Exhibit 10.2

COLLABORATION AGREEMENT

This Collaboration Agreement is entered into as of the Effective Date by and
between Seattle Genetics, Inc., a Delaware corporation having offices at 21823
30th Drive S.E., Bothell, WA 98021 (“SGEN”), and Genentech, Inc., a Delaware
corporation having offices at 1 DNA Way, South San Francisco, CA 94080-4990
(“GNE”).

RECITALS

WHEREAS, GNE is engaged in the research, development and commercialization of
human pharmaceuticals;

WHEREAS, SGEN possesses intellectual property relating to a proprietary
humanized anti-CD40 monoclonal antibody known as SGN-40, as well as other
anti-CD40 antibodies; and

WHEREAS, GNE and SGEN desire to enter into a collaboration under which GNE and
SGEN would endeavor to jointly develop SGN-40, and if successful GNE would
commercialize SGN-40 and SGEN would receive an option to co-promote SGN-40 in
the U.S., all under the terms and conditions set forth below.

NOW THEREFORE, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

1.1 “Abbott Agreement” has the meaning set forth in Section 2.1(b).

1.2 “ADC Collaboration Agreement” means that certain ADC Collaboration Agreement
dated April 19, 2002 by and between SGEN and GNE.

1.3 “Affiliate” means any corporation or other business entity controlled by,
controlling, or under common control with another entity, with “control” meaning
direct or indirect beneficial ownership of [***] of the voting stock of, or
[***] interest in the income of, such corporation or other business entity. For
purposes of this Agreement, with respect to GNE, the term “Affiliate” shall not
include [***] and its successors, or any entity that controls, is controlled by
or is under common control with [***], in each case that is not controlled by
GNE.

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Confidential treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as [***]. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

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1.4 “Allocable Overhead” means [***] costs incurred by a Party that are
attributable to that Party’s [***]. Allocable Overhead shall not include any
costs attributable to [***].

1.5 “Autoimmune Disease Indication” means a non-cancer disease or condition
caused by an immune response against normal tissues, including multiple
sclerosis, rheumatoid arthritis, systemic lupus erythematosus, scleroderma and
inflammatory indications.

1.6 “CD40” means the CD40 cell surface receptor, which is a member of the TNF
superfamily and to which CD40 ligand (CD40L or also known as CD154) binds.

1.7 “Combination Product” has the meaning set forth in Section 1.54.

1.8 “Commercialization” means the marketing, promotion, sale and/or distribution
of Licensed Product in the Territory. “Commercialize” has a correlative meaning.

1.9 “Competitive Product” means any antibody-based product containing an [***]
that (i) specifically [***] and (ii) is not either a [***] or a [***].

1.10 “Confidential Information” means all Information (whether in written, oral,
electronic, visual, tangible, or other form) and materials, including biological
and other tangible materials, that are disclosed by one Party to the other Party
prior to the Effective Date or during the Term, provided that all information
disclosed in tangible form is designated as confidential by the use of an
appropriate stamp or legend and information disclosed in any other form is
identified as confidential at the time of disclosure.

1.11 “Controlled” means, with respect to any intellectual property right or
Information, that the Party owns or has a license to such intellectual property
right or Information and has all the rights necessary (a) to grant to the other
Party a license or sublicense to such intellectual property right as provided
for herein or (b) to transfer such Information to the other Party as provided
for herein (as applicable) without violating the terms of any agreement or other
arrangements with any Third Party existing at the time such Party would be first
required hereunder to grant the other Party such license or sublicense or to
perform such transfer.

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1.12 “Co-Promote” means the detailing or promotion of a Co-Promote Product to
physicians or other authorized prescribers in the U.S. under a single trademark.

1.13 “Co-Promote Product” has the meaning set forth in Section 6.6(a).

1.14 “Co-Promotion Notice” has the meaning set forth in Section 6.6(b).

1.15 “Co-Promotion Option” has the meaning set forth in Section 6.6(a).

1.16 “Co-Promotion Plan” has the meaning set forth in Section 6.6(c).

1.17 “Development” means all activities that relate to (a) obtaining,
maintaining or expanding Regulatory Approval of a Licensed Product, (b) studies
conducted to expand the scientific or medical understanding of a Licensed
Product, whether for publication in a peer-reviewed journal or not, but not
necessarily for the intent of obtaining, maintaining or expanding Regulatory
Approval of Licensed Product (e.g., investigator-sponsored trials) or
(c) developing the ability to manufacture clinical and commercial quantities of
Licensed Product. This includes: (i) research, preclinical testing, toxicology,
and clinical studies of Licensed Product; (ii) preparation, submission, review,
and development of data or information for the purpose of submission to a
governmental authority to obtain, maintain and/or expand Regulatory Approval of
Licensed Product, and outside counsel regulatory legal services related thereto;
(iii) manufacturing process development and scale-up, bulk production and
fill/finish work associated with the supply of Licensed Product for preclinical
and clinical studies, and related quality assurance technical support
activities; and (iv) post-Regulatory Approval product support for a Licensed
Product (including manufacturing and quality assurance technical support, and
laboratory and clinical efforts directed toward the further understanding of the
safety and efficacy of a Licensed Product. “Develop” has a correlative meaning.

1.18 “Development Costs” has the meaning set forth in Section 4.7.

1.19 “Development Plan” has the meaning set forth in Section 4.2(a).

1.20 “Diligent Efforts” means, with respect to particular obligations or tasks
of a Party, the carrying out of such obligations or tasks in a diligent manner
consistent with (a) as to [***], [***] and (b) as to [***], [***], in each case
of (a) and (b) as applicable to the

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development or commercialization of a product having similar technical and
regulatory hurdles and similar market potential, profit potential and strategic
value, that is at a similar stage in its development or product life cycle, and
is based on conditions then prevailing and with due regard to the nature of
efforts and cost required and the current corporate goals and priorities of such
Party, but in any event, not less than the level of effort that such Party uses
to conduct its own comparable business.

1.21 “Dollars” or “$” means the legal tender of the U.S.

1.22 “Drug Approval Application” means, with respect to a particular country, an
application for regulatory approval required before commercial sale or use of a
Licensed Product in such country. For clarity, in the U.S., a “Biologics License
Application” and a “New Drug Application” (as such terms are used by the FDA)
shall each be deemed to be a Drug Approval Application.

1.23 “Effective Date” means the date upon which all provisions of this Agreement
become effective pursuant to Section 16.1.

1.24 “European Union” or “EU” means the European Union or any successor
organization, including any of its member countries.

1.25 “Execution Date” means January 7, 2007, the date upon which this Agreement
has been executed and delivered by both Parties.

1.26 “Executive Officer” means, in the case of SGEN, the Chief Executive Officer
of SGEN or designee, and in the case of GNE, any of the following: the Vice
President of Sales and Marketing, BioOncology or the Vice President, Clinical
Hematology/Oncology of GNE, or their successor functionaries. In no case will
any Executive Officer be a currently serving member of the JDC or JCC.

1.27 “FBMC” means, with respect to a given Licensed Product (or Termination
Product), [***] of a Party’s fully-burdened manufacturing cost (as defined by
such Party’s accounting policies consistently applied), which shall comprise the
sum of: (a) [***] and (b) [***]. With respect to Licensed Products (or
Termination Products) manufactured by a Third

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Party under contract with such Party and supplied either to such Party or
directly to the other Party, Section 1.27(a) shall include the net sum of
(i) [***]; (ii) [***]; and (iii) to the extent not otherwise captured in the
deductions for Net Sales set forth in Section 1.54, [***], and (iv) [***].

1.28 “FDA” means the U.S. Food and Drug Administration or any successor agency
thereto.

1.29 “Field” means all uses.

1.30 “First Commercial Sale” means, with respect to a country in the Territory,
the first sale to a Third Party of a Licensed Product in such country by GNE or
its Affiliates or Sublicensees after the approval of the Drug Approval
Application in such country, or where no Drug Approval Application is required
to be approved, after compliance with such import requirements as are required
to import such Licensed Product into such country for commercial sale.

1.31 “FTE” means the equivalent of a full-time employee of SGEN (including
normal vacations, sick leave, and other similar matters). A Development FTE
charged to GNE shall represent the percentage of time a full-time employee of
SGEN spends working on Development activities assigned to SGEN under a
Development Plan relative to total time over a given time period as recorded in
the SGEN project time reporting system. For the avoidance of doubt, the time
shall be recorded in a manner such that no employee of SGEN can report
him/herself as more than [***] FTE in any given [***]. An FTE is measured on the
basis of a total of [***].

1.32 “GAAP” means United States generally accepted accounting principles.

1.33 “GNE Excluded Patents” means all rights in and to any of the following,
each of which is defined on Exhibit D: [***].

1.34 “GNE Inventions” means all Inventions that are made during the Term by one
or more employees of GNE or persons contractually required to assign or license
such Inventions to GNE, excluding Joint Inventions.

1.35 “GNE Know-How” means all Information that is (a) Controlled by GNE or its
Affiliates as of the Effective Date or any time during the Term, and
(b) necessary or useful for SGEN to research, Develop, manufacture, use, sell,
offer for sale, import, or export Licensed Products.

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1.36 “GNE Patents” means any and all Patents that (a) are Controlled by GNE or
its Affiliates as of the Effective Date or any time during the Term, and
(b) claim a Licensed Product, its use or manufacture, but excluding in any event
the GNE Excluded Patents.

1.37 “GNE Technology” means the GNE Know-How and GNE Patents, including GNE’s
interest in any Joint Patents.

1.38 “GNE Termination Technology” means the GNE Know-How and GNE Patents,
including GNE’s interest in any Joint Patents, but in each case [***].

1.39 “Hematologic Oncology Indication” means a cancerous disease of the blood or
bone marrow, including non-Hodgkin’s lymphoma, multiple myeloma, chronic
lymphocytic leukemia, acute lymphocytic leukemia, Hodgkin’s disease and
Waldenstrom’s macroglobulinemia. For clarification and purposes of calculating
milestone payments owed pursuant to Section 8.3, the following diseases shall
each be considered a different Hematologic Oncology Indication: (a) aggressive
lymphoma subtypes such as diffuse large B-cell lymphoma; (b) indolent lymphoma
subtypes such as follicular lymphoma; (c) multiple myeloma; (d) chronic
lymphocytic leukemia; (e) acute lymphocytic leukemia; and (f) Hodgkin’s disease.

1.40 “HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1974, as amended, 15 U.S.C. §18A.

1.41 “HSR Conditions” shall mean the following conditions, collectively: (a) the
waiting period under the HSR Act shall have expired or earlier been terminated;
(b) no injunction (whether temporary, preliminary or permanent) prohibiting
consummation of the transaction contemplated by this Agreement or any material
portion hereof shall be in effect; (c) no judicial or administrative proceeding
opposing consummation of all or any part of this Agreement shall be pending; and
(d) no requirements or conditions shall have been imposed by the United States
Department of Justice or Federal Trade Commission (as applicable) in connection
with the filings by the Parties under the HSR Act, other than requirements or
conditions that are satisfactory to the Party on whom such requirements or
conditions are imposed.

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1.42 “HSR Filing” shall mean filings by GNE and SGEN with the United States
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice of a Notification and Report Form for Certain Mergers and
Acquisitions (as that term is defined in the HSR Act) with respect to the
subject matter of this Agreement, together with all required documentary
attachments thereto.

1.43 “IND” means an investigational new drug application in the U.S. or any
equivalent Regulatory Filing in another country.

1.44 “Initial Development Plan” has the meaning set forth in Section 4.2(b).

1.45 “Information” means all compositions of matter, techniques, data and other
know-how and technical information, including inventions, improvements and
developments, practices, methods, concepts, trade secrets, documents, computer
data, computer code, apparatus, clinical and regulatory strategies, test data,
analytical and quality control data, formulation, manufacturing, patent data or
descriptions, development information, drawings, specifications, designs, plans,
proposals and technical data and manuals and all other proprietary information.

1.46 “Inventions” means any Information (whether or not patentable) that is
made, discovered, or created, or that otherwise arises from activities conducted
by the Parties pursuant to this Agreement during the Term.

1.47 “Joint Inventions” means any Inventions that are made by at least one SGEN
employee or person contractually required to assign or license such Inventions
to SGEN and at least one GNE employee or person contractually required to assign
or license such Inventions to GNE.

1.48 “Joint Patent(s)” has the meaning set forth in Section 10.1(b).

1.49 “JDC” has the meaning set forth in Section 3.1.

 

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1.50 “Licensed Molecule” means: (a) the humanized anti-CD40 monoclonal antibody
referred to by SGEN as SGN-40 and having the amino acid sequence of hu sgn 26
described in US 60/684,853 filed May 26, 2005, [***] any [***], [***] or [***]
thereof; (b) the murine monoclonal antibody S2C6, [***], [***] or [***] thereof;
or (c) [***]. Licensed Molecules shall also include antibody-drug conjugates
containing any antibody set forth in clauses (a), (b) or (c) above; provided,
however, if the antibody-drug conjugate is subject to the ADC Collaboration
Agreement, [***].

1.51 “Licensed Product” means any pharmaceutical product that uses, incorporates
or contains a Licensed Molecule, including all formulations, line extensions,
and modes of administration thereof.

1.52 “MabTech Agreement” means that certain License Agreement entered into
between SGEN and MabTech AB with an effective date of June 14, 1998, as amended
by the First Amendment to the License Agreement effective January 31, 2000.

1.53 “Marks” has the meaning set forth in Section 10.5.

1.54 “Net Sales” means, with respect to a particular time period, the gross
amounts invoiced for sales of Licensed Products (or as the case may be,
Competitive Products or Termination Products) (in final form for end use) by GNE
and its Affiliates and Sublicensees, [***]:

 

  (i) [***];

 

  (ii) [***];

 

  (iii) [***];

 

  (iv) [***];

 

  (v) [***];

 

  (vi) [***];

 

  (vii) [***]; and

 

  (viii) [***].

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All of the foregoing elements of Net Sales calculations shall be determined on
an [***] in accordance with GAAP or applicable international accounting
standards.

Sales between or among GNE and its Affiliates and Sublicensees, shall be
excluded from the computation of Net Sales, but Net Sales shall include the
first sales to Third Parties by any such Affiliates or Sublicensees.

Notwithstanding anything else in this in this Section 1.54, the supply or other
disposition of Licensed Products (i) as samples, (ii) for use in non-clinical or
clinical studies, (iii) for use in any tests or studies reasonably necessary to
comply with any applicable law, regulation or request by a regulatory or
governmental authority or as is otherwise reasonable and customary in the
industry, in each case shall not be included within the computation of Net
Sales.

In the event a Licensed Product is sold in combination with one or more other
active ingredients which are not the subject of this Agreement (as used in this
definition of Net Sales, a “Combination Product”), then the gross amount
invoiced for that Licensed Product shall be calculated [***]. In the event that
the other active ingredient is not sold separately, then the gross amount
invoiced for that Licensed Product shall be calculated by [***]. In the event
that no such separate sales are made, Net Sales for royalty determination shall
be determined by the Parties in good faith.

1.55 “Other SGEN Research” means those research activities involving in vitro or
non-clinical in vivo work (a) that are being conducted by SGEN as of the
Effective Date or that are conducted by SGEN during the Term and (b) [***].

1.56 “Party” means SGEN or GNE individually, and “Parties” means SGEN and GNE
collectively.

1.57 “Patents” means (a) United States patents, re-examinations, reissues,
renewals, registrations, extensions and term restorations, and all foreign
patents and counterparts of any of the foregoing (including any supplemental
protection certificates), and (b) applications for United States patents,
including provisional applications, continuations, continuations-in-part,
divisional and substitute applications, inventors’ certificates, and extensions,
any and all patents granted on the basis of such applications, and applications
for foreign patents and counterparts of any of the foregoing.

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1.58 “PDL Agreement” means that certain Patent License Agreement between SGEN
and Protein Design Labs, Inc., dated as of January 9, 2004.

1.59 “Phase I Trial” means that portion of the clinical development program that
provides for the well-controlled clinical trials of a Licensed Product in a
human patient population to determine the safe dose range in the proposed
therapeutic indication, as more fully defined in 21 C.F.R. § 312.21(a), or its
successor regulation, or the equivalent in any foreign country. For clarity, the
term “Phase I Trial” shall include the Phase Ib trials referenced in
Section 4.2(b).

1.60 “Phase II Trial” means that portion of the clinical development program
that provides for the well-controlled clinical trials of a Licensed Product in a
human patient population to determine the safe and effective dose range in the
proposed therapeutic indication, as more fully defined in 21 C.F.R. § 312.21(b),
or its successor regulation, or the equivalent in any foreign country.

1.61 “Phase III Trial” means that portion of the clinical development program
that provides for continued clinical trials of a Licensed Product in an extended
human patient population designed to obtain data determining efficacy and safety
of such Licensed Product to support Regulatory Approvals in the proposed
therapeutic indication, as more fully defined in 21 C.F.R. § 312.21(c), or its
successor regulation, or the equivalent in any foreign country.

1.62 “Pivotal Trial” means a controlled study in humans that is prospectively
designed, using predetermined endpoints, to demonstrate, both clinically and
statistically, efficacy and safety sufficient to obtain Regulatory Approval. A
Pivotal Trial would also include any study in humans that although not
prospectively designed as such, results in obtaining Regulatory Approval.

1.63 “Prior Agreements” means the License Agreement between the Parties, dated
March 6, 2003, and the Non-Exclusive Cabilly Patent License Agreement between
the Parties, dated March 6, 2003 (the “Cabilly Agreement”), and, to the extent
referenced in the foregoing agreements, that certain Amended and Restated
Development and License Agreement between the Parties dated March 2, 2001.

 

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1.64 “Regulatory Approval” means all approvals, licenses, registrations or
authorizations of any federal, state or local regulatory agency, department,
bureau or other governmental entity, necessary for the manufacturing, use,
storage, import, transport, marketing and sale of Licensed Products in a country
or regulatory jurisdiction. For countries where governmental approval is
required for pricing or reimbursement for the Licensed Product, “Regulatory
Approval” shall not be deemed to occur until such pricing or reimbursement
approval is obtained.

1.65 “Regulatory Filings” means all applications, filings, dossiers and the like
submitted to a regulatory authority in the Territory for the purpose of
obtaining Regulatory Approval from that regulatory authority in the Territory.
Regulatory Filings shall include, but not be limited to, all Drug Approval
Applications.

1.66 “SGEN Development Period” means the six (6) year period commencing on the
Effective Date.

1.67 “SGEN FTE Rate” means [***] per FTE per year, subject to annual adjustment
on [***] of the Effective Date based on the percentage increase or decrease in
the [***], All Items during the applicable period. Rate includes [***].

1.68 “SGEN Inventions” means all Inventions that are made by one or more
employees of SGEN or persons contractually required to assign or license such
Inventions to SGEN, excluding Joint Inventions.

1.69 “SGEN Know-How” means all Information that is (a) Controlled by SGEN as of
the Effective Date or any time during the Term, and (b) necessary or useful for
GNE to research, Develop, manufacture, use, sell, offer for sale, import, or
export Licensed Products.

1.70 “SGEN Patents” means any and all Patents that (a) are Controlled by SGEN as
of the Effective Date or at any time during the Term and (b) cover an antibody
(including any variant, derivative, or fragment thereof) targeting CD40 or its
manufacture, use or sale. For purposes of this Agreement and notwithstanding
anything to the contrary, the Patents listed on Exhibit A shall be deemed,
without limitation, to be SGEN Patents. Exhibit A may be updated from time to
time. [***].

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1.71 “SGEN Product” means a Licensed Product that uses, incorporates or contains
a Licensed Molecule meeting the criteria set forth in Sections 1.50(a) or (b).

1.72 “SGEN Technology” means SGEN Know-How and SGEN Patents, including SGEN’s
interest in any Joint Patents.

1.73 “Solid Tumor Indication” means any cancer other than a Hematologic Oncology
Indication, including lung, colon, breast, renal cell, ovarian, bladder, head
and neck, squamous cell or hepatocellular cancer.

1.74 “Sublicensee” means any Third Party which enters into an agreement with a
Party or its Affiliate involving the grant to such Third Party of any rights
under the licenses granted to such Party under this Agreement.

1.75 “Term” has the meaning set forth in Section 14.1.

1.76 “[***]” has the meaning set forth in Section 14.5(a)(ii).

1.77 “Territory” means the entire world.

1.78 “Third Party” means any person or entity other than a Party or its
Affiliates.

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

1.80 “U.S. Commercialization Plan” has the meaning set forth in Section 6.2(a).

1.81 “Valid Claim” means a claim of an issued and unexpired Patent (as defined
in Section 1.57(a)) which has not been disclaimed, revoked, held unenforceable
or invalid by a decision of a court or other governmental agency of competent
jurisdiction, unappealable or is unappealed within the time allowed for appeal,
and which has not been admitted to be invalid or unenforceable through reissue
or disclaimer or otherwise.

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1.82 “Valid Claim Product” means a Licensed Product that at the time of sale,
the use or sale of which would, but for the license granted to GNE under
Section 2.1, infringe a Valid Claim of a Patent (as defined in Section 1.57(a))
within the SGEN Patents in the country of sale, subject to Section 8.3(i).

ARTICLE 2

LICENSES

2.1 License to GNE.

(a) Subject to the terms and conditions of this Agreement, SGEN hereby grants to
GNE, under the SGEN Technology, an exclusive (even as to SGEN) royalty-bearing
license (or, as relevant, sublicense) to develop, make, have made, use, import,
export, sell, offer for sale, and market Licensed Products in the Field in the
Territory. Such license shall be sublicensable only with the prior written
consent of SGEN, which shall not be unreasonably withheld. Notwithstanding the
foregoing, [***]; provided, however, that [***]. For the purpose of the
preceding sentence, [***] shall be treated as an Affiliate of [***]. Each
sublicense granted by GNE under this Section 2.1 shall be subordinate to this
Agreement, and GNE shall be responsible for the performance of its Sublicensees.
Any act or omission by a Sublicensee that would be a material breach of this
Agreement had it been performed (or not performed) by GNE shall be treated as a
material breach of this Agreement by GNE, provided, however, that SGEN shall not
have the right to terminate this Agreement pursuant to Section 14.2 based upon
such material breach if (i) GNE terminates the sublicense agreement with such
Sublicensee; (ii) to the extent such material breach is capable of being cured,
GNE cures any such material breach by such Sublicensee or commences a plan to
cure such material breach within [***] days of its first awareness of such
material breach; and (iii) to the extent such material breach is incapable of
being cured, GNE shall, upon SGEN’s request, [***].

(b) Prior to the Execution Date, SGEN has entered into a Development and Supply
Agreement with Abbott Laboratories, Inc. (“Abbott Laboratories”) dated
February 18, 2005 (the “Abbott Agreement”) granting certain rights to
manufacture (but not to use, sell or offer to sell) SGN-40.

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2.2 License to SGEN. Subject to the terms and conditions of this Agreement, GNE
hereby grants to SGEN, under the GNE Technology and the SGEN Technology, a
non-exclusive, royalty-free license to make and use (but not to sell, offer for
sale or import) solely to the extent necessary to conduct (a) those Development
responsibilities expressly assigned to SGEN under the Development Plan as
approved by the JDC and (b) solely during the SGEN Development Period, such
Other SGEN Research as SGEN determines in its sole discretion. Such license
shall be sublicensable solely to subcontractors approved by the JDC, such
approval not to be unreasonably withheld.

2.3 No Non-Permitted Use. GNE hereby covenants that it shall not, nor shall it
cause or permit any Affiliate or Sublicensee to, use or practice, directly or
indirectly, any SGEN Technology for any purposes other than those expressly
permitted by this Agreement.

2.4 No Other Licenses. Neither Party grants to the other Party any rights or
licenses in or to any intellectual property, whether by implication, estoppel,
or otherwise, other than the license rights that are expressly granted under
this Agreement.

2.5 Sublicense Agreements. GNE shall, in each agreement under which it grants a
sublicense under the license set forth in Section 2.1 (each, a “Sublicense
Agreement”), require the Sublicensee to transfer (i) to GNE or SGEN if this
Agreement terminates, and such Sublicense Agreement does not survive in
accordance with Section 14.5(a)(iii), either in whole or in part related to the
country or region of such Sublicense Agreement and (ii) to GNE where only such
Sublicense Agreement terminates: (a) all Regulatory Filings and Regulatory
Approvals held or possessed by such Sublicensee and (b) results of preclinical
studies and Clinical Trials generated by or on behalf of such Sublicensee. With
respect to all Patents and Marks owned or controlled by such Sublicensee, and to
the extent such Patents claim a SGEN Product or its use, manufacture or sale,
each Sublicense Agreement will provide that such Patents and Marks are freely
sublicensable to SGEN or GNE by means of a non-exclusive or exclusive license
upon termination of this Agreement and such Sublicense Agreement [***]. Each
Sublicense Agreement shall also include diligence obligations no less stringent
than those set forth in Sections 4.3 and 6.3, but only to the extent applicable
to the scope of rights granted to and obligations incurred by such Sublicensee
under the terms of the Sublicense Agreement.

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2.6 Third Party Agreements. GNE (or its Affiliate or Sublicensee) shall be
responsible, [***] and [***], for obtaining any agreements with Third Parties
for any Third Party rights which, in the reasonable opinion of [***], would be
infringed by the Development, manufacturing, and Commercialization activities
with respect to Licensed Products in the Territory. GNE (or its Affiliate or
Sublicensee) shall [***] to ensure that: (i) each Third Party clinical trial,
contract manufacturing, or service agreement entered into by GNE or its
Affiliates or Sublicensees with respect to the Licensed Products contains
provision(s) permitting such Third Party contract to be [***]; and (ii) any
Patents that are licensed by GNE (or its Affiliates or Sublicensees) from a
Third Party after the Effective Date and that would constitute GNE Termination
Technology if Controlled by GNE [***].

ARTICLE 3

GOVERNANCE

3.1 Joint Development Committee. Within [***] after the Effective Date, SGEN and
GNE shall form a joint development committee (“JDC”) consisting of [***]
representatives from SGEN and [***] representatives from GNE (or such other
number as the Parties may agree, provided that each of the Parties shall have
the same number of JDC members). Representatives must be appropriate for the
tasks then being undertaken and the stage of development of the Licensed Product
for which activities under the Development Plan will be performed, in terms of
their seniority, availability, function in their respective organizations,
training and experience. Each Party shall designate [***] of its representatives
as its primary JDC contact. Each Party may replace its JDC representatives [***]
upon prior written notice to the other Party. JDC membership may evolve over
time as the project progresses so that each Party’s combined membership
represents the key functions (such as Development, manufacturing or regulatory)
that are the current focus of work on Licensed Products. The JDC shall continue
to exist until the first to occur of (a) the Parties mutually agreeing to
disband the JDC or (b) SGEN providing to GNE written notice of its intention to
disband and no longer participate in the JDC following the end of the SGEN
Development Period. Once SGEN has provided written notice as referred to in
clause (b) above, the JDC shall have no further obligations under Sections 4.2
or 4.4.

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3.2 Meetings of the JDC. The JDC shall meet at least [***] times every calendar
year, provided that the JDC may decide to schedule meetings on a [***] schedule
of [***] times every [***] if indicated by the then-current stage of development
and level of Development activity being conducted by the Parties. Such meetings
shall be held on such dates and at such times and places as agreed to by GNE and
SGEN; provided, however, that at least [***] shall be held in person,
alternating between SGEN’s facilities in Seattle, Washington, and GNE’s
facilities in South San Francisco, California. Responsibility for keeping
minutes will alternate between the Parties, beginning with GNE. JDC meeting
minutes will be sent to each member of the JDC for review as soon as practicable
after a meeting. A Party may, with the prior written consent of the other Party
(such consent not to be unreasonably withheld or delayed), invite a reasonable
number of employees, consultants or scientific advisors to attend a meeting of
the JDC, provided, however, that such invitees shall participate only as
observers and advisors and shall not have a decision-making role. Those invitees
must be bound by appropriate confidentiality obligations. Each Party shall be
responsible for its own expenses for participating in the JDC. Meetings of the
JDC shall be effective only if at least [***] of each Party is present or
participating.

3.3 Responsibilities of the JDC. The JDC shall have the responsibility and
authority to:

(a) Oversee the Regulatory Approval of Licensed Products in the Field in the
U.S., the Development of Licensed Products throughout the Territory in support
of such Regulatory Approval in the U.S., and manufacturing of Licensed Products
in support of such activities;

(b) Review and approve the overall strategy for Development in the Field in the
Territory;

(c) Review and approve any proposed amendments or updates to the Development
Plan;

(d) Monitor the Development of Licensed Products in the Field in the Territory
against the Development Plan;

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(e) Discuss the requirements for Regulatory Approval in applicable countries in
the Territory and oversee regulatory matters with respect to Licensed Products
in the Territory;

(f) Establish subcommittees pursuant to Section 3.11, oversee the activities of
all subcommittees so established, and address disputes or disagreements arising
in all such subcommittees;

(g) Designate and approve all Development activities assigned to SGEN (and
agreed to be undertaken by SGEN pursuant to Section 4.1) under a Development
Plan (subject to the approval mechanism set forth in Section 3.4); and

(h) Perform such other functions as the Parties may agree in writing.

3.4 Areas Outside the JDC’s Authority. The JDC shall have no authority other
than that expressly set forth in Section 3.3 and, specifically, shall have no
authority (a) [***], (b) [***](b) [***] provided that (i) such [***] may be
evidenced by JDC meeting minutes recording [***] of a Development Plan if such
meeting minutes have been approved [***] and (ii) [***] (c) [***], (d) [***], or
(e) [***]. For clarity, the JDC is intended to oversee Development of Licensed
Products for [***] and SGEN acknowledges and agrees that the JDC shall not have
authority over Development of Licensed Products for Regulatory Approval and sale
outside the U.S.. Nothing in this Agreement shall be interpreted as [***] to
provide [***] to enter into discussions with, or otherwise directly influence
the development of [***]; provided, however that [***], shall report on a
regular basis as to the status of Development efforts by its Sublicensees
outside the U.S. and the JDC shall be responsible for [***].

3.5 JDC Decisions.

(a) [***]; Good Faith; Action Without Meeting. The JDC shall decide all matters
by [***], with each Party having [***]. The members of the JDC shall act in good
faith to cooperate with one another and to reach agreement with respect to
issues to be decided by the JDC. Action that may be taken at a meeting of the
JDC also may be taken without a meeting if a [***].

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(b) Failure to Reach Consensus. In the event that the members of the JDC [***]
with respect to any matter over which the JDC has authority and responsibility,
the JDC shall submit the respective positions of the Parties with respect to
such matter for discussion in good faith by the Parties’ respective Executive
Officers. If such individuals are not able to mutually agree upon the resolution
to such matter [***] after the JDC’s submission to them, then, the Executive
Officer of GNE [***]. In no event shall the Executive Officer of GNE decide any
matter [***], or in any other manner [***].

3.6 Joint Commercialization Committee. No later than [***] days following SGEN’s
exercise of its Co-Promotion Option, and only if such Co-Promotion Option has
been exercised by SGEN, SGEN and GNE shall form a joint commercialization
committee (“JCC”) consisting of [***] representatives from SGEN and [***]
representatives from GNE (or such other number as the Parties may agree,
provided that each of the Parties shall have the same number of JCC members).
Each Party may replace its JCC representatives at [***] upon prior written
notice to the other Party. The JCC shall continue to exist until the first to
occur of (i) the Parties [***]; (ii) [***]; (iii) [***]; or (iv) [***].

3.7 Meetings of the JCC. The JCC shall meet on such dates and at such times and
places as agreed to by GNE and SGEN, but in any event shall hold at least [***]
on such dates at such times as it elects. The JCC shall record all decisions
made, and otherwise take minutes as appropriate. Responsibility for keeping
minutes will alternate between the Parties, beginning with GNE. JCC meeting
minutes will be sent to each member of the JCC for review as soon as practicable
after a meeting. A Party may, with the prior written consent of the other Party,
invite a reasonable number of non-voting employees or consultants to attend a
meeting of the JCC. Those invitees must be bound by appropriate confidentiality
obligations. Each Party shall be responsible for its own expenses for
participating in the JCC. Meetings of the JCC shall be effective only if at
least [***] of each Party [***] present or participating.

3.8 Responsibilities of the JCC. The JCC shall have the responsibility and
authority to:

(a) Review the U.S. Commercialization Plan and any proposed amendments or
updates thereto;

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(b) Monitor the Commercialization of Licensed Products in the U.S. against the
U.S. Commercialization Plan;

(c) Serve as a forum for discussing Commercialization issues relating to the
Co-Promote Products;

(d) Oversee and coordinate the Parties’ field sales promotional activities in
the U.S. with respect to Co-Promote Products;

(e) Establish subcommittees pursuant to Section 3.11, oversee the activities of
all subcommittees so established, and address disputes or disagreements arising
in all such subcommittees;

(f) Review and update the Co-Promotion Plan agreed upon by the Parties pursuant
to Section 6.6 (c); and

(g) Perform such other functions as the Parties may agree in writing.

3.9 Areas Outside the JCC’s Authority. The JCC shall have no authority other
than that expressly set forth in Section 3.8 and, specifically, shall have no
authority (a) [***], (b) [***], (c) to determine whether or not a Party [***],
(d) [***].

3.10 JCC Decisions.

(a) [***]; Good Faith; Action Without Meeting. The JCC shall decide all matters
by [***], with each Party having [***]. The members of the JCC shall act in good
faith to cooperate with one another and to reach agreement with respect to
issues to be decided by the JCC. Action that may be taken at a meeting of the
JCC also may be taken without a meeting if a [***] setting forth the action so
taken is [***], provided that such [***].

(b) Failure to Reach Consensus. In the event that the members of the JCC cannot
come to consensus within [***] with respect to any matter over which the JCC has
authority and responsibility, then, [***]. [***].

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3.11 Subcommittees. The JDC and JCC each shall have the right to establish
subcommittees and to delegate certain of its powers and responsibilities
thereto. Except as mutually agreed by the Parties, such subcommittees shall
decide all matters by [***], with each Party having [***], and any disputes that
cannot be resolved by a subcommittee in a reasonable time period shall be
submitted to the JDC or JCC (whichever established such subcommittee) for
resolution in accordance with Section 3.5 or 3.10(b) (as appropriate).

ARTICLE 4

DEVELOPMENT

4.1 Overview.

(a) GNE and SGEN shall perform all Development activities in accordance with the
Development Plan. As between the Parties, GNE, or its Affiliates or
Sublicensee(s) shall bear all costs associated with Development of Licensed
Products in the Field in the Territory, as set forth in more detail in
Section 4.7.

(b) SGEN shall only be obligated to perform Development activities during the
SGEN Development Period, as and to the extent provided in this Section 4.1(b).
SGEN hereby agrees and consents to conduct those Development activities assigned
to SGEN as set forth in the Initial Development Plan, subject to GNE’s
obligation to reimburse SGEN for its Development Costs pursuant to Section 4.7.
SGEN’s obligation to perform any Development activities other than those set
forth in the Initial Development Plan shall require SGEN’s written consent, in
its sole discretion, provided that any Development activities assigned to SGEN
and [***].

(c) Following the end of the SGEN Development Period, SGEN shall have the right
to voluntarily perform new Development activities if reasonably requested by GNE
and agreed to in writing by SGEN. Both Parties have agreed that such right of
SGEN to voluntarily perform such new Development activities as requested by GNE
pursuant to this Section 4.1(c) does not constitute a future performance
obligation of SGEN and, in particular, does not constitute an [***]. In
addition, to the extent that after the SGEN Development Period, GNE requests and
SGEN agrees to undertake further new Development pursuant to this Section 4.1(c)
and [***]. Notwithstanding the foregoing, the Parties expect any creation and
transfer of [***] under this provision and after the end of the SGEN Development
Period to be [***]. In addition, it is understood that [***].

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4.2 Development Plan.

(a) Scope. The Development of each Licensed Product in the Territory under this
Agreement shall be governed by a development plan (each, a “Development Plan”).
Each Development Plan shall be developed in good faith with the overall
objective of optimizing the commercial potential of such Licensed Product. Each
Development Plan shall describe (i) the proposed overall program of Development
for the applicable Licensed Product, including preclinical studies, toxicology,
manufacturing, clinical studies, regulatory plans and other elements of
obtaining Regulatory Approval(s) in each applicable country, (ii) timelines for
key regulatory authority meetings, Drug Approval Applications and Regulatory
Approvals, and (iii) the anticipated tasks and responsibilities of each Party
(subject to Section 4.1(b)). Each Development Plan shall include a summary of
estimated Development expenses of the program expected to be incurred during the
Development process through obtaining Regulatory Approval for each proposed
indication and route of delivery, [***]. In the event of any inconsistency
between the Development Plan and this Agreement, the terms of this Agreement
shall prevail. In the event that the JDC fails to formally approve the
Development Plan or update or amendment thereto, the course of action actually
taken by the Parties shall constitute the Development Plan for the purpose of
this Agreement, unless and to the extent the Parties disagree on such course of
conduct and provided further that this sentence shall in no way be construed as
obligating SGEN to undertake any Development activities which are not otherwise
agreed to by SGEN in accordance with Section 4.1(b).

(b) Initial Development Plan. The Parties have agreed on an outline of the
initial Development Plan, a copy of which is attached hereto as Exhibit B (the
“Initial Development Plan”). Promptly but no later than [***] after the
Effective Date, the Parties shall prepare and submit to the JDC for approval the
full version of the Development Plan, which shall be consistent with Exhibit B,
and in particular, the Development Plan shall allocate to SGEN responsibility
for conducting (i) [***], (ii) [***] and (iii) [***]. It is anticipated that
(w) [***]; (x) [***]; (y) [***]; and (z) [***]. The Parties acknowledge that, as
of the Execution Date, SGEN is performing certain pre-clinical work related to
applications of SGN-40 in the Hematologic Oncology Indications, and the
Development Plan shall include an explicit authorization permitting SGEN to
continue to conduct such pre-clinical work. In addition, the Parties also
acknowledge that as of the Execution Date,

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SGEN has entered into those certain material transfer agreements set forth in
Exhibit E, and that the research studies contemplated to be performed thereunder
may continue to be performed after the Execution Date in accordance with the
terms and conditions of such material transfer agreements.

(c) Updates to the Development Plans. Following approval by the JDC of the full
Development Plan, and commencing in [***] and [***] thereafter, GNE shall update
and prepare the Development Plan for each Licensed Product for the following
[***] to take into account completion of Development activities, or commencement
or cessation of Development activities not contemplated by the then-current
Development Plan and nonetheless approved by the JDC, and submit each such
proposed amended Development Plan to the JDC for review no later than [***] and
for approval no later than [***] of such [***]; provided, that the Development
activities in the Development Plan delegated to and agreed [***], unless [***].

(d) Diligence. SGEN will use Diligent Efforts to carry out the activities set
forth in a Development Plan for which SGEN is responsible and agrees to
undertake pursuant to Section 4.1(b).

4.3 Diligent Development. GNE shall use Diligent Efforts to Develop [***] and in
at least [***] Activities by GNE’s Sublicensees and Affiliates will be
considered as GNE’s activities under this Agreement for purposes of determining
whether GNE has complied with its obligations under this Section 4.3, provided,
however that the failure of a Sublicensee to be diligent is not a breach by GNE
hereunder as long as GNE is taking steps to actively enforce the diligence
obligation under the sublicense agreement, which shall be consistent with the
level of diligence to be applied by GNE under this Section 4.3. Notwithstanding
anything to the contrary, any failure by GNE to meet its diligence obligations
under this Section 4.3 shall not be considered [***] to the extent that such
failure was caused by any act, delay, omission or failure [***] of any of its
obligations under the Development Plan or [***].

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4.4 Development Reports. Each Party will keep the JDC fully informed regarding
the progress and results of such Party’s Development activities and those of its
Affiliates, Sublicensees, and Third Party contractors. At least [***] prior to
each scheduled JDC meeting, each Party shall provide the JDC with a written
report that summarizes, in reasonable detail, all Development activities
performed by such Party and its Affiliates, Sublicensees, and Third Party
contractors during such quarter, and compares such performance with the goals
and timelines set forth in the Development Plan. Each Party shall also make
itself available to further discuss with the JDC its Development of the Licensed
Product as reasonably requested. The obligation to provide development reports
under this Section 4.4 shall cease upon the date that the JDC ceases to exist;
provided, however, that GNE shall thereafter provide directly to SGEN, on an
annual basis, a written report that summarizes all Development activities
performed or anticipated to be performed by GNE and its Affiliates,
Sublicensees, and Third Party contractors, as well as such periodic updates as
may be provided by GNE’s alliance management function.

4.5 Standards of Conduct. Each Party shall perform, and shall ensure that its
Affiliates, Sublicensees, and Third Party contractors perform, the Development
activities for which it is responsible under the Development Plan in a good
scientific manner and in compliance with applicable laws, rules and regulations.

4.6 Development Limitations. SGEN may not conduct or have conducted on its
behalf, or enable any Third Party to conduct, [***]. GNE may conduct or have
conducted on its behalf, or enable any Third Party to conduct, any clinical
activities in support of Regulatory Approval of a Licensed Product in the U.S.
as approved under a Development Plan or by the JDC.

4.7 Development Costs. GNE shall be responsible for, and shall reimburse SGEN on
a [***] basis for, all costs and expenses actually incurred by or on behalf of
SGEN in connection with SGEN’s performance of its Development responsibilities
specified in the Development Plan and agreed to by SGEN pursuant to
Section 4.1(b). In particular, GNE shall reimburse SGEN for such costs and
expenses as follows: (a) [***]; and (b) [***]. For clarity, Development
activities are exclusive of any Other SGEN Research activities and [***], at
which time GNE shall reimburse SGEN for all costs and expenses actually incurred
by or on behalf of SGEN since the Execution Date in connection with SGEN’s
performance of such [***]. In determining

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Development Costs chargeable under this Agreement, SGEN will use its project
accounting systems, as consistently applied across all its projects. Within
[***] after the beginning of [***], SGEN shall provide to GNE a report detailing
all Development Costs incurred during such prior [***], including the number of
FTEs dedicated to Development activities during that calendar quarter
accompanied by the associated cost of such FTEs at the SGEN FTE Rate. Such
report shall be accompanied by a [***]. Such report will provide information on
out-of-pocket expenses incurred during the [***] at a sufficient level of detail
to enable GNE to evaluate the reasonableness of such expenses. Such report will
be accompanied by an itemized invoice for the Development Costs incurred during
the [***]. GNE shall pay SGEN for such Development Costs incurred within [***]
of receipt of a true and correct invoice. As between the Parties, GNE shall be
responsible for all costs and expenses incurred by or on behalf of GNE, its
Affiliates, or its Sublicensees in connection with Development of Licensed
Products. All Development Costs shall be recorded in accordance with GAAP.

4.8 Development Coordination

The Parties, through their designated project liaisons hereunder (each, a
“Project Liaison”) will coordinate regular interactions between their respective
project teams for the Development of Licensed Products pursuant to the
Development Plan. Each Project Liaison shall be primarily responsible for
facilitating the flow of information and otherwise promoting communications and
collaboration within and among the JDC and JCC, between the Parties and
internally within the Parties. Each Project Liaison will be responsible for:
(a) facilitating coordination among the various functional representatives of
his or her appointing Party; (b) providing single-point communication for
seeking consensus both internally within the respective Party’s organization and
together regarding key strategy and Development Plan issues, as appropriate; and
(c) raising disputes with, and facilitating the resolution of disputes by, the
JDC or JCC, as appropriate, in a timely manner.

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ARTICLE 5

REGULATORY

5.1 Regulatory Filings.

(a) GNE and/or its Sublicensees shall be responsible for preparing and filing
all Regulatory Filings and seeking all Regulatory Approvals, including preparing
all reports necessary as part of a Drug Approval Application. All Regulatory
Filings for Licensed Products shall be filed in the name of GNE and/or its
Sublicensees, and GNE and/or its Sublicensees shall have primary responsibility
for all communications and other dealings with the regulatory agencies relating
to the Licensed Products. As soon as practicable after the Effective Date (or
such other date as mutually agreed by the Parties), SGEN shall transfer to GNE
ownership of SGEN’s Regulatory Filings as of the Effective Date (including
without limitation any INDs Controlled by SGEN as of the Effective Date),
provided that SGEN shall not be required to transfer ownership of any INDs
covering any clinical trials being performed by SGEN under the Initial
Development Plan or the Development Plan until such clinical trials are
completed, provided that in the case that SGEN stops work on any such clinical
trial prior to completion SGEN shall transfer ownership of the IND to GNE upon
GNE’s request. In any event, ownership of all such Regulatory Filings shall be
transferred to GNE prior to the end of the SGEN Development Period. SGEN shall,
and hereby does, grant GNE a right of reference with respect to such INDs, to
the extent necessary for GNE to perform any of its Development Responsibilities
under the Development Plan.

(b) The JDC shall develop and implement procedures for drafting and review of
all U.S. Regulatory Filings, including Drug Approval Applications, for Licensed
Products, which shall provide sufficient time for SGEN to [***]. [***].

(c) Each Party will provide the other Party with reasonable advance notice of
any scheduled meeting with any U.S. regulatory agency relating to Development,
U.S. Regulatory Filings and/or a Regulatory Application in the U.S., and the
notified Party shall have the right to participate in any such meeting, to the
extent permitted by law. Each Party also shall promptly furnish the other Party
with summaries of all material correspondence or material meetings with any U.S.
regulatory agency relating to Development, U.S. Regulatory Filings and/or a
Regulatory Approval in the U.S., and each Party shall, at the other Party’s
request, promptly furnish the requesting Party with copies of such
correspondence or copies of minutes of such meetings.

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(d) Following approval of a Drug Approval Application for a Licensed Product,
GNE and/or its Sublicensees shall retain primary responsibility for dealings
with the applicable regulatory agency with respect to such Licensed Product,
including filing all supplements and other documents with such agency with
respect to such Drug Approval Application.

5.2 Product Withdrawals and Recalls. In the event that any regulatory agency
(a) threatens or initiates any action to remove a particular Licensed Product
from the market in any country or (b) requires GNE, its Affiliates, or its
Sublicensees to distribute a “Dear Doctor” letter or its equivalent regarding
use of any Licensed Product, GNE shall notify SGEN of such event as soon as
practicable after GNE becomes aware of the action, threat, or requirement (as
applicable). [***], for conducting any recalls or taking such other necessary
remedial action.

ARTICLE 6

COMMERCIALIZATION

6.1 General. Subject to the remainder of this Article 6, GNE and its
Sublicensees shall have sole responsibility and decision-making authority for
Commercialization activities. Commercialization activities within the U.S. shall
be carried out in accordance with the U.S. Commercialization Plan. As between
the Parties, GNE shall be responsible for all costs and expenses associated with
the Commercialization activities.

6.2 U.S. Commercialization Plan.

(a) No later than [***] following the delivery by SGEN of its Co-Promotion
Exercise Notice in accordance with Section 6.6, GNE shall deliver to the JCC for
its review and comment a draft written U.S. Commercialization Plan setting forth
strategic and tactical commercialization activities to be performed with respect
to each Licensed Product by GNE or on its behalf or by SGEN (including market
summaries and launch plan overview), as well as projected timelines for such
activities within the U.S. (the “U.S. Commercialization Plan”). GNE shall use
Diligent Efforts to prepare the U.S. Commercialization Plan hereunder. GNE shall
consider in good faith reasonable comments received from the JCC regarding the
draft U.S. Commercialization Plan.

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(b) GNE shall thereafter update the U.S. Commercialization Plan on an annual
basis as follows: GNE shall provide the JCC with a draft update to the U.S.
Commercialization Plan no later than [***] of each [***]. GNE may, at its
election, update the U.S. Commercialization Plan between [***] updates by
notifying the JCC of such revised U.S. Commercialization Plan, provided that
such [***], including under the Co-Promotion Plan unless and only to the extent
[***].

(c) The U.S. Commercialization Plan shall include, without limitation: (i) a
description of GNE’s anticipated major marketing activities (both pre- and
post-launch); (ii) [***]; (iii) any requirements for additional planned
marketing studies; and (iv) [***].

(d) It is understood that the initial U.S. Commercialization Plan delivered
pursuant to Section 6.2(a) will likely include only a summary of the anticipated
Commercialization efforts in the U.S. for the Licensed Product.

6.3 Diligent Commercialization.

(a) GNE, its Affiliates and Sublicensees shall use Diligent Efforts to
Commercialize Licensed Products in each country in the Territory for each
indication for which it receives Regulatory Approval. Without limiting the
generality of the foregoing, GNE (or its Affiliate or Sublicensee) shall [***]
with respect to such country.

(b) It is possible that one or more Licensed Products could be [***]. GNE agrees
that it shall not [***].

6.4 Commercialization Reports. GNE shall keep the JCC informed regarding the
overall progress and results of its Commercialization and those of its
Affiliates, Sublicensees, and Third Party contractors. Within [***] after the
end of each [***], GNE shall provide the JCC with a written report that
summarizes, in reasonable detail, U.S. Commercialization activities performed
during such [***]. GNE shall also promptly provide the JCC with any additional
Information regarding the Commercialization of Licensed Products in the U.S., as
reasonably requested thereby.

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6.5 Sales Force Training. GNE shall be solely responsible for the creation of,
and shall use commercially reasonable efforts to create, marketing and
promotional materials for use in the Commercialization of Licensed Products. GNE
shall develop and conduct training programs specifically relating to Licensed
Products for its sales representatives. In the event SGEN exercises its
Co-Promotion Option under Section 6.6, SGEN agrees to utilize such training
programs on an ongoing basis consistent with GNE’s business practices with
respect to sales of Licensed Products to assure a consistent, focused
promotional strategy. In addition, in such event SGEN shall require its sales
force to attend and participate in the sales force training programs conducted
by GNE for the Co-Promote Product(s), subject to reasonable scheduling of such
training events. GNE agrees to provide SGEN with the same marketing and
promotional materials that are provided to GNE’s sales force for use by SGEN’s
sales force in conducting its activities under the Co-Promotion Plan.

6.6 Option to Co-Promote.

(a) With respect to each [***] (each a “Co-Promote Product”), GNE hereby grants
to SGEN an option (a “Co-Promotion Option”) to Co-Promote such Co-Promote
Product in the U.S. in accordance with Section 6.6(d) and the Co-Promotion Plan
(as agreed to in accordance with Section 6.6(c)). Such Co-Promotion Option shall
be exercised as provided in Section 6.6(b).

(b) GNE shall provide SGEN with prompt written notice of [***] (the
“Co-Promotion Notice”). The Co-Promotion Notice will be accompanied by a
detailed summary of the information presented to [***] and used in making the
determination to [***] If SGEN desires to exercise its Co-Promotion Option as to
such Co-Promote Product, SGEN shall provide GNE with written notice of such
exercise (the “Co-Promote Exercise Notice”) no later than [***] after receipt of
written notice from GNE and the accompanying information under this
Section 6.6(b). In the event [***] subsequently determines not to [***]
hereunder upon the subsequent determination of the [***] to so [***].

(c) Promptly following the date of SGEN’s Co-Promote Exercise Notice, the
Parties shall negotiate in good faith a written plan consistent with the
provisions of 6.6(d) containing the operational details related to the Parties’
Co-Promotion activities ([***]), as well as such additional terms consistent
with the provisions in Section 6.6(d) as are reasonably

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necessary for SGEN to exercise its rights under Section 6.6(d) (the
“Co-Promotion Plan”). The Parties shall use good faith efforts to develop,
negotiate and agree to such Co-Promotion Plan within [***] of SGEN’s exercise of
the Co-Promotion Option. If the Parties have not agreed upon a Co-Promotion Plan
despite good faith efforts within such [***] period, then the operational
details of the Parties co-promotion activities shall be determined by the JCC,
as an interim measure, and GNE and SGEN shall continue to negotiate in good
faith for an additional period of [***] concerning the additional terms
consistent with the provisions in Section 6.6(d) as are reasonably necessary for
SGEN to exercise its rights under Section 6.6(d). The Parties shall update the
Co-Promotion Plan on an [***] basis, or more frequently as needed, through the
JCC.

(d) Under the Co-Promotion Option:

(i) SGEN will have the right to field, at its election, up to [***] of the [***]
with an [***] for Co-Promote Products in the U.S.

(ii) Unless otherwise agreed to by GNE or set forth in the U.S.
Commercialization Plan or the Co-Promotion Plan, SGEN’s sales representatives
shall dedicate to Co-Promote Products, [***], in aggregate, measured across all
SGEN sales representatives involved in such Co-Promotion, and as determined by
SGEN’s [***], such policy and procedures to be reasonable and customary in the
pharmaceutical sales industry. Notwithstanding the foregoing, SGEN’s sales
representatives shall [***].

(iii) GNE will compensate SGEN for co-promoting such Co-Promote Product through
payments based on [***]. The calculation of [***] will be described in the
Co-Promotion Plan, but generally means the [***], and will be consistent with
any applicable standard practices of GNE with respect to its own [***], to the
extent GNE has established such standard practices and employs [***] of the
activities of its sales force then in existence.

(iv) GNE will allow SGEN’s sales representatives to attend and participate in
the training programs described in Section 6.5.

(v) The JCC shall be responsible for the coordination of GNE’s and SGEN’s
activities in the sales force deployment and activities with respect to the
sales of Co-Promote Products in the U.S.

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(vi) Notwithstanding SGEN’s exercise of a Co-Promotion Option, GNE shall remain
responsible for, and have [***].

ARTICLE 7

MANUFACTURE AND SUPPLY

7.1 Manufacturing Responsibility. Except as set forth in Section 7.3, GNE shall
be responsible for the manufacturing of Licensed Products in bulk and finished
form for use by GNE, its Affiliates, and its Sublicensees in Field in the
Territory and for use by SGEN pursuant to the Development Plan.

7.2 Transfer of Manufacturing Technology.

(a) As soon as reasonably possible after the Effective Date SGEN shall transfer
to GNE or a Third Party manufacturer designated by GNE all Information
Controlled by SGEN as of the Effective Date reasonably necessary to enable GNE
or such Third Party manufacturer (as appropriate) to replicate the process
employed by SGEN’s Third Party contract manufacturer to manufacture Licensed
Product in the Field as of the Effective Date. The costs and expenses incurred
by SGEN in carrying out such transfer shall be reimbursed by GNE in accordance
with Section 4.7, with such transfer being deemed to be a Development activity
for the purpose of such section and such costs and expenses being deemed to be
Development Costs.

(b) GNE and/or its Third Party manufacturer shall use any Information
transferred pursuant to Section 7.2(a) in accordance with the license granted in
Section 2.1.

(c) GNE acknowledges and agrees that prior to any transfer of any manufacturing
technology or Information to a Third Party manufacturer designated by GNE, GNE
will execute a confidentiality agreement between such Third Party manufacturer
and GNE that contains terms substantially equivalent to those of Article 12 of
this Agreement.

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7.3 Clinical Supply.

(a) Subject to the requirements set forth in this Section 7.3, SGEN will supply
GNE with its clinical requirements of SGN-40 in the Territory until such time as
the technology transfer described in Section 7.2 is complete and GNE is able to
supply Licensed Products on its own or through a GNE contractor or Sublicensee;
provided that [***], unless mutually agreed upon by both Parties in writing.
Upon GNE’s reasonable request, [***]. GNE shall [***].

(b) Upon GNE’s reasonable request, SGEN shall use good faith efforts to assist
GNE with obtaining [***] with respect to [***] for use in the conduct of
clinical trials, either directly by GNE from [***], or by SGEN ordering such
[***] material from [***], it being understood that SGEN shall be under no
obligation to extend any [***], or to [***] without its express written consent.
In any event, GNE shall [***] SGEN for any [***]. In addition, [***] for the
purpose of [***]. Notwithstanding anything to the contrary set forth herein,
SGEN’s obligations under this Article 7 shall terminate in their entirety at the
end of the SGEN Development Period. In the event that GNE decides to terminate,
or have SGEN terminate, the [***] then GNE shall be [***].

ARTICLE 8

PAYMENTS

8.1 Upfront Payment. GNE shall pay to SGEN a non-refundable, non-creditable
payment of Sixty Million Dollars ($60,000,000) within fourteen (14) days after
the Effective Date.

8.2 Maintenance Fee. On the [***] of the Effective Date and on each anniversary
of the Effective Date thereafter, GNE shall pay SGEN an annual maintenance fee
of [***] (each a “Maintenance Fee”); provided, however, that no such payment
shall be due if GNE has spent at least [***] on the Development of Licensed
Products (other than Competitive Products) during the [***] period immediately
preceding such anniversary date, as demonstrated by GNE’s reasonable written
records, which shall be subject to audit as provided in Section 9.2. Any
milestone payments made by GNE pursuant to Section 8.3 during the [***] period
immediately preceding an anniversary date shall be [***] (if any) due on such
anniversary date. GNE’s obligations under this Section 8.2 shall terminate in
their entirety upon the date on which GNE or a Sublicensee first receives
Regulatory Approval for a Licensed Product (other than a Competitive Product
except a Competitive Product for which GNE has agreed to pay royalties in
accordance with Section 8.7).

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8.3 Development Milestones.

(a) [***]. GNE shall make each of the following milestone payments to SGEN upon
[***] of the corresponding milestone event with respect to the [***] to attain
such milestone event in the [***].

 

Event

  

Payment

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

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(b) [***]. GNE shall make each of the following milestone payments to SGEN upon
[***] of the corresponding milestone event with respect the [***] to attain such
milestone event in a [***].

 

Event

  

Payment

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

(c) [***]. GNE shall make each of the following milestone payments to SGEN upon
[***] of the corresponding milestone event with respect to the [***] to attain
such milestone event in a [***].

 

Event

  

Payment

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

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(d) [***]. GNE shall make each of the following milestone payments to SGEN upon
[***] of the corresponding milestone event with respect to the [***] to attain
such milestone event in a [***].

 

Event

  

Payment

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

(e) [***]. GNE shall make each of the following milestone payments to SGEN upon
[***] of the corresponding milestone event with respect to the [***] to attain
such milestone event in an [***]:

 

Event

  

Payment

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

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(f) One-Time MabTech Milestone. GNE shall pay a one-time milestone payment to
SGEN in the amount of [***] within thirty (30) days following the commencement
of the [***] with a Licensed Product (as that term is defined in the MabTech
agreement), provided that such obligation to pay an equivalent milestone payment
is actually incurred by SGEN under the MabTech Agreement.

(g) One-Time Milestone Payment. If GNE’s aggregate payments to SGEN under this
Section 8.3 are [***] as of the [***], then [***]. Such payment shall be due
[***] thereafter, but shall be creditable against any [***] made by GNE to SGEN
pursuant to this [***] prior to the date that is [***] of the Execution Date.

(h) Clarifications. For clarity, each of the milestone payments set forth in
Sections 8.3(a) through (e) shall be made [***]. Furthermore, it is understood
that all payments with respect to events involving a “[***],” “[***],” or
“[***]” [***] shall be applicable to the [***], [***], or [***] ([***]) in which
a particular milestone event occurs, even if earlier or later milestone events
involve a different set of [***], [***], or [***]. For example, if a [***] In
addition, in the event that a [***].

(i) [***]. Solely for the purposes of this Section 8.3 and with respect to the
achievement of the applicable [***], the definition of a [***] shall be read to
also include a [***] that is the subject of a [***] pending as of the time of
[***]. Further, with respect to the achievement of any other milestone, the
definition of [***] shall mean a [***] that at the date of [***]. For all other
milestone events, [***] shall have the meaning provided in [***].

(j) Notice; Payment. Each Party shall notify the other Party within [***] after
the occurrence of an achievement of each milestone event giving rise to a
payment obligation under Sections 8.3(a) through (e), and GNE shall pay SGEN the
indicated amount no later than [***] after receipt of a written invoice from
SGEN.

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8.4 Commercialization Milestones. For each [***], GNE shall make the milestone
payments indicated below to SGEN when [***] of such [***] in the indicated
region [***]. For clarity, each of the milestone payments set forth in this
Section 8.4 shall be made [***]

 

Calendar Year Net Sales

  

Payment

[***]

   [***]

[***]

   [***]

[***]

   [***]

[***]

   [***]

GNE shall notify SGEN within [***] after the occurrence of an achievement of
each milestone event giving rise to a payment obligation under this Section 8.4,
and GNE shall pay SGEN the indicated amount no later than [***] after receipt of
a written invoice from SGEN.

8.5 Royalties.

(a) GNE shall pay to SGEN royalties on Net Sales of [***] in the U.S. at a
royalty rate determined by total Net Sales in the U.S. in a calendar year as
follows:

 

Calendar Year U.S. Net Sales

  

Royalty Rate

[***]

   [***]

[***]

   [***]

[***]

   [***]

(b) GNE shall pay to SGEN royalties on Net Sales of [***] by GNE and its
Sublicensees outside the U.S. at a royalty rate determined by total Net Sales
outside the U.S. in a calendar year as follows:

 

Calendar Year Ex-U.S. Net Sales

  

Royalty Rate

[***]

   [***]

[***]

   [***]

[***]

   [***]

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8.6 Additional Royalty.

(a) After expiration of the royalty obligations in Section 8.5 (a) and (b) with
respect to a particular [***] and a particular country (i.e., [***]), GNE shall
pay the following royalties until the first to occur of (a) [***], or (b) [***]:

(i) a [***] royalty equal to [***] of Net Sales of such [***]; and

(ii) A [***] royalty equal to [***] of Net Sales of such [***].

Notwithstanding anything to the contrary, where [***] is not available on a
country-by-country basis for a country but [***] (x) is available on a regional
basis for the geographic region containing such country, such available regional
sales data across all countries in the applicable geographical region (e.g.,
Europe, North America, Africa, Asia) shall be used in the determination [***] or
(y) [***], the [***] for the applicable major market countries will be used to
determine the [***]. Where no [***] is available for a particular geographical
region, the Parties will determine the [***].

(b) On a country by country basis, GNE shall pay a quarterly royalty equal to
[***] of Net Sales of any [***] in a given country as of the date of [***]. If
such [***] subsequently becomes a [***], the royalties payable pursuant to
Section 8.5(a) or (b) shall apply; provided however, under no circumstances will
GNE pay royalties to SGEN pursuant to this Section 8.6(b) and Section 8.5(a) or
(b) concurrently.

8.7 [***].

(a) [***].

(b) In the case that GNE, its Affiliate or a Sublicensee [***].

(c) Notwithstanding anything to the contrary in this Section 8.7, GNE shall not
be required to make any payments under Section 8.7 (a) or (b) for [***], but
only in the event that [***] (but in no event [***]) enters into a Sublicense
with a [***].

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(d) If a [***], in the reasonable opinion of [***] and [***], then GNE shall be
[***] Third Party based upon the [***] provided that [***] to be [***]
(a) [***], or (b) [***].

8.8 Royalty Adjustments.

(a) Third-Party Royalties. If a Patent or Patents of a Third Party should exist
in any country during the Term which, [***], then GNE shall be [***], against
the [***] in the applicable country, [***] in such country; provided that such
[***] shall in no event cause the [***] (a) [***], with respect to [***] sold in
such country prior to [***], or (b) [***], with respect to [***] sold in such
country on or after [***].

Pass-Through Royalties. GNE shall be responsible for the following royalty
payment obligations (the “Pass-Through Royalties”):

(i) GNE shall pay [***] on [***] (as that term is defined in the [***]) of [***]
for a period of [***] from [***], or as long as such [***] is incurred to SGEN
under the [***]. GNE shall provide SGEN or directly to [***], the information
required to fulfill its reporting obligations related to such royalty payment.

(ii) GNE shall pay to [***] (as that term is defined in the [***]) of [***] (as
that term is defined in the [***]) as long as such [***] is incurred to SGEN
under the [***]. GNE shall pay [***] in accordance with the terms of the [***].
GNE shall provide, [***], all notification and reports required under the [***].

Such Pass-through Royalties shall be [***], pursuant to the terms of [***] as if
GNE were paying the Pass-Through Royalties [***].

(c) Notwithstanding anything to the contrary in this Section 8.8, to the extent
that [***] with respect to [***] on or after [***] in a particular country
(after applying the [***], [***], against the [***] of such [***] in the
applicable country, equal to [***] resulting in such excess; provided, that in
no instance of the application of this [***], will [***].

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8.9 [***]. Notwithstanding the terms of the Prior Agreements, [***] and the
[***] of the [***] or [***] that are set forth in the Prior Agreements, provided
that such waiver shall not apply with respect to [***] with respect to [***]
following termination pursuant to [***].

ARTICLE 9

PAYMENT; REPORTS; AUDITS

9.1 GNE Quarterly Royalty Payments and Reports.

(a) Commencing with the First Commercial Sale of a Licensed Product and ending
with the expiration of all of GNE’s royalty obligations under Sections 8.5, 8.6
and 8.7, GNE agrees to make written reports to SGEN within [***] after the end
of each calendar quarter covering all sales of Licensed Products in the
Territory by GNE and its Affiliates and Sublicensees for which invoices were
sent during such calendar quarter, each such written report stating for the
period in question the following information: (i) total Net Sales of all
Licensed Products sold in the Territory during such calendar quarter, (ii) Net
Sales on a country-by-country basis, (iii) the exchange rate used to convert Net
Sales from the currency in which they are earned to U.S. dollars and (iv) the
total royalty payments due.

(b) The information contained in each report under Section 9.1(a) shall be
considered Confidential Information of GNE. Concurrent with the delivery of each
quarterly report, GNE shall make the payment due SGEN under Sections 8.5, 8.6 or
8.7 for the calendar quarter covered by such report.

9.2 Accounting. Each Party shall keep full, true and accurate books of account
containing the particulars of Net Sales, the calculation of royalties and
Development Costs and other development expenditures which are included in the
calculation of GNE’s expenditures under Section 8.2. Each Party shall keep such
books of account and the supporting data and other records at its principal
place of business. Such books and records must be maintained available for
examination in accordance with this Section for [***] after the end of the
calendar year to which they pertain, and otherwise as reasonably required to
comply with GAAP. Each Party may appoint an internationally-recognized
independent accounting firm reasonably acceptable to the audited Party to
inspect the relevant books of account of the audited Party to verify any reports
or statements provided, or amounts paid or invoiced (as appropriate), by that

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audited Party. The independent accounting firm (and any individuals, if
applicable) appointed to perform the examination under this Agreement must
execute a confidential disclosure agreement with the audited Party, or otherwise
be subject to terms governing non-use and non-disclosure of information that the
audited Party has agreed in writing are acceptable. Each Party may exercise its
right to have the other Party’s relevant records examined only during the [***]
during which the audited Party is required to maintain records, no more than
once in any [***], and only once with respect to records covering any specific
period of time. The audited Party is required to make its records available for
inspection only during regular business hours, only at such place or places
where such records are customarily kept, and only upon receipt of at least [***]
written advance notice from the other Party. The independent accountant will be
instructed to provide an audit report containing its conclusions regarding the
audit, and specifying whether the amounts paid were correct, and, if incorrect,
the amount of any underpayment or overpayment. The independent accountant
further will be instructed to provide that audit report first to the audited
Party, and will be further instructed to redact any proprietary information of
the audited Party not relevant to the calculation of royalties or Research
Support Payments prior to providing that audit report to the other Party. That
audit report shall be deemed to be Confidential Information of the audited
Party, and used only for purposes germane to this Section. After review of the
auditor’s report: (i) if there is an uncontested underpayment by the audited
Party for the period in question, then the audited Party shall pay to the other
Party the full amount of that uncontested underpayment plus interest as
calculated pursuant to Section 9.5, and (ii) if there is an uncontested
overpayment by the audited Party for the period in question, then the other
Party shall provide to the audited Party a credit against future payments (such
credit equal to the full amount of that overpayment), or, if the audited Party
is not obligated to make any future payments, then the other Party shall pay to
the audited Party the full amount of that overpayment. Contested amounts are
subject to dispute resolution under Article 15. If the total amount of any
underpayment (as agreed to by the audited Party or as determined under Article
15) exceeds [***] of the amount previously paid by the audited Party for the
period subject to audit (as long as that period is at least [***]), then the
audited Party shall pay the reasonable costs for the audit.

9.3 Methods of Payments. All payments due to SGEN under this Agreement shall be
paid in Dollars by wire transfer to a bank in the U.S. designated in writing by
SGEN.

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9.4 Taxes. If a law or regulation of any country of the Territory requires
withholding of taxes of any type, levies or other charges with respect to any
amounts payable hereunder to SGEN, GNE shall promptly pay such tax, levy or
charge for and on behalf of SGEN to the proper governmental authority, and shall
promptly furnish SGEN with receipt of such payment. GNE shall have the right to
deduct any such tax, levy or charge actually paid from payment due SGEN or be
promptly reimbursed by SGEN if no further payments are due SGEN. GNE agrees to
assist SGEN in claiming exemption from such deductions or withholdings under
double taxation or similar agreement or treaty from time to time in force and in
minimizing the amount required to be so withheld or deducted.

9.5 Late Payments. Any amounts not paid within [***] after the date due under
this Agreement are subject to interest from the date due through and including
the date upon which payment is received. Interest is calculated, over the period
between the date due and the date paid, at a rate equal to [***] over the “bank
prime loan” rate, as such rate is published in the U.S. Federal Reserve Bulletin
H.15 or successor thereto on the last business day of the applicable calendar
quarter prior to the date on which such payment is due.

9.6 Rights Regarding Consolidation of SGEN Financial Data. If, at any time
during the Term, compliance with any term or condition of this Agreement would,
in GNE’s reasonable opinion and with the concurrence of GNE’s independent
auditors, require GNE to consolidate SGEN within GNE’s financial statements in
order to comply with GAAP, then upon GNE’s request, subject to GNE’s obligations
under Article 12 regarding SGEN Confidential Information, SGEN shall provide to
GNE SGEN’s unaudited quarterly consolidated financial statements, prepared in
accordance with GAAP (i.e., balance sheet, income statement and statement of
cash flows) within [***]. In the event of any such consolidation, GNE shall
notify SGEN in writing and shall provide to SGEN such information as SGEN may
require to comply with its accounting and reporting obligations under GAAP and
Applicable Law arising from any such consolidation.

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ARTICLE 10

INTELLECTUAL PROPERTY RIGHTS

10.1 New Inventions.

(a) Ownership of the SGEN Inventions and all intellectual property rights
therein shall remain vested at all times in SGEN, and ownership of the GNE
Inventions and all intellectual property rights therein shall remain vested at
all times in GNE. Inventorship under this Section 10.1 shall be determined under
U.S. patent laws.

(b) SGEN and GNE shall each own an undivided equal interest in all [***], and
any patents or patent applications claiming such [***] (collectively, “Joint
Patents”). SGEN and GNE shall each have the right to practice and to grant
licenses under the Joint Patents to the extent provided in this Agreement or
otherwise agreed in writing. GNE shall have the first right to prepare, file,
prosecute and maintain, through mutually acceptable outside counsel, with input
from SGEN, each Joint Patent. GNE shall be responsible for [***] of all costs
and expenses incurred in connection with prosecution and maintenance of Joint
Patents; provided they [***]. GNE shall keep SGEN informed of the status of each
such Joint Patent, and shall [***] concerning the preparation, filing,
prosecution and maintenance thereof. If, during the Term, GNE intends not to
file or continue prosecuting or maintaining any Joint Patent, GNE shall notify
SGEN of such intention at least [***] prior to any applicable deadline, and SGEN
shall thereupon have the right, but not the obligation, to assume responsibility
for the preparation, filing, prosecution and/or maintenance of such Joint
Patent, for which [***].

10.2 Patent Filings.

(a) Responsibilities. SGEN shall have the first right to prepare, file,
prosecute and maintain, through mutually acceptable outside counsel, with input
from GNE, each Patent within the SGEN Patents (other than Joint Patents), and
GNE shall reimburse SGEN for [***] incurred by SGEN in connection with such
prosecution and maintenance. Notwithstanding the foregoing, SGEN [***] incurred
by SGEN in connection with the prosecution of maintenance of any SGEN Patents
(other than Joint Patents), to the extent such SGEN Patents [***]. SGEN shall
keep GNE informed of the status of each such SGEN Patent, and shall give
reasonable consideration to any suggestions or recommendations of GNE concerning
the preparation, filing, prosecution and maintenance thereof. If, during the
Term, SGEN intends not to file or continue prosecuting or maintaining a SGEN
Patent (other than a Joint Patent), SGEN shall notify GNE of such intention at
least [***] prior to any applicable deadline, and GNE shall thereupon have the
right, but not the obligation, to assume responsibility for the preparation,
filing, prosecution and/or maintenance of such SGEN Patent in the name of SGEN,
for which [***].

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(b) Cooperation. The Parties agree to cooperate in the preparation, filing,
prosecution and maintenance of all Patents under this Section 10.2, including
obtaining and executing necessary powers of attorney and assignments by the
named inventors, providing relevant technical reports to the filing Party
concerning the invention disclosed in each such Patent, obtaining execution of
such other documents which shall be needed in the filing, prosecution and
maintenance of each such Patent, and, as requested, updating each other
regarding the status of each such Patent, and shall cooperate with the other
Party so far as reasonably necessary with respect to furnishing all information
and data in its possession reasonably necessary to obtain or maintain such
Patents.

10.3 Enforcement and Defense of Patents.

(a) Notice. If either Party becomes aware that a Third Party is infringing or
allegedly infringing any SGEN Patent (an “Infringement”) or that any Third Party
claims that any such SGEN Patent is invalid or unenforceable (a “Patent
Challenge”), it will promptly notify the other Party thereof including available
evidence of infringement or the claim of invalidity or unenforceability. The
Parties will cooperate and use reasonable efforts to stop such Infringement or
Patent Challenge without litigation, prior to either Party initiating any suit
or becoming substantially involved in any suit or other legal action.

(b) Enforcement and Defense.

(i) With respect to any Infringement that involves activity other than a [***]
or with respect to any Patent Challenge not covered in Section 10.3(b)(iv),
[***] will have the sole right (but not the obligation) to take the appropriate
steps to enforce any Patent within the [***] against such Infringement or to
defend such Patent Challenge (as applicable), at its sole cost and discretion.
[***] may, in any such instance, take steps including the initiation,
prosecution and control any suit, proceeding or other legal action by counsel of
its own choice.

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(ii) To the extent any Infringement involves the [***], [***] will have the
first right (but not the obligation), at its [***], to take the appropriate
steps to enforce any Patent within the [***] against [***], including without
limitation the initiation of a suit, proceeding or other legal action by counsel
of its own choice. [***] will have the right, at its [***], to be represented in
any such suit, proceeding, or action by counsel of its own choice.

(iii) If [***] fails to take the appropriate steps to enforce any applicable
[***] within [***] after the date one Party has provided notice to the other
Party of a Field Infringement, then [***] will have the right (but not the
obligation), at its sole expense, to take the appropriate steps to enforce such
Patent(s), including without limitation the initiation of a suit, proceeding or
other legal action by counsel of its own choice. [***] will have the right, at
its [***], to be represented in any such suit, proceeding, or action by counsel
of its own choice.

(iv) The Party controlling any suit, action or proceeding against a [***]
pursuant to Section 10.3(b)(ii) or 10.3(b)(iii) shall also have the right to
control the response to any Patent Challenge asserted by the alleged
infringer(s) as a counterclaim or affirmative defense in such suit, proceeding,
or action.

(c) Cooperation.

(i) If one Party brings any suit, action or proceeding under this Section 10.3,
the other Party agrees to be joined as party plaintiff if necessary to prosecute
the suit, action or proceeding and to give the first Party reasonable authority
to file and prosecute the suit, action or proceeding; provided, however, that
neither Party will be required to transfer any right, title or interest in or to
any property to the other Party or any other party to confer standing on a Party
hereunder.

(ii) The Party not pursuing the suit, action or proceeding brought hereunder
will provide reasonable assistance to the other Party, including by providing
access to relevant documents and other evidence and making its employees
available, subject to the other Party’s reimbursement of any out-of-pocket
expenses incurred by the Party providing such assistance.

(iii) Neither Party will settle nor otherwise compromise any such suit, action
or proceeding in a way that adversely affects the other Party’s intellectual
property rights or its rights or interests with respect to Licensed Products
without such Party’s prior written consent, such consent not to be unreasonably
withheld.

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(d) Recovery. Except as otherwise agreed to by the Parties as part of a
cost-sharing arrangement, any settlements, damages or other monetary awards (the
“Recovery”) recovered pursuant to a suit, proceeding, or action brought pursuant
to this Section 10.3 will be [***] (to the extent not otherwise reimbursed),
[***].

10.4 Defense of Infringement Actions.

(a) During the Term, each Party shall bring to the attention of the other Party
all information the Party reasonably believes is relevant to potential
infringement of Third Party intellectual property rights in connection with the
Development, manufacture, or Commercialization of Licensed Product in the
Territory. The Parties shall discuss such information and decide how to address
the potential infringement.

(b) If GNE and/or SGEN are named as defendant(s) in a patent infringement suit
filed by a Third Party concerning the development, manufacture, production, use,
importation, offer for sale, or sale during the Term of Licensed Products in the
Field, then [***] shall defend such suit [***] and shall indemnify and hold
[***] harmless against any such patent or other infringement suits, and any
claims, losses, damages, liabilities, expenses, including reasonable attorneys’
fees and cost, that may be incurred by [***] therein or in settlement
thereof. Any and all settlements that restrict the scope or enforceability of
the [***], before execution by [***]. [***].

(c) This Section 10.4 shall not be interpreted as placing on either Party a duty
of inquiry regarding Third Party intellectual property rights.

10.5 Trademarks. GNE and its Sublicensees shall be responsible for the
selection, registration, maintenance, and defense of all trademarks for use in
connection with the sale or marketing of Licensed Products in the Field in the
Territory (the “Marks”), as well as all expenses associated therewith. All uses
of the Marks shall be reviewed by the JCC and shall comply with all applicable
laws and regulations (including those laws and regulations particularly applying
to the proper use and designation of trademarks in the applicable countries).

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GNE shall not, without SGEN’s prior written consent, use any trademarks or house
marks of SGEN (including the SGEN corporate name), or marks confusingly similar
thereto, in connection with GNE’s Commercialization of Licensed Products under
this Agreement. GNE shall own all Marks.

ARTICLE 11

REPRESENTATIONS, WARRANTIES, AND COVENANTS

11.1 Mutual Representations and Warranties. Each Party hereby represents and
warrants to the other Party:

(a) Such Party is a corporation or entity duly organized and validly existing
under the laws of the state or other jurisdiction of its incorporation or
formation;

(b) The execution, delivery and performance of this Agreement by such Party has
been duly authorized by all requisite corporate action;

(c) Such Party has the corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder, and such performance does
not conflict with or constitute a breach of any agreement of such Party with a
Third Party; and

(d) Such Party has the right to grant the rights and licenses described in this
Agreement.

11.2 SGEN Representations and Warranties. SGEN hereby represents and warrants to
GNE as follows:

(a) As of the Execution Date, SGEN owns or has rights to all [***].

(b) As of the Execution Date, except as it may have previously disclosed to GNE
in writing, it has not received any written communications [***].

(c) As of the Execution Date, except as it may have previously disclosed to GNE
in writing, there are no [***] and with respect to which SGEN has received
notice and, [***], there are [***].

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(d) SGEN has not entered into any agreement with any Third Party, including
those material transfer agreements listed on Exhibit E, (i) granting rights to
any Third Party that [***] and (ii) [***]. This clause (d) does not apply to the
following: (1) [***]; (2) [***] or (3) [***].

11.3 Disclaimer. EXCEPT AS PROVIDED IN SECTIONS 11.1 AND 11.2, THE TECHNOLOGY
AND INTELLECTUAL PROPERTY RIGHTS PROVIDED BY EACH PARTY ARE PROVIDED “AS IS” AND
EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR
IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN, MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, AND NONINFRINGEMENT OF THE INTELLECTUAL
PROPERTY RIGHTS OF THIRD PARTIES, ARISING FROM A COURSE OF DEALING, USAGE OR
TRADE PRACTICES, IN ALL CASES WITH RESPECT THERETO.

11.4 Limitation of Liability. NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM
THE OTHER PARTY ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN
CONNECTION WITH THIS AGREEMENT, EACH PARTY’S PERFORMANCE OR LACK OF PERFORMANCE
HEREUNDER, OR ANY LICENSE GRANTED HEREUNDER, EXCEPT FOR DAMAGES ARISING FROM A
BREACH OF SECTION 12.1. THE FOREGOING SHALL NOT LIMIT EITHER PARTY’S
INDEMNIFICATION OBLIGATIONS HEREUNDER.

ARTICLE 12

CONFIDENTIALITY

12.1 Confidentiality.

(a) Generally. During and after the Term, each Party (i) shall maintain in
confidence all Confidential Information of the other Party; (ii) shall not use
such Confidential Information for any purpose except as permitted by this
Agreement; and (iii) shall not disclose such Confidential Information to anyone
other than those of its Affiliates, Sublicensees, prospective Sublicensees,
employees, consultants, agents or subcontractors who are bound by

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written obligations of nondisclosure and non-use no less stringent than those
set forth in this Article 12 and to whom such disclosure is necessary in
connection with such Party’s activities as contemplated in this Agreement. Each
Party shall ensure that such Party’s Affiliates, Sublicensees, prospective
Sublicensees, employees, consultants, agents and subcontractors comply with
these obligations. Each Party shall notify the other promptly on discovery of
any unauthorized use or disclosure of the other’s trade secrets or proprietary
information.

12.2 Exceptions. The obligations of confidentiality, non-disclosure, and non-use
set forth in Section 12.1 shall not apply to the extent the receiving Party (the
“Recipient”) can demonstrate that the disclosed information (a) was in the
public domain at the time of disclosure to the Recipient by the other Party, or
thereafter entered the public domain, in each case other than as a result of
actions of the Recipient, its Affiliates, employees, licensees, agents or
subcontractors, in breach of this Agreement; (b) was rightfully known by the
Recipient or its Affiliates (as shown by its written records) prior to the date
of disclosure to the Recipient by the other Party; (c) was received by the
Recipient or its Affiliates on an unrestricted basis from a Third Party
rightfully in possession of such information and not under a duty of
confidentiality to the other Party; or (d) was independently developed by the
Recipient or its Affiliates without use of such Confidential Information.
Notwithstanding any other provision of this Agreement, Recipient’s disclosure of
Confidential Information shall not be prohibited if such disclosure: (i) is in
response to a valid order of a court or other governmental body, provided that
Recipient provides the other Party with prior written notice of such disclosure
in order to permit the other Party to seek a protective order or other
confidential treatment of such Confidential Information; or (ii) is otherwise
required by applicable law or regulation.

12.3 Scientific Publications. The publication strategy of the Parties shall be
directed by the JDC and shall be subject to the following procedures:

(a) Prior to public disclosure or submission for publication or presentation of
a proposed publication describing the results of any scientific or clinical
activity relating to a Licensed Product, the Party disclosing or submitting such
proposed publication (“Submitting Party”) shall provide the JDC and the other
party (“Responding Party”) by expedited delivery (including electronic mail) a
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Responding Party shall be permitted a reasonable time period (but no less than
[***] from the date of confirmed receipt) to review the proposed publication or
presentation. During such time, (i) the JDC shall determine whether the proposed
publication or presentation is consistent with its publication strategy or
whether the proposed publication contains information that is reasonably likely
to have a material adverse impact on the Development or Commercialization of
Licensed Product and (ii) the Responding Party will determine whether the
proposed publication contains subject matter for which patent protection should
be sought (prior to publication of such proposed publication) for the purpose of
protecting an invention, or whether the proposed publication contains the
Confidential Information of the Responding Party. Following the expiration of
applicable time period for review and upon written approval from the JDC, the
Submitting Party shall be free to submit such proposed publication or
presentation for publication and publish or otherwise disclose to the public
such scientific or clinical results, subject to the procedures set forth in
Section 12.3(b).

(b) If the Responding Party believes that the subject matter of the proposed
publication contains Confidential Information or a patentable invention of
either Party, then prior to the expiration of the applicable time period for
review, the Responding Party shall notify the Submitting Party in writing of its
determination that such proposed publication contains such information or
subject matter for which patent protection should be sought. On receipt of such
written notice from the Responding Party, the Submitting Party shall delay
public disclosure of such information or submission of the proposed publication
for an additional period of [***] (or such shorter period mutually agreed by the
Parties) to permit preparation and filing of a patent application on the
disclosed subject matter. The Submitting Party shall thereafter be free to
publish or disclose such information, except that the Submitting Party may not
disclose any Confidential Information of the Responding Party in violation of
Sections 12.1 and 12.2 hereof.

(c) [***]. [***].

12.4 Publicity. The Parties agree that the public announcement of the execution
of this Agreement shall be substantially in the form of the joint press release
attached as Exhibit C, which shall be issued at a time to be mutually agreed by
the Parties. Neither Party shall issue any additional press release or other
publicity materials, or make any public presentation with respect

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to the terms or conditions of, this Agreement or the programs or efforts being
conducted by the other Party hereunder, in each case without the prior written
consent of the other Party. This restriction shall not apply to: (a) disclosures
to a Party’s attorneys, advisors or current or potential investors on a need to
know basis under circumstances that reasonably ensure the confidentiality
thereof, and (b) any future disclosures required by law or regulation, including
as may be required in connection with any filings made with, or by the
requirements of the securities exchange on which such Party’s securities are
traded, provided that the disclosing Party (i) use all reasonable efforts to
inform the other Party at least [***] prior to making any such disclosures and
cooperate with the other Party in seeking a protective order or other
appropriate remedy (including redaction) and (ii) whenever possible, request
confidential treatment of such information. Further, [***]: (w) [***];
(x) [***]; (y) [***]; and (z) [***]. In addition and notwithstanding anything to
the contrary herein, (a) if the relevant text of a proposed press release [***]
in all material respects, then [***] in such proposed press release provided
that the Party issuing such press release [***] and (b) if the [***] of a [***]
such as a [***] has already previously been [***] by the other Party (whether in
the form of an [***]) and the text remains [***], then such text may be included
in such [***].

ARTICLE 13

INDEMNIFICATION

13.1 Indemnification by SGEN. Unless otherwise provided herein, SGEN agrees to
indemnify, hold harmless and defend GNE, its Affiliates, and their directors,
officers, employees and agents (the “GNE Indemnitees”) from and against any and
all Third Party suits, claims, actions, demands, liabilities, expenses and/or
losses (including without limitation attorneys’ fees, court costs, witness fees,
damages, judgments, fines and amounts paid in settlement) (“Losses”) to the
extent that such Losses arise out of (a) [***], (b) [***], (c) [***], or
(d) [***]. Notwithstanding the foregoing, SGEN’s obligation to indemnify, hold
harmless, and defend the GNE Indemnitees shall not apply to the extent any
Losses arise out of those actions set forth in Sections 13.2 (a) through (f).

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13.2 Indemnification by GNE. Unless otherwise provided herein, GNE shall
indemnify, hold harmless and defend SGEN, its Affiliates, and their directors,
officers, employees and agents (the “SGEN Indemnitees”) from and against any and
all Losses, to the extent that such Losses arise out of (a) [***] (b) [***];
(c) [***]; (d) [***]; (e) [***]; or (f) [***]. Notwithstanding the foregoing,
GNE’s obligation to indemnify, hold harmless, and defend the SGEN Indemnitees
shall not apply to the extent any Losses arise out of those actions set forth in
Sections 13.1 (a) through (d).

13.3 Procedure. In the event of a claim by a Third Party against a Party
entitled to indemnification under this Agreement (“Indemnified Party”), the
Indemnified Party shall promptly notify the other Party (“Indemnifying Party”)
in writing of the claim and the Indemnifying Party shall undertake and solely
manage and control, at its sole expense, the defense of the claim and its
settlement. The Indemnified Party shall cooperate with the Indemnifying Party,
including, as requested by the Indemnifying Party entering into a joint defense
agreement. The Indemnified Party may, at its option and expense, be represented
in any such action or proceeding by counsel of its choice. The Indemnifying
Party shall not be liable for any litigation costs or expenses incurred by the
Indemnified Party without the Indemnifying Party’s written consent. The
Indemnifying Party shall not settle any such claim unless such settlement fully
and unconditionally releases the Indemnified Party from all liability relating
thereto, unless the Indemnified Party otherwise agrees in writing.

13.4 Insurance.

(a) Commencing as of the Effective Date, each Party shall obtain and maintain at
its own expense on [***].

(b) Each Party shall obtain and maintain on [***], provided that upon the [***],
the [***] required by this section shall [***].

(c) Additional Requirements. Except to the extent that GNE self-insures, the
following provisions apply:

(i) All insurance coverages shall be primary insurance with respect to each
Party’s own participation under this Agreement, and shall be maintained with an
insurance company or companies having an [***].

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(ii) Each Party shall name the other Party as an additional insured by
endorsement under its Commercial General Liability and Products Liability
insurance policies.

(iii) The insurance policies shall be under an occurrence form, but if only a
claims-made form is available to a Party, then in such a case, such Party shall
maintain the insurance coverage for at least [***] following such Party’s
completing performance of its obligations under this Agreement.

(iv) Each Party shall provide to the other Party its respective certificates of
insurance evidencing the insurance coverages. Each Party shall provide to the
other Party at least [***] prior written notice of any cancellation, nonrenewal
or material change in any of the insurance coverages. Each Party shall, upon
receipt of written request from the other Party, provide renewal certificates to
the other Party for as long as such Party is required to maintain insurance
coverages hereunder.

ARTICLE 14

TERM AND TERMINATION

14.1 Term. The term of this Agreement shall begin on the Effective Date and,
unless earlier terminated in accordance with the terms of this Article 14, will
expire on the date on which neither Party has nor will have any additional
payment obligations to the other Party under this Agreement (the “Term”).

14.2 Termination for Breach. Subject to the terms and conditions of this
Section 14.2, a Party (the “non-breaching Party”) shall have the right, in
addition to any other rights and remedies, to terminate this Agreement in the
event the other Party (the “breaching Party”) is in breach of any of its
material obligations under this Agreement. The non-breaching Party shall first
provide written notice to the breaching Party, which notice shall identify with
particularity the alleged breach. The breaching Party shall have a period of
[***] ([***] in the case of non-payment) after such written notice is provided
to cure such breach. If such breach is not cured within such period, this
Agreement shall terminate immediately at end of such period on written notice
from the non-breaching Party so long as the notifying Party included its intent
to terminate in such notice, unless the breaching Party requests arbitration
pursuant to Section 15.2, in which case, this Agreement shall remain in effect
until the outcome of the arbitration and its termination subject to such
outcome.

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14.3 Termination by GNE. GNE shall have the right to terminate this Agreement
[***] prior written notice to SGEN.

14.4 Termination for Bankruptcy. GNE shall have the right to terminate this
Agreement upon written notice to SGEN, in the event that SGEN seeks protection
of any bankruptcy or insolvency law, a proceeding in bankruptcy or insolvency is
filed by or against SGEN and is not dismissed within [***], or there is an
adjudication by a court of competent jurisdiction that SGEN is bankrupt or
insolvent. SGEN shall have the right to terminate this Agreement upon written
notice to GNE, in the event that GNE seeks protection of any bankruptcy or
insolvency law, a proceeding in bankruptcy or insolvency is filed by or against
GNE and is not dismissed within [***], or there is an adjudication by a court of
competent jurisdiction that GNE is bankrupt or insolvent.

14.5 Effects of Termination.

(a) Upon termination of this Agreement by SGEN for GNE’s [***] or due to GNE’s
[***] or by GNE under [***]:

(i) Each Party shall promptly return to the other Party all relevant records and
materials in its possession or control containing or comprising the other
Party’s Confidential Information and to which the Party does not retain rights
hereunder.

(ii) All licenses granted by each Party to the other shall terminate (except as
set forth in Section 14.5(a)(vi)), and [***].

(iii) Any sublicense granted to a Sublicensee of GNE outside the U.S. shall
survive termination of this Agreement, provided that such Sublicensee (x) is
not, on the effective date of such termination, in breach of any provisions of
its Sublicense Agreement that materially affects SGEN; (y) agrees, in a
subsequent writing, to perform and deliver directly to SGEN all obligations and
payments that would be due to SGEN under this Agreement with respect to matters
within the scope of such Sublicense Agreement; and (z) agrees, in a

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subsequent writing, that, regardless of GNE’s rights and obligations to such
Sublicensee under such Sublicense Agreement, SGEN’s rights and obligations to
such Sublicensee shall not be materially different than SGEN’s rights and
obligations to GNE under this Agreement. Upon termination of this Agreement
pursuant to this [***] and execution of the written agreements contemplated in
this clause (iii), [***].

(iv) GNE and its Affiliates shall discontinue making any representation
regarding its status as a licensee of or distributor for SGEN, for all Licensed
Products. GNE and its Affiliates shall cease conducting any activities with
respect to the marketing, promotion, sale or distribution of Licensed Products.

(v) Subject to this Section 14.5(a), SGEN shall have the right to develop and
commercialize the [***] itself or with one or more Third Parties, and shall have
the right, [***].

(vi) GNE hereby grants to SGEN, [***] to make, have made, import, use, offer for
sale and sell [***]. In consideration for such license, [***] based on the
developmental stage of the most advanced [***] at the time of termination, as
follows:

 

Stage of Development

  

Royalty Rate

[***]

   [***]

[***]

   [***]

[***]

  

[***]

[***]

Such royalty shall be payable, on a country-by-country and [***] basis until the
later of [***] by SGEN or the expiration of the [***] in such country that
covers such [***] or the manufacture, use, or sale of such [***].
Notwithstanding anything to the contrary, the royalty payments set forth above
shall be [***] as set forth in this [***]. For clarity, the royalty payments set
forth in this Section 14.5(a)(vi) do not include the [***]. The license granted
in this Section 14.5(a)(vi) shall be exclusive of any rights under [***], unless
SGEN agrees in writing to [***].

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(vii) GNE shall assign, or cause to be assigned, to SGEN, and will provide full
copies of, all Regulatory Approvals and INDs, BLAs, NDAs and other similar
regulatory applications owned by GNE, its Affiliates, and its Sublicensees that
relate to [***]. GNE shall also take such actions and execute such other
instruments, assignments and documents as may be necessary to effect the
transfer of rights thereunder to SGEN.

(viii) GNE will provide to SGEN copies of all material reports and data,
including clinical and non-clinical data and reports, obtained or generated by
or on behalf of GNE or its Affiliates (or Sublicensees whose rights have
terminated) pursuant to this Agreement that relate to [***], within [***] of
such termination, and SGEN shall have the right [***];

(ix) If GNE used one or more Marks with regard to any [***] in a country, GNE
shall grant to SGEN an [***] solely in connection with the development and
commercialization of such [***], subject to any trademark rights granted in an
ex-U.S. sublicense agreement surviving termination in accordance with [***]. For
clarity, [***].

(x) At SGEN’s request, GNE shall promptly provide to SGEN copies of all clinical
trial, contract manufacturing, or service agreements entered into by GNE or its
Affiliates with respect to the [***]. At SGEN’s request, [***], to the extent
[***]. In the event that such an assignment or sublicense is not permitted under
a particular clinical trial, contract manufacturing, or service agreement, then
GNE shall reasonably cooperate (at SGEN’s request) to assist SGEN in obtaining
the benefits of such agreement.

(xi) At SGEN’s request, GNE shall supply, or cause to be supplied, SGEN’s
requirements of [***] for a period of [***] following the effective date of
termination, [***]. If the termination of the Agreement occurs after the first
[***], then SGEN may elect, on written notice at least [***] in advance to GNE
to [***]. [***].

(xii) [***].

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(xiii) Promptly after the effective date of such termination, GNE shall provide
reasonable technical assistance for the period from the effective date of such
termination until [***] after such date as necessary to provide technology
transfer necessary for SGEN to commence or continue to commercially manufacture
[***].

(xiv) GNE hereby grants to SGEN, effective only upon the [***].

(b) Upon termination of this Agreement by [***] under [***] for a [***] (as
defined below):

(i) SGEN shall promptly return to GNE all relevant records and materials in its
possession or control containing or comprising GNE’s Confidential Information
and to which [***].

(ii) All licenses granted by [***].

(iii) All licenses granted by [***].

(iv) GNE’s obligations under [***]; provided, however that the [***] shall be
[***] and the [***] shall be [***].

(v) [***].

(vi) [***].

(vii) In addition to the provisions set forth in Sections 14.5(b)(iii-iv) and
Section 14.6, the following provisions shall survive termination of the
Agreement under this Section 14.5(b): [***].

(viii) As used herein, a “[***]” shall mean (i) [***], (ii) [***]; (iii) [***];
(v) [***]; (vi) [***]; and (vii) [***] (i) through (vii) [***].

(ix) Notwithstanding any termination by GNE under this Section 14.5(b), in the
event GNE brings an action against SGEN for a breach of this Agreement which is
a [***], and GNE is [***], GNE shall be required either to (i) [***]; or
(ii) [***].

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(c) Upon termination of this Agreement by GNE under Section 14.2 for a material
breach by SGEN of this Agreement [***]:

(i) SGEN shall promptly return to GNE all relevant records and materials in its
possession or control containing or comprising GNE’s Confidential Information
and to which SGEN does not retain rights hereunder.

(ii) All licenses granted by [***].

(iii) All licenses granted by [***].

(iv) [***];

(v) [***].

(vi) [***].

(vii) In addition to the provisions set forth in Sections 14.5(c)(iii-iv) and in
Section 14.6, the following provisions shall survive termination of the
Agreement under this Section 14.5(b): [***].

14.6 Survival; Accrued Rights. The rights and obligations of the Parties under
the following provisions of this Agreement shall survive any expiration or
termination of this Agreement: [***]. In any event, expiration or termination of
this Agreement shall not relieve the Parties of any liability which accrued
hereunder prior to the effective date of such expiration or termination nor
preclude either Party from pursuing all rights and remedies it may have
hereunder or at law or in equity with respect to any breach of this Agreement,
nor prejudice either Party’s right to obtain performance of any obligation.

ARTICLE 15

DISPUTE RESOLUTIONS; GOVERNING LAW

15.1 Disputes. Unless otherwise set forth in this Agreement, in the event of any
significant controversy, claim, or dispute arising out of or relating to this
Agreement, or its interpretation, performance, nonperformance or any breach of
any respective obligations hereunder (hereinafter collectively referred to as a
“Dispute”) arising under this Agreement between the Parties, the Parties shall
[***].

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15.2 Arbitration. If the Parties are unable resolve a given Dispute pursuant to
Section 15.1 within [***], either Party may have the given Dispute settled by
binding arbitration in the manner described below:

(a) Arbitration Request. If a Party intends to begin arbitration to resolve a
Dispute arising under this Agreement, such Party shall provide written notice
(the “Arbitration Request”) to the other Party of such intention and the issues
for resolution. From the date of the Arbitration Request and until such time as
the Dispute has become finally settled, the running of the time periods as to
which Party must cure a breach of this Agreement becomes suspended as to any
breach that is the subject matter of the Dispute.

(b) Additional Issues. Within [***] after the receipt of the Arbitration
Request, the other Party may, by written notice, add additional issues for
resolution.

(c) Subject Matter Exclusions. This Section 15.2 shall not apply to any Dispute
relating to (i) [***]; (ii) [***]; or (iii) [***].

(d) Arbitration Procedure. Discovery shall be under the U.S. Federal Rules of
Civil Procedure then in effect in the [***]. The Arbitration shall be held in
[***] under the rules of the American Arbitration Association (“AAA”). The
arbitration shall be conducted [***] who are knowledgeable in the subject matter
at issue in the Dispute. [***]. Each Party shall make its selection of
arbitrator within [***] after the date of the Arbitration Request. Unless agreed
otherwise by the Parties, the Parties shall have [***] from the appointment of
the last to be appointed of the [***] to present and/or submit their positions
to the arbitrators, and the Parties shall have a hearing before the arbitrators
within [***] of such submission. The arbitrators shall hear evidence by each
Party and resolve each of the issues identified by the Parties. The arbitrators
shall be instructed and required to render a [***]. The written [***] shall be
delivered to the Parties as expeditiously as possible, but in no event more than
[***] after conclusion of the hearing, unless otherwise agreed to by the
Parties. The arbitrators may proceed to an [***]. Each Party agrees to use
reasonable efforts to make all of its current employees available, if reasonably
needed, and agrees that the arbitrators may deem any party as

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“necessary.” The arbitrators shall be authorized to [***]. The Parties may apply
to any court of competent jurisdiction for a temporary restraining order,
preliminary injunction or other interim or conservatory relief, as necessary,
without breaching these arbitration provisions and without abridging the powers
of the arbitrators. At the request of either Party, the arbitrators shall enter
an appropriate protective order to maintain the confidentiality of information
produced or exchanged in the course of the arbitration proceedings. The
arbitrators shall have the power to decide all questions of arbitrability. The
arbitrators also shall be authorized to grant any temporary, preliminary or
permanent equitable remedy or relief the arbitrators deem just and equitable and
within the scope of this Agreement, including, without limitation, an injunction
or order for specific performance. The award of the arbitrators shall be the
[***]. Judgment on the award rendered by the arbitrators may be enforced in any
court having competent jurisdiction thereof, subject only to revocation on
grounds of fraud or clear bias on the part of the arbitrators. Notwithstanding
anything contained in this Section 15.2 to the contrary, each Party shall have
the right to institute judicial proceedings against the other Party or anyone
acting by, through or under such other Party, in order to enforce the
instituting Party’s rights hereunder through specific performance, injunction or
similar equitable relief.

(e) Costs; Satisfaction. Each Party shall bear its own attorneys’ fees, costs,
and disbursements arising out of the arbitration, and shall pay an equal share
of the fees and costs of the arbitrators; provided, however, that the
arbitrators shall be authorized to determine whether a Party is the prevailing
Party, and if so, to award to that prevailing Party reimbursement for its
reasonable attorneys’ fees, costs and disbursements (including, for example,
expert witness fees and expenses, photocopy charges and travel expenses), and/or
the fees and costs of the arbitrators. Absent the filing of an application to
correct or vacate the arbitration award as permitted by applicable law, each
Party shall fully perform and satisfy the arbitration award within [***] of the
service of the award.

15.3 Waiver. By agreeing to this binding arbitration provision, the Parties
understand that they are waiving certain rights and protections which may
otherwise be available if a Dispute between the Parties were determined by
litigation in court, including the right to seek or obtain certain types of
damages precluded by this provision, the right to a jury trial, certain rights
of appeal, and a right to invoke formal rules of procedure and evidence.

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15.4 Choice of Law. The validity, performance, construction, and effect of this
Agreement shall be governed by the laws of the State of California, without
regard to conflicts of law principles that would provide for application of the
law of another jurisdiction.

ARTICLE 16

MISCELLANEOUS

16.1 HSR Act.

(a) HSR Filing. Each of GNE and SGEN shall, within fifteen (15) days after
Execution Date, file with the United States Federal Trade Commission and the
Antitrust Division of the United States Department of Justice, any HSR Filing
required of it under the HSR Act with respect to the subject matter of this
Agreement, which forms shall specifically request early termination of the
initial HSR Act waiting period. The Parties will cooperate with one another to
the extent necessary in the preparation of any such HSR Filing . The Parties
hereto commit to instruct their respective counsel to cooperate with each other
and use good faith, diligent efforts to facilitate and expedite the
identification and resolution of any such issues and, consequently, the
expiration of the applicable HSR Act waiting period, such good faith diligent
efforts to include counsel’s undertaking: (i) to keep each other appropriately
informed of communications received from and submitted to personnel of the
reviewing antitrust authority; and (ii) to confer with each other regarding
appropriate contacts with and response to personnel of the United States Federal
Trade Commission and the Antitrust Division of the United States Department of
Justice. Each Party will be responsible for its own costs, expenses, and filing
fees associated with any HSR Filing. In respect of any HSR Filing, each of GNE
and SGEN will use its good faith, diligent efforts to eliminate any concern on
the part of any court or governmental authority regarding the legality of the
proposed transaction, including cooperating in good faith with any government
investigation and the prompt production of documents and information demanded by
a second request for documents and of witnesses if requested, and to cause the
Effective Date of this Agreement to occur as soon as practical, as provided in
Section 16.1(b). Nothing in this Section shall require either Party to consent
to the divestiture or other disposition of any of its or its Affiliates’ assets
or to consent to any other structural or conduct remedy, and each Party and its
Affiliates shall have no obligation to contest, administratively or in court,
any ruling, order or other action of the United States Federal Trade Commission
and the Antitrust Division of the United States Department of Justice or any
Third Party respecting the transactions contemplated by this Agreement.

 

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(b) Effective Date. Except for the specific provisions expressly identified in
Section 16.1(c), this Agreement shall not be effective until such time as the
HSR Conditions are met. Immediately at the time when all the HSR Conditions are
met, this Agreement shall be effective automatically in its entirety.

(c) Portions of Agreement Effective as of Execution Date. Notwithstanding
Section 16.1(b) and anything in this Agreement to the contrary, the following
provisions of this Agreement shall be in full force and effect as of the
Execution Date: Article 1 (Definitions), Article 12 (Confidentiality), Article
14 (Term and Termination), and Article 16 (Miscellaneous).

16.2 Assignment. Either Party may assign this Agreement (a) to any Affiliate of
such Party without the prior written consent of the other Party, provided that
such Party provides the other Party with written notice of such assignment and
remains fully liable for the performance of such Party’s obligations hereunder
by such Affiliate, or (b) without the prior written consent of the other Party,
to its successor in interest by way of merger, acquisition, or sale of [***] or
more of its voting shares or assets (“Change in Control”), provided that such
Party provides the other Party with written notice of such assignment. Any other
assignment of this Agreement by a Party requires the prior written consent of
the other Party. Any assignment in violation of this Section 16.2 shall be null
and void. This Agreement shall be binding on and shall inure to the benefit of
the permitted successors and assigns of the Parties hereto. Notwithstanding the
foregoing, in the event that a Party assigns this Agreement in connection with a
Change in Control to its successor all of its assets to which this Agreement
relates, the intellectual property rights of such successor in interest, and of
any of its Affiliates as of just prior to such Change in Control, as existing
immediately prior to the closing of such Change in Control, shall be
automatically excluded from the rights licensed to the other Party under this
Agreement. In addition, [***] after the later of (a) closing of such Change in
Control and (b) GNE’s receipt of written notice of such Change in Control.

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16.3 Force Majeure. If either Party shall be delayed, interrupted in or
prevented from the performance of any obligation hereunder by reason of force
majeure including an act of God, fire, flood, earthquake, war (declared or
undeclared), public disaster, act of terrorism, strike or labor differences,
cell culture contamination, lack of access to essential materials or ingredients
required for manufacturing, governmental enactment, rule or regulation, or any
other cause beyond such Party’s control, such Party shall not be liable to the
other therefor; and the time for performance of such obligation shall be
extended for a period equal to the duration of the force majeure which
occasioned the delay, interruption or prevention. The Party invoking such force
majeure rights of this Section 16.3 must notify the other Party by courier or
overnight dispatch (e.g., Federal Express) within a period of [***] of both the
first and last day of the force majeure unless the force majeure renders such
notification impossible in which case notification will be made as soon as
possible. If the delay resulting from the force majeure exceeds [***], both
Parties shall consult together to find an appropriate solution.

16.4 Entire Agreement. This Agreement constitutes the entire agreement between
the Parties with respect to the subject matter herein and, effective on the
Effective Date, supersedes all previous agreements between the Parties with
respect to the subject matter herein, , whether written or oral, including
without limitation the existing mutual confidentiality agreement between SGEN
and GNE dated February 6, 2006 covering the subject matter of this Agreement,
but excluding the Prior Agreements which remain in full force and effect subject
to the terms of this Agreement. This Agreement shall not be changed or modified
orally, but only by an instrument in writing signed by both Parties.

16.5 Severability. If any provision of this Agreement is declared invalid by a
court of last resort or by any court or other governmental body from the
decision of which an appeal is not taken within the time provided by law, then
and in such event, this Agreement will be deemed to have been terminated only as
to the portion thereof that relates to the provision invalidated by that
decision and only in the relevant jurisdiction, but this Agreement, in all other
respects and all other jurisdictions, will remain in force; provided, however,
that if the provision so invalidated is essential to the Agreement as a whole,
then the Parties shall negotiate in good faith to amend the terms hereof as
nearly as practical to carry out the original intent of the Parties, and,
failing such amendment, either Party may submit the matter for resolution
pursuant to Article 15.

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16.6 Notices. Any notice or report required or permitted to be given under this
Agreement shall be in writing and shall be mailed by certified or registered
mail, or telexed or telecopied and confirmed by mailing, as follows and shall be
effective five (5) days after such mailing:

 

If to SGEN:    Seattle Genetics, Inc.    21823 30th Drive S.E.    Bothell, WA
98021    Attention: Chief Executive Officer With copy to:    Seattle Genetics,
Inc.    21823 30th Drive S.E.    Bothell, WA 98021    Attention: General Counsel
If to GNE:    Genentech Inc.    1 DNA Way    South San Francisco, CA 94080   
Attention: Corporate Secretary    Telephone: (650) 225-1000    Facsimile: (650)
467-9146 With a copy to:    Genentech Inc.    1 DNA Way    South San Francisco,
CA 94080    Attention: Vice President, Alliance Management    Telephone: (650)
225-1000    Facsimile: (650) 467-3294

 

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16.7 Further Assurances. The Parties agree to reasonably cooperate with each
other in connection with any actions required to be taken as part of their
respective obligations under this Agreement, and shall (a) furnish to each other
such further information; (b) execute and deliver to each other such other
documents; and (c) do such other acts and things (including working
collaboratively to correct any clerical, typographical, or other similar errors
in this Agreement), all as the other Party may reasonably request for the
purpose of carrying out the intent of this Agreement.

16.8 Agency. Neither Party is, nor will be deemed to be an employee, agent,
fiduciary or representative of the other Party for any purpose. Each Party is an
independent contractor, not an employee or partner of the other Party. Neither
Party shall have the authority to speak for, represent or obligate the other
Party in any way without prior written authority from the other Party.

16.9 No Waiver. Any omission or delay by either Party at any time to enforce any
right or remedy reserved to it, or to require performance of any of the terms,
covenants or provisions hereof, by the other Party, shall not constitute a
waiver of such Party’s rights to the future enforcement of its rights under this
Agreement. Any waiver by a Party of a particular breach or default by the other
Party shall not operate or be construed as a waiver of any subsequent breach or
default by the other Party.

16.10 No Strict Construction. This Agreement has been prepared jointly by the
Parties and shall not be strictly construed against either Party.

16.11 Headings. The captions used herein are inserted for convenience of
reference only and shall not be construed to create obligations, benefits, or
limitations.

16.12 Counterparts. This Agreement may be executed in counterparts, all of which
taken together shall be regarded as one and the same instrument.

16.13 Interpretation of Certain Terms. In this Agreement, the singular shall
include the plural and vice versa, the words “herein”, “hereof” and “hereunder”,
and words of similar import, shall be construed to refer to this Agreement in
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provision hereto, and the word “including” shall be deemed to be followed by the
phrase “without limitation.” References to any Section or Article include
Sections that are part of the related Section (e.g., a Section numbered “Section
3.4.1” would be part of “Section 3.4”, and references to “Section 5.9.1” would
also refer to material contained in the Section described as “Section
5.9.1(a)”). The Article and Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

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IN WITNESS WHEREOF, the Parties have executed this Collaboration Agreement
through their duly authorized representatives to be effective as of the
Effective Date.

 

SEATTLE GENETICS, INC.     GENENTECH, INC. By:   /s/ Clay B. Siegall     By:  
/s/ Arthur D. Levinson Name:   Clay B. Siegall     Name:   Arthur D. Levinson
Title:   President & CEO     Title:   Chairman & CEO

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EXHIBIT A

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EXHIBIT B

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EXHIBIT C

[***]

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EXHIBIT D

[***]

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EXHIBIT E

[***]

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requested with respect to the omitted portions.

 

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