Exhibit 10.1

January 27, 2009

Seattle Genetics, Inc.

21823 30th Drive S.E.

Bothell, WA 98021

 

  Re: Stock Purchase Agreement

Ladies and Gentlemen:

Baker Brothers Life Sciences, L.P. (“BBLS”) and each of its affiliated funds
that are or become signatories to this Agreement (each, an “Investor” and,
collectively the “Investors”), hereby agree with you as follows:

1. Agreement. This Stock Purchase Agreement (this “Agreement”) is made as of the
date first written above among Seattle Genetics, Inc., a Delaware corporation
(the “Company”), and the Investors.

2. Shares; Purchase Price. The Company and the Investors agree that the
Investors will purchase from the Company and the Company will issue and sell to
the Investors an aggregate number of shares of common stock of the Company (the
“Common Stock”) that is equal to the product of (a) the Investors’ collective
Pro Rata Percentage set forth on Exhibit A multiplied by (b) the sum of (1) the
aggregate number of shares of Common Stock sold to the underwriter(s) (the
“Underwritten Shares”) pursuant to the Underwriting Agreement (as the same may
be amended to increase the number of Underwritten Shares thereunder, the
“Underwriting Agreement”) to be executed of even date herewith plus (2) the
number of shares of Common Stock to be purchased hereunder at Closing (as
defined below), with such resultant number of shares rounded down to the nearest
whole share of Common Stock (such resultant number of shares, the “Shares”). The
Company and BBLS shall agree on the final determination of the aggregate number
of Shares no later than two (2) days after the date of this Agreement, upon
which Exhibit A hereto shall be updated by the Company to reflect such
determination. BBLS may allocate the Shares to its affiliated funds as it deems
appropriate by providing written notification to the Company at least
forty-eight (48) hours prior to Closing (as defined below), upon which Exhibit A
hereto will be updated by the Company to reflect such allocation and each such
affiliated fund that is not a signatory to this Agreement as of the date hereof
shall execute a counterpart signature page to this Agreement and deliver it to
the Company. BBLS hereby guarantees the obligation of the Investors to purchase
all of the Shares. Each Investor shall pay a purchase price per Share equal to
the greater of (x) the volume weighted average price at which Underwritten
Shares are sold by such underwriter(s) in one or more transactions through 8
a.m. Eastern time on Wednesday, January 28, 2009, and (y) the price at which the
Underwritten Shares are sold to such underwriter(s) pursuant to the Underwriting
Agreement. The Company shall use its best efforts to cause such underwriter(s)
to provide the Company and the Investors with such information as reasonably
requested to determine such volume weighted average price. The Company and BBLS
shall agree on the final determination of such price no later than two (2) days
after the date of this Agreement. If the Company and BBLS are unable to agree,
any reasonable determination made in good faith by the Company shall be final.

3. Purchase and Sale; Closing.

(a) The completion of the purchase and sale of the Shares (the “Closing”) shall
occur on the third business day after the first date on which (i) the
Stockholder Approval (as defined in Section 4) has been received and (ii) the
conditions set forth in Section 3(c) below have been satisfied or waived (other
than those conditions that by their nature are to be satisfied or waived at the
Closing), or such other time as may be agreed to by the Company and BBLS, orally
or in writing. The Closing shall be conditioned upon receipt of Stockholder
Approval. The date of the Closing is referred to as the “Closing Date”. At the
Closing, the Company shall deliver to each Investor, evidence reasonably
satisfactory to such Investor that the Company has provided irrevocable
instructions to the Company’s transfer agent to deliver to such Investor one or
more stock certificates evidencing the number of Shares set forth opposite such
Investor’s name on Exhibit A hereto containing only the legends expressly
provided in Section 7(b) hereof, and each Investor shall deliver, or cause to be
delivered, to the Company a Federal Funds wire transfer in the full amount of
the purchase price for the Shares being purchased by such Investor, such wire
transfer to be made to the Company pursuant to instructions provided to each
Investor at least one business day prior to the Closing Date.

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(b) The Closing shall occur at the offices of Cooley Godward Kronish LLP, 719
Second Avenue, Suite 900, Seattle, WA 98104 (or such other place as may be
agreed to by the Company and BBLS, orally or in writing) at 10:00 a.m. Eastern
time, on the Closing Date.

(c) The sole conditions to Closing, other than those set forth in Section 3(a),
shall be:

(i) the Company’s delivery to the Investors of a certificate of the Chief
Executive Officer of the Company certifying that (A) the Company has complied in
all material respects with all of its obligations hereunder and satisfied all
the conditions on its part required to be performed or satisfied hereunder at or
prior to the Closing Date; and (B) the representations and warranties of the
Company are true and correct in all material respects as of the Closing Date
(except for representations and warranties which address matters only as to a
specified date, which representations and warranties shall be true and correct
in all material respects with respect to such specified date) (which such
condition may be waived by BBLS in its sole discretion);

(ii) each Investor’s delivery of a certificate of a duly authorized officer of
such Investor that the representations and warranties of such Investor are true
and correct in all material respects as of the Closing Date (which such
condition may be waived by the Company in it sole discretion);

(iii) all applicable waiting periods, if any, in respect of the transactions
contemplated hereby under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the regulations and rules issued pursuant thereto
(collectively, the “HSR Act”) shall have expired or terminated;

(iv) there shall not be in effect any statute, rule, order, decree or injunction
(collectively, an “Order”) of a court or agency of competent jurisdiction which
enjoins or prohibits the consummation of the transactions contemplated by this
Agreement, and no such court or agency of competent jurisdiction shall have
instituted any Proceeding (as defined below) seeking any such Order; and

(v) the Investors shall have received, on and as of the Closing Date,
satisfactory evidence of the good standing of the Company in the State of
Delaware.

4. Stockholder Meeting; Disclosure. The Company shall use commercially
reasonable efforts to hold a meeting of its stockholders, which may be either a
special or annual meeting, on or prior to June 1, 2009 for the purpose of
approving the transactions contemplated by this Agreement (the “Stockholders
Meeting”) and shall use its best efforts to obtain the Stockholder Approval at
the Stockholders Meeting. Such efforts will include, without limitation, the
preparation, delivery and dissemination of a proxy statement or information
statement relating to, among other things, the transactions contemplated by this
Agreement (the “Proxy Statement”), prepared in accordance with the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), to the stockholders of
the Company soliciting their vote in favor of the transactions contemplated
hereby (the “Stockholder Approval”) and containing the Board’s recommendation
that the stockholders approve the transactions contemplated by this Agreement;
provided, that the Company shall not be required to hire a proxy solicitor to
obtain Stockholder Approval. The Company shall deliver drafts of the preliminary
and definitive Proxy Statement to BBLS and itscounsel at least two (2) business
days prior to the filing thereof with the SEC, and shall make reasonable efforts
to address any comments provided by BBLS on the Proxy Statement. Prior to making
any public disclosures about the Investors in connection with this Agreement and
the Shares, the Company shall provide the Investors with a reasonable
opportunity to comment on such disclosure in advance and shall make reasonable
efforts to address any comments provided by an Investor on such disclosure;
provided, that the Company shall be able to disclose the existence of this
Agreement, and state the manner of sale of the Shares, name of the Investors
purchasing Shares and the number of Shares purchased without prior disclosure to
the Investors. In connection with the disclosure of the transactions
contemplated by this Agreement, each of BBLS and each Investor hereby provides
its advance consent to the forms of disclosures set forth on Exhibit B hereto.

5. Company Representations and Warranties. The Company hereby represents and
warrants to, and covenants with, each Investor that:

(a) SEC Reports. The Company has filed all reports required to be filed by it
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
including pursuant to Section 13(a) or 15(d) thereof, for the eighteen
(18) months preceding the date hereof (the foregoing materials (together with
any materials filed by the Company under the Exchange Act for the eighteen
(18) months prior to the date hereof, or on or after the date hereof, whether or
not required to be filed) being collectively referred to herein as the “SEC
Reports”) on a timely basis or has properly filed a notice on Form 12b-25 with
respect to an extension of such time of filing, and

 

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has filed any such SEC Reports prior to the expiration of any such extension.
The SEC Reports, when they were filed with the Securities and Exchange
Commission (the “Commission”), conformed in all material respects to the
requirements of the Securities Act of 1933, as amended (the “Securities Act”),
and the Exchange Act, as applicable, and none of such documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; and any further
SEC Reports so filed with the Commission subsequent to the date hereof and on or
prior to the Closing Date, when such documents are filed with the Commission,
will conform in all material respects to the requirements of the Securities Act
or the Exchange Act, as applicable, and will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.

(b) Financial Statements. The financial statements and the related notes thereto
of the Company and its consolidated subsidiary included or incorporated by
reference in the SEC Reports comply in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, as applicable, and
present fairly the financial position of the Company and its consolidated
subsidiary as of the dates indicated and the results of their operations and the
changes in their cash flows for the periods specified, it being understood that
unaudited interim financial statements are subject to normal, year-end audit
adjustments; such financial statements have been prepared in conformity with
U.S. generally accepted accounting principles (“GAAP”) applied on a consistent
basis throughout the periods covered thereby, except as may be otherwise
specified therein or to the extent unaudited interim financial statements
exclude footnotes or may be condensed or summary statements, and the supporting
schedules included or incorporated by reference in the SEC Reports present
fairly the information required to be stated therein; and the other financial
information included or incorporated by reference in the SEC Reports has been
derived from the accounting records of the Company and its consolidated
subsidiary and presents fairly the information shown thereby.

(c) No Material Adverse Change. Since September 30, 2008, (i) there has not been
any change in the capital stock (except for grants, exercises, terminations, or
forfeitures of equity awards under the Company’s stock option plans and employee
stock purchase plan described in the SEC Reports), long-term debt, notes payable
or current portion of long-term debt of the Company or its subsidiary, or any
dividend or distribution of any kind declared, set aside for payment, paid or
made by the Company on any class of capital stock, or any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the business, properties, management, financial position,
stockholders’ equity, results of operations or prospects of the Company and its
subsidiary taken as a whole; (ii) other than this Agreement and the Underwriting
Agreement, neither the Company nor its subsidiary has entered into any
transaction or agreement that is material to the Company and its subsidiary
taken as a whole or incurred any liability or obligation, direct or contingent,
that is material to the Company and its subsidiary taken as a whole; and
(iii) neither the Company nor its subsidiary has sustained any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor disturbance or dispute or
any action, order or decree of any court or arbitrator or governmental or
regulatory authority, except in each case as otherwise disclosed in the SEC
Reports.

(d) Organization and Good Standing. The Company and its subsidiary have been
duly organized and are validly existing and in good standing under the laws of
their respective jurisdictions of organization, are duly qualified to do
business and are in good standing in each jurisdiction in which their respective
ownership or lease of property or the conduct of their respective businesses
requires such qualification, and have all power and authority necessary to own
or hold their respective properties and to conduct the businesses in which they
are engaged, except where the failure to be so qualified or in good standing or
have such power or authority would not, individually or in the aggregate, have a
material adverse effect on the business, properties, management, financial
position, stockholders’ equity, results of operations or prospects of the
Company and its subsidiary taken as a whole or on the performance by the Company
of its obligations under this Agreement (a “Material Adverse Effect”).

(e) Capitalization. All the outstanding shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable and are not subject to any pre-emptive or similar rights; except
as described in or expressly contemplated by the SEC Reports, there are no
outstanding rights (including, without limitation, pre-emptive rights), warrants
or options to acquire, or instruments convertible into or exchangeable for, any
shares of capital stock or other equity interest in the Company or its
subsidiary, or any

 

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contract, commitment, agreement, understanding or arrangement of any kind
relating to the issuance of any capital stock of the Company or its subsidiary,
any such convertible or exchangeable securities or any such rights, warrants or
options; the capital stock of the Company conforms in all material respects to
the description thereof contained in the SEC Reports; and all the outstanding
shares of capital stock or other equity interests of each subsidiary owned,
directly or indirectly, by the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned directly or indirectly
by the Company, free and clear of any lien, charge, encumbrance, security
interest, restriction on voting or transfer or any other claim of any third
party.

(f) Due Authorization. Subject to receipt of the Stockholder Approval, the
Company has full right, power and authority to execute and deliver this
Agreement and to perform its obligations hereunder; and all action required to
be taken for the due and proper authorization, execution and delivery by it of
each of this Agreement and the consummation by it of the transactions
contemplated hereby (other than the receipt of the Stockholder Approval) have
been duly and validly taken.

(g) The Shares. Subject to receipt of the Stockholder Approval, the Shares to be
issued and sold by the Company hereunder have been duly authorized by the
Company and, when issued and delivered and paid for as provided herein, will be
duly and validly issued and will be fully paid and nonassessable. The issuance
of the Shares is not subject to any preemptive or similar rights;

(h) No Violation or Default. Neither the Company nor its subsidiary is (i) in
violation of its charter or by-laws or similar organizational documents; (ii) in
default, and no event has occurred that, with notice or lapse of time or both,
would constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or its
subsidiary is a party or by which the Company or its subsidiary is bound or to
which any of the property or assets of the Company or its subsidiary is subject;
or (iii) in violation of any law or statute or any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory authority,
except, in the case of clauses (ii) and (iii) above, for any such default or
violation that would not, individually or in the aggregate, have a Material
Adverse Effect.

(i) No Conflicts. Subject to receipt of the Stockholder Approval, the execution,
delivery and performance by the Company of this Agreement, the issuance and sale
of the Shares and the consummation of the transactions contemplated hereby will
not (i) conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or its subsidiary pursuant to, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or its
subsidiary is a party or by which the Company or its subsidiary is bound or to
which any of the property or assets of the Company or its subsidiary is subject,
(ii) result in any violation of the provisions of the charter or by-laws or
similar organizational documents of the Company or its subsidiary or
(iii) result in the violation of any law or statute or any judgment, order, rule
or regulation of any court or arbitrator or governmental or regulatory
authority, except, in the case of clauses (i) and (iii) above, for any such
conflict or violation that would not, individually or in the aggregate, have a
Material Adverse Effect.

(j) No Consents Required. No consent, approval, authorization, order,
registration or qualification of or with any court or arbitrator or governmental
or regulatory authority is required for the execution, delivery and performance
by the Company of this Agreement, the issuance and sale of the Shares and the
consummation of the transactions contemplated by this Agreement, other than
(i) the Stockholder Approval, (ii) filings required by applicable state
securities laws, (iii) the filing of a Notice of Sale of Securities on Form D
with the Commission under Regulation D of the Securities Act, (iv) the filing of
any requisite notices and/or application(s) with the NASDAQ Stock Market in
connection with the issuance and sale of the Shares and the listing of the
Shares for trading thereon in the time and manner required thereby, (v) filings
required under the HSR Act, if any, and (vi) those that have been made or
obtained prior to the date of this Agreement.

(k) Legal Proceedings. Except as described in the SEC Reports, there are no
legal, governmental or regulatory investigations, actions, suits or proceedings
pending to which the Company or its subsidiary is or may be a party or to which
any property of the Company or its subsidiary is or may be the subject that,
individually or in the aggregate, if determined adversely to the Company or its
subsidiary, could reasonably be expected to have a Material Adverse Effect; no
such investigations, actions, suits or proceedings are threatened or, to the
best knowledge of the Company, contemplated by any governmental or regulatory
authority or threatened by others.

 

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(l) Title to Real and Personal Property. The Company and its subsidiary have
good and marketable title in fee simple to, or have valid rights to lease or
otherwise use, all items of real and personal property that are material to the
respective businesses of the Company and its subsidiary, in each case free and
clear of all liens, encumbrances, claims and defects and imperfections of title
except those that (i) do not materially interfere with the use made and proposed
to be made of such property by the Company and its subsidiary or (ii) could not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.

(m) Intellectual Property. The Company and its subsidiary own, or have obtained
valid and enforceable licenses for, or other rights to use, all Intellectual
Property (as defined below) described in the SEC Reports as either being owned
or licensed by them or necessary for the conduct of their respective businesses,
except where the failure to own, license or have such rights would not,
individually or in the aggregate, have a Material Adverse Effect, and (i) to the
knowledge of the Company, there is no infringement, misappropriation or
violation by third parties of any such Intellectual Property; (ii) there is no
pending or, to the knowledge of the Company, threatened action, suit, proceeding
or claim by others challenging the rights of the Company or its subsidiary in or
to any such Intellectual Property, and the Company is unaware of any facts which
it believes would form a reasonable basis for a successful challenge to the
rights in such Intellectual Property that would have a Material Adverse Effect
on the Company; (iii) the Intellectual Property owned by the Company and its
subsidiary and, to the knowledge of the Company, the Intellectual Property
licensed to the Company and its subsidiary have not been adjudged invalid or
unenforceable, in whole or in part, and there is no pending or, to the knowledge
of the Company, threatened action, suit, proceeding or claim by others
challenging the validity or scope of any such Intellectual Property, and the
Company is unaware of any facts which it believes would form a reasonable basis
for a successful challenge to the validity or scope of such Intellectual
Property that would have a Material Adverse Effect on the Company; (iv) to the
knowledge of the Company, there is no pending or threatened action, suit,
proceeding or claim by others that the Company or its subsidiary infringes,
misappropriates or otherwise violates any Intellectual Property or other
proprietary rights of others, the Company has not received any written notice of
such claim and the Company is unaware of any facts which it believes would form
a reasonable basis for a successful claim of such infringement, misappropriation
or violation that would have a Material Adverse Effect on the Company; (v) the
Company is unaware of any facts which it believes would form a reasonable basis
for a successful challenge that any of its employees are in or have ever been in
material violation of any term of any employment contract, patent disclosure
agreement, invention assignment agreement, non-competition agreement,
non-solicitation agreement, nondisclosure agreement or any restrictive covenant
to or with a former employer where the basis of such violation relates to such
employee’s employment with the Company or its subsidiary, or actions undertaken
by the employee while employed with the Company or its subsidiary and (vi) to
the knowledge of the Company, the Company is assignee of or is the recipient of
an obligation to assign each of the Company’s rights in its patents and patent
applications. The term “Intellectual Property” as used herein means all patents,
patent applications, trade and service marks, trade and service mark
registrations, trade names, copyrights, licenses, inventions, trade secrets,
technology, know-how and other intellectual property.

(n) Investment Company Act. The Company is not and, after giving effect to the
transactions contemplated by this Agreement and the Underwriting Agreement, will
not be required to register as an “investment company” or an entity “controlled”
by an “investment company” within the meaning of the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission thereunder
(collectively, the “Investment Company Act”).

(o) Taxes. The Company and its subsidiary have paid all federal, state, local
and foreign taxes and filed all tax returns required to be paid or filed through
the date hereof; and except as otherwise disclosed in the SEC Reports, there is
no tax deficiency that has been, or could reasonably be expected to be, asserted
against the Company or its subsidiary or any of their respective properties or
assets.

(p) Licenses and Permits. The Company and its subsidiary possess all licenses,
certificates, permits and other authorizations issued by, and have made all
declarations and filings with, the appropriate federal, state, local or foreign
governmental or regulatory authorities that are necessary for the ownership or
lease of their respective properties or the conduct of their respective
businesses as described in the SEC Reports, except where the failure to possess
or make the same would not, individually or in the aggregate, have a Material
Adverse Effect; and except as described in the SEC Reports, neither the Company
nor its subsidiary has received notice of any revocation or modification of any
such license, certificate, permit or authorization or has any reason to believe
that any such license, certificate, permit or authorization will not be renewed
in the ordinary course.

 

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(q) Compliance With Environmental Laws. (i) The Company and its subsidiary
(x) are, and at all prior times were, in compliance with any and all applicable
federal, state, local and foreign laws, rules, regulations, requirements,
decisions and orders relating to the protection of human health or safety, the
environment, natural resources, hazardous or toxic substances or wastes,
pollutants or contaminants (collectively, “Environmental Laws”), (y) have
received and are in compliance with all permits, licenses, certificates or other
authorizations or approvals required of them under applicable Environmental Laws
to conduct their respective businesses, and (z) have not received notice of any
actual or potential liability under or relating to any Environmental Laws,
including for the investigation or remediation of any disposal or release of
hazardous or toxic substances or wastes, pollutants or contaminants, and have no
knowledge of any event or condition that would reasonably be expected to result
in any such notice, and (ii) there are no costs or liabilities associated with
Environmental Laws of or relating to the Company or its subsidiary, except in
the case of each of (i) and (ii) above, for any such failure to comply, or
failure to receive required permits, licenses or approvals, or cost or
liability, as would not, individually or in the aggregate, have a Material
Adverse Effect; and (iii) except as described in the SEC Reports, (x) there are
no proceedings that are pending, or that are known to be contemplated, against
the Company or its subsidiary under any Environmental Laws in which a
governmental entity is also a party, other than such proceedings regarding which
it is reasonably believed no monetary sanctions of $100,000 or more will be
imposed, (y) the Company and its subsidiary are not aware of any issues
regarding compliance with Environmental Laws, or liabilities or other
obligations under Environmental Laws or concerning hazardous or toxic substances
or wastes, pollutants or contaminants, that could reasonably be expected to have
a material effect on the capital expenditures, earnings or competitive position
of the Company and its subsidiary, and (z) none of the Company and its
subsidiary anticipates material capital expenditures relating to any
Environmental Laws.

(r) Hazardous Substances. There has been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission, or other release of any kind
of toxic wastes or hazardous substances, including, but not limited to, any
naturally occurring radioactive materials, brine, drilling mud, crude oil,
natural gas liquids and other petroleum materials, by, due to or caused by the
Company or its subsidiary (or, to the best of the Company’s knowledge, any other
entity (including any predecessor) for whose acts or omissions the Company or
its subsidiary is or could reasonably be expected to be liable) upon any of the
property now or previously owned or leased by the Company or its subsidiary, or
upon any other property, in violation of any Environmental Laws or in a manner
or to a location that could reasonably be expected to give rise to any liability
under the Environmental Laws, except for any violation or liability which would
not, individually or in the aggregate, have a Material Adverse Effect.

(s) Disclosure Controls. The Company maintains, on its behalf and on behalf of
its subsidiary, an effective system of “disclosure controls and procedures” (as
defined in Rule 13a-15(e) of the Exchange Act) that is designed to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the Commission’s rules and forms, including
controls and procedures designed to ensure that such information is accumulated
and communicated to the Company’s management as appropriate to allow timely
decisions regarding required disclosure. The Company and its subsidiary have
carried out evaluations of the effectiveness of their disclosure controls and
procedures as required by Rule 13a-15 of the Exchange Act.

(t) Accounting Controls. The Company maintains, on its behalf and on behalf of
its subsidiary, systems of “internal control over financial reporting” (as
defined in Rule 13a-15(f) of the Exchange Act) that comply with the requirements
of the Exchange Act and have been designed by, or under the supervision of,
their respective principal executive and principal financial officers, or
persons performing similar functions, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles, including, but not limited to internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Except as disclosed in the SEC Reports, there are no material
weaknesses in the Company’s internal controls. The Company’s auditors and the
Audit Committee of the Board of Directors of the Company have been advised of:
(i) all significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are reasonably

 

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likely to adversely affect the Company’s ability to record, process, summarize
and report financial information; and (ii) any fraud, whether or not material,
that involves management or other employees who have a significant role in the
Company’s internal controls over financial reporting.

(u) Insurance. The Company and its subsidiary have insurance covering their
respective properties, operations, personnel and businesses, including business
interruption insurance, which insurance is in amounts and insures against such
losses and risks in accordance with customary industry practice for companies of
comparable size, market capitalization and stage of business and clinical
development to protect the Company and its subsidiary and their respective
businesses; and neither the Company nor its subsidiary has (i) received notice
from any insurer or agent of such insurer that capital improvements or other
expenditures are required or necessary to be made in order to continue such
insurance or (ii) any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage at reasonable cost from similar insurers as may be necessary to
continue its business.

(v) No Unlawful Payments. Neither the Company nor its subsidiary nor, to the
best knowledge of the Company, any director, officer, agent, employee or other
person associated with or acting on behalf of the Company or its subsidiary has
(i) used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity; (ii) made any direct
or indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment.

(w) Termination or Nonrenewal of Contracts. Except as would not, individually or
the aggregate, have a Material Adverse Effect, neither the Company nor its
subsidiary has sent or received any communication regarding termination of, or
intent not to renew, any of the contracts or agreements to which the Company or
its subsidiary are a party referred to or described in, or filed as an exhibit
to, the SEC Reports, and no such termination or nonrenewal has been threatened
by, to the Company’s knowledge, any other party to any such contract or
agreement.

(x) Clinical Trials. The clinical and pre-clinical trials conducted by or on
behalf of or sponsored by the Company or its subsidiary, or in which the Company
or its subsidiary have participated, that are described in the SEC Reports or
the results of which are referred to in the SEC Reports were and, if still
pending, are being conducted in all material respects in accordance with
standard medical and scientific research procedures and all applicable statutes,
rules, regulations and policies of the U.S. Food and Drug Administration (the
“FDA”) and comparable drug regulatory agencies outside of the United States to
which it is subject (collectively, the “Regulatory Authorities”), including,
without limitation, 21 C.F.R. Parts 50, 54, 56, 58, and 312, and current Good
Clinical Practices and Good Laboratory Practices; the descriptions in the SEC
Reports of the results of such studies and tests are accurate and complete in
all material respects and fairly present the data derived from such trials and
the Company has no knowledge of any other trials the results of which are
inconsistent with or otherwise call into question the results described or
referred to in the SEC Reports; the Company and its subsidiary have operated and
are currently in compliance in all material respects with all applicable
statutes, rules, regulations and policies of the Regulatory Authorities; and
neither the Company nor its subsidiary have received any notices, correspondence
or other communication from the Regulatory Authorities or any other governmental
agency which could lead to the termination or suspension of any clinical or
pre-clinical trials that are described in the SEC Reports or the results of
which are referred to in the SEC Reports and, to the Company’s knowledge, there
are no grounds for the same.

(y) Compliance with Applicable Laws; Authorizations. The Company and its
subsidiary: (i) are and at all times have been in material compliance with all
statutes, rules and regulations applicable to the ownership, testing,
development, manufacture, packaging, processing, use, distribution, marketing,
labeling, promotion, sale, offer for sale, storage, import, export or disposal
of any product manufactured or distributed by the Company (“Applicable Laws”);
(ii) have not received any FDA Form 483, notice of adverse finding, warning
letter, untitled letter or other correspondence or notice from any court or
arbitrator or governmental or regulatory authority or third party alleging or
asserting material noncompliance with any Applicable Laws or any licenses,
exemptions, certificates, approvals, clearances, authorizations, permits and
supplements or amendments thereto required by any such Applicable Laws
(“Authorizations”); (iii) possess all material Authorizations and such
Authorizations are valid and in full force and effect and are not in violation
of any term of any such Authorizations; (iv) have not received notice of any
claim, action, suit, proceeding, hearing, enforcement, investigation,
arbitration or other action from any court or arbitrator or governmental or
regulatory authority or third party alleging that any product

 

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operation or activity is in violation of any Applicable Laws or Authorizations
and have no knowledge that any such court or arbitrator or governmental or
regulatory authority or third party is considering any such claim, litigation,
arbitration, action, suit, investigation or proceeding; (v) have not received
notice that any court or arbitrator or governmental or regulatory authority has
taken, is taking or intends to take action to materially limit, suspend,
materially modify or revoke any Authorizations and have no knowledge that any
such court or arbitrator or governmental or regulatory authority is considering
such action; and (vi) have filed, obtained, maintained or submitted all material
reports, documents, forms, notices, applications, records, claims, submissions
and supplements or amendments as required by any Applicable Laws or
Authorizations and that all such reports, documents, forms, notices,
applications, records, claims, submissions and supplements or amendments were
complete and correct on the date filed in all material respects (or were
corrected or supplemented by a subsequent submission).

(z) The Company has taken no action designed to, or reasonably likely to have
the effect of, terminating the registration of the Common Stock under the
Exchange Act or the listing of the Common Stock on the NASDAQ Global Market, nor
has the Company received any notification that the Commission or the NASDAQ
Global Market is contemplating terminating such registration or listing.

6. Investor Representations and Warranties. Each Investor hereby represents and
warrants to, and covenants with, the Company as follows:

(a) The Investor represents and warrants to, and covenants with, the Company
that (i) the Investor is knowledgeable, sophisticated and experienced in making,
and is qualified to make decisions with respect to, investments in shares
presenting an investment decision like that involved in the purchase of the
Shares, including investments in securities issued by the Company and
investments in comparable companies, has reviewed the SEC Reports, has
requested, received, reviewed and considered all information it deemed relevant
in making an informed decision to purchase the Shares and has been afforded the
opportunity to obtain such additional information that the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment, and (ii) the
Investor agrees to promptly provide all information reasonably requested by the
Company in connection with the preparation of the Proxy Statement and all such
information shall be true and correct as of the date thereof in all material
respects.

(b) The Investor acknowledges, represents and agrees that no action has been or
will be taken in any jurisdiction outside the United States by the Company that
would permit an offering of the Shares, or possession or distribution of
offering materials in connection with the issue of the Shares in any
jurisdiction outside the United States where action for that purpose is
required. Each Investor outside the United States will comply with all
applicable laws and regulations in each foreign jurisdiction in which it
purchases, offers, sells or delivers Shares or has in its possession or
distributes any offering material, in all cases at its own expense.

(c) The Investor understands that the Shares have not been registered under the
Securities Act and is acquiring the Shares in the ordinary course of business
for its own account and not with a view towards, or for resale in connection
with, the public sale or distribution thereof, except pursuant to sales
registered under the Securities Act or under an exemption from such registration
and in compliance with applicable laws, rules and regulations, and the Investor
does not have a present arrangement to effect any distribution of the Shares to
or through any person or entity.

(d) The Investor further represents and warrants to, and covenants with, the
Company that (a) the Investor has full right, power, authority and capacity to
enter into this Agreement and to consummate the transactions contemplated hereby
and has taken all necessary action to authorize the execution, delivery and
performance of this Agreement, and (b) this Agreement constitutes a valid and
binding obligation of the Investor enforceable against the Investor in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as certain indemnification obligations may be legally unenforceable.

(e) At the time the Investor was offered the Shares, it was, and at the date
hereof and at the Closing Date it is or will be, as applicable, an “accredited
investor” as defined in Rule 501(a) under the Securities Act.

 

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(f) The Investor understands that no United States federal or state agency or
any other government or governmental agency has passed on or made any
recommendation or endorsement of the Shares or the fairness or suitability of
the investment in the Common Stock nor have such authorities passed upon or
endorsed the merits of the offering of the Shares.

(g) The Investor understands that nothing in this Agreement or any other
materials presented to the Investor in connection with the purchase and sale of
the Shares constitutes legal, tax or investment advice. The Investor has
consulted such legal, tax and investment advisors as it, in its sole discretion,
has deemed necessary or appropriate in connection with its purchase of Shares.

(h) The Investor represents, warrants and agrees that, since the date that is
the tenth (10th) trading day prior to the date of this Agreement, it has not
engaged in any short selling of the Company’s securities, or established or
increased any “put equivalent position” as defined in Rule 16(a)-1(h) under the
Securities Exchange Act of 1934 with respect to the Company’s securities.

7. Registration Rights. The Company shall use its commercially reasonable
efforts to treat the Shares as “Registrable Shares” under that certain Investor
Rights Agreement, dated July 8, 2003 (the “2003 Agreement”), among the Company
and certain of its stockholders to the extent, but only to the extent, permitted
by the 2003 Agreement, including using its commercially reasonable efforts to
obtain, on or prior the Closing, an amendment to the 2003 Agreement that shall
have the effect of (i) including in the definition of “Registrable Shares”
thereunder the Shares issuable pursuant to this Agreement and (ii) include each
Investor as party thereunder, which such amendment shall be effective upon the
Closing.

8. Transfer Restrictions.

(a) In connection with any permitted transfer of Shares other than pursuant to
an effective registration statement or pursuant to Rule 144 under the Securities
Act, the Company may require the transferor to provide to the Company an opinion
of counsel selected by the transferor and reasonably acceptable to the Company,
the form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration under
the Securities Act. Notwithstanding the foregoing, the Company hereby consents
to and agrees to register on the books of the Company and with its transfer
agent, without any such legal opinion, except to the extent that the transfer
agent is entitled to such legal opinion, any transfer of Shares by an Investor
to an Affiliate of an Investor, provided that the transferee certifies to the
Company that it is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and provided that such Affiliate agrees to be bound by this
Agreement. For purposes of this Agreement, an “Affiliate” of a person or entity
means any person or entity that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
such person or entity, as such terms are used in and construed under Rule 144
under the Securities Act.

(b) Each Investor agrees that, for so long as is required by this Section 8, the
following legends shall be imprinted on any certificate evidencing the Shares:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE HELD BY A PERSON OR ENTITY WHO
MAY BE DEEMED TO BE AN AFFILIATE OF THE ISSUER FOR PURPOSES OF RULE 144
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

9

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(c) Certificates evidencing the Shares shall not be required to contain such
legends (i) after a transfer pursuant to a registration statement that is
effective under the Securities Act covering the resale of such Shares
(ii) following any sale of such Shares pursuant to Rule 144 or (iii) once they
may be sold pursuant to Rule 144 without limitation thereunder on volume or
manner of sale. At such time as a legend is no longer required for the Shares,
the Company will as soon as reasonably practicable following the delivery by an
Investor to the Company of an opinion of counsel to the extent required by
Section 8(a) and a legended certificate representing such Shares, deliver or
cause to be delivered to such Investor a certificate representing such Shares
that is free from such legend. The Company may not make any notation on its
records that enlarge the restrictions on transfer set forth in this Section 8.

9. Further Action. On and prior to the Closing Date, each of the Company and
each Investor shall use its commercially reasonable efforts to take or cause to
be taken all action and to do or cause to be done all things necessary or, in
the reasonable opinion of such Investor or the Company, as the case may be,
advisable under applicable laws, rules and regulations to consummate and make
effective the transactions contemplated by this Agreement. Without limiting the
foregoing, the Company and each Investor will use its commercially reasonable
efforts to make all filings (including without limitation, under the HSR Act)
and obtain all consents of governmental entities which may be necessary or, in
the reasonable opinion of such Investor or the Company, as the case may be,
advisable for the consummation of the transactions contemplated by this
Agreement. Subject to each party’s determination of the need to file under the
HSR Act, each party hereto shall make all necessary filings to be made by them,
and thereafter make any other required or appropriate submissions, with respect
to this Agreement and the transactions contemplated hereby required under the
HSR Act and each party shall make, as soon as reasonably practicable, all other
necessary filings to be made by it, and thereafter make any other required or
appropriate submissions, with respect to this Agreement and the transactions
contemplated hereby. Each party will cooperate fully (including, without
limitation, by providing all information and assistance as the other party
reasonably requests in connection with its preparation of any filing or
submission that is necessary or, in the reasonable opinion of such Investor or
the Company, as the case may be, advisable under the HSR Act) with the other
parties in seeking to obtain all such authorizations, consents, orders and
approvals.

10. Survival of Representations, Warranties and Agreements. The representations
and warranties made in this Agreement shall terminate as of the Closing. All
covenants and agreements contained herein shall survive until, by their
respective terms, they are fully performed and no longer operative.

11. Notices. All notices, requests, consents and other communications hereunder
will be in writing, will be mailed (a) if within the domestic United States by
first-class registered or certified airmail, or nationally recognized overnight
express courier, postage prepaid, or by facsimile or (b) if delivered from
outside the United States, by International Federal Express or facsimile, and
will be deemed given (i) if delivered by first-class registered or certified
mail domestic, three business days after so mailed, (ii) if delivered by
nationally recognized overnight carrier, one business day after so mailed,
(iii) if delivered by International Federal Express, two business days after so
mailed and (iv) if delivered by facsimile, upon electric confirmation of receipt
and will be delivered and addressed as follows:

if to the Company, to:

Seattle Genetics, Inc.

21823 30th Drive SE

Bothell, WA 98021

Facsimile: (425) 527-4000

Attention: Chief Executive Officer

with a copy to (which shall not constitute notice):

Cooley Godward Kronish LLP

719 Second Avenue, Suite 900

Seattle, WA 98104

Facsimile: (206) 452-8800

Attention: Sonya Erickson

 

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if to the Investors, to:

c/o Baker Brothers Life Sciences, L.P.

655 Madison Avenue, 19th Floor

New York, NY 10021

Attn: Felix Baker

12. Fees and Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such expense. This section shall survive the consummation,
termination or expiration of this Agreement and the transactions contemplated by
this Agreement.

13. Amendment. Prior to the Closing, any term of this Agreement may be amended
or waived only with the written consent of the Company and BBLS. From and after
the Closing, any term of this Agreement may be amended or waived only with the
written consent of the Company and the Investors holding at least a majority of
the Shares purchased pursuant to this Agreement. Any amendment or waiver
effected in accordance with this Section 13 shall be binding upon the Investors
and the Company.

14. Assignment. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement may be assigned or delegated, in whole or in
part, by operation of law or otherwise by any of the parties hereto without the
prior written consent of (i) in the case of an assignment or delegation by an
Investor, the Company and (ii) in the case of an assignment or delegation by the
Company, the Investors, and any such assignment without such prior written
consent shall be null and void. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the parties hereto and their respective successors and assigns.

15. Headings. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and will not be deemed to be part of
this Agreement.

16. Severability. In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein will not in any way
be affected or impaired thereby.

17. Governing Law. This Agreement will be governed by, and construed in
accordance with, the internal laws of the State of New York, without giving
effect to the principles of conflicts of law that would require the application
of the laws of any other jurisdiction.

18. Counterparts. This Agreement may be executed in two or more counterparts,
each of which will constitute an original, but all of which, when taken
together, will constitute but one instrument, and will become effective when one
or more counterparts have been signed by each party hereto and delivered to the
other parties. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original thereof.

19. Adjustments in Share Numbers and Prices. In the event of any stock split,
subdivision, dividend or distribution payable in share of Common Stock (or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly share of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof, each
reference in this Agreement to a number of shares or a price per share shall be
amended to appropriately account for such event.

20. Termination.

(a) If the Stockholder Approval is not received, and the Closing Date has not
occurred, on or before the date six months from the date of this Agreement, this
Agreement shall terminate without any further action on the part of the parties
hereto. In addition, this Agreement may be terminated prior to the Closing by:

(i) the mutual written consent of the Company and BBLS;

(ii) either the Company or BBLS if the Underwriting Agreement is not entered
into prior to the opening of trading on the first trading day following the date
hereof by the Company and the underwriters specified therein or if the
Underwriting Agreement is amended on or after the date hereof other than to
increase the number of Underwritten Shares issuable thereunder;

 

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(iii) either the Company or BBLS upon the termination of the Underwriting
Agreement prior to the closing of the purchase and sale of the Underwritten
Shares thereunder;

(iv) either the Company or BBLS if a court or agency of competent jurisdiction
shall have issued a nonappealable final Order or taken any other action having
the effect of permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement.

(b) In the event that this Agreement is validly terminated as provided in
Section 20(a), then each of the parties shall be relieved of their duties and
obligations arising under this Agreement after the date of such termination and
such termination shall be without liability or obligation to the Company or to
any Investor; provided, however, that such termination will not affect (a) any
rights that have accrued to the benefit of any party prior to the date of such
termination, including damages arising from any breach of this Agreement and
(b) any party’s liability for any breach of this Agreement such party may have
committed prior to the date of such termination. In the event that this
Agreement is validly terminated as provided herein, the Company shall promptly
notify all Investors. The provisions of Section 10 through this Section 20 shall
survive any termination hereof pursuant to Section 20(a) hereof.

[Signature pages follow]

 

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The parties have executed this Stock Purchase Agreement as of the date written
above.

 

COMPANY: SEATTLE GENETICS, INC. By:   /s/ Clay B. Siegall Name:   Clay B.
Siegall Title:   Pres. and CEO INVESTORS: BAKER BROTHERS LIFE SCIENCES, L.P. By:
  Baker Brothers Life Sciences Capital, L.P., its general partner By:   Baker
Brothers Life Sciences Capital (GP), LLC, its general partner By:   /s/ Felix
Baker Name:   Felix Baker, Ph.D Title:   Managing Member

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EXHIBIT A

 

Investor Name

   Pro Rata Percentage   Shares

Baker Brothers Life Sciences, L.P.

   17.03%   TBD

Total:

   17.03%   TBD

Exhibit A

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EXHIBIT B

PERMITTED FORM OF DISCLOSURES

On January 27, 2009, Seattle Genetics, Inc. (the “Company”) entered into a stock
purchase agreement (the “Baker Purchase Agreement”) with Baker Brothers Life
Sciences, L.P. (“BBLS”), an existing stockholder. The Baker Purchase Agreement
provides that, subject to stockholder approval and customary closing conditions,
BBLS and certain affiliated funds (the “Baker Entities”) will purchase a number
of shares of the Company’s common stock, par value $0.001 per share (“Common
Stock”), that would allow the Baker Entities to maintain their collective 17.03%
beneficial ownership position in the Company after giving effect to both the
sale of Common Stock in the Proposed Offering referenced under Item 8.01 below
and the sale of Common Stock to the Baker Entities pursuant to the Baker
Purchase Agreement (such number of shares, the “Baker Shares”). If the
transactions contemplated by the Baker Purchase Agreement are consummated, the
purchase price per share for the Baker Shares will be equal to the greater of
the volume weighted average price at which the shares are sold by the
prospective underwriter in the Proposed Offering referenced under Item 8.01
below during a specified period of time, and the price at which the shares are
sold by the Company to UBS Investment Bank, the prospective underwriter. The
Company has agreed to use commercially reasonable efforts to obtain stockholder
approval for the transactions contemplated by the Baker Purchase Agreement by
June 1, 2009, and if the Company does not receive such approval, the Baker
Purchase Agreement will be terminated and the sale and issuance of the Baker
Shares will not be consummated. In addition, in the event that the Proposed
Offering referenced under Item 8.01 is not consummated, either the Company or
BBLS may terminate the Baker Purchase Agreement. Felix Baker, Ph.D., one of our
directors, is a Managing Member of Baker Brothers Life Sciences Capital (GP),
LLC, the general partner of BBLS’s general partner.

Exhibit B