Exhibit 10.47

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of
the 22nd day of May, 2006, by and between SEATTLE GENETICS, INC., a Delaware
corporation (“Company”), and Pamela A. Trail (“Executive”).

 

RECITALS:

 

A. The Company desires that Executive perform her services as Chief Scientific
Officer of the Company, having been duly appointed to such position by the Board
of Directors of the Company.

 

B. Executive desires to continue in such engagement.

 

C. This Agreement contains other provisions applicable to the employment of
Executive by the Company.

 

In consideration of the above Recitals and the provisions of this Agreement, the
Company and Executive agree as follows:

 

I. DUTIES

 

1.1 Title and Responsibilities. Executive shall serve as Chief Scientific
Officer (“CSO”) of the Company, which title may be changed at any time in the
sole discretion of the Company. Executive’s responsibilities and duties shall
include those inherent in Executive’s position with the Company and shall
further include such other managerial responsibilities and executive duties
consistent with such position as may be assigned to Executive from time to time
by the Chief Executive Officer of the Company. Executive shall devote her best
efforts and full business time to the business and interests of the Company.
During the term of Executive’s employment with the Company, Executive may serve
on the board of directors of up to two (2) other companies, manage personal
investments, and engage in civic and charitable activities, provided that such
activities shall not represent a conflict of interest with the Company and do
not materially detract from fulfilling Executive’s responsibilities and duties
to the Company.

 

II. COMPENSATION

 

2.1 Base Salary. Executive shall be paid a base salary (“Base Salary”) by the
Company during the term of Executive’s employment at the rate determined by the
Compensation Committee of the Board of Directors (the “Compensation Committee”),
which is currently $280,000 per year. Executive’s Base Salary shall be reviewed
annually by the Compensation Committee and evaluated based on performance and
salary levels of other executives of comparable position within the industry and
geographic location of the Company. Based upon such evaluation and review,
Executive’s Base Salary may be adjusted from time to time as determined by the
Compensation Committee in its sole discretion.

 

2.2 Bonus. In addition to her Base Salary, Executive shall receive a bonus of
$35,000 payable upon commencement of her employment with the Company and a bonus
of $20,000 payable upon the six (6) month anniversary of her commencement date
with the Company (“Initial Bonus”). In addition, Executive will be eligible to
receive an annual bonus (the “Annual Bonus”), currently targeted at thirty
percent (30%) of Executive’s Base Salary, based upon performance criteria and
financial and operational results of the Company as determined by the
Compensation Committee pursuant to the Company’s 2006 Senior Executive Annual
Bonus Plan.

 

2.3 Stock Options. Upon approval by the Compensation Committee, Executive will
be granted an option to purchase 300,000 shares of Company common stock at an
exercise price set at the closing sales price of the

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Company’s common stock as of the date of grant. Executive may be eligible to
receive grants of stock options or purchase rights from time to time in the
future, on such terms and subject to such conditions as the Compensation
Committee shall determine as of the date of any such grant and pursuant to the
existing stock plan(s) of the Company.

 

2.4 Other Benefits.

 

(i) Executive shall be entitled to such employee benefits generally available to
full-time salaried employees of the Company, including without limitation,
health insurance, paid vacation of not less than four (4) weeks per year,
retirement plans and other similar benefits; provided, that Company reserves the
right to amend, modify, terminate or make any other changes in such benefits
generally available to full-time salaried employees of the Company at any time
in its sole discretion. In addition, Executive will be granted ten (10) days of
accrued vacation upon commencement of her employment.

 

(ii) Executive shall receive the following benefits as part of her relocation:
(a) up to $12,000 for the costs of temporary housing; (b) reimbursement of
travel expenses for up to two (2) trips to Seattle, Washington;
(c) reimbursement of travel expenses for one (1) house-hunting trip for
Executive and her family for three (3) nights; (d) direct payment of moving
expenses, including packing, loading and unloading, for the reasonable and
normal household goods moved to Executive’s new residence located in Seattle or
its surrounding areas from Executive’s current residence (provided, Company
shall determine the moving company used to provide such moving services);
(e) reimbursement of the reasonable and customary closing costs associated with
the sale of Executive’s current residence (reasonable costs include standard
real estate commissions for such area, appraisal fees, title fees, attorney’s
fees for normal, uncontested sales and government recording and transfer
charges); (f) a resettlement allowance of $50,000, less applicable taxes and
withholding, payable during the first payroll processing period after
commencement of employment; and (g) reimbursement of travel expenses for final
trip for Executive and her family to Seattle, Washington. Unless otherwise
specified above, reimbursement or payment of such benefits shall be made upon
presentation of receipts for such costs except for closing costs which shall be
reimbursed upon presentation of the closing documents for such sale detailing
the costs to be reimbursed. The above benefits are available for a period of one
(1) year from Executive’s date of hire with the Company. If Executive’s
employment terminates by Voluntary Termination (as defined below) within one
(1) year of Executive’s hire date, then Executive shall reimburse the Company
for all expenses and costs set forth above in Section 2.4(ii) that have been
paid by the Company.

 

(iii) The Company shall pay or reimburse Executive for all travel and
entertainment expenses incurred by Executive in connection with Executive’s
duties on behalf of the Company, subject to the reasonable approval of the
Company. Executive shall only be entitled to reimbursement to the extent that
Executive follows the reasonable procedures established by the Company for
reimbursement of such expenses which will include, but will not be limited to,
providing satisfactory evidence of such expenditures.

 

III. TERMINATION OF EMPLOYMENT

 

3.1 Termination of Employment and Severance Benefits.

 

(a) Termination of Employment. This Agreement may be terminated upon the
occurrence of any of the following events:

 

(i) The Company’s determination in good faith that it is terminating Executive
for Cause (as defined in Section 3.3 below) (“Termination for Cause”);

 

(ii) The Company’s determination that it is terminating Executive without Cause,
which determination may be made by the Company at any time at the Company’s sole
discretion, for any or no reason (“Termination Without Cause”);

 

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(iii) The effective date of a written notice sent to the Company from Executive
stating that Executive is electing to terminate her employment with the Company
(“Voluntary Termination”);

 

(iv) A change in Executive’s status such that a Constructive Termination (as
defined in Section 3.2(d) below) has occurred; or

 

(v) Following Executive’s death or Disability (as defined in Section 3.4 below).

 

3.2 Severance Benefits. Executive shall be entitled to receive severance
benefits upon termination of employment only as set forth in this Section 3.2
and contingent upon resignation from all positions held by Executive and a full
release and waiver of claims by Executive:

 

(a) Voluntary Termination. If Executive’s employment terminates by Voluntary
Termination, then Executive shall not be entitled to receive payment of any
severance benefits. Executive will receive payment(s) for all salary and unpaid
vacation accrued as of the date of Executive’s termination of employment and
Executive’s benefits will be continued under the Company’s then existing benefit
plans and policies in accordance with such plans and policies in effect on the
date of termination and in accordance with applicable law.

 

(b) Involuntary Termination. If Executive’s employment is terminated under
Section 3.1(a)(ii) (Termination Without Cause) or 3.1(a)(iv) (Constructive
Termination) above (such termination, an “Involuntary Termination”), Executive
will be entitled to receive payment of severance benefits equal to Executive’s
regular monthly salary for twelve (12) months (the “Severance Period”). Such
payments shall be made, at the Company’s option, in a lump sum within thirty
(30) days after the effective date of termination, or ratably over the Severance
Period according to the Company’s standard payroll schedule; provided, however,
that such payment may not extend beyond two (2) months after the end of the
calendar year in which the effective date of termination occurs. Executive will
also be entitled to receive payment on the date of termination of any Initial
Bonus which has been earned under Section 2.2, but not yet paid, and the pro
rata portion of any Annual Bonus based on achievement of the specific corporate
and individual performance targets established for the fiscal year in which the
termination occurs. Executive will receive payment(s) for all salary and unpaid
vacation accrued as of the date of Executive’s termination of employment and
health insurance benefits will be continued through payment of Executive’s COBRA
health insurance premiums by the Company over the Severance Period.

 

(c) Termination for Cause. If Executive’s employment is terminated for Cause,
then Executive shall not be entitled to receive payment of any severance
benefits. Executive will receive payment(s) for all salary and unpaid vacation
accrued as of the date of Executive’s termination of employment and Executive’s
benefits will be continued under the Company’s then existing benefit plans and
policies in accordance with such plans and policies in effect on the date of
termination and in accordance with applicable law.

 

(d) Constructive Termination. “Constructive Termination” shall be deemed to
occur if (i)(A) there is a material reduction or change in job duties,
responsibilities and requirements inconsistent with Executive’s position with
the Company and prior duties, responsibilities and requirements, provided that
neither a mere change in title alone nor reassignment to a position that is
substantially similar to the position held prior to the change in terms of job
duties, responsibilities or requirements shall constitute a material reduction
in job responsibilities; or (B) there is a reduction in Executive’s then-current
base salary by at least twenty percent (20%), provided that an across-the-board
reduction in the salary level of all other senior executives by the same
percentage amount as part of a general salary level reduction shall not
constitute such a salary reduction; or (C) Executive refuses to relocate to a
facility or location more than 50 miles from the Company’s current location; and
(ii) within the thirty (30)-day period immediately following such event
Executive elects to terminate her employment voluntarily.

 

(e) Termination by Reason of Death or Disability. In the event that Executive’s
employment with the Company terminates as a result of Executive’s death or
Disability (as defined in Section 3.4 below), Executive or

 

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Executive’s estate or representative will receive all salary and unpaid vacation
accrued as of the date of Executive’s death or Disability and any other benefits
payable under the Company’s then existing benefit plans and policies in
accordance with such plans and policies in effect on the date of death or
Disability and in accordance with applicable law. In addition, Executive’s
estate or representative will receive the amount of Executive’s Initial and
Annual Bonus for the fiscal year in which the death or Disability occurs to the
extent that the Initial or Annual Bonus has been earned as of the date of
Executive’s death or Disability, as determined by the Board of Directors or its
Compensation Committee based on the specific corporate and individual
performance targets established for such fiscal year.

 

3.3 Definition of Cause. For purposes of this Agreement, “Cause” for Executive’s
termination will exist at any time after the happening of one or more of the
following events:

 

(a) An action or omission of Executive which constitutes a willful and
intentional material breach of this Agreement or the Confidentiality Agreement
(defined below), including without limitation, Executive’s theft or other
misappropriation of the Company’s proprietary information;

 

(b) Executive’s commitment of fraud, embezzlement, misappropriation of funds or
breach of trust in connection with Executive’s employment; or

 

(c) Executive’s conviction of any crime which involves dishonesty or a breach of
trust, or gross negligence in connection with the performance of the Executive’s
duties.

 

3.4. Definition of Disability. For purposes of this Agreement “Disability” shall
mean that Executive has been unable to perform her duties hereunder as the
result of Executive’s incapacity due to physical or mental illness, and such
inability, which continues for at least one hundred twenty (120) consecutive
calendar days or one hundred fifty (150) calendar days during any consecutive
twelve-month period, if shorter, after its commencement, is determined to be
total and permanent by a physician selected by the Company and its insurers and
acceptable to Executive or to Executive’s legal representative (with such
agreement on acceptability not to be unreasonably withheld).

 

IV. STOCK ACCELERATION

 

4.1 Accelerated Vesting. In addition to any other right of acceleration that may
be provided pursuant to any stock option plan or agreement pursuant to which
Executive has been granted options to purchase shares of Common Stock of the
Company, if Executive’s employment is terminated due to an Involuntary
Termination, the vesting of any unvested stock options and the lapsing of the
Company’s repurchase right with respect to any shares of restricted stock held
by Executive as of the date of Executive’s Involuntary Termination shall
accelerate such that the options shall become vested and the repurchase right
shall lapse as to an additional twelve (12) months; provided that if such
Involuntary Termination occurs within twelve (12) months after a Change of
Control (as defined below), then the vesting of all stock options and the lapse
of the Company’s repurchase right with respect to all shares of restricted stock
of the Company held by Executive shall be accelerated completely so that one
hundred percent (100%) of the shares of common stock covered by the stock
options are fully vested and exercisable and the Company’s repurchase right has
lapsed with respect to all shares of restricted stock held by Executive.

 

4.2 Definition of Change of Control. For purposes of this Agreement, “Change of
Control” shall mean the occurrence of any of the following events: (i) an
acquisition of the Company by another entity by means of any transaction or
series of related transactions (including, without limitation, any
reorganization, merger or consolidation but excluding any merger effected
exclusively for the purpose of changing the domicile of the Company), or (ii) a
sale of all or substantially all of the assets of the Company (collectively, a
“Merger”), so long as in either case the Company’s stockholders of record
immediately prior to such Merger will, immediately after such Merger, hold less
than 50% of the voting power of the surviving or acquiring entity.

 

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V. RESTRICTIVE COVENANTS

 

5.1 Confidentiality Agreement. Executive shall sign, or has signed the Company’s
form of Proprietary Information and Inventions Agreement (the “Confidentiality
Agreement”) substantially in the form attached hereto as Exhibit A. Executive
hereby represents and warrants to the Company that she has complied with all
obligations under the Confidentiality Agreement and agrees to continue to abide
by the terms of the Confidentiality Agreement and further agrees that the
provisions of the Confidentiality Agreement shall survive any termination of
this Agreement or of Executive’s employment relationship with the Company,
including the noncompetition provisions of the Confidentiality Agreement.

 

VI. OTHER PROVISIONS

 

6.1 Limitation on Severance Benefits. In the event that any severance benefits
provided for in this Agreement to Executive (i) constitute “parachute payments”
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”) and (ii) but for this Section 6.1, would be subject to the
excise tax imposed by Section 4999 of the Code, then Executive’s severance
benefits under Section 3.2 shall be payable either:

 

(a) in full, or

 

(b) as to such lesser amount which would result in no portion of such benefits
being subject to excise tax under Section 4999 of the Code,

 

whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by Executive on an after-tax basis, of the greatest amount of
benefits under Section 3.2 notwithstanding that all or some portion of such
benefits may be taxable under Section 4999 of the Code. Unless the Company or
Executive otherwise agree in writing, any determination required under this
Section 6.1 shall be made in writing by independent public accountants appointed
by Executive and reasonably acceptable to the Company (the “Accountants”), whose
determination shall be conclusive and binding upon Executive and the Company for
all purposes. For purposes of making the calculations required by this
Section 6.1, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code. The Company and Executive shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section 6.1. The Company shall bear all costs
the Accountants may reasonably incur in connection with any calculations
contemplated by this Section 6.1.

 

6.2 Indemnification. The Company hereby agrees to indemnify and hold the
Executive harmless, to the fullest extent permitted by law and as set forth in
the Amended and Restated Certificate of Incorporation of the Company, from and
against any expenses, including legal fees, and all judgments, fines and amounts
paid in settlement and reasonably incurred in connection with legal,
administrative or investigative proceedings to which the Executive is made, or
threatened to be made, a party by reason of the fact the Executive is or was a
director or officer of the Company.

 

6.3 Entire Agreement. This Agreement, the Confidentiality Agreement and any
agreement pertaining to Executive’s stock options or shares of restricted stock
contain the entire agreement and understanding of the parties with respect to
Executive’s employment by the Company and compensation payable to Executive by
the Company and supersede all prior understandings, agreements and discussions.
This Agreement may only be amended or modified by a written instrument executed
by Executive and the Chief Executive Officer of the Company pursuant to
authorization by the Compensation Committee.

 

6.4 Notices. Any and all notices permitted or required to be given under this
Agreement must be in writing. Notices will be deemed given (i) on the first
business day after having been sent by commercial overnight courier

 

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with written verification of receipt, or (ii) on the third business day after
having been sent by registered or certified mail from a location on the United
States mainland, return receipt requested, postage prepaid, whichever occurs
first, at the address set forth below or at any new address, notice of which
will have been given in accordance with this Section 6.4:

 

If to the Company:

  

Seattle Genetics, Inc.

     21823 30th Drive SE      Bothell, WA 98021      Attn: General Counsel

If to Executive:

  

Pamela A. Trail

     c/o Seattle Genetics, Inc.      21823 30th Drive SE      Bothell, WA 98021

 

6.5 Non-Waiver. Failure to enforce at any time any of the provisions of this
Agreement shall not be interpreted to be a waiver of such provisions or to
affect either the validity of this Agreement or the right of either party
thereafter to enforce each and every provision of this Agreement.

 

6.6 Separability. If one or more provisions of this Agreement is finally
determined to be invalid or unenforceable, such provision will not affect or
impair the other provisions of this Agreement, all of which will continue to be
in effect and will be enforceable, provided, however, that any such invalid
provisions shall, to the extent possible, be reformed so as to implement insofar
as practicable the intentions of the parties.

 

6.7 Term. The employment of Executive under this Agreement shall be for an
unspecified term. The Company and Executive acknowledge and agree that
Executive’s employment is and shall continue to be at-will, as defined under
applicable law, and that Executive’s employment with the Company may be
terminated by either party at any time for any or no reason, and with or without
notice. If Executive’s employment terminates for any reason, Executive shall not
be entitled to any payments, benefits, damages award or compensation other than
as provided in this Agreement.

 

6.8 Law. This Agreement shall be interpreted in accordance with the laws of the
State of Washington.

 

6.9 No Duty to Mitigate. Executive shall not be required to mitigate the amount
of any payment contemplated by this Agreement (whether by seeking new employment
or in any other manner), nor, except as otherwise provided in this Agreement,
shall any such payment be reduced by any earnings that Executive may receive
from any other source.

 

6.10 Legal Fees. In the event either party breaches this Agreement, the
nonbreaching party shall be entitled to recover from the breaching party any and
all damages, costs and expenses, including without limitation, attorneys’ fees
and court costs, incurred by the nonbreaching party as a result of the breach.

 

6.11 Counterparts. This Agreement may be executed in counterparts which when
taken together will constitute one instrument. Any copy of this Agreement with
the original signatures of all parties appended will constitute an original.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

COMPANY: SEATTLE GENETICS, INC.

By:

  /S/    CLAY B. SIEGALL

Name:

  Clay B. Siegall

Title:

  President and CEO EXECUTIVE /S/    PAMELA A. TRAIL Pamela A. Trail

 

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