonza shall provide (a) reasonable access to the Lonza Facilityduring all operational hours[*]     3.3 Lonza Personnel at the Lonza Facility.It is understood that Genentech isentering into this Agreement, the Tech Transfer Agreement and the Quality Agreement in relianceupon 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 withsufficient technical expertise and reasonably acceptable to Genentech, to perform its obligationsunder this Agreement, the Tech Transfer Agreement and the Quality Agreement, including withoutlimitation the implementation of the Manufacturing Process, manufacture, storage and qualitytesting of the Bulk Drug at the Lonza Facility. Without limiting any other provision of thisAgreement, so long as such personnel remain employed by Lonza, Lonza will use CommerciallyReasonable 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 thatin order to enable them to fulfill their respective obligations under this Agreement, they haveentered into the Tech Transfer Agreement and, pursuant thereto, jointly developed a plan for thetransfer 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 theManufacturing Process for the Bulk Drug and the Bulk Drug Specifications. The Tech TransferAgreement sets forth the specific responsibilities of the Parties in connection with technologytransfer and implementation of the Manufacturing Process at the Lonza Facility, and themodifications to the Lonza Facility needed to implement the Manufacturing Process at the LonzaFacility, including a timeline, budget and statement of work jointly developed by the Parties. TheTech Transfer Agreement includes reasonable milestones for the transfer of technology,
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exchange of information, and implementation of the project, reasonable timelines for achievingsuch milestones, and criteria for assessing the progress and success of the project as itprogresses.          4.1.2 Commercially Reasonable Best Efforts; Cooperation; Tech Transfer Agreement.Lonza shall use Commercially Reasonable Best Efforts to complete its responsibilities in a timelymanner 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 assistGenentech in its efforts to perform its obligations under the Tech Transfer Agreement and Section4.1 of this Agreement.          4.1.3 Delivery of Working Cell Bank. By not later than the applicable deliverydeadline set forth in the Tech Transfer Agreement, Genentech shall deliver to Lonza the WorkingCell Bank, which shall conform to Genentech’s applicable release criteria, as set forth inGenentech’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 toSection 3.1.4 hereof, the JPT shall have the authority to modify or supplement attachments andexhibits to the Tech Transfer Agreement as necessary to ensure implementation of the ManufacturingProcess in the Lonza Facility in a timely manner. In addition, Genentech may, in its solediscretion, modify the Manufacturing Process as it deems appropriate or useful to ensureimplementation of the Manufacturing Process in the Lonza Facility in a timely manner. To theextent such modifications are directed to implementing Genentech’s Manufacturing Process (as suchprocess existed as of the Effective Date) at the Lonza Facility, it is understood and agreed by theParties that such modifications are contemplated by the Tech Transfer Agreement and the QualityAgreement and the payments set forth in Section 6.3 and 6.4 herein. To the extent Genentech electsto make any other modifications to Genentech’s Manufacturing Process, and such modifications wouldresult in a material change and cost to the Parties to implement, such modifications shall besubject to the provisions of Article 8.     4.3 Facility Modifications and Improvements.Lonza shall use Commercially ReasonableBest Efforts to: (a) make facility modifications as required to conduct the Manufacturing Processat the Lonza Facility, and (b) procure, engineer, install, scale-up, test and validate theequipment and systems necessary to conduct the Manufacturing Process at the Lonza Facility, in eachcase as described in, and in accordance with, the Tech ‘Transfer Agreement, in each as determinedby Genentech in its reasonable discretion.     4.4 Initial Runs and Batches.          4.4.1 Development Runs. Lonza shall use Commercially Reasonable Best Efforts toperform Development Runs at such size and in such number sufficient to produce [*] as set forth inthe Tech Transfer Agreement. Lonza will provide the Product resulting from such SuccessfulDevelopment Runs and Development Batches to Genentech, at no cost other than the cost specified inSection 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 maymake whatever further use of such Development Runs, including, without limitation, any Producttherefrom, as it shall determine, or direct Lonza, at Lonza’s cost, to dispose of the material fromsuch Development Runs. It is understood that if Lonza commences a Development Run, and delivers 3Successful Development Runs prior to finishing such commenced Development Run, Genentech will payfor such commenced Development Run (subject to not having to pay for more than four (4) DevelopmentRuns)**.**          4.4.2 Validation and Qualification Batches. Once scale-up of the ManufacturingProcess is completed at the Lonza Facility, and Genentech has reviewed and approved thedeliverables specified in Section 4.4.1 above, Lonza shall use Commercially Reasonable Best Effortsto perform all required process validation described in Section 12.3 and shall performQualification Runs sufficient to produce, at commercial scale, [*] as set forth in the TechTransfer Agreement in order to document the operability and reproducibility of the ManufacturingProcess and permit the Parties to complete and file the regulatory documents described in Section4.6 hereof. Lonza shall provide the Product and Bulk Drug resulting from such Qualification Runsand 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 thedelivery terms set forth in Section 5.5 hereof; provided, Genentech shall have [*] Genentech maymake whatever further use of such Qualification Batches, including, without limitation, any Producttherefrom, as it shall determine appropriate.
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     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 beincluded in the Tech Transfer Agreement, which raw material specifications may be amended from timeto time by Genentech at its reasonable discretion[*] for raw materials used in the manufacture ofthe 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 shallprocure [*] maintain and store, such amounts of raw materials and components as required, includingas agreed by the Parties an adequate supply of safety stock, for the Development Runs andQualification 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 serviceswith no additional mark-up or administrative fees to Genentech; provided, to the extent Lonza isunable to procure such raw materials from the Approved Suppliers for the Development Runs andQualification Runs, Genentech shall provide such raw materials and components to Lonza with noadditional mark-up or administrative fees.          4.5.3 Raw Materials Testing. Lonza shall perform testing and evaluation of the rawmaterials as required by the applicable raw material specifications or Bulk Drug Specifications andcGMP, and otherwise in accordance with the Tech Transfer Agreement, the Quality Agreement andstandard operating procedures to be agreed upon in writing by the Parties.     4.6 Regulatory Matters.Lonza shall use Commercially Reasonable Best Efforts totimely prepare, assist and enable Genentech to obtain and maintain all Regulatory Approvals thatare required to manufacture Bulk Drug at the Lonza Facility and that are required to market andsell in the Territory the Product resulting from the Bulk Drug, including, without limitation, thepreparation, filing and maintenance of supplements to any Lonza existing FDA licenses’, and Lonzashall reasonably assist Genentech to timely prepare, assist and enable Genentech to obtain allRegulatory Approvals that are required to market and sell in the Territory the Product resultingfrom 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, manufacturingand controls sections of the sBLA to be filed by Genentech with FDA. Lonza shall also reasonablyassist Genentech in responding to requests and inquiries from the FDA prior to, during and afterregulatory review periods, including without limitation, providing all data, records and reportsrequested by Genentech relevant to such review periods, and by attending meetings with suchregulatory authorities to the extent Genentech requests for Lonza to participate given its uniqueknowledge or its status as manufacturer of Bulk Drug under this Agreement. Lonza personnel shallalso facilitate pre-approval inspection of the Lonza Facility conducted by such regulatoryauthorities. The assistance to be provided by Lonza under this Section 4.6 shall be provided at noadditional 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 useCommercially Reasonable Best Efforts to complete the modifications specified under Section 4.3 andmake the Lonza Facility ready and available by [*] for Lonza to perform Development Runs andmanufacture Development Batches at such size and in such number as is set forth in the TechTransfer Agreement, as determined by Genentech in its reasonable discretion (the “Phase ACompletion”). If Phase A Completion is not achieved by [*], with respect to each SupplementalBatch Payment to be paid by Genentech pursuant to Section 6.4.3(b), such amount shall be reduced byan amount equal to [*] (i.e., amount to be paid shall equal to [*] and, if Phase A Completion isnot achieved by [*], each Supplemental Batch Payment to be paid by Genentech pursuant to Section6.4.3(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 theforegoing, Lonza agrees to use Commercially Reasonable Best Efforts by [*] to manufacture atcommercial scale and fill the first (1st) Successful Development Lot, as further definedin the Tech Transfer Agreement (the “Development Run Initiation”).          4.7.3 Target Date for Commencement of Qualification Runs. In addition to theforegoing, Lonza agrees to use Commercially Reasonable Best Efforts by [*] to commence manufactureof the first (1st) Qualification
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Batch in at least a [*] as determined by achievement of certain criteria (such criteria to beagreed upon by the Parties) specified in the Tech Transfer Agreement (the “Qualification RunInitiation”).          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 scaleand deliver to Genentech [*] produced from [*] including all appropriate data, records and reportsrelated 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 samplesfrom each of such Qualification Lots by the target date specified in Section 6.3.4, and uses itsCommercially Reasonable Best Efforts to deliver to Genentech all appropriate data, records andreports 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 beSuccessful, Lonza shall be deemed to have “delivered” such Successful Qualification Lots toGenentech by such target date.          4.7.5 Target Date for Enablement of sBLA Filing. In addition to the foregoing, Lonzaagrees to use Commercially Reasonable Best Efforts to prepare, assist and enable Genentech to filethe 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 thechemistry, 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 BestEfforts to prepare, assist and enable Genentech (including, without limitation, those obligationsof Lonza specified in Section 4.6) to obtain by [*] FDA approval for the manufacture of Bulk Drugat the Lonza Facility (the “FDA Approval”).          4.7.7 Termination for Failure to Achieve Certain Target Dates. Without limiting theforegoing, 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 theright to terminate the Agreement in accordance with Section 20.2.3 hereof.     4.8 Manufacturing, Documentation.In accordance with the terms of the Tech TransferAgreement, Genentech shall, by the relevant date that is set forth in the Tech Transfer Agreementas such date may be modified by the JPT, provide to Lonza the Manufacturing Documentation listedwithin exhibits and schedules to the Tech Transfer Agreement, and shall, thereafter, from time totime and in accordance with the timeline set forth in the Tech Transfer Agreement, provide to Lonzasuch additional Manufacturing Documentation as Lonza shall reasonably require in order to implementthe Tech Transfer Agreement and the Manufacturing Process and otherwise perform its obligationsunder this Agreement. In accordance with the terms of the Quality Agreement and cGMP, Lonza shallmaintain a process notebook which maintains a record of the Manufacturing Process as implemented atthe 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 suchProcess Notebook at any time during the Term. Genentech’s obligations under this Section 4.8 shallbe subject to obligations to Third Parties as set forth in written agreements in effect prior tothe Effective Date of this Agreement. In the event an obligation to a Third Party prohibitsGenentech from rendering such assistance, Genentech shall promptly seek from such Third Partypermission to render such assistance. Such Manufacturing Documentation and Process Notebook shallbe the sole property of Genentech, and shall be treated in all respects as Genentech ConfidentialInformation. The Process Notebook, including any copies or any portion thereof, shall be deliveredto Genentech upon expiration or termination of this Agreement.     4.9 Product Substitution.Genentech shall have the right at any time prior to [*] tosubstitute 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 ofsimilar 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 productsubstitution.**ARTICLE 5.****RUNS; PRODUCTION AND SUPPLY; DELIVERIES**
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     5.1 Commercial Production of Bulk Drug.[*] that comply with cGMP and the Bulk DrugSpecifications, the Target Yield and the warranties in Section 7.1, and the execution and deliveryby Lonza of the related Certificates of Compliance and Certificates of Testing, “CommercialProduction” of Bulk Drug will commence under this Agreement, with the first Commercial Runperformed after Phase B Completion and prior to FDA Approval. After Commercial Production hascommenced, changes to the Manufacturing Process shall be made as set forth in Article 8 hereof andthe Quality Agreement or as the Parties may otherwise agree in writing. Issues relating to qualityof Product shall be resolved in accordance with the Quality Agreement.     5.2 Efforts.          5.2.1 Commercially Reasonable Best Efforts. Lonza shall use Commercially ReasonableBest Efforts to conduct Commercial Production and deliver Bulk Drug in the amounts and time framespecified in this Agreement.          5.2.2 Minimum Runs and Campaign Period. Notwithstanding anything to the contrary inthis Article 5, but subject to the other terms of this Agreement, in each calendar year during theTerm, Lonza shall make available the Lonza Facility during each Campaign and perform at least thenumber of Runs set forth in Exhibit A during such Campaign, as further defined as the “CampaignMinimum “ and “Campaign Minimum Run” for such calendar quarter on Exhibit A attached hereto andincorporated 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 enteringinto this Agreement, the Tech Transfer Agreement and the Quality Agreement in reliance upon Lonzabeing fully prepared and able to conduct manufacturing of the Bulk Drug during each Campaign. Inorder 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 outfittedwith 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 tobe performed on equipment and tools within the Lonza Facility has been performed prior to suchCampaign; (iv) that the Lonza Facility is fully and adequately staffed with all supervisors,engineers, technicians, inspectors, and other dedicated personnel necessary, and with sufficienttechnical expertise and acceptable to Genentech, to perform Commercial Production, including anyquality testing of Bulk Drug produced (in addition, the Parties shall mutually agree upon each ofthe primary and secondary Lonza key personnel to be assigned to perform the Commercial Productionduring each Campaign, and once agreed, Lonza may not change such assignment without Genentech’smutual agreement); (v) that Lonza has adequate stock of raw materials on hand to perform all Runsrequired 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 toreview and/or approve an activity hereunder obligate Genentech to do so, nor shall its exercise orfailure 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 thisAgreement 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 “ProductManufacturing Forecast” which shall commence with the first day of the next calendar quarter andestablish, on a yearly basis, for the remainder of the Term, the dates on which Campaigns are to beconducted, the number of Runs to be performed and the quantity of Bulk Drug reasonably expected tobe manufactured, released and supplied to Genentech, all within the ranges set forth in Exhibit Ahereto (except as otherwise agreed pursuant to Section 5.7 hereof). The Product ManufacturingForecast shall be used for joint planning purposes and shall be non-binding unless otherwisespecified herein, and may be amended by the Parties from time to time as the Parties deemappropriate. Beginning [*] the anticipated commencement of Commercial Production (or such otherdate as agreed upon by the Parties in writing), each Product Manufacturing Forecast shall bebinding for the first [*] of the next calendar quarter following such forecast, and non-binding forthe remainder of the Term, as further described below. Beginning with the initial binding ProductManufacturing Forecast, the forecasts for Bulk Drug and Campaigns within the first [*] months ofthe next calendar quarter following each such rolling Product Manufacturing
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Forecast shall constitute a Bulk Drug Commitment and shall be binding upon the Parties andcannot be changed except upon mutual written consent of the Parties. By way of example only, whenthe rolling Product Manufacturing Forecast for [*] is issued, the twelve (12)-month period coveredby 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 writtenpurchase 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 suchfrequency as otherwise mutually agreed), in person or via telephone, to review and discussproduction, supply and logistics operations for the next three (3) month period, including: (i) thedates on which Campaigns shall occur, (ii) dates or approximate dates on which Runs will start andbe 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, andrelated 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 determinedelivery dates and a shipping schedule for deliveries of Bulk Drug under this Agreement, and shallestablish a written “Delivery Schedule” as a part of the Product Manufacturing Forecast and therelated Bulk Drug Commitment.          5.4.2 Delivery Dates. For each Run, the delivery date respectively set forth in theDelivery Schedule will be the “Delivery Date” for such Run, unless the Parties agree on analternative 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 BulkDrug is delivered to Genentech’s Designated Carrier at Lonza’s Facility in accordance with Section5.5 hereof, or the actual date of delivery to Genentech of the records specified in Section 10.2.1for 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 Section5.8 hereof, Genentech shall purchase all Bulk Drug that complies with and conforms to cGMP, theBulk Drug Specifications, the Target Yield and the warranties set forth in Section 7.1 up to theapplicable Campaign Maximum set forth in Exhibit A hereto (except as otherwise agreed pursuant toSection 5.7 hereof).          5.4.4 Shortages; Shortfalls; Delivery Delays. If at any time during the Term, Lonzais 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/ordelay, 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 provideGenentech with additional Commercial Runs to meet outstanding Bulk Drug Commitments under thisAgreement, including, without limitation, extending the then existing Campaign and/or schedulingand 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 anysuch shortfall, shortage and/or delay is over. It is understood and agreed that nothing hereinthis Section 5.4.4 shall release Lonza from its obligation to promptly supply Bulk Drug toGenentech 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 tomeet the Annual Minimum Success Rate and/or Target Yield for a calendar quarter (as furtherdescribed on Exhibit B attached hereto and incorporated herein): (i) at Genentech’s request, Lonzashall discuss in good faith with Genentech a reduction in the Purchase Price for all CommercialBatches accepted by Genentech in accordance with Section 5.4.6 for such calendar quarter (thedetermination of such reduction to be based upon the actual success rate achieved over suchcalendar quarter, including without limitation the actual Target Yield achieved in each CommercialLot produced in such calendar quarter), and (ii) Genentech shall have the right to terminate theAgreement 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, theBulk Drug Specifications, the Target Yield and the warranties in Section 7.1.
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          5.4.6 Acceptance of Bulk Drug. Lonza shall deliver to Genentech samples of allBatches manufactured under this Agreement, as and when Batches are manufactured, and otherwise inaccordance with the Quality Agreement and applicable standard operating procedures approved by bothParties. Lonza shall also provide the related Batch Record and other Batch documentation describedin the Quality Agreement for each Batch of Bulk Drug. Upon receipt of samples of a particularBatch of Bulk Drug together with the related Batch Record and other Batch documentation (as setforth in the Quality Agreement or as otherwise reasonably requested by Genentech), Genentech shallperform 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 QualityAgreement or Section 9.1 hereof, such testing and review shall be completed within [*] afterGenentech’s receipt of samples of such Batch together with the related Batch Record and other Batchdocumentation. Any investigation shall be initiated and conducted in accordance with Genentech’sapplicable standard operating procedure. Subject to Genentech’s rights to make claims underArticle 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 beenreleased by Genentech pursuant to applicable release testing standard operating protocols asdescribed in the Quality Agreement.     5.5 Delivery Terms.Lonza shall deliver Bulk Drug, suitably packed in agreed uponshipping containers, to Genentech’s [*] at which time title to and risk of loss for the Bulk Drugshall transfer to Genentech. Genentech shall have the right to designate the carrier. Genentechshall undertake and arrange for shipment of Bulk Drug within [*] after the Acceptance Date relatedthereto. Lonza shall provide storage for such Bulk Drug at no charge during this period. Prior toshipping any Bulk Drug, Genentech shall obtain all appropriate approvals and consents of anygovernmental authority necessary for the transportation or shipment of such Bulk Drug. Lonza shallcomply 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 4.4.2hereof), and Non-Conforming Bulk Drug (see Section 9.4) shall also be subject to the delivery termsset forth in this Section 5.5. Genentech shall procure, at Genentech’s cost, and provide to Lonzasufficient quantities of freeze tanks for shipment of Bulk Drug from Lonza’s Facility to GenentechDesignated Carrier. Lonza shall maintain such freeze tanks in compliance with the terms of theQuality Agreement. [*] Such freeze tanks shall be deemed to be “Portable Equipment” and shall besubject to Section 15.2 hereof.     5.6 Storing, Packaging and Shipping.Lonza shall store, package, label and ship theBulk Drug according to the Bulk Drug Specifications and according to packaging procedures mutuallyagreed 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 duringthe [*] 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 providedfor under this Agreement.          5.7.2 Additional Capacity Made Available After Calendar Year 2004. If at any time inany year after the [*] and during the Term, additional capacity becomes available at the LonzaFacility 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 additionalcapacity is available during the Term, and in each case, [*]to Genentech as provided for under thisAgreement.          5.7.3 New Capacity. Each and every time in any year during the Term, if new capacitybecomes available at the Lonza Facility for commercial production, as a result of Lonza installingadditional bioreactors at the Lonza Facility (other than that capacity specified in the TechTransfer Agreement), Genentech [*]          5.7.4 Notice. Lonza shall promptly notify Genentech in writing upon any suchadditional or new capacity becoming available, and provide Genentech with all informationreasonably useful for Genentech to make a decision regarding such additional or new capacity.
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               (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 providewritten notification to Lonza regarding [*]               (b) With respect to any additional or new capacity subject to Genentech’s [*] (i) if suchadditional or new capacity will not be available until [*] after such notice from Lonza, Genentechshall have [*] days following its receipt of all such information to review such information andprovide written notification to Lonza regarding its decision to negotiate with respect to suchadditional 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 suchinformation to review such information and provide written notification to Lonza regarding itsdecision to[*] with respect to such additional or new capacity. With respect to any additional ornew capacity subject to [*], during said [*] or [*] day period, as applicable, Lonza shall be freeto talk to any Third Party, provided Lonza does not enter into a written agreement with any ThirdDuring 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 ofpursuant to Section 5.7.4 and is subject to:               (a) Genentech’s [*] if written notice is given that Genentech does not want to accept suchadditional 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 specifiesin 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 suchadditional or new capacity, or written notice is not given by Genentech within said [*] or [*] dayperiod, as applicable, Genentech will have [*] for such additional or new capacity (or, asapplicable, 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 writtenagreement with Genentech on such terms.          5.7.6 [*]. It is understood and agreed to by the Parties, if any existing capacity or newcapacity becomes available at the Lonza Facility during the Term, use of such capacity would firstbe subject to the provisions of Section 5.7.5, and then subject to the provisions of this Section5.7.6. [*]               (a) Genentech Right of Last Refusal on Existing Capacity. Lonza agrees that duringthe Term, Lonza shall not enter into a written agreement to use any existing capacity at the LonzaFacility to manufacture for itself or any Affiliate or Third Party, any [*] Product, without firstproviding written notice of and offering to enter into a written agreement with Genentech on suchterms. If, at any time(s) during the Term, Lonza receives and is ready to accept a bona-fidewritten offer from a Third Party or Affiliate, negotiated in good faith and at arms-length andwhich offer contains all material terms, to use any existing capacity at the Lonza Facility tomanufacture an [*] Product, Lonza shall provide written notification to Genentech of such offer andall 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 necessaryto remove the name of the Third Party and the identity of the [*] Product). Genentech shall havethirty (30) days following its receipt of all such information to review such information andprovide written notification to Lonza regarding its decision to accept such capacity. If Genentechprovides written notice to Lonza within such thirty (30) day period of its acceptance of suchcapacity, Genentech shall have the right to use such capacity to manufacture Bulk Drug for so longas such existing capacity is available during the Term and under the same terms and conditions ofthis Agreement [*] shall prevail with respect to such capacity). If written notice is given thatGenentech does not want to accept such additional capacity, or written notice is not given byGenentech within said thirty (30) day period, Genentech will have waived its right to accept suchcapacity, and Lonza will be free to provide such capacity to such Third Party as long as the termsof the written agreement with such Third Party are not [*] to such Third Party than the terms lastoffered to [*], without first offering to enter into a written agreement with Genentech on suchterms.               (b) Exclusivity on New Capacity.
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                    (i) If Lonza elects to build any new capacity at the Lonza Facility, Lonza agrees that duringthe Term, Lonza shall not use such new capacity to manufacture, either for commercial supply orclinical supply, for itself or any Affiliate or Third Party, any [*],Product. Notwithstanding theforegoing, and subject to the other provisions of this Agreement, this Section 5.7.6(b) does notprohibit Lonza from manufacturing the Product for ultimate sale by Roche outside the United Statesand Canada in accordance with the terms of this Agreement, or for Roche as otherwise agreed upon inwriting by the Parties.                    (ii) Subject to the foregoing, if, at any time(s) during the Term, Lonza receives a bona-fidewritten offer from a Third Party or Affiliate, negotiated in good faith and at arms-length andwhich offer contains all material terms, to use any new capacity at the Lonza Facility tomanufacture an [*] Product, Lonza may provide written notification to Genentech of such offer andrequest 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 forGenentech to make a decision regarding such capacity (including without limitation, a copy of theagreed upon terms of such offer, redacted as necessary to remove the name of the Third Party andthe identity of the [*] Product).                    (iii) Genentech agrees to consider in good faith each such written request by Lonza forGenentech to accept and use such capacity, and, in considering such request, Genentech shall takeinto account the current business relationship of the Parties and the product life cycle stage ofits Product.                    (iv) Subject to the foregoing, Genentech may, at its sole discretion, either elect or rejectsuch request to use such capacity, and (1) if Genentech elects to accept such request to use suchcapacity, Genentech may use such capacity for so long as such new capacity is available during theTerm, and on terms and conditions [*]to Genentech as provided for under this Agreement ([*] of thisAgreement), or (2) if Genentech rejects such request to use such capacity, such capacity shallremain subject to Section 5.7.6(b)(i).               (c) Definition of [*] Products. As used herein, [*]. To the extent anyproduct is substituted for the Product pursuant to Section 4.9, such obligations under this Section5.7.6 shall apply as well to any protein(s) or peptide(s) (including any fragment thereof) whosemechanism of action is initiated by binding to the target that is the subject of such substitutedproduct.     5.8 Regulatory Approval for Outside the United States.Any time following Phase BCompletion, Genentech may request that Lonza seek EMEA, MHWJ, or other Regulatory Approval toenable Bulk Drug to be sold outside of the United States by Genentech or its designee, includingwithout limitation, Roche and/or Zenyaku Kogyo Co. Ltd. Upon such request, the JPT will meet todiscuss 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 shalldiscuss Roche’s role in such project; provided, however, that the Agreement shall remain betweenthe Parties, and Roche shall not be a Third Party beneficiary hereunder unless otherwise agreed toin writing by the Parties. The supply, purchase and payment provisions of this Agreement would notbe affected by a decision to seek Regulatory Approval outside the United States for the Producthereunder unless otherwise agreed to in writing by the Parties, and Genentech would continue topurchase the Bulk Drug Commitment in accordance with the terms of this Agreement, at least up tothe 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 sellthe Lonza Facility, including without limitation an election to solicit a Third Party, or anelection to consider a solicitation or other inquiry received from a Third Party, to purchase theLonza Facility, on each such occasion, Lonza shall promptly provide written notice to Genentechthereof, and with such notice shall provide to Genentech all information reasonably useful forGenentech 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 withrespect to such proposed sale). Genentech shall have ninety (90) days to review such informationand 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) dayperiod Lonza shall be free to talk to any Third Party with respect to such proposed sale of theLonza Facility, provided Lonza does not enter into a written agreement with any Third Partyregarding such proposed sale of the Lonza Facility until after the end of such ninety (90) dayperiod.
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          5.9.2 Effect of Notice. If written notice is given that Genentech desires to purchasethe Lonza Facility, the Parties shall negotiate in good faith the terms thereof. If written noticeis given that Genentech does not want to purchase the Lonza Facility, or written notice is notgiven by Genentech within said ninety (90) day period, Genentech will have waived its right tonegotiate in good faith with Lonza and to submit a bid for the Lonza Facility and Lonza shall befree to sell the Lonza Facility without restriction to any Third Party; provided, Lonza consummatessuch sale within one (1) year of such written notice by Lonza to Genentech under Section 5.9.1. Anyfinal decision to sell the Lonza Facility will be based on economic and such other considerationsas 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 onlyapplies with respect to the sale of the Lonza Facility, and not with respect to any such sale thatis incidental to a proposed sale of Lonza Group Ltd.**ARTICLE 6.****PAYMENTS**     6.1 Execution Fee.Genentech shall pay Lonza [*] within [*] business days of theEffective Date.     6.2 [Intentionally left blank]     6.3 Milestone Payments.For each Milestone I through VI set forth in this Section 6.3that is completed by the deadline respectively described below, Genentech shall pay the relatedmilestone, within [*]business days of receipt of a correct, undisputed invoice, which may bedelivered 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 payLonza [*] or               (c) If Phase A Completion is not achieved until after [*] but before [*]Genentech shall payLonza [*].          6.3.2 Completion of Milestone II: Development Run Initiation. If Development RunInitiation is achieved by [*], Genentech shall pay Lonza [*].          6.3.3 Completion of Milestone III: Qualification Run Initiation. If Qualification RunInitiation 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 payLonza [*]          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 LonzaFacility 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 [*].
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     6.4 Batch Pricing; Invoicing.          6.4.1 Development Batches. For each Development Batch [*]manufactured by not laterthan [*]and in compliance with this Agreement, and conformance to cGMP, the Bulk DrugSpecifications, 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 manufacturesuch Batch. Such amount shall be the Purchase Price for such Development Batches.          6.4.2 Qualification Batches. For each Successful Qualification Batch [*] manufacturedby not later than [*]and in compliance with this Agreement and conformance to cGMP, the Bulk DrugSpecifications, the Target Yield, and the warranties provided in Section 7.1 hereof, Genentechshall pay Lonza an amount equal to [*] per Batch and, subject to Section 4.5, the Acquisition Costof raw materials used to manufacture each such Batch. Such amount shall be the Purchase Price forsuch 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 DrugSpecifications, the Target Yield, and the warranties provided in Section 7.1 hereof, Genentechshall pay Lonza an amount equal to [*]. Such amount shall be the Purchase Price for suchCommercial Batches.               (b) In addition to the foregoing, subject to Section 4.7.1, with respect to each suchSuccessful Commercial Batch under 6.4.3(a) above, up to a maximum of [*] such Successful CommercialBatches, Genentech shall pay Lonza an amount equal to [*] (the “Supplemental Batch Payment”). Itis understood and agreed, that no such payment shall be due for any Successful Commercial Batchesin excess of such [*] Successful Commercial Batches, including without limitation any additionalBatches 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) aone-time additional payment of [*] upon delivery to Genentech of the [*] Successful CommercialBatch 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 noevent 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 PurchasePrice. In addition, for invoices issued with respect to Section 6.4.2(c), such invoices shall alsoreference a complete list of the Successful Commercial Batches produced, shipped and accepted byGenentech during such calendar year. Amounts due under undisputed correct invoices shall be dueand payable in U.S. currency within thirty (30) days after receipt of such invoice.
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     6.5 Payment Method.All payments due hereunder shall be made by wire transfer from abank in the United States in immediately available funds to a bank in the United States designatedby 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 thisAgreement (or for such longer period of time as may be required by applicable laws andregulations), Lonza shall maintain complete and accurate books, records, documents, and otherevidence of costs, expenses and allowances pertaining to this Agreement and/or the Tech TransferAgreement 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 properlyreflect all costs and expenses incurred by Lonza in connection with this Agreement and/or the TechTransfer Agreement. Genentech, acting through its independent public accountants of recognizednational standing selected by Genentech and reasonably acceptable to Lonza, shall have a right toexamine and audit such Records once per Campaign, upon at least twenty (20) days’ prior writtennotice.**ARTICLE 7.****MANUFACTURER PRODUCT WARRANTIES**     7.1 Product Warranties by Lonza.Lonza hereby warrants to Genentech that the BulkDrug, 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 Genentechand approved by Genentech based on the Genentech standard operating procedures provided byGenentech 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 extentarising through or as a result of the acts or omissions of Lonza, its Affiliates or theirrespective agents.     7.2 Lonza Facility.Lonza hereby warrants that it owns or lawfully controls the LonzaFacility, and that, provided the Manufacturing Process is successfully implemented in accordancewith the Tech Transfer Agreement, it has sufficient manufacturing capacity to enable Lonza tomanufacture Bulk Drug throughout the Term in quantities sufficient to fulfill, in each calendaryear, the Campaign Minimums and Campaign Minimum Runs for such year as set forth in Exhibit Ahereto, in accordance with this Agreement. Lonza hereby covenants that it will use CommerciallyReasonable Best Efforts to ensure that the Lonza Facility shall be maintained in accordance withcGMP and in such condition as will allow Lonza to manufacture the Bulk Drug in compliance with andconformance to cGMP and the Bulk Drug Specifications.
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     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, ANYWARRANTY 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 expresslyset forth to the contrary in the Quality Agreement, in the event that (i) Genentech is required, ordesires, to change the Bulk Drug Specifications or the Manufacturing Process Lonza shall useCommercially 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 provideinformation 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 suchchange(s). The notification and approval procedure shall be in accordance with standard operatingprocedures (i.e., change control procedures) agreed upon by the Parties from time to time. TheParties shall hold a JPT meeting in a timely manner with appropriate advisors invited to discusssuch changes as appropriate.               (b) Prior to implementation of any such material change(s) to the Bulk Drug Specifications orManufacturing Process, the Parties agree to negotiate in good faith in an attempt to reachagreement on (i) the new Purchase Price (higher or lower) for any Bulk Drug manufactured under thisAgreement by Lonza which embodies such material change, giving due consideration to the effect ofsuch material change on Lonza’s direct manufacturing costs for Bulk Drug, and (ii) any otheramendments 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 anestimate of the reasonable and necessary expenses that would be incurred by Lonza as a result ofthe 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 capitalexpenditure costs. If such change(s) are implemented, Genentech will reimburse Lonza for thereasonable and necessary expenses as agreed upon in advance and incurred by Lonza as a result ofany such change(s) to the Bulk Drug Specifications or Manufacturing Process, including, but notlimited to, reimbursing Lonza for its validation and analytical development costs and capitalexpenditure costs.               (d) Lonza shall use Commercially Reasonable Best Efforts to promptly accommodate changesdescribed in Section 8.1 hereof in light of Lonza’s facilities and resource constraints and currentoperations. Lonza shall cooperate with Genentech in good faith to implement all agreed uponchanges to the Bulk Drug Specifications or Manufacturing Process in accordance with the agreed uponschedule. During the pendency of Lonza implementing any such changes to the Manufacturing Processor Bulk Drug Specifications, Lonza shall, at Genentech’s written request, produce and Genentechshall purchase Bulk Drug in accordance with the terms of the Agreement.               (e) If any such changes to the Bulk Drug Specifications or Manufacturing Process rendersobsolete 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 creditor 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 orsupplies, as the case may be, so rendered obsolete or unusable, not to exceed the amount of suchraw materials, components or supplies which would have been required for Lonza to manufacture andsupply the total quantity of Bulk Drug specified in Bulk Drug Commitments outstanding under thisAgreement.               (f) The notification and formal approval procedure for those changes to the Bulk DrugSpecifications or Manufacturing Process approved by the Parties under this Section shall be inaccordance with the Quality Agreement and standard operating procedures (i.e., change controlprocedures) agreed upon in writing by Genentech and Lonza from time to time.
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     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 QualityAgreement and/or the Tech Transfer Agreement, Lonza shall not change the Bulk Drug Specificationsor the Manufacturing Process except with Genentech’s prior written consent, which consent Genentechmay grant in its sole discretion.     8.3 Vendor or Supplier Changes.Notwithstanding anything to the contrary in thisAgreement (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 themanufacture 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 Batchor the related Batch Record and other Batch documentation specified in Section 10.2.1 (e.g., BatchRecords, 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 thedecision is to reject the Batch, Genentech will have an additional five (5) days to write up andcommunicate 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 discoveryof such latent defect, but in no event later than one (1) year after delivery to Genentech’sDesignated Facility, which notice shall specify the manner in which such Bulk Drug fails to conformto any warranty and shall be accompanied by any test results or reports evidencing suchnon-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 inthis Section 9.1 of a Genentech decision to investigate whether a potentially Non-Conformingshipment 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 investigatingand resolving such potentially Non-Conforming shipment, which investigation shall be completed inaccordance 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 theabsence of such agreement, by a mutually acceptable qualified independent Third Party whose feesshall be paid by the non-prevailing Party) that either (i) there is no nonconformity, in which caseGenentech shall pay to Lonza the Purchase Price for such Bulk Drug, or (ii) there is nonconformitybut the nonconformity was not caused by Lonza (or its agents), in which case Lonza shall have noliability to Genentech with respect thereto, and Genentech shall pay to Lonza the Purchase Pricefor such Bulk Drug.     9.3 Lonza Liability; Replacement of Product.If it is determined by agreement of theParties (or in the absence of such agreement, by a mutually acceptable qualified independent ThirdParty whose fees shall be paid by the non-prevailing Party) that the nonconformity was caused byLonza (or its agents), at Genentech’s written request, Lonza shall as soon as practicable useCommercially Reasonable Best Efforts to replace such Non-Conforming Bulk Drug with conforming BulkDrug, at no additional, cost to Genentech except for payment of the Purchase Price for thereplacement conforming Bulk Drug, which shall be payable as follows: if Genentech previously paidthe Purchase Price for the Non-Conforming Bulk Drug, then Lonza shall promptly and in any eventwithin thirty (30) days credit such amount to Genentech on the next invoice (or, at Genentech’soption, Genentech may set off such amount against amounts owed to Lonza under this Agreement), andGenentech shall pay the Purchase Price for the replacement conforming Bulk Drug; and, if Genentechdid not previously pay the Purchase Price for the Non-Conforming Bulk Drug, then Genentech shallpay the Purchase Price for the replacement conforming Bulk Drug; provided, however, Genentech shallhave no obligation to pay Lonza for replacement Conforming Bulk Drug which is not delivered by adate acceptable to
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Genentech (such date to be mutually agreed in writing by the parties following Genentech’swritten 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 ofNon-Conforming Bulk Drug pursuant to Section 9.3, Genentech agrees that it shall not dispose of orallow such Bulk Drug to be disposed of without written prior notification to Lonza. Disposition ofNon-Conforming Bulk Drug shall be determined in accordance with the provisions of the QualityAgreement.**ARTICLE 10.****MANUFACTURING AUDITS; CERTIFICATE OF COMPLIANCE;****AND REGULATORY MATTERS**     10.1 Manufacturing Audits.Genentech shall have the right to perform, directly orthrough its representatives, cGMP compliance audit [*] pre-approval inspection audits, For CauseAudits, and additional follow-up audits Genentech reasonably believes is necessary as a result ofthe findings of any of the foregoing audits, all in accordance with the audit provisions set forthin the Quality Agreement. During such audits, personnel of Genentech or its representatives shallhave access only to all public areas (including cafeteria’s) and those areas that are directlyrelated 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 representativesshall 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 ofBulk Drug, Lonza shall furnish to Genentech the Batch Records and Lonza’s Release Documentationdescribed in the Quality Agreement, including, without limitation, a Certificate of Testing, aCertificate of Compliance and a summary (in a format to be agreed upon by Genentech and Lonza) ofany deviations or investigations that occurred during the manufacturing or testing of the Bulk Drugthat is part of such shipment. The provisions set forth in the Quality Agreement regardingdeviations 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 timeperiods required by applicable laws and regulations of all regional, national, federal, state andlocal regulatory agency in the jurisdictions where the Product will be sold. Lonza agrees that, inresponse to any complaint, or in the defense by Genentech of any litigation, hearing, regulatoryproceeding or investigation relating to Bulk Drug, Lonza shall make available to Genentech suchLonza 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 anycomplaints relating to the Product to the FDA and any other regulatory authorities, including, butnot limited to, complaints relating to the manufacture of the Product and adverse drug experiencereports. Genentech shall maintain complaint files in accordance with cGMP. Lonza shall provideGenentech with a copy of any complaints received by Lonza with respect to the Product in accordancewith the Quality Agreement and standard operating procedures to be agreed upon by Genentech andLonza from time to time. Genentech shall have responsibility for responding to all complaints, andfor promptly providing Lonza with a copy of any responses to complaints relating to the manufactureof the Product. Lonza shall use Commercially Reasonable Best Efforts to respond to requests fromGenentech for information in Lonza’s possession that is necessary for Genentech to respond tocomplaints 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 shallimmediately and within at least three (3) business days notify the other Party in writing of, andshall provide the other Party with
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copies of, any correspondence and other documentation received or prepared by such Party inconnection with any of the following events: (i) receipt of a regulatory letter, Warning Letter, orsimilar 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 inspectionsapplicable to any Lonza Facility to the extent associated with Lonza’s activities under thisAgreement; (ii) any recall, market withdrawal or correction of any Batch of Bulk Drug or resultingFinished Product; and (iii) any regulatory comments related to the manufacture of Bulk Drug orresulting Finished Product requiring a response or action by a Party.          10.4.2 Regulatory Correspondence Requiring a Lonza Response. In the event Lonzareceives any regulatory letter or comments from any regional, national, federal, state or localregulatory authority in the Territory directed to its manufacture of Bulk Drug requiring a responseor action by Lonza, including, but not limited to, receipt of a Form 483 (InspectionalObservations) 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 responserelated to Lonza’s manufacture of Bulk Drug and will cooperate fully with Lonza in preparing suchresponse. Lonza shall provide Genentech with a copy of each such response (redacted to removeinformation not related to the manufacture of Bulk Drug or Lonza’s other obligations under thisAgreement) for Genentech’s review and comment prior to Lonza’s submission of its detailed writtenresponse. Lonza shall give all due consideration to any Genentech comments to each such proposedLonza response provided Genentech timely responds. Likewise, in the event Genentech receives anyregulatory letter or comments from any regional, national, federal, state or local regulatoryauthority in the Territory directed to the manufacture of Bulk Drug at the Lonza Facility requiringa 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 orpossession, promptly provide Genentech with relevant data or information sufficient for Genentechto prepare any response related to the manufacture of Bulk Drug and will cooperate fully withGenentech in preparing such response. Genentech shall provide Lonza with a copy of each suchresponse (redacted to remove information not related to the manufacture of Bulk Drug at Lonza’sFacility or Genentech’s obligations under this Agreement) for Lonza’s review and comment prior toGenentech’s submission of its detailed written response. Genentech shall give all dueconsideration to any Lonza comments to each such proposed Genentech response provided Lonza timelyresponds.     10.5 Inspections; Non-Compliance; Failure to Manufacture.          10.5.1 Inspections. In the event the Lonza Facility is inspected, or Lonza isnotified 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 BulkDrug, Lonza shall notify Genentech within twenty-four (24) hours after receipt of notice of suchinspection, and shall supply Genentech with copies of any correspondence or portions ofcorrespondence which relate to Bulk Drug. Genentech may send, and upon the request of Lonza shallsend, representatives to the Lonza Facility to participate in any portion of such inspection whichis 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 resultof an inspection described in Section 10.5.1 above, that Lonza is not in compliance with applicablelaws or regulations or otherwise not in compliance with cGMP with respect to the manufacture ofBulk Drug, Lonza shall at its expense use Commercially Reasonable Best Efforts to cure any suchnon-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 FinishedProduct is the subject of a recall, market withdrawal or correction. Genentech shall (i) bear thecost of and be responsible for conducting all recalls, market withdrawals or corrections of BulkDrug or Finished Product, (ii) remain obligated to pay Lonza the Purchase Price for the Bulk Drugrecalled or used to make such recalled Finished Product (as long as it is not Non-Conforming BulkDrug), and (iii) reimburse Lonza for its direct out-of-pocket expenses related to the recall, ifany. Notwithstanding the foregoing, to the extent such recall, market withdrawal or correction wascaused by Lonza’s breach of any of its warranties set forth in Article 7 hereof, Lonza shall creditGenentech for all of the Purchase Price for the Bulk Drug recalled or used to make such recalledFinished Product and shall reimburse Genentech for all of Genentech’s reasonable out-of-pocketexpenses directly related to the recall, if any. For the avoidance of doubt such expenses shallnot, except
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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 soleauthority for, conducting any recalls, market withdrawals or corrections with respect to theProduct in the Territory.**ARTICLE 12.****QUALITY ASSURANCE; QUALITY CONTROL; VALIDATION; STABILITY**     12.1 Responsibility for Quality Assurance and Quality Control.Responsibility forquality assurance and quality control of Bulk Drug shall be allocated between Genentech and Lonzaas set forth in the Quality Agreement and in standard operating procedures agreed upon in writingby Genentech and Lonza from time to time. In general, (a) Lonza shall be responsible forperforming certain in-process testing and selected acceptance testing on the Bulk Drug as set forthin the Tech Transfer Agreement and the Quality Agreement, and (b) Genentech shall be responsiblefor 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 cGMPvalidation status of the Lonza Facility, as well as the utilities and equipment used in themanufacture of Bulk Drug at the Lonza Facility, and shall make relevant validation reportsapplicable 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 ofand timelines set forth in the Tech Transfer Agreement and Quality Agreement, Genentech shallprovide Lonza with Manufacturing Documentation related to the validation of the ManufacturingProcess, as further described therein, including, without limitation, drafts of the productcomparability 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 andGenentech shall review and approve all process validation protocols and reports. A ProcessQualification Plan (as defined in the Quality Agreement) to be developed by Lonza and approved byGenentech will identify additional process validation related to the technology transfer to Lonza,if required, at commercial scale. Lonza shall provide Genentech with copies of documentationrelated to the validation of the Manufacturing Process, as implemented by Lonza, and validationreports applicable thereto, to Genentech, at Genentech’s reasonable request, on a frequency and ina format to be agreed upon by Lonza and Genentech.     12.4 Change Control.Any changes to the Lonza Facility, utilities, equipment orprocesses used by Lonza in its performance under this Agreement, including those relating to themanufacturing, storage, testing, shipping and cleaning procedures that are used by Lonza in themanufacture of Bulk Drug under this Agreement, shall occur pursuant to change control proceduresagreed upon by Lonza and Genentech and as set forth in the Quality Agreement.     12.5 Stability.Genentech shall conduct all necessary stability testing to complywith cGMP and other applicable regulatory guidelines. Such stability testing shall include testingto validate the lead times for shipment, the shelf life of Bulk Drug and the Bulk DrugSpecifications applicable to shipment, storage and handling of Bulk Drug. Lonza shall prepare allstability samples, and shall sublot stability samples and package and ship stability samples toGenentech, all in accordance with timelines, protocols and procedures agreed upon by Lonza andGenentech 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 WorkingCell Bank that it receives in safe and secure storage under its control in the Lonza Facility atPortsmouth, New Hampshire, and shall not permit the transfer of the Working Cell Bank to any LonzaAffiliate or any Third Party that is not specifically authorized in advance and in writing byGenentech. Lonza shall comply with all applicable regulatory requirements relating to generalsafety and compliance in handling the Working Cell Bank and any raw materials and components usedin manufacturing Product and Bulk Drug.
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     13.2 Manufacturing Capabilities.Lonza shall at all relevant times throughout theTerm 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 sufficientnumbers of appropriately qualified personnel, in each case to enable Lonza to manufacture Bulk Drugin accordance with the Bulk Drug Specifications and in quantities sufficient to fulfill itsobligations to supply Bulk Drug under this Agreement.     13.3 Compliance with Law.     Lonza shall perform all work and services under thisAgreement in conformance with cGMP and in conformance with the substantive requirements of allapplicable material regional, national, state and local laws, ordinances and governmental rules orregulations in the Territory, and shall have all applicable licenses and permits required toperform the work and services hereunder, the absence of which would materially adversely affect themarketability of the Bulk Drug.     13.4 Lonza Facility.Lonza will use Commercially Reasonable Best Efforts to ensurethat the Lonza Facility shall be maintained in accordance with cGMP and in such condition as willallow Lonza to manufacture the Bulk Drug in accordance with the Bulk Drug Specifications.     13.5 Storage Facilities.Lonza shall provide sufficient and suitable cGMP storagefacilities 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 materialsnecessary to meet the Bulk Drug Commitment. Lonza shall only use the raw materials [*] formanufacture of Bulk Drug under this Agreement.     13.7 Subcontracting.Lonza shall not subcontract any of its obligations hereunderwithout 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 manufacturingand control records for Bulk Drug which are required for any Genentech regulatory filings withrespect to the Product, which records shall be in Lonza’s standard formats unless otherwise agreedupon by the Parties.          13.8.2 Lonza shall provide Genentech promptly after the end of each annual reporting periodfor the Product (as calculated consistent with appropriate regulations and guidelines) with suchinformation as is reasonably requested in writing by Genentech for the preparation of the annualreport with respect to the manufacturing and control of the Product for such annual reportingperiod. Thereafter, Genentech shall provide to Lonza at least fifteen (15) days prior toGenentech’s filing with the respective regulatory authorities a copy of such Genentech annualreport, and Genentech shall take into consideration any Lonza comments to such annual report withrespect to the manufacture of Product.     13.9 Manufacturing Data.Lonza shall collect data on the yield from each Batch, aswell as the date of manufacture of each such Batch and make reports of the same available toGenentech in the form of a monthly manufacturing status report in Lonza’s standard format or insuch other format as may be agreed by the Parties. Lonza shall retain such manufacturing data inaccordance with the requirements of applicable laws, rules and regulations.     13.10 Retention and Reserve Samples.Lonza shall isolate, identify and, subject toSection 20.3 hereof, retain retention and reserve samples of all raw materials and in-processproduction steps used in the production of Bulk Drug as may be required by standard operatingprocedures 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 orexpressly set forth in the Quality Agreement, Lonza shall not perform any analytical testing onBulk Drug unless agreed to by Lonza and Genentech.     13.12 Accurate Documentation.Each Party shall use diligent efforts to ensure allrecords and documentation provided to the other Party in connection with the manufacture of BulkDrug shall be accurate in all material respects.
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     13.13 Insurance.          13.13.1 Insurance. During the term of this Agreement, and thereafter for the periodof time required below, Lonza shall maintain:               **(i) Commercial General Liability**insurance, including contractual liability, in the minimumamount 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 annualaggregate 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” policyform and the CGL insurance coverage shall be maintained by Lonza for at [*] following terminationof this Agreement, and the Products Liability insurance, for [*] following termination of thisAgreement.            (c) The CGL insurance shall provide coverage for Bulk Drug in Lonza’s care, custody andcontrol.            (d) Each of the above insurance policies shall be primary insurance as respects Lonza’sparticipation under this Agreement.            (e) All of the above insurance coverage shall be maintained with an insurance company orcompanies 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 thisAgreement, 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 incase of cancellation or material change, a thirty (30) day notice shall be provided to Genentech.**ARTICLE 14.**