EXHIBIT 10.3

Confidential treatment requested

 

COLLABORATION AGREEMENT

 

This Agreement is entered into as of March 27, 2002 (“Effective Date”), by and
between:

 

ð                                    SEATTLE GENETICS, INC., a Delaware
corporation, having its principal place of business at 21823 30th Drive S.E.,
Bothell, Washington 98021

 

                                                (hereinafter referred to as
“SGI”)

 

and:

 

ð                                    CELLTECH R & D LIMITED, a corporation
organized and existing under the laws of England, having its principal place of
business at 208 Bath Road, Slough, Berkshire SL1 3WE UK.

 

                                                (hereinafter referred to as
“Celltech”).

 

WITNESSETH

 

WHEREAS, SGI owns or controls intellectual property rights relating to certain
drug conjugation and linker technology;

 

WHEREAS, Celltech is a biopharmaceutical company currently conducting research
and development programs aimed at the discovery of antigens and antibodies
targeting those antigens for the development and commercialization of
pharmaceutical products;

 

WHEREAS, Celltech wishes to acquire from SGI exclusive options to worldwide
exclusive licenses under SGI’s patent rights and know-how related to SGI’s drug
conjugation and linker technology;

 

WHEREAS, SGI is willing to grant to Celltech such exclusive options in order to
allow Celltech to evaluate SGI’s drug conjugation and linker technology for use
with certain of Celltech’s proprietary antigens and antibodies, and

 

WHEREAS, SGI is willing to grant to Celltech such exclusive licenses, subject to
the terms of and conditioned upon this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and obligations set
forth herein, the Parties hereto, intending to be legally bound, agree as
follows:

 

ARTICLE I - DEFINITIONS AND INTERPRETATION

 

1.1.          Definitions:  For the purposes of this Agreement the following
words and phrases shall have the following meanings:

 

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“Additional Research Program Fees” has the meaning set forth in Section 3.4(b)
hereof.

 

“ADC” means any Antibody [***] that incorporates or uses Drug Conjugation
Technology.

 

“Affiliate” means, with respect to a Party, any person, corporation or business
entity that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, a Party.  For the
purpose of this definition, control of a corporation or of another business
entity shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management or the policies of the entity, whether
through the ownership of voting securities, by agreement or otherwise; provided,
however, that the direct or indirect beneficial ownership of less than [***] of
the voting interests in, or less than a [***] interest in the equity of, such
corporation or other business entity shall not alone constitute control of such
corporation or other business entity.

 

“Agreement” means this agreement, all amendments and supplements to this
Agreement and all schedules to this Agreement.

 

“Antibody” or “Antibodies” means any monoclonal antibody, fragment thereof or
modification thereof, [***], with a unique amino acid sequence that binds to a
Research Antigen or Exclusive Antigen.  By way of clarification, Antibodies with
different amino acid sequences shall be deemed to be different Antibodies,
irrespective of whether they bind to the same Research Antigen or Exclusive
Antigen.

 

“Antigen” means any [***] (including any [***]), [***], compound or other
composition, and any [***] thereof, to which an antibody binds.

 

“[***]” and “[***]” have the meaning set forth in Schedule B.

 

“[***]” and “[***]” have the meaning set forth in Schedule B.

 

“[***]” means the Third Party Patents and Third Party Know-How licensed to SGI
under the License Agreement between [***] and SGI, dated [***], as amended.

 

“Calendar Quarter” means any of the three-month periods beginning January 1,
April 1, July 1 and October 1 in any year.

 

“Celltech Know-How” means confidential information and materials, excluding
Third Party Know-How, which is Controlled by Celltech or its Affiliates, whether
as of or after the Effective Date, to the extent such is necessary or useful, as
reasonably determined by the JDC, for SGI to perform its obligations under the
Research Program.  The Celltech Know-How shall include the Program Know-How to
the extent Controlled by Celltech.

 

“Celltech Patents” means all Patent Rights which are Controlled by Celltech or
its Affiliates as of or after the Effective Date and which are necessary, as
reasonably determined by the JDC, for SGI to perform its obligations under the
Research Program.  Celltech Patents shall include the Program Patents to the
extent Controlled by Celltech.

 

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“Celltech Technology” means the Celltech Know-How and the Celltech Patents.

 

“Combination Product” means any Licensed Product that contains, in addition to
an ADC, one or more other ingredients that have a biologic activity as a
therapeutic agent when administered alone.

 

“Commercially Reasonable Efforts” means, with respect to any objective by any
Party, reasonable, diligent, good faith efforts to accomplish such objective as
such Party would normally use to accomplish a similar objective under similar
circumstances.

 

“Confidential Information” has the meaning set forth in Section 10.1.

 

“Control” or “Controlled” means with respect to any (a) material, item of
information, method, data or other know-how, or (b) intellectual property right,
in each case the possession (whether by ownership or license, other than
pursuant to this Agreement) by a Party or its Affiliates of the ability to grant
to the other Party access and/or a license as provided herein under such item or
right without violating the terms of any agreement or other arrangement with any
Third Party existing before or after the Effective Date.

 

“[***]” means any [***], or [***] thereof, that does not [***].

 

“Drug Conjugation Technology” means drug conjugates and drug conjugation
chemistry Controlled by SGI, including [***] and analogues and derivatives
thereof, [***] and analogues and derivatives thereof and linker technology for
attaching drugs to Antibodies.

 

“Effective Date” means the date of this Agreement as set forth above.

 

“Events of Force Majeure” shall have the meaning set forth in Article 17.

 

“Exclusive Antigen” shall have the meaning set forth in Section 4.2.1.

 

“Exclusive License” shall have the meaning set forth in Section 4.2.1.

 

“Field” means the [***]; provided that with respect to use of the [***], the
Field shall be limited to the use of [***].

 

“FTE” means the per annum rate of full time work of an SGI employee who is
adequately trained to perform Research Program activities pursuant to this
Agreement.

 

“GLP Toxicology” means the first toxicology study commenced using GLP grade
Licensed Product in an animal model to determine toxicology of said Licensed
Product.

 

“First Commercial Sale” means, in each country of the Territory, the first
commercial sale of a Licensed Product by Celltech, its Affiliates or
Sublicensees to a Third-Party following, if required by law, Regulatory Approval
and, when Regulatory Approval is not required by law, the first commercial sale
in that country, in each case for use or consumption of such Licensed Product in
such country by the general public; for avoidance of doubt, First

 

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Commercial Sale of a given Licensed Product cannot occur more than once in any
particular country of the Territory.

 

“Initial Research Program Fee” shall have the meaning set forth in
Section 3.4(a).

 

“Initiation” means, with respect to a human clinical trial, the treatment of the
first patient with a Licensed Product pursuant to a clinical protocol of the
specified clinical trial.

 

“JDC” shall have the meaning set forth in Section 3.6.

 

“Licensed Product” means any and all products that incorporates or uses the SGI
Technology and where the development, manufacture, sale or use of such products,
absent the rights granted to Celltech under this Agreement, would constitute a
misappropriation and/or an infringement of SGI Technology.

 

“Net Sales” means the gross amount received by Celltech, its Affiliates and
Sublicensees from the sale of Licensed Products to Third-Parties, less the sum
of the following deductions for amounts actually incurred related to said sale:

 

(i)            normal, customary trade discounts (including volume discounts),
credits, allowances and adjustments for rejections, recalls and returns; and

 

(ii)           cost of freight and insurance, special packaging, sales, use,
excise, value added and similar taxes, surcharges, duties and other governmental
charges (other than income tax) imposed on the sale and included in the gross
amount charged to customers.

 

In the event that a Licensed Product is sold as part of a kit or Combination
Product, the Parties shall negotiate in good faith an appropriate adjustment to
“Net Sales,” taking into account SGI’s Third Party Obligations and the price or
(if not available) the fair market value of the products sold as part of the kit
or Combination Product if sold separately.

 

“[***]” means all [***] pursuant to which SGI or its Affiliates have, [***],
obtained [***] of any [***] under any [***] or [***] and [***].  SGI’s [***] and
during the Term shall be set forth on Schedule B hereof and the [***] of the
[***] shall be set forth on Schedule F.

 

“Option” means, with respect to each Research Antigen, the exclusive option
granted by SGI to Celltech pursuant to the provisions of Section 4.1 hereof to
obtain an Exclusive License under Section 4.2 hereof.

 

“Option Exercise Fee” shall have the meaning set forth in Section 7.1.1.

 

“Option Period” means, with respect to each Research Antigen, the period
commencing as of the date that [***], provided that for any Research Antigen the
Option Period shall be the greater of [***] or [***] from the date that SGI
[***].

 

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“Parties” means Celltech and SGI, and “Party” means either of them.

 

“Patent Rights” means all claims in [***] patents, [***] patent applications and
all patent applications [***], provided, such patent has not expired, lapsed, or
been held invalid or unenforceable by a final decision, which is unappealed or
unappealable, of a court of competent jurisdiction or of an administrative
agency having authority over patents or such patent application has not been the
subject of a rejection notice from which an appeal cannot be taken or in respect
of which the applicable period for appeal has not expired, and any
continuations, continuations-in-part, divisions, provisionals or any substitute
applications, any patent issued with respect to any such patent applications,
any reissue, reexamination, renewal or extension (including any supplementary
protection certificate) of any such patent, and any confirmation patent or
registration patent or patent of addition based on any such patent, and all
foreign counterparts of any of the foregoing.

 

“Phase I Clinical Trial” means a clinical study in subjects to evaluate the
pharmacokinetic and pharmacodynamic properties, maximum tolerated dose, dosing
interval, and absorption, distribution, metabolism and excretion of a candidate
drug.

 

 “Phase III Clinical Trial” means a controlled, multi-center clinical trial,
involving patients with the disease or condition of interest to obtain
sufficient efficacy and safety data to support regulatory submissions and
labeling of a candidate drug.

 

“[***]” and “[***]” have the meaning set forth in Schedule B.

 

“Program Invention” means all patentable inventions that are conceived or
reduced to practice by one or more employees, agents or consultants of Celltech
and/or one or more employees, agents or consultants of SGI in the course of
performing the Research Program.

 

“Program Know-How” means confidential information and materials, including, but
not limited to, (i) pharmaceutical, chemical, biological and biochemical
products, (ii) technical and non-technical data, and information relating to the
results of tests, assays, methods and/or processes, and (iii) drawings, plans,
diagrams, specifications and/or other documents containing said information and
data, in each case which is made jointly by employees, consultants or agents of
SGI or its Affiliates and by employees, consultants or agents of Celltech or its
Affiliates following the Effective Date during the course of the Research
Program Term, but excluding the Program Patents.

 

“Program Patents” means all Patent Rights that claim or cover Program
Inventions.

 

“Regulatory Approval” means final regulatory approval (including, where
applicable, pricing approval in the event that actual sales do not take place
before such approval) required to market a Licensed Product for a disease or
condition in accordance with the applicable laws and regulations of a given
country.  In the United States, its territories and possessions, Regulatory
Approval means approval of a Biologics License Application (“BLA”) or its
equivalent by the United States Food and Drug Administration (“FDA”), or
successor agency.

 

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“Research Antigen” means any Antigen that is [***] designated a “Research
Antigen” under this Agreement pursuant to Section 2.1.2.

 

“Research Fees” shall have the meaning set forth in Section 3.4(c).

 

“Research Fees Report” shall have the meaning set forth in Section 3.4(c).

 

“Research Program” means the research program conducted pursuant to Article 3.

 

“Research Program Term” means the term of the Research Program set forth in
Section 3.3.

 

“Royalty Term” means, on a Licensed Product-by-Licensed Product and
country-by-country basis, the period of time equal to the longer of: (a) [***]
from the date of First Commercial Sale of Licensed Product in such country; or
(b) the term for which there are Valid Claims of SGI Owned Patents or Third
Party Patents directly relating to the Licensed Product in such country.

 

“SGI Know-How” shall mean confidential information and materials relating to the
Drug Conjugation Technology, excluding Third Party Know-How, which is Controlled
by SGI or its Affiliates, whether as of or after the Effective Date, to the
extent such is useful or necessary for the manufacture, testing, use or sale of
a Licensed Product in the Field.  The SGI Know-How shall include Drug
Conjugation Technology and, to the extent Controlled by SGI, the Program
Know-How.

 

“SGI Patents” means all Patent Rights within Third Party Patents, the SGI Owned
Patents and, to the extent Controlled by SGI, the Program Patents.

 

“SGI Owned Patents” means all Patent Rights relating to the Drug Conjugation
Technology, other than the Third Party Patents, which are owned and Controlled
by SGI or its Affiliates, whether as of or after the Effective Date and which
contain claims which would be infringed by the manufacture, use or sale of
Licensed Products in the Field in the absence of this Agreement.  The relevant
SGI Owned Patents as of the Effective Date are listed in Schedule A, which may
be amended from time to time by the Parties.

 

“SGI Technology” means all SGI Patents, Third Party Know-How and SGI Know-How.

 

“Sublicensees” means any person acting pursuant to a sublicense granted to it by
Celltech or its Affiliates as provided in Section 4.2.2 hereof.

 

“Term” shall have the meaning set forth in Article 15.

 

“Territory” means all countries in the world.

 

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“Third-Party” means any person or entity other than Celltech, SGI and their
respective Affiliates.

 

“THIRD PARTY KNOW-HOW” MEANS CONFIDENTIAL INFORMATION AND MATERIALS RELATING TO
THE DRUG CONJUGATION TECHNOLOGY, EXCLUDING SGI KNOW-HOW WHICH IS CONTROLLED BY
SGI OR ITS AFFILIATES AND CELLTECH KNOW-HOW WHICH IS CONTROLLED BY CELLTECH OR
ITS AFFILIATES, AS OF THE EFFECTIVE DATE, TO THE EXTENT SUCH IS USEFUL OR
NECESSARY FOR THE MANUFACTURE, TESTING, USE OR SALE OF A LICENSED PRODUCT IN THE
FIELD.

 

“Third Party License Agreement” means all contracts or agreements with Third
Parties pursuant to which SGI or its Affiliates have, as of the Effective Date,
obtained Control of any rights under any Third Party Patent or Third Party
Know-How.  SGI’s Third Party License Agreements existing as of the Effective
Date are set forth in Schedule B and the material provisions of the Third Party
License Agreements are set forth on Schedule D.

 

“Third Party Obligations” shall have the meaning set forth in Section 7.3.1.

 

“Third Party Patents” means all Patent Rights relating to the Drug Conjugation
Technology, other than the SGI Owned Patents or Program Patents, which are
Controlled by SGI or its Affiliates as of the Effective Date and which contain
claims which would be infringed by the manufacture, use or sale of Licensed
Products in the Field in the absence of this Agreement.  The relevant Third
Party Patents as of the Effective Date are listed in Schedule C, which may be
amended from time to time by the Parties.

 

“Valid Claim” means a claim of any issued unexpired patent, which has not been
revoked or held unenforceable or invalid by a decision of a court or
governmental agency of competent jurisdiction from which no appeal can be taken,
or with respect which an appeal is not taken within the time allowed for appeal,
and which has not been disclaimed, denied or admitted to be invalid or
unenforceable through reissue, disclaimer or otherwise.

 

1.2.          Certain Rules of Interpretation in this Agreement and the
Schedules.

 

(a)           Unless otherwise specified, all references to monetary amounts are
to United States of America currency (U.S. Dollar);

 

(b)           The descriptive headings of Articles and Sections are inserted
solely for convenience of reference and are not intended as complete or accurate
descriptions of the content of such Articles or Sections;

 

(c)           The use of words in the singular or plural, or with a particular
gender, shall not limit the scope or exclude the application of any provision of
this Agreement to such person or persons or circumstances as the context
otherwise permits;

 

(d)           The words “include” and “including” have the inclusive meaning
frequently identified with the phrases “without limitation” and “but not limited
to”;

 

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(e)           Whenever a provision of this Agreement requires an approval or
consent by a Party to this Agreement and notification of such approval or
consent is not delivered within the applicable time limit, then, unless
otherwise specified, the Party whose approval or consent is required shall be
conclusively deemed to have withheld its approval or consent;

 

(f)            Unless otherwise specified, time periods within or following
which any payment is to be made or act is to be done shall be calculated by
excluding the day on which the period commences and including the day on which
the period ends and by extending the period to the next business day following
if the last day of the period is not a business day in the jurisdiction of the
Party to make such payment or do such act; and

 

(g)           Whenever any payment is to be made or action to be taken under
this Agreement is required to be made or taken on a day other than a business
day, such payment shall be made or action taken on the next business day
following such day to make such payment or do such act.

 

ARTICLE 2 - RESEARCH ANTIGENS

 

2.1.1        Number of Options for Research Antigens.

 

Subject to the provisions of this Agreement, including the availability of an
Antigen pursuant to Section 2.3, Celltech may acquire Options pursuant to
Section 4.1 for the following number of Research Antigens during the Research
Program Term:

 

(a)           Upon payment of the Initial Research Program Fee set forth in
Section 3.4(a), Celltech shall receive Options for up to [***] Research Antigens
for evaluation in the Research Program; and

 

(b)           Celltech may acquire Options for up to an additional [***]
Research Antigens for evaluation in the Research Program by paying the
Additional Research Program Fees set forth in Section 3.4(b) hereof.

 

2.1.2        Designation of Research Antigens.  Celltech shall notify SGI of the
identity of, and to the extent available the genetic sequence for, any Antigen
that Celltech wishes to designate as a Research Antigen.  Within [***] following
receipt of such notice, SGI shall notify Celltech whether the Antigen is
available for designation as a Research Antigen pursuant to Section 2.3. Upon
notice by SGI to Celltech that an Antigen is available for designation as a
Research Antigen pursuant to Section 2.3, such Antigen shall be deemed to be a
“Research Antigen” under this Agreement. If SGI does not respond within the
[***] following receipt of such notice, the Antigen Celltech wishes to designate
as a Research Antigen shall be deemed to be a Research Antigen.  Schedule E to
this Agreement will be amended from time to time to list the Research Antigens
(including a description thereof) under this Agreement.

 

2.1.3        [***].  At any time after designation of a Research Antigen
pursuant to Section 2.1.2 but prior to the earlier of (i) delivery of materials
for such Research Antigen to SGI or (ii) [***] from the date of designation of
such Research Antigen, Celltech may, at its sole discretion,

 

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[***] such Research Antigen and [***], at no additional cost, [***]; provided
that Celltech may not make more than [***] for each Research Antigen.

 

2.2.1        Research License to Celltech.

 

Subject to the provisions of this Agreement, SGI hereby grants to Celltech and
its Affiliates, for the Research Program Term, a non-exclusive license in the
Territory under SGI Technology as may be specifically designated in writing by
Celltech solely for the purpose of conducting research and development
activities on Research Antigens to evaluate Celltech’s interest in exercising
the Options.  The research license granted to Celltech under this Section 2.2.1
shall not include (i) the right to use SGI Technology for any commercial purpose
whatsoever, (ii) the right to grant sublicenses thereto to any Third-Party other
than to engage the services of Third-Party contractors to undertake certain
research activities on Celltech’s behalf consistent with the research license
granted herein or (iii) the right to initiate any human clinical trial of a
Licensed Product in any country.  Nothing in this Agreement shall be construed
to grant Celltech rights to use SGI Technology in any human clinical trial or
similar clinical activity with respect to a Licensed Product prior to Celltech
exercising its Option for the applicable Research Antigen pursuant to Section
4.2 hereof.

 

2.2.2                        Research License to SGI.

 

Subject to the provisions of this Agreement, Celltech hereby grants to SGI and
its Affiliates, for the Research Program Term, a non-exclusive license under
Celltech Technology solely for the purpose of conducting research and
development activities on Research Antigens and Antibodies thereto in order for
SGI to perform its obligations under this Agreement.  The research license
granted to SGI under this Section 2.2.2 shall not include (i) the right to use
Celltech Technology for any commercial purpose whatsoever,  (ii) the right to
grant sublicenses thereto to any Third-Party or (iii) the right to initiate any
human clinical trials using any Celltech Technology.

 

2.2.3        Additional Assistance.

 

In addition to other assistance explicitly set forth in this Agreement, during
the course of the Term, SGI and Celltech shall each provide the other Party with
reasonable technical assistance relating to the use of such SGI Technology and
Celltech Technology, respectively, solely to the extent licensed to the other
Party in this Agreement.

 

2.3.          Availability of an Antigen [***].

 

It is understood and agreed that SGI shall grant Celltech’s request to designate
an Antigen as a Research Antigen unless, prior to Celltech’s request pursuant to
Sections 2.1.2 or 2.1.3: (i) [***] or (ii) [***] pursuant to Sections 2.1.2 or
2.1.3.  Additionally, SGI shall not be required to [***] any [***] pursuant to
Section 3.5.1 if such [***] are unavailable pursuant to this Section 2.3(i) or
(ii).

 

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ARTICLE 3 - RESEARCH PROGRAM

 

3.1.          Objective.  Celltech intends to conduct a Research Program to
evaluate Research Antigens and Antibodies for commercial development under this
Agreement.  In support of the Research Program, upon SGI’s receipt of Antibodies
to Research Antigens, SGI shall prepare ADCs for Celltech pursuant to Section
3.5.

 

3.2.          Conduct of Research Program.  Celltech and SGI shall use all
Commercially Reasonable Efforts to complete research works in accordance with
the stated objective of the Research Program as set forth in Section 3.1.  Any
research work performed by Celltech and SGI pursuant hereto shall be performed
in a good scientific manner and in compliance with all applicable laws.

 

3.3.          Term of the Research Program.  The term of the Research Program
shall be for a period of [***] from the Effective Date unless terminated earlier
in accordance with Article 15 hereof (the “Research Program Term”).

 

3.4.          Research Program Fees.  Celltech shall pay to SGI the following
amounts in consideration of the Research Program:

 

(a)           In consideration for the Options on the [***] Research Antigens as
set forth in Section 2.1.1(a) and within thirty (30) days of the Effective Date,
Celltech shall pay to SGI the sum of [***] by wire transfer of immediately
available funds, which payment shall be nonrefundable and non-creditable (the
“Initial Research Program Fee”).

 

(b)           If Celltech elects to acquire additional Options pursuant to
Section 2.1.1(b) during the Research Program Term, Celltech shall make an
additional payment in the sum of [***] per Antigen for up to [***] additional
Antigens and a maximum aggregate total of [***] Research Antigens.  Payment
shall be by wire transfer of immediately available funds for each additional
Research Antigen within thirty (30) days of Option exercise, which payment shall
be nonrefundable and non-creditable (the “Additional Research Program Fees”).

 

(c)           In partial consideration for the research performed by SGI,
Celltech shall reimburse SGI for all JDC (as defined in Section 3.6)
pre-approved (which approval will not be unreasonably withheld): 1)
out-of-pocket costs incurred by SGI and 2) FTEs at a rate of [***] per FTE per
year for the [***] of the Research Program and [***] per FTE per year for the
[***] of the Research Program (collectively, the “Research Fees”).  Within
thirty (30) days after the end of each Calendar Quarter, SGI shall submit a
report to Celltech supporting the calculation of both out-of-pocket costs and
FTEs due for such Calendar Quarter (a “Research Fees Report”).  Celltech shall
pay all Research Fees to SGI within thirty (30) days of receipt of each Research
Fees Report.

 

(d)           Celltech shall pay SGI the following fees immediately upon
delivery to Celltech of 1) ADCs meeting the reasonable criteria set by the Joint
Development Committee

 

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and 2) all SGI Know-How and Third Party Know-How necessary or useful to evaluate
such ADCs:

 

(i)            [***] upon receipt of [***] requested by Celltech;

 

(ii)           [***] upon receipt of [***] requested by Celltech; and

 

(iii)          [***] upon receipt of [***] requested by Celltech.

 

3.5.          SGI Preparation of ADCs.

 

3.5.1        During the Research Program Term, at the request of Celltech and
utilizing SGI Technology specifically designated in writing by Celltech, SGI
will use Commercially Reasonable Efforts to prepare and deliver to Celltech
ADC’s for (i) any and all Antibodies provided by Celltech recognizing Research
Antigens designated by Celltech under this Agreementand (ii) [***]; provided
that SGI may decline to prepare an ADC for a [***] to an Antigen based on the
availability of the [***] pursuant to Section 2.3(i) and (ii); and provided
further that Celltech shall not be permitted to designate as a Research Antigen
any [***] for which SGI prepares an ADC pursuant to this Section 3.5.1.

 

3.5.2        EXCEPT AS PROVIDED IN ARTICLE 14, SGI MAKES NO REPRESENTATIONS AND
GRANTS NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW,
BY STATUTE OR OTHERWISE, REGARDING THE ADCs PREPARED BY SGI INCLUDING ANY
WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE.

 

3.6           Joint Development Committee.  Within [***] of the Effective Date,
the Parties will establish a Joint Development Committee (the “JDC”) to make
decisions regarding the Research Program consistent with the objective as set
forth in Section 3.1 hereof.  The JDC will be responsible for, among other
things, reviewing research plans, exchanging information, monitoring use of the
SGI Technology by Celltech and the Celltech Technology by SGI, facilitating
cooperation and coordination between the Parties, and for implementing all
activities approved by the JDC.  The JDC will be composed of [***] of each
Party, who shall be appointed (and may be replaced at any time) by such Party on
written notice to the other in accordance with this Agreement.  Such
representatives shall possess the requisite experience and seniority to enable
them to make decisions on behalf of the Parties with respect to the Research
Program.  The JDC will make decisions based on a majority vote or by a written
resolution signed by the designated representatives of each of the Parties. Any
member of the JDC may designate a substitute to attend and perform the functions
of that member at any meeting of the JDC.  If the members of the JDC are split
on a decision, [***].  The JDC will meet at least [***] annually until [***],
and at least [***] annually thereafter during the Term, or at any other
frequency unanimously agreed by the members of the JDC.

 

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ARTICLE 4 - OPTIONS AND LICENSES

 

4.1.          Option Grant.

 

4.1.1.       Grant of the Options.  Subject to the terms of this Agreement, SGI
hereby grants to Celltech an exclusive Option during the Option Period for each
Research Antigen designated pursuant to Section 2.1.2 or 2.1.3 to obtain an
Exclusive License as set forth in Section 4.2.1 hereof.

 

4.1.2.       Exercise of the Options.   During the Option Period and on a
Research Antigen by Research Antigen basis, Celltech may provide written notice
to SGI that it wishes to acquire the Exclusive License to the SGI Technology, as
set forth in Section 4.2.1.

 

4.2.          Exclusive License Grant to Celltech.

 

4.2.1.       Grant.  If (i) Celltech elects to exercise its Option pursuant to
Section 4.1.2, and (ii) Celltech pays the Option Exercise Fee pursuant to
Section 7.1.1, then subject to the terms and conditions of this Agreement, and
commencing as of the date that SGI receives the Option Exercise Fee, SGI is
automatically deemed to grant, and in such event hereby grants, to Celltech, on
a Research Antigen-by-Research Antigen basis, an exclusive (even as to SGI),
royalty-bearing license, including the right to sublicense as set forth in
Section 4.2.2 hereof,  under such SGI Technology specifically designated in
writing by Celltech, as  required, to develop, have developed, make, have made,
use, import, have imported, export, have exported, offer to sell, sell and have
sold Licensed Products directed toward such Research Antigen within the Field in
the Territory (an “Exclusive License”), whereupon the Research Antigen shall
thereafter be deemed to be an “Exclusive Antigen”.

 

The date upon which an Exclusive License is granted with respect to each
Research Antigen under this Section 4.2 is referred to herein as the “Exclusive
License Date” for such Research Antigen.

 

4.2.2.       Rights to Sublicense.

 

(a)           For each License granted pursuant to Section 4.2.1 hereof,
Celltech shall have the right to sublicense its rights to any Affiliate or any
Third-Party (“Sublicensee”), subject to the terms and conditions of this
Agreement.

 

(b)           Celltech shall be responsible for making all payments due to SGI
for completion of any milestones or due to Net Sales of any Licensed Products by
any such Sublicensee and for compliance with all terms of this Agreement
applicable to Celltech (including all terms of this Agreement identified as
applicable to Sublicensee).

 

(c)           Celltech shall notify SGI of each sublicense granted to Affiliates
or Third-Parties and shall provide SGI with the name and address of each
Sublicensee and a description of the rights granted and the territory covered by
such Sublicensee.

 

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4.3.          [***].  Subject to the bona fide rights of Third-Parties that may
exist, SGI hereby [***] the right to [***],” any [***] under any [***].  SGI
shall promptly notify Celltech of any [***] by providing a description of the
[***] thereunder, including all [***] applicable to [***] including any [***] or
[***].  Upon such notification, Celltech may, at its sole discretion, by giving
written notice to SGI at any time during the Term, [***] under this Agreement;
provided that Celltech will [***] to SGI for all [***] that [***] under any
[***] any such [***] as provided in Section 7.3.2 in so far as they relate to
[***] and all [***] that [***] under any [***] covering any such [***] as
provided in Section 7.5.2 in so far as they relate to [***].  If Celltech does
not [***] to [***] under a [***], then Celltech shall have [***] to such [***]
and the [***] and [***] under such [***] shall be [***].  Nothing herein shall
be construed to obligate SGI to [***] or to [***] thereunder.  Nothing contained
herein shall affect SGI’s representations and warranties contained in Section
14.1.

 

4.4.          Compliance with Third Party License Agreements.  To the extent
that Celltech designates an SGI Technology pursuant to [***] that is covered
under a Third Party License Agreement [***], Celltech hereby agrees to comply
with the covenants and conditions of such Third Party License Agreement as set
forth in Schedule D [***] hereto as they apply to Celltech, its Affiliates or
Sublicensees as a sublicensee of SGI under such Third Party License Agreement
[***].  To the extent that Celltech [***] an SGI Technology pursuant to [***]
licensed by SGI under a Third Party License Agreement [***], and such agreement
is amended to include additional terms or conditions, the parties agree to amend
Schedules D [***] to include such terms and conditions as are relevant to this
Agreement; provided, however, that SGI shall not [***] that would [***] under
this Agreement [***]; and provided, further, that SGI shall not [***] that
[***].

 

ARTICLE 5 - TECHNOLOGY DISCLOSURE AND SUPPLY

 

5.1.          Disclosure of Drug Conjugation Technology.

 

SGI shall disclose and supply to Celltech in a timely manner such SGI
Technology, including Drug Conjugation Technology, SGI Know-How and technology
covered by New Third Party License Agreements and any related materials, as may
be useful to enable Celltech to use the same at its own facilities for the
purposes of and on the terms and conditions of this Agreement.  In addition,
during the term of this Agreement, SGI shall, upon Celltech’s reasonable request
and with reasonable notice to SGI, make available to Celltech at SGI’s
facilities, SGI’s personnel to provide a reasonable amount of technical
assistance and training to Celltech’s personnel. Celltech shall pay all
out-of-pocket expenses and FTE costs incurred by SGI in providing such technical
assistance and training in accordance with Section 3.4(c).

 

ARTICLE 6 - DEVELOPMENT AND COMMERCIALIZATION

 

6.1           Celltech shall develop, commercialize and market Licensed Products
using Commercially Reasonable Efforts. Without limiting the foregoing, Celltech,
at its sole discretion, (i) shall be responsible for conducting such preclinical
and clinical trials as are necessary or

 

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desirable to obtain regulatory approvals to develop and commercialize such
Licensed Products, (ii) shall be responsible for developing and obtaining
neces­sary approval to market such Licensed Products (including, as the case may
be, pricing approval), and (iii) shall be responsible for marketing such
Licensed Products.   Celltech shall comply with all applicable good laboratory,
clinical and manufacturing practices in the development and commercialization of
such Licensed Products, and shall use Commercially Reasonable Efforts to cause
its Affiliates and subcontractors to do the same.

 

6.2           Celltech shall be solely responsible for funding all costs of the
development and commercialization of each such Licensed Product.  Celltech shall
keep SGI informed upon reasonable requests by SGI from time to time as to the
progress of the development of Licensed Products.  Beginning on [***] and
thereafter within [***] following the end of each [***] upon SGI’s request,
Celltech shall provide SGI with a written report summarizing Celltech’s
activities related to research and development of Licensed Products and status
of clinical trials and government approvals necessary for marketing Licensed
Products.

 

ARTICLE 7 - OPTION EXERCISE FEE, EXCLUSIVE LICENSE FEES, ROYALTIES AND
MILESTONES.

 

7.1.          Option Exercise Fee; Exclusive License Fees.

 

7.1.1.       In consideration for each Option exercised pursuant to Section
4.1.2, Celltech shall make a payment to SGI in the sum of [***] by wire transfer
of immediately available funds (the “Option Exercise Fee”). Each Option Exercise
Fee paid by Celltech to SGI is [***] for the applicable Exclusive Antigen during
the [***] period from the Exclusive License Date for such Exclusive Antigen.

 

7.1.2        On the [***] of each Exclusive License date and on each subsequent
[***] until terminated pursuant to 7.1.3 or Article 15, Celltech shall pay to
SGI an exclusive license fee in the amount of [***] for each Exclusive Antigen. 
Each annual exclusive license fee is [***] for the applicable Exclusive Antigen
during the [***] period.

 

7.1.3.       Celltech may terminate the Exclusive License for any Exclusive
Antigen for any reason and at any time upon [***] prior notice to SGI.  Upon
termination pursuant to this Section 7.1.3, [***].

 

7.2.          Royalties Payable by Celltech.

 

In consideration for the Exclusive Licenses granted to Celltech herein, during
the Royalty Term, Celltech shall pay to SGI royalties on Net Sales of Licensed
Products.  Such royalties shall be at the following rates, determined on a
Licensed Product-by-Licensed Product basis:

 

(a)           [***] of the first [***] in aggregate Net Sales of Licensed
Product in each calendar year;

 

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(b)           [***] of Net Sales of Licensed Product over [***] up to [***] in
each calendar year; and

 

(c)           [***] of  Net Sales of Licensed Product in excess of [***] in each
calendar year.

 

7.3.          Third-Party Royalties.

 

7.3.1.       [***], Celltech shall pay to SGI [***] any Third-Party royalties
owed by SGI to a Third Party pursuant to each Third Party License Agreement
accruing due to the sale of Licensed Product in the Field in the Territory by
Celltech, its Affiliates and Sublicensees (“Third Party Obligations”). The Third
Party Obligations are as follows:  [***].  To the extent Third Party Obligations
accrue due to the sale of Licensed Product, Celltech shall be responsible for
such royalties based on the following schedule:

 

(a)           [***];

 

(b)           [***]

 

(c)           [***];

 

provided, that SGI shall not be obligated to pay any Third Party Obligations
hereunder in excess of [***].

 

7.3.2        [***]

 

7.4.          Milestone Payments.

 

As additional consideration for the licenses granted to Celltech hereunder,
Celltech shall pay to SGI the following milestone payments on Licensed Product
within [***] of each occurrence of each milestone event set forth below:

 

(a)           Upon [***];

 

(b)           Upon [***];

 

(c)           Upon [***];

 

(d)           Upon [***]; and

 

(e)           Upon [***].

 

Celltech will only be required to pay each of the above milestones to SGI for
the [***] Licensed Product associated with each Exclusive Antigen to complete
the milestone event.

 

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7.5           Third Party Milestone Payments.

 

7.5.1        SGI shall be responsible for [***].  SGI and Celltech shall each
pay [***] pursuant to 4.2.1 for the development and commercialization of a
Licensed Product under this Agreement.  The milestones owed by SGI under the
[***] that may be applicable to Licensed Products are as follows:

 

(a)           [***] upon [***];

 

(b)           [***] upon [***];

 

(c)           [***] upon [***]; and

 

(d)           [***] upon [***].

 

7.5.2        [***]

 

ARTICLE 8 - ROYALTY REPORTS AND ACCOUNTING

 

8.1.          Reports, Exchange Rates.

 

8.1.1.       During the Royalty Term, Celltech shall furnish to SGI, with
respect to each Calendar Quarter following the First Commercial Sale, a written
report showing on a consolidated basis in reasonably specific detail and on a
country-by-country basis, (a) the gross sales of Licensed Products sold by
Celltech, its Affiliates and its Sublicensees in the Territory during the
corresponding Calendar Quarter and the calculation of Net Sales from such gross
sales; (b) the royalties payable in U.S. dollars, if any, which shall have
accrued hereunder based upon Net Sales of Licensed Products; (c) the withholding
taxes, if any, required by law to be deducted in respect of such royalties;
(d) the dates of the First Commercial Sale of each Licensed Product in each
country in the Territory if it has occurred during the corresponding Calendar
Quarter; and (e) the exchange rates (as determined pursuant to Section 8.1.3
herein) used in determining the royalty amount expressed in U.S. dollars
(collectively, “Reports”).

 

8.1.2.       Reports shall be due on the [***] following the close of each
Calendar Quarter.  Celltech shall keep complete and accurate records in
sufficient detail to properly reflect all gross sales and Net Sales and to
enable the royalties payable hereunder to be determined.

 

8.1.3.       With respect to sales (if any) of Licensed Products invoiced in
U.S. dollars, the gross sales, Net Sales, and royalties payable shall be
expressed in U.S. dollars.  With respect to sales of Licensed Products invoiced
in a currency other than U.S. dollars, the gross sales, Net Sales and royalties
payable shall be expressed in the currency of the invoice issued by the Party
making the sale together with the U.S. dollars equivalent of the royalty
payable, calculated using [***].

 

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8.2.          Audits.

 

8.2.1.       Upon the written request of SGI and not more than once in each
calendar year, Celltech shall permit an independent certified public accounting
firm of internationally recognized standing, selected by SGI and reasonably
acceptable to Celltech, at SGI’s expense, to have access during normal business
hours to such of the records of Celltech and its Affiliates as may be reasonably
necessary to verify the accuracy of the Reports hereunder for any year ending
not more than [***] prior to the date of such request.  The accounting firm
shall disclose to SGI only whether the records are correct or not and the
specific details concerning any discrepancies.  No other information shall be
shared.

 

8.2.2.       If such accounting firm concludes that additional royalties were
owed during such period, Celltech shall pay the additional royalties within
[***] of the date SGI delivers to Celltech such accounting firm’s written report
so concluding.  The fees charged by such accounting firm shall be paid by SGI;
provided, however, if the audit discloses that the royalties payable by Celltech
for the audited period are more than [***] of the royalties actually paid for
such period, then Celltech shall pay the reasonable fees charged by such
accounting firm.

 

8.2.3        Upon the expiration of [***] following the end of any calendar
year, the calculation of royalties payable with respect to such year shall be
binding and conclusive upon SGI, and Celltech, its Affiliates and Sublicensees
shall be released from any liability or accountability with respect to royalties
for such year.

 

8.3.          Confidential Financial Information.

 

SGI shall treat all financial information subject to review under this Article 8
or under any sublicense agreement as Confidential Information of Celltech, and
shall cause its accounting firm to retain all such financial information in
confidence.

 

ARTICLE 9 - PAYMENTS.  LATE PAYMENTS

 

9.1.          Payment Terms.

 

Royalties shown to have accrued by each Report provided for under Article 8 of
this Agreement shall be due on the date such Report is due.  Payment of
royalties in whole or in part may be made in advance of such due date.  Past due
payments shall accrue interest at a rate of [***] per annum, or if less, the
maximum applicable rate permitted by law, unless occurring as a result of an
event the Parties agree constitutes an Event of Force Majeure or as a result of
a good faith dispute between the Parties regarding performance or breach of
their obligations hereunder.

 

9.2.          Payment Method.

 

All payments by Celltech to SGI under this Agreement shall be paid in U.S.
dollars, and all such payments shall be made by bank wire transfer in
immediately available funds to the bank account designated by SGI in writing.

 

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9.3.          Exchange Control.

 

If at any time legal restrictions prevent the prompt remittance of part or all
royalties with respect to any country in the Territory where Licensed Product is
sold, payment shall be made through such lawful means or method as the Parties
reasonably shall determine.

 

9.4.          Withholding Taxes.

 

Except as otherwise provided below, all amounts owing from Celltech to SGI under
this Agreement are gross amounts.  Celltech shall be entitled to deduct the
amount of any withholding taxes payable or required to be withheld by Celltech,
its Affiliates or Sublicensees, to the extent Celltech, its Affiliates or
Sublicensees pay to the appropriate governmental authority on behalf of SGI such
taxes.  Celltech shall use Commercially Reasonable Efforts to minimize any such
taxes, levies or charges required to be withheld on behalf of SGI by Celltech,
its Affiliates or Sublicensees.  Celltech shall promptly deliver to SGI proof of
payment of all such taxes, levies and other charges, together with copies of all
communications from or with such governmental authority with respect thereto.

 

ARTICLE 10 - CONFIDENTIALITY

 

10.1.        Non-Disclosure Obligations.

 

Except as otherwise provided in this Article 10, during the Term and for a
period of [***] thereafter, each Party shall maintain in confidence, and use
only for purposes as expressly authorized and contemplated by this Agreement,
all confidential or proprietary information, data, documents or other materials
supplied by the other Party under this Agreement and marked or otherwise
identified as “Confidential”.  For purposes of this Agreement, information and
data described above shall be hereinafter referred to as “Confidential
Information.”  Each Party shall use at least the same standard of care as it
uses to protect its own Confidential Information to ensure that its and its
Affiliates’ and its sublicensees (or prospective sublicensees) and their
employees, agents, consultants and clinical investigators only make use of
Confidential Information for purposes as expressly authorized and contemplated
by this Agreement and do not disclose or make any unauthorized use of such
Confidential Information.

 

10.2.        Permitted Disclosures.

 

Notwithstanding the foregoing, the provisions of Section 10.1 hereof shall not
apply to information, documents or materials that the disclosing Party can
conclusively establish:

 

(a)           have become published or otherwise entered the public domain other
than by acts of the disclosing Party or its Affiliates in contravention of this
Agreement;

 

(b)           are permitted to be disclosed by prior consent of the other Party;

 

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(c)           have become known to the disclosing Party by a Third-Party,
provided such Confidential Information was not obtained by such Third-Party
directly or indirectly from the other Party under this Agreement on a
confidential basis;

 

(d)           prior to disclosure under the Agreement, was already in the
possession of the disclosing Party, its Affiliates or Sublicensees, provided
such Confidential Information was not obtained directly or indirectly from the
other Party under this Agreement;

 

(e)           is disclosed in a press release agreed to by both Parties hereto,
which agreement shall not be unreasonably withheld; and

 

(f)            are required to be disclosed by the disclosing Party to comply
with any applicable law, regulation or court order, or are reasonably necessary
to obtain patents, copyrights or authorizations to conduct clinical trials with,
and to commercially market Licensed Product(s), provided that the disclosing
Party shall provide prior notice of such disclosure to the other Party and take
reasonable and lawful actions to avoid or minimize the degree of disclosure.

 

10.3.        Terms of the Agreement.

 

Celltech and SGI shall not disclose any terms or conditions of this Agreement to
any Third-Party without the prior written consent of the other Party, except as
required by applicable laws, regulations or a court order (and in any such case
the disclosing Party shall provide notice to the other Party and take reasonable
and lawful actions to avoid or minimize the degree of such disclosures). 
However, Celltech may disclose the terms and conditions of this Agreement to
potential licensees.

 

10.4.        Press Releases and Other Disclosures to Third-Parties.

 

Neither SGI nor Celltech will, without the prior written consent of the other,
issue any press release or make any other public announcement or furnish any
statement to any Third Party (other than either Parties’ respective Affiliates)
concerning the existence of this Agreement, its terms and the transactions
contemplated thereby, except for (i) general statement referring to the
existence of this Agreement, and identity of the Parties but no other details,
(ii) disclosures made in compliance with Sections 10.2 and 10.3 hereof,
(iii) attorneys, consultants, and accountants retained to represent them in
connection with the transactions contemplated hereby and (iv) occasional, brief
comments by the respective officers of Celltech and SGI consistent with such
guidelines for public statements as may be mutually agreed by Celltech and SGI
made in connection with routine interviews with analysts or members of the
financial press.

 

10.5.        Publications Regarding Results of the Research Program.

 

No Party may publish, present or announce results of the Research Program either
orally or in writing (the “Publication”) without obtaining the written consent
of the other Party, provided that either Party may release a Publication that
generally sets forth information concerning their research programs.  The other
Party shall have [***] from receipt of the

 

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proposed Publication to provide comments and/or proposed changes to the
disclosing Party.  The disclosing Party shall take into account the comments
and/or proposed changes made by the other Party on any Publication and shall
agree to have employees or others acting on behalf of the other Party be
mentioned as co-authors on any Publication describing results to which such
persons have contributed.  If the other Party reasonably determines the
Publication would amount to the public disclosure of such Party’s Confidential
Information and/or of a patentable invention upon which a patent application may
be filed prior to any such disclosure, submission of the concerned Publication
to Third-Parties shall be delayed for a [***] period from the date of said
notice, or for such longer period which may appear necessary for appropriately
deleting Confidential Information from the proposed Publication and/or drafting
and filing a patent application covering such invention.

 

ARTICLE 11 - INVENTIONS AND PATENTS

 

11.1.        Ownership of Inventions.

 

11.1.1.     Disclosure of Program Inventions.  Each Party shall promptly
disclose to the other Party the making, conception or reduction to practice of
any Program Inventions.

 

11.1.2  Ownership of Program Inventions.  All right, title and interest in all
Program Inventions that are discovered, made or conceived as part of the
activities conducted pursuant to this Agreement during the Research Program Term
shall be owned as follows:

 

A)     [***] SHALL OWN ALL PROGRAM INVENTIONS THAT ARE INVENTED SOLELY BY ONE OR
MORE EMPLOYEES, AGENTS OR CONSULTANTS OF [***];

 

B)    [***] SHALL OWN ALL PROGRAM INVENTIONS THAT ARE INVENTED SOLELY BY ONE OR
MORE EMPLOYEES, AGENTS OR CONSULTANTS OF [***]; AND

 

C)     SUBJECT TO SECTION 11.1.3, [***] SHALL [***] OWN ALL PROGRAM INVENTIONS
THAT ARE INVENTED BY ONE OR MORE OF ITS EMPLOYEES, AGENTS OR CONSULTANTS,
TOGETHER WITH ONE OR MORE EMPLOYEES, AGENTS OR CONSULTANTS OF THE OTHER.

 

For the purposes of determining ownership of Program Inventions under this
Section 11.1.2, inventorship shall be determined under U.S. patent law.  In the
event of a dispute regarding inventorship, the JDC shall engage a Third Party
patent attorney jointly selected by the Parties to resolve such dispute.

 

11.1.3      Ownership of Drug Conjugate Technology, Antibodies, Research
Antigens and Exclusive Antigens.

 

For all Program Inventions set forth under Section 11.1.2.(c):

 

(a)           As between Celltech and SGI, [***] shall have and retain all
right, title and interest in and to any and all Program Inventions directly
relating to [***] developed as a direct result of the Research Program, and to
the extent that any such [***] within Program

 

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Inventions shall have been invented by [***] and is owned by [***]; [***],
subject to retaining an [***] hereto during the Term for all [***] licensed
under this Agreement.

 

(b)           As between SGI and Celltech, [***] shall have and retain all
right, title and interest in and to any and all Program Inventions directly
relating to [***] developed as a direct result of the Research Program, and to
the extent that any such [***] within Program Inventions shall have been
invented by [***] and are owned by [***], [***].

 

11.1.4      Assignment by Employees, Agents or Independent Contractors. 
Celltech and SGI agree that all employees acting on its behalf in performing its
obligations under this Agreement shall be obligated to assign to such Party all
Program Inventions made or conceived by such employee as part of the activities
conducted under this Agreement.  Celltech and SGI agree that in the case of
non-employees working on its behalf, that such Party shall endeavor to obtain an
assignment of all Program Inventions made by such non-employees.

 

11.2.        Patent Prosecution and Maintenance.

 

11.2.1.  SGI Owned Patents.  SGI shall be responsible for and shall control the
preparation, filing, prosecution, grant and maintenance of all SGI Owned Patents
and shall keep Celltech currently advised as to the status of the same.  SGI
shall, at its sole expense, prepare, file, prosecute and maintain such SGI Owned
Patents in good faith consistent with its customary patent policy and its
reasonable business judgment, and shall consider in good faith the interests of
Celltech in so doing.  If SGI elects to abandon a SGI Owned Patent and/or
terminate its obligations to file, prosecute or maintain any such patent, then
it shall notify Celltech in writing of its election and provide Celltech a [***]
period from receipt of such written notification in which to respond to such
notice before abandoning and/or discontinuing its obligations to file, prosecute
or maintain such patent.  If Celltech responds within such [***] response period
that it wishes to file, prosecute or maintain such patent, then SGI shall
promptly transfer and assign such patent to Celltech and shall continue to file,
prosecute and maintain such patent until such transfer and assignment becomes
effective.  Celltech shall reimburse SGI for all reasonable costs associated
with filing, prosecuting or maintaining such patent from date it notifies SGI it
wishes to assume responsibility for the patent(s) until the transfer and
assignment becomes effective.  Upon such transfer and assignment becoming
effective, SGI shall transfer its files to Celltech and shall reasonably assist
Celltech in the filing, prosecuting and maintaining of such patent.

 

11.2.2.  Celltech Patents.  Subject to Section 11.2.1 and 11.2.3, Celltech shall
be responsible for and shall control the preparation, filing, prosecution, grant
and maintenance, of all Celltech Patents other than the Program Patents. 
Celltech shall, at its sole expense, prepare, file, prosecute and maintain such
Patent Rights in good faith consistent with its customary patent policy and its
reasonable business judgment.

 

11.2.3                  Program Inventions.

 

(a)           SGI shall have the sole right, but not the obligation, to prepare,
file, prosecute, and maintain, at SGI’s expense, any patent(s) on Program
Inventions set forth in

 

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Section 11.1.3(a).  SGI shall keep Celltech currently advised as to the status
of all patent(s) with respect to the Program Inventions set forth in Section
11.1.3(a) and shall supply Celltech promptly with copies of all patents, patent
applications, substantive patent office actions, substantive responses received
or filed in connection with such applications.  In the event that SGI elects not
to file for patent protection or elects not to prosecute or maintain a patent(s)
on the Program Inventions set forth in Section 11.1.3(a), it shall notify
Celltech in writing of such decision and provide Celltech a [***] period from
receipt of such written notification in which to respond to such notice before
abandoning and/or discontinuing to file, prosecute or maintain such patent(s). 
Celltech shall have the right, but not the obligation to assume the
responsibility therefore, at its own cost and expense.  If Celltech responds
within such [***] response period that it wishes to file, prosecute or maintain
such patent(s), then SGI shall promptly transfer and assign all right, title and
interest in and to such patent(s), including all files, to Celltech and shall
continue to file, prosecute and maintain such patent(s) until such transfer and
assignment become effective.  Celltech shall reimburse SGI for all reasonable
costs associated with filing, prosecuting or maintaining such Patent(s) from
date it notifies SGI it wishes to assume responsibility for the patent(s) until
the transfer and assignment becomes effective.  Upon such transfer and
assignment becoming effective, SGI shall transfer its files to Celltech and
shall reasonably assist Celltech in the filing, prosecuting and maintaining of
such patent(s).

 

(b)           Celltech shall have the sole right, but not the obligation to
prepare, file, prosecute, and maintain, at Celltech’s expense, any patent(s) on
Program Inventions set forth in Section 11.1.3(b).

 

(c)           For all patents other than as set forth in Sections 11.2.3(a) and
(b), Celltech shall have the sole right, but not the obligation to prepare,
file, prosecute, and maintain, at both Celltech and SGI’s expense, patent(s) on
Program Inventions.  Celltech shall keep SGI currently advised as to the status
of all such patent(s) and shall supply SGI promptly with copies of all patents,
patent applications, substantive patent office actions, substantive responses
received or filed in connection with such applications.  In the event that
Celltech elects not to file for patent protection or elects not to prosecute or
maintain such patent(s), it shall notify SGI in writing of such decision and
provide SGI a [***] period from receipt of such written notification in which to
respond to such notice before abandoning and/or discontinuing to file, prosecute
or maintain such patent(s).  SGI shall have the right, but not the obligation to
assume the responsibility therefore, at its own cost and expense.  If SGI
responds within such [***] response period that it wishes to file, prosecute or
maintain such patent(s), then Celltech shall promptly transfer and assign all
its right, title and interest in and to such patent(s) to SGI and shall continue
to file, prosecute and maintain such patent(s) until such transfer and
assignment become effective.  SGI shall reimburse Celltech for all reasonable
costs associated with filing, prosecuting or maintaining such Patent(s) from
date it notifies Celltech it wishes to assume responsibility for such patent(s)
until the transfer and assignment becomes effective.  Upon such transfer and
assignment becoming effective, Celltech shall transfer its files to SGI and
shall reasonably assist SGI in the filing, prosecuting and maintaining of such
patent(s).

 

11.2.4      Cooperation.  The Parties shall at all times fully cooperate in
order to reasonably implement the foregoing provisions.

 

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11.3.        Enforcement of  Patents.

 

11.3.1      SGI Patents.  Subject to Section 11.3.3, SGI shall have the right,
at its sole expense, to determine the appropriate course of action to enforce
the SGI Patents or otherwise abate the infringement thereof, to take (or refrain
from taking) appropriate action to enforce the SGI Patents, to control any
litigation or other enforcement action and to enter into, or permit, the
settlement of any such litigation or other enforcement action with respect to
the SGI Patents, and in good faith shall consider the interests of Celltech in
so doing.  All monies recovered upon the final judgment or settlement of any
such suit to enforce any SGI Patents shall be retained by SGI; provided,
however, that to the extent that any award is attributable to loss of sales of a
Licensed Product, the Parties shall negotiate in good faith an appropriate
allocation of such award to reflect the economic interests of the Parties under
this Agreement with respect to such Licensed Product.  Celltech and SGI shall
fully cooperate with each other in any action to enforce the SGI Patents.  If
SGI fails to take any action to enforce the SGI Patents or control any
litigation with respect to the SGI Patents within a period of [***] after
reasonable notice of the infringement of the SGI Patents, then Celltech shall
have the right to bring and control any such action by counsel of its own
choice, and in such case, all monies recovered upon the final judgment or
settlement of any such suit to enforce any SGI Patents shall be retained by
Celltech.  In such a case, SGI shall cooperate fully with Celltech, at
Celltech’s expense, in its efforts to enforce the SGI Patents, including being
joined as a party to such action if necessary.

 

11.3.2.     Celltech Patents.  Subject to Section 11.3.3, Celltech shall have
the right, at its sole expense, to determine the appropriate course of action to
enforce the Celltech Patents or otherwise abate the infringement thereof, to
take (or refrain from taking) appropriate action to enforce the Celltech
Patents, to control any litigation or other enforcement action and to enter
into, or permit, the settlement of any such litigation or other enforcement
action with respect to the Celltech Patents.  All monies recovered upon the
final judgment or settlement of any such suit to enforce any Celltech Patents
shall be retained by Celltech.  SGI and Celltech shall fully cooperate with each
other in any action to enforce the Celltech Patents.

 

11.3.3      Program Inventions.

 

(a)           Enforcement.  In the event that either Party becomes aware that
any patent covering a Program Invention is infringed or misappropriated by a
Third Party or is subject to a declaratory judgment action, the Party becoming
aware of such event shall promptly notify the other Party.  The Party with the
right to prepare, file, prosecute, and maintain a patent(s) with respect to such
Program Invention, as set forth in Sections 11.2.3(a)-(c), and which is then
maintaining said patent(s), in its sole discretion, shall have the right and
shall be solely responsible for pursuing any action for infringement or
misappropriation against Third Parties or defending any declaratory judgment
action relating thereto.  To the extent that the Program Invention being pursued
is a Program Invention as set forth in Section 11.2.3(c) or an SGI Patent
covering a Licensed Product, the Party not having the right to prepare, file,
prosecute, and maintain a Patent(s) with respect to such Program Invention and
which is not then actually maintaining said Patent(s) shall have the option to
participate in such action at its sole expense.

 

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(b)           Failure to Enforce. If the Party with the right to pursue any
action for infringement or misappropriation against Third Parties or defending
any declaratory judgment action as set forth in Section 11.3.3(a) above fails to
pursue or defend such action relating to a Program Invention within [***]
written notice by the other Party of its desire to proceed, then the other Party
shall have the option to pursue or defend such actions; provided, that such
Party pays all costs and expenses related to the same, and keeps the other Party
reasonably informed of its progress and provides copies of any documents related
to such proceedings and reasonable notice of all proceedings relating to same. A
Party electing to exercise its option to proceed under this Section 11.3.3(b)
shall notify the other Party of its decision to exercise its option as soon as
possible.

 

(c)           Division of Recoveries. Any recovery of damages received in
connection with a suit (including by way of settlement) under Section 11.3.3(a)
involving a Program Invention set forth in Section 11.2.3(a) or (b) shall be
retained by the Party that owns said Program Invention. Any recovery of damages
received in connection with a suit (including by way of settlement) under
Section 11.3.3(a) involving a Program Invention set forth in Section 11.2.3(c)
brought by SGI or Celltech shall be retained by the Party that conducted such
suit (other than the assistance that each party is required to provide to the
litigating party pursuant to Section 11.5 and for which it has been
reimbursed).  Any recovery of damages received in connection with a suit under
Section 11.3.3(a) (including by way of settlement) jointly brought by SGI and
Celltech (other than the assistance that each party is required to provide to
the litigating party pursuant to Section 11.5 and for which it has been
reimbursed) shall be used first to reimburse the Parties, on a pro-rata basis,
for all expenses actually incurred in such suit, and any remainder shall be
divided equally between Celltech and SGI after payment of any obligations to any
Third Party in relation to any recovery; provided, however, that to the extent
that any award recovered under this section 11.3.3(c) is attributable to loss of
sales of a Licensed Product, the Parties shall negotiate in good faith an
appropriate allocation of such award to reflect the economic interests of the
Parties under this Agreement with respect to such Licensed Product.

 

11.4.        Prior Patent Rights.  Notwithstanding anything to the contrary in
this Agreement, with respect to any SGI Patents that are subject to any Third
Party License Agreement, the rights and obligations of the Parties under Section
11.2 and 11.3 shall be subject to such Third Party rights to participate in and
control prosecution, maintenance and enforcement of such Third Party Patents in
accordance with the terms and conditions of the applicable Third Party License
Agreement.

 

11.5         Cooperation.  In any claim, suit or proceeding under Section 11.3.3
which either Party may become involved, the other Party shall, at the request
and expense of the Party initiating or defending the claim, suit or proceeding,
cooperate and assist such Party in all reasonable respects, including having its
employees testify when requested and making available relevant records, papers,
information, specimens and the like.

 

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ARTICLE 12 - INFRINGEMENT ACTIONS BY THIRD-PARTIES 

 

12.1        Infringement Claims by Third Parties.

 

(a)           Third Party Claims.  If the making, having made, developing,
using, distributing for sale, promoting, marketing, offering for sale, selling,
having sold, importing or exporting of any Licensed Products results in an
assertion or a claim against a Party of infringement or misappropriation of any
Third Party’s intellectual property right due to the use of SGI Technology
(“Third Party Claim”), the Party first having notice of a Third Party Claim
shall promptly notify the other Party in writing specifying in reasonable detail
the alleged grounds or basis for the Third Party Claim.

 

(b)           Response to Third Party Claims.  In the event of a Third Party
Claim, the Parties agree to respond to and/or defend against the Third Party
Claim as follows:

 

(i)  Each Party shall use Commercially Reasonable Efforts in responding to and
defending against such Third Party Claim, and will render such reasonable
assistance as the other Party may request, at the requesting Party’s expense, in
defending such Third Party Claim.

 

(ii)  Neither Party shall settle any Third Party Claim in a manner that is
prejudicial to the other Party without the other Party’s prior written consent.

 

(iii)  Each Party shall be responsible for its own fees and costs of attorneys
and consultants, together with court costs, incurred in defending against the
Third Party Claim.

 

(iv)  Each party shall keep the other Party reasonably informed of the status of
the suit under this Article 12.

 

(c)           Third Party Royalties.  If Celltech, its respective Affiliates or
Sublicensees, by court order, settlement or other agreement entered into in good
faith, is required to pay royalties and/or damages to any Third Parties in
connection with the disposition of a Third Party Claim, Celltech, its Affiliates
or Sublicensees, shall be entitled to reduce the royalties payable to SGI
hereunder by [***]; provided that: (1) such Third Party Claim is directly
related to SGI Technology and (2) such reductions reduce by no more than [***]
the royalties otherwise due to SGI hereunder after taking account of Third Party
royalties under Section 7.3.

 

ARTICLE 13 - REGULATORY ASSISTANCE

 

Should Celltech develop an ADC for clinical development, SGI will provide at
Celltech’s request, technical information required for Celltech to file for and
obtain permission to commence human clinical trials.  This information will
include, as available, Chemistry Manufacturing and Controls documentation, other
toxicity and safety data, access to any drug master files on record with the FDA
and any other relevant materials.  Celltech shall reimburse SGI for any
out-of-pocket and FTE costs incurred by SGI in providing such information, as
set forth in Section 3.4(c).

 

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ARTICLE 14 - REPRESENTATIONS AND WARRANTIES

 

14.1.        Representations and Warranties.

 

(a)           This Agreement has been duly executed and delivered by each Party
and constitutes the valid and binding obligation of each Party, enforceable
against such Party in accordance with its terms, except as enforceability may be
limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium or other laws relating to or affecting creditors’ rights generally
and by general equitable principals.  The execution, delivery and performance of
this Agreement has been duly authorized by all necessary action on the part of
each Party, its officers and directors.

 

(b)           The execution, delivery and performance of the Agreement by each
Party does not conflict with any agreement, instrument or understanding, oral or
written, to which it is a party or by which it is bound, nor violate any law or
regulation of any court, governmental body or administrative or other agency
having jurisdiction over it.

 

(c)           SGI has not, and during the term of the Agreement will not, grant
any right to any Third-Party relating to any SGI Technology which would conflict
with the rights granted to Celltech hereunder.

 

(d)           SGI represents and warrants that it has the right to grant the
licenses granted herein and that it has no knowledge of any rights of any
Third-Parties that would interfere with the practice of the SGI Technology.

 

(e)           SGI represents and warrants that as of the Effective Date,
Schedules A, B, C and D are accurate and complete in all material respects.

 

(f)            SGI represents and warrants that as of the Effective Date it has
complied with all requirements under [***].

 

(g)           SGI represents and warrants that as of the Effective Date it is
not in breach of any of the Third Party License Agreements and shall use
Commercially Reasonable Efforts to continue to comply with the terms of said
Third Party License Agreements and any New Third Party License Agreements.

 

14.2         Performance by Affiliates.

 

The Parties recognize that each may perform some or all of its obligations under
this Agreement through Affiliates, provided, however, that each Party shall
remain responsible and be guarantor of the performance by its Affiliates and
shall cause its Affiliates to comply with the provisions of this Agreement in
connection with such performance.

 

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ARTICLE 15 - TERM AND TERMINATION

 

15.1.        Term.

 

15.1.1      Unless earlier terminated pursuant to this Article 15, the term of
this Agreement shall commence on the Effective Date and shall remain in full
force and effect until the expiration of the Royalty Term (“Term”).

 

15.1.2      Notwithstanding Section 15.1, this Agreement shall terminate upon
the conclusion of the Research Program Term if Celltech has not exercised an
Option as set forth in Section 4.1.2.

 

15.2.        Termination by Celltech.

 

Celltech shall have the right, at its sole discretion at any time after [***],
to terminate this Agreement by providing [***] prior written notice to SGI of
such termination.

 

15.3.        Discontinuance of Development Efforts by Celltech.

 

Celltech shall promptly give SGI notice if Celltech intends to abandon the
commercial development of any Exclusive Antigen or Antibody thereto whereupon
any Exclusive License with respect to such Exclusive Antigen shall automatically
terminate and all rights related to the use of SGI Technology in connection with
the Exclusive Antigen shall revert back to SGI, provided, however, that Celltech
shall retain any and all rights in and to [***] and any and all rights granted
pursuant to [***].

 

15.4.        Termination for Cause.

 

Either Party may terminate this Agreement for material breach by the other Party
(the “Breaching Party”) of any material provision of the Agreement, if the
Breaching Party has not cured such breach within [***] after notice thereof;
provided, however, that termination under this Section 15.4 shall be
automatically stayed for the duration of any dispute resolution proceeding
initiated under Section 21.3; and provided further, however, that in the event
Celltech fails to timely pay SGI any undisputed annual exclusive license fees,
royalty payments and milestone payments set forth in Article 7, Research Program
Fee(s) set forth in Section 3.4 or Option Exercise Fee(s) set forth in Section
7.1.1, Celltech shall have only [***] from said notice to cure such breach.

 

15.5.        Termination Upon Insolvency.

 

Either Party may terminate this Agreement if, at any time, the other Party shall
file in any court or agency pursuant to any statute or regulation of any state,
country or jurisdiction, a petition in bankruptcy or insolvency or for
reorganization or for an arrangement or for the appointment of a receiver or
trustee of that Party or of its assets, or if such other Party proposes a
written agreement of composition or extension of its debts, or if such other
Party shall be served

 

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with an involuntary petition against it, filed in any insolvency proceeding, and
such petition shall not be dismissed within [***] after the filing thereof, or
if such other Party shall propose or be a party to any dissolution or
liquidation, or if such other Party shall make an assignment for the benefit of
its creditors.

 

15.6.        Termination of Third Party License Agreements.  All rights and
obligations under any Third Party License Agreements  sublicensed to Celltech
under this Agreement shall terminate upon [***] prior written notice by SGI if
Celltech breaches any material provision of such  Third Party License Agreement
and fails to cure such breach within such [***] period; provided, however such
cure period may be extended by consent of the Parties; All rights and
obligations under the [***] shall automatically terminate if Celltech is
utilizing any [***] and fails to maintain the insurance required under the Third
Party License Agreement with [***] or as otherwise agreed with [***].  All
rights and obligations under any Third Party License Agreement sublicensed to
Celltech under this Agreement shall terminate upon termination of such Third
Party License Agreements.

 

15.7.        Effect of Expiration and Termination.

 

15.7.1.     Except where explicitly provided within this Agreement, termination
of this Agreement for any reason, or expiration of this Agreement, will not
affect any: (i) obligations, including payment of any royalties or other sums
which have accrued as of the date of termination or expiration, and (ii) rights
and obligations which, from the context thereof, are intended to survive
termination or expiration of this Agreement, including provisions of
Articles 10, 11, 12, 16 and 21, and Sections 8.2, 8.3 and 15.7, which shall
survive the expiration or termination of the Agreement.  Notwithstanding the
foregoing, all licenses granted by SGI to Celltech hereunder, including all
Exclusive Licenses, and all sublicenses granted by Celltech hereunder, will
immediately terminate upon termination of this Agreement pursuant to Sections
15.2, 15.4 or 15.5.

 

15.7.2.     Upon the expiration of the Royalty Term for each Exclusive Antigen
pursuant to Section 15.1, SGI hereby grants Celltech a royalty-free, perpetual,
worldwide, license to use the SGI Technology for that Exclusive Antigen.

 

15.8         [***] Notification.  SGI shall provide Celltech with written notice
of any termination of the [***] at least [***] prior to the effective date of
such termination.

 

ARTICLE 16 - INDEMNITY.

 

16.1.        Direct Indemnity.

 

16.1.1.     Each Party shall indemnify and hold harmless, and hereby forever
releases and discharges the other Party from and against all Third Party claims,
demands, liabilities, damages and expenses, including attorneys’ fees and costs
(collectively, the “Liabilities”) arising out of (i) the breach of any material
provision of this Agreement by the indemnifying Party (or the inaccuracy of any
representation or warranty made by such Party in this Agreement), except

 

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to the extent such Liabilities resulted from the gross negligence, recklessness
or willful misconduct of the other Party; or (ii) the gross negligence,
recklessness or willful misconduct of the indemnifying Party.

 

16.1.2.     Celltech shall indemnify and hold harmless, and hereby forever
releases and discharges SGI from and against all Liabilities suffered or
incurred arising out of any Third-Party claims for personal injury, death or
disability or any Licensed Product recall to the extent caused by (a) any
failure to test for or provide adequate warnings of adverse side effects to the
extent such failure arises out of acts or omissions in connection with the
preclinical or clinical testing of any Licensed Product, (b) any manufacturing
defect in any Licensed Product or (c) any other act or omission of Celltech in
connection with its obligations under this Agreement; except in each case to the
extent such Liabilities resulted from the gross negligence, recklessness or
willful misconduct by SGI or the inaccuracy of any representation or warranty
made by SGI in this Agreement.

 

16.1.3.     SGI shall indemnify and hold harmless, and hereby forever releases
and discharges Celltech from and against all Liabilities suffered or incurred
arising out of any Third-Party claims for personal injury, death or disability
or any Licensed Product recall to the extent caused by (a) any SGI Technology
incorporated in a Licensed Product other than any Celltech Technology, (b) any
manufacturing defect in any SGI Technology, or (c) any other act or omission of
SGI in connection with its obligations under this Agreement; except in each case
to the extent such Liabilities resulted from the gross negligence, recklessness
or willful misconduct by Celltech or the inaccuracy of any representation or
warranty made by Celltech in this Agreement.

 

16.2.        Procedure.

 

A Party (the “Indemnitee”) that intends to claim indemnification under this
Article 16 shall promptly provide written notice to the other Party (the
“Indemnitor”) of any Liability or action in respect of which the Indemnitee
intends to claim such indemnification, which notice shall include a reasonable
identification of the alleged facts giving rise to such Liability, and the
Indemnitor shall have the right to participate in, and, to the extent the
Indemnitor so desires, jointly with any other Indemnitor similarly noticed, to
assume the defense thereof with counsel selected by the Indemnitor; provided,
however, that the Indemnitee shall have the right to retain its own counsel,
with the fees and expenses to be paid by the Indemnitor, if representation of
such Indemnitee by the counsel retained by the Indemnitor would be inappropriate
due to actual or potential differing interests between such Indemnitee and any
other Party represented by such counsel in such proceedings.  Any settlement of
a Liability for which any Indemnitee seeks to be reimbursed, indemnified,
defended or held harmless under this Article 16 shall be subject to prior
consent of such Indemnitee, which consent shall not be withheld unreasonably.

 

ARTICLE 17- FORCE MAJEURE

 

No Party (or any of its Affiliates) shall be held liable or responsible to the
other Party (or any of its Affiliates) nor be deemed to have defaulted under or
breached the Agreement for failure or delay in fulfilling or performing any term
of the Agreement when such failure or delay

 

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is caused by or results from causes beyond the reasonable control of the
affected Party (or any of its Affiliates) including fire, floods, embargoes,
war, acts of war (whether war be declared or not), insurrections, riots, civil
commotions, acts of God or acts, or omissions or delays in acting by any
governmental authority (collectively, “Events of Force Majeure”); provided,
however, that the affected Party shall exert all reasonable efforts to
eliminate, cure or overcome any such Event of Force Majeure and to resume
performance of its covenants with all possible speed.  Notwithstanding the
foregoing, to the extent that an Event of Force Majeure continues for a period
in excess of [***], the affected Party shall promptly notify in writing the
other Party of such Event of Force Majeure and within [***] of the other Party’s
receipt of such notice, the Parties agree to negotiate in good faith either (i)
to resolve the Event of Force Majeure, if possible, (ii) to extend by mutual
agreement the time period to resolve, eliminate, cure or overcome such Event of
Force Majeure, (iii) to amend this Agreement to the extent reasonably possible,
or (iv) to terminate this Agreement.

 

ARTICLE 18 - ASSIGNMENT

 

This Agreement may not be assigned or otherwise transferred, nor, except as
expressly provided hereunder, may any right or obligations hereunder be assigned
or transferred to any Third-Party by either Party without the consent of the
other Party, such consent not to be unreasonably withheld; provided, however,
that either Party may, without such consent but with notification, assign this
Agreement and its rights and obligations hereunder to any of its Affiliates or
in connection with the transfer or sale of all or substantially all of its
business, or in the event of its merger or consolidation (such merger or
consolidation shall be hereinafter referred to as a “Change in Control”).  Any
permitted assignee shall assume all rights and obligations of its assignor under
this Agreement[***].

 

ARTICLE 19 - SEVERABILITY

 

Each Party hereby agrees that it does not intend to violate any public policy,
statutory or common laws, rules, regulations, treaty or decision of any
government agency or executive body thereof of any country or community or
association of countries.  Should one or more provisions of this Agreement be or
become invalid, the Parties hereto shall substitute, by mutual consent, valid
provisions for such invalid provisions which valid provisions in their economic
effect are sufficiently similar to the invalid provisions that it can be
reasonably assumed that the Parties would have entered into this Agreement with
such provisions.

 

In case such provisions cannot be agreed upon, the invalidity of one or several
provisions of this Agreement shall not affect the validity of this Agreement as
a whole, unless the invalid provisions are of such essential importance to this
Agreement that it is to be reasonably assumed that the Parties would not have
entered into this Agreement without the invalid provisions.

 

ARTICLE 20 - INSURANCE

 

20.1         During the term of this Agreement and thereafter for the period of
time required below, each Party shall maintain [***] and [***].

 

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20.2         Prior to [***], Celltech shall either:  (i) obtain and maintain on
an ongoing basis [***] (which amount shall be increased to [***] if [***] or
(ii) [***], and, at SGI’s request ( but not more than annually), Celltech
provides [***] or (iii) obtain and maintain such other insurance as may be
agreed by the Parties.

 

ARTICLE 21 - MISCELLANEOUS

 

21.1.        Notices.

 

Any consent, notice or report required or permitted to be given or made under
this Agreement by one of the Parties hereto to the other shall be in writing,
delivered personally or by facsimile (and promptly confirmed by personal
delivery, first class air mail or courier), first class air mail or courier,
postage prepaid (where applicable), addressed to such other Party at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the address or in accordance with this Section 21.1 and
(except as otherwise provided in this Agreement) shall be effective upon receipt
by the addressee.

 

If to SGI:

Seattle Genetics, Inc.

21823 30th Drive S.E.

Bothell, WA 98021

Attention:  Chief Executive Officer

 

With copy to:

Venture Law Group

4750 Carillon Point

Kirkland, WA  98033

Attention: Sonya F. Erickson

 

If to Celltech:

Celltech R&D Limited

208 Bath Road

Slough, Berkshire SL1 3WE

United Kingdom

Attention:  Company Secretary

 

21.2.        Applicable Law.

 

The Agreement shall be governed by and construed in accordance with the laws of
the State of New York, without regard to the conflict of law principles thereof.

 

21.3.        Dispute Resolution.

 

The Parties agree that if any dispute or disagreement arises between Celltech on
the one hand and SGI on the other in respect of this Agreement, they shall
follow the following procedure in an attempt to resolve the dispute or
disagreement.

 

 

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(a)           The Party claiming that such a dispute exists shall give notice in
writing (“Notice of Dispute”) to the other Party of the nature of the dispute;

 

(b)           Within [***] of receipt of a Notice of Dispute, a nominee or
nominees of Celltech and a nominee or nominees of SGI shall meet in person and
exchange written summaries reflecting, in reasonable detail, the nature and
extent of the dispute, and at this meeting they shall use their reasonable
endeavors to resolve the dispute;

 

(c)           If, within a further period of [***], the dispute has not been
resolved, the President of SGI and the President of Celltech shall meet at a
mutually agreed upon time and location for the purpose of resolving such
dispute;

 

(d)           If, within a further period of [***], the dispute has not been
resolved or if, for any reason, the required meeting has not been held, then the
same shall be submitted by the Parties to arbitration in Seattle, Washington in
accordance with the then-current commercial arbitration rules of the American
Arbitration Association (“AAA”) except as otherwise provided herein.  The
Parties shall choose, by mutual agreement, one (1) arbitrator within [***] of
receipt of notice of the intent to arbitrate.  If no arbitrator is appointed
within the times herein provided or any extension of time that is mutually
agreed upon, the AAA shall make such appointment within [***] of such failure. 
The judgment rendered by the arbitrator shall include costs of arbitration,
reasonable attorneys’ fees and reasonable costs for expert and other witnesses. 
Nothing in this Agreement shall be deemed as preventing either Party from
seeking injunctive relief (or any other provisional remedy).  If the issues in
dispute involve scientific, technical or commercial matters, any arbitrator
chosen hereunder shall have educational training and/or industry experience
sufficient to demonstrate a reasonable level of relevant scientific, medical and
industry knowledge and have at least ten (10) years relevant experience.

 

(e)           In the event of a dispute regarding any payments owing under this
Agreement, all undisputed amounts shall be paid promptly when due and the
balance, if any, promptly after resolution of the dispute.

 

21.4.        Entire Agreement.

 

This Agreement contains the entire understanding of the Parties with respect to
the subject matter hereof.  All express or implied agreements and
understandings, either oral or written, heretofore made are expressly superseded
by this Agreement.  This Agreement may be amended, or any term hereof modified,
only by a written instrument duly executed by both Parties hereto.

 

21.5.        Independent Contractors.

 

SGI and Celltech each acknowledge that they shall be independent contractors and
that the relationship between the two Parties shall not constitute a
partnership, joint venture or agency.  Neither SGI nor Celltech shall have the
authority to make any statements,

 

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representations or commitments of any kind, or to take any action, which shall
be binding on the other Party, without the prior consent of the other Party to
do so.

 

21.6.        Affiliates

 

Each Party shall cause its respective Affiliates to comply fully with the
provisions of this Agreement to the extent such provisions specifically relate
to, or are intended to specifically relate to, such Affiliates, as though such
Affiliates were expressly named as joint obligors hereunder.

 

21.7.        Waiver.

 

The waiver by either Party hereto of any right hereunder or the failure to
perform or of a breach by the other Party shall not be deemed a waiver of any
other right hereunder or of any other breach or failure by said other Party
whether of a similar nature or otherwise.

 

21.8.        Counterparts.

 

This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.

 

21.9         Section Headings.  The captions or headings of the sections or
other subdivisions hereof are inserted only as a matter of convenience or for
reference and shall have no effect on the meaning of the provisions hereof.

 

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first set forth above.

 

 

 

SEATTLE GENETICS, INC.

 

 

 

By:

 

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

CELLTECH R&D LIMITED

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

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