Document:

exhibit10110q2020q3

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                                                                                                    Exhibit 10.1                                                                                                                                                                                                         EXECUTION VERSION                                                                                     LICENSE AND COLLABORATION AGREEMENT                                                                                                                                                                     by and between                                                                                                                                                       MERCK SHARP & DOHME CORP.                                                                                                                                                                            and                                                                                                                                                            SEATTLE GENETICS, INC.                                                                                                 Dated as of: September 13, 2020                                                                                                                           

 

                             TABLE OF CONTENTS                                                                                                                    Page                                  Table of Contents   ARTICLE   1  DEFINITIONS ....................................................................................................... 1  ARTICLE   2  OVERVIEW OF COLLABORATION; LICENSE GRANTS ............................ 34         2.1  Overview of Collaboration ....................................................................................... 34         2.2  License Grants to Merck ........................................................................................... 34         2.3  License Grants to SeaGen ......................................................................................... 37         2.4  No Implied Licenses; Retained Rights ..................................................................... 38         2.5  Third Party In-License Agreements ......................................................................... 39         2.6  Sublicense Rights by Licensee; Further Grants of Licenses by Licensor ................ 39         2.7  Use of Subcontractors ............................................................................................... 40         2.8  No Outside Development, Manufacture or Commercialization of Licensed                    Compounds and the Licensed Product ..................................................... 41         2.9  Exclusivity ................................................................................................................ 42  ARTICLE 3  GOVERNANCE .................................................................................................... 45         3.1  Committees ............................................................................................................... 45         3.2  Joint Steering Committee ......................................................................................... 46         3.3  Joint Development Committee ................................................................................. 52         3.4  Joint Manufacturing Committee ............................................................................... 55         3.5  Joint Commercialization Committee ........................................................................ 57         3.6  Financial Managers; Joint Finance Committee ........................................................ 60         3.7  Meetings of Subcommittees ..................................................................................... 61         3.8  Decision Making of Subcommittees ......................................................................... 62         3.9  Alliance Managers .................................................................................................... 62  ARTICLE 4  ALLOCATION OF RESPONSIBILITIES ............................................................ 63         4.1  General... .................................................................................................................. 63         4.2  Technology Transfers to Enable Collaboration ........................................................ 64  ARTICLE 5  DEVELOPMENT .................................................................................................. 65         5.1  Development ............................................................................................................. 65         5.2  Development Plans for the Licensed Product ........................................................... 65         5.3  Development Reports; Development Data and Records .......................................... 70         5.4  Lead Study Party; Conduct of Clinical Trials........................................................... 71         5.5  Regulatory and Safety Responsibility for the Licensed Product .............................. 72  ARTICLE 6 COMMERCIALIZATION ..................................................................................... 78         6.1  Commercialization .................................................................................................... 78         6.2  Commercialization Plan............................................................................................ 78         6.3  Commercialization Reports ...................................................................................... 82         6.4  Lead Distribution Party............................................................................................. 82         6.5  Promotional Materials; Other Field-Based Materials ............................................... 83         6.6  Promotion for the Licensed Product ......................................................................... 86         6.7  Unsolicited Requests for Medical Information......................................................... 87         6.8  Recalls... .................................................................................................................. 87  ARTICLE 7  MANUFACTURE ................................................................................................. 88                                         -i-       [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED 

 

                             TABLE OF CONTENTS                                     (continued)                                                                           Page             7.1  Manufacture Generally ............................................................................................. 88         7.2  Manufacturing Plan for the Licensed Product .......................................................... 89         7.3  Development Supply for Licensed Product .............................................................. 90         7.4  Commercial Supply for Licensed Product ................................................................ 91         7.5  Continuity of Supply for Licensed Compounds and the Licensed Product.............. 94         7.6  Compliance for Licensed Compounds and the Licensed Product ............................ 94         7.7  Audits and Oversight of Manufacturing Facilities for Licensed Compounds and the                    Licensed Product ...................................................................................... 95         7.8  Changes to Specifications and Manufacturing Process for Licensed Compound or                    Licensed Product ...................................................................................... 96         7.9  Supply Agreements for Supply of Licensed Product ............................................... 96         7.10  Supply of Proprietary Product for Clinical Trial of Proprietary Combination ....... 97  ARTICLE 8 COMPLIANCE ....................................................................................................... 97         8.1  Compliance with Applicable Law and Ethical Business Practices .......................... 97         8.2  Safety or Legal Issues ............................................................................................. 100         8.3  Data Privacy............................................................................................................ 100  ARTICLE 9  CONFIDENTIALITY AND PUBLICATION .................................................... 101         9.1  Nondisclosure Obligation ....................................................................................... 101         9.2  Permitted Disclosure ............................................................................................... 102         9.3  Disclosures Required by Applicable Law .............................................................. 103         9.4  Program Know-How ............................................................................................... 104         9.5  Publication .............................................................................................................. 104         9.6  Publicity/Use of Names .......................................................................................... 105  ARTICLE 10  PAYMENTS ...................................................................................................... 106         10.1  Upfront Payment ................................................................................................... 106         10.2  Development Milestones ...................................................................................... 106         10.3  Commercial Milestones ........................................................................................ 112         10.4  Sharing of Costs and Revenues for Licensed Compounds and the Licensed Product                    Generally ................................................................................................ 114         10.5  Payment Terms ..................................................................................................... 117         10.6  Recordkeeping and Audit ..................................................................................... 118         10.7  Taxes ................................................................................................................ 119  ARTICLE 11  REPRESENTATIONS, WARRANTIES AND COVENANTS ....................... 119         11.1  Representations and Warranties of Each Party ..................................................... 119         11.2  Additional SeaGen Representations and Warranties ............................................ 120         11.3  Additional SeaGen Representations and Warranties with Respect to the Licensed                    Compound and the Licensed Product .................................................... 123         11.4  Additional Covenants of SeaGen.......................................................................... 125         11.5  Additional Covenants of Merck............................................................................ 125         11.6  Non-Solicitation .................................................................................................... 126         11.7  Disclaimer ............................................................................................................. 126                                        -ii-       [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED 

 

                             TABLE OF CONTENTS                                     (continued)                                                                           Page       ARTICLE 12  INTELLECTUAL PROPERTY ........................................................................ 127         12.1  Intellectual Property Operating Committee .......................................................... 127         12.2  Disclosure of Program Know-How ...................................................................... 128         12.3  Ownership of Intellectual Property ....................................................................... 128         12.4  Filing, Prosecution and Maintenance of Patent Rights ......................................... 129         12.5  Patent Term Extension and Supplementary Protection Certificate ...................... 132         12.6  Common Ownership Under Joint Research Agreements ..................................... 133         12.7  Administrative Proceedings .................................................................................. 133         12.8  Invalidity or Unenforceability Defenses or Actions ............................................. 134         12.9  Patent Listings ...................................................................................................... 135         12.10  Enforcement of Patents and Know-How ............................................................ 137         12.11  SeaGen Existing In-Licenses .............................................................................. 142         12.12  Trademarks ......................................................................................................... 143  ARTICLE 13 INDEMNIFICATION; LIMITATION ON LIABILITY ................................... 146         13.1  General Indemnification by SeaGen ..................................................................... 146         13.2  General Indemnification by Merck ....................................................................... 146         13.3  Shared Liability Claims; Product Liability Actions for Proprietary Combinations; [                    * ] ........................................................................................................... 147         13.4  Additional Indemnification by SeaGen ................................................................ 150         13.5  Claims for Indemnification ................................................................................... 150         13.6  Disclaimer of Liability .......................................................................................... 152         13.7  Insurance ............................................................................................................... 152  ARTICLE 14 TERM AND TERMINATION ........................................................................... 152         14.1  Term..... ................................................................................................................ 152         14.2  Unilateral Termination of Agreement in its Entirety by Merck ........................... 152         14.3  Termination by Mutual Agreement ...................................................................... 152         14.4  Termination for Cause .......................................................................................... 153         14.5  Termination For Bankruptcy ................................................................................ 153         14.6  Termination for Patent Challenge ......................................................................... 154         14.7  Effects of Termination .......................................................................................... 155         14.8  Milestone Payments .............................................................................................. 165         14.9  Effect of Expiration or Termination; Survival...................................................... 165  ARTICLE 15  TAX MATTERS ................................................................................................ 166         15.1  Tax Partnership ..................................................................................................... 166         15.2  Tax Information Sharing....................................................................................... 166         15.3  Tax Returns of Tax Partnership ............................................................................ 166         15.4  Additional Matters ................................................................................................ 167   ARTICLE 16  MISCELLANEOUS .......................................................................................... 167         16.1  Use of Affiliates .................................................................................................... 167         16.2  Interpretation......................................................................................................... 167         16.3  Force Majeure ....................................................................................................... 168                                        -iii-      [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED 

 

                            TABLE OF CONTENTS                                    (continued)                                                                          Page           16.4  Assignment ........................................................................................................... 168        16.5  Severability ........................................................................................................... 176        16.6  Notices ................................................................................................................ 176        16.7  Applicable Law ..................................................................................................... 177        16.8  Dispute Resolution ............................................................................................... 177        16.9  Entire Agreement; Amendments .......................................................................... 179        16.10  Export Controls ................................................................................................... 179        16.11  Headings ............................................................................................................. 179        16.12  Independent Contractors ..................................................................................... 179        16.13  Third-Party Beneficiaries.................................................................................... 179        16.14  Waiver ................................................................................................................ 180        16.15  Cumulative Remedies ......................................................................................... 180        16.16  Waiver of Rule of Construction .......................................................................... 180        16.17  Business Day Requirements ............................................................................... 180        16.18  Counterparts ........................................................................................................ 180        16.19  Further Actions ................................................................................................... 180                                                 -iv-      [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                  Table of Contents                                     (continued)                                             Schedules and Exhibits   Schedule 1.26:  European Collaboration Territory  Schedule 1.39:  Cost of Goods Manufactured  Schedule 1.133:  SeaGen Existing CMO Agreements  Schedule 1.134:  SeaGen Existing In-Licenses  Schedule 1.139:  SeaGen Patents  Schedule 1.152:  SGN-LIV-1-A  Schedule 1.153:  SGN-LIV-1-B  Schedule 1.154:  SGN-LIV-1-C  Schedule 2.7:  Permitted Distributor Countries  Schedule 2.9.2:  Next Generation Compound Criteria - SGN-LIV-1-C  Schedule 6.8:  Certain Costs of Recalls  Schedule 7.9:  Certain Terms for Supply Agreements  Schedule 9.6.1:  Press Release  Schedule 11.2:  SeaGen Disclosure Schedules  Schedule 11.3.1:  Regulatory Documentation  Schedule 13.4:  [ * ]   Schedule 14.7.6:  Continuing Product Payment Reductions  Schedule 15.3:  Partnership Tax Related Provisions  Exhibit A:  Initial Development Plan       [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                     LICENSE AND COLLABORATION AGREEMENT          This License and Collaboration Agreement (this “Agreement”) is entered into as of   September 13, 2020 (the “Effective Date”), by and between Merck Sharp & Dohme Corp., a   company organized and existing under the laws of New Jersey (“Merck”), and Seattle Genetics,   Inc., a company organized and existing under the laws of Delaware (“SeaGen”).  Merck and   SeaGen are sometimes referred to herein individually as a “Party” and collectively as the   “Parties”.                                       RECITALS:          WHEREAS, SeaGen is a global biopharmaceutical company engaged in the research,   development and commercialization of biopharmaceutical products, including antibody drug   conjugates, and owns or controls certain patents and other intellectual property relating to antibody   drug conjugates, including SGN-LIV-1-A (as defined below, and which is also known as   ladiratuzumab vedotin (LV));            WHEREAS, Merck and its Affiliates possess expertise in the research, development and   commercialization of pharmaceutical products;          WHEREAS, the Parties (or their respective Affiliates) are currently parties to that certain   Clinical Trial Collaboration and Supply Agreement having an Effective Date of September 8, 2017   (the “CTC”) relating to the use of SeaGen’s proprietary antibody drug conjugate SGN-LIV-1-A   and Merck’s proprietary product “KEYTRUDA” in concomitant or sequential use for the   treatment of certain tumor types; and           WHEREAS, Merck and SeaGen desire to enter into a collaboration to develop,   manufacture, commercialize and otherwise jointly exploit Licensed Compounds and the Licensed   Product upon the terms and conditions set forth herein, including as a monotherapy and in   combination (including concomitant or sequential therapy) with other pharmaceutical products.          NOW, THEREFORE, in consideration of the foregoing premises and the mutual   covenants herein contained, the receipt and sufficiency of which are hereby acknowledged, Merck   and SeaGen hereby agree as follows:                              ARTICLE 1   DEFINITIONS         Whenever used in this Agreement with an initial capital letter, the terms defined in this  Article 1 and elsewhere in this Agreement, and any cognates or correlatives thereof, whether used  in the singular or plural, shall have the specified meanings.           1.1   “Accounting Standards” means GAAP or IAS/IFRS or equivalent standards  adopted by a Party from time to time, as applicable, as consistently applied by such Party or its  Affiliates in maintaining its books and records.           1.2   “Act” means, as applicable, the United States Federal Food, Drug and Cosmetic  Act, 21 U.S.C. § 301 et seq., as such may be amended from time to time.                                         -1-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED 

 

           1.3   “Action” means any claim, cause of action or suit (whether in contract or tort or   otherwise), litigation (whether at law or in equity, whether civil or criminal), arbitration or other   proceedings brought or asserted by any Third Party (including any Governmental Authority)   against a Party (or any other Indemnified Party).          1.4   “Affiliate” means any entity directly or indirectly controlled by, controlling, or   under common control with, a Party to this Agreement, regardless of whether such entity is or   becomes an Affiliate on or after the Effective Date, but only for so long as such control exists.  For   purposes of this definition, “control” (including, with correlative meanings, “controlled by”,   “controlling” and “under common control with”) means (a) possession, direct or indirect, of the   power to direct or cause direction of the management or policies of an entity (whether through   ownership of securities or other ownership interests, by contract or otherwise), or (b) beneficial   ownership of fifty percent (50%) or more (or the maximum ownership interest permitted by   Applicable Law giving control) of the voting securities or other ownership or general partnership   interest (whether directly or indirectly) or other comparable equity interests in an entity.          1.5   “Allowable Commercialization Costs” means, with respect to the   Commercialization of the Licensed Product for the Territory in a given period, the sum of the   following with respect to such Licensed Product in such period, but solely to the extent (a) incurred   by a Party (or its Affiliate) on or after the Effective Date as a cost or expense in accordance with   the applicable Party’s Accounting Standards, (b) directly attributable or reasonably allocable to   the Commercialization of such Licensed Product for the Territory, including, for clarity, those that  are directly attributable or reasonably allocable to the Commercialization of a Proprietary  Combination pursuant to this Agreement and the Commercialization Plan (and, for clarity, costs  associated with the Commercialization of a Proprietary Combination pursuant to this Agreement  and the Commercialization Plan shall be fully allocated to the Licensed Product hereunder),  including, for example, Promotional Materials for the Licensed Product that reference a  Proprietary Combination (but excluding for clarity any Merck Proprietary Combination Outside  Promotional Materials and SeaGen Proprietary Combination Outside Promotional Materials) and  (c) within the scope of the activities set forth in the Commercialization Plan and in accordance  with the Commercialization Budget (plus any Permitted Commercialization Overage):               1.5.1 [ * ];               1.5.2 [ * ];               1.5.3 [ * ]; provided that, (i) if SeaGen is [ * ], this Section 1.5.3 shall exclude [  * ], but shall include [ * ] and (ii) if Merck is [ * ], this Section 1.5.3 shall exclude [ * ], but shall  include [ * ];                1.5.4 such costs and expenses incurred [ * ];               1.5.5 [ * ] payable as a result of [ * ]; and                1.5.6 [ * ] costs and expenses [ * ] incurred by or on behalf of [ * ] in carrying out   [ * ].                                           -2-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

           1.6   “Allowable Development Costs” means, with respect to the Development of the   Licensed Product in a given period, the Development Costs incurred by a Party (or its Affiliate)   for the Development of such Licensed Product pursuant to this Agreement, but solely to the extent   (a) incurred by a Party (or its Affiliate) on or after the Effective Date as a cost or expense in   accordance with the applicable Party’s Accounting Standards, (b) directly attributable or   reasonably allocable to such Licensed Product (provided that, for clarity, costs associated with the   Development of a Proprietary Combination pursuant to this Agreement and the Development Plan   shall be fully allocated to the Licensed Product, including, for example, subject to Section 5.2.6(b),   Clinical Trials for a Proprietary Combination to the extent set forth in the Development Plan),   including, for example, Other Field-Based Materials for the Licensed Product that reference a   Proprietary Combination (but excluding for clarity any Merck Proprietary Combination Outside   Other Field-Based Materials and SeaGen Proprietary Combination Outside Other Field-Based   Materials), and (c) within the scope of the activities set forth in the Development Plan and in   accordance with the Development Budget (plus any Permitted Development Overage).           1.7   “Allowable Field Force FTE Costs” means the aggregate Field Force FTE Costs  of a Party or its Affiliates pursuant to the Commercialization Plan that are directly attributable or  reasonably allocable to Promotional activities for the Licensed Product for the Territory conducted  by a Party’s (or its Affiliate’s) field force.          1.8   “Allowable Joint IP Costs” means Joint Patent Costs, Joint Trademark Costs and  Joint IP Action Costs, in each case, incurred by or on behalf of a Party or its Affiliates in  accordance with this Agreement.           1.9   “Allowable Promotion FTE Costs” means the aggregate Promotion FTE Costs of  a Party or its Affiliates pursuant to the Commercialization Plan that are directly attributable or  reasonably allocable to Promotion activities for the Licensed Product for the Territory.           1.10  “Ancillary Agreement” means any Merck Supply Agreement, SeaGen Supply  Agreement, Promotion Agreement, European Collaboration Territory Distribution Agreement,  Pharmacovigilance Agreement, Regulatory Agreement, [ * ], and any other agreement (including  quality agreements) entered into by and between the Parties or their Affiliates specifically related  to the Development, Manufacture or Commercialization of a Licensed Compound or Licensed  Product.  For clarity, no Third Party shall be a party to an Ancillary Agreement.         1.11  “Applicable Law” means, as applicable, (a) any United States federal, state or local  law, statute, standard, ordinance, code, rule, regulation, resolution or promulgation, (b) any  national, provincial, state or local or multinational law, statute, standard, ordinance, code, rule,  regulation, resolution or promulgation in any country or region in the Territory outside the United  States, (c) any order, writ, judgment, injunction, decree, stipulation, ruling, determination or award  entered by or with any Governmental Authority in the Territory, or (d) any license, franchise,  permit or similar right granted under any of the foregoing, or any similar provision having the  force or effect of law, including as applicable (i) cGLPs, cGCPs and cGMPs and (ii) all applicable  data protection and privacy laws, rules and regulations, including the United States Department of  Health and Human Services privacy rules under the Health Insurance Portability and  Accountability Act and the Health Information Technology for Economic and Clinical Health Act,                                         -3-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     as any of the foregoing may be amended from time to time. Regarding Personal Data (as defined   herein), Applicable Laws means any applicable law, rule, regulation, ordinance, directive,   interpretation, judgment, or decision of any Governmental Authority in relation to data protection,   privacy, restrictions on, or requirements in respect of, the processing of Personal Data of any kind,   including HIPAA, General Data Protection Regulation (Regulation (EU) 2016/679) (GDPR),   Brazilian General Data Protection Law (Federal Law no. 13,709/2018), the Act on the Protection   of Personal Information of Japan, and any equivalent Applicable Laws in any other jurisdiction,   as any of the foregoing may be amended from time to time (collectively, “Data Protection   Laws”).           1.12  “Biomarker Test” means, in relation to a Licensed Compound or the Licensed   Product, any diagnostic test designed to objectively measure or evaluate samples of blood, other   body fluids or tissue as an indicator of biological processes, pathogenic processes or   pharmacologic responses and may include next generation sequencing (NGS) tests or   immunohistochemistry (IHC) tests, as applicable, in each case, to determine if a Licensed   Compound or the Licensed Product may be useful for a given patient or patient population.           1.13  “Business Day” means a day other than a Saturday, Sunday, or any other day when   banks are authorized or required by law to be closed in New York, New York, or Seattle,   Washington.          1.14  “Calendar Quarter” means the respective periods of three (3) consecutive   calendar months ending on March 31, June 30, September 30 and December 31; provided,   however, that the first Calendar Quarter of the Term shall begin on the Effective Date and end on   the last day of the then-current Calendar Quarter and the last Calendar Quarter of the Term shall   begin on the first day of such Calendar Quarter and end on the last day of the Term.          1.15  “Calendar Year” means each successive period of twelve (12) months   commencing on January 1 and ending on December 31; provided, however, that the first Calendar   Year of the Term shall begin on the Effective Date and end on December 31 of the then-current   Calendar Year and the last Calendar Year of the Term shall begin on the first day of such Calendar   Year and end on the last day of the Term.           1.16  “CEOs” means, respectively, [ * ] (or the officer or employee of Merck then   serving in a substantially equivalent capacity) or his or her designee and [ * ] (or the officer or  employee of SeaGen then serving in a substantially equivalent capacity) or his or her designee,  provided that any such designee must have decision-making authority on behalf of the applicable  Party.          1.17  “cGCP” or “current Good Clinical Practice” means the applicable then-current  standards for clinical activities for pharmaceuticals or biologicals, as set forth in the Act and any  regulations or guidance documents promulgated thereunder, as amended from time to time,  together with, with respect to work performed in a country other than the United States, any similar  standards of good clinical practice as are required by any Regulatory Authority in such country.         1.18  “cGLP” or “current Good Laboratory Practice” means the applicable then-  current standards for laboratory activities for pharmaceuticals or biologicals, as set forth in the Act                                        -4-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     and any regulations or guidance documents promulgated thereunder, as amended from time to   time, together with, with respect to work performed in a country other than the United States, any   similar standards of good laboratory practice as are required by any Regulatory Authority in such   country.            1.19  “cGMP” or “current Good Manufacturing Practice” means the applicable then- current standards for conducting Manufacturing activities for pharmaceuticals or biologicals (or  active pharmaceutical ingredients) as are required by any applicable Regulatory Authority in the  Territory.           1.20  “Change of Control” with respect to a Party, shall be deemed to have occurred if  any of the following occurs after the Effective Date:                       (a)   any Third Party “person” or “group” (as such terms are defined  below) (i) is or becomes, through one or a series of transactions, the “beneficial owner” (as defined   below), directly or indirectly, of the then-outstanding shares of common stock of such Party (or  any direct or indirect parent entity or ultimate parent entity of such Party) representing fifty percent  (50%) or more of the total then-outstanding common stock (or foreign equivalent thereof) (the  “Outstanding Common Stock”), (ii) is or becomes, through one or a series of transactions, the  “beneficial owner”, directly or indirectly, of shares of securities, capital stock or other interests  (including partnership interests) of such Party (or any direct or indirect parent entity or ultimate  parent entity of such Party) then-outstanding and normally entitled (without regard to the   occurrence of any contingency) to vote in the election of the directors, managers or similar  supervisory positions (“Outstanding Voting Stock”) of such Party (or any direct or indirect parent  entity or ultimate parent entity of such Party) representing fifty percent (50%) or more of the total  voting power of all Outstanding Voting Stock of such Party (or any direct or indirect parent entity  or ultimate parent entity of such Party) or (iii) has the power, directly or indirectly, to elect a  majority of the members of the Party’s (or any direct or indirect parent entities or ultimate parent  entities of such Party) board of directors (or similar governing body); or                      (b)   such Party (or any direct or indirect parent entity or ultimate parent  entity of such Party) enters into a merger, consolidation or similar transaction with a Person  (whether or not such Party (or any direct or indirect parent entity or ultimate parent entity of such  Party) is the surviving entity) (a “Business Combination”), in each case, unless, following such   Business Combination, (i) the individuals and entities who were the beneficial owners,   respectively, of the Outstanding Common Stock and Outstanding Voting Stock of such Party (and   the ultimate parent entity thereof) immediately prior to such Business Combination beneficially   own, directly or indirectly, fifty percent (50%) or more of, respectively, (1) the then-outstanding   shares of common stock (or foreign equivalent thereof) and (2) the combined voting power of the   then-outstanding voting securities entitled to vote generally in the election of directors, of the  corporation or other entity resulting from such Business Combination (and the ultimate parent  entity thereof) and (ii) fifty percent (50%) or more of the members of the board of directors (or  similar governing body) of the corporation or other entity resulting from such Business  Combination (and ultimate parent entity thereof, as applicable) were members of the board of  directors (or similar governing body) of such Party (or ultimate parent entity of such Party, as  applicable) at the time of the execution of the initial agreement, or became members of the board                                         -5-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     of directors of such corporation or other entity by virtue of the action of the board of directors (or   similar governing body) of such Party (or ultimate parent entity), providing for such Business   Combination; or                       (c)   such Party (and its Affiliates) sells, exchanges or otherwise transfers   to any Third Party, directly or indirectly (including through the transfer of shares (or other   ownership interests) in Affiliates), in one or a series of transactions, the properties and assets   representing all or substantially all of such Party’s total assets (together with all or substantially   all of the properties and assets of its Affiliates).         For the purpose of this definition of Change of Control, (x) “person” and “group” have the  meanings given such terms under Sections 13(d) and 14(d) of the United States Securities  Exchange Act of 1934 and the term “group” includes any group acting for the purpose of acquiring,  holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under the aforesaid Act;  (y) a “beneficial owner” shall be determined in accordance with Rule 13d-3 under the aforesaid  Act; and (z) the terms “beneficially owned” and “beneficially own” shall have meanings  correlative to that of “beneficial owner.”          1.21  “China” means the People’s Republic of China[ * ].             1.22  “Clinical Trial” means a Phase I Clinical Trial, Phase II Clinical Trial, Phase III  Clinical Trial or Phase IV Clinical Trial.         1.23  “CMC” means chemistry, manufacturing and controls.         1.24  “CMC Development” means the CMC-related Development activities related to  the composition, manufacture, and specification of a Licensed Compound or the Licensed Product   intended to assure the proper identification, quality, purity and strength thereof, including test  method development and stability testing, process development, process improvements  (improving product robustness or manufacturing efficiencies), drug substance development,  process qualification, process and method validation, process scale-up, formulation development,  delivery system development, QA and QC development.           1.25  “Co-Exclusive” means, as between the licensor Party and the licensee Party, a  license that is exclusive to the licensee Party (with the right to grant sublicenses thereof in  accordance with Section 2.6.1); provided that the licensor Party reserves full rights for itself to  exploit the licensed intellectual property for the licensed purposes (with the right to grant further  licenses thereof in accordance with Section 2.6.2).         1.26  “Collaboration Territory” means each of (a) the United States of America,  including its territories and possessions (the “US Collaboration Territory”), and (b) (i) the  countries within the European Union, (ii) the countries within the European Free Trade  Association and (iii) the United Kingdom ((i), (ii) and (iii), collectively, the “European  Collaboration Territory”).  The countries within the European Collaboration Territory as of the  Effective Date are set forth on Schedule 1.26.   For clarity, (x) if a given country was a member of   the European Union or the European Free Trade Association during the Term, but thereafter is no   longer part of the European Union or the European Free Trade Association, as applicable, such                                        -6-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   country shall remain as part of the European Collaboration Territory for purposes of this  Agreement and (y) in the event that a country that was not, as of the Effective Date, part of the  European Union or the European Free Trade Association, but thereafter becomes a member state  of the European Union or European Free Trade Association during the Term, such country shall  be, as of the effective date thereof, part of the European Collaboration Territory for purposes of  this Agreement, and the Parties shall work in good faith to transition such country to the European  Collaboration Territory on transition terms to be discussed by the JSC and agreed to by the Parties.          1.27  “Combination Product” means a Licensed Product containing a Licensed  Compound in combination with one or more additional pharmaceutically active ingredients and  combined in (i) a single formulation or (ii) separate formulations but in a single package and sold  for a single price, in each case, that the Parties determine to Develop hereunder pursuant to a  Development Plan.  For clarity, a Proprietary Combination is not a Combination Product unless it  meets the foregoing definition.         1.28  “Combination Therapy” means, with respect to a Licensed Compound or the  Licensed Product, the use of or method of using a Licensed Compound or the Licensed Product  with any other pharmaceutical product(s) (whether a Third Party product, Merck Proprietary  Product or SeaGen Proprietary Product (and including, in each case, marketed products or pipeline  products)) in concomitant or sequential administration, that the Parties determine to Develop  hereunder pursuant to a Development Plan.  For clarity, “sequential administration” shall not  include separate but sequential lines of therapy.         1.29  “Commercialization Budget” means the budget for the Commercialization of the  Licensed Product for the Territory, as set forth in the applicable Commercialization Plan, as the  same may be amended from time to time in accordance with this Agreement.  For clarity, the  Commercialization Budget may be broken down into regions.         1.30  “Commercialization Plan” shall have the meaning given to such term in Section  6.2.1.  For clarity, (a) each Commercialization Plan shall include a Commercialization Budget and  (b) the Commercialization Plan may be broken down into regions, including pursuant to the  Regional Commercialization Sub-Plans, as applicable.           1.31  “Commercialize” means to promote, market, distribute, import, sell, offer for sale  and provide commercial-related product support for the Licensed Product, and  “Commercializing” and “Commercialization” shall have correlative meanings.  Commercialization may also include the foregoing activities, if any, with respect to a Companion  Diagnostic for the Licensed Product, which activities, if any, shall be set forth in the relevant  Commercialization Plan with respect to a Companion Diagnostic for the Licensed Product, as  applicable.          1.32  “Commercially Reasonable Efforts” means, with respect to the efforts to be  expended by a Party with respect to any objective, the reasonable, diligent, good faith efforts to  accomplish such objective as a similarly situated biopharmaceutical company would normally use  to accomplish a similar objective under similar circumstances.  It is understood and agreed that  with respect to the Development, Manufacture and Commercialization of a Licensed Compound  or Licensed Product by either Party (or its Affiliate), such efforts shall be substantially equivalent                                       -7-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

     to those efforts and resources commonly used by such Party (or its Affiliate) for pharmaceutical   products owned by it or to which it has rights (and which are not subject to co-development or co-  commercialization rights of a Third Party), which product is at a similar stage in its development   or product life and is of similar market potential taking into account efficacy, safety, approved  labeling, the competitiveness of alternative products (the sale of which such Party and its Affiliates  do not profit from) in the marketplace, the patent and other proprietary position of the product, the  likelihood of regulatory approval given the Regulatory Authority involved, the profitability of the  product including the amounts payable to licensors of patent or other intellectual property rights  (but not including any amounts payable to or shared with the other Party or its Affiliates hereunder  or under any Ancillary Agreements) and other relevant factors.  With respect to Licensed  Compounds and the Licensed Product, Commercially Reasonable Efforts shall be determined on  a country-by-country basis for a particular Licensed Compound or for the Licensed Product, as  applicable, and it is anticipated that the level of effort will be different for different markets, and  will change over time, reflecting changes in the status of the applicable Licensed Compound or  the Licensed Product and the market(s) involved.         1.33  “Committee” means the Joint Steering Committee (and each Subcommittee of the  JSC) and the Intellectual Property Operating Committee.         1.34  “Companion Diagnostic” or “CDx” means (a) a Class III PMA-approved (or  foreign equivalent) Biomarker Test that is clinically linked to a Licensed Compound or the  Licensed Product to determine its applicability to a specific patient or patient population or (b) any  other Biomarker Test for a Licensed Compound or the Licensed Product to determine its  applicability to a specific patient or patient population, in each case, that the Parties determine to  Develop hereunder pursuant to a Development Plan.         1.35  “Competing Product” means any product containing or comprising, in any form,  formulation, presentation or dosage strength, any [ * ].  For clarity, any product containing or  comprising [ * ].  For clarity, any product containing or comprising [ * ] are Competing Products.         1.36  “Confidential Information” means any and all confidential or proprietary  information and data, including all Merck Know-How, all SeaGen Know-How, and all other  scientific, pre-clinical, clinical, regulatory, manufacturing, marketing, financial and commercial  information or data, whether communicated in writing or orally or by any other method, which is  provided by or on behalf of one Party to the other Party in connection with this Agreement or any  Ancillary Agreement.           1.37   “Control”, “Controls” or “Controlled by” means, subject to Section 16.4.2, with   respect to any intellectual property right, information, documents or materials, the possession of   the right (whether by ownership or license, other than pursuant to this Agreement or any Ancillary   Agreement) or the ability of a Party or its Affiliate to grant access to, or a license or sublicense of,   such intellectual property right, information, documents or materials as provided for herein without   violating any Applicable Law or the terms of any agreement or other arrangement with any Third   Party existing at the time such Party would be required hereunder to grant the other Party such   access or license or sublicense.                                         -8-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

           1.38  “Corporate Marks” means, (a) in the case of Merck, the corporate Trademarks   owned by Merck or its Affiliates as Merck may designate in writing to SeaGen from time to time  (each, a “Merck Corporate Mark”) and (b) in the case of SeaGen, the corporate Trademarks  owned by SeaGen or its Affiliates as SeaGen may designate in writing to Merck from time to time  (each, an “SeaGen Corporate Mark”), including for the purposes of both clause (a) and (b), any  translation or derivation of any of the foregoing, either alone or in combination with other words  and all marks, trade dress, logos, monograms, domain name registrations and other source  identifiers confusingly similar to or embodying any of the foregoing either alone or in combination  with other words.           1.39  “Cost of Goods Manufactured” means the cost to produce a given quantity of  Licensed Product by a Party or its Affiliate, as calculated in accordance with Schedule 1.39,   including taking into account in such calculation any other capital expenditure, costs and expenses   approved as Cost of Goods Manufactured under Section 3.4.2(o).            1.40  “Develop” means (a) to research, develop, analyze, test and conduct non-clinical,  preclinical (including GLP Tox Studies), clinical and all other regulatory studies and trials for a  Licensed Compound or the Licensed Product, as applicable, including new indications and new  combinations, (b) all activities pertaining to CMC Development and formulation development  (including new formulations), (c) all other activities related to securing and maintaining Marketing  Authorization for a Licensed Compound or the Licensed Product, as applicable, and regulatory  activities in connection therewith and (d) medical affairs activities for the Licensed Product.   Development may also include the foregoing activities, if any, with respect to any Companion  Diagnostic, which activities, if any, shall be set forth in the relevant Development Plan with respect  to a Companion Diagnostic for a Licensed Compound or the Licensed Product, as applicable.  “Developing” and “Development” shall have correlative meanings.         1.41  “Development Budget” means the budget for the Development of the Licensed  Product for the Territory, as set forth in the applicable Development Plan, as the same may be  amended from time to time in accordance with this Agreement.           1.42  “Development Costs” means the sum of (a) Development FTE Costs and Medical  Affairs FTE Costs and (b) out-of-pocket costs and expenses, incurred by a Party or any of its  Affiliates in connection with the Development of a Licensed Compound or the Licensed Product  in the Territory, in each case, that are (i) incurred on or after the Effective Date, (ii) incurred as an  expense in accordance with the applicable Party’s Accounting Standards of such Party and (iii)  directly attributable or reasonably allocable to a Licensed Compound or the Licensed Product for  the Territory, including, for clarity, those that are directly attributable or reasonably allocable to  the Development of a Proprietary Combination pursuant to this Agreement and the Development  Plan (and, for clarity, any such costs associated with the Development of a Proprietary  Combination pursuant to this Agreement and the Development Plan shall be fully allocated to the  Licensed Product hereunder), including, for example, subject to Section 5.2.6(b), Clinical Trials  for a Proprietary Combination to the extent included in the Development Plan). Development  Costs shall include:                 1.42.1 such costs and expenses that are [ * ] activities for [ * ];                                         -9-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

               1.42.2 such costs and expenses that are [ * ] activities for [ * ];               1.42.3 such costs and expenses incurred [ * ], including the cost of [ * ];               1.42.4 the [ * ] for use in [ * ];               1.42.5 such costs and expenses for [ * ] such as [ * ];               1.42.6 such costs and expenses [ * ], including [ * ];                1.42.7 such costs and expenses [ * ], including [ * ];                1.42.8 costs and expenses [ * ]; and              1.42.9  any [ * ] as a result of [ * ].          1.43  “Development Data” means any data generated from Development activities  hereunder with respect to a Licensed Compound or the Licensed Product, including from  Development of a Proprietary Combination.           1.44  “Development FTE Cost” means, for any period, the Development FTE Rate  multiplied by the number of FTEs in such period performing Development activities that are  directly attributable or reasonably allocable to the Licensed Product (including for use in a  Proprietary Combination) for the Territory.          1.45  “Development FTE Rate” means the rate of [ * ] for one (1) full FTE per full  calendar year; provided that, starting January 1, 2021, such rate shall adjust on January 1 of each  Calendar Year by [ * ].  Notwithstanding the foregoing, the Parties may mutually agree in writing  on alternative Development FTE Rates for the conduct of Development activities in the Territory  (which rate may be different for different regions in the Territory).           1.46  “Development Plan” shall have the meaning given to such term in Section 5.2.1   For clarity, each Development Plan shall include a Development Budget.         1.47  “Distributor” means any Third Party(ies) appointed by the Lead Distribution Party  or any of its Affiliates (or their respective (sub)licensees) in accordance with the terms of this  Agreement to distribute and sell Licensed Product(s), with or without packaging rights, in one or  more countries in the Territory, in circumstances where such Third Party purchases its  requirements of Licensed Product(s) from such Party or its Affiliates (or their respective  sublicensees) but does not otherwise make any royalty or other similar payment to such Party or  its Affiliates (or their respective sublicensees) with respect to such Third Party’s sale of such  Licensed Product(s).  For clarity, a “Distributor” shall not be considered a sublicensee for purposes  of this Agreement (even if ancillary licenses are granted to such Distributor for purposes of  conducting its activities (specifically, distributing and selling the Licensed Product)).         1.48  “EMA” means the European Medicines Agency and any successor Regulatory  Authority having substantially the same function.                                        -10-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

         1.49  “European Free Trade Association” means the organization of the member states  of the European Free Trade Association, as it may be constituted from time to time during the  Term.        1.50   “European Union” means the organization of member states of the European  Union, as it may be constituted from time to time during the Term.          1.51  “FDA” means the United States Food and Drug Administration and any successor  Regulatory Authority having substantially the same function.           1.52  “Field” means any and all uses and purposes, including diagnostic, prophylactic  and therapeutic uses in humans and animals.         1.53  “Field Force FTE Cost” means, for any period, the Field Force FTE Rate  multiplied by the number of field force FTEs in such period conducting Promotional activities for  the Licensed Product in accordance with this Agreement (and, in the Collaboration Territory, in  accordance with the applicable Promotion Agreement) that are directly attributable or reasonably  allocable to conducting such Promotional activities for the Licensed Product (including conducting  calls for the Licensed Product, including for use in a Proprietary Combination) for the Territory  by a Party’s (or its Affiliate’s) field force, but subject to any further allocation to the Licensed  Product as set forth in a Promotion Agreement, as applicable.          1.54  “Field Force FTE Rate” means the rate per FTE for the Territory as set forth in  the applicable Commercialization Plan or as otherwise agreed to by the Parties for the conduct of  Promotional activities for the Licensed Product in accordance with this Agreement (and the  applicable Promotion Agreement, if any) in the Territory by a Party’s (or its Affiliate’s) field force  (which rate may be different for different regions in the Territory), as such rate may be adjusted  by mutual written agreement of the Parties on an annual basis.  If the Parties are unable to agree  on the Field Force FTE Rate in a given Commercialization Plan, but have previously agreed to the  Field Force FTE Rate in a different Commercialization Plan, then such previously agreed to Field  Force FTE Rate shall be used.         1.55  “First Commercial Sale” means, with respect to the Licensed Product in a country,  the first sale to a Third Party for end use or consumption of such Licensed Product in such country  after receipt of all Marketing Authorizations for such Licensed Product in such country, excluding,  however, any sale or other distribution for use in a Clinical Trial.            1.56  “FTE” means the equivalent of the work of one (1) individual employee full time  for one (1) full calendar year (consisting of a total of [ * ] hours per calendar year) of work directly  related to Development, Promotion or other Commercialization activities under this Agreement.   Any person who devotes fewer than [ * ] hours per calendar year shall be treated as an FTE on a  pro rata basis based upon the actual number of hours worked divided by [ * ].         1.57  “GAAP” means accounting principles generally accepted in the United States,  consistently applied.                                        -11-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

         1.58  “GLP Tox Study” means a pre-clinical study conducted in a species using  applicable cGLP for the purposes of assessing the onset, severity, and duration of toxic effects and  their dose dependency with the goal of establishing a safety profile required for a regulatory  submission supporting the dosing of human subjects. For the avoidance of doubt, preliminary  toxicology studies are not regarded as a GLP Tox Study.         1.59  “Governmental Authority” or “Government” means any United States (federal,  state or local) government (or political subdivision thereof), or any foreign government (or  political subdivision thereof), or any multinational governmental organization or authority, or any  governmental authority, agency or commission, in each case, entitled to exercise any  administrative, executive, judicial, legislative, police, regulatory or taxing authority or power, any  court or tribunal (or any department, bureau or division thereof), or any governmental arbitrator or  arbitral body.         1.60  “IAS/IFRS” means International Accounting Standards/International Financial  Reporting Standards of the International Accounting Standards Board, consistently applied.           1.61  “Incidence” means, with respect to any type or subtype of cancer (including a  separate and distinct tumor type), for the Calendar Year preceding the applicable Calendar Year  for which the “Incidence” is being measured, an incidence in the US of over 10,000 patient  population (taking into account all stages of the applicable type or subtype) according to the  incidence published by the Surveillance, Epidemiology, and End Results (SEER) Program of the  National Cancer Institute (https://seer.cancer.gov/) or its substitute or successor statistic program  as agreed to by the Parties, to establish the size of the treatable population in the US.         1.62  “IND” means an investigational new drug application, clinical trial authorization  application, or similar application or submission (including any supplements of any of the  foregoing) for approval to conduct human clinical investigations of a product filed with or  submitted to a Regulatory Authority in conformance with the requirements of such Regulatory  Authority.          1.63  [ * ]         1.64  “Initial Merck Proprietary Product” means Merck’s (or its Affiliate’s) product  pembrolizumab, a humanized anti-human PD-1 monoclonal antibody, that is primarily marketed  as of the Effective Date under the tradename KEYTRUDA®, in any form, formulation,  presentation or dosage strength.         1.65  “Initiated” or “Initiation” means, with respect to a Clinical Trial, the  administration of the first dose of the Licensed Product being studied to the first human subject in  such Clinical Trial.         1.66  “Joint IP Action Costs” means, with respect to the Licensed Product, any costs  and expenses which are deemed to be “Joint IP Action Costs” pursuant to Article 12 with respect  to such Licensed Product, but only to the extent such costs and expenses are incurred on or after  the Effective Date.                                         -12-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

         1.67  “Joint Patent Costs” means any costs and expenses which are deemed to be “Joint  Patent Costs” pursuant to Article 12, but only to the extent such costs and expenses are incurred  on or after the Effective Date.          1.68  “Joint Program Copyright” means all Program Copyrights other than copyrights  in any (a) Merck Proprietary Combination Outside Promotional Materials, Merck Proprietary  Combination Outside Other Field-Based Materials, Merck Licensed Product Combination  Promotional Materials, Merck Licensed Product Combination Other Field-Based Materials or  other content owned by Merck as set forth in Section 12.3.4(a), and (b) SeaGen Proprietary  Combination Outside Promotional Materials, SeaGen Proprietary Combination Outside Other  Field-Based Materials, SeaGen Licensed Product Combination Promotional Materials, SeaGen  Licensed Product Combination Other Field-Based Materials or other content owned by SeaGen as  set forth in Section 12.3.4(b).          1.69  “Joint Program Know-How” means all Program Know-How that is not SeaGen  Program Know-How or Merck Program Know-How.  For clarity, Joint Program Know-How shall  include all Program Know-How that (a) specifically relates to the use of or method of using a  Licensed Compound or the Licensed Product in any Combination Therapy (including the use of  or method of using the Licensed Product with a SeaGen Proprietary Product or Merck Proprietary  Product in a Combination Therapy), or (b) relates to a Biomarker Test or Companion Diagnostic  (this clause (b) “Biomarker Joint Program Know-How”).           1.70  “Joint Program Patents” means all Patent Rights that claim Joint Program Know- How, but that do not (subject to Section 12.4.3(b)) claim SeaGen Program Know-How or Merck  Program Know-How.          1.71  “Joint Trademark Costs” means any costs and expenses that are deemed to be  “Joint Trademark Costs” pursuant to Article 12, but only to the extent such costs and expenses are  incurred on or after the Effective Date.         1.72  “Know-How” means any and all proprietary or confidential inventions,  discoveries, developments, data (including pre-clinical, clinical and regulatory data), information,  trade secrets, specifications, formulae, instructions, processes, methods, protocols, expertise and  other technology, including any of the foregoing applicable to formulations, compositions or to  their manufacture, development, registration, use or marketing or to methods of assaying or testing  them, and all biological, chemical, pharmacological, biochemical, toxicological, pharmaceutical,  physical and analytical, safety, quality control, and manufacturing data relevant to any of the  foregoing. “Know-How” excludes Patent Rights, Trademarks and physical substances.          1.73  “Lead Distribution Party” means (a) with respect to the Licensed Product for sale  in the US Collaboration Territory, SeaGen (unless otherwise determined by the JCC), (b) with  respect to the Licensed Product for sale in the European Collaboration Territory, SeaGen (unless  otherwise determined by the JCC), (c) with respect to the Licensed Product for sale in the SeaGen  Territory, SeaGen (unless otherwise determined by the JCC), and (d) with respect to the Licensed  Product for sale in the Merck Territory, Merck (unless otherwise determined by the JCC), in each  case (a), (b), (c) and (d), except as otherwise expressly set forth in this Agreement.                                          -13-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

           1.74  “Lead Manufacturing Party” means, with respect to the Licensed Product,   SeaGen (unless otherwise determined by the JSC or otherwise expressly set forth in this   Agreement); provided that (a) where a Party acts as a second source for supply in accordance with   Section 7.4.4 or otherwise takes over responsibility for Manufacturing Licensed Product in  accordance with this Agreement (or the applicable Ancillary Agreement), and, as such,  Manufactures the Licensed Product, such Party shall be the “Lead Manufacturing Party” with   respect to the quantities of Licensed Product Manufactured by it and (b) without limiting the   foregoing sub-clause (a), certain specific Manufacturing responsibilities for the Licensed Product   as set forth in the Manufacturing Plan (e.g., secondary packaging and labeling) may be designated   to the other Party, in which case such other Party shall be the “Lead Manufacturing Party” to the   extent of such assigned responsibilities as set forth in the Manufacturing Plan.          1.75  “Lead Patent Party” means, (a) SeaGen, with respect to the SeaGen Product- Specific Patents and Joint Program Patents, and (b) Merck, with respect to the Merck Product- Specific Patents, in each case, except as otherwise expressly set forth in this Agreement.         1.76  “Lead Regulatory Party” means, (a) with respect to the Licensed Product in the  US Collaboration Territory, SeaGen (unless otherwise determined by the JSC), (b) with respect to  the Licensed Product in the European Collaboration Territory, Merck (unless otherwise  determined by the JSC), (c) with respect to the Licensed Product in the SeaGen Territory, SeaGen  (unless otherwise determined by the JSC), and (d) with respect to the Licensed Product in the  Merck Territory, Merck (unless otherwise determined by the JSC), in each case (a), (b), (c) and  (d), except as otherwise expressly set forth in this Agreement.           1.77  “Lead Study Party” means, with respect to a given Clinical Trial for the Licensed  Product, the Party that is designated by the JSC as the “Lead Study Party” for such Clinical Trial  as set forth in the Development Plan, in each case, except as otherwise expressly set forth in this  Agreement.         1.78  “Lead Trademark Party” means, with respect to a given country in the Territory,  unless otherwise determined by the JCC, the Party that is the “Lead Distribution Party” for such  country, as set forth in this Agreement.           1.79  “Licensed Compound” means (a) SGN-LIV-1-A, (b) any Next Generation  Compound for which Merck has delivered (or is deemed to have delivered) a Licensed Compound   Notice pursuant to Section 2.9.2 or (c) any Acquired Competing Product that the non-Acquiring  Competing Product Party elects to include as a “Licensed Compound” pursuant to an offer to do  so from the Acquiring Competing Product Party pursuant to Section 2.9.3(c).  For clarity, (i) as of  the Effective Date, SGN-LIV-1-A is the only Licensed Compound; and (ii) the Parties may  Develop one or more Licensed Compounds hereunder at any one time.         1.80  “Licensed Product” means a product containing or comprising a Licensed  Compound, in any form, formulation, presentation or dosage strength.  For clarity, (a) each  Licensed Product containing or comprising the same Licensed Compound, in any form,  formulation, presentation or dosage strength, including, for clarity, (i) for monotherapy use or in  Combination Therapy with any product (including a Proprietary Product) or (ii) in any  Combination Product, shall be considered the same Licensed Product for purposes of this                                        -14-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     Agreement [ * ]; provided that, notwithstanding the foregoing, [ * ], (b) Licensed Products shall  include Combination Products (in any form, formulation, presentation or dosage strength), and (c)  if there is more than one Licensed Compound hereunder (e.g., a Next Generation Compound for   which Merck has delivered (or is deemed to have delivered) a Licensed Compound Notice   pursuant to Section 2.9.2), then a product containing or comprising a different Licensed Compound   (in any form, formulation, presentation or dosage strength) will be considered a different Licensed   Product for purposes of this Agreement, but each such product will be deemed to be one of the   Licensed Products hereunder.          1.81  “Licensed Product Net Revenues” means, with respect to a given Licensed  Product in a given period, the sum of: (a) all Licensed Product Net Sales in such period, and (b)  all net sales (calculated in the same manner as the calculation of Licensed Product Net Sales,   mutatis mutandis) of such Licensed Product sold in such period to Third Parties for the Territory   by each sublicensee (but excluding, for clarity, any Distributor) of each Party (and their respective   Affiliates), as reported by the applicable sublicensee, as applicable, to the applicable Party (or its   Affiliate), in each case (a) and (b), for such Licensed Product.          1.82  “Licensed Product Net Sales” means, with respect to Licensed Product sold to  Third Parties (including to Distributors) for the Territory by a Party or its Affiliates, the gross  amount invoiced (not including value added taxes, consumption taxes, sales taxes, or similar taxes)  for sales of such Licensed Product for the Territory during a given period during the Term, less  the following normal and customary deductions that are related to such Licensed Product sold  during the Term and not otherwise deducted in computing other amounts hereunder (without  duplication):                     [ * ]         Licensed Product Net Sales shall be determined from the applicable Party’s (or its   Affiliate’s) books and records maintained in accordance with the applicable Party’s (or its   Affiliate’s) Accounting Standards (in each case, to the extent reasonably practicable when   determining amounts at a product level) consistently applied. It is understood that any accruals of   amounts reflected in Licensed Product Net Sales shall be periodically (but at least once a Calendar   Quarter) trued-up by the Parties consistent with their customary practices and in accordance with   the applicable Party’s Accounting Standards (to the extent reasonably practicable when   determining amounts at a product level), and Licensed Product Net Sales shall be adjusted to reflect   such trued-up amounts.          Any of the deductions listed above that involves a payment by a Party or its Affiliates shall  be taken as a deduction in the Calendar Quarter in which the payment is accrued by such entity.   For purposes of determining Licensed Product Net Sales, a Licensed Product shall be deemed to  be sold when invoiced.  Notwithstanding the foregoing, a “sale” shall not include transfers or  dispositions of such Licensed Product for pre-clinical or clinical purposes or as samples, in each  case, without charge.           In the event that the Licensed Compound is sold as part of a Combination Product in a  country in the Territory, Licensed Product Net Sales for such Combination Product shall be  calculated [ * ].                                        -15-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

           Subject to the above, Licensed Product Net Sales shall be calculated in accordance with   the standard internal policies and procedures of the applicable Party and its Affiliates, which must   be in accordance with the Accounting Standards.           1.83  “LIV-1” means [ * ].         1.84  “Manufacture” or “Manufacturing” means, with respect to a compound or  product (including a Licensed Compound and the Licensed Product), the receipt, handling and  storage of active pharmaceutical ingredients and other materials, the manufacturing, processing,  packaging and labeling, holding (including storage), quality assurance and quality control testing  (including release) of such compound or product and shipping of such compound or product.   Manufacturing may also include the foregoing activities, if any, with respect to any Companion  Diagnostic for a Licensed Compound or the Licensed Product, which activities, if any, shall be set  forth in the relevant Manufacturing Plan.         1.85  “Marketing Authorization Application” or “MAA” means a New Drug  Application, Biologics License Application, Worldwide Marketing Application, Marketing  Authorization Application, filing pursuant to Section 510(k) of the Act, or similar application or  submission for Marketing Authorization of a product filed with a Regulatory Authority to obtain  marketing approval for such product in that country or in that group of countries, or any  supplements to any of the foregoing.         1.86  “Marketing Authorization” means all approvals from the relevant Regulatory  Authority necessary to market and sell a product in any country or group of countries.  For clarity,  with respect to the Licensed Product, Marketing Authorization shall include [ * ].           1.87  “Medical Affairs FTE Cost” means, for any period, the Medical Affairs FTE Rate  multiplied by the number of medical affairs FTEs in such period performing medical affairs  activities that are directly attributable or reasonably allocable to the Licensed Product (including  for use in a Proprietary Combination) for the Territory.         1.88  “Medical Affairs FTE Rate” means the rate per FTE for the Territory as set forth  in the applicable Development Plan or as otherwise agreed to by the Parties for the conduct of  medical affairs activities for the Territory (which rate may be different for different regions in the  Territory), as such rate may be adjusted by mutual written agreement of the Parties on an annual  basis.  If the Parties are unable to agree on the Medical Affairs FTE Rate in a given Development  Plan, but have previously agreed to the Medical Affairs FTE Rate in a different Development Plan,  then such previously agreed to Medical Affairs FTE Rate shall be used.         1.89  “Merck General Know-How” means any Merck Know-How other than Merck  Product-Specific Know-How.         1.90  “Merck General Patents” means any Merck Patents other than Merck Product- Specific Patents.         1.91  “Merck Know-How” means all Know-How Controlled by Merck or its Affiliates  as of the Effective Date or at any time thereafter until the end of the Term that is necessary or                                        -16-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     reasonably useful for the Development, Manufacture, or Commercialization of any Licensed   Compound or the Licensed Product, whether as a monotherapy or for use in any Combination   Therapy, or any Companion Diagnostic, and that is either (a) Merck Program Know-How (but  excluding, for clarity, Joint Program Know-How), or (b) other Know-How Controlled by Merck   that Merck discloses to SeaGen and that the Parties mutually agree to use (through the JDC), and   is actually used, in the Development of the Licensed Product under this Agreement (and in   accordance with the Development Plan) or any Ancillary Agreement (the Know-How in this clause  (b), “Other Merck Contributed Know-How”), but in each case, excluding any Acquiring Person  Intellectual Property.         1.92  “Merck Patents” means all Patent Rights Controlled by Merck or its Affiliates as  of the Effective Date or at any time thereafter until the end of the Term, that cover or claim, or are  otherwise necessary or reasonably useful for the Development, Manufacture or Commercialization  of, any Licensed Compound or the Licensed Product, whether as a monotherapy or for use in any  Combination Therapy, or any Companion Diagnostic, and that are either (a) Merck Program  Patents (but excluding, for clarity, Joint Program Patents), (b) other Patent Rights Controlled by  Merck that claim the use or method of using a Merck Proprietary Product in a Merck Proprietary   Combination that the Parties have agreed to Develop hereunder pursuant to a Development Plan   or (c) other Patent Rights Controlled by Merck that claim the Other Merck Contributed Know-  How; but in each case, excluding any Acquiring Person Intellectual Property.          1.93  “Merck Product-Specific Know-How” means all [ * ] Know-How that is[ * ], but   excluding [ * ].          1.94  “Merck Product-Specific Patents” means all [ * ] Patents that claim or cover (a)   [ * ], or (b) any [ * ]; but excluding (in each case (a) and (b)) any [ * ] Patents that claim or cover   [ * ].          1.95  “Merck Program Know-How” means (a) all [ * ] Know-How [ * ] that is [ * ] but,   for clarity, not (i) [ * ] or (ii) [ * ] (this clause (a), a “Merck Proprietary Product Program  Invention”) and (b) all [ * ] Know-How that is [ * ].          1.96  “Merck Program Patents” means all Patent Rights that claim Merck Program   Know-How and do not claim SeaGen Program Know-How or Joint Program Know-How.          1.97  “Merck Proprietary Combination” means a Proprietary Combination in which a   Merck Proprietary Product is the Proprietary Product.  For clarity, the Proprietary Combination of   the Licensed Product and the Initial Merck Proprietary Product shall be a Merck Proprietary   Combination for purposes of this Agreement.           1.98  “Merck Proprietary Combination Mark” means the Trademarks, if any, jointly   developed and agreed to by the Parties that combines a Merck Proprietary Product Mark and a   Collaboration Mark for use in connection with the Merck Proprietary Combination as permitted in   the Agreement.                                          -17-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

           1.99  “Merck Proprietary Product” means any product that is owned by, or exclusively  or co-exclusively licensed to Merck, or any of its Affiliates, including the Initial Merck Proprietary  Product, but not including any Licensed Compound or the Licensed Product.         1.100 “Merck Proprietary Product Marks” means the Trademarks of Merck or its  Affiliates with respect to any Merck Proprietary Product for use in a Merck Proprietary  Combination, which Merck shall designate in writing to SeaGen from time to time.         1.101 “Merck Supply Agreement” means any and all supply agreements (including  related quality agreements) entered into by the Parties (or their respective Affiliates) with respect  to the Manufacture and supply of Licensed Product by or on behalf of Merck (or its Affiliate) to  SeaGen (or its Affiliate) for use in the Commercialization of such Licensed Product in accordance  with this Agreement.  Each such Merck Supply Agreement for supply shall be on terms to be  mutually agreed to by the Parties in good faith.         1.102 “Merck Technology” means the Merck Patents, Merck Know-How and Merck’s  (and its Affiliates’) interest in the Joint Program Patents and Joint Program Know-How.         1.103 “Merck Territory” means those portions of the Territory other than the  Collaboration Territory and the SeaGen Territory.           1.104 [ * ]         1.105 “Ongoing Clinical Trials” means all Clinical Trials of the Licensed Product that  have been Initiated and are ongoing by SeaGen as of the Effective Date (and are included in the  Initial Development Plan (and related initial Development Budget)) [ * ].  For clarity, with respect  to such Clinical Trials, (x) updates to the protocol for any such Clinical Trial are subject to the  approval of the JDC in accordance with Sections 3.3.2(d) and 5.4.1; and (y) any amendment to the  Development Plan (and related Development Budget) with respect thereto are subject to the  approval of the JSC in accordance with Section 3.2.3(e).          1.106 “Other Field-Based Materials” means, with respect to the Licensed Product, all  written, printed, electronic or graphic field-based materials [ * ] used by or on behalf of (a) either  or both Parties in the Collaboration Territory, (b) SeaGen in the SeaGen Territory, or (c) Merck in  the Merck Territory; in each case ((a), (b) and (c)), [ * ] for the Licensed Product (including for  use as a monotherapy or in any Combination Therapy) conducted hereunder.         1.107 “Patent Rights” means any and all patents and patent applications (which for the  purpose of this Agreement shall be deemed to include certificates of invention and applications for  certificates of invention), including divisionals, continuations, continuations-in-part, reissues,  renewals, substitutions, registrations, re-examinations, revalidations, extensions, supplementary  protection certificates and the like of any such patents and patent applications, and any and all  foreign equivalents of the foregoing.           1.108 “Person” means an individual, Governmental Authority, Public Official,  corporation, partnership, limited liability company, trust, business trust, association, joint stock                                         -18-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization or any   other form of entity not specifically listed herein.            1.109 “Phase I Clinical Trial” means a human clinical trial in any country that would   satisfy the requirements of 21 C.F.R. § 312.21(a).          1.110 “Phase II Clinical Trial” means a human clinical trial in any country that would   satisfy the requirements of 21 C.F.R. § 312.21(b).          1.111 “Phase III Clinical Trial” means a human clinical trial in any country that would   satisfy the requirements of 21 C.F.R. § 312.21(c).            1.112 “Phase IV Clinical Trial” means any human clinical trial (other than a Phase I   Clinical Trial, Phase II Clinical Trial or Phase III Clinical Trial) in any country that is conducted   on the Licensed Product for an indication in the Field after Marketing Authorization of the   Licensed Product has been obtained from an appropriate Regulatory Authority in such country for   such indication.          1.113 [ * ]          1.114 “Pricing Approval” means, with respect to any country or jurisdiction in which   one or more Governmental Authorities determine or approve the pricing at which the Licensed   Product will be charged to, or reimbursed by, public or private payors, the approval, agreement,   determination or decision by such applicable Governmental Authority(ies) establishing the pricing   and reimbursement status for such Licensed Product for any such payor or group of payors.           1.115 “Product Liability” means any liability in respect of any personal injury or death   (or risk of personal injury or death) arising from, relating to or otherwise in respect of, the use or   ingestion of, or exposure to, a product (including as a result of participating in a Clinical Trial),   whether based on negligence, strict product liability or any other product liability theory.          1.116 “Program Copyright” means copyright in Promotional Materials (and other   content) created in connection with the Development, Manufacturing and Commercialization of   the Licensed Product (a) by or on behalf of a Party or its Affiliate or sublicensee in the conduct of   activities under this Agreement or any Ancillary Agreement, or (b) jointly by or on behalf of the   Parties or their respective Affiliates or sublicensees in the conduct of activities under this   Agreement or any Ancillary Agreement.            1.117 “Program Know-How” means any and all Know-How (including Development   Data) conceived, developed, generated or reduced to practice during the Term (a) by or on behalf   of a Party or its Affiliate or sublicensee in the conduct of activities under this Agreement or any   Ancillary Agreement, or (b) jointly by or on behalf of the Parties or their respective Affiliates or   sublicensees in the conduct of activities under this Agreement or any Ancillary Agreement.  For   clarity, notwithstanding anything to the contrary, any and all Know-How conceived, developed,   generated or reduced to practice by or on behalf of SeaGen or its Affiliates or sublicensees in the   conduct of pre-clinical development activities under Section 2.9.2 with respect to Next Generation  Compounds prior to Merck delivering a Licensed Compound Notice with respect to the applicable                                        -19-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   Next Generation Compound (which activities shall, for purposes of the definition of SeaGen  Linker Technology at Section 1.138, be independent of the activities under this Agreement) (i)  shall be solely owned by SeaGen; (ii) shall not be Program Know-How for purposes of this  Agreement; and (iii) with effect from and after delivery (or deemed delivery) of a Licensed  Compound Notice (if any) from Merck pursuant to Section 2.9.2, will be SeaGen Know-How for  purposes of this Agreement.         1.118 “Program Patents” means the Merck Program Patents, SeaGen Program Patents  and Joint Program Patents.          1.119 “Promote” means, with respect to a given country in the Territory, any activities  undertaken by Merck (or its Affiliates) or SeaGen (or its Affiliates) in such country, or by both  Merck (or its Affiliates) and SeaGen (or its Affiliates) in such country jointly (such joint activities  in a given country, “Co-Promotion”), in each case, aimed at encouraging the use of the Licensed  Product in such country, including marketing, promoting, conducting calls and details, contract  administration, key account management, advertising (including educating, speaking programs  and promotional symposia), but excluding any Distribution activities, Manufacturing activities or  Development activities. “Promotion” shall have a correlative meaning.           1.120 “Promotion FTE Cost” means, for any period, the Promotion FTE Rate multiplied  by the number of FTEs in such period performing Promotion activities that are directly attributable  or reasonably allocable to the Licensed Product (including for use in a Proprietary Combination)  for the Territory, but subject to any further allocation to the Licensed Product as set forth in a  Promotion Agreement, as applicable.  For the avoidance of doubt, Promotion FTE Costs shall  exclude Field Force FTE Costs.         1.121 “Promotion FTE Rate” means the rate per FTE for the Territory as set forth in the  applicable Commercialization Plan or otherwise agreed to by the Parties for the conduct of  Promotion for the Territory (which rate may be different for different regions in the Territory), as  such rate may be adjusted by mutual written agreement of the Parties on an annual basis.  If the  Parties are unable to agree on the Promotion FTE Rate in a given Commercialization Plan, but  have previously agreed to the Promotion FTE Rate in a different Commercialization Plan, then  such previously agreed to Promotion FTE Rate shall be used.         1.122 “Promotional Materials” means, with respect to the Licensed Product, all written,  printed, electronic or graphic material (including the content of Licensed Product specific  websites) used (a) by or on behalf of either or both Parties in connection with the Promotion of the  Licensed Product in the Collaboration Territory conducted hereunder, (b) by or on behalf of  SeaGen in connection with the Promotion of the Licensed Product in the SeaGen Territory  conducted hereunder, or (c) by or on behalf Merck in connection with the Promotion of the  Licensed Product in the Merck Territory conducted hereunder.  Promotional Materials may include  such materials for use in connection with the Promotion of the Licensed Product in a Proprietary  Combination.          1.123 “Proprietary Combination” means any Combination Therapy of the Licensed  Product and one or more Proprietary Product(s) as Developed by the Parties pursuant to a  Development Plan following addition of such Proprietary Combination to the Development Plan                                       -20-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

     by approval of the JSC under Section 5.2.4(b) (provided that, for clarity, the Proprietary   Combination of the Licensed Product and the Initial Merck Proprietary Product shall be a   Proprietary Combination for purposes of this Agreement and shall not require approval by the JSC   under Section 5.2.4(b)).           1.124 “Proprietary Product Party” means, with respect to a Proprietary Combination,   the Party that owns or controls the Proprietary Product used in such Proprietary Combination;   specifically: (a) in the case of a Merck Proprietary Combination, Merck; and (b) in the case of a   SeaGen Proprietary Combination, SeaGen.           1.125 “Proprietary Product” means any SeaGen Proprietary Product or Merck   Proprietary Product that the Parties agree, via the JSC under Section 5.2.4(b), to Develop pursuant   to this Agreement for use in a Proprietary Combination.          1.126 “Proprietary Triple Combination Therapy” means any Combination Therapy   involving the use of the Licensed Product, a Merck Proprietary Product and a SeaGen Proprietary   Product, as Developed by the Parties pursuant to a Development Plan following addition of such   Combination Therapy to the Development Plan by approval of the JSC under Section 5.2.4(b).         1.127 “Public Official” means (i) any officer, employee or representative of any regional,  federal, state, provincial, county or municipal government or government department, agency or  other division; (ii) any officer, employee or representative of any commercial enterprise that is  owned or controlled by a government, including any state-owned or controlled veterinary,  laboratory or medical facility; (iii) any officer, employee or representative of any public  international organization, such as the African Union, the International Monetary Fund, the United  Nations or the World Bank; and (iv) any person acting in an official capacity for any government  or government entity, enterprise or organization identified above.         1.128 “Regulatory Authority” means any applicable Governmental Authority involved  in granting approvals (including Pricing Approvals) for the manufacturing, development or  marketing of a product (including the Licensed Product), including Marketing Authorizations  therefor, in the Territory.         1.129 “Regulatory Documentation” means, with respect to a Licensed Compound or the  Licensed Product, all submissions, documents and other correspondence submitted to applicable  Regulatory Authorities in connection with the Development, Manufacture or Commercialization  thereof, including INDs, MAAs and Marketing Authorizations (including product labeling and in  connection with Pricing Approvals and health technology assessments) and the US Certificate of  Pharmaceutical Product, and amendments and supplements thereto.           1.130 “Related Party” means, as applicable, (a) each of Merck and its Affiliates and their  respective sublicensees (which term does not include Distributors) and (b) each of SeaGen and its  Affiliates and their respective sublicensees (which term does not include Distributors).          1.131 “Safety Issue” means, with respect to the Licensed Product, that (a) a Regulatory  Authority or safety data review board for a Clinical Trial of such Licensed Product has required  termination or suspension of a Clinical Trial of such Licensed Product, (b) a Party reasonably                                        -21-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     believes in good faith that (i) the Initiation of a Clinical Trial of such Licensed Product is not   warranted, or (ii) termination or suspension of a Clinical Trial of such Licensed Product is   warranted, in each case because of a material safety concern with respect to the use of such   Licensed Product in such Clinical Trial; provided that such Party has provided reasonable evidence   to the other Party documenting such material safety concern, or (c) a Party reasonably believes in   good faith that the continued Commercialization of such marketed Licensed Product poses a   material safety concern; provided that such Party has provided reasonable evidence to the other   Party documenting such material safety concern.            1.132 “Sales and Marketing Expenses” means, for the Licensed Product, those costs   and expenses (other than those deducted as part of the calculation of Licensed Product Net Sales)   incurred by a Party or its Affiliates that are directly attributable or reasonably allocable to the   market development or Promotion of such Licensed Product for the Territory consistent with the   Commercialization Plan, whether before or after the First Commercial Sale of such Licensed   Product.  Sales and Marketing Expenses shall include: [ * ] for the [ * ] under the [ * ], including   [ * ] to a [ * ] related to [ * ] and other [ * ], and [ * ] with [ * ] and [ * ] in connection with the [ *   ] in connection with the [ * ] related to [ * ] and [ * ] that directly relate to the [ * ].  Sales and   Marketing Expenses will specifically [ * ] for any of the [ * ] associated with [ * ] for the [ * ]   without being [ * ] (other than the [ * ] that such [ * ] in this [ * ] and such other [ * ] where the   applicable [ * ] and such other [ * ] with the [ * ] to this Agreement [ * ] shall be [ * ] to the [ * ]  to the [ * ] are set forth in the [ * ] and in [ * ].  Sales and Marketing Expenses will also specifically  exclude [ * ] such as [ * ] to the [ * ], and [ * ].         1.133 “SeaGen Existing CMO Agreements” means those contract manufacturing  agreements between SeaGen or its Affiliate and a Third Party set forth on Schedule 1.133.          1.134 “SeaGen Existing In-Licenses” means those license agreements between SeaGen   or its Affiliate and a Third Party set forth on Schedule 1.134.          1.135 “SeaGen General Know-How” means any SeaGen Know-How other than SeaGen  Product-Specific Know-How.         1.136 “SeaGen General Patents” means any SeaGen Patents other than SeaGen Product-  Specific Patents.          1.137 “SeaGen Know-How” means all Know-How Controlled by SeaGen or its   Affiliates as of the Effective Date or at any time thereafter until the end of the Term that is  necessary or reasonably useful for the Development, Manufacture, or Commercialization of any   Licensed Compound or the Licensed Product, whether as a monotherapy or for use in any   Combination Therapy, or any Companion Diagnostic, (a) including the SeaGen Program Know-  How (but excluding, for clarity, Joint Program Know-How), but (b) excluding any Acquiring   Person Intellectual Property.          1.138 “SeaGen Linker Technology” means, [ * ].          1.139 “SeaGen Patents” means all Patent Rights Controlled by SeaGen or its Affiliates   as of the Effective Date or at any time thereafter until the end of the Term, that cover or claim, or                                        -22-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     are otherwise necessary or reasonably useful for, the Development, Manufacture or   Commercialization of, any Licensed Compound or the Licensed Product, whether as a   monotherapy or for use in any Combination Therapy, or any Companion Diagnostic, (a) including   all SeaGen Program Patents (but excluding, for clarity, Joint Program Patents), but (b) excluding   any Acquiring Person Intellectual Property.  The SeaGen Patents as of the Effective Date include   those set forth on Schedule 1.139; provided that with respect to the SeaGen Linker Technology,   Schedule 1.139 lists only those SeaGen Patents within the SeaGen Linker Technology that are   relevant to SGN-LIV-1-A; provided further that SeaGen will update Schedule 1.139 to list SeaGen   Patents within the SeaGen Linker Technology that are relevant to SGN-LIV-1-B, SGN-LIV-1-C   or any other Next Generation Compound, respectively, upon Merck’s delivery (or deemed   delivery) of a Licensed Compound Notice with respect thereto pursuant to Section 2.9.2.          1.140 “SeaGen Product-Specific Know-How” means all [ * ] Know-How that is [ * ],  but excluding (a) any [ * ] (“SeaGen Linker Product-Specific Know-How”), and (b) any [ * ].            1.141 “SeaGen Product-Specific Patents” means all [ * ] Patents that claim or cover (i)   [ * ], or (ii) [ * ]; but excluding (in each case (i) and (ii)) (a) any [ * ] Patents that claim or cover [   * ] (“SeaGen Linker Product-Specific Patents”), and (b) s[ * ] Patents that claim or cover [ * ].           1.142 “SeaGen Program Know-How” means (a) all [ * ] Know-How [ * ] but, for clarity,   not (i) [ * ] or (ii) [ * ] (this clause (a), a “SeaGen Proprietary Product Program Invention”),   and (b) all [ * ] Know-How that is [ * ].          1.143 “SeaGen Program Patents” means all Patent Rights that claim SeaGen Program   Know-How and do not claim Merck Program Know-How or Joint Program Know-How.          1.144 “SeaGen Proprietary Combination” means a Proprietary Combination in which   a SeaGen Proprietary Product is the Proprietary Product.           1.145 “SeaGen Proprietary Combination Mark” means the Trademarks, if any, jointly   developed and agreed to by the Parties that combines a SeaGen Proprietary Product Mark and a   Collaboration Mark for use in connection with the SeaGen Proprietary Combination as permitted   in the Agreement.          1.146 “SeaGen Proprietary Product” means any product that is owned by, or   exclusively or co-exclusively licensed to, SeaGen or any of its Affiliates, including SeaGen’s (or   its Affiliate’s) product known as [ * ], but not including any Licensed Compound (or Next   Generation Compound) or the Licensed Product.          1.147 “SeaGen Proprietary Product Marks” means the Trademarks of SeaGen or its   Affiliates with respect to any SeaGen Proprietary Product for use in a SeaGen Proprietary   Combination, which SeaGen shall designate in writing to Merck from time to time.          1.148 “SeaGen Supply Agreement” means any and all supply agreements (including  related quality agreements) entered into by the Parties (or their respective Affiliates) with respect  to the Manufacture and supply of Licensed Product by or on behalf of SeaGen (or its Affiliate) to  Merck (or its Affiliate) for use in the Development and Commercialization of such Licensed                                        -23-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     Product in accordance with this Agreement.  Each such SeaGen Supply Agreement for supply shall   be on terms to be mutually agreed to by the Parties in good faith.            1.149 “SeaGen Technology” means the SeaGen Patents, SeaGen Know-How and  SeaGen’s (and its Affiliates’) interest in the Joint Program Patents and Joint Program Know-How.          1.150 “SeaGen Territory” means Canada.         1.151 “Senior Executives” means, (a) with respect to Merck, (i) the [ * ], (ii) the [ * ],  (iii) the [ * ] or (v) the [ * ] (or, in each case of (a)(i), (ii), (iii), (iv) or (v), as applicable, a person  in an equivalent position at Merck), as the case may be and depending on the nature of the dispute  at issue, and (b) with respect to SeaGen, (i) the Chief Medical Officer, (ii) the Executive Vice  President, Commercial, (iii) the Chief Technical Officer or (iv) the Senior Vice President,  Intellectual Property (or, in each case of (b)(i), (ii), (iii) or (iv), as applicable, a person in an  equivalent position at SeaGen), as the case may be and depending on the nature of the dispute at  issue.         1.152 “SGN-LIV-1-A” means [ * ].          1.153 “SGN-LIV-1-B” means [ * ].           1.154 “SGN-LIV-1-C” means [ * ].           1.155 “Subcommittees” means the JDC, JMC, JCC, the JFC and any other subcommittee   of the JSC (but excluding, for clarity, the JSC itself) formed in accordance with Article 3.  For   clarity, the IPOC shall not be a Subcommittee.           1.156 “Sublicensee Revenues” means, with respect to the Licensed Product for the   Territory, any payments (net of any VAT on such payments and any withholding tax deducted   from such payments that cannot be claimed as a credit or otherwise utilized by a Party or its   Affiliates) received by a Party or any its Affiliates during the Term from its or their respective   Third Party (sub)licensee(s) or Distributors [ * ] for the [ * ], to the [ * ] to the [ * ] in the [ * ] or   the [ * ] in the [ * ]; provided that Sublicensee Revenues shall exclude any amounts included in   Licensed Product Net Sales.  Notwithstanding the foregoing, the following shall apply:               1.156.1if the applicable agreement giving rise to Sublicensee Revenues includes (i)  products other than the applicable Licensed Product (including any Proprietary Product), or (ii)  intellectual property other than intellectual property covering or claiming the applicable Licensed  Product, the Parties shall mutually agree upon a fair and reasonable allocation of the Sublicensee  Revenues to the Licensed Product for the Territory, and in the event that the Parties are unable to  agree, the dispute shall be resolved pursuant to Section 16.8;               1.156.2 in the case where Licensed Compound is sold as part of a Combination  Product, Sublicensee Revenues for such Combination Product shall be calculated as mutually  determined by the Parties prior to the time the Development commences in relation to such  Combination Product in order to allocate the Sublicensee Revenues between the Licensed                                         -24-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     Compound contained therein and the other active pharmaceutical ingredients contained therein;   and                 1.156.3 for clarity, Sublicensee Revenues shall not include any payments in   consideration for (i) a Change of Control transaction with respect to a given Party, or (ii) other   transaction in which a Party assigns this Agreement to a Third Party as permitted hereunder.          1.157 “Territory” means all of the countries in the world, and their territories and   possessions.          1.158 “Third Party” means a Person other than Merck, SeaGen or their respective   Affiliates.            1.159 “Third Party In-License Agreements” means, subject to the provisions of Section   2.5.2 or 2.5.3, a license or other similar agreement between a Party (or its Affiliate) and a Third   Party pursuant to which such Party (or its Affiliates) obtains a license or similar right in any (a)   Know-How necessary or reasonably useful for the Development, Manufacture or   Commercialization of a Licensed Compound or the Licensed Product under this Agreement; or (b)   Patent Right that claims or covers a Licensed Compound or the Licensed Product or the   Development, Manufacture or Commercialization of a Licensed Compound or the Licensed   Product.  Third Party In-License Agreements shall include the SeaGen Existing In-Licenses.             1.160 “Third Party Payments” means, with respect to Licensed Compound or the   Licensed Product, any upfront payment, milestone payment, royalty or any other similar payment   paid to any Third Party by a Party (or its Affiliates) during the Term under any Third Party In-  License Agreement, which payments are directly attributable to or reasonably allocable to (a) the   Development (including Manufacture for purposes of Development) or (b) the Commercialization   (including Manufacture for purposes of Commercialization), of Licensed Compound or the   Licensed Product for the Territory in accordance with this Agreement (including for use in a   Proprietary Combination); provided that, for clarity, “Third Party Payments” shall exclude [ * ].    Third Party Payments shall also include the foregoing payments directly attributable to or   reasonably allocable to the Development or Commercialization of any Companion Diagnostic as   set forth in the Development Plan or Commercialization Plan, as applicable. Notwithstanding the   foregoing, if the applicable Third Party In-License Agreement giving rise to Third Party Payments   includes or applies to any (i) products other than Licensed Compound or the Licensed Product, or   (ii) intellectual property other than intellectual property covering or claiming Licensed Compound   or the Licensed Product, then, in each case ((i) and (ii)), the Parties shall mutually agree upon a   fair and reasonable allocation of the applicable payments to the Licensed Compound or the   Licensed Product (including any Proprietary Combination that is being Developed or   Commercialized pursuant to this Agreement and the Development Plan or Commercialization   Plan, as applicable, which allocation, as calculated as aforesaid, shall be fully allocated to the   Licensed Product) in the Territory for purposes of including in Third Party Payments, and in the   event that the Parties are unable to agree, the dispute shall be resolved pursuant to Section 16.8.             1.161 “Trademarks” means any and all trademarks, service marks, brand names,  certification marks, collective marks, logos, symbols, trade dress, assumed names, company                                         -25-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   names, fictitious names, trade names, and other indicia of origin, together with all goodwill  associated therewith and symbolized thereby.          1.162 “U.S. Pivotal Trial” means a clinical trial of the Licensed Product conducted on a  sufficient number of human subjects that satisfies each of the following ((a), (b) and (c)):               (a)   such trial is designed to establish that the Licensed Product has an  acceptable safety and efficacy profile for its intended use, and to determine warnings, precautions,  and adverse reactions that are associated with such product in the dosage range to be prescribed,  and is intended to support Marketing Authorization of the Licensed Product by the FDA; and                (b)   such trial is a registration trial that is expected to generate results and data  sufficient to obtain Marketing Authorization from the FDA for the Licensed Product; and               (c)   such clinical trial is mutually agreed to by the Parties, prior to the Initiation  thereof, to be the “U.S. Pivotal Trial” and such clinical trial is identified as the “U.S. Pivotal Trial”  in the Development Plan (provided that, for clarity, if the Parties are conducting a given clinical  trial pursuant to the Development Plan that was not initially designated as the “U.S. Pivotal Trial”,  but following Initiation thereof, such clinical trial is materially amended, in accordance with this  Agreement, in a manner such that the Parties mutually agree that such clinical trial would then be  the “U.S. Pivotal Trial”, then the Parties may designate such clinical trial as the “U.S. Pivotal  Trial” in the Development Plan following Initiation thereof).         1.163 “VAT” means (a) any tax imposed in compliance with the Council Directive of 28  November 2006 on the common system of value added tax (EC Directive 2006/112), and (b) any  other tax of a similar or equivalent nature, imposed by any other jurisdictions.          1.164 “Violation” means that a Party or any of its officers or directors or any other  personnel of such Party (or other permitted agents of such Party performing activities hereunder,  including any of such Party’s Affiliates, sublicensees or Third Party contractors and their  respective officers and directors) has been:  (a) convicted of any of the felonies identified among  the exclusion authorities listed on the U.S. Department of Health and Human Services, Office of  Inspector General (OIG) website, including 42 U.S.C. § 1320a-7(a)  (http://oig.hhs.gov/exclusions/authorities.asp); (b) identified in the OIG List of Excluded  Individuals/Entities (LEIE) database (http://exclusions.oig.hhs.gov/) or the U.S. General Services  Administration’s list of Parties Excluded from Federal Programs (http://www.epls.gov); or (c)  listed by any U.S. federal agency as being suspended, debarred, excluded or otherwise ineligible  to participate in federal procurement or non-procurement programs, including under 21 U.S.C. §  335a (http://www.fda.gov/ora/compliance_ref/debar/) (each of (a), (b) and (c), collectively, the  “Exclusions Lists”).         1.165 Additional Definitions.  Each of the following terms has the meaning described in  the corresponding section of this Agreement indicated below:                               Definition:                         Section:         “6221(b) election”                               15.3         “AAA”                                            16.8.2(b)                                       -26-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

                             Definition:                         Section:         “Acquired Competing Product”                     2.9.3         “Acquiring Competing Product Party”              2.9.3         “Acquiring Person Intellectual Property”         16.4.2(a)         “Acquiror PDx Product”                           16.4.2(b)         “Actual COGS”                                    7.4.5(a)         “Agreement”                                      Preamble         “Alliance Manager”                               3.9.1         “Anti-Corruption Laws”                           8.1.5(a)         “Applicable Percentage”                          14.7.6(a)(i)         [ * ]                                            [ * ]         “Bankruptcy Party”                               14.5.1         “BBA”                                            15.3         “Biomarker Joint Program Know-How”               1.69         “Biosimilar Application”                         12.10.3(b)         “Business Combination”                           1.20(b)         [ * ]                                            [ * ]         [ * ]                                            [ * ]         “CMO Recovered Amounts”                          13.3.3(c)         “Code”                                           15.3         “Collaboration Marks”                            12.12.1         “Commercial Milestone Event”                     10.3.1         “Commercial Milestone Payment”                   10.3.1         “Commercialization Cost Report”                  10.4.2(a)         “Commercialization Guidelines”`                  3.5.2(b)         “Commercialization Plan”                         6.2.1         “Competitive Infringement”                       12.10.1         “Continuing Party”                               14.7.6(a)(ii)         “Continuing Payment Term”                        14.7.6(a)(iii)         “Continuing Product”                             14.7.6(a)(iv)         “Continuing Product Payments”                    14.7.6(a)         “Controlling Party”                              12.10.3(a)(i)         “Co-Promotion”                                   1.119         “Core Data Sheet”                                5.5.1(b)         “Cost Reconciliation Report”                     10.4.2(b)         “Cost Reports”                                   10.4.2(a)         “CTC”                                            Recitals         “Data Protection Laws”                           1.11         “Development Cost Report”                        10.4.2(a)         “Development Milestone Event”                    10.2.1         “Development Milestone Payment”                  10.2.1         “Development Plan”                               5.2.1         “Dispute”                                        16.8.1         “Distribution”                                   6.4.1                                       -27-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

                             Definition:                         Section:         “DPA”                                            8.3.2         “Effective Date”                                 Preamble         “Electronic Delivery”                            16.18         “Estimated COGS”                                 7.4.5(a)         “European Collaboration Territory”               1.26         “European Collaboration Territory Distribution   6.4.3         Agreement”         “Excluded Claim”                                 16.8.2(e)         “Exclusions Lists”                               1.164         “Existing CDA”                                   16.9         “Existing DPA”                                   8.3.2         “Existing PDx Combination Trial”                 16.4.2(b)(ii)         “Existing Regulatory Materials”                  4.2.2         “Existing SeaGen CMO”                            7.7.2         “Financial Manager”                              3.6.1         “Force Majeure”                                  16.3         “Global Publication Strategy”                    3.3.2(a)         [ * ]                                            [ * ]         “Indemnified Party”                              13.5.1         “Indemnifying Party”                             13.5.1         “Independent Patent Counsel”                     12.5.1(b)         “Infringement Action”                            12.10.2(a)         “Initial Commercialization Plan”                 6.2.2         “Initial Development Plan”                       5.2.2         “Initial Manufacturing Plan”                     7.2.1         “Insolvency Event”                               14.5.1         “Interim Permitted Competing Activities”         2.9.4         “IPOC”                                           12.1.1         “JCC” or “Joint Commercialization Committee”     3.5.1         “JDC” or “Joint Development Committee”           3.3.1         “JFC” or “Joint Finance Committee”               3.6.2         “JMC” or “Joint Manufacturing Committee”         3.4.1         “Joint Other Field-Based Materials”              6.5.2(a)         “Joint Promotional Materials”                    6.5.2(a)         “JSC” or “Joint Steering Committee”              3.2.1         “Licensed Compound Notice”                       2.9.2         “Licensee Party”                                 2.5.1         “Licensor Party”                                 2.5.1         [ * ]                                            [ * ]         “Losses”                                         13.1         “Manufacturing Data”                             7.1.1         “Manufacturing Plan”                             7.1.1         “MCI”                                            5.2.4(d)                                       -28-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

                             Definition:                         Section:         “Merck”                                          Preamble         “Merck Agreements”                               11.5.3         [ * ]                                            [ * ]         “Merck Collaboration Mark”                       12.12.1         “Merck Continuing Combinations”                  14.7.7         “Merck Corporate Mark”                           1.38         “Merck Indemnified Parties”                      13.1         “Merck Licensed Product Combination Other Field- 6.5.3(a)         Based Materials”         “Merck Licensed Product Combination Promotional  6.5.3(a)         Materials”         [ * ]                                            [ * ]         “Merck Proprietary Combination Outside Other Field- 6.5.4(a)         Based Materials”         “Merck Proprietary Combination Outside Promotional 6.5.4(a)         Materials”         “Merck Proprietary Product Program Invention”    1.95         “Milestone Event”                                10.3.1         “Milestone Payment”                              10.3.1         “Next Generation Compound”                       2.9.2         “Next Generation Compound Notice”                2.9.2         [ * ]                                            [ * ]         “Non-Controlling Party”                          12.10.3(a)(i)         “Ongoing Merck Proprietary Combination Trial”    14.7.4         “Other Field-Based Materials Guidelines”         3.3.2(k)         “Other Merck Contributed Know-How”               1.91         “Outstanding Common Stock”                       1.20(a)         “Outstanding Voting Stock”                       1.20(a)         “Patent Listings”                                12.9.1(a)         “Patent Term Extension”                          12.5.1         “Party” or “Parties”                             Preamble         “Payee”                                          10.7.2         “Paying Party”                                   10.7.2         [ * ]                                            [ * ]         “Permitted Commercialization Overage”            6.2.6(b)         “Permitted Development Overage”                  5.2.6(c)         “Personal Data”                                  8.3.1         “Pharmacovigilance Agreement”                    5.5.7(a)         [ * ]                                            [ * ]         [ * ]                                            [ * ]         [ * ]                                            [ * ]         “Pricing Guidelines”                             3.5.2(g)         “Promotion”                                      1.120                                        -29-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

                             Definition:                         Section:         “Promotion Agreement”                            6.6.1(b)         “Promotional Materials Guidelines”               3.5.2(c)         “Proprietary Product Regulatory Documentation”   5.5.5(a)         “Recall”                                         6.8.1(a)         [ * ]                                            [ * ]         “Recalling Party”                                6.8.1(b)         “Recoupment Amount”                              14.7.6(a)(v)         “Regional Commercialization Sub-Plan”            6.2.4         “Regulatory Agreement”                           5.5.8         “Regulatory Plan”                                5.5.2(a)         “Relevant Infringement IP”                       12.10.2(a)(i)         “Relevant Linker Infringement IP”                12.10.2(a)(i)         “Restricted Employee”                            11.6         “Revenue Reconciliation Report”                  10.4.2(d)         “Revenue Report”                                 10.4.2(c)         “Reversion Product”                              14.7.5(e)         “SeaGen”                                         Preamble         “SeaGen Acquiror”                                16.4.2(b)         “SeaGen Agreements”                              11.4.3         [ * ]                                            [ * ]         “SeaGen Combo Patent”                            2.2.3         “SeaGen Continuing Combinations”                 14.7.5(e)         “SeaGen Collaboration Mark”                      12.12.1         “SeaGen Corporate Mark”                          1.38         “SeaGen Disclosure Schedules”                    11.2         “SeaGen Indemnified Parties”                     13.2         “SeaGen Licensed Product Combination Other Field- 6.5.3(b)         Based Materials”         “SeaGen Licensed Product Combination Promotional 6.5.3(b)         Materials”         “SeaGen Linker Product-Specific Know-How”        1.140         “SeaGen Linker Product-Specific Patents”         1.141         [ * ]                                            [ * ]         [ * ]                                            [ * ]         [ * ]                                            [ * ]         “SeaGen Product-Specific Technology”             11.2.3         “SeaGen Proprietary Combination Outside Other    6.5.4(b)          Field-Based Materials”         “SeaGen Proprietary Combination Outside 6.5.4(b)         Promotional Materials”         “SeaGen Proprietary Product Program Invention”   1.142         “Sensitive Information”                          16.4.2(b)(i)         [ * ]                                            [ * ]                                        -30-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

                               Definition:                         Section:          [ * ]                                            [ * ]          [ * ]                                            [ * ]          “Shared Liability Action”                        13.3.1(a)          [ * ]                                            [ * ]          “Soliciting Party”                               11.6          “Tax Partnership”                                15.1          “Term”                                           14.1          [ * ]                                            [ * ]          “Trademark Clearance Party”                      12.12.1          “Transition Lead”                                4.2.3          “Transition Plan”                                4.2.3          [ * ]                                            [ * ]          [ * ]                                            [ * ]          “US Collaboration Territory”                     1.26             ARTICLE 2    OVERVIEW OF COLLABORATION; LICENSE GRANTS          2.1   Overview of Collaboration.  The Parties intend and have agreed to undertake a   collaboration under this Agreement to Develop and Manufacture the Licensed Compounds, and   Develop, Manufacture and Commercialize the Licensed Product, including as a monotherapy as   well as for use in any Combination Therapy, in each case, as more particularly described herein.           2.2   License Grants to Merck.  Subject to the terms and conditions of this Agreement,  the following shall apply:                2.2.1 Grants under SeaGen Technology for use with the Licensed  Compounds and the Licensed Product.  SeaGen shall, and hereby does, grant on behalf of itself   and its Affiliates (and hereby causes its Affiliates to grant) to Merck a Co-Exclusive (with SeaGen  and its Affiliates) right and license, with the right to grant sublicenses through multiple tiers  (subject to Section 2.6), under the SeaGen Technology to research, develop (including Develop),  make (including Manufacture), have made (including have Manufactured), import, use, sell and  offer to sell (including Commercialize) and otherwise exploit the Licensed Compounds and the  Licensed Product, whether as a monotherapy or for use in any Combination Therapy, and any  Companion Diagnostic, in the Field in the Territory in accordance with this Agreement, which  license shall be payment-bearing pursuant to Section 10.4.2 during the Term with respect to the   Licensed Product.  For clarity, the foregoing license grant, with respect to the Licensed Product   for use in a Combination Therapy or Combination Products, as applicable, or any Companion   Diagnostic, only extends to those Combination Therapies and Combination Products and   Companion Diagnostics, in each case, that the Parties have mutually agreed, via the JSC, to   Develop pursuant to a Development Plan.  In particular, the foregoing license grant, with respect   to the Licensed Product for use in a Combination Therapy with any SeaGen Proprietary Product,   is only for use with those SeaGen Proprietary Combinations that the Parties have mutually agreed,   via the JSC, to Develop pursuant to a Development Plan, and, in such case, (a) is limited to the   right for Merck and (subject to Section 2.6) its Affiliates and sublicensees to (i) conduct those                                        -31-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     Development activities for the applicable SeaGen Proprietary Combination that are assigned to   Merck pursuant to a Development Plan, including, as applicable, if Merck is the Lead Regulatory   Party, submitting Regulatory Documentation for a label indication for the Licensed Product for   use in the SeaGen Proprietary Combination, and (ii) Promote and otherwise Commercialize the   Licensed Product for use in the SeaGen Proprietary Combination, in each case ((i) and (ii)), solely   in accordance with this Agreement, and (b) excludes the right for Merck and its Affiliates and   sublicensees to (i) Develop any SeaGen Proprietary Product (other than the Development of the   use of a SeaGen Proprietary Product in the corresponding SeaGen Proprietary Combination in   accordance with the Development Plan and this Agreement), or (ii) Manufacture, Promote or   otherwise Commercialize any SeaGen Proprietary Product (other than the Promotion or other   Commercialization of the Licensed Product for use in the applicable SeaGen Proprietary   Combination in accordance with this Agreement).  In addition, SeaGen shall, and hereby does,   grant on behalf of itself and its Affiliates (and hereby causes its Affiliates to grant) to Merck a   right of reference to any INDs, MAAs, Marketing Authorizations and other Regulatory   Documentation for the Licensed Product that are Controlled by SeaGen or any of its Affiliates,   which right of reference shall be solely for use in connection with Merck and its Affiliates’ and   sublicensees’ Development, Manufacture and Commercialization of the Licensed Product,   including as a monotherapy as well as for use in any Combination Therapy, in the Field for the   Territory in accordance with this Agreement.  At the request of Merck, SeaGen shall provide to   Merck a cross-reference letter or similar communication to the applicable Governmental Authority  to effectuate such right of reference.                 2.2.2 Grant under SeaGen Corporate Marks, SeaGen Collaboration Marks  and SeaGen Proprietary Product Marks for use with the Licensed Product.  SeaGen shall,  and hereby does, grant on behalf of itself and its Affiliates (and hereby causes its Affiliates to  grant) to Merck a fully-paid, royalty-free right and license (which license shall be (x) non- exclusive with respect to the SeaGen Corporate Marks and SeaGen Proprietary Product Marks,  and (y) Co-Exclusive (with SeaGen and its Affiliates) with respect to the SeaGen Collaboration  Marks), with the right to grant sublicenses through multiple tiers (subject to Section 2.6), to use  (a) the SeaGen Corporate Marks, the SeaGen Collaboration Marks and the SeaGen Proprietary  Product Marks in Promotional Materials and Other Field-Based Materials for the Licensed  Product, (b) the SeaGen Collaboration Marks in the packaging and labeling for the Licensed  Product, and (c) any Program Copyright owned by SeaGen or its Affiliate, in each case of (a), (b)  and (c), solely for the purposes of Promoting and otherwise Commercializing the Licensed Product  in the Field in the Territory (including Promoting the Licensed Product for use in any Combination  Therapy or Combination Product, or with any Companion Diagnostic, in each case, that the Parties  have mutually agreed, via the JSC, to Develop pursuant to a Development Plan), in all cases solely  in accordance with this Agreement (provided, however, that notwithstanding the foregoing, (i) the  SeaGen Proprietary Product Marks and (ii) any Program Copyrights for the SeaGen Proprietary  Combinations, may only be used for Promoting and otherwise Commercializing the Licensed  Product solely for use in the applicable SeaGen Proprietary Combination in accordance with this  Agreement and as approved by SeaGen); provided that such rights shall be exercised in accordance  with the Promotional Materials Guidelines and Other Field-Based Materials Guidelines and, with  respect to the SeaGen Corporate Marks and SeaGen Proprietary Product Marks, SeaGen quality  standards and branding guidelines established by SeaGen (which are consistently applied) as  notified by SeaGen to Merck from time to time.  In all cases, SeaGen or its Affiliate shall remain                                        -32-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   the owner of the SeaGen Corporate Marks, SeaGen Collaboration Marks and SeaGen Proprietary  Product Marks (and of all trademark rights therein and all trademark registrations and applications  therefor) and the goodwill pertaining thereto.  Should Merck (or its Related Parties) acquire any  ownership rights in any SeaGen Corporate Mark, SeaGen Collaboration Mark or SeaGen  Proprietary Product Mark, Merck shall (and shall procure that its Related Parties will), and hereby  does, assign any such rights to SeaGen (or its applicable Affiliate), to the extent legally  permissible, and, to the extent not legally permissible, waive such rights.                2.2.3 Grant under SeaGen  Technology for use with Merck Proprietary  Products in a Merck Proprietary Combination.  SeaGen shall, and hereby does, grant on behalf  of itself and its Affiliates (and hereby causes its Affiliates to grant) to Merck a fully-paid, royalty- free, Co-Exclusive (with SeaGen and its Affiliates) right and license, with the right to grant  sublicenses through multiple tiers (subject to Section 2.6), under any SeaGen Patent that claims or  covers the applicable Merck Proprietary Combination (each such SeaGen Patent, a “SeaGen  Combo Patent”) and under any SeaGen Know-How that is necessary or reasonably useful for the  applicable Merck Proprietary Combination, to seek and obtain regulatory approval for, import,  use, sell and offer to sell (including Commercialize) and otherwise exploit the applicable Merck  Proprietary Product for use in the corresponding Merck Proprietary Combination.  In addition,  SeaGen shall, and hereby does, grant on behalf of itself and its Affiliates (and hereby causes its  Affiliates to grant) to Merck a right of reference to any INDs, MAAs, Marketing Authorizations  and other Regulatory Documentation for any Licensed Product that are Controlled by SeaGen or  any of its Affiliates, which right of reference shall be for use in connection with the applicable  Merck Proprietary Product for use in the corresponding Merck Proprietary Combination in the  Field for the Territory.  At the request of Merck, SeaGen shall provide to Merck a cross-reference  letter or similar communication to the applicable Governmental Authority to effectuate such right  of reference.  For clarity, the foregoing license grant and right of reference only extends to those  Merck Proprietary Combinations that the Parties have mutually agreed, via the JSC, to Develop  pursuant to a Development Plan.               2.2.4 Grant under SeaGen Corporate Marks and SeaGen Collaboration  Marks for use with Merck Proprietary Products in a Merck Proprietary Combination.   Subject to Section 6.5.4, SeaGen shall, and hereby does, grant on behalf of itself and its Affiliates  (and hereby causes its Affiliates to grant) to Merck a fully-paid, royalty-free right and license  (which license shall be (x) non-exclusive with respect to the SeaGen Corporate Marks, and (y) Co- Exclusive (with SeaGen and its Affiliates) with respect to the SeaGen Collaboration Marks), with  the right to grant sublicenses through multiple tiers (subject to Section 2.6), to use (a) the SeaGen  Corporate Marks and the SeaGen Collaboration Marks, and (b) any Program Copyright owned by  SeaGen or its Affiliate, in each case of (a) and (b), in Merck Proprietary Combination Outside  Promotional Materials and Merck Proprietary Combination Outside Other Field-Based Materials  for Merck Proprietary Products for the purposes of promoting the Merck Proprietary Products  solely for use in a Merck Proprietary Combination in the Field in the Territory; provided that such  rights shall be exercised in accordance with the quality standards and branding guidelines  established by SeaGen (which are consistently applied) as notified by SeaGen to Merck from time  to time.  In all cases, SeaGen or its Affiliate shall remain the owner of the SeaGen Corporate Marks  and SeaGen Collaboration Marks (and of all trademark rights therein and all trademark  registrations and applications therefor) and the goodwill pertaining thereto.  Should Merck (or its                                       -33-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

     Related Parties) acquire any ownership rights in any SeaGen Corporate Mark or SeaGen   Collaboration Mark, Merck shall (and shall procure that its Related Parties will), and hereby does,   assign any such rights to SeaGen (or its applicable Affiliate), to the extent legally permissible, and,   to the extent not legally permissible, waive such rights.          2.3   License Grants to SeaGen.  Subject to the terms and conditions of this Agreement,  the following shall apply:                2.3.1 Grants under Merck Technology for use with the Licensed Compounds  and the Licensed Product.  Merck shall, and hereby does, grant on behalf of itself and its  Affiliates (and hereby causes its Affiliates to grant) to SeaGen a Co-Exclusive (with Merck and its  Affiliates) right and license, with the right to grant sublicenses through multiple tiers (subject to  Section 2.6), under the Merck Technology to research, develop (including Develop), make  (including Manufacture), have made (including have Manufactured), import, use, sell and offer to  sell (including Commercialize) and otherwise exploit the Licensed Compounds and the Licensed  Product, whether as a monotherapy or for use in any Combination Therapy, and any Companion  Diagnostic, in the Field in the Territory in accordance with this Agreement, which license shall be  payment-bearing pursuant to Section 10.4.2 during the Term with respect to the Licensed Product.   For clarity, the foregoing license grant, with respect to the Licensed Product for use in a  Combination Therapy or Combination Products, as applicable, or any Companion Diagnostic, only  extends to those Combination Therapies and Combination Products and Companion Diagnostics,  in each case, that the Parties have mutually agreed, via the JSC, to Develop pursuant to a  Development Plan.  In particular, the foregoing license grant, with respect to the Licensed Product  for use in a Combination Therapy with any Merck Proprietary Product, is only for use with those  Merck Proprietary Combinations that the Parties have mutually agreed, via the JSC, to Develop  pursuant to a Development Plan, and, in such case, (a) is limited to the right for SeaGen and  (subject to Section 2.6) its Affiliates and sublicensees to (i) conduct those Development activities  for the applicable Merck Proprietary Combination that are assigned to SeaGen pursuant to a  Development Plan, including, as applicable, if SeaGen is the Lead Regulatory Party, submitting  Regulatory Documentation for a label indication for the Licensed Product for use in the Merck  Proprietary Combination, and (ii) Promote and otherwise Commercialize the Licensed Product for  use in the Merck Proprietary Combination, in each case ((i) and (ii)), solely in accordance with  this Agreement, and (b) excludes the right for SeaGen and its Affiliates and sublicensees to (i)  Develop any Merck Proprietary Product (other than the Development of the use of a Merck  Proprietary Product in the corresponding Merck Proprietary Combination in accordance with the  Development Plan and this Agreement), or (ii) Manufacture, Promote or otherwise Commercialize  any Merck Proprietary Product (other than the Promotion or other Commercialization of the  Licensed Product for use in the applicable Merck Proprietary Combination in accordance with this  Agreement).  In addition, Merck shall, and hereby does, grant on behalf of itself and its Affiliates  (and hereby causes its Affiliates to grant) to SeaGen a right of reference to any INDs, MAAs,  Marketing Authorizations and other Regulatory Documentation for the Licensed Product that are  Controlled by Merck or any of its Affiliates, which right of reference shall be solely for use in  connection with SeaGen and its Affiliates’ and sublicensees’ Development, Manufacture and  Commercialization of the Licensed Product, including as a monotherapy as well as for use in any  Combination Therapy, in the Field for the Territory in accordance with this Agreement.  At the                                         -34-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     request of SeaGen, Merck shall provide to SeaGen a cross-reference letter or similar  communication to the applicable Governmental Authority to effectuate such right of reference.                  2.3.2 Grant under Merck Corporate Marks, Merck Collaboration Marks   and Merck Proprietary Product Marks for use with the Licensed Product.  Merck shall, and   hereby does, grant on behalf of itself and its Affiliates (and hereby causes its Affiliates to grant)   to SeaGen a fully-paid, royalty-free right and license (which license shall be (x) non-exclusive   with respect to the Merck Corporate Marks and Merck Proprietary Product Marks, and (y) Co-  Exclusive (with Merck and its Affiliates) with respect to the Merck Collaboration Marks), with   the right to grant sublicenses through multiple tiers (subject to Section 2.6), to use (a) the Merck   Corporate Marks, the Merck Collaboration Marks and the Merck Proprietary Product Marks in   Promotional Materials and Other Field-Based Materials for the Licensed Product, (b) the Merck   Collaboration Marks in the packaging and labeling for the Licensed Product, and (c) any Program   Copyright owned by Merck or its Affiliate, in each case of (a), (b) and (c), solely for the purposes   of Promoting and otherwise Commercializing the Licensed Product in the Field in the Territory   (including Promoting the Licensed Product for use in any Combination Therapy or Combination   Product, or with any Companion Diagnostic, in each case, that the Parties have mutually agreed,   via the JSC, to Develop pursuant to a Development Plan), in all cases solely in accordance with   this Agreement (provided, however, that notwithstanding the foregoing, (i) the Merck Proprietary   Product Marks and (ii) any Program Copyrights for the Merck Proprietary Combinations, may   only be used for Promoting and otherwise Commercializing the Licensed Product solely for use in   the applicable Merck Proprietary Combination in accordance with this Agreement and as approved   by Merck); provided that such rights shall be exercised in accordance with the Promotional   Materials Guidelines and Other Field-Based Materials Guidelines and, with respect to the Merck   Corporate Marks and Merck Proprietary Product Marks, Merck quality standards and branding   guidelines established by Merck (which are consistently applied) as notified by Merck to SeaGen   from time to time.  In all cases, Merck or its Affiliate shall remain the owner of the Merck   Corporate Marks, Merck Collaboration Marks and Merck Proprietary Product Marks (and of all   trademark rights therein and all trademark registrations and applications therefor) and the goodwill   pertaining thereto.  Should SeaGen (or its Related Parties) acquire any ownership rights in any   Merck Corporate Mark, Merck Collaboration Mark or Merck Proprietary Product Mark, SeaGen   shall (and shall procure that its Related Parties will), and hereby does, assign any such rights to   Merck (or its applicable Affiliate), to the extent legally permissible, and, to the extent not legally   permissible, waive such rights.           2.4   No Implied Licenses; Retained Rights.                2.4.1 Except as expressly provided herein, nothing in this Agreement grants   either Party or vests in either Party any right, title or interest in or to the Know-How, Patent Rights,   Confidential Information, Trademarks or other intellectual property of the other Party (either   expressly or by implication or estoppel), other than the licenses and rights expressly granted   hereunder and the assignments expressly made hereunder.                2.4.2 SeaGen hereby expressly retains (on behalf of itself and its Affiliates) the   right, title and interest in and to the SeaGen Technology to (i) conduct its and their Development,   Manufacturing and Commercialization activities for the Licensed Compounds and the Licensed                                         -35-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     Product as are allocated to SeaGen under the applicable Development Plan, Manufacturing Plan   and Commercialization Plan, in accordance with this Agreement, and (ii) practice such SeaGen   Technology outside the scope of the license grant in Section 2.2.1 for products other than Licensed   Compounds and Licensed Products (subject to the terms and conditions of this Agreement,   including Section 2.9).  Merck hereby expressly retains (on behalf of itself and its Affiliates) the   right, title and interest in and to the Merck Technology to (i) conduct its and their Development,   Manufacturing and Commercialization activities for the Licensed Compounds and the Licensed   Product as are allocated to Merck under the applicable Development Plan, Manufacturing Plan   and Commercialization Plan, in accordance with this Agreement, and (ii) practice such Merck   Technology outside the scope of the license grant in Section 2.3.1 for products other than Licensed   Compounds and Licensed Products (subject to the terms and conditions of this Agreement,   including Section 2.9).         2.5    Third Party In-License Agreements.                  2.5.1 Generally.  The licenses granted under Sections 2.2 and 2.3 may include  certain rights licensed by a Third Party to the license-granting party (or its Affiliate) (the “Licensor  Party”) under Third Party In-License Agreements.  Any sublicense of Third Party intellectual  property rights granted by the Licensor Party pursuant to Sections 2.2 and 2.3 to the other Party  (the “Licensee Party”) shall be subject to the terms and conditions of the Third Party In-License  Agreement applicable to sublicensees under which such sublicense is granted, subject to Section  2.5.2.                 2.5.2 New Third Party In-License Agreements After Effective Date.  During  the Term, without the approval of the JSC, neither Party nor any of its Affiliates may enter into  any Third Party In-License Agreement with respect to any intellectual property rights that will be  used for the Development, Commercialization or Manufacture of the Licensed Compounds or the  Licensed Product hereunder; provided that, for clarity, the foregoing shall not apply to a Party with  respect to intellectual property related to any of its Proprietary Products for use in a Proprietary  Combination to the extent that all costs and expenses under any such license agreement are borne  by such Party.  For the avoidance of doubt, any license or other similar agreement between a Party  (or its Affiliate) and a Third Party pursuant to which such Party (or its Affiliates) obtains a license  or similar right in any Know-How or Patent Right that was entered into in violation of the  provisions of this Section 2.5.2 shall not be a “Third Party In-License Agreement” for purposes of  this Agreement, unless the other Party approves in writing the inclusion of such license or other  similar agreement as a “Third Party In-License Agreement”, in such other Party’s discretion.               2.5.3 Third Party In-License Agreements as of the Effective Date.  As of the  Effective Date, the SeaGen Existing In-Licenses are the only Third Party In-License Agreements.   No amounts paid or payable by either Party under any other license or other similar agreement  between a Party (or its Affiliate) and a Third Party, in existence as of the Effective Date, pursuant  to which such Party (or its Affiliates) has obtained a license or similar right in any Know-How or  Patent Right shall be deemed to be a “Third Party Payment” for purposes of this Agreement, unless  the other Party approves in writing the inclusion of such license or other similar agreement as a  “Third Party In-License Agreement”, in such other Party’s discretion, in which case (a) such  license or similar agreement shall thereafter be a “Third Party In-License Agreement” hereunder                                         -36-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     and (b) the applicable payments pursuant to such Third Party In-License Agreement made   thereafter shall be included hereunder as “Third Party Payments” (to the extent such payments   otherwise fall within the definition of “Third Party Payments”).          2.6   Sublicense Rights by Licensee; Further Grants of Licenses by Licensor.                  2.6.1 Sublicenses by Licensee.  Each Party may grant sublicenses (through   multiple tiers) of the license to it under Section 2.2 or 2.3 to any Affiliates and Third Parties;   provided, however, that (a) each such sublicense is consistent with the applicable terms of this   Agreement, (b) each such sublicense terminates upon the termination (but not upon expiration) of   this Agreement (except to the extent that the license under which such sublicense was granted   survives such termination), and (c) with respect to any sublicenses to a Third Party, a sublicense   to a Third Party to (i) Develop the Licensed Compounds or the Licensed Product must be approved   by the JSC (or otherwise expressly set forth in the Development Plan), (ii) Manufacture the   Licensed Compounds or the Licensed Product must be approved by the JSC (or otherwise   expressly set forth in the Manufacturing Plan) or (iii) Commercialize the Licensed Product in any   of the Collaboration Territory, China, Brazil or Japan (or any country or region in any of the   foregoing) must be approved by the JSC (or otherwise expressly set forth in the Commercialization   Plan), in each case of this clause (c), prior to entering into any such license agreement with a Third   Party; provided, however, that no such consent shall be required pursuant to this clause (c) for any   sublicense, in whole or in part, to a Third Party contractor (e.g., a contract research organization   or a contract manufacturer) to carry out activities hereunder on behalf of the applicable Party in   accordance with this Agreement (including, in all cases, Section 2.7).  In no event shall any   sublicense granted pursuant to Section 2.2 or 2.3 diminish, reduce or eliminate any of the   obligations of the sublicensing Party under this Agreement.  Any sublicense granted pursuant to   Section 2.2 or 2.3 shall be subject to, and consistent with, the applicable terms and conditions of   this Agreement and shall require each sublicensee to comply with all applicable terms and   conditions of this Agreement (including, for clarity, Section 12.3).  Notwithstanding the foregoing,   the applicable Party may grant sublicenses (through multiple tiers) of the license to it under Section   2.2.3 and 2.2.4 to any Affiliates or Third Parties without consent or approval of the other Party to   the extent that the applicable sublicensee obtains rights or licenses to such Party’s Proprietary   Product, as applicable, and solely in connection with such Party’s Proprietary Product for use in   the applicable Proprietary Combination.                  2.6.2 Further License Grants by Licensor to Co-Exclusive IP.  Subject to the  terms and conditions of this Agreement, with respect to any Co-Exclusive licenses granted by a  Party to the other Party pursuant to Section 2.2 or 2.3, as applicable, the Party that is the license  grantor party shall have the same rights to grant additional licenses under such Co-Exclusively  licensed intellectual property (within the scope of the license grants to the licensee Party) as the  licensee party would have to grant sublicenses of such intellectual property in accordance with  Section 2.6.1, mutatis mutandis (i.e., the license grantor Party may only grant such further licenses  to the extent permitted under and in compliance with Section 2.6.1 as if such license grantor Party  were the licensee granting a sublicense).  For clarity, subject to the terms and conditions of this  Agreement (including Section 2.9), the grant of a Co-Exclusive license to the other Party as set  forth herein shall not restrict the license grantor Party from exploiting such Co-Exclusively                                         -37-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     licensed intellectual property, including by granting licenses, outside the scope of the license grants   to the licensee Party.          2.7   Use of Subcontractors.  Each Party shall have the right to engage Third Party  subcontractors to perform its rights and obligations hereunder with respect to the Licensed  Compounds and the Licensed Product hereunder (provided that such engagement is consistent with   the Development Plan, Manufacturing Plan, Commercialization Plan, and the applicable Merck   Supply Agreement or SeaGen Supply Agreement, as applicable); provided that (a) neither Party   shall have the right to use a contract sales force to Promote the Licensed Product in the   Collaboration Territory, unless specifically set forth in the Commercialization Plan, (b) neither   Party shall have the right to use a Distributor to distribute or sell the Licensed Product unless   (i) approved by the JSC, (ii) specifically set forth in the Commercialization Plan or (iii) for a   country set forth on Schedule 2.7, (c) neither Party shall have the right to use a Third Party contract   manufacturer to Manufacture any Licensed Compound or the Licensed Product unless specifically   set forth in the Manufacturing Plan (or, in the case of SeaGen, is an existing contract manufacturer   engaged by SeaGen pursuant to a SeaGen Existing CMO Agreement to Manufacture any Licensed   Compound or the Licensed Product (or any component thereof) as of the Effective Date, but   subject to 7.7) and (d) neither Party shall have the right to use a contract research organization to   perform any material activities with respect to the Development of a Licensed Compound or the   Licensed Product unless specifically set forth in the Development Plan.  Subject to Section 13.3.3,  in no event shall any subcontracting hereunder diminish, reduce or eliminate any of the obligations  of the subcontracting Party hereunder, and any such subcontracting shall be subject and to and  consistent with, the applicable terms and conditions of this Agreement and shall require each such  subcontractor to comply with all applicable terms and conditions of this Agreement (including, for   clarity, Section 12.3).  Subject to Section 13.3.3, any act or omission of a Party’s Third Party   subcontractor in the performance of activities hereunder shall constitute the act or omission of such   Party for purposes of this Agreement.            2.8   No Outside Development, Manufacture or Commercialization of Licensed   Compounds and the Licensed Product.                  2.8.1 Notwithstanding anything to the contrary contained herein, but subject to   Sections 2.8.2 and 2.9.2, unless and until this Agreement expires or is terminated, during the Term,  neither Merck nor SeaGen shall, and each of Merck and SeaGen shall cause their respective  Affiliates not to, directly or indirectly, by itself or with or through any Third Party, Develop,  Manufacture or Commercialize any Licensed Compound or the Licensed Product, including as a  monotherapy or for use in any combination (including concomitant or sequential therapy) with   other products, or grant a Third Party any rights to do so, except as permitted under, and in   accordance with, this Agreement and the Development Plan, Manufacturing Plan, and   Commercialization Plan, as applicable.                  2.8.2 Subject to Section 2.4.1, Section 2.9 (with respect to Competing Products),   and Article 9, as applicable:  (a) nothing contained herein shall prohibit or otherwise restrict in any   way a Party or its Affiliates, itself or with or through any Third Parties, from researching,   developing, using, importing, exporting, making, having made, offering to sell or selling any of its   Proprietary Products, and (b) nothing herein shall grant a Party (or any of its Affiliates) any right                                         -38-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     to research, develop, use, import, export, make, have made, offer to sell or sell the other Party’s   Proprietary Products or to determine any prices or reimbursements or to share in any revenues with   respect thereto, and (c) each Party and its Affiliates retain all rights to develop (including seeking   regulatory approval for) and commercialize (including determining pricing and reimbursement  for) its Proprietary Products, and nothing contained herein shall limit a Party’s and its Affiliate’s  rights to develop (including seeking regulatory approval for) or commercialize (itself or with or   through any Third Parties) any of its Proprietary Products anywhere in the Territory; provided that,   in each case ((a), (b) and (c)), the Development, Manufacture and Commercialization of the   Licensed Product for use in any combination (including concomitant or sequential use) with any   Proprietary Product, including in any Proprietary Combination, shall be subject to the provisions   of this Agreement.  In addition, subject to Section 2.4.1, Section 2.9 (with respect to Competing   Products), and Article 9, nothing contained herein shall prohibit or otherwise restrict in any way   SeaGen or its Affiliates, itself or with or through any Third Parties, from researching, developing,   using, importing, exporting, making, having made, offering to sell or selling any payload or linker   component of any Licensed Compound or the Licensed Product, in each case, alone or as   components in other products but excluding the use thereof in any Licensed Compound, Licensed   Product or Competing Product.            2.9   Exclusivity.                2.9.1 Exclusivity.  During the Term, neither Party (nor any of its Affiliates) will   (and such Party will ensure that its Affiliates do not) [ * ].  Notwithstanding the foregoing, the   provisions of this Section 2.9.1 will not apply to, and a Party and its Affiliates will not be prohibited   under this Section 2.9.1 from, (i) clinically developing, selling or otherwise commercializing the   Licensed Compounds and the Licensed Product in accordance with this Agreement (including the   Development Plan, Manufacturing Plan and Commercialization Plan, as applicable), (ii) granting   rights to Third Party sublicensees and subcontractors to clinically develop, sell or otherwise   commercialize the Licensed Compounds and the Licensed Product in accordance with this   Agreement (including Sections 2.6 and 2.7), (iii) with respect to Merck (and its Affiliates), from   and after the [ * ] year anniversary of the Effective Date, carrying out activities (alone or with any  Third Party) to [ * ], and (iv) without limiting the foregoing clause (iii), with respect to Merck (and  its Affiliates), from and after the [ * ] year anniversary of the Effective Date, carrying out activities  (alone or with any Third Party) to [ * ].                    2.9.2 SeaGen Pre-Clinical Research of Competing Products.    Notwithstanding Section 2.9.1, and subject to Section 2.9.3 and Section 5.2.4(a), SeaGen and its  Affiliates (itself, but not with or through any Third Party) may conduct, at its cost, pre-clinical  development (prior to GLP Tox Studies) of a Competing Product (including SGN-LIV-1-B and  SGN-LIV-1-C)  for purposes of identifying alternative or “next generation” compounds to  potentially be included as a Licensed Compound under this Agreement (each such Competing  Product, a “Next Generation Compound”), subject to the remainder of this Section 2.9.2.   SeaGen shall use Commercially Reasonable Efforts to pre-clinically develop (prior to GLP Tox  Studies) each of SGN-LIV-1-B and SGN-LIV-1-C.  SeaGen shall update the JSC by providing a  summary overview of such activities for each Next Generation Compound on a quarterly basis  (and any other reasonable information requested by the JSC with respect thereto) and shall  consider in good faith any comments of Merck with respect to such activities.  SeaGen shall notify                                        -39-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     Merck in writing of any Next Generation Compound that SeaGen or its Affiliate pre-clinically  develops (and in all cases, prior to initiating any GLP Tox Study for such Next Generation  Compound) that it reasonably believes is suitable for further Development in GLP Tox Studies,   such notice including all data generated from the pre-clinical development, including all data   supporting or establishing SeaGen’s belief that the Next Generation Compound is suitable for   further Development in GLP Tox Studies (each, a “Next Generation Compound Notice”).    Merck shall have [ * ] days from receipt of the Next Generation Compound Notice to notify   SeaGen in writing if Merck desires to include such Next Generation Compound Candidate as a   “Licensed Compound” under this Agreement (“Licensed Compound Notice”). During such [ * ]   day period, SeaGen shall use reasonable efforts to answer Merck’s questions with respect to such   Next Generation Compound, including, if applicable, providing additional information necessary   or reasonably useful for Merck to decide whether to include such Next Generation Compound   hereunder as a “Licensed Compound”.  If Merck timely provides SeaGen with a Licensed   Compound Notice, then the Next Generation Compound that is the subject of such Licensed   Compound Notice shall be included as a “Licensed Compound” hereunder as of the date of such   notice.  Notwithstanding the foregoing, with respect to SGN-LIV-1-C, if Merck does not issue a   Licensed Compound Notice within [ * ] days from receipt of the Next Generation Compound   Notice for SGN-LIV-1-C, but the Next Generation Compound Notice for SGN-LIV-1-C includes   sufficient data (as determined by the JSC) showing that SGN-LIV-1-C has met the “Criteria for   Go to GLP Tox Studies” set forth in part 1 of Schedule 2.9.2, then unless the Parties mutually   agree otherwise, Merck shall be deemed to have issued a Licensed Compound Notice for SGN- LIV-1-C, and SGN-LIV-1-C shall be included as a “Licensed Compound” hereunder, as of the  date of expiration of such [ * ] day period.  For clarity, in all cases, SeaGen and its Affiliates (itself  or with or through any Third Party) shall have no right to, and shall not, conduct any GLP Tox  Studies or any clinical development or commercialization of any Next Generation Compound  unless and until Merck provides a Licensed Compound Notice with respect to the applicable Next  Generation Compound, and in such case, such GLP Tox Studies and any further Development and  Commercialization thereof shall be conducted under and in accordance with this Agreement,  including the applicable Development Plan and Commercialization Plan.                  2.9.3 Acquired Competing Products.  If after the Effective Date, (i) a Party (or   any of its Affiliates) acquires any Third Party (or business or assets of a Third Party) (by merger,   purchase of assets, stock acquisition or otherwise) and, as a result of such transaction, obtains   rights (via ownership or otherwise) to a Competing Product, or (ii) a Party is acquired by a Third   Party (by merger, purchase of assets, stock acquisition or otherwise, including as a result of a   Change of Control with a Person who (itself or any of its affiliates) owns or controls a Competing  Product) that owns or controls a Competing Product immediately prior to such transaction, and, as  a result of such transaction under the preceding sub-clause (i) or (ii), such Party (or any of its  Affiliates) (the “Acquiring Competing Product Party”) would be in breach of the provisions of  Section 2.9.1 (such Competing Product, an “Acquired Competing Product”), then such  Acquiring Competing Product Party (and its Affiliates) will not be deemed to be in breach of  Section 2.9.1 so long as such Acquiring Competing Product Party (and its Affiliates, as applicable)  no later than [ * ] months following such transaction, undertakes at least one of the following:                       (a)   sells, transfers and assigns to a Third Party all of the Acquiring  Competing Product Party’s (and its Affiliates’) rights to such Acquired Competing Product                                        -40-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     (provided that, for the avoidance of doubt, the Acquiring Competing Product Party may continue   to retain an economic interest therein (e.g., upfront payments, milestone payments, royalties, etc.));                       (b)   ceases and terminates the activities with respect to the Acquired   Competing Product during the Term which are in breach of the provisions of Section 2.9.1;                      (c)   within [ * ] months following the consummation of the applicable   acquisition transaction, offers in writing to the other Party to include such Acquired Competing   Product as a “Licensed Compound” under this Agreement (on financial terms to be discussed, in   addition to the sharing of future Allowable Development Costs, Allowable Commercialization   Costs and Allowable Joint IP Costs, as set forth herein, if such Acquired Competing Product is   included as a Licensed Compound hereunder), in which case such other Party shall have [ * ] days   following receipt of such written offer to notify the Acquiring Competing Product Party in writing   if it desires to so include such Acquired Competing Product, and if such other Party so notifies the   Acquiring Competing Product Party in writing that such Acquired Competing Product should be  included as a “Licensed Compound” hereunder, then the Acquired Competing Product will  thereafter automatically be a “Licensed Compound” for purposes of this Agreement, and the  Parties shall enter into an amendment to this Agreement to so include such Acquired Competing  Product as a “Licensed Compound” hereunder; provided that if such other Party does not so notify  the Acquiring Competing Product Party that the Acquired Competing Product should be included  under this Agreement within such time period, then the Acquired Competing Product Party shall  complete a different applicable alternative under this clause 2.9.3 with respect to such Acquired  Competing Product no later than [ * ] months following the consummation of the applicable  acquisition transaction; or                     (d)   solely with respect to Merck as the Acquiring Competing Product  Party, Merck provides notice of termination of this Agreement in accordance with Section 14.2 at  least [ * ] months prior to expiration of such [ * ]-month period.               2.9.4 Interim Activities for Acquired Competing Products.  For clarity, the  Acquiring Competing Product Party will not be in breach of its obligations under Section 2.9.1   with respect to an Acquired Competing Product as long as the Acquiring Competing Product Party   complies with the provisions of Section 2.9.3; provided that, during the [ * ] month period during   which the Acquiring Competing Product Party is permitted to undertake the alternatives set forth   in Section 2.9.3, the Acquiring Competing Product Party shall be permitted to continue to conduct   the development, manufacturing and commercialization of the Acquired Competing Product (the   “Interim Permitted Competing Activities”) so long as (a) such Interim Permitted Competing   Activities will be conducted separately from any activities conducted under this Agreement,   including the maintenance of separate lab notebooks and records; (b) no personnel or contractors   of the Acquiring Competing Product Party or any of its Affiliates who have conducted activities   pursuant to this Agreement shall be involved in any Interim Permitted Competing Activities; (c)   the Acquiring Competing Product Party shall establish reasonable firewall protections and   safeguards (that are reasonably acceptable to the other Party) designed to ensure that the Interim   Permitted Competing Activities are segregated from the activities conducted hereunder; (d) the   Acquiring Competing Product Party shall not use (or permit to be used) in the conduct of any   Interim Permitted Competing Activities any Confidential Information of the other Party,                                         -41-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     Development Data or Program Know-How, and the Acquiring Competing Product Party shall   ensure that none of the foregoing are provided to or otherwise disclosed to any Person that is   involved in the conduct of any Interim Permitted Competing Activities; and (e) the conduct of the   Interim Permitted Competing Activities do not delay or otherwise inhibit the conduct of the   Acquiring Competing Product Party’s obligations hereunder or the conduct of activities under any   Development Plan, Manufacturing Plan or Commercialization Plan.                2.9.5 Combination Therapies.                        (a)   [ * ]. For clarity, during the Term, [ * ] shall be [ * ]                        (b)   [ * ].  Notwithstanding anything to the contrary (including Section   5.2.4(b)) hereunder, but subject to Section 3.2.4(b)(vi), after the [ * ] anniversary of the Effective   Date, if SeaGen proposes a Clinical Trial for use of the Licensed Product in combination (including   concomitant or sequential therapy) with a [ * ] (alone or in further combination with one or more   other products approved for the applicable tumor type) for consideration by the JSC under Section   5.2.4(b), and such Clinical Trial for such combination is not approved to be included in the   Development Plan by Merck through the JSC within [ * ] days following SeaGen’s request, then   SeaGen (or its Affiliates) may carry out such Clinical Trial (alone or with any Third Party) for the   Licensed Product for use in combination (including concomitant or sequential therapy) with such   [ * ] (such Clinical Trial, a [ * ] and such combination therapy, a [ * ]), provided that (i) SeaGen   (and its Affiliates), as applicable, [ * ] and (ii) SeaGen (and its Affiliates) [ * ].  Notwithstanding  anything to the contrary hereunder, Section [ * ] shall apply[ * ].  For purposes of [ * ].                             ARTICLE 3   GOVERNANCE         3.1   Committees.  The Parties shall establish a Joint Steering Committee and  appropriate Subcommittees to oversee the Development, Manufacture and Commercialization of  Licensed Compounds and the Licensed Product, as more particularly described in this Article 3.   Notwithstanding the foregoing, with respect to the Licensed Compounds and the Licensed Product,  and the Development, Manufacturing and Commercialization thereof, each Party shall retain the  rights, powers and discretion granted to it under this Agreement and the Ancillary Agreements and  no such rights, powers or discretion shall be delegated to or vested in the JSC or any Subcommittee  unless such delegation or vesting of rights is expressly provided for in this Agreement or the  Ancillary Agreements or the Parties expressly so agree in writing.  Notwithstanding anything to  the contrary in this Agreement, in no circumstances shall the JSC (including pursuant to Section  3.2.4(b)) or any Subcommittee have any power to amend, modify or waive compliance with this  Agreement or any Ancillary Agreements.  The Parties hereby agree and acknowledge that, for  purposes of efficiency, if agreed to by the Parties, one or more (or all) of each Party’s  representatives appointed to the JSC (or any of the other Subcommittees) hereunder may also be  appointed by such Party to any committee under any other collaboration agreement(s) between the  Parties (or their respective Affiliates), and, in such case, meetings of such committees shall be  coordinated to discuss the applicable issues under the various collaboration agreement(s).         3.2   Joint Steering Committee.                                           -42-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

                 3.2.1 Formation.  Within [ * ] days after the Effective Date, the Parties shall   establish a Joint Steering Committee (the “JSC” or “Joint Steering Committee”) to oversee,  review, manage and coordinate the Development, Manufacture and Commercialization of  Licensed Compounds and the Licensed Product and to facilitate communications between the  Parties in connection therewith.                 3.2.2 Composition of the Joint Steering Committee.  The Joint Steering  Committee shall be composed of [ * ] employees of Merck or its Affiliates as representatives of   Merck and [ * ] employees of SeaGen or its Affiliates as representatives of SeaGen.  Each Party   may change one or more of its representatives to the JSC from time to time in its sole discretion,   effective upon notice to the other Party of such change.  Within [ * ] days after the Effective Date,   the Parties shall each appoint their initial [ * ] representatives to the JSC.  Each Party’s   representatives shall have appropriate technical credentials, experience and knowledge for their   specific role within the JSC, and ongoing familiarity with the Licensed Compounds and the   Licensed Product and shall be duly authorized under their respective company’s internal   governance procedures to make the decisions or carry out the activities given to them under this   Agreement.  If agreed by the JSC, the JSC may invite non-members to participate in the discussions   and meetings of the JSC; provided that such participants are under obligations of confidentiality   consistent with this Agreement and shall have no voting authority at the JSC. The JSC shall be co-  chaired by representatives of each Party.  The role of the co-chairpersons shall be to convene and   preside in person or telephonically at meetings of the JSC, to prepare and circulate agendas and to   ensure the preparation of minutes (all such responsibilities to alternate between each Party’s co-  chairperson on an annual basis), but the co-chairpersons shall have no additional powers or rights   beyond those held by the other JSC representatives.                3.2.3 Specific Responsibilities of the JSC.  With respect to Licensed   Compounds and the Licensed Product, in addition to its general responsibilities to oversee, review,   manage and coordinate the Development, Manufacture and Commercialization of Licensed   Compounds and the Licensed Product, the JSC shall, subject to the terms of this Agreement, in   particular:                      (a)   oversee the collaborative activities of the Parties under this   Agreement for the Licensed Compounds and the Licensed Product, including to coordinate the   overall strategy for the Development, Manufacture and Commercialization of Licensed   Compounds and the Licensed Product in the Field in the Territory, including to address any matters   that would otherwise be under the purview of a given Subcommittee prior to the establishment of   such Subcommittee;                        (b)   facilitate the transition of any applicable Development,   Manufacturing and Commercialization activities for Licensed Compounds and the Licensed   Product between the Parties;                      (c)   review the progress of each Development Plan, Manufacturing Plan   and Commercialization Plan;                      (d)   discuss reports from the Subcommittees and provide guidance   thereto;                                         -43-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

                       (e)   review, discuss and approve (i) any amendments to the   Development Plan (including the Development Budget), including the Regulatory Plan contained   therein (and also including, for clarity, any matter requiring the approval of the JSC under Section   5.2.4), (ii) the initial Commercialization Plan (including the Commercialization Budget) and any   amendments thereto, and (iii) the initial Manufacturing Plan (including the Manufacturing Data)   and any amendments thereto;                       (f)   review, discuss and approve any Regional Commercialization Sub- Plans and any amendments thereto (provided that the approval of Regional Commercialization  Sub-Plans for the SeaGen Territory and the Merck Territory shall be limited to approval for  consistency with the applicable approved Commercialization Plan (but allowing for differences in  regional and local factors to be addressed) and the Commercialization Budget);                       (g)   review, discuss and approve the Commercialization Guidelines and  any amendments thereto for the Licensed Product;                       (h)   review, discuss and approve [ * ] following the receipt of Marketing  Authorization, [ * ], for such country;                      (i)   discuss and determine, consistent with Section 4.1.1, which Party  shall be the Lead Study Party for a given Clinical Trial of the Licensed Product (and, for clarity, a  Party may be the Lead Study Party for a given Clinical Trial notwithstanding the use of resources,  assistance or services of Third Parties (as permitted in accordance with this Agreement) or the  other Party in connection with such Clinical Trial);                      (j)   discuss and determine (i) [ * ];                     (k)   discuss and determine whether to put in place a second source  supply (including by a Third Party or by a Party) for the Licensed Compound and for the Licensed  Product in accordance with Section 7.4.4;                     (l)   approve the licensing of any intellectual property from a Third Party  in order to gain rights to use such Third Party’s intellectual property in the Development,  Manufacture or Commercialization of a Licensed Compound or Licensed Product under this  Agreement in accordance with Section 2.5.2;                      (m)   approve the grant of sublicenses with respect to the Development,  Manufacture and Commercialization of the Licensed Product as set forth in Section 2.6;                     (n)   discuss and agree on any patient assistance program (or the like) for  the Licensed Product for the Territory;                      (o)   establish such additional Subcommittees with respect to Licensed  Compounds and the Licensed Product as it deems necessary to achieve the objectives and intent  of this Agreement (including, if determined by the JSC, (x) separate Subcommittees for separate  therapeutic areas (e.g., separate JDCs, JCCs and JMCs per therapeutic area), (y) separate regional  commercial Subcommittees for the Commercialization of the Licensed Product in different                                        -44-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     regions, and (z) separate Subcommittees with respect to a Companion Diagnostic for use in   connection with the Licensed Product), and to determine if any Subcommittee should be  disbanded;                      (p)   attempt to resolve issues presented to it by, and disputes within, any  Subcommittee; and                      (q)   perform such other functions with respect to Licensed Compounds  and the Licensed Product designated to the JSC as expressly set forth herein or as the Parties may  mutually agree in writing, except where in conflict with any provision of this Agreement.                  3.2.4 Decision Making.                        (a)   Decision Making; Escalation.  The JSC shall act by unanimous   consent.  The representatives from each Party will have, collectively, one (1) vote on behalf of that   Party.  In the event that the JSC cannot or does not, after good faith, reasonable efforts, reach   agreement on any issue within the purview of the JSC (and, for clarity, any matter that is within   the purview of any Subcommittee shall also be deemed to be within the purview of the JSC) within   [ * ] Business Days after the JSC first considers such issue, either Party (through the Alliance   Managers) may elect to formally submit such issue to the Parties’ applicable Senior Executives for   resolution (and, for the avoidance of doubt, references in this Agreement to decisions or approvals   by the JSC or a Subcommittee shall include such decision or approval mutually made by the Senior   Executives pursuant to this Section 3.2.4(a), to the extent applicable).  In the event that the Senior   Executives are unable to resolve a given issue referred to the Senior Executives in accordance with   this Section 3.2.4(a) within [ * ] Business Days after the dispute is formally submitted to the Senior   Executives for resolution, then either Party (through the Alliance Managers) may elect to formally   submit such issue to the Parties’ respective [ * ] for resolution (and, for the avoidance of doubt,   references in this Agreement to decisions or approvals by the JSC or a Subcommittee shall include   such decision or approval mutually made by such [ * ] pursuant to this Section 3.2.4(a), to the   extent applicable).                       (b)   Final Resolution.  In the event that the Parties’ respective [ * ] are   unable to resolve a given issue referred to the [ * ] in accordance with Section 3.2.4(a) within [ *   ] Business Days after the dispute is formally submitted to the [ * ] for resolution, then the resolution  or course of conduct shall be determined as follows (and, for the avoidance of doubt, references in  this Agreement to decisions or approvals by the JSC or a Subcommittee shall include such decision  or approval made pursuant to this Section 3.2.4(b), to the extent applicable):                            (i)   with respect to matters related to the Development of the   Licensed Product (including the Development Plan and any amendments thereto, including any   dispute as to whether to add a new Clinical Trial to the Development Plan or to discontinue any   existing Clinical Trial), subject to Section 3.2.4(b)(ii) and Section 3.2.4(b)(vi), such dispute shall   [ * ] and will [ * ] (and, for clarity, except as otherwise set forth in [ * ], if such matter is [ * ], then  [ * ];                             (ii)  All decisions as to whether to include the Development of  the Licensed Product for use in any Combination Therapy (including with a Merck Proprietary                                        -45-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     Product, SeaGen Proprietary Product or Third Party product) in the Development Plan must be   approved in writing by each of the Parties, and any dispute with respect thereto shall [ * ]; provided,   however, the Development of the Licensed Product for use in Combination Therapy [ * ] is hereby  deemed to be mutually approved by the Parties as of the Effective Date.  If the Parties mutually  agree to include the Development of the Licensed Product for use in Combination Therapy with a  Merck Proprietary Product or SeaGen Proprietary Product, as applicable, then the following shall  apply:                                  (1)   if the Parties approve the Development of the  Licensed Product for use in Combination Therapy with a SeaGen Proprietary Product, then in the  event of a dispute with respect to matters related to the [ * ]; and                                  (2)   if the Parties approve the Development of the  Licensed Product for use in Combination Therapy with a Merck Proprietary Product, then in the  event of a dispute with respect to matters related to the [ * ];                            (iii) with respect to matters related to the Commercialization of  the Licensed Product for the Territory (including the Commercialization Plan and any amendments  thereto and any Regional Commercialization Sub-Plan and any amendments thereto), subject to  Section 3.2.4(b)(iv) and 3.2.4(b)(vi), such dispute shall [ * ] and will [ * ] (and, for clarity, except  as otherwise set forth in [ * ], if such matter is [ * ], then [ * ]; provided however that, subject to  Section 3.2.4(b)(iv) and 3.2.4(b)(vi), (x) with respect to a dispute related to the contents of a  Regional Commercialization Sub-Plan for the SeaGen Territory, SeaGen shall have final decision- making authority with respect to such dispute, provided that in all cases the contents of such  Regional Commercialization Sub-Plan are consistent with the Commercialization Plan (including  the Commercialization Budget) as applied to the SeaGen Territory and (y) with respect to a dispute  related to the contents of a Regional Commercialization Sub-Plan for the Merck Territory, Merck  shall have final decision-making authority with respect to such dispute, provided that in all cases  the contents of such Regional Commercialization Sub-Plan are consistent with the  Commercialization Plan (including the Commercialization Budget) as applied to the Merck  Territory;                             (iv)  if the Licensed Product is being Commercialized hereunder  for use in a Proprietary Combination, then with respect to matters related to any Promotional  Materials and Other Field-Based Materials for the Licensed Product to the extent related to the  Proprietary Product or Proprietary Combination (including any information related to the  Proprietary Product contained therein), but subject always to the Promotional Materials Guidelines  and the Other Field-Based Materials Guidelines, [ * ];                             (v)   with respect to all other matters related to a Licensed  Compound or the Licensed Product for the Territory within the purview of the JSC (including (A)  the Manufacturing Plan, and any amendments thereto, or (B) any dispute regarding entering into  a Third Party In-License Agreement as set forth in Section 2.5.2), subject to Section 3.2.4(b)(vi),  such dispute shall [ * ] and will [ * ] (and, for clarity, if such matter is [ * ] then [ * ];                            (vi)  notwithstanding the provisions of Sections 3.2.4(b)(i),  3.2.4(b)(iii) and 3.2.4(b)(v), (A) if a Party reasonably and in good faith believes that there is a                                        -46-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     Safety Issue with respect to the Licensed Product being used in a given Clinical Trial that is being   conducted hereunder, then such Party shall have the right to require the other Party to suspend,   and such other Party shall suspend as so required, such Clinical Trial (subject to the other Party’s   obligation to comply with legal and regulatory requirements) until such Safety Issue is reasonably   resolved, or (B) if a Party reasonably and in good faith believes that (x) a change to the   Development Plan, Commercialization Plan or Manufacturing Plan, as applicable, is required in   order for such Party to reasonably perform the Development, Commercialization or Manufacturing   activities allocated to such Party for the Licensed Product under the Development Plan,   Commercialization Plan or Manufacturing Plan, as applicable, in compliance with Applicable Law   (or to satisfy a specific Regulatory Authority request), or (y) a change to the Core Data Sheet is   required in order to comply with Applicable Law (or to satisfy a specific Regulatory Authority   request), then such Party shall notify the other Party thereof in writing, including a reasonably   detailed description of such changes and requirements to comply with Applicable Law (or to   satisfy a specific Regulatory Authority request), and the Parties shall use good faith efforts to   mutually agree in writing on any such required changes to the then-current Development Plan,   Commercialization Plan, Manufacturing Plan or Core Data Sheet, as applicable; provided that the   determination as to whether such changes are required to comply with Applicable Law or satisfy   a Regulatory Authority request shall be subject to Section 16.8.                      (c)   Operational Discretion.  Subject to Section 3.2.4(b), the Party to   which an activity under any Development Plan, Commercialization Plan or Manufacturing Plan is   assigned shall have the right to make final operational decisions with respect to how such activity   is conducted from an operational perspective; provided that (i) such decisions are consistent with   this Agreement and the Development Plan (including Development Budget), Manufacturing Plan   (including Manufacturing Data) or Commercialization Plan (including Commercialization   Budget), as applicable (and, for the avoidance of doubt, the foregoing provisions of this Section   3.2.4(c) shall not be interpreted to empower such Party to make final decisions with respect to any   changes to the Development Plan (including Development Budget), Manufacturing Plan   (including Manufacturing Data) or the Commercialization Plan (including Commercialization   Budget)), and (ii) such decisions are consistent with customary business practices for other of such   Party’s similar products.                      (d)   Proprietary Products. Notwithstanding the foregoing provisions   of this Section 3.2.4, the Joint Steering Committee shall have no decision-making authority with  respect to any matters related to a Party’s Proprietary Products (other than with respect to the  Development and Commercialization of the Licensed Product for use in a Proprietary  Combination), and, for clarity, any such matters shall not be subject to the foregoing provisions of  this Section 3.2.4, and all development, manufacturing and commercialization activities with  respect to any Proprietary Product (other than with respect to the Development and  Commercialization of the Licensed Product for use in a Proprietary Combination) shall be at the  determination of the Proprietary Product Party as set forth in Section 2.8.2.                     (e)   Limitation of Authority.  The JSC (and each Subcommittee) shall  only have the powers expressly assigned to it in this Article 3 and elsewhere in this Agreement  and shall not have the authority to: (i) modify or amend the terms and conditions of this Agreement,  (ii) waive either Party’s compliance with, or determine that either Party has or has not fulfilled,                                        -47-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   the terms and conditions of this Agreement, (iii) make a decision that is stated to require the mutual  agreement or mutual consent of the Parties (or that is subject to the determination of the other Party  as set forth herein), or (iv) determine any issue in a manner that would conflict with, expand, or  reduce the express terms and conditions of this Agreement.               3.2.5 Meetings.  The Parties shall endeavor to have their first meeting of the JSC  within thirty (30) days after the formation thereof.  Thereafter, the JSC shall meet in accordance  with a schedule established by the JSC, but no less frequently than [ * ] times per Calendar Year,  unless the JSC determines a different frequency, with the location for such meetings to be  determined by the JSC.  The JSC may meet in person, or alternatively, the JSC may meet by means  of teleconference, videoconference or other similar communications equipment.  Either Party may  also call a special meeting of the JSC by at least ten (10) Business Days’ prior written notice to  the other Party in the event such requesting Party reasonably believes that a significant matter must  be addressed prior to the next scheduled meeting, and such requesting Party shall provide the JSC  no later than five (5) Business Days prior to the special meeting with materials reasonably adequate  to enable an informed decision on the relevant matter; provided that for time sensitive matters, a  Party may call a special meeting of the JSC and provide relevant materials with less than [ * ]  Business Days’ notice if the Parties agree that an issue warrants an expedited meeting.  No later  than [ * ] Business Days prior to any meeting of the JSC (other than a special meeting as described  above), the designated co-chairperson of the JSC shall prepare and circulate an agenda for such  meeting to all members of the JSC; provided, however, that either Party shall be free to include  additional topics on such agenda, either prior to or, if representatives of each Party are present at  a meeting, during the course of such meeting.  Each Party shall bear its own costs and expenses  related to the attendance of such meetings by its representatives.  The designated co-chairperson  of the JSC will be responsible for preparing reasonably detailed written minutes of all JSC  meetings that reflect, without limitation, material decisions made at such meetings.  The designated  JSC co-chairperson shall send draft meeting minutes to each member of the JSC for review and  approval within [ * ] Business Days after each JSC meeting.  Such minutes will be deemed  approved unless one or more members of the JSC objects to the accuracy of such minutes within  [ * ] Business Days of receipt.         3.3   Joint Development Committee.               3.3.1 Composition of the Joint Development Committee.  Within [ * ] days  after the Effective Date, the Parties shall establish a committee to oversee Development of the  Licensed Compounds and the Licensed Product for the Territory in accordance with the  Development Plan and to coordinate the Development and regulatory activities of the Parties with  respect to the Licensed Compounds and the Licensed Product (the “JDC” or “Joint Development  Committee”).  Each Party shall initially appoint [ * ] employees of such Party or its Affiliates as  representatives to the JDC, with each Party’s representatives having appropriate technical  credentials, experience and knowledge for their specific role within the JDC for the development  of products, and having sufficient seniority within the applicable Party to make decisions arising  within the scope of the JDC’s responsibilities and being duly authorized under their respective  company’s internal governance procedures to make the decisions or carry out the activities given  to them under this Agreement.  The JDC may change its size from time to time by mutual,  unanimous consent of its members; provided that the JDC shall consist at all times of an equal                                       -48-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

     number of representatives of each of Merck and SeaGen.  Each Party may replace one or more of   its JDC representatives at any time in its sole discretion upon written notice to the other Party.  If   agreed by the JDC, the JDC may invite non-members to participate in the discussions and meetings  of the JDC; provided that such participants are under obligations of confidentiality consistent with  this Agreement and shall have no voting authority at the JDC.  The JDC shall be co-chaired by  representatives of each Party.  The role of the co-chairpersons shall be to convene and preside at  meetings of the JDC, to prepare and circulate agendas and to ensure the preparation of minutes (all  such responsibilities to alternate between each Party’s co-chairperson on an annual basis), but the  co-chairpersons shall have no additional powers or rights beyond those held by the other JDC  representatives.                 3.3.2 Specific Responsibilities of the JDC.  In addition to its general  responsibilities, with respect to Licensed Compounds and the Licensed Product, the JDC shall,  subject to the terms of this Agreement, in particular:                     (a)   discuss, prepare and approve for submission to the JSC amendments  to the Development Plan (including the Development Budget and the Regulatory Plan);                      (b)   review and update quarterly financial forecasts for Development of  the Licensed Product (including timing of expenditures) to endeavor to ensure actual and  anticipated expenditure is within the approved Development Budget for the relevant Calendar Year  and make recommendations to the JSC for approval of any variances before additional  expenditures are incurred;                     (c)   create, implement and review the overall strategy for Development  of the Licensed Product (including the Regulatory Plan) and the design and objectives of all  Clinical Trials and non-clinical studies conducted under the Development Plan;                     (d)   review and approve the protocols for all Clinical Trials conducted  under the Development Plan and any material amendments thereto (including any amendments  which would change the primary endpoint of such Clinical Trial, dosage or similar matters);  provided that such review and approval shall be conducted within a timeframe that does not unduly  delay any Clinical Trial;                      (e)   review and discuss the Next Generation Compound Notices and  related data;                     (f)   decide timing for filing or withdrawal of any registration application  or any submission to conduct investigative studies for the Licensed Product, including any IND or  MAA;                     (g)   oversee the conduct of any Clinical Trial under the Development  Plan, including discuss, coordinate and share information regarding operational activities  associated with such Clinical Trials, including study feasibility, study-specific key opinion leader  (KOL) engagement, country and site selection, site contracting, use of contract research  organizations (including preparation of guidelines with respect to the use of contract research                                         -49-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     organizations) or the resources of the other Party, site opening and enrollment (including steps to   effectively address over or under enrollment);                         (h)   oversee the forecasting of quantities of Licensed Product required   for Clinical Trials for incorporation into the Manufacturing Plan and Development Plan;                      (i)   discuss and agree on the overall regulatory filing strategy for   obtaining Marketing Authorizations for the Licensed Product for the Territory and for maintaining   such Marketing Authorizations (including post-approval commitments), including overseeing the  strategy for submission and maintenance of the registration dossiers (including MAAs) for the  Licensed Product;                      (j)   review, discuss, coordinate and approve Phase IV Clinical Trials,  local clinical evaluations and outcomes research activities, including the allocation of budgeted  resources thereto (to the extent applicable) and the priorities thereof (subject to consultation with  the JCC regarding funding decisions) for the Licensed Product;                     (k)   (i) review and discuss, in consultation with the JCC, medical affairs  activities for the Licensed Product, including field-based medical education activities by either  Party, use of medical liaisons and grant-based medical education programs for Licensed Product,  medical affairs materials to be used by the Parties, plans for investigator-initiated studies, and grant  plans; and (ii) discuss, prepare and approve guidelines specifying the content of the Other Field- Based Materials (including, for clarity, with respect to medical liaison and other medical affairs  activities) with respect to use of the Licensed Product as a monotherapy or in any Combination  Therapy (the “Other Field-Based Materials Guidelines”) and any amendments thereto; provided  that the Proprietary Product Party will determine the content of the Other Field-Based Materials  Guidelines relating to its Proprietary Product;                     (l)   discuss and approve plans for development of Companion  Diagnostics, if any, specifically for use in connection with any Licensed Compound or the  Licensed Product;                     (m)   review, discuss and approve, in consultation with the JCC, strategies  for distribution of Licensed Product for “compassionate use” or as free goods;                     (n)   review, discuss, coordinate and approve a global publication  strategy for the Licensed Products (including a strategy for the publication of Development Data  developed under this Agreement from the conduct of Clinical Trials for the Licensed Products)  (“Global Publication Strategy”);                     (o)   discuss, coordinate and approve a strategy for the Development of  the Licensed Product for use in a Combination Therapy with pharmaceutical product(s) other than  the Initial Merck Proprietary Product (including testing and conducting Clinical Trials for the  Licensed Product for use in a Combination Therapy with [ * ]) reasonably in advance of loss of  patent exclusivity with respect to the composition of matter of the Initial Merck Proprietary  Product;                                         -50-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

                       (p)   establish working teams to advise the JDC on matters within the   purview of the JDC; and                      (q)   perform such other functions with respect to Licensed Compounds   or the Licensed Product as may be appropriate to further the purposes of this Agreement, as   directed by the JSC.          3.4   Joint Manufacturing Committee.                3.4.1 Composition.  Within [ * ] days after the Effective Date, the Parties shall  establish a committee to oversee CMC Development activities and Manufacturing of clinical and  commercial supplies of Licensed Compounds and the Licensed Product for the Territory (the  “JMC” or “Joint Manufacturing Committee”).  Each Party shall initially appoint [ * ] employees  of such Party or its Affiliates as representatives to the JMC, with each Party’s representatives  having appropriate technical credentials, experience and knowledge in the manufacturing of  products similar to the Licensed Product for their specific role within the JMC, and having  sufficient seniority within the applicable Party to make decisions arising within the scope of the  JMC’s responsibilities and being duly authorized under their respective company’s internal  governance procedures to make the decisions or carry out the activities given to them under this   Agreement.  The JMC may change its size from time to time by mutual, unanimous consent of its   members; provided that the JMC shall consist at all times of an equal number of representatives   of each of Merck and SeaGen.  Each Party may replace one or more of its JMC representatives at   any time in its sole discretion upon written notice to the other Party.  If agreed by the JMC, the   JMC may invite non-members to participate in the discussions and meetings of the JMC; provided   that such participants are under obligations of confidentiality consistent with this Agreement and  shall have no voting authority at the JMC.  The JMC shall be co-chaired by representatives of each   Party.  The role of the co-chairpersons shall be to convene and preside at meetings of the JMC, to   prepare and circulate agendas and to ensure the preparation of minutes (all such responsibilities to   alternate between each Party’s co-chairperson on an annual basis), but the co-chairpersons shall   have no additional powers or rights beyond those held by the other JMC representatives.                3.4.2 Specific Responsibilities of the Joint Manufacturing Committee.  In   addition to its general responsibilities, with respect to Licensed Compounds and the Licensed   Product, the Joint Manufacturing Committee shall, subject to the terms of this Agreement, in   particular:                      (a)   oversee clinical and commercial Manufacture of Licensed   Compounds and the Licensed Product, including coordination of the Manufacturing activities of   the Lead Manufacturing Party with respect to Licensed Compounds and the Licensed Product and   developing the overall manufacturing strategy, including considerations around supply   redundancy and resiliency as well as life cycle management initiatives;                      (b)   discuss, prepare and approve for submission to the JSC each   Manufacturing Plan (including the Manufacturing Data) and any amendments thereto for Licensed   Compounds and the Licensed Product;                                         -51-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

                       (c)   oversee implementation of each Manufacturing Plan for Licensed   Compounds and the Licensed Product;                      (d)   with respect to the Manufacturing activities of the Lead   Manufacturing Party prior to the JSC’s approval of the initial Manufacturing Plan, review, discuss   and approve any matter related to the Manufacture of a Licensed Compound or the Licensed   Product that would otherwise have been be set forth in the Manufacturing Plan (prior to the Lead   Manufacturing Party commencing the applicable Manufacturing activity);                      (e)   review forecasts provided in the Commercialization Plan for the   Licensed Product and oversee development of, and discuss and agree on, logistical strategies,   including capacity planning and appropriate inventory levels of Licensed Compounds and the   Licensed Product to maintain consistency with the forecasts;                       (f)   establish a sales and operations planning team to coordinate the   Parties’ supply activities;                       (g)   oversee the conduct of the CMC Development for Licensed   Compounds and the Licensed Product, and facilitate the flow of information between the Parties   with respect to CMC Development;                      (h)   oversee development of, and recommend to JSC for approval,   strategies for second sourcing for the Manufacture of Licensed Compounds and the Licensed   Product;                      (i)   discuss, prepare and approve (in coordination with the JDC) for   submission to the JSC proposed annual and interim amendments to CMC Development activities   within the Development Plan, if any;                      (j)   discuss and oversee (in coordination with the JDC) CMC   regulatory-related activities and maintenance of regulatory submissions, including INDs and   MAAs, for the Licensed Product to ensure regulatory compliance and timely management of   responses to any Regulatory Authority queries pre- and post-approval as well as during regulatory   review processes;                      (k)   oversee the preparation for and reviewing responses to regulatory   inspections related to the Manufacture of the Licensed Product, including the development of   policies and procedures therefor;                        (l)   oversee and monitor all QA- and QC-related matters concerning the  Licensed Product;                     (m)   discuss and approve any Manufacturing sites or testing sites  proposed to be established following the Effective Date for the Licensed Compounds or the  Licensed Product; provided, however, that in performing such review and approval, the JMC shall  take into consideration any then-existing supply or quality agreements established with Third Party                                         -52-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     manufacturing sites for the Licensed Compounds or the Licensed Product in accordance with this   Agreement, and seek to avoid conflicts with the provisions thereof;                       (n)   discuss and approve changes to the specifications or any changes to   the manufacturing process (including any change that may affect the quality of Licensed   Compounds or the Licensed Product, or change in Third Party contract manufacturer or key   material vendor) for the Licensed Compounds or the Licensed Product; provided, however, that   the Parties may agree in writing upon an alternate mechanism for Manufacturing change controls   that is reasonably acceptable to both Parties with the goal of being timely and efficient;                     (o)   review any proposals for any capital expenditure, manufacturing site  transfer costs or other non-recurring costs or expenses in relation to the Manufacture of the  Licensed Compounds and the Licensed Product and approve any such capital expenditures or other  costs and expenses and a budget therefor (including the allocation thereof related to the applicable  Licensed Compounds and the Licensed Product), which shall then be set forth in the  Manufacturing Plan; provided that, [ * ];                     (p)   review and agree on the Cost of Goods Manufactured (including a  breakdown of the components thereof, as well as the methodologies for allocating indirect costs)  on an annual basis, and review manufacturing processes on an annual basis, with a goal towards  minimizing Cost of Goods Manufactured for Licensed Compounds and the Licensed Product,  while ensuring continuous fully-compliant supply to maintain consistency with the forecasts and  required inventory and safety stock levels;                      (q)   subject to Section 13.3.3, discuss ways to prevent, mitigate, respond  to [ * ] failed batches of Licensed Product (or Licensed Compound) at a Third Party contract  manufacturer, [ * ];                     (r)   coordinate with the JDC regarding (i) allocation of amounts under  Development Budget to CMC Development activities for the Licensed Product, (ii) strategies for  new indications, formulations and delivery systems for the Licensed Product, and (iii) other  Development matters related to the Manufacture of the Licensed Product;                      (s)   establish working teams to advise the JMC on matters within the  purview of the JMC; and                      (t)   perform such other functions with respect to Licensed Compounds  or the Licensed Product as may be appropriate to further the purposes of this Agreement, as  directed by the JSC.          3.5   Joint Commercialization Committee.                 3.5.1 Composition.  No later than the earlier of [ * ] or [ * ], the Parties shall  establish a committee to oversee Commercialization of the Licensed Product (other than  commercial manufacture) for the Territory (the “JCC” or “Joint Commercialization  Committee”).  Each Party shall initially appoint [ * ] employees of such Party or its Affiliates as  representatives to the JCC, with each Party’s representatives having appropriate technical                                        -53-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   credentials, experience and knowledge in the commercialization of products similar to the  Licensed Product for their specific role within the JCC, and having sufficient seniority within the  applicable Party to make decisions arising within the scope of the JCC’s responsibilities and being  duly authorized under their respective company’s internal governance procedures to make the  decisions or carry out the activities given to them under this Agreement.  The JCC may change its  size from time to time by mutual, unanimous consent of its members; provided that the JCC shall  consist at all times of an equal number of representatives of each of Merck and SeaGen.  Each  Party may replace one or more of its JCC representatives at any time in its sole discretion upon  written notice to the other Party.  If agreed by the JCC, the JCC may invite non-members to  participate in the discussions and meetings of the JCC; provided that such participants are under  obligations of confidentiality consistent with this Agreement and shall have no voting authority at  the JCC.  The JCC shall be co-chaired by representatives of each Party.  The role of the co- chairpersons shall be to convene and preside at meetings of the JCC, to prepare and circulate  agendas and to ensure the preparation of minutes (all such responsibilities to alternate between  each Party’s co-chairperson on an annual basis), but the co-chairpersons shall have no additional  powers or rights beyond those held by the other JCC representatives.                 3.5.2 Specific Responsibilities of the Joint Commercialization Committee.  In  addition to its general responsibilities, with respect to Licensed Compounds and the Licensed  Product, the Joint Commercialization Committee shall, subject to the terms of this Agreement, in  particular:                     (a)   discuss, prepare and approve for submission to the JSC the initial  Commercialization Plan (including the Commercialization Budget) and amendments thereto for  the Licensed Product;                       (b)   discuss, prepare and approve for submission to the JSC guidelines  (including the Pricing Guidelines), policies and procedures to be followed by the Parties in  connection with the Commercialization of the Licensed Product and any amendments thereto  (collectively, the “Commercialization Guidelines”);                     (c)   discuss, prepare and approve guidelines specifying the content of  the Promotional Materials (including, for clarity, with respect to the Promotion of the Licensed  Product as a monotherapy or for use in any Combination Therapy) (the “Promotional Materials  Guidelines”) and any amendments thereto; provided that the Proprietary Product Party will  determine the content of the Promotional Materials Guidelines relating to its Proprietary Product;                     (d)   review revenue forecasts and review the Commercialization Budget  (including timing of expenditures) for the Territory at least on a quarterly basis to endeavor to  ensure actual and anticipated spend is within the approved Commercialization Budget;                      (e)   review and discuss the Commercialization activities of SeaGen and  Merck with respect to the Licensed Product for the Territory and coordinate the Commercialization  activities of Merck and SeaGen with respect to the Licensed Product Promoted under this  Agreement in the Territory, including pre- and post-launch activities and any other Promotion  activities by the Parties for the Licensed Product in the Territory;                                         -54-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

                       (f)   following the receipt of Marketing Authorization, [ * ], in a given   country [ * ], review the commercial strategy and discuss, prepare and submit a recommendation   to the JSC [ * ];                        (g)   in order to assist with, among other things, Licensed Product supply   forecasts as well as decisions to commit and allocate resources to the activities hereunder, but   subject in all cases to Applicable Law, establish [ * ] for the Licensed Product for the Territory   (collectively, the “Pricing Guidelines”), which Pricing Guidelines shall be established [ * ];                      (h)   discuss general market access strategies for the Licensed Product;                        (i)   discuss and determine (i) if Merck (rather than SeaGen) should be   the Lead Distribution Party (or the Lead Trademark Party) for the Licensed Product in any portion   of the SeaGen Territory or the US Collaboration Territory or the European Collaboration Territory   and (ii) if SeaGen (rather than Merck) should be the Lead Distribution Party (or the Lead   Trademark Party) for the Licensed Product in any portion of the Merck Territory;                        (j)   establish a process by which the Parties will review and comment   on training materials and programs and training of the Parties’ sales forces for the   Commercialization of the Licensed Product in the Territory;                     (k)   prepare Licensed Product forecasts to be shared with the JMC for  planning of inventory levels of Licensed Compounds and the Licensed Product;                     (l)   discuss and approve global brand positioning and messaging for the  Licensed Product;                     (m)   discuss and approve plans for commercialization of Companion  Diagnostics, if any, specifically for use in connection with the Licensed Product;                      (n)   oversee implementation of the Commercialization Plan;                      (o)   establish working teams to advise the JCC on matters within the  purview of the JCC; and                      (p)   perform such other functions with respect to Licensed Compounds  or the Licensed Product as may be appropriate to further the purposes of this Agreement, as  directed by the JSC.            3.6   Financial Managers; Joint Finance Committee.                 3.6.1 Financial Managers.  Within [ * ] days after the Effective Date, each Party  shall appoint an employee of that Party or its Affiliate who shall oversee the financial calculations  (including accounting matters), financial reporting and payments hereunder with respect to the  Licensed Compounds and the Licensed Product (each, a “Financial Manager”).  Such persons   shall facilitate clear and responsive communication between the Parties and the effective exchange   of information with respect to such matters hereunder, and may serve as a single point of contact                                         -55-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     for any such matters.  Each Party may designate a replacement Financial Manager for such Party   in its sole discretion by notice in writing to the other Party.                3.6.2 Composition of the Joint Finance Committee.  Within [ * ] days after the   Effective Date, the Parties shall establish a committee to coordinate financial matters with respect   to Licensed Compounds and the Licensed Product and to support the JSC, the JDC, the JCC and   the JMC in connection therewith (the “JFC” or “Joint Finance Committee”).  Each Party shall  initially appoint [ * ] employees of such Party or its Affiliates as representatives to the JFC, with  each Party’s representatives having appropriate technical credentials, experience and knowledge  for their specific role within the JFC, and having sufficient seniority within the applicable Party to  make decisions arising within the scope of the JFC’s responsibilities and being duly authorized  under their respective company’s internal governance procedures to make the decisions or carry  out the activities given to them under this Agreement.  The JFC may change its size from time to  time by mutual, unanimous consent of its members; provided that the JFC shall consist at all times  of an equal number of representatives of each of Merck and SeaGen.  Each Party may replace one  or more of its JFC representatives at any time in its sole discretion upon written notice to the other  Party.  If agreed by the JFC, the JFC may invite non-members to participate in the discussions and  meetings of the JFC; provided that such participants are under obligations of confidentiality  consistent with this Agreement and shall have no voting authority at the JFC.  The JFC shall be  co-chaired by representatives of each Party.  The role of the co-chairpersons shall be to convene  and preside at meetings of the JFC, to prepare and circulate agendas and to ensure the preparation  of minutes (all such responsibilities to alternate between each Party’s co-chairperson on an annual  basis), but the co-chairpersons shall have no additional powers or rights beyond those held by the  other JFC representatives.                 3.6.3 Specific Responsibilities of the JFC.  In addition to its general  responsibilities, with respect to Licensed Compounds and the Licensed Product, the JFC shall,  subject to the terms of this Agreement and subject to the oversight of the JSC, in particular:                     (a)   work with the JSC and the other Subcommittees to assist in  financial, budgeting and planning matters as required, including assisting in the preparation of  budgets and annual and long term plans with respect to the Licensed Product;                      (b)   recommend, for approval by the JSC, procedures, formats and  timelines consistent with this Agreement for reporting financial data as well as additional or  alternative reporting procedures concerning financial aspects of the collaboration with respect to  the Licensed Product;                     (c)   prepare such reports on financial matters as are approved by the JSC  for the implementation of the financial aspects of the collaboration with respect to the Licensed  Product;                     (d)   coordinate audits of financial data where appropriate and required  or allowed by this Agreement with respect to the Licensed Product;                                          -56-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

                       (e)   address issues of implementation relating to the financial mechanics   and calculations under this Agreement and the Ancillary Agreements with respect to the Licensed  Product;                      (f)   recommend, for approval by the JSC, a means of reconciling, one to   the other, the internal reporting and accounting standards of each of the Parties where necessary   and methods of charging costs and expenses of each of the Parties, in each case, with respect to   the Licensed Product;                      (g)   review the appropriate allocation of costs and expenses with respect   to Allowable Commercialization Costs, Allowable Development Costs and Allowable Joint IP   Costs;                      (h)   propose to the JSC adjustments to the Development FTE Rates,   Medical Affairs FTE Rates, Promotion FTE Rates and Field Force FTE Rates annually;                       (i)   establish working teams to advise the JFC on matters within the   purview of the JFC; and                      (j)   perform such other functions with respect to Licensed Compounds   or the Licensed Product as may be appropriate to further the purposes of this Agreement, as   directed by the JSC.          3.7   Meetings of Subcommittees.  Each Subcommittee shall meet at least one (1) time   per Calendar Quarter at a time mutually agreed by the Parties, spaced at regular intervals unless   the applicable Subcommittee determines a different frequency, with the location for such meetings   to be determined by the applicable Subcommittee.  Each Subcommittee may meet in person, or   alternatively, such Subcommittee may meet by means of teleconference, videoconference or other   similar communications equipment.  Either Party may also call a special meeting of the applicable   Subcommittee by at least ten (10) Business Days’ prior written notice to the other Party in the   event such requesting Party reasonably believes that a significant matter must be addressed prior   to the next scheduled meeting, and such requesting Party shall provide the applicable   Subcommittee no later than five (5) Business Days prior to the special meeting with materials   reasonably adequate to enable an informed decision on the relevant matter; provided that for time   sensitive matters, a Party may call a special meeting of the applicable Subcommittee and provide   relevant materials with less than five (5) Business Days’ notice if the Parties agree that an issue   warrants an expedited meeting.  No later than ten (10) Business Days prior to any meeting of the   applicable Subcommittee (other than a special meeting as described above), the designated co-  chairperson of the applicable Subcommittee shall prepare and circulate an agenda for such meeting   to all members of the applicable Subcommittee; provided, however, that either Party shall be free   to include additional topics on such agenda, either prior to or, if representatives of each Party are   present at a meeting, during the course of such meeting.  Each Party will bear the expense of its   respective Subcommittee members’ participation in the meetings of the applicable Subcommittee.    The designated co-chairperson of the applicable Subcommittee shall be responsible for keeping   reasonably detailed written minutes of all meetings of such Subcommittee that reflect all decisions   made at such meetings.  The designated Subcommittee co-chairperson shall send meeting minutes   to each member of the applicable Subcommittee for review and approval within ten (10) Business                                        -57-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   Days after each meeting of such Subcommittee.  Minutes will be deemed approved unless one or  more members of the applicable Subcommittee objects to the accuracy of such minutes within ten  (10) Business Days of receipt.         3.8   Decision Making of Subcommittees.  Each Subcommittee shall act by unanimous  consent.  For a given Subcommittee, the representatives from each Party on such Subcommittee  will have, collectively, one (1) vote on behalf of that Party.  If a given Subcommittee cannot or  does not, after good faith, reasonable efforts, reach unanimous consent on an issue that comes  before such Subcommittee and over which such Subcommittee has oversight within [ * ] Business  Days after such issue is first considered by such Subcommittee, then such matter shall be raised to  the JSC for resolution in accordance with Section 3.2.4.         3.9   Alliance Managers.                3.9.1 Alliance Managers.  Each Party shall appoint one or more employees of it  or its Affiliate who shall oversee interactions between the Parties for all matters related to this  Agreement and any Ancillary Agreements between the Parties or their Affiliates (each, an  “Alliance Manager”).  Such persons shall endeavor to assure clear and responsive communication  between the Parties and the effective exchange of information, and shall serve as a single point of  contact for any matters arising under this Agreement.  The Alliance Managers shall have the right  to attend all Committee meetings as non-voting participants and may bring to the attention of the  applicable Committee any matters or issues either of them reasonably believes should be  discussed, and shall have such other responsibilities as the Parties may mutually agree in writing;  provided that the Alliance Manager shall not count toward the number of representatives that each  Party may have on each such Committee.  Each Party may designate a replacement Alliance  Manager for such Party in its sole discretion by notice in writing to the other Party.               3.9.2 Responsibilities.  The Alliance Managers shall have the responsibility of  creating and maintaining a constructive work environment between the Parties. Without limiting  the generality of the foregoing, each Alliance Manager shall:                     (a)   identify and bring disputes and issues that may result in disputes  (including any asserted occurrence of a breach by a Party) to the attention of the Parties in a timely  manner, and function as the point of first referral in all matters of conflict resolution;                      (b)   provide a single point of communication for seeking consensus both  internally within the Parties’ respective organizations and between the Parties;                      (c)   plan and coordinate cooperative efforts, internal communications  and external communications between the Parties with respect to this Agreement; and                     (d)   take responsibility for ensuring that governance meetings and the  production of meeting agendas and minutes occur as set forth in this Agreement (and the Alliance  Managers shall facilitate such activities on behalf of the co-chairs of the JSC or other relevant  Subcommittee), and that relevant action items resulting from such meetings are appropriately  carried out or otherwise addressed.                                        -58-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

                 ARTICLE 4    ALLOCATION OF RESPONSIBILITIES         4.1   General.  In the allocation of roles and responsibilities under this Agreement  pursuant to the Development Plan and Commercialization Plan, whether by the JSC or by the  Parties, the Parties intend to adhere to the following principles:               4.1.1 Development.  The Parties desire to work together in good faith, through  the JSC and the other Subcommittees and otherwise in accordance with this Agreement, to promote  the efficient and coordinated Development of the Licensed Compounds and Licensed Product by  the Parties.  The Parties have agreed upon an allocation of certain roles and responsibilities  between the Parties as of the Effective Date with respect to the Development of the Licensed  Compounds and Licensed Product, such that, unless otherwise determined by the JSC (or as  otherwise expressly set forth herein), (a) SeaGen shall be the Lead Regulatory Party in the US  Collaboration Territory and the SeaGen Territory; and (b) Merck shall be the Lead Regulatory  Party in the European Collaboration Territory and the Merck Territory.  Subject to the foregoing  allocation of responsibilities, and subject further to the applicable Party having or being able to  procure (through itself, its Affiliates and permitted subcontractors) the relevant capabilities and  infrastructure, the Parties, acting through the JSC and otherwise in accordance with this  Agreement, shall seek to equitably allocate any remaining roles and responsibilities under this  Agreement with respect to the Development of the Licensed Compounds and Licensed Product in  the Territory, such that each Party will have responsibility for approximately [ * ] (the exact  amount to be determined on a commercially reasonable basis) of the remaining Development  activities for the Licensed Product in the Territory; provided that, in all cases (unless otherwise  determined by the JSC), SeaGen shall be the Lead Study Party with respect to the Ongoing Clinical  Trials.  For clarity, the Parties acknowledge and agree that, through the JSC, either Party may be  appointed as the Lead Study Party for a particular Clinical Trial of the Licensed Product  notwithstanding that such Clinical Trial may (i) be conducted in one or more countries in the other  Party’s portion of the Territory (in the case of Merck, the Merck Territory, and, in the case of  SeaGen, the SeaGen Territory), (ii) be conducted in a country where the other Party is the Lead  Regulatory Party, or (iii) involve a Proprietary Combination with the other Party’s Proprietary  Product.                4.1.2 Commercialization (including Promotion) in the Collaboration  Territory.  The Parties desire to work together in good faith, through the JSC and the other  Subcommittees and otherwise in accordance with this Agreement, with the intent to promote the  efficient and coordinated Commercialization of the Licensed Product by the Parties.  Unless  otherwise determined by the JSC (or as otherwise expressly set forth herein), the Lead Distribution  Party for each region of the Territory has been agreed upon between the Parties as of the Effective  Date such that (a) SeaGen shall be the Lead Distribution Party for the US Collaboration Territory,  the European Collaboration Territory and the SeaGen Territory, and (b) Merck shall be the Lead  Distribution Party for the Merck Territory.  Subject to the foregoing allocation of responsibilities  and subject further to the applicable Party beginning launch planning activities at least [ * ] prior,  and having or being able to procure (in each case, through itself, its Affiliates and permitted  subcontractors) by a commercially reasonable period of time prior to be able to execute  successfully on such plan, to the anticipated first commercial sale of the applicable Licensed  Product in the US Collaboration Territory or the European Collaboration Territory (as applicable)                                       -59-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

     the relevant capabilities and infrastructure, for all other Promotion activities (and other   Commercialization activities, but excluding Distribution) in the US Collaboration Territory or the   European Collaboration Territory (as applicable), consistent with the Commercialization Plan (and  the Regional Commercialization Sub-Plan) for the Collaboration Territory, the Parties, acting  through the JSC and otherwise in accordance with this Agreement, shall seek to equitably allocate  any remaining roles and responsibilities under this Agreement with respect to such Promotion (and  other Commercialization) of the Licensed Product in the US Collaboration Territory or the  European Collaboration Territory (as applicable), such that each Party will have responsibility for  approximately [ * ] (the exact amount to be determined on a commercially reasonable basis) of the  Promotion activities (and other Commercialization activities, but excluding Distribution) for the  Licensed Product in the US Collaboration Territory or the European Collaboration Territory (as  applicable), including through Co-Promotion and other allocation of Commercialization activities  of the Licensed Product; provided that the Parties intend that such allocation shall enable SeaGen,  in addition to being the Lead Distribution Party in the European Collaboration Territory, to  meaningfully employ its European Commercialization infrastructure in support of Promotion or  other Commercialization activities for the Licensed Product in the European Collaboration  Territory.           4.2   Technology  Transfers to Enable Collaboration.  The Parties agree and  acknowledge that SeaGen has been responsible for the Development of the Licensed Compound  and the Licensed Product prior to the Effective Date.  In order to facilitate Merck’s involvement  in the Development and Commercialization of the Licensed Product in accordance with this  Agreement, the following shall apply:                4.2.1 Provision of Information. Promptly after the Effective Date, the JDC will  develop and implement a plan for the secure transfer of SeaGen Know-How from SeaGen to Merck  under this Agreement.  During the Term as reasonably requested by Merck from time to time,  SeaGen will transfer to Merck such SeaGen Know-How that is necessary or reasonably useful for  Merck to perform its Development or Commercialization obligations for the Licensed Product  hereunder.  For clarity, SeaGen’s obligations under this section shall exclude the obligation to  transfer any SeaGen Know-How specific to Manufacturing of the Licensed Product, which are  included in the SeaGen Supply Agreement and 7.4.4(c), as applicable.                4.2.2 Copies of Regulatory Materials.  Promptly after the Effective Date (but in  all cases within [ * ] thereafter), SeaGen shall provide to Merck true, correct and complete  electronic copies of any and all material Regulatory Documentation (as well as such other  Regulatory Documentation reasonably requested by Merck that is necessary or reasonably useful  for Merck to perform its Development and Commercialization obligations hereunder) related to  the Licensed Product held or generated by or on behalf of SeaGen or its Affiliates (the “Existing  Regulatory Materials”), including providing copies of all documents submitted to the applicable  Regulatory Authority in connection therewith.                4.2.3 Transition; Transition Leads and Transition Plan.  The Parties shall  work together and cooperate in good faith, using Commercially Reasonable Efforts, to transition  from SeaGen to Merck those Development and Commercialization activities with respect to the  Licensed Product to be performed by Merck in accordance with this Agreement as of the Effective                                         -60-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     Date and thereafter during the term if any role, task or activity is reassigned in accordance with   this Agreement, and each Party shall provide the other Party with assistance as reasonably   requested by such other Party in connection with any such transition of the Development and   Commercialization of the Licensed Product hereunder.  Within thirty (30) days after the Effective   Date, each Party shall appoint an employee of it or its Affiliate who shall oversee the transition   (each, a “Transition Lead”).  The Transition Leads shall endeavor to assure clear and responsive   communication between the Parties with respect to the transition, and shall serve as a single point   of contact for any matters arising in connection with the transition.  Each Party may designate a   replacement Transition Lead for such Party in its sole discretion by notice in writing to the other   Party.  In order to facilitate any such transition, at the request of either Party, the Parties shall work   together in good faith and establish a transition plan setting forth transition activities to be   undertaken by or on behalf of each Party in order to assist with such transition (a “Transition   Plan”). Once established, each Party shall use Commercially Reasonable Efforts to expeditiously   perform its activities under the Transition Plan.                            ARTICLE 5    DEVELOPMENT          5.1   Development.  All Development activities for Licensed Compounds and the   Licensed Product (including as a monotherapy as well as for use in any Combination Therapy,   including for use in any Proprietary Combination) for use in the Field in the Territory will be   performed by the Parties in accordance with this Agreement and the applicable Development Plan.    Subject to the terms of this Agreement, each Party shall use Commercially Reasonable Efforts to   perform the activities allocated to such Party under the applicable Development Plan.  During the   Term, neither Party (nor their respective Affiliates) shall undertake any Development activities   with respect to any Licensed Compounds or the Licensed Product for use in the Field in the   Territory, except to the extent consistent with the applicable Development Plan.           5.2   Development Plans for the Licensed Product.                  5.2.1 General.  The Development of the Licensed Compounds and the Licensed   Product for the Territory shall be conducted pursuant to a comprehensive, Territory-wide  development plan approved by the JSC (each, a “Development Plan”).  Each Development Plan   shall include a Development Budget and shall describe (a) the overall program of Development   for the Licensed Compounds and Licensed Product, including non-clinical studies, Clinical Trials,   the Regulatory Plan and other elements for obtaining and maintaining Marketing Authorization(s)   for the Licensed Compounds and the Licensed Product and fulfilling other regulatory obligations,   including post-approval commitments, and associated timelines and priorities, (b) for the key   countries in the Territory, timelines for key Regulatory Authority interactions, filing of   applications for Marketing Authorizations, and the receipt and maintenance of Marketing   Authorizations, (c) subject to Section 4.1.1, the anticipated tasks and responsibilities and resource   allocation of each Party for such Development, (d) subject to Section 4.1.1, the Lead Study Party   for each such Clinical Trial and a reasonably detailed description of each such Clinical Trial,   including the estimated timeline therefor and (e) the allocation of the Development Budget for all   such activities.  For clarity, the Development Plan may also include activities with respect to the   Development of Companion Diagnostics for use in connection with the Licensed Product.  Both   Parties shall have the right to propose to the JDC, for approval by the JSC, additional Development                                         -61-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     activities with respect to Licensed Compounds and the Licensed Product, including expansion of   a Development Plan to include any new indication(s) or new formulation(s) for the Licensed   Product, or new Combination Therapies (including any Proprietary Combination) or Combination   Products, or any other amendment to a Development Plan, but such proposal shall be included,   and the Development Plan revised, only if approved by the JSC.  In the event of any inconsistency   between the Development Plan and this Agreement, the terms of this Agreement shall prevail.                  5.2.2 Initial Development Plan.  The initial Development Plan (including the   initial Development Budget) is attached hereto as Exhibit A (the “Initial Development Plan”).    The Initial Development Plan shall be effective from the Effective Date until amended and updated   by the JDC, and approved by the JSC, in accordance with this Agreement.                5.2.3 Amendments to Development Plan.  On an annual basis, or more often as   the Parties may deem appropriate, the JDC shall prepare proposed amendments to the then-current   Development Plan, and, subject to this Agreement, the corresponding Development Budget, for   approval of the JSC no later than December 1 of each Calendar Year.  Such amended Development   Plan shall cover the applicable period as set forth therein and shall contain corresponding updates   to the Development Budget included therein, which shall appropriately itemize the costs and   expenses separately for each Development activity, to the extent practicable.  Such updated and   amended Development Plan shall reflect any changes, re-prioritization of studies within,  reallocation of resources with respect to, or revisions to the then-current Development Plan.  In  addition, the JDC may prepare amendments to the Development Plan and corresponding allocation  of the Development Budget for the JSC’s approval from time to time during the Calendar Year in  order to reflect changes in such plan and budget, in each case, in accordance with the foregoing.   Once approved by the JSC, the amended Development Plan (and Development Budget) shall  become effective for the applicable period on the date approved by the JSC (or such other date as  the JSC shall specify).  Any JSC-approved amended Development Plan (and Development Budget)  shall supersede the previous Development Plan (and Development Budget) for the applicable  period.  Notwithstanding the foregoing, in the event that the JSC does not approve a given amended  Development Plan (or Development Budget, as applicable), then the then-current Development  Plan (or Development Budget, as applicable) shall continue in effect without modification (i.e., no  changes shall be made to the Development Plan (and Development Budget) unless and until agreed  to by the JSC) such that only the Development activities set forth in the then-current Development   Plan shall continue (in accordance with the then-current Development Budget, as applicable,   without any additional budget changes being made).                  5.2.4 Additional Development of Next Generation Compounds, Combination   Therapies, Combination Products and Companion Diagnostics.                        (a)   In the event that Merck provides a Licensed Compound Notice   pursuant to Section 2.9.2 for SGN-LIV-1-B, SGN-LIV-1-C or any other Next Generation   Compound (or, with respect to SGN-LIV-1-C, Merck is deemed to have provided a Licensed  Compound Notice pursuant to Section 2.9.2 for SGN-LIV-1-C) such that such Next Generation  Compound is included as a “Licensed Compound” hereunder, then the Parties shall be deemed to  have agreed to initiate a GLP Tox Study therefor and the JSC will promptly (and in any event  within [ * ] days after SeaGen’s receipt of the applicable Licensed Compound Notice), amend the                                         -62-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     Development Plan to include GLP Tox Studies for such Licensed Compound.  In addition, in the   event that Merck provides (or is deemed to have provided) a Licensed Compound Notice pursuant  to Section 2.9.2 for SGN-LIV-1-C such that SGN-LIV-1-C is included as a “Licensed Compound”  hereunder, then, upon successful completion of such GLP Tox Studies for SGN-LIV-1-C (as  determined by the JSC; provided that, with respect to SGN-LIV-1-C, GLP Tox Studies for SGN-  LIV-1-C shall have been successfully completed if the JSC determines that the data from the GLP   Tox Studies for SGN-LIV-1-C shows that SGN-LIV-1-C has met the “Criteria of Go to Phase I   Clinical Evaluation” set forth in part 2 of Schedule 2.9.2), unless otherwise agreed by both Parties,   each Party shall be deemed to have agreed to initiate at least one (1) Phase I Clinical Trial for   SGN-LIV-1-C (which Phase I Clinical Trial would have as its aim, unless otherwise determined   by the JDC, to [ * ]) and the JSC will promptly (and within [ * ] days after first presentation of the   final results of such successful GLP Tox Studies to the JSC), amend the Development Plan to   include at least one (1) Phase I Clinical Trial therefor, the design of and protocol for which Phase   I Clinical Trial shall be mutually agreed by the Parties via the JDC in accordance with Section   3.3.2(c) and 3.3.2(d), respectively.                       (b)   In the event that a Party desires to develop (i) a Licensed Compound   or the Licensed Product for any Combination Therapy with, or as a Combination Product with,   (A) a product of a Third Party or (B) a Merck Proprietary Product or (C) a SeaGen Proprietary   Product (including, in each case ((A), (B) and (C)), marketed products or pipeline products), or   (ii) any Companion Diagnostic for a Licensed Compound or the Licensed Product, such Party may   propose including such Combination Therapy, Combination Product or Companion Diagnostic in   the Development Plan, but such proposal shall be included only if agreed to by the JSC.  With   respect to any development for use in a Combination Therapy or as a Combination Product with a   product of a Third Party or development of a Companion Diagnostic of a Third Party, the Parties,   through the JSC, shall discuss and agree upon any agreements to be entered into with the applicable   Third Party for use of such Third Party’s product in combination or in connection with the Licensed   Product; provided that any such agreement with such Third Party shall be subject to the approval   of the JSC.  With respect to any development for use in a Proprietary Triple Combination Therapy,   the Parties shall, in good faith prior to the time Development commences in relation to such   Proprietary Triple Combination Therapy, discuss in good faith and mutually agree upon any   additional terms or other amendments to this Agreement with respect to the proposed Development   and Commercialization of the Licensed Product for use in such Proprietary Triple Combination   Therapy [ * ].                      (c)   For clarity, in the event that (i) a Next Generation Compound is   included as a Licensed Compound pursuant to Section 2.9.2 or an Acquired Competing Product is   included as a Licensed Compound pursuant to Section 2.9.3(c), or (ii) a Combination Therapy   (including any Proprietary Combination), Combination Product or Companion Diagnostic is   approved by the JSC pursuant to Section 5.2.4(b) for inclusion in the Development Plan; then, in   each case (i) and (ii), any further Development activities with respect to such Licensed Compound   or for such Licensed Product for use in such Combination Therapy or as a Combination Product,   or such Companion Diagnostic, as applicable, shall be in accordance with the Development Plan   as approved by the JSC and the other terms and conditions of this Agreement.                                            -63-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

                       (d)   [ * ].  The Parties agree (and in the case of Merck, Merck agrees on   behalf of Merck and MCI) as follows with respect to [ * ]: (i) as of the Effective Date, [ * ]; (ii) in   the event that [ * ] for purposes of this Agreement [ * ]; and (iii) except as aforesaid in sub-clause   (ii)[ * ] the [ * ] shall [ * ].                5.2.5 Development Responsibilities.  Subject to the terms and conditions of this   Agreement (including Section 10.4), each Party shall use Commercially Reasonable Efforts to   conduct the Development of the Licensed Product in accordance with the then-approved   Development Plan and shall use Commercially Reasonable Efforts to do so within the   corresponding Development Budget allocations.  Subject to Section 3.2.4(b)(vi) and Section 8.2,   unless otherwise approved by the JSC, neither Party may unilaterally (a) discontinue the   Development of the Licensed Product, (b) terminate any Development Plan, or (c) fail to Initiate,   or terminate after Initiation, any Clinical Trial set forth in a Development Plan.                5.2.6 Development Costs; Costs in Excess of Development Budget.                        (a)   Sharing.  The Parties shall share Allowable Development Costs as   set forth in Section 10.4.                        (b)   Proprietary Product Costs.  For clarity, with respect to any  Development of the Licensed Product for use in a Proprietary Combination, except as otherwise  set forth in the Development Plan (as approved by the JSC), the Proprietary Product Party shall  manufacture and supply such Proprietary Product Party’s Proprietary Product for use in such  Development (including Clinical Trials of the Licensed Product for use in a Proprietary  Combination) and [ * ].  For clarity, unless otherwise set forth in the Development Plan, such  Proprietary Product will be delivered in unpackaged, unlabeled form for use in the Clinical Trials  and both (i) the costs of packaging and labeling such Proprietary Product for use in such Clinical  Trials, and (ii) the transportation costs to deliver such Proprietary Product to the Clinical Trial  sites, shall, in each case (i) and (ii)), be Allowable Development Costs.                     (c)   Permitted Development Overage. The Party that is responsible for  the performance of activities described in the Development Plan shall use Commercially  Reasonable Efforts to ensure that the actual costs and expenses for such Development activities  for Licensed Compounds and the Licensed Product in a Calendar Year do not exceed [ * ] percent  ([ * ]%) of the estimated allocated costs and expenses budgeted for such activity for such Calendar  Year as set forth in the Development Budget (i.e., the costs and expenses for the performance of a  specific activity described in the Development Plan may exceed the estimated allocated costs and  expenses therefor as set forth in the Development Budget by up to [ * ] percent ([ * ]%) (the  “Permitted Development Overage”) and such costs and expenses, to the extent such costs and  expenses are within the Permitted Development Overage and would otherwise have been included  as Allowable Development Costs but for the budget overage, shall be included as Allowable  Development Costs).  If either Party believes that the actual costs and expenses in relation to a  particular Development activity in a Calendar Year will exceed the allocated budget (plus the  Permitted Development Overage) for such activity during such Calendar Year as set forth in the  Development Budget, such Party may request the JSC to review and approve an amendment to the  Development Budget before incurring such excess cost.  In the event that the JSC does not approve                                         -64-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   an increase in the Development Budget for such activity, the Party performing such Development  activity shall be solely responsible for the costs and expenses for Development it incurs which are  in excess of the Development Budget (plus the Permitted Development Overage) (and any such  excess shall not be Allowable Development Costs hereunder); provided that, to the extent such  excess costs and expenses are attributable to reasonable activities performed as a direct result of [  * ] and in each case of [ * ] have been [ * ] but for the [ * ].                5.2.7 Activities under the Existing CTC.  The Parties hereby agree and  acknowledge that (a) from and after the Effective Date, all activities that were being conducted by  the Parties pursuant to the CTC as of the Effective Date shall thereafter be deemed to be conducted  pursuant to this Agreement (including that the clinical trials being conducted by the Parties  pursuant to the CTC as of the Effective Date are included in the Initial Development Plan  hereunder), and will be subject to the terms and conditions of this Agreement (rather than the CTC)  and (b) as of the Effective Date, the CTC shall terminate and be of no further force and effect  (provided that, for clarity, the activities conducted under the CTC prior to such termination shall  continue to be governed by the applicable provisions of the CTC, including any provisions thereof  that survive the termination of the CTC).          5.3   Development Reports; Development Data and Records.                5.3.1 Reports and Data.  Each Party shall keep the JDC reasonably informed  regarding the progress and results of Development activities for the Licensed Compounds and the  Licensed Product performed by such Party, including a quarterly report of results achieved versus  the Development Plan.  Such reports shall also include all Development Data generated since the  last report from any Development activities for a Licensed Compounds or the Licensed Product  hereunder, including Clinical Trials.  Each Party will promptly respond to the other Party’s  reasonable questions regarding any such reports, and shall provide updates on Development  activities for the Licensed Compounds and the Licensed Product to the other Party from time to  time as such other Party may reasonably request.  Notwithstanding the foregoing, a Party shall not  be required to disclose or otherwise provide to the other Party or the JSC (or any Subcommittee)  any Development Data that specifically relates to such Party’s Proprietary Product (but not  specifically related to the use or method of using the applicable Proprietary Combination).                 5.3.2 Use of Development Data.  Prior to publication of Development Data in  accordance with this Agreement, neither Party shall use the Development Data for any purpose  other than (a) to seek Marketing Authorization for the Licensed Product in accordance with this  Agreement, (b) to file and prosecute the Joint Program Patents and enforce any resulting patents  pursuant to this Agreement, (c) with respect to Merck (provided that Merck may not so use  Development Data that is a SeaGen Proprietary Product Program Invention), (i) to file and  prosecute the Merck Program Patents and enforce any resulting patents pursuant to this  Agreement, (ii) with respect to any Merck Proprietary Product used in a Proprietary Combination,  to seek Marketing Authorization for such Merck Proprietary Product, (d) with respect to SeaGen  (provided that SeaGen may not so use Development Data that is a Merck Proprietary Product  Program Invention), (i) to file and prosecute the SeaGen Program Patents and enforce any resulting  patents pursuant to this Agreement, (ii) with respect to any SeaGen Proprietary Product used in a  Proprietary Combination, to seek Marketing Authorization for such SeaGen Proprietary Product,                                        -65-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

   or (e) for internal research purposes (provided that Merck may not so use Development Data that  is a SeaGen Proprietary Product Program Invention and SeaGen may not so use Development Data  that is a Merck Proprietary Product Program Invention); provided, however, that the foregoing  restrictions shall no longer apply to any Development Data that becomes available to the public.               5.3.3 Study Reports.  The Lead Study Party (as the sponsor) for a given Clinical  Trial for the Licensed Product pursuant to a Development Plan shall provide the other Party with  an electronic draft of the final study report for such Clinical Trial as soon as reasonably practicable  after completion of the Clinical Trial, for such other Party to provide comments to the Lead Study  Party, which comments shall be provided within [ * ] days of receipt of the draft of such final study  report.  The Lead Study Party shall consider in good faith such comments and, at either Party’s  reasonable request, the Parties shall meet in person or via teleconference within ten (10) Business  Days after the Lead Study Party’s receipt of such comments to discuss such comments in good  faith.  The Lead Study Party shall provide the other Party with a copy of the final study report for  a given study promptly after such final study report is available.  In the event that a given Clinical  Trial under the Development Plan is for a Proprietary Combination, the Lead Study Party shall not  include any statements in the study report relating to the applicable Proprietary Product which  have not been approved by the applicable Proprietary Product Party, unless otherwise required by  Applicable Law.                 5.3.4 Records.  Each Party shall maintain (and shall cause its Affiliates and  subcontractors performing Development activities with respect to the Licensed Product to  maintain) records, in sufficient detail and in good scientific manner appropriate for patent and  regulatory purposes, which shall fully and properly reflect all work done and results achieved in  the performance of the Development of the Licensed Product.  Each Party shall have the right,  during normal business hours and upon reasonable (and, in any event, not less than thirty (30)  days’) prior written notice, not more than once per Calendar Year (unless for cause), to inspect all  such records of the other Party (which may be redacted for information that is not related to this  Agreement, including, (a) with respect to records of Merck and its Affiliates, redactions for  information specific to the Merck Proprietary Product and not related to a Merck Proprietary  Combination, and (b) with respect to records of SeaGen and its Affiliates, redactions for  information specific to the SeaGen Proprietary Product and not related to a SeaGen Proprietary  Combination or specific to the SeaGen Linker Technology that is not relevant for the Licensed  Product or a Licensed Compound) to the extent reasonably requested for the purposes of this  Agreement.  Such records and the information disclosed therein shall be maintained in confidence  in accordance with Section 9.1.                5.3.5 Data Integrity.  Each Party agrees that it shall carry out all Development  activities for the Licensed Product and collect and record any data generated therefrom in  compliance with Applicable Law and in a manner consistent with the following: (a) data will be  generated using sound scientific techniques and processes, (b) data will be accurately recorded in  accordance with good scientific practices by persons conducting research hereunder, (c) data will  be analyzed appropriately without bias in accordance with good scientific practices, and (d) data  and results will be stored securely and in a manner that can be easily retrieved.         5.4   Lead Study Party; Conduct of Clinical Trials.                                          -66-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

                 5.4.1 With respect to a Clinical Trial of Licensed Product to be conducted   pursuant to the Development Plan, the Lead Study Party shall prepare and submit to the JDC for   review, discussion and approval in accordance with Section 3.3.2(d) the protocol (and any material  amendments thereto) for any such Clinical Trial.               5.4.2 The Lead Study Party for a Clinical Trial shall have operational control of  all applicable Development activities (provided that such activities are consistent with the  Development Plan and this Agreement) and shall act as the sponsor of such Clinical Trial.  The  Lead Study Party shall be responsible for obtaining all necessary approvals and clearances,  including IRB approvals, INDs and other regulatory approvals and customs clearances necessary  for the conduct of such Clinical Trials, in each case, in accordance with this Agreement, and the  Lead Study Party shall ensure that all such approvals and clearances are obtained prior to initiating  performance of the applicable Clinical Trial.   The Lead Study Party shall ensure that the Clinical  Trial is performed in accordance with the protocol and all Applicable Laws, including cGCPs.                5.4.3 The Lead Study Party shall be responsible for selecting the Clinical Trial  sites and clinical trial investigators for the Development activities and entering into clinical trial  agreements in connection therewith.  The clinical trial agreements shall require the Clinical Trial  sites to comply with all Applicable Laws and will contain provisions in accordance with industry  standards, including those relating to confidentiality, data and results, intellectual property and  publications; provided that, in all cases, such agreement shall require that all Know-How  specifically related to the Licensed Product (or any Proprietary Product), including improvements  or modifications thereof, shall be assigned to the Lead Study Party (and thereafter subject to further  assignment as between the Parties as provided for herein).               5.4.4 The Lead Study Party shall prepare and obtain the patient informed consent  forms for the Clinical Trials as part of the Development activities, which shall comply with  Applicable Law.  The Lead Study Party shall ensure that all patient authorizations and consents in  connection with the Clinical Trials permit, in accordance with Applicable Law, sharing of clinical  trial data with the other Party in accordance with this Agreement.         5.5   Regulatory and Safety Responsibility for the Licensed Product.               5.5.1 Approval of MAAs and Core Data Sheet.                     (a)   MAA.  The JDC in collaboration with the JMC shall review and  approve (1) the contents of each MAA for the Licensed Product in the Collaboration Territory,  and (2) the CMC components of any MAA for the Licensed Product in the Territory.  If the CMC  components of any MAA for the Licensed Product have previously been approved as set forth  above, the Lead Regulatory Party may submit such components (or subset thereof) to the  applicable Regulatory Authorities without seeking additional approval; provided that if any  material changes are made to such components or additional CMC information is required to be  submitted together with such components, approval under this Section 5.5.1(a) shall be required.                      (b)   Core Data Sheet.  Merck will lead the preparation and update of the   Core Data Sheet for the Licensed Product, in consultation with SeaGen.  The initial Core Data   Sheet and any changes to the Core Data Sheet shall be agreed between the Parties.  In the event                                        -67-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     that the Parties cannot agree upon the content of the Core Data Sheet or any changes thereto, either   Party may escalate the matter as follows:  (i) if such matter relates to safety labelling, either Party   (through the Alliance Managers) may elect to formally submit such issue to Merck’s [ * ] (or a   person in an equivalent position at Merck) and SeaGen’s [ * ] (or a person in an equivalent position   at SeaGen) for resolution; and (ii) for all other such matters, and for any matter not resolved as   provided in the foregoing clause (i) within [ * ] Business Days after formal submission of such   matter under the foregoing clause (i) for resolution, either Party may elect to submit such issue to   the JSC for final resolution in accordance with Section 3.2.4.  The Lead Regulatory Party in the   applicable country shall be responsible for creating and updating the local product information for   the Licensed Product in the applicable country; provided that the Lead Regulatory Party shall  submit such information to the JDC for approval by the JDC if any material deviations are made  from the Core Data Sheet.  Any changes to the local product information required by Applicable  Laws or a Governmental Authority shall be communicated by the applicable Party to the JDC in a  timely manner.  For purposes of this Agreement, “Core Data Sheet” means a document setting  forth information relating to safety, efficacy, indications, dosing, pharmacology, and other  information concerning the Licensed Product.                5.5.2 Lead Regulatory Party.                     (a)   The regulatory strategy for the Licensed Product in the Territory  shall be governed by the applicable portion of the Development Plan related to regulatory matters  (the “Regulatory Plan”).  The Regulatory Plan shall only be amended upon approval by the JSC.   The Lead Regulatory Party with respect to a given country in the Territory shall be responsible  for, and shall use Commercially Reasonable Efforts to, conduct the activities pursuant to the  Regulatory Plan for the applicable Licensed Product in such country, which shall include the  Parties’ plan for filing MAAs for the applicable Licensed Product in such country, including any  supplements and amendments thereto.                     (b)   The applicable Lead Regulatory Party shall be responsible for taking  the lead with all interactions with Regulatory Authorities (meetings, telephone, etc.) in a given  country in the Territory and for other regulatory matters related to the Licensed Product in such  country in the Territory [ * ].  To the extent permitted by the applicable Regulatory Authority and  Applicable Law, the non-Lead Regulatory Party shall be entitled to have [ * ] to the [ * ] with [ *  ] in the [ * ] for the Licensed Product and (ii)] to the extent [ * ] for the [ * ] (and in each case, [ *  ], the Lead Regulatory Party shall provide notice to the other Party sufficiently in advance of any  such meeting or interaction unless such advance notice is not possible due to the urgency of the  situation, in which case the Lead Regulatory Party shall inform the other Party of the content of  such a meeting as soon as reasonably possible after the meeting has taken place).                     (c)   Subject to Section 5.5.1(b) with respect to the Core Data Sheet, the  Lead Regulatory Party for a country shall also be responsible for preparing all Regulatory  Documentation for the applicable Licensed Product in such country in the Territory [ * ].  The non- Lead Regulatory Party shall have the right to review and comment upon (which comments shall  be made in a timely manner and shall be considered in good faith by the Lead Regulatory Party)  all material Regulatory Documentation for the Licensed Product in the Territory (which material  Regulatory Documentation shall be provided by the Lead Regulatory Party to the other Party                                         -68-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   reasonably prior to submission thereof).  The Lead Regulatory Party shall promptly provide to the  non-Lead Regulatory Party a copy of (i) all material correspondence from any Regulatory  Authority for the Licensed Product, and (ii) final material Regulatory Documentation submitted to  a Regulatory Authority for the Licensed Product after submission thereof.  Without limiting the  foregoing, if the non-Lead Regulatory Party receives any material correspondence from a  Regulatory Authority from a Regulatory Authority for the Licensed Product, it shall promptly  provide copies thereof to the other Party.                       (d)   The Lead Regulatory Party for a country in the Territory shall also  be responsible, in accordance with this Agreement, for submitting and thereafter maintaining  (including all routine maintenance) all (subject to Section 5.5.3) investigational study applications  (including INDs) and all registration dossiers (including MAAs) and all Marketing Authorizations  related to the applicable Licensed Product in such country in the Territory (including with respect  to Pricing Approvals and health technology assessments for the Licensed Product, as applicable),  and all such INDs, MAAs and Marketing Authorizations (including with respect to Pricing  Approvals and health technology assessments for the Licensed Product, as applicable) shall be in  the name of the Lead Regulatory Party (or its Affiliate or sublicensee, or if required under  Applicable Law in a given country, a local Distributor).  The Lead Regulatory Party shall not  withdraw (and shall cause its Affiliates not to withdraw) any Marketing Authorization for the  Licensed Product in the Territory without the prior consent of the JSC.                      (e)   The Lead Regulatory Party for a country in the Territory shall also  be responsible, in accordance with this Agreement, for activities to support the registration of the  Licensed Product, including post-marketing surveillance programs, in accordance with the  Development Plan.                       (f)   With respect to Pricing Approvals and health technology  assessments for the Licensed Product, the following shall apply to the extent permitted by  Applicable Law and the applicable Regulatory Authority:                            (i)   The Lead Regulatory Party shall seek to obtain Pricing  Approvals for the Licensed Product from the applicable Regulatory Authorities, [ * ]; provided,  however, that [ * ] in the event that the [ * ] then, before doing so[ * ] shall [ * ] and shall [ * ] with  respect thereto, however, [ * ].                            (ii)  The Parties hereby agree and acknowledge that the foregoing  provisions of this Section 5.5.2 do not give the non-Lead Regulatory Party the right to receive,  review and comment on Regulatory Documentation or other correspondence with Regulatory  Authorities with respect to, or attend meetings or other interactions with Regulatory Authorities in  connection with, [ * ]; provided, however, that in lieu thereof, (w), the Lead Regulatory Party shall  provide to the JCC [ * ], (x) the Lead Regulatory Party shall provide periodic updates to the JCC  on [ * ], (y) the Lead Regulatory Party [ * ] shall provide to the non-Lead Regulatory Party’s [ * ],  and (z) the Lead Regulatory Party shall provide to the JCC a copy of all final Pricing Approvals  (and any amendments thereto) for the Licensed Product promptly following receipt from the  applicable Regulatory Authority.  Notwithstanding the foregoing provisions of this Section                                        -69-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

     5.5.2(f)(ii), at least [ * ] months prior to the launch of the Licensed Product in the Collaboration   Territory, [ * ].                             (iii) As set forth in Section 3.5.2(f), upon the Lead Regulatory   Party’s receipt of Marketing Authorization, [ * ], for a particular country [ * ], the JCC shall [ * ]   to the JSC regarding [ * ].  Upon receipt of such recommendation, the JSC shall, in accordance   with Section 3.2.3(h), review, discuss and determine whether to approve, as appropriate, [ * ].                      (g)   The Parties shall reasonably cooperate, and shall provide such   reasonable assistance as may be reasonably requested by the other Party, in connection with the   activities relating to the Licensed Product described in this Section 5.5.2.                5.5.3 Lead Study Party.  Notwithstanding Section 5.5.1, if the Lead Study Party   for a given Clinical Trial is not the Lead Regulatory Party in a certain country, then such Lead   Study Party shall be responsible for regulatory matters in such country with respect to such Clinical   Trial, including obtaining and maintaining the IND for such Clinical Trial in its (or its Affiliate’s)   name; provided that the Parties shall cooperate and coordinate with respect to all communications,   filings and meetings with respect to such Clinical Trial as provided in Section 5.5.2; provided,   further, that if one Party is the Lead Study Party and the other Party is the Lead Regulatory Party,   then, at the Lead Study Party’s reasonable request, the Lead Study Party may exercise the rights   of reference granted to it under Article 2 to reference the Lead Regulatory Party’s existing INDs  for the applicable Licensed Product, in connection with the applicable Clinical Trial, and, in any  case, the Lead Regulatory Party shall execute the necessary documents and provide necessary  information to permit such reference to its Regulatory Documentation.                 5.5.4 References to Proprietary Product in Licensed Product Regulatory   Documentation and Communications.  Notwithstanding Section 5.5.1, 5.5.2 or 5.5.3, the  Proprietary Product Party shall have the right to review and approve (and if the other Party is the  Lead Regulatory Party or Lead Study Party, as applicable, such other Party shall afford the  Proprietary Product Party the right to review and approve) the content of any Regulatory  Documentation for the Licensed Product and other regulatory correspondence for the Licensed  Product to the extent that, in each case, such content refers to its Proprietary Product.  Without  limiting the foregoing, with respect to Regulatory Documentation or communications with a  Regulatory Authority for the Licensed Product that specifically pertain to a Proprietary Product  Party’s Proprietary Product (in the event the other Party is the Lead Regulatory Party or Lead  Study Party, as applicable), the other Party (as the Lead Regulatory Party or Lead Study Party, as  applicable) shall provide to the Proprietary Product Party any comments or other inquiries from a  Regulatory Authority it receives that specifically pertain to the Proprietary Product Party’s  Proprietary Product, and the Proprietary Product Party shall promptly review and respond to such  comment or inquiry and such other Party (as the Lead Regulatory Party or Lead Study Party, as  applicable) shall forward such response to the Regulatory Authority on the Proprietary Product  Party’s behalf.  The Parties agree to work together in good faith to provide responses in a timely  manner such that each Party is able to meet deadlines for submissions to Regulatory Authorities.                 5.5.5 Regulatory Documentation for Proprietary Products.  The provisions of  this Section 5.5.5 shall apply only with respect to submissions, documents and other                                         -70-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     correspondence submitted to Regulatory Authorities with respect to a Proprietary Product Party’s   Proprietary Product for use in a Proprietary Combination (and, for clarity, shall not apply with   respect to submissions, documents and other correspondence submitted to Regulatory Authorities   for the Licensed Product itself for use in the Proprietary Combination, which shall be governed by   the foregoing provisions of this Section 5.5).                        (a)   Notwithstanding the foregoing provisions of this Section 5.5, the   applicable Proprietary Product Party shall be responsible for preparing all submissions, documents   and other correspondence submitted to applicable Regulatory Authorities for such Proprietary   Product Party’s Proprietary Products for use in a Proprietary Combination in the Territory,   including INDs, MAAs and Marketing Authorizations (including product labeling and including   in connection with pricing/reimbursement approvals and health technology assessments), in each   case, for the Proprietary Product, and amendments and supplements thereto (collectively, the   “Proprietary Product Regulatory Documentation”).                        (b)   The applicable Proprietary Product Party shall (i) promptly provide   to the other Party a copy of those portions of all material correspondence from any Regulatory   Authority with respect to Proprietary Product Regulatory Documentation to the extent specifically   pertaining to the Licensed Compound or Licensed Product (but excluding pricing/reimbursement   approvals and health technology assessments for the Proprietary Product, as applicable), (ii)   promptly provide to the other Party a copy of those portions of final material Proprietary Product   Regulatory Documentation that specifically pertain to Licensed Compound or Licensed Product   after submission thereof (but excluding pricing/reimbursement approvals and health technology   assessments for the Proprietary Product, as applicable) and (iii) keep the other Party informed   regarding all material regulatory matters that specifically pertain to the Licensed Compound or the   Licensed Product for use in the applicable Proprietary Combinations (but excluding   pricing/reimbursement-related and health technology assessment-related submissions,   communications and approvals, in each case, for the Proprietary Product, as applicable).                      (c)   For clarity, notwithstanding Section 5.5.2(b), the non-Proprietary   Product Party shall not be entitled to have representatives present at meetings or other interactions   with Regulatory Authorities for the other Party’s Proprietary Products; provided, however, that the   Proprietary Product Party shall provide updates to the other Party with respect to such meetings or   other material interactions with Regulatory Authorities to the extent specifically pertaining to the   Licensed Compound or the Licensed Product (but excluding pricing/reimbursement-related and  health technology assessment-related meetings or other interactions, in each case, for the  Proprietary Product, as applicable).                       (d)   Except as expressly set forth in the foregoing provisions of this  Section 5.5.5, the non-Proprietary Product Party shall have no right to review or receive any  regulatory documentation with respect to any of the Proprietary Product Party’s Proprietary  Products.                 5.5.6 Components of Proprietary Combinations Sold Separately.  For the  avoidance of doubt, with respect to a Proprietary Combination, the Parties expect and intend for  the Licensed Product and the applicable Proprietary Product in such Proprietary Combination to                                         -71-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     be priced and sold separately, and, as between the Parties, the applicable Proprietary Product Party  shall have the sole right, in its discretion (unless and solely to the extent the applicable Proprietary  Combination is a Combination Product hereunder, in which case the Parties will discuss in good   faith and mutually agree on how to handle establishing the terms and conditions relating to the sale   of such Combination Product), to sell its Proprietary Product and establish any terms and   conditions relating to the sale thereof, including the price (including discounts, rebates and other   forms of price concessions), which activities with respect to such Proprietary Product shall be   deemed to be outside the scope of this Agreement (and, for clarity, the Proprietary Product Party   shall not be required to share with the non-Proprietary Product Party any pricing information   (including any information with respect to Pricing Approvals and health technology assessments   for its Proprietary Product) with respect to such Proprietary Product Party’s Proprietary Products).                  5.5.7 Safety Reporting.                        (a)   Within [ * ] days after the Effective Date, the Parties (or their   respective Affiliates) shall initiate negotiations to enter into a pharmacovigilance agreement for   the Licensed Product (the “Pharmacovigilance Agreement”) for exchanging adverse event and   other safety information relating to the Licensed Product worldwide.  In the event of any   inconsistency between the terms of this Agreement and the Pharmacovigilance Agreement, the   terms of this Agreement shall prevail and govern, except to the extent such conflicting terms   relating directly to the pharmacovigilance responsibilities of the Parties (including the exchange   of safety data), in which case the terms of the Pharmacovigilance Agreement shall prevail and   govern.                      (b)   SeaGen (or its Affiliate) shall provide Merck an electronic copy to   include [ * ] for all legacy data of applicable adverse events for the Licensed Product that is within   SeaGen’s (or its Affiliate’s) possession, for inclusion in Merck’s safety database for the Licensed   Product.                         (c)   Upon receipt and completion of processing of all legacy data as set   forth in the foregoing clause (b), Merck will assume the role of global safety database holder for   the Licensed Product.  SeaGen may continue to hold a mirror safety database for the Licensed   Product.                       (d)   Each Party hereto agrees to notify the other Party of any information   of which such Party becomes aware concerning any adverse events with respect to the Licensed   Product.  All serious adverse events shall be exchanged as a processed case (on a CIOMS-1 form   in English) within [ * ] calendar days of receipt and all non-serious adverse events shall be  exchanged as a processed case (on a CIOMS-1 form in English) within [ * ] calendar days of   receipt.  Adverse events with respect to the Licensed Product from Clinical Trials that are drug-  related, fatal and life threatening shall be exchanged (on a CIOMS-1 form in English) within [ * ]   calendar days.  The Pharmacovigilance Agreement shall ensure that adverse event and other safety   information is exchanged according to a schedule that will permit each Party to comply with   Applicable Law, including any local regulatory requirements.                        (e)   It is understood and agreed that these safety reporting requirement   provisions are based on the policies and procedures of the Parties and regulatory reporting                                        -72-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     requirements. In the event of changes to regulatory requirements for safety reporting, the Parties   agree to comply with any such reasonably required revised notification requirements.                5.5.8 Regulatory Agreement.  At the request of either Party, the Parties shall   negotiate in good faith and enter into a regulatory agreement setting forth additional details with   respect to regulatory matters related to Licensed Compound and Licensed Product and any   Proprietary Product that is the subject of a Proprietary Combination (the “Regulatory   Agreement”).                          ARTICLE 6    COMMERCIALIZATION         6.1   Commercialization.  All Commercialization activities for Licensed Compounds  and the Licensed Product for use in the Field in the Territory will be performed by the Parties in  accordance with this Agreement and the applicable Commercialization Plan.  Subject to the terms  of this Agreement, each Party shall use Commercially Reasonable Efforts to perform the activities  allocated to such Party under the applicable Commercialization Plan.  During the Term, neither  Party (nor their respective Affiliates) shall undertake any Commercialization activities with respect  to any Licensed Compounds or the Licensed Product for use in the Field in the Territory, except  to the extent consistent with the applicable Commercialization Plan and Commercialization  Guidelines.              6.2   Commercialization Plan.                6.2.1 Commercialization Plan.  The Commercialization of the Licensed  Compounds and the Licensed Product for the Territory shall be conducted pursuant to a   comprehensive, Territory-wide commercialization plan approved by the JSC (which shall be   broken down by region, including, at a minimum, for the SeaGen Territory, Merck Territory and   Collaboration Territory) (each, a “Commercialization Plan”); provided that with respect to the  SeaGen Territory and the Merck Territory, the Commercialization Plan shall be a higher level plan  (with more specific details to be set forth in the applicable Regional Commercialization Sub-Plans  as set forth in Section 6.2.4).  Each Commercialization Plan shall include (i) a Commercialization  Budget (which shall be further broken down by region, including, at a minimum, for the SeaGen  Territory, Merck Territory and Collaboration Territory), (ii) the Licensed Product forecast for  Commercialization purposes and (iii) a plan for the launch sequence of the Licensed Product in  the applicable countries in the Territory.  The Commercialization Plan shall (a) subject to Section  4.1.2, allocate Commercialization activities between the Parties in the Collaboration Territory  (including the Promotion of the Licensed Product in and the preparation of the Promotional  Materials and Other Field-Based Materials for, in each case, the applicable countries or regions in  the Collaboration Territory), including an allocation of the Commercialization Budget for such  activities, (b) unless otherwise agreed to by the Parties in writing, allocate all Commercialization  activities in the SeaGen Territory (including the Promotion of the Licensed Product in and the   preparation of the Promotional Materials and Other Field-Based Materials for, in each case, the   SeaGen Territory) to SeaGen, and (c) unless otherwise agreed to by the Parties in writing, allocate   all Commercialization activities in the Merck Territory (including the Promotion of the Licensed   Product in and the preparation of the Promotional Materials and Other Field-Based Materials for,   in each case, the Merck Territory) to Merck, but in all cases, the Commercialization Plan shall be                                         -73-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     consistent with Sections 6.4, 6.5 and 6.6.  For clarity, the Commercialization Plan may also include   activities with respect to the Commercialization of a Companion Diagnostic.  Both Parties shall   have the right to propose to the JCC additional Commercialization activities with respect to the   Licensed Product not then part of the applicable Commercialization Plan.  In the event of any   inconsistency between the Commercialization Plan and this Agreement, the terms of this   Agreement shall prevail.                 6.2.2 Initial Commercialization Plan.  The initial Commercialization Plan  (including Commercialization Budget) for the Licensed Product shall be prepared jointly by the  Parties and submitted to the JCC for its review (and ultimately submitted to the JSC for its review  and approval) at least [ * ] prior to the anticipated issuance of the first Marketing Authorization by  a Regulatory Authority for such Licensed Product (each, an “Initial Commercialization Plan”).    The Initial Commercialization Plan for the Licensed Product shall be effective from the date   approved by the JSC until amended and updated by the JCC, and approved by the JSC, in   accordance with this Agreement.  For the avoidance of doubt, no Commercialization of the   Licensed Product in the Territory shall occur unless and until the JSC approves the Initial   Commercialization Plan with respect thereto.               6.2.3 Amendments to Commercialization Plan.  On an annual basis, or more  often as the Parties may deem appropriate, the JCC shall prepare proposed amendments to the  then-current Commercialization Plan for the Licensed Product and the corresponding  Commercialization Budget, for approval of the JSC no later than [ * ] of each Calendar Year.  Such  amended Commercialization Plan shall cover the applicable period as set forth therein and shall  contain corresponding updates to the Commercialization Budget included therein, which shall  appropriately itemize the costs and expenses separately for each Commercialization activity for  the applicable Licensed Product, to the extent practicable.  Such updated and amended  Commercialization Plan shall reflect any changes, reallocation of resources with respect to, or  additions to the then-current Commercialization Plan.  In addition, the JCC may prepare  amendments to the Commercialization Plan and corresponding allocation of the  Commercialization Budget for the JSC’s approval from time to time during the Calendar Year in  order to reflect changes in such plan and budget, in each case, in accordance with the foregoing.   Once approved by the JSC, the amended Commercialization Plan (and Commercialization Budget)  shall become effective for the applicable period on the date approved by the JSC (or such other  date as the JSC shall specify).  Any JSC-approved amended Commercialization Plan (and  Commercialization Budget) for the Licensed Product shall supersede the previous  Commercialization Plan (and Commercialization Budget) for such Licensed Product for the  applicable period.  Notwithstanding the foregoing, in the event that the JSC does not approve a  given amended Commercialization Plan (or Commercialization Budget, as applicable) for the  Licensed Product, then the then-current Commercialization Plan and Commercialization Budget  (for the preceding Calendar Year) for such Licensed Product, as applicable, shall be deemed to be  automatically renewed for the upcoming Calendar Year.                6.2.4 Regional Commercialization Plans.  Following the preparation of the  Commercialization Plan for a given Calendar Year, no later than [ * ] of each applicable Calendar  Year, (a) SeaGen, for the SeaGen Territory, (b) Merck, for the Merck Territory, and (c) the Parties  jointly, for the Collaboration Territory, shall prepare regional commercialization plans with                                        -74-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     additional details related to the Commercialization of the applicable Licensed Product in the   SeaGen Territory, Merck Territory or Collaboration Territory, as applicable (each, a “Regional   Commercialization Sub-Plan”), for submission to and review by the JCC, and approval by the   JSC (provided that, with respect to the Regional Commercialization Sub-Plan for the Merck   Territory and the SeaGen Territory, such approval by the JSC shall only be for consistency with   the overall approved Commercialization Plan for the applicable Calendar Year, but allowing for   differences in regional and local factors to be addressed).  In all cases, the Party(ies) preparing a   given Regional Commercialization Sub-Plan shall ensure that such Regional Commercialization   Sub-Plan is consistent with the Commercialization Plan (including Commercialization Budget) for   the applicable Calendar Year, and the Party(ies) preparing a given Regional Commercialization   Sub-Plan may (but shall not be required to) further break down such Regional Commercialization   Sub-Plan on a country-by-country basis.  In addition, the Party that prepared the applicable  Regional Commercialization Sub-Plan (or either Party for the Regional Commercialization Sub- Plan for the Collaboration Territory) may propose amendments to a given Regional  Commercialization Sub-Plan from time to time during the Calendar Year in order to reflect  changes in such plan, and shall submit such proposed amendments to the JSC for review and  approval (provided that, with respect to the Regional Commercialization Sub-Plan for the Merck  Territory and the SeaGen Territory, such approval by the JSC shall only be for consistency with  the overall approved Commercialization Plan, but allowing for differences in regional and local  factors to be addressed).  Once approved by the JSC, the applicable Regional Commercialization  Sub-Plan (and any amendments thereto) shall become effective for the applicable period on the  date approved by the JSC (or such other date as the JSC shall specify).  Any JSC-approved  amended Regional Commercialization Sub-Plan for the Licensed Product shall supersede the  previous Regional Commercialization Sub-Plan for the applicable region for such Licensed  Product for the applicable period.  Notwithstanding the foregoing, in the event that the JSC does  not approve a Regional Commercialization Sub-Plan for the Licensed Product for a given Calendar  Year for a given region, then (a) any portion (if any) of the Regional Commercialization Sub-Plan   for such Licensed Product for such Calendar Year for such region that is approved by the JSC shall   be deemed to be the Regional Commercialization Sub-Plan for such Licensed Product for such  Calendar Year for such region, and (b) if no such portion is so approved, there shall be no Regional  Commercialization Sub-Plan for such Licensed Product for such Calendar Year for such region  (provided that, for clarity, in each case ((a) and (b)), the overall Commercialization Plan for such  Licensed Product for such Calendar Year shall continue to apply with respect to the applicable  region).  In the event of a conflict between the Commercialization Plan and a given Regional  Commercialization Sub-Plan, the Commercialization Plan shall control.                6.2.5 Commercialization Responsibilities.  Subject to the terms and conditions  of this Agreement (including Section 10.4), each Party shall use Commercially Reasonable Efforts  to conduct the Commercialization of the Licensed Product in accordance with the then-approved  Commercialization Plan (and the applicable Regional Commercialization Sub-Plan, if applicable)  and shall use Commercially Reasonable Efforts to do so within the corresponding  Commercialization Budget allocations.                 6.2.6 Commercialization Costs; Costs in Excess of the Commercialization  Budget.                                           -75-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

                     (a)   With respect to Commercialization of the Licensed Product for the  Territory, the Parties shall share Allowable Commercialization Costs as set forth in Section 10.4.                         (b)   The Party that is responsible for the performance of activities  described in the Commercialization Plan shall use Commercially Reasonable Efforts to ensure that  the actual costs and expenses for such Commercialization activities for the Licensed Product in a  Calendar Year do not exceed [ * ] percent ([ * ]%) of the estimated allocated costs and expenses  budgeted for such activity for such Calendar Year as set forth in the Commercialization Budget  (i.e., the costs and expenses for the performance of a specific activity described in the  Commercialization Plan may exceed the estimated allocated costs and expenses therefor as set  forth in the Commercialization Budget by up to [ * ] percent ([ * ]%) (the “Permitted  Commercialization Overage”) and such costs and expenses, to the extent such costs and expenses  are within the Permitted Commercialization Overage and would otherwise have been included as  Allowable Commercialization Costs but for the budget overage, shall be included as Allowable  Commercialization Costs).  If either Party believes that the actual costs and expenses in relation to  a particular Commercialization activity in a Calendar Year will exceed the allocated budget (plus  the Permitted Commercialization Overage) for such activity during such Calendar Year as set forth  in the Commercialization Budget, such Party may request the JSC to review and approve an  amendment to the Commercialization Budget before incurring such excess cost.  In the event that  the JSC does not approve an increase in the Commercialization Budget for such activity, then the  Party performing such Commercialization activity shall be solely responsible for the costs and  expenses for Commercialization it incurs which are in excess of the Commercialization Budget  (plus the Permitted Commercialization Overage) (and any such excess shall not be Allowable  Commercialization Costs hereunder); provided that, to the extent such excess costs and expenses  are attributable to reasonable activities performed as a direct result of [ * ] have been [ * ] for the  [ * ].         6.3   Commercialization Reports.  Each Party shall keep the JCC reasonably informed  regarding the progress and results of Commercialization activities for the Licensed Product for the  Territory performed by such Party, including a [ * ] report of material activities performed versus  the Commercialization Plan (which [ * ] reports shall be in a form, and include such content, as  determined by the JCC).  Each Party will promptly respond to the other Party’s reasonable  questions regarding any such reports, and shall provide updates on Commercialization activities  for the Licensed Product to the other Party from time to time as such other Party may reasonably  request.         6.4   Lead Distribution Party.                 6.4.1 Certain Rights and Responsibilities of Lead Distribution Party.  The  Lead Distribution Party for the Licensed Product in a given country shall be solely responsible for  (a) handling all order processing, invoicing and collection, distribution, returns, inventory and  receivables arising from sales to Third Parties (collectively, “Distribution”) and (b) for booking  of sales of such Licensed Product in such country.              6.4.2 Terms of Sale to Customers.  To the extent permitted by Applicable Law,  the Lead Distribution Party shall have the right and responsibility for establishing and modifying                                        -76-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

     the terms and conditions of sale of the Licensed Product to customers in the applicable countries,   including any terms and conditions relating to the price at which the Licensed Product will be sold   to customers (including discounts, rebates and other forms of price concessions); provided that, in   connection therewith, the following shall apply:                      (a)   subject to Applicable Law, the Lead Distribution Party shall not [ *   ];                        (b)   in those countries where Regulatory Authorities issue Pricing   Approvals for the Licensed Product, such pricing decisions and terms and conditions shall in all   cases comply with all applicable Pricing Approvals from the applicable Regulatory Authorities in   the country of sale as may be obtained by the Lead Regulatory Party as set forth in Section 5.5.2;   and                      (c)   such pricing decisions and terms and conditions shall, to the extent   permitted by Applicable Law, also [ * ] (but subject in all cases to Section 6.4.2(b) if applicable,   which shall control in the event of a conflict); provided, however, that in the event that the [ * ]   then, before doing so, [ * ] shall [ * ] and shall [ * ] with respect thereto, however, [ * ], but subject   in all cases to Section 6.4.2(b).                6.4.3 Distribution Model in the European Collaboration Territory.  Given   that SeaGen is the Lead Distribution Party and Merck is the Lead Regulatory Party in the European   Collaboration Territory, prior to the launch of the Licensed Product in the European Collaboration  Territory, the Parties (or their respective Affiliates) shall negotiate in good faith and enter into a  distribution agreement for the Licensed Product in the European Collaboration Territory (the   “European Collaboration Territory Distribution Agreement”) for Merck to appoint SeaGen as   the distributor of the Licensed Product in the European Collaboration Territory and to allocate and   coordinate certain additional specific rights and responsibilities between the Parties with respect   to the Licensed Product with the goal of ensuring that SeaGen can exercise its rights and perform   its obligations as the Lead Distribution Party and Merck can exercise its rights and perform its   obligations as the Lead Regulatory Party in the European Collaboration Territory.          6.5   Promotional Materials; Other Field-Based Materials.                 6.5.1 General.  Subject to Sections 6.5.2 and 6.5.3, the Party allocated the   applicable task pursuant to the Commercialization Plan for a given country in the Territory, shall   be responsible for preparing the Promotional Materials and the Other Field-Based Materials for   the applicable Licensed Product (including, for clarity, any such Promotional Materials and Other   Field-Based Materials for the Licensed Product for use in any Combination Therapy) in such  country. All Promotional Materials shall comply with the Promotional Materials Guidelines, all  Other Field-Based Materials shall comply with the Other Field-Based Materials Guidelines, and   all Promotional Materials and all Other Field-Based Materials shall also, in each case, be consistent  with the Commercialization Guidelines and the Commercialization Plan.  The Party that prepares  the applicable Promotional Materials or Other Field-Based Materials shall be responsible for   ensuring that such Promotional Materials or Other Field-Based Materials comply with Applicable  Law.                                         -77-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

               6.5.2 Materials other than Proprietary Combination Materials.                       (a)   Subject to Section 6.5.3, with respect to Promotional Materials or  Other Field-Based Materials, as applicable, for the Collaboration Territory, the Parties shall  reasonably cooperate and coordinate in connection with the preparation of such Promotional  Materials and Other Field-Based Materials, as applicable (such Promotional Materials for the  Collaboration Territory, the “Joint Promotional Materials” and such Other Field-Based  Materials for the Collaboration Territory, the “Joint Other Field-Based Materials”).  The Party  responsible for preparing Joint Promotional Materials or Joint Other Field-Based Materials, as  applicable, shall provide proposed versions of such Joint Promotional Materials or Joint Other  Field-Based Materials to the other Party for review and approval, in particular, for compliance  with Applicable Law and the Promotional Materials Guidelines or Other Field-Based Materials  Guidelines, as applicable.  Neither Party shall use any Promotional Materials to Promote the  Licensed Product in the Collaboration Territory other than Joint Promotional Materials that have  been reviewed and approved by the other Party as aforesaid; provided that for clarity, each Party  shall have the right to Promote the Licensed Product to the approved labeling for such Licensed  Product in accordance with Applicable Laws.  Neither Party shall use any other field based  materials [ * ] to conduct the applicable field-based activities [ * ] for the Licensed Product in the  Collaboration Territory other than Joint Other Field-Based Materials that have been reviewed and  approved by the other Party as aforesaid.                     (b)   Subject to Section 6.5.3, unless otherwise set forth in the  Commercialization Plan, SeaGen, with respect to the SeaGen Territory, and Merck, with respect  to the Merck Territory, shall be responsible for preparing the local Promotional Materials and local  Other Field-Based Materials, as applicable, for the SeaGen Territory and Merck Territory,  respectively; provided that, in each case, unless otherwise agreed to by the JCC, such local  Promotional Materials and local Other Field-Based Materials shall be based on the Joint  Promotional Materials and Joint Other Field-Based Materials with such changes as may be  reasonably required to translate such materials into local language and to otherwise comply with  local requirements, guidelines and customs in the applicable country (provided that, in all cases,  such materials shall comply with the Promotional Materials Guidelines or Other Field-Based  Materials Guidelines, as applicable).  The Party that prepares the applicable local Promotional  Materials or local Other Field-Based Materials shall be responsible for ensuring that such  Promotional Materials or Other Field-Based Materials comply with Applicable Law.                 6.5.3 Proprietary Combination Materials for use under this Agreement.  Notwithstanding the foregoing provisions of this Section 6.5 or any other provision of this  Agreement:                     (a)   With respect to the Promotion and other field-based activities for the  Licensed Product for use in a Merck Proprietary Combination to be conducted by the Parties  hereunder, Merck shall lead the preparation of the Promotional Materials and Other Field-Based  Materials, including preparing all revisions, updates and translations thereof, as applicable, for the  Licensed Product for use in a Merck Proprietary Combination (such Promotional Materials, the  “Merck Licensed Product Combination Promotional Materials” and such Other Field-Based  Materials, the “Merck Licensed Product Combination Other Field-Based Materials”)                                        -78-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

     throughout the Territory, in each case, in consultation with SeaGen.  All Merck Licensed Product   Combination Promotional Materials and Merck Licensed Product Combination Other Field-Based   Materials shall comply with the Promotional Materials Guidelines and Other Field-Based   Materials Guidelines, respectively, and, in each case, be consistent with the Commercialization   Guidelines and the Commercialization Plan.  Merck shall ensure that the Merck Licensed Product   Combination Promotional Materials and Merck Licensed Product Combination Other Field-Based   Materials comply with Applicable Law.  Merck shall provide the proposed versions of such Merck   Licensed Product Combination Promotional Materials or Merck Licensed Product Combination   Other Field-Based Materials [ * ] to SeaGen for review and comment, in particular for compliance   with Applicable Law and the Promotional Materials Guidelines or Other Field-Based Materials   Guidelines, as applicable, and Merck shall [ * ] by SeaGen.  Notwithstanding anything to the   contrary contained herein, nothing contained herein shall be deemed to grant to SeaGen (and its   Affiliates) any right to promote any Merck Proprietary Product (whether as a standalone product   or in combination with any other product); provided that, for clarity, SeaGen shall have the right   to Promote the Licensed Product for use in a Merck Proprietary Combination in accordance with   this Agreement and the applicable Commercialization Plan.                       (b)   With respect to the Promotion and other field-based activities for the   Licensed Product for use in a SeaGen Proprietary Combination to be conducted by the Parties   hereunder, SeaGen shall lead the preparation of the Promotional Materials and Other Field-Based   Materials, including preparing all revisions, updates and translations thereof, as applicable, for the   Licensed Product for use in a SeaGen Proprietary Combination (such Promotional Materials, the   “SeaGen Licensed Product Combination Promotional Materials” and such Other Field-Based   Materials, the “SeaGen Licensed Product Combination Other Field-Based Materials”)   throughout the Territory, in each case, in consultation with Merck.  All SeaGen Licensed Product   Combination Promotional Materials and SeaGen Licensed Product Combination Other Field-  Based Materials shall comply with the Promotional Materials Guidelines and Other Field-Based   Materials Guidelines, respectively, and, in each case, be consistent with the Commercialization   Guidelines and the Commercialization Plan.  SeaGen shall ensure that the SeaGen Licensed   Product Combination Promotional Materials and SeaGen Licensed Product Combination Other   Field-Based Materials comply with Applicable Law.  SeaGen shall provide the proposed versions  of such SeaGen Licensed Product Combination Promotional Materials or SeaGen Licensed  Product Combination Other Field-Based Materials [ * ] to Merck for review and comment, in   particular for compliance with Applicable Law and the Promotional Materials Guidelines or Other   Field-Based Materials Guidelines, as applicable, and SeaGen shall [ * ] by  Merck.    Notwithstanding anything to the contrary contained herein, nothing contained herein shall be   deemed to grant to Merck (and its Affiliates) any right to promote any SeaGen Proprietary Product   (whether as a standalone product or in combination with any other product); provided that, for   clarity, Merck shall have the right to Promote the Licensed Product for use in a SeaGen Proprietary   Combination in accordance with this Agreement and the applicable Commercialization Plan.                 6.5.4 Proprietary Combination Materials for use Outside this Agreement.   Notwithstanding the foregoing provisions of this Section 6.5 or any other provision of this   Agreement:                                          -79-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

                       (a)   With respect to the promotion and other field-based activities for a   Merck Proprietary Product for use in a Merck Proprietary Combination to be conducted by or on   behalf of Merck outside of this Agreement (i.e., outside of the promotion and other field-based   activities for the Licensed Product under this Agreement), [ * ], for any Merck Proprietary Product   for use in a Merck Proprietary Combination, including such materials that refer to the Licensed   Product (such Promotional Materials, the “Merck Proprietary Combination Outside   Promotional Materials” and such Other Field-Based Materials, the “Merck Proprietary   Combination Outside Other Field-Based Materials”) throughout the Territory, and SeaGen   shall [ * ], respectively. Merck shall ensure that the Merck Proprietary Combination Outside   Promotional Materials and Merck Proprietary Combination Outside Other Field-Based Materials   comply with Applicable Law and shall be responsible for the use thereof. For clarity, the Merck   Proprietary Combination Outside Promotional Materials and Merck Proprietary Combination   Outside Other Field-Based Materials shall be used by or on behalf of Merck for use in the   promotion of the applicable Merck Proprietary Product for use in the Merck Proprietary   Combination, and not for the Promotion of the Licensed Product for use in the Merck Proprietary   Combination.                       (b)   With respect to the promotion and other field-based activities for a   SeaGen Proprietary Product for use in a SeaGen Proprietary Combination to be conducted by or   on behalf of SeaGen outside of this Agreement (i.e., outside of the promotion and other field-based   activities for the Licensed Product under this Agreement), SeaGen [ * ], for any SeaGen   Proprietary Product for use in a SeaGen Proprietary Combination, including such materials that   refer to the Licensed Product (such Promotional Materials, the “SeaGen Proprietary  Combination Outside Promotional Materials” and such Other Field-Based Materials, the  “SeaGen Proprietary Combination Outside Other Field-Based Materials”) throughout the  Territory, and Merck shall [ * ], respectively.  SeaGen shall ensure that the SeaGen Proprietary  Combination Outside Promotional Materials and SeaGen Proprietary Combination Outside Other  Field-Based Materials comply with Applicable Law and shall be responsible for the use thereof.   For clarity, the SeaGen Proprietary Combination Outside Promotional Materials and SeaGen  Proprietary Combination Outside Other Field-Based Materials shall be used by or on behalf of  SeaGen for use in the promotion of the applicable SeaGen Proprietary Product for use in the  SeaGen Proprietary Combination, and not for the Promotion of the Licensed Product for use in the  SeaGen Proprietary Combination.          6.6   Promotion for the Licensed Product.               6.6.1 Inside the Collaboration Territory.                       (a)   General.  Subject to Section 4.1.2, the Parties intend that each Party  will have responsibility for approximately [ * ] (the exact amount to be determined on a  commercially reasonable basis) of the Promotion activities for the Licensed Product in each of (i)  the US Collaboration Territory and (ii) the European Collaboration Territory, through Co- Promotion of the Licensed Product; provided that a Party shall only be allocated Promotion  activities to the extent such Party has reasonable commercial capabilities to perform such  Promotion activities.  All Promotion activities for the Licensed Product (including for use in                                         -80-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     Proprietary Combinations) in the Collaboration Territory shall be consistent with the applicable   Commercialization Plan.                      (b)   Promotion Agreement.  The Parties will enter Promotion   agreements to coordinate the Promotion activities for the Licensed Product in the countries (or   regions) in the Collaboration Territory (each, a “Promotion Agreement”), which shall also   include provisions for establishing call plans (and consequences of call shortfalls) and allocating   Field Force FTE Costs, as well as agreed target customers or stakeholders on a regional basis.  The   Parties will use good faith efforts to enter into a Promotion Agreement at least [ * ] months prior   to the anticipated First Commercial Sale of the Licensed Product in the applicable country or   region in the Collaboration Territory.                 6.6.2 SeaGen Territory.  For clarity, as between the Parties, SeaGen (in addition   to being the Lead Distribution Party) shall have the sole right to conduct Promotion activities for   the Licensed Product in the SeaGen Territory in accordance with this Agreement and the   Commercialization Plan.                6.6.3 Merck Territory.  For clarity, as between the Parties, Merck (in addition   to being the Lead Distribution Party) shall have the sole right to conduct Promotion activities for   the Licensed Product in the Merck Territory in accordance with this Agreement and the   Commercialization Plan.          6.7   Unsolicited Requests for Medical Information.  Each Party will respond to   unsolicited requests for information from health care professionals in the Territory with respect to   the Licensed Product in a manner consistent with such Party’s current business practices and   Applicable Law.  Notwithstanding the foregoing, unless otherwise set forth in the   Commercialization Plan, the Lead Distribution Party in a given country shall develop and approve,   in consultation with the other Party, responses relating to the Licensed Product for use by both   Parties in addressing these information requests in such country, which responses will be used by   the responding Party in responding to such requests unless otherwise required by Applicable Law.    Nothing in this Agreement shall prohibit or limit either SeaGen or Merck from responding to   unsolicited requests for information with respect to any of their other respective pharmaceutical   products in accordance with its customary business practices and Applicable Law.         6.8   Recalls.                 6.8.1 Licensed Product.                       (a)   Each Party shall promptly provide notice to the other Party (a) if it  is considering withdrawing or recalling or taking similar action (including any product distribution  hold, recall, clinical hold, or market withdrawal; each a “Recall”) with respect to the Licensed  Product in a country of the Territory or (b) of any newly identified safety issue or safety signal or  adverse event related to the Licensed Product or any circumstance arising in such Party’s studies  of the Licensed Product, for which the Party reasonably believes that an action warranting the  Licensed Product Recall may be required to protect public health.  Such notice shall be given by  telephone and e-mail (which notice shall be provided within [ * ], unless such Recall involves an  adverse event, in which case, such notice shall be provided immediately) and confirmed in writing                                        -81-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     promptly thereafter.  The Parties shall promptly meet (either in person or by teleconference or   videoconference, or by other means as agreed to by the Parties) and discuss in good faith the reason   the notifying Party is considering a Recall (including any safety issues or signals), the scope thereof   and the process for undertaking such Recall (provided that such discussions do not delay any action   required to protect public health) and work to jointly implement a strategy and any actions that   may be required to protect public health, with respect to the Licensed Product in one or more   countries in the Territory.                        (b)   If the Parties agree to commence a Recall (whether instituted at the   request of a Regulatory Authority or, subject to the remaining provisions of this Section 6.8,   voluntarily instituted by either Party), then the Party holding the Marketing Authorization for the   applicable Licensed Product in the applicable country shall implement a Recall (the “Recalling   Party”).  If the Parties are unable to agree as to whether to commence a Recall, then either Party   may determine (provided that such determination is made reasonably and in good faith) that a   Recall is necessary in which case the Recalling Party shall institute a Recall; provided that,   notwithstanding the foregoing, the Party that is not the holder of the Marketing Authorization in   the applicable country in the Territory may only unilaterally determine that a Recall is necessary   with respect to such Licensed Product in such country in the event that such Party determines,   reasonably and in good faith, that (A) such Licensed Product in such country is not in compliance   with cGMPs, Applicable Law or applicable specifications or is adulterated or misbranded within   the meaning of the Act or any similar Applicable Law of any applicable jurisdiction or (B) there   is a Safety Issue with respect to such Licensed Product in such country, in which case the Party   holding the Marketing Authorization for the applicable Licensed Product in such country shall   institute a Recall (and shall be the Recalling Party) and the other Party shall provide reasonable   assistance in connection therewith; provided that, for clarity, the Party that does not hold the   Marketing Authorization for the applicable Licensed Product in the applicable country shall have   no right by itself to institute any Recall with respect to the Licensed Product in such country (other   than to cause the Party holding the Marketing Authorization to institute the Recall in accordance   with this Section 6.8).  The other Party shall fully cooperate with the Recalling Party and comply   with the Recalling Party’s reasonable instructions for assistance in carrying out the Recall, and if   the Recalling Party is not the Lead Distribution Party, then, at the request of the Recalling Party   and to the extent permitted pursuant to Applicable Law, the Lead Distribution Party shall   implement the Recall that was instituted by the Recalling Party.  The costs and expenses of   implementing any Recall shall be shared by the Parties equally unless (x) such costs and expenses   are subject to an indemnification obligation by one Party to the other Party under this Agreement   (in which case, such costs and expenses are addressed pursuant to Section 13.1 or Section 13.2   (but subject to Section 13.3, as applicable)) or (y) such costs and expenses are allocated to a Party  pursuant to the terms set forth in Schedule 6.8.                  6.8.2 Proprietary Product.  For clarity, (a) Merck shall have the sole right, in its  discretion and at its own expense, to handle any and all Recalls of Merck Proprietary Product, and  nothing contained herein is granting SeaGen any rights in connection therewith; and (b) SeaGen  shall have the sole right, in its discretion and at its own expense, to handle any and all Recalls of  SeaGen Proprietary Product, and nothing contained herein is granting Merck any rights in  connection therewith.                                          -82-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

                              ARTICLE 7   MANUFACTURE          7.1   Manufacture Generally.                 7.1.1 Licensed Compounds and the Licensed Product.  All Manufacture and   supply of Licensed Compounds and Licensed Product shall be conducted pursuant to a   comprehensive, Territory-wide manufacturing plan (the “Manufacturing Plan”) that sets forth (i)   activities for the scale-up and manufacturing process validation for Licensed Compounds and the   Licensed Product, including the timeline therefor, as well as risk management and other related   activities, (ii) all significant work necessary to establish Manufacturing capacity for the   Development and Commercialization of Licensed Compounds and Licensed Product, including   capital expenditures in relation to the Manufacture of Licensed Compounds or the Licensed   Product (provided that, for clarity, any such capital expenditures which also benefit other products   in addition to the Licensed Compounds and the Licensed Product will be allocated among the   Licensed Compounds and Licensed Products, on the one hand, and such other products on the   other hand, as agreed to by the Parties in good faith), (iii) any Third Party contract manufacturers   to be utilized to Manufacture Licensed Compounds or the Licensed Product, (iv) the anticipated   tasks and responsibilities and resource allocation of the Parties for the Manufacture of Licensed   Compounds and the Licensed Product for Development and Commercialization, (v) matters   related to safety stock, back-up manufacturers and other back-up plans for Manufacturing Licensed   Compounds and the Licensed Product, (vi) the quantity of, and schedule for delivery for, clinical   supplies of the Licensed Product necessary to conduct all Clinical Trials (which shall be consistent   with the Development Plan), (vii) a unit forecast for Licensed Compounds and the Licensed   Product to be Manufactured in the following Calendar Year on behalf of the Lead Manufacturing   Party for Commercialization purposes and (viii) a non-binding estimate of the Cost of Goods   Manufactured on a unit basis for the Licensed Product for the following Calendar Year (clauses   (vi), (vii) and (viii), collectively referred to herein as “Manufacturing Data”).               7.1.2 Diligence.  Each Party shall use Commercially Reasonable Efforts to  conduct (i) the Manufacture of Licensed Compounds and the Licensed Product for Development  and Commercialization hereunder to the extent such Manufacture is assigned to such Party in the  Manufacturing Plan and (ii) the other activities allocated to such Party under the Manufacturing  Plan, and in each case, such Manufacture shall be in accordance with the Manufacturing Plan, this  Agreement and the Merck Supply Agreement or SeaGen Supply Agreement, as applicable.  During  the Term, neither Party (nor their respective Affiliates) shall undertake any Manufacturing  activities with respect to any Licensed Compounds or the Licensed Product for use in the Field in  the Territory, except to the extent consistent with the applicable Manufacturing Plan.         7.2   Manufacturing Plan for the Licensed Product.                7.2.1 Initial Manufacturing Plan.  The initial Manufacturing Plan (including the  Manufacturing Data) shall be prepared jointly by the Parties and submitted to the JMC for its  review (and ultimately submitted to the JSC for its review and approval), within such time as  determined by the JMC (the “Initial Manufacturing Plan”).  The Initial Manufacturing Plan shall  be effective from the date approved by the JSC until amended and updated by the JMC, and  approved by the JSC, in accordance with this Agreement.  Subject to Section 3.4.2(d), until the                                         -83-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     Initial Manufacturing Plan is approved by the JSC, SeaGen shall, under the direction of the JMC,   conduct the Manufacturing activities for Licensed Compound or the Licensed Product in   accordance with SeaGen’s normal practices during the [ * ] period immediately prior to the   Effective Date, and otherwise in accordance with the terms of this Agreement.                 7.2.2 Amendments to Manufacturing Plan.  On an [ * ] basis, or more often as   the Parties may deem appropriate, the JMC shall prepare proposed amendments to the then-current   Manufacturing Plan (including the Manufacturing Data), for approval of the JSC in accordance   with Section 3.2.3(e) no later than [ * ] of each Calendar Year.  Such amended Manufacturing Plan   shall cover the applicable period as set forth therein.  Such updated and amended Manufacturing   Plan shall reflect any changes, re-prioritization of activities within, reallocation of resources with   respect to, or additions to, the then-current Manufacturing Plan.  In addition, the JMC may prepare   amendments to the Manufacturing Plan for the JSC’s approval in accordance with Section 3.2.3(e)   from time to time during the Calendar Year in order to reflect changes in such plan, in each case,   in accordance with the foregoing.  Once approved by the JSC (or the JMC, as applicable), the   amended Manufacturing Plan (including the amended Manufacturing Data) shall become effective   for the applicable period on the date approved by the JSC (or the JMC, as applicable) (or such   other date as the JSC (or the JMC, as applicable) shall specify).  Any JSC (or JMC, as applicable)- approved amended Manufacturing Plan shall supersede the previous Manufacturing Plan for the  applicable period.  Notwithstanding the foregoing, in the event that the JSC (or the JMC, as  applicable) does not approve any amended Manufacturing Plan (including any amended  Manufacturing Data), the then-current Manufacturing Plan shall continue in effect without  modification (i.e., no changes shall be made to the Manufacturing Plan unless and until agreed to  by the JSC (or the JMC, as applicable)); provided that the Manufacturing Data shall be deemed to  be automatically be renewed for the subsequent Calendar Year.                7.2.3 Cost of Goods Manufactured for Licensed Product.  The Lead   Manufacturing Party shall use Commercially Reasonable Efforts to minimize the Cost of Goods   Manufactured for the applicable Licensed Product to the extent reasonably practicable, while   ensuring continuous fully-compliant supply to maintain consistency with the forecasts and   required inventory and safety stock levels.             7.3   Development Supply for Licensed Product.                  7.3.1 Calculation of Cost of Goods Manufactured for Development. Cost of   Goods Manufactured for Development activities hereunder shall be equal to the Lead   Manufacturing Party’s Cost of Goods Manufactured for manufacturing and supplying the Licensed   Product.                7.3.2 Supply Agreement for Development Use by Merck.  Within [ * ] days   after the Effective Date (or such other time as determined by the JMC), the Parties will enter into   a SeaGen Supply Agreement, pursuant to which SeaGen (as the Lead Manufacturing Party for the   applicable Licensed Product) will Manufacture and supply such Licensed Product to Merck (or its   Affiliate) for any Development to be conducted by or on behalf of Merck (or its Affiliates) pursuant   to this Agreement.  For clarity, such Licensed Product will be supplied to Merck by SeaGen in [ *   ] vials, and Merck shall be responsible for all [ * ] and any other specific Manufacturing                                         -84-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   responsibilities for the Licensed Product as set forth in and designated to Merck in the  Manufacturing Plan.               7.3.3 Supply for Development Use by SeaGen.  SeaGen (as the Lead  Manufacturing Party) shall perform its Manufacturing obligations with respect to the Licensed  Product for use by or on behalf of SeaGen (or its Affiliates) for Development activities hereunder  (e.g., if SeaGen is the Lead Study Party), in accordance with this Agreement.               7.3.4 Allocation of Cost of Goods Manufactured for Development. With  respect to the Manufacture and supply of Licensed Product for use in the Development activities  hereunder, the Cost of Goods Manufactured shall be included in Allowable Development Costs  (to the extent included in the Development Budget (plus any Permitted Development Overage)) to  the extent such quantities of Licensed Product were in accordance with the Manufacturing Plan.   For clarity, if SeaGen is supplying Licensed Product to Merck for use in the Development activities  hereunder pursuant to the applicable SeaGen Supply Agreement, there will not be a separate charge  for such supply under such agreement (i.e., the quantities of Licensed Product supplied under the  applicable SeaGen Supply Agreement shall be supplied under such agreements free of charge).               7.3.5 Efforts.  The Lead Manufacturing Party shall use Commercially  Reasonable Efforts to Manufacture and supply those quantities of Licensed Product as set forth in  the Manufacturing Plan for use in the Development activities hereunder, which Manufacture and  supply shall be in accordance with the Manufacturing Plan, this Agreement and the Merck Supply  Agreement or SeaGen Supply Agreement, as applicable.         7.4   Commercial Supply for Licensed Product.                 7.4.1 Commercial Supply.  Subject to the oversight of the JMC as described in  Section 3.4, SeaGen or its Affiliates shall Manufacture and supply the commercial requirements  for the Licensed Product in fully packaged and labelled, finished form (except as may otherwise  set forth in the European Collaboration Territory Distribution Agreement or as otherwise set forth  in the Manufacturing Plan) in accordance with the terms hereof (and the SeaGen Supply  Agreement contemplated by Section 7.4.2, as applicable) for Commercialization worldwide by  each Party; provided that Merck shall be responsible for any specific Manufacturing  responsibilities for the Licensed Product as set forth in and designated to Merck in the  Manufacturing Plan.  For clarity, such Licensed Product shall be labelled in accordance with the  labelling specifications provided by Merck for the Merck Territory, provided by SeaGen for the  SeaGen Territory and as agreed upon between the Parties for the Collaboration Territory.  With  respect to the Licensed Product for sale in a given country: (a) in the Merck Territory, Merck shall  be responsible for ensuring that such labelling complies with the approved label and Applicable  Laws for the applicable country in the Merck Territory; (b) in the SeaGen Territory, SeaGen shall  be responsible for ensuring that such labelling complies with the approved label and Applicable  Laws for the applicable country in the SeaGen Territory; (c) in the US Collaboration Territory,  SeaGen shall be responsible for ensuring that such labelling complies with the approved label and  Applicable Laws in the US Collaboration Territory; and (d) in the European Collaboration  Territory, each Party shall be responsible for ensuring that such labelling complies with the  approved label and Applicable Laws for the applicable country in the European Collaboration                                        -85-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

     Territory in accordance with the activities assigned to each of the Parties pursuant to this   Agreement.                 7.4.2 Supply Agreement for Commercial Use by Merck.  Prior to the  commencement of the [ * ] for the Licensed Product (or such other time as determined by the  JMC), the Parties will enter into a SeaGen Supply Agreement, pursuant to which SeaGen (as the  Lead Manufacturing Party for the applicable Licensed Product) will Manufacture and supply such  Licensed Product to Merck (or its Affiliate) for any Commercialization to be conducted by or on  behalf of Merck (or its Affiliates) pursuant to this Agreement (i.e., if Merck is the Lead  Distribution Party in any portion of the Territory (including the Merck Territory)).               7.4.3 Supply for Commercial Use by SeaGen.  SeaGen (as the Lead  Manufacturing Party) shall perform its Manufacturing obligations with respect to Licensed Product  for use by or on behalf of SeaGen (or its Affiliates) for Commercialization activities hereunder  (i.e., if SeaGen is the Lead Distribution Party in any portion of the Territory), in accordance with  this Agreement.               7.4.4 Second Source for Commercial Supply.                     (a)   Committee Review.  The JMC will, from time to time, evaluate the  need for a second or additional source for the Manufacture (in whole or in part) of the Licensed  Product or any component thereof (i.e., source(s) other than the then-current source(s) for such  Manufacture of the Licensed Product or components) for specific countries or regions or the entire  Territory, and make applicable recommendations to the JSC.                     (b)   Second Source.  If at any time the JSC agrees that it is necessary or  desirable to establish a second or additional source for the Manufacture (in whole or in part) of the  Licensed Product or any component thereof (for clarity, not including the supply of raw materials  or excipients for use in such Manufacture) for specific countries or regions or the entire Territory,  subject to the oversight of the JMC as described in Section 3.4, then Merck will have the first right  and option, exercisable upon written notice to SeaGen within [ * ] days of the JSC’s agreement, to  (a) establish contracts and maintain arrangements with Third Parties approved by the JMC (after  conferring and discussing various potential Third Party manufacturers), for such second or  additional source Manufacturing, or (b) conduct such second or additional source Manufacturing  itself or through an Affiliate; provided that any such Person Manufacturing the Licensed Product  (including Merck or its Affiliates) and any such Manufacturing site must be qualified in  accordance with the applicable terms and conditions of any quality agreement then in place  between the Parties.  If Merck exercises such option, then (i) if Merck will be supplying any  quantities of Licensed Product to SeaGen for Commercialization purposes, then the Parties shall  enter into a Merck Supply Agreement to provide for such Manufacturing and the supply of  Licensed Product or applicable components from Merck to SeaGen under terms and conditions  substantially similar to those applicable for supply from SeaGen to Merck, and (ii) the relevant  activities and budget therefor shall be included in the Development Plan.  If Merck does not  exercise such option within such [ * ] day period, or if Merck fails to use Commercially Reasonable   Efforts to establish such second or additional source Manufacturing within the time period   mutually agreed by the Parties in the Development Plan, then SeaGen shall have the right to (A)                                         -86-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     establish contracts and maintain arrangements with Third Parties approved by the JMC (after   conferring and discussing various potential Third Party manufacturers), for such second or   additional source Manufacturing, or (B) conduct such second or additional source Manufacturing   itself or through an Affiliate; provided, that (x) any such Person Manufacturing the Licensed   Product (including SeaGen or its Affiliates) and any such Manufacturing site must be qualified in   accordance with the applicable terms and conditions of any quality agreement then in place   between the Parties and (y) SeaGen shall use Commercially Reasonable Efforts to establish such   second or additional source Manufacturing within the time period mutually agreed by the Parties   in the Development Plan.                      (c)   Manufacturing Technology Transfer.  In the event that Merck at   any time elects to establish a second or additional source of Manufacture pursuant to this Section   7.4.4(b), SeaGen and its Affiliates shall provide or cause their Third Party subcontractors to   provide all assistance reasonably requested by Merck to conduct a technical transfer of   Manufacturing to Merck or its designee, including by providing copies of such documents and   information, access to relevant Manufacturing personnel and facilities, samples, materials, and   other know-how, as are necessary or reasonably useful to enable Merck or its designee to conduct   such Manufacturing in accordance with Applicable Law.  Such technical transfer shall be   conducted in accordance with a technical transfer plan developed and approved by the JMC.                      (d)   Contract Volumes; Inventory.  If the JSC establishes any second   or additional sources of supply of Licensed Product, unless otherwise agreed to by the JMC, the   JMC shall continue to allocate sourcing under the Manufacturing Plan, as between the existing   sources and any second or additional sources, with the intent to maintain Manufacturing volumes   at existing Third Party Manufacturing sites at or above the minimum level necessary to avoid the   imposition of penalties (i.e., any “take or pay” or minimum volume requirements for the   Manufacture of the Licensed Product) against a Party or its Affiliate(s).  In such case, each Party   shall provide a report of their respective inventory of Licensed Product (including components   thereof) to the JMC on a Calendar Quarterly basis or as otherwise determined by the JMC.                7.4.5 Costs.                        (a)   Calculation of Commercial Cost of Goods Manufactured. Prior  to the start of the Calendar Year in which the First Commercial Sale of the Licensed Product is  anticipated to occur, and prior to the start of each Calendar Year thereafter (in each case, no later  than [ * ] of the preceding Calendar Year), the Parties, through the JFC and JMC, shall establish  the estimated Cost of Goods Manufactured (per unit) of Licensed Product for the commercial  Manufacture of the Licensed Product for the upcoming Calendar Year based on the estimated Cost  of Goods Manufactured as calculated pursuant to Schedule 1.39 (the “Estimated COGS”), which   Estimated COGS for a given Calendar Year shall thereafter be subject to true-up at the end of the  applicable Calendar Year as set forth in the remainder of this Section 7.4.5(a).  Within [ * ] days   following the end of a given Calendar Year, the Parties, through the JFC and JMC, shall determine   the actual Cost of Goods Manufactured (per unit) for the commercial Manufacture of Licensed   Product incurred during such Calendar Year as calculated pursuant to Schedule 1.39 (the “Actual   COGS”), and such Actual COGS shall serve as the basis for an [ * ] reconciliation between   Estimated COGS established prior to the start of the Calendar Year and Actual COGS for the                                         -87-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   quantities of Licensed Product Manufactured for commercial sale for such Calendar Year, which  reconciliation shall be reflected in the calculation of the final payment made between the Parties  with respect to such Calendar Year (or the following Calendar Quarter if data necessary to  determine such reconciliation is not available in time to reflect in the final payment for such  Calendar Year); provided, however, that notwithstanding the foregoing, [ * ].  A mechanism for  the reconciliation process will be agreed to by the JFC. The Parties shall each track their respective  inventory of Licensed Product (including components thereof) and their respective Cost of Goods  Manufactured, and each Party shall provide a report of such inventory and its Cost of Goods  Manufactured for Licensed Product to the JFC and JMC on a [ * ] basis or as otherwise determined  by the JMC.                     (b)   Allocation of Commercial Cost of Goods Manufactured:                            (i)   Supply by Lead Manufacturing Party for  Commercialization by Lead Manufacturing Party.  If the Lead Manufacturing Party for the  Licensed Product is also the Lead Distribution Party for such Licensed Product in the applicable  portions of the Territory, then, with respect to the Manufacture and supply of such Licensed  Product for use in the Commercialization activities hereunder by or on behalf of such Lead  Distribution Party (or its respective Affiliates), the Cost of Goods Manufactured (based on the  Estimated COGS and reconciliations for the applicable Calendar Year as set forth in Section  7.4.5(a)) shall be included in Allowable Commercialization Costs (even if not included in the  Commercialization Budget) to the extent such quantities of Licensed Product were in accordance  with the Manufacturing Plan.                            (ii)  Supply by Lead Manufacturing Party for  Commercialization by Other Party.  If the Lead Manufacturing Party is supplying Licensed  Product to the other Party (for those portions of the Territory where such other Party is the Lead  Distribution Party) for use in the Commercialization activities hereunder pursuant to a Merck  Supply Agreement or SeaGen Supply Agreement, as applicable, then such Licensed Product shall  be supplied to the Lead Distribution Party under such supply agreement at the Cost of Goods  Manufactured (based on the Estimated COGS and reconciliations for the applicable Calendar Year  as set forth in Section 7.4.5(a)) (and such costs incurred by the Lead Manufacturing Party shall not  be separately included in Allowable Commercialization Costs); provided that, for clarity, any such  amounts paid by the Lead Distribution Party to the Lead Manufacturing Party under a Merck  Supply Agreement or SeaGen Supply Agreement, as applicable, shall be included in Allowable  Commercialization Costs (even if not included in the Commercialization Budget) of the Lead  Distribution Party.               7.4.6 Efforts.  The Lead Manufacturing Party shall use Commercially  Reasonable Efforts to Manufacture and supply those quantities of Licensed Product as set forth in  the Manufacturing Plan for Commercialization by the Lead Distribution Party in the Territory,  which Manufacture and supply shall be in accordance with the Manufacturing Plan, this  Agreement and the Merck Supply Agreement or SeaGen Supply Agreement, as applicable.  In the  event that there is excess market demand in the Territory for commercial supply of the applicable  Licensed Product beyond what is set forth in the Manufacturing Plan, then the JMC shall discuss  in good faith amendments to such Manufacturing Plan to address such excess demand.                                         -88-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

           7.5   Continuity of Supply for Licensed Compounds and the Licensed Product.  The   Lead Manufacturing Party for Licensed Product shall, in coordination with the JMC, establish and   put in place reasonable mechanisms to assure continuity of supply of the Licensed Compounds   and the Licensed Product, which may include holding safety stock or other mechanisms in each   case as specified in the applicable Manufacturing Plan.          7.6   Compliance for Licensed Compounds and the Licensed Product.  Without   limitation of the terms of any Merck Supply Agreement or SeaGen Supply Agreement, as   applicable, the Lead Manufacturing Party shall ensure that all Manufacturing activities with  respect to any Licensed Compounds and the Licensed Product for which it is the Lead  Manufacturing Party shall be conducted in accordance with cGMPs and Applicable Law as well  as in accordance with the specifications for the applicable Licensed Compounds or the Licensed  Product, and shall ensure that upon delivery thereof (which shall be defined in accordance with  the Merck Supply Agreement or SeaGen Supply Agreement, as applicable, with respect to supply   to the other Party, or otherwise shall be when the Licensed Compound or Licensed Product, as   applicable, leaves the manufacturing facility) the Licensed Compounds and the Licensed Product   are not adulterated or misbranded within the meaning of the Act or any similar Applicable Law of   any applicable jurisdiction.          7.7   Audits and Oversight of Manufacturing Facilities for Licensed Compounds   and the Licensed Product.                  7.7.1 The Lead Manufacturing Party will reasonably cooperate with the non-Lead   Manufacturing Party with respect to the oversight of any of the Lead Manufacturing Party’s Third   Party contract manufacturers involved in the Manufacture of Licensed Compound or Licensed   Product to be supplied by or on behalf of the Lead Manufacturing Party (or its Affiliates) for   Development or Commercialization activities hereunder, including pursuant to the SeaGen Supply   Agreement or Merck Supply Agreement, as applicable, and in connection therewith, (a) the Lead   Manufacturing Party shall keep the non-Lead Manufacturing Party fully informed with respect to  any compliance issues related to any such Third Party contract manufacturer, (b) at the request of  the non-Lead Manufacturing Party, the Lead Manufacturing Party shall meet with the non-Lead   Manufacturing Party to discuss any compliance or deficiency issues, and (c) at the request of the   non-Lead Manufacturing Party, the Lead Manufacturing Party shall provide to the non-Lead   Manufacturing Party information reasonably available to the Lead Manufacturing Party (or any of   its Affiliates) in connection with the activities of such Third Party contract manufacturers related   to the Manufacture of Licensed Compound or Licensed Product.                  7.7.2 The non-Lead Manufacturing Party shall have the right to audit (including   quality audits and environmental health and safety (EHS) audits) any facilities involved in the   Manufacture of Licensed Compound or Licensed Product, including the facilities of any Third   Party contract manufacturer engaged by the Lead Manufacturing Party, but subject to the   provisions of Section 7.7.3.  Such audit rights shall be exercised at reasonable times and for a   reasonable duration; provided that the non-Lead Manufacturing Party shall not audit a given   facility more than [ * ] (unless for cause); provided that, in addition to the foregoing audit rights,   with respect to any of SeaGen’s Third Party contract manufacturers under any SeaGen Existing   CMO Agreements (each, an “Existing SeaGen CMO”), SeaGen shall afford Merck the right to                                         -89-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   conduct an initial audit of each such Existing SeaGen CMO, which audit must be requested by  Merck within [ * ] days after the Effective Date.   In all cases, SeaGen shall afford Merck the right  to initiate such audit within [ * ] days after Merck’s request to conduct such audit.  Following any  such audit, (a) the non-Lead Manufacturing Party will provide an audit report to the Lead  Manufacturing Party, and the Parties shall promptly thereafter meet to discuss the audit findings  and observations, (b) within [ * ] days after such meeting, the Lead Manufacturing Party shall  provide to the non-Lead Manufacturing Party a corrective action plan to reasonably address the  audit findings and observations for the non-Lead Manufacturing Party’s review and approval, and  (c) once approved by the non-Lead Manufacturing Party, the Lead Manufacturing Party shall use  Commercially Reasonable Efforts to (or use Commercially Reasonable Efforts to cause its Third  Party contract manufacturer to, as applicable) implement such corrective action plan to the non- Lead Manufacturing Party’s reasonable satisfaction (and, if such corrective action plan is not  implemented to the non-Lead Manufacturing Party’s reasonable satisfaction with a reasonable  period of time, then, unless otherwise determined by the JMC, the Lead Manufacturing Party shall  no longer use such source of supply for the Manufacture of Licensed Compounds or the Licensed  Product, as applicable).  The Parties will work together in good faith to expedite all such audits  and the implementation of any applicable corrective action plan.  The Merck Supply Agreement  or SeaGen Supply Agreement, as applicable, shall contain additional provisions with respect to  such audit rights.                 7.7.3 Notwithstanding the provisions of Section 7.7.2, with respect to any  Existing SeaGen CMO, Merck shall only have the right to perform the audits set forth in Section  7.7.2 to the [ * ]; provided that, in connection therewith, the following shall apply:  [ * ] and, [ * ]  to the [ * ] to the [ * ] and in any event, [ * ] to the [ * ].         7.8   Changes to Specifications and Manufacturing Process for Licensed  Compound or Licensed Product.  Prior to implementing any changes to the specifications or any  changes to the manufacturing process that may affect the quality or regulatory filings of any  Licensed Compound or the Licensed Product, the Lead Manufacturing Party shall prepare a  description and plan for the implementation of any such changes, and shall submit such plan and  changes to the JMC for review and approval; provided, however, that the Parties may agree in  writing upon an alternate mechanism for Manufacturing change controls that is reasonably  acceptable to both Parties with the goal of being timely and efficient.  The Lead Manufacturing  Party shall not (and shall ensure that its Affiliates and Third Party manufacturers do not) make any  such changes unless and until approved by the JMC or as otherwise agreed pursuant to the Merck  Supply Agreement or SeaGen Supply Agreement, as applicable, and the Lead Manufacturing Party  shall provide to the Lead Regulatory Party all information in its Control that is reasonably  necessary for the Lead Regulatory Party to support the review and update of applicable Regulatory  Documentation as a result of any such change.  The Lead Manufacturing Party shall use  Commercially Reasonable Efforts to ensure that, during the Term, the Manufacturing process for  any Licensed Compound or Licensed Product, as applicable, will be qualified and validated in  accordance with cGMPs.         7.9   Supply Agreements for Supply of Licensed Product.  Each SeaGen Supply  Agreement and Merck Supply Agreement entered into under this Agreement shall reflect the terms  set forth on Schedule 7.9 and such other customary terms and conditions for the supply and quality                                       -90-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

     of pharmaceutical products in the biopharmaceutical industry in the context of a cost and profit   sharing arrangement as reasonably agreed to by the Parties, including with respect to forecasting   and ordering, compliance audits, the engagement of subcontractors, a fair and equitable allocation   of Licensed Product between the Parties and their Affiliates in the event of Licensed Product   shortfalls, and representations and warranties.           7.10  Supply of Proprietary Product for Clinical Trial of Proprietary Combination.     In the event that for the Parties agree to conduct a Clinical Trial of the Licensed Product for use in   a Proprietary Combination, then the Parties shall negotiate in good faith and enter into a supply   agreement pursuant to which the Proprietary Product Party (or its Affiliate) shall supply (or have   supplied), at the [ * ], the applicable Proprietary Product to the other Party for use in each Clinical   Trial for which such other Party is the Lead Study Party.  For the avoidance of doubt,   notwithstanding anything to the contrary contained herein (including the provisions of Section   7.7), nothing contained herein is intended to grant the non-Proprietary Product Party any rights to   audit any manufacturing or supply activities with respect to the manufacture or supply of the other   Party’s Proprietary Products. The Proprietary Product Party shall be solely responsible for the   Manufacture and supply of its Proprietary Product for use in such Clinical Trial in accordance with   the terms of such supply agreement.                              ARTICLE 8    COMPLIANCE         8.1   Compliance with Applicable Law and Ethical Business Practices.                8.1.1 In conducting its activities hereunder and under each Ancillary Agreement,  each Party shall (and shall cause its Affiliates, sublicensees and contractors to) comply in all  respects with Applicable Law and accepted pharmaceutical industry business practices, including,  if and to the extent applicable to such Person or its activities hereunder, the Federal Food, Drug,  and Cosmetic Act (21 U.S.C. § 301 et seq.), the Public Health Service Act (42 U.S.C. § 201 et  seq.), the Anti-Kickback Statute (42 U.S.C. § 1320a-7b), Civil Monetary Penalty Statute (42  U.S.C. § 1320a-7a), the False Claims Act (31 U.S.C. § 3729 et seq.), comparable state statutes, the  regulations promulgated under all such statutes, and the regulations issued by the FDA or other  applicable Governmental Authority.  Each Party shall promptly notify the other Party in writing  of any material deviations from Applicable Law with respect to activities under this Agreement.                8.1.2 Each Party hereby certifies that it has not and will not employ or otherwise  use in any capacity the services of any person or entity debarred under 21 U.S.C. § 335a (or  equivalent foreign provisions) in performing any activities under this Agreement or any Ancillary  Agreement.  Each Party shall notify the other Party, in writing, immediately if any such debarment  occurs or comes to its attention, and shall, with respect to any person or entity so debarred,  promptly remove such person or entity from performing any further activities under this  Agreement or any Ancillary Agreement, as applicable.                8.1.3 Each Party’s corporate policy requires that business must be conducted  within the letter and spirit of the Applicable Law.  Accordingly, Merck and SeaGen agree to  conduct the activities contemplated herein in a manner which is consistent with both Applicable  Law and good business ethics.                                         -91-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

                 8.1.4 Each Party acknowledges that no employee of the other Party or its   Affiliates shall have authority to give any direction, either written or oral, relating to the making   of any commitment by such Party or its agents to any Third Party in violation of the terms of this   or any other provision of this Agreement.                8.1.5 Each Party will:                       (a)   in connection with its activities under or in connection with this   Agreement strictly comply with the OECD Anti-Bribery Convention on combating bribery of   foreign public officials in international business transactions, the United States Foreign Corrupt   Practices Act of 1977, the United Kingdom Bribery Act 2010 and any other equivalent Applicable   Law in the Territory for the prevention of fraud, corruption, racketeering, money laundering and   terrorism, in each case as may be amended from time to time (such Applicable Law, the “Anti-  Corruption Laws”), including such Party’s own internal policies in connection therewith. Each   Party shall require any Affiliates, contractors, subcontractors, distributors or other persons or   entities that provide services to such Party in connection with this Agreement to comply with such   Party’s obligations under this Section;                       (b)   not, in the performance of this Agreement, directly or indirectly,   make any payment, or offer or transfer anything of value, or agree or promise to make any payment   or offer or transfer anything of value, to a Public Official or any other Third Party with the purpose   of influencing decisions related to either Party or its business in a manner that would violate Anti-  Corruption Laws; and                      (c)   no later than [ * ], or shall provide details of any exception to the   foregoing; and maintain records (financial and otherwise) and supporting documentation related   to the subject matter of this Agreement in order to document or verify compliance with the   provisions of this Section 8.1.5 and upon request of the other Party, up to [ * ] per year and upon   reasonable advance notice, shall provide the other Party or its representative with access to such   records for purposes of verifying compliance with the provisions of this Section 8.1.5.                8.1.6 In connection with this Agreement, each Party has implemented and agrees   to maintain and enforce a compliance and ethics program designed to prevent and detect violations   of Applicable Law, including the Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 301 et seq.),   the Public Health Service Act (42 U.S.C. § 201 et seq.), the Anti-Kickback Statute (42 U.S.C. §   1320a-7b), Civil Monetary Penalty Statute (42 U.S.C. § 1320a-7a), the False Claims Act (31  U.S.C. § 3729 et seq.) and anti-corruption Applicable Law, throughout its operations (including   subsidiaries) and the operations of its contractors and subcontractors that have responsibility for   products, payments or services provided under this Agreement.  Merck agrees to comply with   Merck’s internal code of conduct for such program and SeaGen agrees to comply with SeaGen’s   internal code of conduct for such program.  The Alliance Managers will facilitate discussions and   the sharing of information and experiences between the Parties respective compliance and ethics   organizations, as part of which SeaGen will provide updates relating to the development of its anti- bribery and corruption compliance program.               8.1.7 In connection with this Agreement, each Party has implemented, and will  maintain and enforce, a system of internal accounting controls designed to ensure the making and                                        -92-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     keeping of accurate books, records, and accounts with respect to any products, payments or   services provided under this Agreement.  In connection with this Agreement, each Party has   implemented and will at all times during the Term maintain an adequate internal audit program,   and will conduct periodic internal audits in each case in accordance with its established policies   and procedures to ensure compliance with applicable legal requirements and the terms of this   Agreement.                  8.1.8 With respect to the activities contemplated under this Agreement:                        (a)   each Party has been and will, for the Term, be in compliance with   all Applicable Law relating to international trade, including economic sanctions, import and export   controls and customs procedures; and                       (b)   neither Party has, on its own behalf or in acting on behalf of any   other Person, engaged and will not for the Term engage, directly or indirectly, in any transactions,   or otherwise deal with, except to the extent permissible under applicable United States law or other   Applicable Law, any country or Person targeted by United States or other relevant economic   sanctions Applicable Law, including any Person designated on the Specially Designated Nationals   List in connection with any activities related to the services under this Agreement.                 8.1.9 Each Party agrees that it will not use (and will cause its Affiliates and Third  Party contractors not to use) any Person (including any employee, officer, director or Third Party  contractor) who is (or has been) on the Exclusions Lists, or who is (or has been) in Violation, in   the performance of any activities hereunder or under any Ancillary Agreement.  Each Party   certifies to the other Party that, as of the Effective Date, it has screened itself, and its officers and   directors (and its Affiliates and Third Party contractors (acting in connection with this Agreement)   and their respective officers and directors) against the Exclusions Lists and that it has informed   the other Party in writing whether it, or any of its officers or directors (or any of its Affiliates or   any of their respective officers and directors) has been in Violation.  After the Effective Date, each   Party will notify the other Party in writing immediately if any such Violation occurs or comes to   its attention.                8.1.10 SeaGen and Merck shall (a) track and collect financial disclosure   information from all “clinical investigators” involved in the clinical trials hereunder and (b)   prepare and submit the certification or disclosure of the same in accordance with all Applicable   Law, including Part 54 of Title 21 of the United States Code of Federal Regulations (Financial   Disclosure by Clinical Investigators) and related FDA Guidance Documents. Prior to the initiation   of clinical activities hereunder, SeaGen and Merck shall determine, in writing, whether each Party   shall track and collect separate certification or disclosure forms for each of Merck and SeaGen or   use one (1) “combined” certification or disclosure form for both Merck and SeaGen. For purposes   of this Section 8.1.10, the term “clinical investigators” shall have the meaning set forth in Part   54.2(d) of Title 21 of the United States Code of Federal Regulations.                8.1.11 The Lead Study Party (as the sponsor) for a given Clinical Trial hereunder   will be responsible for reporting payments and other transfers of value made to health care   professionals (e.g., investigators, steering committee members, data monitoring committee   members, consultants) in connection with the Clinical Trial in accordance with reporting                                        -93-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     requirements under Applicable Law (including the Physician Payment Sunshine Act and state gift   Applicable Law, and the European Federation of Pharmaceutical Industries and Associations   Disclosure Code) and such Party’s applicable policies.  The value of the Licensed Product shall be   determined by mutual agreement between the Parties in accordance with Applicable Law. The   Proprietary Product Party shall provide all information required for such reporting regarding the   value of such  Proprietary Product Party’s Proprietary Products provided for use in Clinical Trials   of Proprietary Combinations.  With respect to any Clinical Trial of a Proprietary Combination   conducted under the Development Plan, if the Proprietary Product Party is not the sponsor of such   Clinical Trial, the Proprietary Product Party shall provide the Lead Study the necessary   information regarding the value of its Proprietary Products under such Clinical Trial within [ * ]   following approval of the protocol for such Clinical Trial.  In the event that, at any time during the   Term while such Clinical Trial is ongoing, the value of the applicable Proprietary Product provided   for such Clinical Trial hereunder changes, such Proprietary Product Party shall notify the Lead   Study Party (that is the sponsor of such Clinical Trial) of such revised value, and the effective date   of such revised value, within [ * ] following such change.  Such information shall be provided to   the Lead Study Party’s point of contact who is identified to the other Party in writing following   the Effective Date and thereafter promptly following any change to such point of contact.                8.1.12 The Lead Study Party (as the sponsor) for a given Clinical Trial hereunder   shall be responsible for ensuring compliance with the requirements for registering such Clinical   Trial and posting results of such Clinical Trial on clinicaltrials.gov, and any applicable foreign   equivalent.          8.2   Safety or Legal Issues.  Notwithstanding anything to the contrary contained  herein, neither Party hereto (nor its Affiliates) shall be required to perform any obligation  hereunder to the extent that (a) such Party reasonably believes that the performance of such  obligation would be prohibited by, or would otherwise not comply with, Applicable Law or (b)  such Party reasonably believes that there is a Safety Issue with respect to the performance of such  obligation; provided, however, that the provisions of this Section 8.2 shall not limit a Party’s  payment obligations under this Agreement.  In such case, the Parties shall use reasonable best  efforts to replace such obligation with an alternative obligation that would not be prohibited by  Applicable Law or would not lead to a Safety Issue, as applicable, insofar as practical, to  implement the purposes of this Agreement.          8.3   Data Privacy.                8.3.1 Each Party shall: (i) comply with all Data Protection Laws with respect to  the collection, use, transfer, storage, destruction, aggregation or other use of Personal Data (as  defined in the applicable Data Protection Laws, collectively, “Personal Data”) in connection with  its activities under or in connection with this Agreement and the Ancillary Agreements, including  the Development and Commercialization of the Licensed Product hereunder, (ii) implement  appropriate and reasonable security processes and controls in connection with its activities under  or in connection with this Agreement and the Ancillary Agreements so as to protect the security  and privacy of Personal Data in accordance with Data Protection Laws, and (iii) take such steps as  necessary to comply with Data Protection Laws to permit such Party to disclose Personal Data to                                         -94-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     the other Party and to permit the other Party to use and disclose such Personal Data in accordance   with this Agreement and the Ancillary Agreements;               8.3.2 The Parties (or their respective Affiliates, as applicable) entered into that  certain Data Protection Agreement with an effective date of [ * ] (the “Existing DPA”). The Parties   will amend the Existing DPA to cover the collection, storage, transfer, processing and use of   Personal Data by the Parties and their Affiliates under this Agreement as contemplated by this   Agreement within [ * ] of the Effective Date (the Existing DPA, as amended, the “DPA”).                   ARTICLE 9   CONFIDENTIALITY AND PUBLICATION          9.1   Nondisclosure Obligation.  During the Term and for a period of [ * ] years   thereafter, all Confidential Information disclosed by one Party or any of its Affiliates to the other   Party or any of its Affiliates hereunder or under an Ancillary Agreement shall be maintained in   confidence by the receiving Party and its Affiliates and shall not be (a) disclosed to any Third Party   without the prior written consent of the disclosing Party, except as set forth herein, or (b) used for   any purpose except as set forth herein (including for the exercise of the rights and licenses granted   to such Party hereunder (including the right to use and exercise the Joint Program Know-How and   the Joint Program Patents as set forth in Section 12.3.5), but it being understood that this clause   (b) shall not create or imply any rights or licenses not expressly granted under this Agreement)   without the prior written consent of the disclosing Party.  The Parties agree that the terms of this   Agreement and the Ancillary Agreements will be treated as Confidential Information of both   Parties and may only be disclosed as permitted herein.  Notwithstanding the foregoing, the   confidentiality and non-use obligations with respect to Confidential Information under this Article   9 shall not apply with respect to any information of the disclosing Party to the extent that:                   9.1.1 such information (except for Development Data or Program Know-How) is   known by the receiving Party at the time of its receipt, and not through a prior disclosure by the   disclosing Party, as documented by the receiving Party’s business records;                9.1.2 such information is in the public domain by use or publication before its   receipt from the disclosing Party, or thereafter enters the public domain through no fault of the   receiving Party;                9.1.3 such information is subsequently disclosed to the receiving Party by a Third   Party, which Third Party may lawfully make such disclosure and is not under an obligation of   confidentiality to the disclosing Party with respect to such information; or                9.1.4 such information (except for Development Data or Program Know-How) is  developed by the receiving Party independently of Confidential Information received from the  disclosing Party, as documented by the receiving Party’s business records.                9.1.5 Specific aspects or details of Confidential Information shall not be deemed  to be within the public domain or in the possession of the receiving Party merely because the  Confidential Information is embraced by more general information in the public domain or in the  possession of the receiving Party.                                         -95-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

           9.2   Permitted Disclosure.  Notwithstanding the provisions of Section 9.1, a receiving   Party shall be permitted to disclose the Confidential Information of the disclosing Party to the   extent such Confidential Information:                 9.2.1 is disclosed to Governmental Authorities in order to (a) obtain or maintain   Patent Rights in relation to the Licensed Compounds, Licensed Product or Companion Diagnostics   in accordance with the terms hereof or (b) obtain or maintain approval to (i) conduct Clinical Trials   for the Licensed Product or Companion Diagnostics or (ii) market the Licensed Product or   Companion Diagnostics; provided that (in each case ((a) or (b)), such disclosure may be only to   the extent reasonably necessary to obtain or maintain such Patent Rights or approval in accordance   with the provisions of this Agreement; provided that, to the extent practicable, the disclosing Party   shall notify the other Party prior to making such disclosure; provided, further, that this Section   9.2.1 shall not permit (A) SeaGen to disclose any Confidential Information of Merck specific to   any Merck Proprietary Product that is not specifically related to a Merck Proprietary Combination;   and (B) Merck to disclose any Confidential Information of SeaGen specific to any SeaGen  Proprietary Product that is not specifically related to a SeaGen Proprietary Combination;                9.2.2 is deemed necessary by a Party to be disclosed to its Related Parties,   agent(s), consultant(s), or other Third Parties for the Development, Manufacture or   Commercialization of Licensed Compounds or the Licensed Product for the Territory, or for such   Person to determine their interest in performing such activities, in accordance with this Agreement   on the condition that such Related Parties, agent(s), consultant(s), or other Third Parties agree to   be bound by confidentiality and non-use obligations that are no less stringent than those   confidentiality and non-use obligations contained in this Agreement; provided, however, that the   term of confidentiality for any Third Party shall be no less than [ * ] years; provided, further, that   this Section 9.2.2 shall not permit the non-Proprietary Product Party to disclose any Confidential  Information of the Proprietary Product Party that is specific to such Proprietary Product Party’s  Proprietary Product but not specifically related to a Proprietary Combination;               9.2.3 with respect to the Proprietary Product Party, is disclosed to governmental  or other regulatory agencies in order to (a) obtain or maintain Patent Rights in relation to the  Proprietary Party’s Propriety Products for use in a Proprietary Combination in accordance with  Article 12 or (b) obtain or maintain approval to (i) conduct Clinical Trials for the Proprietary  Party’s Proprietary Products for use in a Proprietary Combination or (ii) market such Party’s  Proprietary Products for use in a Proprietary Combination; provided that (in each case (a) and (b)),  such disclosure may be only to the extent reasonably necessary to obtain or maintain such Patent  Rights or approval;                 9.2.4 with respect to each Proprietary Product Party, is deemed necessary by such  Proprietary Product Party to be disclosed to its Related Parties, agent(s), consultant(s), or other  Third Parties for the development, manufacture or commercialization of such Party’s Proprietary  Products for use in a Proprietary Combination for the Territory, or for such Person to determine  their interest in performing such activities, in accordance with this Agreement on the condition  that such Related Parties, agent(s), consultant(s), or other Third Parties agree to be bound by  confidentiality and non-use obligations that are no less stringent than those confidentiality and                                         -96-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     non-use obligations contained in this Agreement; provided, however, that the term of   confidentiality for any Third Party shall be no less than ten (10) years;                9.2.5 with respect to Joint Program Know-How (including Biomarker Joint   Program Know-How), is disclosed to (a) Governmental Authorities in order to (i) obtain or   maintain Joint Program Patents in accordance with the terms hereof in connection with products   and diagnostics (other than the Licensed Product or any Companion Diagnostic) or (ii) obtain or   maintain approvals in connection with products and diagnostics (other than the Licensed Product   or any Companion Diagnostic); provided that (in each case (i) or (ii)), such disclosure may be only   to the extent reasonably necessary to obtain or maintain such Patent Rights or approvals or (b)   actual or potential collaborators, licensees, sublicensees or contractors in connection with a Party’s   exercise of its rights to use the Joint Program Know-How (including Biomarker Joint Program   Know-How) as set forth in Section 12.3.5 on the condition that such actual or potential   collaborators, licensees, sublicensees or contractors agree to be bound by confidentiality and non-  use obligations that are no less stringent than those confidentiality and non-use obligations   contained in this Agreement, provided, however, that the term of confidentiality for any Third   Party shall be no less than [ * ] years;                 9.2.6 is deemed necessary by a Party to be disclosed to its actual or potential   acquirors, investment bankers, investors, lenders, or other similar sources of financing solely for  the purpose of evaluating or carrying out an actual or potential investment or acquisition, in each  case, on the condition that such Person agrees to be bound by confidentiality and non-use   obligations that are no less stringent than those confidentiality and non-use obligations contained   in this Agreement; or                  9.2.7 is deemed necessary by counsel to the receiving Party to be disclosed to   such Party’s external attorneys, independent accountants or financial advisors for the sole purpose   of enabling such attorneys, independent accountants or financial advisors to provide advice to the   receiving Party, on the condition that such attorneys, independent accountants and financial   advisors agree to be bound by confidentiality and non-use obligations that are no less stringent   than those confidentiality and non-use provisions contained in this Agreement; provided, however,   that the term of confidentiality for such attorneys, independent accountants and financial advisors   shall be no less than [ * ] years.          9.3   Disclosures Required by Applicable Law.  If a Party is required by Applicable   Law or judicial or administrative process to disclose Confidential Information that is subject to the   non-disclosure provisions of Section 9.1, such Party may disclose such Confidential Information   as so required; provided that such Party shall promptly inform the other Party of the disclosure that   is being sought in order to provide such other Party an opportunity to challenge or limit the   disclosure obligations, and, if requested by the other Party, cooperate in all reasonable respects with   the other Party’s efforts to obtain confidential treatment or a protective order with respect to any   such disclosure.  Confidential Information that is disclosed as required by Applicable Law or by   judicial or administrative process shall remain otherwise subject to the confidentiality and non-use   provisions of Section 9.1, and the Party so disclosing Confidential Information shall (a) take all   steps reasonably necessary, including seeking to obtain an order of confidentiality, to endeavor to   ensure the continued confidential treatment of such Confidential Information and (b) disclose such                                         -97-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   Confidential Information only to the extent required by such Applicable Law or judicial or  administrative process.          9.4   Program Know-How.  (a) Joint Program Know-How shall be considered  Confidential Information of both Parties (and both Parties shall be deemed a disclosing Party and  a receiving Party with respect thereto) for purposes of this Agreement, (b) Merck Program Know- How shall be considered Confidential Information of Merck for purposes of this Agreement and  (c) SeaGen Program Know-How shall be considered Confidential Information of SeaGen for  purposes of this Agreement.          9.5   Publication.  Merck and SeaGen each acknowledge the other Party’s interest in  publishing the results of the research and development hereunder with respect to Licensed  Compounds and the Licensed Product in order to obtain recognition within the scientific  community and to advance the state of scientific knowledge.  Each Party also recognizes the  mutual interest in obtaining valid patent protection and in protecting business interests and trade- secret information.  Consequently, subject to, and except for disclosures permitted pursuant to,  Section 9.2 or 9.3, each Party may make such publications or presentations with respect to  Licensed Compounds or the Licensed Product only in accordance with the Global Publication  Strategy and this Section 9.5.  If either Party, its Affiliates, or their respective employee(s) or  consultant(s) wishes to make such a publication or presentation related to a Licensed Compound  or Licensed Product (including joint Confidential Information), such Party shall deliver to the other  Party for such other Party’s review an electronic copy of any proposed written publication at least  [ * ] prior to submission for publication, or an electronic copy of any proposed abstract, poster or  other presentations at least [ * ] prior to submission for publication or presentation.  The reviewing  Party shall have the right (a) to propose modifications to the publication or presentation for patent  reasons, trade-secret reasons or business reasons, which comments will be in writing and  considered in good faith, or (b) to request a reasonable delay in publication or presentation in order  to protect patentable information, including, in the case of Merck, in connection with the proposed  publication of SeaGen Product Specific Know-How.  If the reviewing Party requests a delay, the  publishing Party shall delay submission or presentation for a period of up to [ * ] to enable the  preparation and filing of patent applications protecting each Party’s rights in such information to  be filed in accordance with Article 12.  Upon expiration of such [ * ], the publishing Party shall be  free to proceed with the publication or presentation.  If the reviewing Party requests modifications  to the publication or presentation in such written proposals, the publishing Party shall edit such  publication to delete Confidential Information (other than Development Data) of the reviewing  Party that the reviewing Party identifies for deletion in the reviewing Party’s written comments  prior to submission of the publication or presentation.  Notwithstanding the foregoing, (a) the  Parties agree that study information and results shall be posted by the applicable Party in  accordance with Section 8.1.12, and such study results required to be posted pursuant to this clause  (a) will not constitute Confidential Information of either Party, (b) if such publication or  presentation involves a Proprietary Product or a Proprietary Combination, then the applicable  portion of such publication or presentation related to the Proprietary Product or Proprietary  Combination shall be subject to the review and prior written approval of the applicable Proprietary  Product Party, such approval not to be unreasonably withheld, conditioned or delayed, and (c) as  between the Parties, the Proprietary Product Party shall have the sole right to make any  publications or presentations with respect to such Proprietary Product Party’s Proprietary Products                                       -98-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

     in its discretion and without compliance with this Section 9.5 (and the non-Proprietary Product   Party shall have no right to do so), provided that, for clarity, with respect to this clause (c), to the   extent the content of such publications or presentations relates to the Licensed Product or the use   of such Proprietary Product in a Proprietary Combination, then such publications or presentations   shall be subject to the provisions of this Section 9.5.  Notwithstanding the foregoing provisions of   this Section 9.5, with respect to any SeaGen Know-How that is specific to the Licensed Product   (to the extent such SeaGen Program Know-How has not been previously publicly presented or   published either (i) prior to the Effective Date or (ii) after the Effective Date in compliance with   this Agreement), except as required by Applicable Law, SeaGen shall not publicly present or   publish such SeaGen Know-How unless such presentation or publication is approved by Merck in   writing, such approval not to be unreasonably withheld, conditioned or delayed; provided that, for   clarity, the foregoing shall not limit or prevent SeaGen from publishing or presenting SeaGen   Know-How that relates to the SeaGen Linker Technology generally or any SeaGen Proprietary  Product that has been clinically developed or commercialized.  The Parties will agree on a  publication plan for Licensed Compounds and the Licensed Product through the JDC.           9.6   Publicity/Use of Names.                9.6.1 The Parties have mutually approved a joint press release attached hereto as  Schedule 9.6.1 with respect to this Agreement and either Party may make subsequent public   disclosure of the contents of such press release.  Except as may be otherwise provided herein,   neither Party shall issue any press release or make any public announcement concerning the terms   of this Agreement or the transactions described herein without the prior written consent of the   other Party; provided that this Section 9.6 shall not preclude any Party from issuing any such press   release or making any such public announcement if such Party reasonably believes that any such   release or announcement is (a) required by Applicable Law, or (b) required by the rules of any   stock exchange on which such Party’s (or such Party’s Affiliates’) securities are listed.  To the   extent that a Party concludes in good faith that it is or may be required to make such a release or   announcement or file or register this Agreement or a notification thereof with any Governmental   Authority (including as may be required by the rules of any stock exchange on which such Party’s   (or such Party’s Affiliates’) securities are listed) in accordance with the foregoing clause (a) or (b),   as applicable, such Party agrees to consult and coordinate with the other Party with respect to such   disclosure in accordance with Section 9.3 and, if applicable, the preparation and submission of a   confidential treatment request for this Agreement in accordance with the remainder of this Section   9.6.1. Notwithstanding the foregoing, if a Party is required by Applicable Law to submit a   description of the terms of this Agreement to or file a copy of this Agreement with any   Governmental Authority as aforesaid and such Party has (i) promptly notified the other Party in   writing of such requirement and any respective timing constraints, (ii) provided copies of the   proposed disclosure or filing to the other Party reasonably in advance of such filing or other   disclosure and (iii) given the other Party a reasonable time under the circumstances to comment   upon and request confidential treatment for such disclosure, then such Party will have the right to   make such disclosure or filing at the time and in the manner reasonably determined by its counsel   to be required by Applicable Law or the applicable Governmental Authority. If a Party seeks to   make a disclosure or filing as set forth in this Section 9.6.1 and the other Party provides comments   within the respective time periods or constraints specified herein, the Party seeking to make such   disclosure or filing will reasonably consider such comments and use good faith efforts to                                        -99-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   incorporate such comments in the disclosure or filing; provided that prior to making any such filing  of this Agreement, the Parties shall reasonably cooperate and use good faith efforts to agree on a  redacted form of this Agreement to be so filed.                9.6.2 Except as may be otherwise provided herein, no Party or its Affiliate shall  use the Corporate Marks or any other name or Trademark of the other Party, its Affiliates or their  respective employees in any publicity, promotion, news release or disclosure relating to this  Agreement or its subject matter, without the prior express written permission of the other Party,  except as may be required by Applicable Law.                                ARTICLE 10  PAYMENTS         10.1  Upfront Payment.  In consideration of the licenses and other rights granted to  Merck herein by SeaGen, subject to the terms and conditions of this Agreement, Merck shall pay  to SeaGen, within [ * ] Business Days following the Effective Date, a one-time, non-refundable  and non-creditable upfront payment in the amount of Six Hundred Million Dollars ($600,000,000).         10.2  Development Milestones.                10.2.1 Development Milestone Payments.  In further consideration for the  licenses and other rights granted to Merck herein by SeaGen, subject to the terms and conditions  of this Agreement (including Section 16.4.2(b)(viii)), Merck will notify SeaGen within [ * ]  Business Days following the first achievement of each milestone event described below in this  Section 10.2.1 (each, a “Development Milestone Event”) by the Parties under this Agreement  after the Effective Date with respect to the first Licensed Product to achieve the applicable  Development Milestone Event, and Merck shall thereafter pay the corresponding payment  amounts set forth below associated with the applicable Development Milestone Event in  accordance with Section 10.2.2 (each, a “Development Milestone Payment”):                                                            Development Milestone                 Development Milestone Event                                                        Payment (in U.S. Dollars)                                                                         1. [ * ]                                                     [ * ]                                                                       2. [ * ]                                                     [ * ]                                                                       3. [ * ]                                                     [ * ]   4. [ * ]                                                     [ * ]                                                                         5. [ * ]                                                     [ * ]   6. [ * ]                                                     [ * ]                                                                         7. [ * ]                                                     [ * ]                                      -100-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

                                                          Development Milestone                 Development Milestone Event                                                        Payment (in U.S. Dollars)     8. [ * ]                                                     [ * ]                                                                         9. [ * ]                                                     [ * ]   10. [ * ]                                                    [ * ]     11. [ * ]                                                    [ * ]     12. [ * ]                                                    [ * ]     13. [ * ]                                                    [ * ]     14. [ * ]                                                    [ * ]     15. [ * ]                                                    [ * ]     16. [ * ]                                                    [ * ]     17. [ * ]                                                    [ * ]     18. [ * ]                                                    [ * ]     19. [ * ]                                                    [ * ]     20. [ * ]                                                    [ * ]     21. [ * ]                                                    [ * ]     22. [ * ]                                                    [ * ]                 With respect to the Development Milestone Events the following shall apply:                     (a)   With respect to Development Milestones Events [ * ], if a given [ *  ], then Development Milestone Event [ * ] will be deemed achieved as of [ * ] and the  corresponding Development Milestone Payment shall be due and payable by Merck.                     (b)   if Development Milestone Event [ * ] is skipped and not paid, but  Development Milestone Event [ * ] is subsequently achieved [ * ], then upon achievement of  Development Milestone Event [ * ], Development Milestone Event [ * ] will be deemed achieved  and the corresponding Development Milestone Payment shall be due and payable by Merck with  the Development Milestone Payment corresponding to Development Milestone Event 3.                     (c)   if Development Milestone Event [ * ] is skipped and not paid, but  Development Milestone Event [ * ] is subsequently achieved [ * ], then upon achievement of                                      -101-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

     Development Milestone Event [ * ], Development Milestone Event [ * ] will be deemed achieved   and the corresponding Development Milestone Payment shall be due and payable by Merck with   the Development Milestone Payment corresponding to Development Milestone Event [ * ].                      (d)   The achievement of Development Milestone Event [ * ].  If any one   of Development Milestone Events [ * ] shall be payable at [ * ].                     (e)   The achievement of Development Milestone Event [ * ].  If any one  of Development Milestone Events [ * ] shall be payable at [ * ].                     (f)   The achievement of Development Milestone Event [ * ].  If any one  of Development Milestone Events [ * ] shall be payable at [ * ].                     (g)   The achievement of Development Milestone Event [ * ].  If any one  of Development Milestone Events [ * ] shall be payable at [ * ].                     (h)   The achievement of Development Milestone Event [ * ].  If any one  of Development Milestone Events [ * ] shall be payable at [ * ].                      (i)   If [ * ], then the applicable Development Milestones Events [ * ].                      (j)   Notwithstanding the foregoing [ * ].                     (k)   Each of the foregoing Development Milestone Payments in this  Section 10.2.1 shall be payable a maximum of one (1) time, for the first Licensed Product (which,  for clarity, need not be the same Licensed Product that achieved any other Development Milestone  Event) to achieve the applicable Development Milestone Event as set forth in the foregoing chart  regardless of the number of Licensed Products achieving the applicable Development Milestone  Event (i.e., a maximum of [ * ] Development Milestone Payments may be made pursuant to this  Section 10.2.1), and no Development Milestone Payment shall be due hereunder for subsequent or  repeated achievement of a given Development Milestone Event ([ * ]).  For the avoidance of doubt,  the maximum amount payable by Merck pursuant to this Section 10.2.1 is Eight Hundred and Fifty  Million Dollars ($850,000,000), assuming that each of the Development Milestone Events in this  Section 10.2.1 were achieved.               10.2.2 Invoice and Payment of Development Milestone Payments. Following  delivery of notification by Merck to SeaGen (or if the JDC determines and notifies the Parties via  the JSC) that the applicable Development Milestone Event has been achieved by the Parties  (including through their respective Affiliates and sublicensees) pursuant to this Agreement,  SeaGen shall invoice Merck for the applicable Development Milestone Payment, and Merck shall  pay such Development Milestone Payment within [ * ] days after receipt of the invoice therefor.   Each Development Milestone Payment is non-refundable and non-creditable.         10.3  Commercial Milestones.               10.3.1 Commercial Milestones Payments. In further consideration for the  licenses and other rights granted to Merck herein by SeaGen, subject to the terms and conditions                                        -102-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     of this Agreement, the JFC will notify the Parties within [ * ] days after the end of the Calendar   Quarter during which a given milestone event described below in this Section 10.3.1 (each, a   “Commercial Milestone Event” and together with any Development Milestone Event, each, a   “Milestone Event”) was first achieved by the Parties under this Agreement after the Effective  Date with respect to the first Licensed Product to achieve the applicable Commercial Milestone  Event, and Merck shall thereafter pay the applicable amounts set forth below associated with the  applicable Commercial Milestone Event in accordance with Section 10.3.2 (each, a “Commercial   Milestone Payment” and together with any Development Milestone Payment, each, a “Milestone   Payment”):                    Commercial Milestone Event             Commercial Milestone                              [ * ]                      Payment (in U.S. Dollars)         1. [ * ]                                                  [ * ]        2. [ * ]                                                  [ * ]        3. [ * ]                                                  [ * ]        4. [ * ]                                                  [ * ]        5. [ * ]                                                  [ * ]        6. [ * ]                                                  [ * ]                  Each of the foregoing Commercial Milestone Events in this Section 10.3.1 shall be payable   a maximum of one (1) time as set forth in the foregoing chart regardless of the number of times   the applicable Commercial Milestone Event was achieved (i.e., a maximum of [ * ] Commercial   Milestone Payments may be made pursuant to this Section 10.3.1), and no Commercial Milestone   Payment shall be due hereunder for any subsequent or repeated achievement of a given   Commercial Milestone Event ([ * ]). For the avoidance of doubt, the maximum amount payable   by Merck pursuant to this Section 10.3.1 is One Billion Seven Hundred Fifty Million Dollars   ($1,750,000,000), assuming that each of the Commercial Milestone Events in this Section 10.3.1   were achieved.  For clarity, (a) [ * ], including for [ * ], (b) subject to the foregoing sub-clause (a)   of [ * ] shall [ * ] and (c) if [ * ], then the [ * ] for [ * ] shall be [ * ].                 10.3.2 Invoice and Payment of Commercial Milestone Payments. Following   delivery of notification by the JFC to the Parties that the applicable Commercial Milestone Event   has been achieved by the Parties pursuant to this Agreement, SeaGen shall invoice Merck for the   applicable Commercial Milestone Payment, and Merck shall pay such Commercial Milestone   Payment within [ * ] days after receipt of the invoice therefor.  Each Commercial Milestone   Payment is non-refundable and non-creditable.          10.4  Sharing of Costs and Revenues for Licensed Compounds and the Licensed   Product Generally.                  10.4.1 Generally.  With respect to Licensed Compounds and the Licensed   Product, (a) on a worldwide basis, the Parties shall share all Allowable Development Costs on the   basis of fifty percent (50%) to Merck and fifty percent (50%) to SeaGen; (b) on a worldwide basis,                                       -103-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     the Parties shall share all Allowable Joint IP Costs on the basis of fifty percent (50%) to Merck   and fifty percent (50%) to SeaGen; (c) on a worldwide basis, the Parties shall share all Allowable   Commercialization Costs on the basis of fifty percent (50%) to Merck and fifty percent (50%) to   SeaGen; and (d) on a worldwide basis, the Parties shall share Licensed Product Net Sales and   Sublicensee Revenues, in each case, received pursuant to this Agreement, on the basis of fifty   percent (50%) to Merck and fifty percent (50%) to SeaGen, in each case ((a), (b), (c) and (d)),   which shall be paid as set forth in Section 10.4.2.  Notwithstanding the financial definitions herein,   the Parties acknowledge and agree that no cost or expense, and no revenues, shall be included in   the Allowable Development Costs, Allowable Commercialization Costs or Allowable Joint IP   Costs, or in the calculation of Cost of Goods Manufactured or Licensed Product Net Sales or   Sublicensee Revenues, if inclusion therein would result in a duplication or double-counting of the   same cost or expense or the same revenue.                10.4.2 Calculation and Payment of Shared Costs and Revenues.  During the   Term, the following shall apply:                      (a)   Within [ * ] days after the end of each Calendar Quarter, each Party   shall provide to the other Party and the Financial Managers, in a format to be mutually agreed by   the Financial Managers, (i) a detailed, activity-based statement of its (and its Affiliates’) Allowable   Development Costs and Allowable Joint IP Costs, including an itemized breakdown of the   calculation of Development FTE Costs included in the Allowable Development Costs (each, a   “Development Cost Report”), and (ii) a detailed, activity-based statement of its (and its   Affiliates) Allowable Commercialization Costs (each, a “Commercialization Cost Report” and,   together with the corresponding Development Cost Report, the “Cost Reports”), including an   itemized breakdown of the calculation of each element of Allowable Commercialization Costs   (including Sales and Marketing Expenses, Allowable Promotion FTE Costs, Allowable Field   Force FTE Costs, Cost of Goods Manufactured and Third Party Payments), in each case of (i) and   (ii), to the extent incurred in such Calendar Quarter (or a good faith estimate of any portions thereof   where actuals are not known as of such time).  The Costs Reports shall be in a format to be agreed   upon by the Financial Managers.  To the extent that any such Allowable Development Costs,   Allowable Joint IP Costs or Allowable Commercialization Costs reported pursuant to this Section   10.4.2(a), were estimated, the relevant Party shall provide actual cost information with the next   Calendar Quarter’s quarterly Development Cost Report or Commercialization Cost Report, as   applicable, and the provisions of Section 10.4.2(b) shall apply to properly allocate between the  Parties any amount by which such actual costs exceeded or were less than the estimated costs.  For  clarity, Allowable Development Costs, Allowable Joint IP Costs and Allowable  Commercialization Costs for each Calendar Quarter may include accruals/estimates, and those  accruals/estimates will be trued up to actual costs each Calendar Quarter as part of the cost  reporting for the following Calendar Quarter.                     (b)   Within [ * ] days after the end of each Calendar Quarter, the  Financial Managers shall provide to Merck, SeaGen and the JSC a written report (each, a “Cost  Reconciliation Report”) setting forth, in a format to be mutually agreed by the Financial  Managers, the calculations of (i) the Allowable Development Costs and Allowable Joint IP Costs,  and each Party’s share of such Allowable Development Costs and Allowable Joint IP Costs, and  (ii) the Allowable Commercialization Costs and each Party’s share of such Allowable                                       -104-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   Commercialization Costs.  Such Cost Reconciliation Report shall include for such Calendar  Quarter, the (A) total Allowable Development Costs, total Allowable Joint IP Costs and total  Allowable Commercialization Costs incurred by each Party, and each Party’s respective  proportionate share thereof, and (B) the net payment due from one Party to the other Party in  accordance with Section 10.4.1. Each Party shall promptly following receipt of each Cost  Reconciliation Report issue an invoice to the other Party for any such net payment due to such  Party from such other Party in accordance with Section 10.4.1.  Any net payment owed from one  Party to the other Party shall be paid within [ * ] days following receipt of such invoice; provided  that if a Party disputes an amount provided in such Cost Reconciliation Report, then such disputed  amount shall be reviewed by the JSC (provided, however, that in the event that the JSC is unable  to resolve the issue, either Party shall have the right to have an independent auditor examine the  applicable records in order to resolve such issue pursuant to Section 10.6, which determination  shall be binding on the Parties absent manifest error), and any net payment owed with respect to  the undisputed amounts shall be paid within such [ * ] day period (and the disputed amount, if  determined to be owed, shall be paid within [ * ] Business Days of resolution of the dispute).  If  requested by Merck or SeaGen, any invoices or other supporting documentation for any payments  to a Third Party that individually exceed [ * ] shall be promptly provided.                       (c)   Within [ * ] days after the end of each Calendar Quarter, each Party  shall provide to the other Party and the Financial Managers, in a format to be mutually agreed by  the Financial Managers, (i) a detailed statement of its (and each of its Affiliate’s) Licensed Product  Net Sales with respect to the applicable Licensed Product for the Territory (including the  calculation thereof, including a breakdown of Licensed Product Net Sales (and the calculation  thereof)) and (ii) a detailed statement of Sublicensee Revenues for such Calendar Quarter with  respect to the applicable Licensed Product for the Territory, as well as details of any adjustments  to be made to the amounts submitted in the previous Calendar Quarter in the previous Revenue  Report (each, a “Revenue Report”).  The Revenue Report shall be in a format to be agreed upon  by the Financial Managers.                     (d)   Within [ * ] days after the end of each Calendar Quarter, the  Financial Managers shall provide to Merck, SeaGen and the JSC a written report (each, a  “Revenue Reconciliation Report”) setting forth, in a format to be mutually agreed by the  Financial Managers prior to the First Commercial Sale of Licensed Product in the Territory, (i) the  total Licensed Product Net Sales and Sublicensee Revenues for the applicable Licensed Product  for the Territory, the amount of Licensed Product Net Sales and Sublicensee Revenues for the  applicable Licensed Product for the Territory recognized by each Party, and each Party’s share of  such Licensed Product Net Sales and Sublicensee Revenues for the applicable Licensed Product  for the Territory, and (ii) the net payment due from one Party to the other Party in accordance with  Section 10.4.1.  Each Party shall promptly following receipt of each Revenue Reconciliation  Report issue an invoice to the other Party for any such net payment due to such Party from such  other Party in accordance with Section 10.4.1.  Any net payment owed from one Party to the other  Party shall be paid within [ * ] days following receipt of such invoice; provided that if a Party  disputes an amount provided in such Revenue Reconciliation Report, then such disputed amount  shall be reviewed by the JSC (provided, however, that in the event that the JSC is unable to resolve  the issue, then either Party shall have the right to have an independent auditor examine the  applicable records in order to resolve such issue pursuant to Section 10.6, which determination                                      -105-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

     shall be binding on the Parties absent manifest error), and any net payment owed with respect to   the undisputed amounts shall be paid within such [ * ] day period (and the disputed amount, if   determined to be owed, shall be paid within [ * ] Business Days of resolution of the dispute).                      (e)   For planning purposes, at least [ * ] days prior to the end of a given   Calendar Quarter, each Party shall report to the other Party and the Financial Managers its non-  binding estimated Sublicensee Revenues, Allowable Development Costs, Allowable Joint IP   Costs, Allowable Commercialization Costs and, with effect from First Commercial Sale, Licensed   Product Net Sales, in each case, for the current Calendar Quarter (which shall be based on the   estimated actual amounts for the [ * ] months of such Calendar Quarter and the forecasted amounts   for the last month of such Calendar Quarter); provided that, for clarity, the Parties shall not be   required to reconcile such estimates with the actual amounts.                      (f)   All costs and expenses and revenues pursuant to this Section 10.4.2   shall be recorded and reported consistent with such Party’s Accounting Standards, consistently   applied, and shall be reported in U.S. Dollars (with currency conversions as set forth in Section   10.5).                      (g)   The Financial Managers may determine to consolidate the Cost   Reconciliation Report and Revenue Reconciliation Report in order to result in one net payment by   the applicable Party.  In addition, if agreed to by the Parties (such agreement not to be unreasonably   withheld, conditioned or delayed), the Parties shall have the right to reconcile amounts within the   Cost Reconciliation Report and Revenue Reconciliation Report at the local country level, on a   case-by-case basis; provided that any such amounts shall not also be counted in Section 10.4.1 in   order to avoid duplication.                        (h)   The Parties acknowledge and agree that the Cost of Goods   Manufactured, the Development FTE Rates, Medical Affairs FTE Rates, Promotion FTE Rates   and Field Force FTE Rates represent fair market value for the provision of the applicable services   for which such amounts are paid and represent arms’-length negotiated amounts.  The   Development FTE Rates, Medical Affairs FTE Rates, Promotion FTE Rates and Field Force FTE   Rates shall be reviewed annually by the Parties and may be adjusted by mutual written agreement   of the Parties to the extent the Parties mutually determine that an adjustment is necessary to comply   with the arm’s-length standard under Applicable Law.                      (i)   Notwithstanding anything to the contrary set forth herein, (i) when  calculating the Parties’ Allowable Commercialization Costs, Allowable Development Costs and  Allowable Joint IP Costs, any amount of, or in respect of, recoverable VAT incurred by each Party  (or its Affiliates) in respect of any item of expenditure or cost that forms a component of such  calculations shall be excluded and (ii) when calculating Licensed Product Net Sales and  Sublicensee Revenues, any amount of, or in respect of, VAT in respect of any item of revenue that  forms a component of such calculations shall be excluded.                       (j)   Each Party shall consider in good faith other reasonable procedures  proposed by the other Party for sharing applicable financial information hereunder in order to  permit each Party to close its books periodically in a timely manner.                                         -106-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

                 10.4.3 Costs other than Allowable Costs.  For the avoidance of doubt, each Party   shall be solely responsible for any costs and expenses (including any payments arising under any   agreements between such Party (or its Affiliates) and Third Party licensors, including such   payments arising from the grant of rights to, or exercise of rights by, the other Party (or any of its   Affiliates or sublicensees) hereunder) incurred by it (or its Affiliate) in connection with the   Development, Manufacture or Commercialization of Licensed Compound and Licensed Product,   other than such costs and expenses that are included in the Allowable Development Costs,   Allowable Joint IP Costs or Allowable Commercialization Cost as set forth in this Agreement   (which shall be shared by the Parties as set forth in this Section 10.4).          10.5  Payment Terms.                10.5.1 Currency Exchange; Offset.  All payments to be made by a Party under   this Agreement shall be made in U.S. Dollars, by wire transfer, pursuant to the instructions of the   Party receiving payment, as designated from time to time. To the extent any costs and expenses   shared by the Parties hereunder are incurred in a currency other than U.S. Dollars, the applicable   expense shall be converted into U.S. Dollars by the incurring Party on a monthly basis using as a   rate of exchange the average actual foreign currency exchange rate for the month in which the   expense is incurred according to the exchange rates utilized by the applicable Party in its own   internal accounting system, consistently applied.  Likewise, to the extent Licensed Product is sold   in a currency other than U.S. Dollars, the amount received shall be converted into U.S. Dollars on   a monthly basis using as a rate of exchange the average actual foreign currency exchange rate for   the month in which the sale is made according to the exchange rates utilized by the applicable   Party in its own internal accounting system, consistently applied.  Unless otherwise agreed to by   the Parties, neither Party shall have the right to offset any payment that is owed by the other Party   but not paid against any payments owed by such Party, if any, under this Agreement.                10.5.2 Late Payments. Any undisputed payments or portions thereof due   hereunder that are not paid on the date such payments are due under this Agreement shall bear   interest at a rate equal to the lesser of: (a) [ * ] or (b) the maximum rate permitted by Applicable   Laws; in each case calculated on the number of days such payment is delinquent (provided that if   the payment is disputed, such interest shall be calculated from the time that the dispute is resolved),   compounded monthly.          10.6  Recordkeeping and Audit.                10.6.1 Each Party and its Affiliates shall maintain complete and accurate books   and records of account, in accordance with its applicable Accounting Standards, of all transactions   and other business activities under this Agreement and the Ancillary Agreements, sufficient to   confirm the accuracy of all financial reports furnished by a Party to the other Party under this   Agreement or the Ancillary Agreements, as applicable, and all charges or payments by a Party to   the other Party under this Agreement or the Ancillary Agreements.  For [ * ] years after the end of   the applicable Calendar Year, upon reasonable written notice to a Party, but no more than once per   Calendar Year, such Party shall permit an independent certified public accountant of national  standing designated by the other Party to audit such books and records of account of such Party in  order to confirm the accuracy and completeness of all such reports and all such charges or                                        -107-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     payments.  The accounting firm shall disclose to the Party requesting the audit only whether the   audited reports are correct or incorrect and the specific details concerning any discrepancies.  No   other information shall be provided to the Party requesting the audit.                  10.6.2 The Party requesting an audit shall bear all costs and expenses incurred in   connection with any such audit; provided, however, that if any such audit identifies any   underpayments by the audited Party hereunder or overpayments by the auditing Party hereunder,   in each case, that are the fault of the audited Party, in excess of [ * ] percent ([ * ]%) of the amount   actually payable, or [ * ] U.S. Dollars ($[ * ]), whichever is greater, then, in addition to paying the  full amount of such underpayment or overpayment, the audited Party shall reimburse the other  Party for all reasonable costs and expenses incurred by such Party in connection with such audit.               10.6.3 Each Party shall be required to maintain books and records for the greater  of (a) [ * ] or (b) for as long as either Party is required by applicable tax law to maintain such books  and records.  Upon the expiration of [ * ] following the end of any Calendar Year, the cost sharing   and revenue sharing calculations as set forth in Section 10.4 with respect to such  Calendar Year   shall be binding and conclusive upon both Parties.  Unless an audit is ongoing with respect to such   period, the Parties shall be released from any liability or accountability with respect to said   calculations for such Calendar Year.                 10.6.4 The Party requesting an audit shall treat all financial information subject to   review under this Section 10.6 in accordance with the confidentiality and non-use provisions of   Article 9, and shall cause its accounting firm to enter into an acceptable confidentiality agreement   with the audited Party obligating it to retain all such information in confidence pursuant to such   confidentiality agreement.             10.7  Taxes.                10.7.1 VAT.  Any consideration due under this Agreement is exclusive of VAT.   If any VAT will be chargeable on any of the transactions contemplated under this Agreement and   is payable to the respective tax authority by the Party making the supply or providing the service   for VAT purposes, upon receipt of a valid invoice in accordance with the applicable VAT law   from the supplying or service providing Party, the other Party shall pay such VAT in addition to   the consideration otherwise due.                   10.7.2 Withholding Taxes.  Any Party (the “Paying Party”) required to make a   payment pursuant to this Agreement to the other Party (the “Payee”) shall be entitled to deduct or   withhold from the amount payable the tax for which the Paying Party is liable to deduct or withhold   under any provisions of applicable tax law.  If the withholding tax is eliminated, or the withholding   tax rate is reduced, in each case, according to the provisions of an applicable double tax treaty or   regulations applicable thereto, then no deduction or withholding shall be made or a reduced amount   shall be deducted or withheld, in each case as applicable, only if the Paying Party is timely   furnished with necessary documents or certification to the effect that the payment is exempt from   tax or subject to a reduced tax rate or the Payee otherwise satisfies the requirements to obtain the   treaty benefit in question.  Any withheld tax shall be treated as having been paid by the Paying   Party to the Payee for all purposes of this Agreement.  The Paying Party shall timely forward to   the Payee any tax receipts received by it or reasonably available to it certifying the payments of                                       -108-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     withholding tax on behalf of the Payee. In the event such receipts are not available, the Paying   Party shall provide the Payee with such proof of payment of such tax as may be reasonably   acceptable to the Payee.  If the Paying Party failed to deduct or withhold tax required by Applicable   Law, the Payee shall indemnify and hold harmless the Paying Party from any such taxes (including   any interest, penalties or additions to tax imposed thereto) and further shall assist the Paying Party   with regard to all procedures required in order to obtain relief and, if appropriate, reimbursement   by tax authorities (including providing proof, if applicable, that the appropriate tax has in fact been   paid by the Payee) or, in case tax authorities will not reimburse withholding tax to the Paying   Party, the Payee will immediately pay to the Paying Party (for remittance to the appropriate taxing  authority to the extent not previously paid to such authorities by the Paying Party) the amount of  such tax (including any interest, penalties or additions to tax imposed thereto) not previously paid   by the Payee to the appropriate taxing authority.                  10.7.3 Tax Cooperation.  Each Party shall provide the other with reasonable   assistance to enable the recovery, as permitted by Applicable Law, of withholding taxes, VAT or   similar obligations resulting from payments made under this Agreement, such recovery to be for   the benefit of the Party bearing such withholding tax or VAT.            ARTICLE 11  REPRESENTATIONS, WARRANTIES AND COVENANTS           11.1  Representations and Warranties of Each Party.  Each Party represents and   warrants to the other Party, as of the Effective Date (provided that, solely to the extent a   representation below in this Section 11.1 relates to an Ancillary Agreement, such representation   shall be deemed to be made as of the date the applicable Ancillary Agreement has been duly   executed by each Party (or its or their applicable Affiliates)), that:                  11.1.1 it is duly organized, validly existing and in good standing in its jurisdiction   of organization;                11.1.2 it and its applicable Affiliates have the requisite corporate or other company   power and authority to enter into this Agreement and each Ancillary Agreement to which it is a   party and to perform its obligations hereunder and thereunder;                 11.1.3 this Agreement has been duly executed by it and is legally binding upon it   and enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency or   other laws of general application affecting the enforcement of creditor rights, judicial principles   affecting the availability of specific performance and general principles of equity (whether   enforceability is considered a proceeding at law or equity);                11.1.4 when each Ancillary Agreement has been duly executed by such Party or   its applicable Affiliate, such Ancillary Agreement will be legally binding upon it or its applicable   Affiliate and enforceable in accordance with its terms, subject to the effects of bankruptcy,   insolvency or other laws of general application affecting the enforcement of creditor rights, judicial   principles affecting the availability of specific performance and general principles of equity   (whether enforceability is considered a proceeding at law or equity);                                        -109-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

                 11.1.5  the execution and delivery of this Agreement by it and each Ancillary   Agreement by it or its applicable Affiliate and the performance by it or its applicable Affiliate of   the transactions contemplated hereby and thereby have been duly authorized by all necessary   corporate or other company action and do not violate (a) such Party’s or its applicable Affiliate’s   charter documents, bylaws or other organizational documents, (b) any agreement, instrument or   contractual obligation to which such Party or its applicable Affiliate is bound, (c) in any material   respect, any Applicable Law or regulation of any court, governmental body or administrative or   other agency having jurisdiction over such Party or its applicable Affiliate or (d) any order, writ,   judgment, injunction, decree or award of any Governmental Authority presently in effect and   applicable to such Party or its Affiliates; and                11.1.6 except for (a) FDA, EMA or other regulatory approvals, licenses, clearances   and the like necessary for the development, manufacture, sales or marketing of pharmaceutical   products, and (b) any required filing with the U.S. Securities and Exchange Commission (SEC) or   equivalent filings with regard to this transaction in other countries, no authorization, consent,   approval, exemption of or filing or registration with (i) any court or Governmental Authority under   Applicable Law is or shall be necessary for, or in connection with, the entering into of this   Agreement, the Ancillary Agreements or the transactions contemplated hereby or thereby, or for   the performance by it and its Affiliates of their respective obligations under this Agreement and   the Ancillary Agreements, or (ii) any other Person is or shall be necessary for, or in connection   with, the entering into of this Agreement, the Ancillary Agreements or the transactions   contemplated hereby or thereby.           11.2  Additional SeaGen Representations and Warranties.  Except as otherwise set   forth on Schedule 11.2 (the “SeaGen Disclosure Schedules”), SeaGen represents and warrants to   Merck, as of the Effective Date, that:                11.2.1 SeaGen has the right, power and authority to grant the rights and licenses   granted to Merck hereunder, and SeaGen has obtained all necessary consents and fulfilled all   necessary conditions, if any, to grant the rights and licenses to Merck hereunder, and the rights and   licenses granted (or purported to be granted) to Merck hereunder does not conflict with any   agreement between SeaGen (or its Affiliate) and any Third Party.                 11.2.2 The Patent Rights listed on Schedule 1.139 are all included within the   SeaGen Patents. To SeaGen’s knowledge, all SeaGen Patents listed on Schedule 1.139 are valid   and enforceable Patent Rights (or in the case of patent applications, applied for). All SeaGen   Patents are filed and maintained properly and correctly and all applicable fees have been paid on   or before any final due date for payment.  SeaGen has complied with all Applicable Laws,   including any duties of candor to applicable patent offices, in connection with the filing,   prosecution and maintenance of the SeaGen Patents.                  11.2.3 SeaGen is the sole and exclusive owner of, or otherwise Controls, the   SeaGen Technology.  All of the SeaGen Product-Specific Know-How, the SeaGen Linker Product- Specific Know-How, the SeaGen Product-Specific Patents and the SeaGen Linker Product- Specific Patents (collectively, the “SeaGen Product-Specific Technology”) that is owned by  SeaGen or its Affiliate are free and clear of liens, charges and encumbrances.  Schedule 1.139 sets                                        -110-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     forth a complete and accurate list of the SeaGen Patents (including all application number and   filing dates, registration numbers and dates, jurisdictions and owner(s)).  SeaGen (and its   Affiliates) do not own or control (through license or otherwise) any (A) Patent Rights other than   those Patent Rights included within the SeaGen Patents and set forth on Schedule 1.139 or (B) any   Know-How other than the Know-How included within the SeaGen Know-How, in each case of   (A) and (B), that is necessary or reasonably useful to Develop, Manufacture or Commercialize the   Licensed Compound or Licensed Product (for clarity, in the form the Licensed Compound and the   Licensed Product exist as of the Effective Date).                 11.2.4 SeaGen has obtained from each inventor of the SeaGen Patents that are  listed on Schedule 1.139 and indicated on Schedule 1.139 as being owned by SeaGen or any of its   Affiliates agreements that have assigned to SeaGen or its Affiliate each such inventor’s entire   right, title and interest in and to the applicable SeaGen Patents, and, to SeaGen’s Knowledge, each   such agreement is valid and enforceable.                 11.2.5 Neither SeaGen nor any of its Affiliates has granted any Third Party, and   neither SeaGen nor any of its Affiliates is under any obligation to grant any Third Party any right   to research, develop, manufacture or commercialize any Licensed Compound, Licensed Product   or Competing Product (including any rights or licenses under the SeaGen Technology to research,   develop, manufacture or commercialize any Licensed Compound, Licensed Product or any   Competing Product), other than (i) the rights granted to SeaGen’s Third Party contract   manufacturers to manufacture the Licensed Compound, Licensed Product and Next Generation   Compounds on behalf of SeaGen and (ii) the rights granted to SeaGen’s Third Party contract   research organizations to conduct development activities on behalf of SeaGen with respect to the   Licensed Compound, Licensed Product and Next Generation Compounds.                  11.2.6 Neither SeaGen nor any of its Affiliates is subject to, or bound by, any   exclusivity provisions, non-compete provisions or other similar types of provisions or obligations   pursuant to any agreement with a Third Party or otherwise that would limit or restrict in any way   SeaGen or any of its Affiliates from researching, developing, making, having made, importing,   using, selling, offering to sell or otherwise exploiting the Licensed Compound or Licensed Product   as set forth herein, or granting the rights to Merck to do so as set forth herein.                  11.2.7 To SeaGen’s knowledge, the use or other exploitation of the SeaGen   Product-Specific Technology, as contemplated under this Agreement, (i) does not and will not   infringe any valid, enforceable and unexpired issued Patent Right of any Third Party or   misappropriate any Know-How or other intellectual property of any Third Party and (ii) does not   and will not infringe the claims of any published Third Party patent application if such claims were   validly issued in their current form.  To SeaGen’s knowledge, the use, Development, Manufacture   and Commercialization of the Licensed Compound or Licensed Product, in each case, as   contemplated under this Agreement, (a) does not and will not infringe any valid, enforceable and   unexpired issued Patent Right of any Third Party or misappropriate any Know-How or other   intellectual property of any Third Party and (b) does not and will not infringe the claims of any   published Third Party patent application if such claims were validly issued in their current form.                                           -111-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

                 11.2.8 There is no (a) actual claim, litigation, demand, suit, proceeding, arbitration,   inquiry, investigation or other legal action, whether civil, criminal, administrative or regulatory,   pending, or, to SeaGen’s knowledge, threatened in writing by any Third Party against SeaGen or   any of its Affiliates or (b) judgment or settlement against or owed by SeaGen or any of its   Affiliates, in each case ((a) or (b)), in connection with the SeaGen Technology or Licensed  Compound or Licensed Product, including any of the foregoing that is (i) alleging that the issued  patents in the SeaGen Patents are invalid or unenforceable, or the patent applications in the SeaGen  Patents will, upon issuance, be invalid or unenforceable, (ii) alleging that the conception,  development, generation, reduction to practice, disclosing, copying, making, assigning or licensing  of the SeaGen Technology or the practice thereof infringes or would infringe any Patent Rights of  any Person or misappropriates or would misappropriate any Know-How or other intellectual  property right of any Person, or (iii) relating to any design defect, failure to warn or product  liability claim or action for the Licensed Compound or Licensed Product.  As used in this section,  “proceeding” excludes those pertaining to prosecution of Patent Rights (and communications  attendant thereto) between SeaGen (or its Affiliate) and the relevant Governmental Authority  without participation of a Third Party contestant or challenger.               11.2.9 Schedule 1.134 sets forth a complete and accurate list of all agreements   between SeaGen (or its Affiliate) and a Third Party entered into prior to the Effective Date pursuant   to which SeaGen (or its Affiliate) Controls any Patent Rights or Know-How included within the   SeaGen Patents or SeaGen Know-How (other than (i) agreements with SeaGen’s (or its Affiliate’s)   employees and agreements with independent contractors and service providers entered into in the   ordinary course of SeaGen’s (or its Affiliate’s) business, in each case, pursuant to which such   employee, independent contractor or service provider, as applicable, assigns its right, title and   interest to such Patent Rights and Know-How to SeaGen (or its Affiliate), and (ii) agreements   entered into in the ordinary course of business with service providers under which SeaGen (or its   Affiliate) is granted customary licenses to the provider’s proprietary technology).  SeaGen has   provided Merck with true, correct and complete copies of all SeaGen Existing In-Licenses.  Neither   SeaGen nor its Affiliates are in breach or default under any SeaGen Existing In-License, nor, to   SeaGen’s knowledge, is any counterparty thereto in breach of any SeaGen Existing In-License,   and neither SeaGen nor its Affiliates have received any written notice of breach or default with   respect to any SeaGen Existing In-License.  The SeaGen Existing In-Licenses are in full force and   effect.  There are no terms or conditions in any SeaGen Existing In-License (or any other   agreement between SeaGen or any of its Affiliates and a Third Party) that (a) would prevent Merck   from exercising, or otherwise conflict with, the rights and licenses granted to Merck under this   Agreement, including with respect to the prosecution, maintenance, enforcement or defense of any   SeaGen Product-Specific Technology, or (b) would require SeaGen or any of its Affiliates to grant   any Third Party rights under any Program Know-How or Program Patents.                   11.2.10Except pursuant to the SeaGen Existing In-Licenses set forth on Schedule   1.134, neither SeaGen nor any of its Affiliates are subject to any payment obligations to Third   Parties as a result of the execution or delivery of this Agreement, or as a result of the grant or   exercise of any of the rights or licenses granted to Merck under this Agreement.                11.2.11Schedule 1.133 sets forth a complete and accurate list of all agreements   between SeaGen (or its Affiliate) and a Third Party entered into prior to the Effective Date and in                                       -112-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     force as of the Effective Date pursuant to which SeaGen (or its Affiliate) has engaged a Third Party   to Manufacture the Licensed Compound or Licensed Product.  SeaGen has provided Merck with   true, correct and complete copies of all SeaGen Existing CMO Agreements.  Neither SeaGen nor   its Affiliates are in breach or default under any SeaGen Existing CMO Agreement, nor, to   SeaGen’s knowledge, is any counterparty thereto in breach of any SeaGen Existing CMO  Agreement, and neither SeaGen nor its Affiliates have received any written notice of breach or  default with respect to any SeaGen Existing CMO Agreement.  The SeaGen Existing CMO  Agreements are in full force and effect.                 11.2.12SeaGen has provided to Merck, prior to the Effective Date, true, correct and  complete copies of all material data and information in SeaGen’s or any of its Affiliates’ control  regarding the quality, efficacy or safety of the Licensed Compound or Licensed Product, and all  quality, efficacy and safety data and information provided or otherwise made available to Merck  (or any of its Affiliates) is true, correct and complete in all material respects.  As of the Effective   Date, all information, documents and materials provided or otherwise made available in writing   by or on behalf of SeaGen to Merck (or any of its Affiliates) on or prior to the Effective Date in   contemplation of this Agreement was and is true, correct and complete in all material respects, and   such information, documents and materials do not (a) contain any untrue statement of a material   fact or (b) omit any fact that would cause the statements or facts or information contained therein,   in light of the circumstances under which they were made, to be misleading in any material respect.          11.3  Additional SeaGen Representations and Warranties with Respect to the   Licensed Compound and the Licensed Product.  Except as otherwise set forth in the SeaGen   Disclosure Schedules, SeaGen further represents and warrants to Merck as of the Effective Date,   that:                11.3.1 Schedule 11.3.1 sets forth all of the INDs, MAAs and Marketing   Authorizations for the Licensed Compound or Licensed Product, as applicable, in the name of, or   otherwise held by or on behalf of, SeaGen or any of its Affiliates in the Territory.  To SeaGen’s   knowledge, except as set forth on such Schedule, no other Person has obtained, or filed for, any   INDs, MAAs or Marketing Authorizations for the Licensed Compound or Licensed Product in the   Territory.  Each of the INDs, MAAs and Marketing Authorizations set forth on Schedule 11.3.1   have been approved by the FDA or other applicable Regulatory Authority and, are in full force   and good standing, and neither SeaGen nor any of its Affiliates has received any notice in writing,   or otherwise has knowledge of any facts, which have, or would reasonably be expected to have,   led SeaGen (or its Affiliate) to believe that any of the INDs, MAAs or Marketing Authorizations   relating to the Licensed Compound or Licensed Product are not currently in, or may not with the   passage of time remain in, good standing with the FDA or other applicable Regulatory Authority.                  11.3.2 SeaGen has provided Merck access to all material correspondence between   SeaGen (or any of its Affiliates) and the FDA (or other Regulatory Authority) regarding the   Licensed Compound or Licensed Product, including (a) reports of inspection observations from   any Regulatory Authority related to manufacturing facilities where the Licensed Compound or   Licensed Product are being manufactured, (b) establishment inspection reports from any   Regulatory Authority, (c) any FDA Form 483s relating to the Licensed Compound or Licensed   Product or any equivalent thereto from any Regulatory Authority in any applicable jurisdiction,                                        -113-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     (d) safety inquiries from any Regulatory Authority, (e) any input from any Regulatory Authority   related to trial approvability, post-approval obligations, and notice of clinical hold, and (f) any   notice, warning letter, regulatory letter, Section 305 notice, or any other similar communication to   SeaGen or any of the Affiliates stating that their businesses were or are in material violation of any   Applicable Law, or were or are the subject of any material pending, threatened or anticipated   administrative agency or governmental or regulatory authority investigation, proceeding, review   or inquiry; in each case ((a) through (f)), with respect to the Licensed Compound or Licensed   Product.                 11.3.3 Neither SeaGen nor any of its Affiliates (alone or with any Third Party) is   conducting any clinical development of any Licensed Product or Competing Product except for   the Ongoing Clinical Trials.                  11.3.4 All research, development (including non-clinical studies and clinical   studies) and manufacturing activities with respect to the Licensed Compound or the Licensed   Product conducted by or on behalf of SeaGen or any of its Affiliates prior to the Effective Date,   have been conducted in all material respects in accordance with all Applicable Law and SeaGen   (and its Affiliates) has not employed or otherwise used in any capacity the services of any person   or entity debarred under 21 U.S.C. § 335a (or foreign equivalent) in performing any such research,   development (including non-clinical studies and clinical studies) or manufacturing activities prior   to the Effective Date.  Neither SeaGen nor any of its Affiliates, nor any of its or their respective   directors, officers or employees, nor to SeaGen’s knowledge, any of its or its Affiliates’ respective   agents, have made a knowingly false or fraudulent statement to any Regulatory Authority with   respect to the Development of the Licensed Compound or Licensed Product, or knowingly failed   to disclose a material fact required under Applicable Law to be disclosed to any Regulatory   Authority with respect to the Development of the Licensed Compound or Licensed Product.                11.3.5 No Licensed Product has been recalled, withdrawn, suspended or   discontinued (whether voluntarily or otherwise), and no warning letters or similar notices have   been issued with respect to the Licensed Product by any Regulatory Authority, and to SeaGen’s   knowledge no recall, withdrawal, suspension, discontinuance, warning letters or similar notices   with respect to any Licensed Product is pending or threatened.                11.3.6 No funding from any government funding source has been used in the  Development or Manufacture, in each case, by or on behalf of SeaGen (or any of its Affiliates), of  the Licensed Compound or Licensed Product.  No Development or Manufacture, in each case, by  or on behalf of SeaGen (or any of its Affiliates), of the Licensed Compound or Licensed Product  has been conducted under any government contract.  No Know-How, Patent Rights or other  intellectual property within the SeaGen Product-Specific Technology is a “subject invention” as  defined under 48 CFR 27.301 (or foreign equivalent thereof).         11.4  Additional Covenants of SeaGen.  At all times during the Term, SeaGen shall  comply with the following:               11.4.1 SeaGen will not assign or otherwise transfer ownership of, or any other right  title or interest in and to, any SeaGen Technology, except to the extent such assignment or transfer  does not conflict with or adversely affect the licenses or other rights granted to Merck hereunder;                                        -114-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

                 11.4.2 SeaGen will not grant to any Third Party any license or other rights to any   SeaGen Technology, any Licensed Compound or the Licensed Product, if such license grant or   other rights conflicts with the licenses or other rights granted to Merck hereunder; and                11.4.3 With respect to any SeaGen Existing In-License (or, subject to Section 2.5.2   and 2.5.3, any other Third Party In-License Agreement between SeaGen (or its Affiliate) and a   Third Party) or SeaGen Existing CMO Agreement (collectively, the “SeaGen Agreements”), (a)  SeaGen shall not (and shall cause its Affiliates not to) breach any SeaGen Agreement, and (b) to  the extent within SeaGen’s (or its Affiliate’s) reasonable control, SeaGen shall (and shall cause its  Affiliates to, as applicable) maintain the applicable SeaGen Agreement in full force and effect as  it may relate to the Licensed Compound or Licensed Product or the SeaGen Technology (as related  to the Licensed Compound or Licensed Product).  SeaGen shall (and shall cause its Affiliates to,  as applicable) enforce its rights under each SeaGen Agreement to the extent necessary to preserve  the licenses, options and other rights granted to Merck under this Agreement.  SeaGen shall not  (and shall cause its Affiliates not to) amend, modify or terminate any SeaGen Existing In-License  in a manner that could adversely impact the rights or licenses granted to Merck hereunder, or  otherwise impose any additional obligations (including any increased financial obligations) on  Merck hereunder, unless SeaGen obtains Merck’s prior written consent (such consent not to be  unreasonably withheld, conditioned or delayed).  SeaGen shall keep Merck fully informed of any  material development pertaining to any SeaGen Agreement (as related to the Licensed Compound  or Licensed Product), and SeaGen will provide Merck with prompt written notice of any claim of  a breach of which it is aware under any SeaGen Agreement or notice of termination of any SeaGen  Agreement.           11.5  Additional Covenants of Merck.  At all times during the Term, Merck shall  comply with the following:               11.5.1 Merck will not assign or otherwise transfer ownership of, or any other right  title or interest in and to, any Merck Technology in the Territory, except to the extent such  assignment or transfer does not conflict with or adversely affect the rights granted to SeaGen  hereunder; or                11.5.2 Merck will not grant to any Third Party any license or other rights to any  Merck Technology in the Territory if such license grant or other rights conflicts with the rights  granted to SeaGen hereunder.                 11.5.3 Subject to Section 2.5.2 and 2.5.3, with respect to any Third Party In- License Agreement between Merck (or its Affiliate) and a Third Party (collectively, the “Merck  Agreements”), (a) Merck shall not (and shall cause its Affiliates not to) breach any Merck  Agreement, and (b) to the extent within Merck’s (or its Affiliate’s) reasonable control, Merck shall  (and shall cause its Affiliates to, as applicable) maintain the applicable Merck Agreement in full  force and effect as it may relate to the Licensed Compound or Licensed Product.  Merck shall (and  shall cause its Affiliates to, as applicable) to enforce its rights under each Merck Agreement to the  extent necessary to preserve the licenses, options and other rights granted to SeaGen under this  Agreement.  Merck shall not (and shall cause its Affiliates not to) amend, modify or terminate any  Merck Existing In-License in a manner that could adversely impact the rights or licenses granted                                        -115-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   to SeaGen hereunder, or otherwise impose any additional obligations (including any increased  financial obligations) on SeaGen hereunder, unless Merck obtains SeaGen’s prior written consent  (such consent not to be unreasonably withheld, conditioned or delayed).  Merck shall keep SeaGen  fully informed of any material development pertaining to any Merck Agreement as related to the  Licensed Compound or Licensed Product, and Merck will provide SeaGen with prompt written  notice of any claim of a breach of which it is aware under any Merck Agreement or notice of  termination of any Merck Agreement.         11.6  Non-Solicitation.  During the period commencing on the Effective Date and ending  on the [ * ] year anniversary of the Effective Date, with respect to the other Party’s (or its  Affiliate’s) employees involved with the negotiation or performance of this Agreement or any  Ancillary Agreement (each a “Restricted Employee”), each Party (a “Soliciting Party”) shall  not, and shall cause its Affiliates (and any other Person engaged by such Soliciting Party or its  Affiliate to act on its behalf for such purpose) not to, directly or indirectly, hire any Restricted  Employee of the other Party (or any of its Affiliates), or take any action to solicit or encourage any  such Restricted Employee to terminate his or her employment with the other Party (or any of its  Affiliates), or to seek or accept employment or other affiliation with the Soliciting Party (or any  of its Affiliates); provided, however, the Soliciting Party and its Affiliates shall not be restricted  from (a) hiring or soliciting any such Restricted Employee of the other Party (or its Affiliates)  through a general solicitation of employees (including through the use of general advertisement in  the mass media, participation in job fairs or website postings) not specifically directed or targeted  at any such persons or (b) hiring any such Restricted Employee of the other Party (or its Affiliates)  who contacts the Soliciting Party on his or her own initiative without any direct or indirect  solicitation from Soliciting Party (or any of its Affiliates).         11.7  Disclaimer. EACH PARTY ACKNOWLEDGES AND AGREES THAT  EXCEPT AS SET FORTH IN THIS AGREEMENT (OR ANY ANCILLARY AGREEMENT),  INCLUDING THIS ARTICLE    11, MERCK AND SEAGEN EXPRESSLY DISCLAIM ANY  AND ALL REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, STATUTORY  OR OTHERWISE, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY  OR ANY IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE, ALL OF  WHICH ARE HEREBY SPECIFICALLY EXCLUDED AND DISCLAIMED.  NEITHER  PARTY MAKES ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR  IMPLIED, THAT ANY RESEARCH, DEVELOPMENT, MANUFACTURING                     OR  COMMERCIALIZATION EFFORTS WITH REGARD TO THE LICENSED COMPOUNDS,  LICENSED PRODUCTS OR NEXT GENERATION COMPOUNDS WILL BE SUCCESSFUL.                      ARTICLE 12  INTELLECTUAL PROPERTY         12.1  Intellectual Property Operating Committee.                 12.1.1 Composition.  Within [ * ] after the Effective Date, the Parties shall  establish a committee to facilitate discussion and cooperation between the Parties with respect to  intellectual property matters set forth under this Agreement, including the matters contemplated  by this Article 12 (the “IPOC”).  Each Party shall initially appoint at least one (1) employee of  such Party or its Affiliates as representatives to the IPOC, each such representative (a) having                                       -116-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

     sufficient seniority and expertise in the prosecution, maintenance, enforcement and defense of   Patent Rights or Trademarks to participate on the IPOC, and (b) to be duly authorized under their   respective company’s internal governance procedures to carry out the activities given to them   under this Agreement.  The IPOC may change its size from time to time by mutual, unanimous   consent of its members; provided that the IPOC shall consist at all times of an equal number of   representatives of each of Merck and SeaGen.  Each Party may replace one or more of its IPOC   representatives at any time in its sole discretion upon written notice to the other Party.  If agreed   by the IPOC, the IPOC may invite non-members to participate in the discussions and meetings of   the IPOC (e.g., trademark specialists from the Parties); provided that such participants are under   obligations of confidentiality consistent with this Agreement.                  12.1.2 No-Decision Making Authority.  The Parties hereby agree and   acknowledge that the IPOC shall be a forum for review and robust discussion with respect to the   intellectual property matters under the purview of the IPOC, and for making recommendations to   the Parties with respect thereto, but the IPOC shall not have specific decision-making authority.                  12.1.3 Specific Responsibilities of the Intellectual Property Operating   Committee.  In addition to its general responsibilities, the IPOC shall, subject to the terms of this  Agreement, in particular:                     (a)   discuss issues relating to inventorship or ownership of Program   Know-How in accordance with the terms of Section 12.3;                     (b)   discuss, develop and coordinate strategies for obtaining,  maintaining, defending and enforcing patent protection for the Joint Program Patents, SeaGen  Product-Specific Patents and Merck Product-Specific Patents under this Agreement;                      (c)   facilitate cooperation between the Parties pursuant to Section 12.4.3;                      (d)   discuss, develop and coordinate strategies in connection with the   selection, adoption, use, registration and enforcement of the Collaboration Marks; and                      (e)   serve as a forum for the prompt disclosure of all material issues   relating to the intellectual property that is the subject of this Agreement.                12.1.4 Meetings.  The IPOC will meet on a Calendar Quarterly basis (or more or   less frequently as the Parties may otherwise mutually agree), with the location for such meetings   to be determined by the IPOC.  The IPOC may meet in person or, alternatively, the IPOC may   meet by means of teleconference, videoconference or other similar communications equipment.    Each Party will bear the expense of its respective IPOC members’ participation in IPOC meetings.    The IPOC shall be responsible for keeping reasonably detailed written minutes of all meetings of   the IPOC.                  12.1.5 Duration of the IPOC.  The IPOC shall endure for the Term, and if   mutually agreed to by the Parties, after the end of the Term (for such period of time as agreed to   by the Parties).                                        -117-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

           12.2  Disclosure of Program Know-How.               12.2.1 Disclosure by Merck.  Merck shall promptly disclose to SeaGen in writing  the development, making, conception or reduction to practice of Joint Program Know-How as well  as any Merck Program Know-How (other than Merck Proprietary Product Program Inventions)  and any SeaGen Program Know-How.                12.2.2 Disclosure by SeaGen.  SeaGen shall promptly disclose to Merck in  writing the development, making, conception or reduction to practice of Joint Program Know- How, as well as any SeaGen Program Know-How (other than SeaGen Proprietary Product  Program Inventions) and any Merck Program Know-How.          12.3  Ownership of Intellectual Property.               12.3.1 Inventorship.  Inventorship of Program Know-How shall be determined by  application of U.S. patent law pertaining to inventorship, and, except as otherwise set forth herein,  ownership of Program Know-How shall be determined based on inventorship.  Except as otherwise  set forth herein, ownership of Program Copyrights shall be determined by application of U.S.  copyright law pertaining to ownership.                12.3.2 SeaGen Program Intellectual Property.  Subject to the rights and licenses  granted to Merck hereunder and in the Ancillary Agreements, as between the Parties, the entire  right, title and interest in and to the SeaGen Program Know-How and SeaGen Program Patents  shall be owned solely by SeaGen or any of its Affiliates, as applicable.                12.3.3 Merck Program Intellectual Property.  Subject to the rights and licenses  granted to SeaGen hereunder and in the Ancillary Agreements, as between the Parties, the entire  right, title and interest in and to the Merck Program Know-How and Merck Program Patents shall  be owned solely by Merck or any of its Affiliates, as applicable.                 12.3.4 Proprietary Product-Related Promotional Materials.                     (a)   Subject to the rights and licenses granted to SeaGen hereunder and  in the Ancillary Agreements, as between the Parties, the entire right, title and interest in and to (i)  the Merck Proprietary Combination Outside Promotional Materials and the Merck Proprietary  Combination Outside Other Field-Based Materials, and the copyrights in the content therein, and  (ii) the Merck Licensed Product Combination Promotional Materials and Merck Licensed Product  Combination Other Field-Based Materials (or other content) created pursuant to this Agreement  for a Merck Proprietary Combination, and the Program Copyrights in the content therein, in each  case, shall be owned solely by Merck or any of its Affiliates, as applicable.                      (b)   Subject to the rights and licenses granted to Merck hereunder and in  the Ancillary Agreements, as between the Parties, the entire right, title and interest in and to (i) the  SeaGen Proprietary Outside Combination Promotional Materials and the SeaGen Proprietary  Combination Outside Other Field-Based Materials, and the copyrights in the content therein and  (ii) the SeaGen Licensed Product Combination Promotional Materials and SeaGen Licensed  Product Combination Other Field-Based Materials (or other content) created pursuant to this                                       -118-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     Agreement for a SeaGen Proprietary Combination, and the Program Copyrights in the content   therein, in each case, shall be owned solely by SeaGen or any of its Affiliates, as applicable.                12.3.5 Jointly Owned Intellectual Property.  Subject to the rights and licenses   granted to each Party hereunder and in the Ancillary Agreements, (a) Joint Program Know-How,   Joint Program Patents and Joint Program Copyrights shall be owned jointly by Merck and SeaGen   and (b) subject to the terms and conditions of this Agreement, including Section 2.9 and Article 9,   each Party shall have the right to use and exercise Joint Program Know-How, the Joint Program  Patents and Joint Program Copyrights, and grant licenses under its interest in Joint Program Know- How, Joint Program Patents and Joint Program Copyrights, as it deems appropriate without the  consent of (and if any such consent is required, such consent is hereby granted), or any obligation  to, the other Party, including any duty to account.                 12.3.6 Assignment.  Each Party shall (and shall cause its Affiliates to), and hereby  does, for no additional consideration (and the rights and obligations of the Parties as set forth in  this Agreement is deemed sufficient consideration), assign all rights worldwide to the Program  Know-How, Program Patents and Program Copyrights to the other Party to effectuate the  ownership thereof as set forth in the foregoing provisions of Sections 12.3.2, 12.3.3, 12.3.4 and  12.3.5.  Each Party shall reasonably assist the other in recording and perfecting such other Party’s  rights in and to such Program Know-How and Program Patents.          12.4  Filing, Prosecution and Maintenance of Patent Rights.                 12.4.1 Prosecution and Maintenance of SeaGen Product-Specific Patents,  Joint Program Patents and Merck Product-Specific Patents.  The Lead Patent Party shall have  the right, but not the obligation, to prepare, file, prosecute and maintain the SeaGen Product- Specific Patents, Joint Program Patents and Merck Product-Specific Patents, as applicable,  worldwide; provided that with respect to Joint Program Patents, such preparation, filing,  prosecution and maintenance shall be done through outside counsel mutually agreed to by the  Parties.  The Lead Patent Party shall keep the other Party reasonably informed of all material steps  with regard to the preparation, filing, prosecution and maintenance of the SeaGen Product-Specific  Patents, Joint Program Patents and Merck Product-Specific Patents, as applicable, including by  providing such other Party with a copy of material communications to and from any patent  authority in the Territory regarding such SeaGen Product-Specific Patents, Joint Program Patents  or Merck Product-Specific Patents, as applicable, and the other Party shall be copied on all material  correspondence with the Lead Patent Party’s patent counsel with respect thereto.  The Lead Patent  Party shall provide the other Party drafts of any material filings or responses to be made to such  patent authorities in the Territory in advance of submitting such filings or responses so as to allow  for a reasonable opportunity for such other Party to review and comment thereon, and the Lead  Patent Party shall consider in good faith and discuss the requests and suggestions of such other  Party with respect to such Lead Patent Party’s drafts and with respect to strategies for filing and  prosecuting the SeaGen Product-Specific Patents, Joint Program Patents or Merck Product- Specific Patents, as applicable, in the Territory.  The Lead Patent Party shall consult with the other  Party reasonably prior to (but at least [ * ] days prior to) taking or failing to take any substantive  action (including making any filings) with respect to the SeaGen Product-Specific Patents, Joint  Program Patents or Merck Product-Specific Patents, as applicable, including any action that would                                        -119-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     materially affect the scope or validity of rights under any patent applications or patents within the   SeaGen Product-Specific Patents, Joint Program Patents or Merck Product-Specific Patents, as  applicable (such as substantially narrowing or canceling any claim without reserving the right to  file a continuing or divisional patent application, abandoning any patent or not filing or perfecting   the filing of any patent application in any country).  In the event that the Lead Patent Party decides   not to prepare, file, prosecute or maintain a SeaGen Product-Specific Patent, Joint Program Patent   or Merck Product-Specific Patent, as applicable, in a country in the Territory, the Lead Patent Party   shall provide reasonable prior written notice to the other Party of such intention (which notice   shall, in any event, be given no later than [ * ] days prior to the next deadline for any action that   may be taken with respect to such Patent Right in such country), the other Party shall thereupon   have the option, in its sole discretion, to assume the control and direction of the preparation, filing,   prosecution and maintenance of such SeaGen Product-Specific Patent, Joint Program Patent or   Merck Product-Specific Patent, as applicable; provided, however, that (a) with respect to any   Merck Product-Specific Patent, if Merck determines in good faith that SeaGen’s prosecution and   maintenance of such Merck Product-Specific Patent is reasonably likely to have a material adverse   impact on Merck’s overall relevant Patent Rights portfolio, then SeaGen shall not have any right   to direct such prosecution and maintenance; and (b) with respect to any SeaGen Product-Specific   Patent, if SeaGen determines in good faith that Merck’s prosecution and maintenance of such   SeaGen Product-Specific Patent is reasonably likely to have a material adverse impact on   SeaGen’s overall relevant Patent Rights portfolio, then Merck shall not have any right to direct   such prosecution and maintenance.  Upon such other Party’s written exercise of such option, such   other Party shall assume the responsibility and control for the preparation, filing, prosecution and   maintenance of such SeaGen Product-Specific Patent, Joint Program Patent or Merck Product-  Specific Patent, as applicable, and shall thereafter be the Lead Patent Party with respect thereto.    In such event, the original Lead Patent Party shall promptly provide the new Lead Patent Party   with the appropriate documents for such transfer of responsibility and control and reasonably   cooperate with such new Lead Patent Party in such country as provided under Section 12.4.3.                12.4.2 Costs of Prosecution and Maintenance of SeaGen Product-Specific   Patents, Joint Program Patents and Merck Product-Specific Patents.  All out-of-pocket costs  and expenses (including, for clarity, amounts paid to outside counsel in connection with the  preparation, filing, prosecution and maintenance of the applicable Patent Rights) actually and  reasonably incurred by a Party or its Affiliates in connection with the preparation, filing,  prosecution and maintenance of SeaGen Product-Specific Patents, Joint Program Patents or Merck  Product-Specific Patents in accordance with Section 12.4.1 shall be deemed to be “Joint Patent  Costs”.                 12.4.3 Cooperation.                       (a)   The Parties agree to cooperate fully in the preparation, filing,  prosecution and maintenance of the SeaGen Product-Specific Patents, Joint Program Patents and  Merck Product-Specific Patents.  Cooperation shall include the Parties (A) executing all papers  and instruments, or requiring its employees or contractors to execute such papers and instruments,  so as to enable the other Party to apply for and to prosecute the SeaGen Product-Specific Patents,  Joint Program Patents or Merck Product-Specific Patents, as applicable, in the Territory, to the  extent provided for in this Agreement, and (B) promptly informing the other Party of any matters                                       -120-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     coming to such Party’s attention that may materially affect the preparation, filing, prosecution or   maintenance of any such SeaGen Product-Specific Patents, Joint Program Patents or Merck  Product-Specific Patents, as applicable.  Without limiting the foregoing, if a Party will be  prosecuting any Patent Rights Controlled by the other Party, such other Party shall promptly  provide the prosecuting Party with the appropriate documents for such transfer of responsibility  and control and reasonably cooperate with prosecuting Party in order for the prosecuting Party to  assume such prosecution.                     (b)   With respect to Joint Program Patents, Merck Program Patents and  SeaGen Program Patents, the Parties intend to prepare, file, prosecute and maintain such Patent  Rights such that (i) the claims within the Joint Program Patents claim Joint Program Know-How,  but do not also claim Merck Program Know-How or SeaGen Program Know-How, (ii) the claims  within the Merck Program Patents claim Merck Program Know-How, but do not also claim Joint  Program Know-How or SeaGen Program Know-How and (iii) the claims within the SeaGen  Program Patents claim SeaGen Program Know-How, but do not also claim Joint Program Know- How or Merck Program Know-How.  Notwithstanding the foregoing, if mutually agreed to by the  Parties, a Joint Program Patent may claim Merck Program Know-How or SeaGen Program Know-  How that is not separately patentable to the extent not including such Merck Program Know-How   or SeaGen Program Know-How would render the claims in the Joint Program Patent unpatentable.                       (c)   Notwithstanding the Party that is designated as the “Lead Patent   Party” with respect to a given SeaGen Product-Specific Patent, Joint Program Patent or Merck   Product-Specific Patent, as applicable, the Parties may, by mutual written agreement, determine   that the other Party should be the “Lead Patent Party” with respect to a given SeaGen Product-  Specific Patent, Joint Program Patent or Merck Product-Specific Patent, as applicable, in which   case such other Party shall thereafter be the “Lead Patent Party” with respect to the applicable   SeaGen Product-Specific Patent, Joint Program Patent or Merck Product-Specific Patent.                12.4.4 Prosecution and Maintenance of SeaGen General Patents.  SeaGen shall   have the sole right, but not the obligation, to prepare, file, prosecute and maintain the SeaGen   General Patents worldwide, at SeaGen’s sole cost and expense; provided that if there are any   SeaGen General Patents that claim or cover a Licensed Compound or Licensed Product, SeaGen   shall reasonably consult with Merck in connection with the prosecution and maintenance thereof.                 12.4.5 Prosecution and Maintenance of Merck General Patents.  Merck shall   have the sole right, but not the obligation, to prepare, file, prosecute and maintain the Merck   General Patents worldwide, at Merck’s sole cost and expense.           12.5  Patent Term Extension and Supplementary Protection Certificate.                  12.5.1 The Parties shall discuss in good faith, through the IPOC, strategies in order   to avoid the loss of any rights that may otherwise be available to the Parties for the SeaGen   Product-Specific Patents, Joint Program Patents or Merck Product-Specific Patents with respect to   supplementary protection certificates or patent term extensions, including under the provisions of   the Drug Price Competition and Patent Term Restoration Act of 1984 or comparable laws outside   the United States, in respect of the Licensed Product (any such right, a “Patent Term Extension”).   The JSC shall determine, based upon the strategies proposed by the IPOC, which SeaGen Product-                                      -121-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     Specific Patent, Joint Program Patent or Merck Product-Specific Patent shall be a Patent Right for   which the Parties desire to obtain a Patent Term Extension in respect of the Licensed Product, and   the Party that is the Lead Patent Party for such Patent Right shall apply for such Patent Term   Extension.  The Parties shall reasonably cooperate, including the applicable patent holder taking  such actions as are required under any Applicable Law, in connection with the foregoing.   Notwithstanding the provisions of 3.2.4, if the JSC is unable to agree on which SeaGen Product-  Specific Patents, Joint Program Patents or Merck Product-Specific Patents, if any, shall be a Patent  Right for which the Parties will seek to obtain a Patent Term Extension in respect of the Licensed  Product, as applicable, within [ * ] Business Days after the JSC first considers the issue, then the  following shall apply:                      (a)   Either Party (through the Alliance Managers) may elect to formally  submit such issue to the Parties’ applicable Senior Executives for resolution.  In the event that the  Senior Executives are unable to resolve a given issue referred to the Senior Executives within [ *  ] Business Days after the dispute is formally submitted to the Senior Executives for resolution,  then either Party may elect (through the Alliance Managers) to formally submit such issue to the  Parties’ respective [ * ] for resolution.                     (b)   In the event that the [ * ] are unable to resolve a given issue referred  to the [ * ] within [ * ] Business Days after the dispute is formally submitted to the [ * ] for  resolution, then either Party may elect to submit such issue to a patent counsel jointly selected by  the Parties (provided that such selection shall not be unreasonably withheld, conditioned or  delayed) who (and whose firm, if applicable) (i) is not, and was not at any time during the [ * ]  years prior to such dispute, an employee, consultant, legal advisor, officer or director of, and does  not have any conflict of interest with respect to, either Party; (ii) has at least [ * ] years’ experience  practicing patent law in the life sciences industry; and (iii) possesses expertise with respect to  antibody drug conjugates (an “Independent Patent Counsel”).  Such Independent Patent Counsel  shall determine which SeaGen Product-Specific Patents, Joint Program Patents or Merck Product-  Specific Patents, if any, shall be a Patent Right for which the Parties will seek to obtain a Patent   Term Extension in respect of the Licensed Product, taking into account all relevant factors   (including the impact on the exploitation of the Licensed Product and any material adverse impact   on a Party’s overall relevant intellectual property portfolio), and such Independent Patent   Counsel’s determination shall be binding upon the Parties.  Expenses of the Independent Patent   Counsel shall be “Joint Patent Costs”;          provided, in each case, (a) and (b), that if a shorter period of time is necessary to take the   action that is the subject of the matter requiring resolution, including in order to comply with   applicable statutory requirements for seeking a Patent Term Extension or to avoid any loss of   rights, the Parties shall modify the time periods set forth in clauses (a) and (b) so as to permit the   taking of such action within such shorter period of time.                12.5.2 Notwithstanding the foregoing, (a) SeaGen (and its Affiliates) shall [ * ] and   (b) Merck (and its Affiliates) shall [ * ].                  12.5.3 All out-of-pocket costs and expenses actually and reasonably incurred by a   Party or its Affiliates in connection with obtaining any such Patent Term Extensions with respect                                        -122-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     to the Licensed Product in accordance with this Section 12.5 shall be deemed to be “Joint Patent   Costs”.             12.6  Common Ownership Under Joint Research Agreements.  Notwithstanding   anything to the contrary in this Article 12, neither Party shall have the right to make an election   under 35 U.S.C. § 102(c) when exercising its rights under this Article 12 without the prior written   consent of the other Party.  With respect to any such permitted election, the Parties shall coordinate   their activities with respect to any submissions, filings or other activities in support thereof.  The   Parties acknowledge and agree that this Agreement is a “joint research agreement” as defined in   35 U.S.C. § 100(h).           12.7  Administrative Proceedings.                12.7.1 SeaGen Product-Specific Patents, Joint Program Patents and Merck   Product-Specific Patents.  Each Party shall promptly notify the other Party in writing upon receipt   by such Party of information concerning the request for, or filing or declaration of, any reissue,   post-grant review, inter partes review, derivation proceeding, supplemental examination,   interference, opposition, reexamination or other administrative proceeding relating to any of the   SeaGen Product-Specific Patents, Joint Program Patents or Merck Product-Specific Patents, as   applicable.  The Parties shall thereafter consult and reasonably cooperate to determine a course of   action with respect to any such proceeding and shall reasonably consult with one another in an   effort to agree with respect to decisions on whether to initiate or how to respond to such a   proceeding, as applicable, and the course of action in such proceeding, including settlement   negotiations and terms; provided, however, that, except as otherwise agreed by the Parties, and   except as set forth in Section 12.7.2, [ * ] shall control and have final decision-making authority   with respect to any such proceeding relating to such SeaGen Product-Specific Patent, Joint   Program Patent or Merck Product-Specific Patent, as applicable.                12.7.2 Interaction with Invalidity Actions and Infringement Actions.  If any   proceeding under Section 12.7.1 involves Patent Rights involved in an invalidity or   unenforceability action under Section 12.8 or an Infringement Action under Section 12.10, any  decisions as to whether to initiate or how to respond to such a proceeding, and the course of action  in such proceeding, shall be made by the Party controlling such invalidity or unenforceability  action or such Infringement Action as set forth in Section 12.8 or Section 12.10, as applicable.                12.7.3 Costs and Expenses.  All out-of-pocket costs and expenses actually and  reasonably incurred by a Party or its Affiliates in connection with any proceeding under the  provisions of Section 12.7.1 with respect to SeaGen Product-Specific Patents, Joint Program  Patents or Merck Product-Specific Patents, as applicable, will be borne in the same manner as out-  of-pocket costs and expenses incurred with respect to prosecution and maintenance of such Patent  Rights pursuant to Section 12.4.               12.7.4 Administrative Proceedings with respect to SeaGen General Patents.  [   * ] shall have the [ * ] to handle any [ * ] or other administrative proceeding with respect to any   SeaGen General Patent [ * ].                                        -123-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

                 12.7.5 Administrative Proceedings with respect to Merck General Patents.  [   * ] shall have the [ * ] to handle any [ * ] other administrative proceeding with respect to any Merck   General Patent [ * ].          12.8  Invalidity or Unenforceability Defenses or Actions.                12.8.1 SeaGen Product-Specific Patents, Joint Program Patents and Merck  Product-Specific Patents.  Each Party shall promptly notify the other Party in writing of any  alleged or threatened assertion of invalidity or unenforceability of any of the SeaGen Product- Specific Patents, Joint Program Patents or Merck Product-Specific Patents, as applicable, by a  Third Party, including in a declaratory judgment action or similar action or claim filed by a Third  Party or as a defense or as a counterclaim in any Infringement Action under Section 12.10, in each  case, of which such Party becomes aware.  As between the Parties, and subject to Section 12.10   with respect to defenses or counterclaims in Infringement Actions, as applicable, [ * ].  The other   Party may participate in any such claim, suit or proceeding in the Territory with counsel of its   choice; provided that [ * ] shall retain control of the defense in such claim, suit or proceeding.  If   [ * ] elects not to defend or control the defense of the applicable SeaGen Product-Specific Patent,  Joint Program Patent or Merck Product-Specific Patent in a claim, suit or proceeding brought in  the Territory, or otherwise fails to initiate and maintain the defense of any such claim, suit or  proceeding, then the other Party may conduct and control the defense of any such claim, suit or  proceeding.                   12.8.2 Cooperation.  With respect to the SeaGen Product-Specific Patents, Joint  Program Patents and Merck Product-Specific Patents, each Party shall assist and cooperate with  the other Party as such other Party may reasonably request from time to time in connection with  its activities set forth in Section 12.8.1, including by being joined as a party in such action or  proceeding as is necessary to bring or defend such action or proceeding, providing access to  relevant documents and other evidence, and making its employees available at reasonable business  hours.  In connection with any such defense or claim or counterclaim, the controlling Party shall  keep the other Party reasonably informed of any steps taken, and shall provide copies of all  documents filed, in connection with such defense, claim or counterclaim.  In connection with the  activities set forth in Section 12.8.1 with respect to SeaGen Product-Specific Patents, Joint  Program Patents and Merck Product-Specific Patents, as applicable, the controlling Party shall  consider in good faith any comments from the other Party, and each Party shall consult with the  other as to the strategy for the defense of the SeaGen Product-Specific Patents, Joint Program  Patents or Merck Product-Specific Patents, as applicable.               12.8.3 Costs and Expenses.  All out-of-pocket costs and expenses actually and  reasonably incurred by a Party or its Affiliates in connection with any proceeding under the  foregoing provisions of this Section 12.8 with respect to SeaGen Product-Specific Patents, Joint  Program Patents or Merck Product-Specific Patents, as applicable, will be borne in the same  manner as out-of-pocket costs and expenses incurred with respect to prosecution and maintenance  of such Patent Rights pursuant to Section 12.4.               12.8.4 SeaGen General Patents.  [ * ] shall have the [ * ] the SeaGen General  Patents [ * ].                                        -124-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

               12.8.5 Merck General Patents.  [ * ] shall have the [ * ] Merck General Patents [  * ].         12.9  Patent Listings.               12.9.1 SeaGen Product-Specific Patents, Joint Program Patents and Merck  Product-Specific Patents.                       (a)   The Parties shall discuss, through the IPOC, strategies with respect  to filings with Regulatory Authorities in the Territory for listing SeaGen Product-Specific Patents,  Joint Program Patents and Merck Product-Specific Patents for the Licensed Product as required or  allowed (a) in the United States, in the FDA’s Orange Book or Purple Book, or (b) any other  national or international equivalents of any of the foregoing (“Patent Listings”).  The JSC shall  determine which SeaGen Product-Specific Patents, Joint Program Patents or Merck Product- Specific Patents, as applicable, shall be used for any Patent Listings for the Licensed Product.   Notwithstanding the provisions of 3.2.4, if the JSC is unable to agree on which SeaGen Product- Specific Patents, Joint Program Patents or Merck Product-Specific Patents, if any, shall be used  for any Patent Listing for the Licensed Product, as applicable, within [ * ] Business Days after the  JSC first considers the issue, then the following shall apply:                            (i)   Either Party (through the Alliance Managers) may elect to  formally submit such issue to the Parties’ applicable Senior Executives for resolution.  In the event  that the Senior Executives are unable to resolve a given issue referred to the Senior Executives  within [ * ] Business Days after the dispute is formally submitted to the Senior Executives for  resolution, then either Party (through the Alliance Managers) may elect to formally submit such  issue to the Parties’ respective [ * ] for resolution.                           (ii)  In the event that the [ * ] are unable to resolve a given issue  referred to the [ * ] within [ * ] Business Days after the dispute is formally submitted to the [ * ]  for resolution, then either Party may elect to submit such issue to an Independent Patent Counsel  jointly selected by the Parties (provided that such selection shall not be unreasonably withheld,  conditioned or delayed).  Such Independent Patent Counsel shall determine which SeaGen  Product-Specific Patents, Joint Program Patents or Merck Product-Specific Patents, if any, shall  be used for Patent Listings in respect of the Licensed Product, taking into account all relevant  factors (including the impact on the exploitation of the Licensed Product and any material adverse  impact on a Party’s overall relevant intellectual property portfolio), and such patent counsel’s  determination shall be binding upon the Parties.  Expenses of the patent counsel shall be “Joint  Patent Costs”;         provided, in each case, (i) and (ii), that if a shorter period of time is necessary to take the  action that is the subject of the matter requiring resolution, including in order to comply with  applicable statutory requirements for submitting or obtaining a Patent Listing or to avoid any loss  of rights, the Parties shall modify the time periods set forth in clauses (i) and (ii) so as to permit  the taking of such action within such shorter period of time.                      (b)   In addition, to the extent that any SeaGen General Patent or Merck  General Patent (i) is required under Applicable Law to be included in a Patent Listing with respect                                      -125-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

     to the Licensed Product, [ * ], with respect to such SeaGen General Patent, or [ * ], with respect to   such Merck General Patent, will identify such Patent Right and permit it to be listed, or (ii) is   allowed under Applicable Law to be included in a Patent Listing, then [ * ], with respect to such   SeaGen General Patent, or [ * ], with respect to such Merck General Patent, will have the final   decision making authority as to whether to identify such Patent Right to the other Party for listing   and permit it to be listed.                        (c)   Notwithstanding the foregoing, the Parties [ * ].                      (d)   The JSC shall determine, subject to the requirements of Applicable   Law, whether [ * ], as applicable, shall make the necessary filings for the Patent Listings for the   Licensed Product determined in accordance with this Section 12.9, and such Party shall make all   such filings. At the filing Party’s reasonable request, the other Party shall provide prompt and   reasonable assistance (including by taking such action as patent holder as is required under any   Applicable Law) in connection with the foregoing, including (A) providing to the filing Party all   necessary information, including a correct and complete list of the applicable SeaGen Patents,   Joint Program Patents and Merck Patents claiming the Licensed Product, to enable the filing Party   to make such filings with Regulatory Authorities in the Territory with respect to such Patent   Rights, and (B) cooperating with the filing Party’s reasonable requests in connection therewith,   including meeting any submission deadlines.                    12.9.2 Costs and Expenses.  All out-of-pocket costs and expenses actually and   reasonably incurred by a Party or its Affiliates in connection with the Patent Listings pursuant to   Section 12.9.1 shall be deemed to be “Joint Patent Costs”.          12.10 Enforcement of Patents and Know-How.               12.10.1 Notices.  Each Party shall promptly notify the other Party in writing of any  known or suspected infringement or misappropriation of any SeaGen Technology or Merck  Technology by a Third Party of which such Party becomes aware, in each case, to the extent such  alleged infringing or misappropriating activities involve, as to the Licensed Product, [ * ] with   respect thereto (a “Competitive Infringement”).  Promptly following [ * ] the Parties[ * ] shall [   * ].                12.10.2 Relevant Infringement IP.                        (a)   Competitive Infringement (Relevant Infringement IP).                             (i)   As between the Parties, [ * ] shall have the first right, but not  the obligation, to initiate an infringement or other appropriate claim, suit or proceeding anywhere  in the world against any Third Party (an “Infringement Action”) with respect to any Competitive  Infringement of any (i) Merck Product-Specific Patents or Merck Product-Specific Know-How,  (ii) SeaGen Product-Specific Patents or SeaGen Product-Specific Know-How or (iii) Joint   Program Patents or Joint Program Know-How ((i), (ii) and (iii), collectively, the “Relevant   Infringement IP”); provided that [ * ] shall not initiate any such Infringement Action with respect  to a Competitive Infringement of the Relevant Infringement IP in the foregoing clauses [ * ], the                                        -126-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     Parties shall mutually agree upon the strategy with respect to such Infringement Action and [ * ]   prosecution of such Infringement Action, if any, shall be consistent with such agreed upon strategy.                              (ii)  Any such prosecution of an Infringement Action with   respect to a Competitive Infringement of the Relevant Infringement IP shall be through outside  counsel selected by [ * ] and approved by [ * ] (such approval not to be unreasonably withheld,  conditioned or delayed).  In the event [ * ] prosecutes any such Infringement Action with respect  to a Competitive Infringement, [ * ] shall have the right to join as a party to such Infringement  Action in the Territory and participate with its own counsel; provided that [ * ] shall retain control  of the prosecution of such Infringement Action, including the responses to any defense or any  counterclaim raised in connection therewith.  In connection with any Infringement Action under  this Section 12.10.2(a)(ii), [ * ] shall provide [ * ] with drafts of all official papers and statements  prior to their submission in such Infringement Action, with sufficient time to allow [ * ] to review,  consider and substantively comment thereon, and [ * ] shall consider such comments in good faith.   If [ * ] does not take steps, using Commercially Reasonable Efforts, to prosecute, an Infringement  Action under this Section 12.10.2(a)(ii) with respect to a Competitive Infringement with respect  to the Relevant Infringement IP (A) within [ * ] days following the first notice provided above  with respect to such Infringement Action, or (B) no later than [ * ] days before the time limit, if  any, set forth under Applicable Law for filing of such Infringement Actions (provided that such  date in this clause (B) occurs after the first such notice of the Infringement Action is provided),  whichever comes first, then [ * ] may, by providing written notice to [ * ] within [ * ] Business  Days following the earlier to occur of (A) or (B), prosecute such Infringement Action with respect  to such Competitive Infringement (and [ * ] shall have the right to join as a party to such  Infringement Action in the Territory and participate with its own counsel); provided that (x) the  foregoing provisions of this Section 12.10.2(a)(ii) shall apply with respect to [ * ] and [ * ] in   connection with such Infringement Action of the Relevant Infringement IP prosecuted by [ * ],   mutatis mutandis, and (y) [ * ] prosecution of such Infringement Action, if any, shall be consistent   with the Parties’ mutually agreed upon strategy.                         (b)   Competitive Infringement (Relevant Linker Infringement IP).                            (i)   As between the Parties, [ * ] shall have the first right, but not   the obligation, to initiate an Infringement Action with respect to any Competitive Infringement of   any (i) SeaGen Linker Product-Specific Patents or (ii) SeaGen Linker Product-Specific Know-  How ((i) and (ii), collectively, the “Relevant Linker Infringement IP”), in each case subject to [   * ] the Parties shall mutually agree upon the strategy with respect to such Infringement Action and   [ * ] prosecution of such Infringement Action, if any, shall be consistent with such agreed upon   strategy.  In connection with any Infringement Action under this Section 12.10.2(b)(i), [ * ] shall   provide [ * ] with drafts of all official papers and statements prior to their submission in such   Infringement Action, with sufficient time to allow [ * ] to review, consider and substantively   comment thereon, and [ * ] shall consider such comments in good faith.                             (ii)  If [ * ] does not take steps, using Commercially Reasonable   Efforts, to prosecute, an Infringement Action under this Section 12.10.2(b)(ii) with respect to a   Competitive Infringement of the Relevant Linker Infringement IP (A) within [ * ] days following   the first notice provided above with respect to such Infringement Action, or (B) no later than [ * ]                                        -127-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     days before the time limit, if any, set forth under Applicable Law for filing of such Infringement   Actions (provided that such date in this clause (B) occurs after the first such notice of the   Infringement Action is provided), whichever comes first, then [ * ] may, by providing written   notice to [ * ] within [ * ] Business Days following the earlier to occur of (A) or (B), [ * ] the   Parties shall mutually agree upon the strategy with respect to such Infringement Action.  Subject   to the foregoing, [ * ] may initiate such Infringement Action; provided that (x) the foregoing   provisions of this Section 12.10.2(b)(ii) shall apply with respect to [ * ] and [ * ] in connection   with such Infringement Action of the Relevant Linker Infringement IP prosecuted by [ * ], mutatis   mutandis, and (y) [ * ] prosecution of such Infringement Action, if any, shall be consistent with  the Parties’ mutually agreed upon strategy.  [ * ] shall have the right to join as a party to such  Infringement Action in the Territory and participate with its own counsel.                     (c)   Costs of Competitive Infringement.  All out-of-pocket costs and  expenses actually and reasonably incurred by a Party or its Affiliates in connection with any  Infringement Action for a Competitive Infringement in accordance with Section 12.10.2(a) or  12.10.2(b), as applicable, shall be deemed to be “Joint IP Action Costs”.                      (d)   Non-Competitive Infringement of Joint Program Patents and  Joint Program Know-How. With respect to any activities of a Third Party that may constitute an  infringement, unauthorized use or misappropriation of any Joint Program Patents or Joint Program  Know-How that is not a Competitive Infringement, the Parties shall discuss and agree regarding  enforcement of such Joint Program Patents or Joint Program Know-How (including any sharing  of recoveries with respect thereto), [ * ].                      (e)   Non-Competitive Infringement of SeaGen Patents and SeaGen  Know-How.  With respect to any activities of a Third Party that may constitute an infringement,  unauthorized use or misappropriation of any SeaGen Patents or SeaGen Know-How that is not a  Competitive Infringement, [ * ] shall have the sole right, but not the obligation, at its sole cost, to  initiate an Infringement Action anywhere in the world against any Third Party with respect thereto;  provided, however, that [ * ].  As between the Parties, [ * ] shall be entitled to retain any and all  recoveries in connection with any such Infringement Action.                     (f)   Non-Competitive Infringement of Merck Product-Specific  Patents and Merck Product-Specific Know-How; Any Infringement of Merck General  Patents and Merck General Know-How.  With respect to any activities of a Third Party that may  constitute an infringement, unauthorized use or misappropriation of (i) any Merck Product- Specific Patents or Merck Product-Specific Know-How that is not a Competitive Infringement, or  (ii) any Merck General Patents or Merck General Know-How, [ * ] shall have the sole right, but  not the obligation, at its sole cost, to initiate an Infringement Action anywhere in the world against  any Third Party with respect thereto; provided, however, that [ * ].  As between the Parties, [ * ]   shall be entitled to retain any and all recoveries in connection with any such Infringement Action.                 12.10.3 BPCIA and Biosimilar Applications.                       (a)   Notwithstanding the foregoing provisions of Section 12.10.2, if   either Party receives a copy of a Biosimilar Application referencing the Licensed Product, whether   or not such notice or copy is provided under any Applicable Laws (including under the BPCIA,                                       -128-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     the United States Patient Protection and Affordable Care Act, or implementing FDA regulations   and guidance applicable to the approval or manufacture of any biosimilar product or   interchangeable product), or otherwise becomes aware that such a Biosimilar Application has been   submitted to a Regulatory Authority for marketing authorization (such as in an instance described   in 42 U.S.C. § 262(l)(2)), the remainder of this Section 12.10.3 shall apply. Such Party shall   promptly, but in any event within [ * ] Business Days, notify the other Party.  The owner of the   relevant Patents shall then seek permission to view the Biosimilar Application, information   regarding the process or processes used to manufacture the product that is the subject of the   Biosimilar Application, and related confidential information from the filer of the Biosimilar   Application if necessary under 42 U.S.C. § 262(l)(1)(B)(iii). If either Party receives any equivalent   or similar communication or notice in the United States or any other jurisdiction, the Party   receiving such communication or notice shall within five (5) Business Days notify the other Party   of such communication or notice to the extent permitted by Applicable Laws.  Regardless of the   Party that is the “reference product sponsor”, as defined in 42 U.S.C. § 262(l)(1)(A), for purposes   of such Biosimilar Application:                             (i)   [ * ] (the “Controlling Party” and [ * ] the “Non- Controlling Party”, provided, however, that [ * ]) shall discuss and agree in good faith upon an  appropriate strategy with respect to such Biosimilar Application and all actions taken with respect  to such Biosimilar Action, if any, shall be consistent with such strategy (as may be revised from  time to time by prior written agreement of the Parties hereunder).                           (ii)  The Controlling Party shall have the first right to designate  the outside counsel and in-house counsel who shall receive confidential access to the Biosimilar  Application, information regarding the process or processes used to manufacture the product that  is the subject of the Biosimilar Application, and any related confidential information pursuant to  42 U.S.C. § 262(l)(1)(B)(ii), provided that any such outside counsel shall be consented to in writing  by the Non-Controlling Party, such consent not to be unreasonably withheld, conditioned or  delayed.  Notwithstanding the foregoing, if the Controlling Party is not permitted, pursuant to  Applicable Law, to make such designations (or take any other action as set forth in this Section  12.10.3) due to the fact that the Controlling Party is not the Lead Regulatory Party or the holder  of the applicable Patent Rights, as applicable, then the Non-Controlling Party shall make such  designations (or take such other actions as set forth in this Section 12.10.3) at the reasonable  direction of the Controlling Party.                             (iii) In each case, after consulting with the Non-Controlling Party  and subject to the then-current strategy agreed upon between the Parties under clause (i) above,  the Controlling Party shall have the right to [ * ].  If the Non-Controlling Party is required pursuant  to Applicable Law to execute any of these tasks it shall do so in accordance with the then-current  strategy agreed upon between the Parties under clause (i) above and in coordination with the  Controlling Party.  The Controlling Party shall have the right to [ * ].                           (iv)  The Controlling Party shall have the right, after consulting  with the Non-Controlling Party and subject to the then-current strategy agreed upon between the  Parties under clause (i) above, [ * ] in any other jurisdiction outside of the United States. If the  Non-Controlling Party is required by Applicable Law to execute any of these tasks, it shall do so                                        -129-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     in accordance with Controlling Party’s reasonable instructions, subject to the then-current strategy   agreed upon between the Parties under clause (i) above.                            (v)   The Non-Controlling Party shall cooperate with the   Controlling Party’s reasonable requests in connection with the foregoing activities to the extent   required or permitted by Applicable Law.  The Controlling Party shall notify the Non-Controlling  Party of any such lists or communications promptly after they are made.                           (vi)  Each Party shall within [ * ] Business Days after receiving  any notice of commercial marketing provided by the filer of a Biosimilar Application pursuant to  42 U.S.C. § 262(l)(8)(A), notify the other Party thereof.  To the extent permitted by Applicable  Law, and subject to clause (i) above, the Controlling Party shall have the first right, but not the  obligation, to seek an injunction against such commercial marketing as permitted pursuant to 42  U.S.C. § 262(l)(8)(B) and to file an action for patent infringement, provided that [ * ].  Except as  otherwise provided in this Section 12.10.3, any such action shall be subject to the terms and  conditions of Sections 12.10.2, 12.10.4 and 12.10.5.                            (vii) The Parties recognize that procedures other than those set  forth above in this Section 12.10.3 may apply with respect to Biosimilar Applications.  In the event  that the Parties determine that certain provisions of Applicable Laws in the United States or in any  other country in the Territory apply to actions taken by the Parties with respect to Biosimilar  Applications under this Section 12.10.3 in such country, the Parties shall comply with any such  Applicable Laws in such country (and any relevant and reasonable procedures established by  Parties) in exercising their rights and obligations with respect to Biosimilar Applications under  this Section 12.10.3 in a manner to effectuate the intent of this Section 12.10.3.                     (b)   As used herein, the term “Biosimilar Application” means an  application or submission filed with a Regulatory Authority for Marketing Authorization of a  pharmaceutical or biological product claimed to be biosimilar or interchangeable to the Licensed  Product or otherwise relying on the approval of such Licensed Product, including, for example, an  application filed under 42 U.S.C. § 262(k).                12.10.4 Cooperation and Settlement.  The Parties agree to cooperate fully in any  Infringement Action for a Competitive Infringement with respect to any Relevant Infringement IP  or Relevant Linker Infringement IP, as applicable, pursuant to Sections 12.10.2(a), 12.10.2(b) and  12.10.3.  If a Party brings such an Infringement Action, [ * ].  Neither Party shall settle any  Infringement Action of any Relevant Infringement IP or Relevant Linker Infringement IP, as  applicable, in accordance with Sections 12.10.2(a), 12.10.2(b) and 12.10.3 with respect to a  Competitive Infringement [ * ].  Without limiting the foregoing, the Party commencing the  litigation pursuant to Sections 12.10.2(a), 12.10.2(b) and 12.10.3 with respect to any Relevant  Infringement IP or Relevant Linker Infringement IP, as applicable, shall provide the other Party  with copies of all pleadings and other documents filed with the court.                12.10.5 Recovery.  Except as otherwise agreed by the Parties in connection with  a cost sharing arrangement, any recovery realized as a result of an Infringement Action with respect  to any Relevant Infringement IP or Relevant Linker Infringement IP, as applicable, brought  pursuant to Sections 12.10.2(a), 12.10.2(b) and 12.10.3 (whether by way of settlement or                                       -130-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     otherwise) with respect to a Competitive Infringement shall be first allocated to reimburse the   Parties for their out-of-pocket costs and expenses in making such recovery (which amounts shall   be allocated pro rata if insufficient to cover the totality of such expenses).  Any remainder after   such reimbursement is made shall be retained by the Party bringing such Infringement Action; [ *   ].           12.11 SeaGen Existing In-Licenses.  Subject to the provisions of this Article 12, in the   event that Merck is not fully able to enjoy any of the rights granted to Merck under this Article 12   as a result of such rights being subject to the applicable terms and conditions of a SeaGen Existing   In-License, then SeaGen shall use reasonable efforts to allow Merck to exercise and enjoy such   rights to the maximum extent possible under the applicable SeaGen Existing In-License, including   by (i) promptly providing to Merck any relevant information and correspondence from the   counterparty to the applicable SeaGen Existing In-License, (ii) consulting with Merck in   connection with any relevant matters and providing Merck’s comments thereon to the counterparty   to the applicable SeaGen Existing In-License, and (iii) exercising any rights or options (e.g., step-  in rights) that SeaGen may have under the applicable SeaGen Existing In-License as reasonably   directed by Merck in order to allow Merck to fully exercise its rights under this Article 12.           12.12 Trademarks.                 12.12.1Collaboration Marks for Products.  The JSC shall designate one of the   Parties (the “Trademark Clearance Party”) who shall be responsible, subject to the oversight of   and in coordination with the JCC, and with input from the IPOC, for identifying potential   Trademarks to be used to identify the Licensed Product and, in connection therewith, the   Trademark Clearance Party shall create a list of potential candidate Trademarks.  From the list of   such potential Trademarks, the Trademark Clearance Party shall be responsible for the legal   assessment and testing (market research and regulatory risk assessment) of the potential   Trademark candidates, and shall keep the other Party reasonably informed at each step in the   process (including through addressing the issues with the IPOC and the JCC), and shall present   the lead Trademark candidates before the JCC and the JSC along with the recommendations of the   IPOC with respect to such lead Trademark candidates.  From the above-referenced list and based   on the outcome of the Trademark legal assessment and Trademark testing by the Trademark   Clearance Party and input from the IPOC, the JCC shall consider and advise the JSC, and the JSC   shall ultimately be responsible for the selection of the actual Trademarks (and any backups) to be   used to identify the Licensed Product in each country in the Territory (the “Collaboration   Marks”).  Once the JSC selects the Collaboration Marks, the Lead Trademark Party in the   applicable country shall thereafter be responsible for the filing, registration and maintenance of   the Collaboration Marks in the applicable countries in the Territory, and all out-of-pocket costs  and expenses associated therewith (or associated with its other activities under this Section  12.12.1) actually and reasonably incurred by the Lead Trademark Party or its Affiliates shall be  deemed to be “Joint Trademark Costs”.  The Lead Trademark Party in the applicable country shall  coordinate with and keep the other Party reasonably informed of the status of the Trademark  applications and registrations for Collaboration Marks in such country in the Territory, including  by providing regular updates on the status of the Trademark applications and registrations for the  Collaboration Marks (at a frequency to be determined by the IPOC and otherwise upon reasonable  request), and by providing advanced notice to the other Party with sufficient time to respond if a                                       -131-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     refusal may make it necessary or advisable to abandon an application for a Collaboration Mark.    All uses of the Collaboration Marks in connection with proposed major promotional activities shall  be reviewed by the JCC prior to first public display, launch or distribution thereof.  Each Party  shall ensure that its use of the Collaboration Marks complies with all Applicable Law (including  Applicable Law particularly applying to the proper use and designation of Trademarks in the  applicable countries or regions in the Territory) and complies with all applicable quality standards  and branding guidelines established by the Lead Trademark Party in the applicable country with  input from the IPOC for the applicable Collaboration Mark in the applicable country.  Each Party  acknowledges and agrees that the applicable Lead Trademark Party in the applicable country shall  own all applicable Collaboration Marks in such country, including all Trademark registrations and  applications therefor (any such Collaboration Marks owned by SeaGen or its Affiliate, a “SeaGen  Collaboration Mark” and any such Collaboration Marks owned by Merck or its Affiliate, a  “Merck Collaboration Mark”), including all goodwill associated therewith, and should (a)  Merck (or its Related Parties) acquire any ownership rights or goodwill in any SeaGen  Collaboration Mark, Merck shall (and shall procure that its Related Parties will), and hereby does,  assign any such rights to SeaGen (or its applicable Affiliate), to the extent legally permissible, and,  to the extent not legally permissible, waive such rights and (b) SeaGen (or its Related Parties)  acquire any ownership rights or goodwill in any Merck Collaboration Mark, SeaGen shall (and  shall procure that its Related Parties will), and hereby does, assign any such rights to Merck (or its  applicable Affiliate), to the extent legally permissible, and, to the extent not legally permissible,  waive such rights.  Neither Party nor its respective Affiliates shall register or use any Trademark,  domain name, URL or social media identifier which consists of or incorporates, in whole or in  part, or is confusingly similar to, the Collaboration Marks for any products, services or uses, other  than for the Licensed Product hereunder.                12.12.2Third Party Infringement or Challenge.  Each Party shall promptly  inform the other Party of any actual, alleged or threatened infringement of, conflict with or  challenge to the Collaboration Marks of which such Party has notice, including attempted  registration of trademarks that such Party plans to challenge as being confusingly similar to the  Collaboration Marks.  SeaGen and Merck shall thereafter consult and cooperate in good faith to  agree on a course of action (such agreement not to be unreasonably withheld, conditioned or  delayed), including the commencement of administrative or civil legal action by either or both  SeaGen and Merck; provided that [ * ].  The out-of-pocket costs and expenses with respect to any  such actions or defense actually and reasonably incurred by a Party or its Affiliates shall be deemed  to be “Joint Trademark Costs”.  Any recovery obtained by either or both Merck or SeaGen in  connection with or as a result of any action contemplated by this Section 12.12.2 with respect to  any Collaboration Marks, whether by settlement or otherwise, shall be shared in order as follows:  (a) first to repay each Party’s reasonable out-of-pocket costs and expenses (including reasonable  attorneys’ fees) incurred in connection with the action, which repayment shall be on a pro rata  basis if such recovery is insufficient to repay such out-of-pocket costs and expenses of both Parties,  and (b) the amount of any recovery remaining, if any, with respect to any such infringement shall  be treated in a manner consistent with Section 10.4 as if such recovery were Licensed Product Net  Sales.  In connection with any action (or defense) contemplated by this Section 12.12.2, the Parties  shall reasonably cooperate with each other and will provide each other with such information,  documents, powers, instruments, testimony or other assistance as the other Party may reasonably  request in connection with the prosecution or defense of any such action or proceeding.  Each Party                                       -132-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   shall keep the other Party informed of developments in any such action or proceeding, including,  to the extent permissible by Applicable Law, consultation on any settlement.  Neither Party shall  settle any such action or proceeding [ * ].  The non-prosecuting Party shall have the right to be  represented by counsel of its own choice, at its expense.               12.12.3Merck Proprietary Product Marks for use in Merck Proprietary  Combination.  As between the Parties, Merck shall be responsible for the filing, registration and  maintenance of the Merck Proprietary Product Marks for use in a Merck Proprietary Combination  in the Territory, at its cost and expense.  SeaGen hereby acknowledges and agrees that Merck shall  own all Merck Proprietary Product Marks (and all Trademark registrations and applications  therefor) in the Territory, including all goodwill associated therewith, and should SeaGen (or its  Related Parties) acquire any ownership rights or goodwill in any Merck Proprietary Product Mark,  SeaGen shall (and shall procure that its Related Parties will), and hereby does, assign any such  rights to Merck (or its applicable Affiliate), to the extent legally permissible, and, to the extent not  legally permissible, waive such rights.  Neither SeaGen nor its respective Affiliates shall register  or use any Trademark, domain name, URL or social media identifier which consists of or  incorporates, in whole or in part, or is confusingly similar to, the Merck Proprietary Product Marks  for any products, services or uses.                12.12.4SeaGen Proprietary Product Marks for use in SeaGen Proprietary  Combination.  As between the Parties, SeaGen shall be responsible for the filing, registration and  maintenance of the SeaGen Proprietary Product Marks for use in a SeaGen Proprietary  Combination in the Territory, at its cost and expense.  Merck hereby acknowledges and agrees that  SeaGen shall own all SeaGen Proprietary Product Marks (and all Trademark registrations and  applications therefor) in the Territory, including all goodwill associated therewith, and should  Merck (or its Related Parties) acquire any ownership rights or goodwill in any SeaGen Proprietary  Product Mark, Merck shall (and shall procure that its Related Parties will), and hereby does, assign  any such rights to SeaGen (or its applicable Affiliate), to the extent legally permissible, and, to the  extent not legally permissible, waive such rights.  Neither Merck nor its respective Affiliates shall  register or use any Trademark, domain name, URL or social media identifier which consists of or  incorporates, in whole or in part, or is confusingly similar to, the SeaGen Proprietary Product  Marks for any products, services or uses.                12.12.5Use of Trademarks of the Other Party.  Except as may be expressly  agreed to by the Parties, or except to the extent required to comply with Applicable Law, neither  Party shall, without the other Party’s prior written consent, use any Trademarks of the other Party  (including the other Party’s Corporate Marks, or any Collaboration Marks, Merck Proprietary  Product Marks or SeaGen Proprietary Product Marks), or any Trademark that is confusingly  similar to, any of the other Party’s Corporate Marks, Collaboration Marks, Merck Proprietary  Marks or SeaGen Proprietary Product Marks; provided that the Parties may use the Corporate  Marks, Collaboration Marks, Merck Proprietary Product Marks or SeaGen Proprietary Product  Marks of the other Party in connection with the Commercialization of the Licensed Product and  any Proprietary Combination in accordance with this Agreement (and the applicable Promotion  Agreement, if applicable) (as well as, in the case of the applicable Proprietary Product Party, in  connection with the commercialization of such Proprietary Product Party’s Proprietary Product for  use in a Proprietary Combination in accordance with the licenses set forth in Section 2.2.4).                                      -133-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

     Moreover, neither Party (nor their respective Affiliates) shall register or use (except as expressly   permitted herein) any domain name, URL or social media identifier that incorporates, in whole or   in part, any of the other Party’s Corporate Marks, Merck Proprietary Product Marks or SeaGen   Proprietary Product Marks.  For clarity, no Merck Corporate Marks or SeaGen Corporate Marks   or Merck Proprietary Product Marks or SeaGen Proprietary Product Marks, nor any variants,   derivatives, translations or transliterations of any Merck Corporate Marks or SeaGen Corporate   Marks or Merck Proprietary Product Marks or SeaGen Proprietary Product Marks, shall be deemed   a Collaboration Mark.   Without limiting the foregoing, if the Parties agree on a version of a Merck   Proprietary Combination Mark or SeaGen Proprietary Combination Mark that combines a   Collaboration Mark, on the one hand, and a Merck Proprietary Product Mark or SeaGen   Proprietary Product Mark, on the other, for use in connection with a Proprietary Combination, as   applicable (provided, that, for clarity, such Merck Proprietary Combination Mark or SeaGen   Proprietary Combination Mark and the use thereof shall be subject, in all cases, to Merck’s or   SeaGen’s prior approval, as applicable), such Merck Proprietary Combination Mark or SeaGen   Proprietary Combination Mark shall not cause any Merck Proprietary Product Mark or SeaGen   Proprietary Product Mark to become a Collaboration Mark and shall not result in SeaGen or Merck   (or any of their Affiliates), as applicable, having any ownership rights or independent right to use   or enforce any Merck Proprietary Product Mark or SeaGen Proprietary Product Mark, as   applicable, of the other Party.             ARTICLE 13  INDEMNIFICATION; LIMITATION ON LIABILITY          13.1  General Indemnification by SeaGen. Subject to Section 13.3.3, SeaGen shall   indemnify and hold harmless Merck, its Affiliates and their respective directors, officers,   employees and agents, and their respective successors and assigns (collectively, the “Merck   Indemnified Parties”) from, against and in respect of any and all liabilities, losses, costs and  expenses (including reasonable costs and expenses of investigation and defense), damages, fines,  penalties, costs and expenses or amounts paid in settlement (including reasonable attorneys’ and  experts’ fees and costs and expenses), in each case, payable to Third Parties (collectively,   “Losses”), in each case to the extent resulting from any Action and to the extent such Losses are   incurred or suffered by the Merck Indemnified Parties or any of them as a result of, arising out of   or directly or indirectly relating to: (a) any breach of this Agreement or any Ancillary Agreement   by SeaGen or its Affiliates, (b) the negligence, willful misconduct or violation of Applicable Law   by or of SeaGen, its Affiliates or licensees or their respective directors, officers, employees or   agents or any of them, in each case, in performing under this Agreement or any Ancillary   Agreement, (c) the promotion or other commercialization by or on behalf of SeaGen or its   Affiliates or licensees outside of this Agreement of a SeaGen Proprietary Product [ * ] for use in a  SeaGen Proprietary Combination (including the use by or on behalf of SeaGen or any of its  Affiliates or licensees of any SeaGen Proprietary Combination Outside Promotional Materials or  SeaGen Proprietary Combination Outside Other Field-Based Materials), (d) the Development,  Manufacture or Commercialization of any Licensed Compound or Licensed Product by or on  behalf of SeaGen or its Affiliates or licensees prior to the Effective Date or after the end of the  Term, (e) the conduct of any [ * ] by or on behalf of SeaGen or any of its Affiliates or licensees,  or (f) the conduct of any [ * ] by or on behalf of SeaGen or any of its Affiliates or licensees; except,  in each case ((a), (b), (c), (d), (e) and (f)), to the extent caused by the negligence, willful  misconduct, violation of Applicable Law or breach of this Agreement or any Ancillary Agreement                                       -134-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     of or by Merck, its Affiliates or any of the other Merck Indemnified Parties.  For clarity, Merck   (and its Affiliates and sublicensees) shall not be licensees of SeaGen for purposes of this Section   13.1.           13.2  General Indemnification by Merck. Subject to Section 13.3.3 and 13.4, Merck   shall indemnify and hold harmless SeaGen, its Affiliates and their respective directors, officers,   employees and agents, and their respective successors and assigns (collectively, the “SeaGen   Indemnified Parties”), from, against and in respect of any and all Losses in each case, payable to   Third Parties, in each case to the extent resulting from any Action and to the extent such Losses   are incurred or suffered by the SeaGen Indemnified Parties or any of them as a result of, arising   out of or directly or indirectly relating to: (a) any breach of this Agreement or any Ancillary   Agreement by Merck or its Affiliates, (b) the negligence, willful misconduct or violation of   Applicable Law by or of Merck, its Affiliates or licensees or their respective directors, officers,   employees or agents or any of them, in each case, in performing under this Agreement or any   Ancillary Agreement, (c) the promotion or other commercialization by or on behalf of Merck or   its Affiliates or licensees outside of this Agreement of a Merck Proprietary Product for use in a   Merck Proprietary Combination (including the use by or on behalf of Merck of any of its Affiliates   or licensees of any Merck Proprietary Combination Outside Promotional Materials or Merck   Proprietary Combination Outside Other Field-Based Materials) or (d) the conduct of any [ * ] by   or on behalf of Merck or any of its Affiliates or licensees; except, in each case ((a), (b), (c) and   (d)), to the extent caused by the negligence, willful misconduct, violation of Applicable Law or   breach of this Agreement or any Ancillary Agreement of or by SeaGen, its Affiliates or any of the   other SeaGen Indemnified Parties.  For clarity, SeaGen (and its Affiliates and sublicensees) shall   not be licensees of Merck for purposes of this Section 13.2.          13.3  Shared Liability Claims; Product Liability Actions for Proprietary   Combinations; [ * ].                13.3.1 Shared Liability Action; Product Liability Actions for Proprietary   Combinations.                      (a)   Shared Liability Action.  Subject to Sections 13.1, 13.2, 13.3.1(b),   13.3.3 and 13.4, any and all Losses resulting from any Action brought against any SeaGen   Indemnified Party or Merck Indemnified Party as a result of, arising out of or directly or indirectly   relating to, any units of Licensed Compound or Licensed Product sold or administered during the   Term pursuant to this Agreement for use in the Field for the Territory, including any Product   Liability Action, or Action for infringement or misappropriation of intellectual property of a Third   Party (in each case, other than such Losses entitled to indemnification under Section 13.1, Section   13.2, Section 13.4 or any Ancillary Agreement, as applicable) (a “Shared Liability Action”) shall  [ * ].                     (b)   Product Liability Actions for Proprietary Combinations.   Subject to Sections 13.1, 13.2 and 13.3.3, any and all Losses resulting from any Product Liability  Action brought against any SeaGen Indemnified Party or Merck Indemnified Party as a result of  units of Licensed Product administered during the Term pursuant to this Agreement in a  Proprietary Combination shall be allocated as follows: [ * ].  For clarity, nothing in this                                        -135-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     Section 13.3.1(b) precludes a Party from exercising its right to indemnification under Section 13.1   or Section 13.2, if applicable.               13.3.2 Cooperation.  In the event of a Shared Liability Action as set forth in  Section 13.3.1, the Parties shall promptly discuss in good faith and agree on how to address such  Action.  Neither Party shall agree to any settlement of such Action without the prior written consent  of the other Party, which shall not be unreasonably withheld, conditioned or delayed.                  13.3.3 [ * ].  If an [ * ], as applicable, to [ * ], then, notwithstanding the provisions   of [ * ], provided that, in the [ * ], the provisions of [ * ] shall apply and the provisions of [ * ] shall   not apply) or the provisions of [ * ], provided that, in [ * ], the provisions of [ * ] shall apply and   the provisions of [ * ] shall not apply), [ * ] that may be [ * ], that would otherwise be [ * ] for the   [ * ] in the [ * ] in accordance with [ * ], in each case of (i) and (ii), [ * ] in the [ * ] pursuant to this   Agreement [ * ] in a [ * ] and that were [ * ], and (b) [ * ] of the [ * ], then the following shall apply   with respect to [ * ]:                       (a)   in the event of [ * ], the Parties shall [ * ] shall have the [ * ] with   respect to [ * ]; however, neither Party shall [ * ], which shall [ * ];                      (b)   if [ * ], then [ * ] shall [ * ], with respect to [ * ]; provided that [ * ]   shall not [ * ], which shall [ * ] as a result of [ * ];                        (c)   if [ * ], then [ * ] shall [ * ], with respect to any [ * ] shall not [ * ]   with the [ * ], which shall [ * ] as a result of such [ * ]; and                      (d)   [ * ] shall be [ * ] in connection with [ * ], and [ * ] in connection   with [ * ]; provided that, if there are [ * ] then [ * ] shall be [ * ].                  For purposes of this Section 13.3.3, [ * ] shall mean [ * ] in accordance with this   Agreement [ * ]; provided that [ * ].              In the event of [ * ], notwithstanding anything to the contrary [ * ] or any [ * ], as set forth   in the foregoing provisions of this Section 13.3.3 shall be [ * ] with respect to any [ * ], to the   extent [ * ].            Notwithstanding the foregoing provisions of this Section 13.3.3, the provisions of this   Section 13.3.3 shall not apply with respect to [ * ].           13.4  Additional Indemnification by SeaGen.  Without limiting the foregoing   indemnification obligations of SeaGen pursuant to Sections 13.1 and 13.3, SeaGen hereby agrees   to provide such additional indemnifications to the Merck Indemnified Parties as set forth in that   certain [ * ] between the Parties dated as of the date hereof and attached hereto as [ * ].          13.5  Claims for Indemnification.                13.5.1 A Party seeking indemnification under this Article 13 (an “Indemnified   Party”) shall give prompt written notification to the Party from whom indemnification is sought                                        -136-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     (the “Indemnifying Party”) of the commencement of any Action for which indemnification may   be sought or, if earlier, upon the assertion of any such Action by a Third Party (it being understood   and agreed, however, that the failure by an Indemnified Party to give notice of an Action as   provided in this Section 13.5.1 shall not relieve the Indemnifying Party of its indemnification   obligation under this Agreement, except and only to the extent that such Indemnifying Party is   actually prejudiced as a result of such failure to give notice).                13.5.2 Within [ * ] after delivery of such notification, the Indemnifying Party may,  upon written notice thereof to the Indemnified Party, assume control of the defense of such Action  using counsel reasonably satisfactory to the Indemnified Party.  If the Indemnifying Party does not  assume control of such defense, the Indemnified Party shall control such defense.  The assumption  of a defense by the Indemnifying Party shall not be deemed an admission that the Indemnifying  Party has an obligation to defend, indemnify or hold harmless an Indemnified Party from and   against any Loss from an Action.  If the Indemnifying Party assumes and conducts the defense of   an Action as provided above, and if it is ultimately determined pursuant to Section 16.8 that the   Indemnifying Party was not obligated to indemnify, defend, or hold harmless an Indemnified Party   from and against any Loss from such Action, the Indemnified Party shall reimburse the   Indemnifying Party for any and all reasonable and verifiable out-of-pocket costs and expenses  (including reasonable attorneys’ and experts’ fees, costs and expenses) incurred by the  Indemnifying Party in connection with defending such Action and all other Losses paid by the  Indemnifying Party on behalf of the Indemnified Party in connection with such Action, and if such  determination is the result of an arbitration proceeding initiated by the Indemnifying Party pursuant  to Section 16.8, then the Indemnified Party also shall reimburse the Indemnifying Party for all of  the reasonable and verifiable out-of-pocket costs and expenses (including reasonable attorneys’  and experts’ fees, costs and expenses and costs and expenses of the arbitration) incurred by the  Indemnifying Party in connection with such arbitration proceeding.               13.5.3 The Party not controlling such defense may participate therein at its own  expense; provided that if the Indemnifying Party assumes control of such defense and the  Indemnified Party reasonably concludes, based on advice from counsel, that the Indemnifying  Party and the Indemnified Party have conflicting interests with respect to such action, suit,  proceeding or claim, the Indemnifying Party shall be responsible for the reasonable fees, costs and  expenses of counsel to the Indemnified Party solely in connection therewith; provided, further,  however, that in no event shall the Indemnifying Party be responsible for the fees, costs and  expenses of more than one counsel in any one jurisdiction for all Indemnified Parties.               13.5.4 The Party controlling such defense shall keep the other Party advised of the  status of such Action and the defense thereof and shall consider in good faith recommendations  made by the other Party with respect thereto.               13.5.5 The Indemnified Party shall not agree to any settlement of such Action  without the prior written consent of the Indemnifying Party, which shall not be unreasonably  withheld, conditioned or delayed.  The Indemnifying Party shall not agree to any settlement of  such Action or consent to any judgment in respect thereof that does not include a complete and  unconditional release of the Indemnified Party (and the other Merck Indemnified Parties or SeaGen  Indemnified Parties, as applicable) from all liability with respect thereto or that imposes any                                        -137-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     liability or obligation on the Indemnified Party (or other Merck Indemnified Parties or SeaGen   Indemnified Parties, as applicable) without the prior written consent of the Indemnified Party,  which shall not be unreasonably withheld, conditioned or delayed.                13.5.6 If the Indemnifying Party chooses to defend any Action, the Indemnified   Party shall cooperate in the defense thereof and shall furnish such records, information and   testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings,   trials and appeals as may be reasonably requested in connection therewith.  Such cooperation shall   include access during normal business hours afforded to the Indemnifying Party to, and reasonable   retention by the Indemnified Party of, records and information that are reasonably relevant to such   Action and making employees and agents available on a mutually convenient basis to provide   additional information and explanation of any material provided hereunder, and the Indemnifying   Party shall reimburse the Indemnified Party for all its reasonable and verifiable out-of-pocket costs   and expenses in connection therewith.          13.6  Disclaimer of Liability.  NOTWITHSTANDING ANYTHING TO THE   CONTRARY HEREIN OR IN ANY ANCILLARY AGREEMENT, EACH PARTY   ACKNOWLEDGES AND AGREES THAT IN NO EVENT SHALL ANY PARTY OR ANY OF   ITS RESPECTIVE AFFILIATES BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL,   PUNITIVE, CONSEQUENTIAL OR OTHER SIMILAR DAMAGES SUFFERED BY   SEAGEN, MERCK OR ANY OF THEIR RESPECTIVE AFFILIATES IN CONNECTION   WITH THIS AGREEMENT OR ANY ANCILLARY AGREEMENT OR OTHERWISE   ARISING DIRECTLY OR INDIRECTLY OUT OF THE TRANSACTIONS CONTEMPLATED   BY THIS AGREEMENT OR ANY ANCILLARY AGREEMENT, WHETHER IN CONTRACT,   WARRANTY, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, INCLUDING   LOSS OF PROFITS OR REVENUE (AND, FOR CLARITY, NEITHER PARTY NOR ANY OF   THEIR RESPECTIVE AFFILIATES SHALL BE ENTITLED TO RECOVER FOR ANY LOST   PROFIT OR LOST REVENUE DAMAGES, WHETHER SUCH DAMAGES ARE CLAIMED   AS DIRECT OR INDIRECT DAMAGES); PROVIDED THAT THIS SECTION 13.6 SHALL   NOT APPLY WITH RESPECT TO A PARTY’S INDEMNIFICATION OBLIGATIONS WITH   RESPECT TO LOSSES FROM THIRD PARTY ACTIONS UNDER THIS ARTICLE 13.            13.7  Insurance.  Each Party shall procure and maintain insurance (or self-insurance),   including clinical trials insurance and product liability insurance, as applicable, with respect to its   activities hereunder and which is consistent with normal business practices of prudent companies   similarly situated at all times during which the Licensed Product is being clinically tested in human   subjects or commercially distributed or sold, as applicable. Except with respect to self-insurance,   each Party shall provide the other Party with evidence of such insurance upon request. Such   insurance shall not be construed to create a limit of either Party’s liability with respect to its   indemnification obligations under this Article 13 or otherwise.                         ARTICLE 14  TERM AND TERMINATION          14.1  Term.  This Agreement shall be effective as of the Effective Date and, unless   terminated earlier pursuant to Section 14.2, 14.3, 14.4, 14.5 or 14.6, this Agreement shall continue   in full force and effect, until the date on which the Licensed Compounds and the Licensed Product                                        -138-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   are no longer being Developed or Commercialized under this Agreement (provided that normal  pauses or gaps between or following Clinical Trials or other studies for the analysis of data,  preparation of reports and design of future Clinical Trials or preparation of applications for  Marketing Authorization and other customary Development functions not constituting Clinical  Trials would not constitute cessation of Development) (the “Term”).            14.2  Unilateral Termination of Agreement in its Entirety by Merck.  Merck shall  have the right to terminate this Agreement in its entirety (with or without cause) at any time by  giving [ * ] advance written notice to SeaGen.            14.3  Termination by Mutual Agreement.  The Parties shall have the right to terminate  this Agreement in its entirety (or in part) upon mutual written agreement.  In such case, the Parties  shall agree in writing on the effects of such termination (including the costs of transition or wind- down of activities), and the provisions of Section 14.7 shall not apply (unless otherwise mutually  agreed to by the Parties).         14.4  Termination for Cause.               14.4.1 Termination by Merck for Cause.  Merck shall have the right to terminate  this Agreement in its entirety at any time during the Term upon written notice to SeaGen if SeaGen  is in material breach of this Agreement, and has not cured such breach within [ * ] days after notice  requesting cure of the breach (provided that if such cure cannot be fully achieved within such [ *  ] day cure period, then such cure period will be extended for an additional period of up to [ * ]  additional days (for a total cure period of [ * ] days)); provided, however, that in the event of a  good faith dispute with respect to the existence of such a material breach, the [ * ] day cure period  (as may be extended pursuant to the foregoing provisions of this Section 14.4.1) shall be tolled  until such time as the dispute is resolved pursuant to Section 16.8 and, for clarity, this Agreement  shall remain in full force and effect during such period.               14.4.2 Termination by SeaGen for Cause.  SeaGen shall have the right to  terminate this Agreement in its entirety at any time during the Term upon written notice to Merck  if Merck is in material breach of this Agreement, and has not cured such breach within [ * ] days  after notice requesting cure of the breach (provided that if such cure cannot be fully achieved  within such [ * ] day cure period, then such cure period will be extended for an additional period  of up to [ * ] additional days (for a total cure period of [ * ] days)); provided, however, that in the  event of a good faith dispute with respect to the existence of such a material breach, the [ * ] day  cure period (as may be extended pursuant to the foregoing provisions of this Section 14.4.2) shall  be tolled until such time as the dispute is resolved pursuant to Section 16.8 and, for clarity, this  Agreement shall remain in full force and effect during such period.               14.4.3 Disfavored Remedy.  The Parties agree that the remedies under the  foregoing Sections 14.4.1 and 14.4.2 are to be invoked only if the applicable material breach  cannot be adequately remedied through a combination of specific performance and the payment  of money damages as available to the non-breaching Party in accordance with this Agreement.          14.5  Termination For Bankruptcy.                                         -139-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

                 14.5.1 Termination.  If a Party (the “Bankruptcy Party”) makes a general   assignment for the benefit of creditors, appoints or suffers appointment of a receiver or trustee   over all or substantially all of its property, files a petition under any bankruptcy or insolvency act   or has any such petition filed against it, in each case, which is not dismissed, discharged, bonded   or stayed within [ * ] after the filing thereof (each, an “Insolvency Event”), the other Party may   terminate this Agreement in its entirety, effective immediately upon written notice to such   Bankruptcy Party.                14.5.2 Licenses.  In the event that this Agreement is terminated due to the rejection   of this Agreement by or on behalf of the Bankruptcy Party due to an Insolvency Event, all licenses   and rights to licenses granted under or pursuant to this Agreement by the Bankruptcy Party to the   other Party are and shall otherwise be deemed to be licenses of rights to “intellectual property”   (including for purposes of 365(n) of the United States Bankruptcy Code).  The Parties agree that   the other Party, as a licensee of such rights under this Agreement, shall retain and may fully   exercise all of its rights and elections under any applicable insolvency statute, and that upon   commencement of an Insolvency Event by or against the Bankruptcy Party, the other Party shall   be entitled to a complete duplicate of or complete access to (as such other Party deems   appropriate), any such intellectual property and all embodiments of such intellectual property.    Such intellectual property and all embodiments thereof shall be promptly delivered to the other   Party (a) upon any such commencement of a bankruptcy proceeding, at the written request therefor   by the other Party, unless the Bankruptcy Party elects to continue to perform all of its obligations   under this Agreement or (b) if not delivered under clause (a) above, upon the rejection of this   Agreement by or on behalf of the Bankruptcy Party, then at the written request therefore.  The   provisions of this Section 14.5.2 shall be (i) without prejudice to any rights the other Party may   have arising under any applicable insolvency statute or other Applicable Law and (ii) effective   only to the extent permitted by Applicable Law.          14.6  Termination for Patent Challenge.                 14.6.1 In the event that Merck or any of its Affiliates directly takes any action, or  knowingly provides financial or other assistance (including direct legal or technical advice) to any  Third Party, to challenge in a court or administrative proceeding any claim in any SeaGen Patent  as being invalid, unenforceable or otherwise not patentable, SeaGen shall have the right to  immediately terminate this Agreement in its entirety, including the rights with respect thereto of  any Merck sublicensee, [ * ] written notice to Merck; provided that SeaGen shall not have the right  to terminate this Agreement (a) if Merck withdraws or causes to be withdrawn such action within  such [ * ] period or (b) if Merck (or its Affiliate) or such Third Party challenges any SeaGen Patents  in defense of claims raised by or on behalf of SeaGen (or its Affiliate) against Merck (or its  Affiliate) or such Third Party, or otherwise in connection with an assertion of a cross-claim or a  counter-claim. In the event that SeaGen notifies Merck in writing that any of Merck’s sublicensees  directly takes any action, or knowingly provides financial or other assistance (including direct legal  or technical advice) to any Third Party, to challenge in a court or administrative proceeding any  claim in any SeaGen Patent as being invalid, unenforceable or otherwise not patentable, then  Merck shall terminate such sublicensee’s sublicense in its entirety, unless (i) such action by such  sublicensee is withdrawn within [ * ] after SeaGen notice to Merck thereof or (ii) such sublicensee  (or its affiliate) or such Third Party challenges any SeaGen Patents in defense of claims raised by                                       -140-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     or on behalf of SeaGen (or its Affiliate) against such sublicensee (or its affiliate) or such Third   Party, or otherwise in connection with an assertion of a cross-claim or a counter-claim.               14.6.2 In the event that SeaGen or any of its Affiliates directly takes any action, or  knowingly provides financial or other assistance (including direct legal or technical advice) to any  Third Party, to challenge in a court or administrative proceeding any claim in any Merck Patent as  being invalid, unenforceable or otherwise not patentable, Merck shall have the right to immediately  terminate this Agreement in its entirety, including the rights with respect thereto of any SeaGen  sublicensee, upon [ * ] prior written notice to SeaGen; provided that Merck shall not have the right  to terminate this Agreement (a) if SeaGen withdraws or causes to be withdrawn such action within  such [ * ] period or (b) if SeaGen (or its Affiliate) or such Third Party challenges any Merck Patents  in defense of claims raised by or on behalf of Merck (or its Affiliate) against SeaGen (or its  Affiliate) or such Third Party, or otherwise in connection with an assertion of a cross-claim or a  counter-claim. In the event that Merck notifies SeaGen in writing that any of SeaGen’s  sublicensees directly takes any action, or knowingly provides financial or other assistance  (including direct legal or technical advice) to any Third Party, to challenge in a court or  administrative proceeding any claim in any Merck Patent as being invalid, unenforceable or   otherwise not patentable, then SeaGen shall terminate such sublicensee’s sublicense in its entirety,   unless (i) such action by such sublicensee is withdrawn within [ * ] after Merck notice to SeaGen   thereof or (ii) such sublicensee (or its affiliate) or such Third Party challenges any Merck Patents   in defense of claims raised by or on behalf of Merck (or its Affiliate) against such sublicensee (or   its affiliate) or such Third Party, or otherwise in connection with an assertion of a cross-claim or a  counter-claim.         14.7  Effects of Termination.               14.7.1 Generally.  In the event of termination of this Agreement for any reason,  except as set forth in this Section 14.6 and for the surviving provisions as set forth in Section 14.9,  the rights, licenses and obligations of the Parties hereunder shall terminate and be of no further  force or effect as of the effective date of such termination.                14.7.2 Return of Confidential Information.  In the event of termination of this   Agreement for any reason, no later than [ * ] days after the effective date of such termination, each  Party shall either (a) return or cause to be returned to the other Party or (b) destroy and certify such  destruction to the other Party, all Confidential Information of the other Party (other than Joint  Program Know-How), except to the extent that such Party needs to retain such Confidential  Information to exercise its rights or perform its obligations hereunder that survive termination.   Notwithstanding the foregoing, (i) each Party and may keep one copy of Confidential Information  received from the other Party in its confidential files for record purposes, and (ii) each Party shall  be permitted to retain Confidential Information included in any computer records or files  containing such Confidential Information that have been created solely by such Party’s automatic   archiving and back-up procedures, to the extent created and retained in a manner consistent with   such Party’s standard archiving and back-up procedures.                14.7.3 Transition of Licensed Product Activities.                                        -141-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

                       (a)   Subject to Section 14.7.4, in the event of termination of this   Agreement for any reason, the Parties shall work together in good faith following such termination   in order to effect, as soon as reasonably practicable (but in any event within [ * ] months) following   the effective date of termination, an orderly wind-down or transition in accordance with Sections   14.7.3(b) and 14.7.5 of the ongoing Development, Manufacture and Commercialization   responsibilities with respect to the Licensed Product from Merck to SeaGen with respect to those   Development, Manufacture and Commercialization activities being performed by Merck   hereunder for the Licensed Product as of the date of such termination; provided that (i) except if   this Agreement is terminated by Merck under Section 14.2 or by SeaGen pursuant to Section 14.4.2   for Merck’s material breach, or as otherwise provided in Section 14.7.3(b) or 14.7.5, SeaGen shall   reimburse Merck for any costs and expenses incurred by Merck (or any of its Affiliates) in   connection therewith, and (ii) except as expressly set forth in Section 14.7.5, Merck shall not be   required to grant any assignments, rights or licenses to any intellectual property or to any other   assets or materials of Merck or any of its Affiliates in connection therewith.                        (b)   Notwithstanding the provisions of Section 14.7.1, the licenses   granted to Merck hereunder shall survive during such transition period in order for Merck (and its   Related Parties), prior to completion of such transition, to:                           (i)   unless Merck or SeaGen elects to continue the applicable  Clinical Trial under Section 14.7.4 or 14.7.5(b), subject to compliance with Applicable Law   (including taking into account patient safety), wind-down any ongoing Clinical Trials that were  being conducted by Merck (or any of its Related Parties ) as the Lead Study Party with respect to  the Licensed Product hereunder at the time of such termination (provided that (A) the costs of   winding-down such Clinical Trials shall be Allowable Development Costs and be shared between   the Parties in accordance with Section 10.4, mutatis mutandis and (B) the provisions of Section   5.3 shall apply to any and all Development Data generated from such Clinical Trials after the   effective date of termination, mutatis mutandis);                             (ii)  solely if this Agreement is terminated after the first   commercial sale of the Licensed Product in any country where Merck is the Lead Distribution   Party, Distribute and otherwise Commercialize any remaining inventory (including Licensed   Product Manufactured pursuant to Section 14.7.3(b)(iv)) of the Licensed Product hereunder for   such country; provided that, all activities with respect to such Distribution and Commercialization   of the Licensed Product shall be done in accordance with the applicable terms and conditions of   this Agreement, mutatis mutandis, and the Parties shall continue to share the costs and expenses   with respect to such Distribution and other Commercialization of such inventory in accordance   with Section 10.4, mutatis mutandis, and shall share the Licensed Product Net Sales from the sale   of such inventory in accordance with Section 10.4, mutatis mutandis;                             (iii) solely with respect to those countries where Merck is the   Lead Regulatory Party, to continue to undertake such Development activities for the Licensed   Product designated to Merck as the Lead Regulatory Party, during such transition period, as   applicable; provided that all such activities shall be done in accordance with the applicable terms   and conditions of this Agreement, mutatis mutandis, and the Parties shall continue to share the                                        -142-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     costs and expenses with respect to such activities in accordance with Section 10.4, mutatis   mutandis; and                            (iv)  if Merck is the Lead Manufacturing Party, to finish any   Manufacturing of any work-in-progress of Licensed Product; provided that all such activities shall   be done in accordance with the applicable terms and conditions of this Agreement, mutatis   mutandis, in which case, the Parties shall continue to share the costs and expenses with respect to   such activities in accordance with Section 10.4, mutatis mutandis;                      provided that, for clarity, Merck shall have no obligation to undertake such   activities in the foregoing clauses (ii) or (iv) of this Section 14.7.3(b), as applicable.                  14.7.4 Election by Parties to Continue Ongoing Conduct of Clinical Trials for   Merck Proprietary Combinations under a Clinical Trial Agreement.  In the event of  termination of this Agreement for any reason, notwithstanding the provisions of Section 14.7.3 or  14.7.5(b), with respect to any Clinical Trial of the Licensed Product for use in a Merck Proprietary  Combination that has been Initiated and is ongoing as of the effective date of termination (any   such Clinical Trial, an “Ongoing Merck Proprietary Combination Trial”), the following shall  apply:                     (a)   With respect to each Ongoing Merck Proprietary Combination Trial,  either Party may elect, on a Clinical Trial-by-Clinical Trial basis, to continue the conduct of such  Ongoing Merck Proprietary Combination Trial pursuant to Section 14.7.4(c) and will provide   written notice to the other Party of its election before the effective date of termination or within   the [ * ] period immediately thereafter.                      (b)   With respect to any Ongoing Merck Proprietary Combination Trial   that neither Merck nor SeaGen elected to continue pursuant to Section 14.7.4(a) and that is being   conducted by Merck (or any of its Related Parties on its behalf) as the Lead Study Party, SeaGen   will make an election under Section 14.7.5(b) as to whether to transfer to SeaGen, wind-down or   for Merck to continue the applicable Clinical Trial, in each case, in accordance with Section   14.7.5(b).                       (c)   With respect to each Ongoing Merck Proprietary Combination Trial   for which Merck or SeaGen elects to continue pursuant to Section 14.7.4(a) (on a Clinical Trial-  by-Clinical Trial basis), the Parties will negotiate in good faith a clinical trial collaboration   agreement between the Parties (provided that if the Parties are unable to agree on such clinical trial   collaboration agreement within [ * ] days after the effective date of termination, then the Parties   shall use the CTC as the form of such clinical trial collaboration agreement, with such changes as   may be necessary to reflect that a different Clinical Trial is being conducted, and also to reflect   any potential different roles of the Parties with respect to such Clinical Trial (based on the   allocation of such roles under this Agreement) as compared to the CTC) with respect to the   continued conduct by the applicable Lead Study Party of such Clinical Trial until completion   (other than in the event of a Safety Issue) in accordance with the Development Plan in effect as of   the effective date of termination; provided that, for clarity, pending the execution of the clinical   trial collaboration agreement, (i) the conduct of such Clinical Trials shall continue in accordance   with the terms and conditions of this Agreement (including, for clarity, with respect to sharing of                                       -143-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     Allowable Development Costs in connection therewith), mutatis mutandis, (ii) the provisions of   Section 5.3 shall apply to any and all Development Data generated from such Clinical Trial after   the effective date of termination, mutatis mutandis, (iii) the Parties’ obligations under the   Pharmacovigilance Agreement shall remain in full force and effect with respect to such Clinical   Trial, and (iv) without limiting the foregoing sub-clause (i), the licenses granted to each Party   hereunder shall survive as necessary in order for such Party to continue the conduct of any such   Clinical Trials.                  14.7.5 Transfers and Licenses from Merck to SeaGen.  In the event of   termination of this Agreement for any reason, at SeaGen’s option, upon written notice to Merck   (in each case no later than [ * ] days after the effective date of termination), Merck shall make the   following transfers to SeaGen (except in the case of sub-clauses (a), (c), (d) and (f) below to the   extent Merck needs to retain such assets, materials or rights, as applicable, to the extent necessary   for Merck to conduct its activities under Sections 14.7.3(b) or 14.7.4, in which case, any activities   remaining to be performed under sub-clauses (a), (c), (d) and (f) will be performed promptly upon   completion of the applicable Merck activities under Sections 14.7.3(b) or 14.7.4, as applicable,   provided that SeaGen had made its election to have such activities performed within the [ * ] day   period after the effective date of termination):                       (a)   Regulatory Documentation.  Merck shall, at SeaGen’s cost   (provided that if this Agreement is terminated by Merck under Section 14.2 or by SeaGen pursuant   to Section 14.4.2 for Merck’s material breach, then SeaGen shall not be required to reimburse  Merck for such costs), provide SeaGen with copies of and, subject to compliance with Applicable  Laws, and to the extent it is legally permitted to do so, Merck shall also transfer and assign to   SeaGen (or its designee) any and all (i) Marketing Authorizations (including any and all pricing   approval and government reimbursement approvals), and (ii) other material Regulatory   Documentation, in each case, that are owned by Merck or its Affiliate (including, solely if Merck   has the legal right to do so, any and all of the foregoing that were made or filed by Merck’s or its   Affiliates’ respective sublicensees) and that are solely and exclusively for the Licensed Product   (including, if applicable, Licensed Product for use in a SeaGen Proprietary Combination (but   excluding any of the foregoing that are related to any Combination Product that is co-formulated   with any Merck Proprietary Product, which shall be addressed under a separate agreement between  the Parties as set forth in Section 14.7.5(g)), and solely as they exist as of the effective date of   termination.  In the event of a failure to obtain assignment (and provided that Merck will use   Commercially Reasonable Efforts to obtain such assignment), then Merck and its Affiliates hereby   consent and grant to SeaGen, its Affiliates and (sub)licensees the right to access and reference   (without any further action required on the part of Merck or its Affiliates whose authorization to   file such consent with any Regulatory Authority is hereby granted) any such Regulatory   Documentation owned by Merck or its Affiliates with respect to the Licensed Product for SeaGen’s   and its Affiliates’ use in connection with the Licensed Product.                      (b)   Clinical Trials. Subject to Section 14.7.4, if, at the time of such  termination, Merck (or any of its Related Parties on its behalf) as the Lead Study Party is  conducting any Clinical Trials for the Licensed Product, then, at SeaGen’s election on a Clinical  Trial-by-Clinical Trial basis, to the extent elected by written notice to Merck before the effective  date of termination or within the [ * ] day period immediately thereafter: (i) to the extent                                       -144-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     permissible under Applicable Law and commercially feasible, Merck shall, and shall cause its   Related Parties to, at SeaGen’s cost (provided that if this Agreement is terminated by Merck under   Section 14.2 or by SeaGen pursuant to Section 14.4.2 for Merck’s material breach, then SeaGen   shall not be required to reimburse Merck for such costs) transfer the conduct of such Clinical Trial   to SeaGen (or its designees), and SeaGen shall assume any and all liability for the conduct of such   transferred Clinical Trial after the effective date of such transfer (except to the extent arising prior   to the transfer date or from any willful misconduct or negligent act or omission by Merck or its   Related Parties or their respective employees, agents and contractors), (ii) to the extent permissible   under Applicable Laws (and taking into account patient safety matters), Merck shall wind-down   the applicable Clinical Trial in accordance with Section 14.7.3 or (iii) to the extent that a given   Clinical Trial may not be transferred to SeaGen under the foregoing clause (i) pursuant to   Applicable Law (and if clause (ii) is not elected with respect to such Clinical Trial), Merck shall,   at SeaGen’s cost, continue such Clinical Trial until completion (provided that Merck may   discontinue such Clinical Trial for Safety Issues).  In furtherance of the foregoing, notwithstanding   the provisions of Section 14.7.1, the licenses granted to Merck hereunder shall survive solely to   the extent necessary for Merck (and its Related Parties) to finish, transition or otherwise wind-  down such Clinical Trials, as applicable.  If such costs are to be borne by SeaGen as set forth in   this Section 14.7.5(b), then SeaGen shall pay Merck for the costs of such activities, which costs   shall be paid by SeaGen to Merck within [ * ] days after receipt of an invoice and supporting   documentation therefor.  Notwithstanding the foregoing, in the event of termination of this   Agreement by Merck under Section 14.2, with respect to any Ongoing Merck Proprietary Clinical   Trial under the Development Plan for a Merck Proprietary Combination with the Initial Merck   Proprietary Product that has been Initiated prior to the effective date of termination and that will   continue after the effective date of termination pursuant to this Section 14.7.5(b), Merck shall   continue to supply the Initial Merck Proprietary Product, at Merck’s cost, for use in each such   Clinical Trial in accordance with (and for the quantities set forth in) the Development Plan as in  existence as of the effective date of termination of this Agreement.                       (c)   Trademarks. Subject to compliance with Applicable Laws, to the  extent it is legally permitted to do so, Merck shall transfer to SeaGen, at SeaGen’s cost (provided  that if this Agreement is terminated by Merck under Section 14.2 or by SeaGen pursuant to Section  14.4.2 for Merck’s material breach, then SeaGen shall not be required to reimburse Merck for such  costs), any Merck Collaboration Marks (including all applications therefor), in each case, that are  owned by Merck or its Affiliate and that are solely and exclusively for the Licensed Product (but  excluding any of the foregoing that are related to any Combination Product that is co-formulated  with any Merck Proprietary Product, which shall be addressed under a separate agreement between  the Parties as set forth in Section 14.7.5(g)), and solely as they exist as of the effective date of  termination (and, following such transfer, such Merck Collaboration Marks shall thereafter be  deemed to be SeaGen Collaboration Marks).                     (d)   Inventory.  Merck shall transfer to SeaGen the remaining inventory  of Licensed Product (including work-in-progress) owned by, and in the possession of, Merck (or  its Affiliate), and, (i) solely if such Licensed Product was manufactured by or on behalf of Merck  or its Affiliate, SeaGen shall pay to Merck the Cost of Goods Manufactured of such inventory (and   work-in-progress) plus the costs of transportation to SeaGen, or (ii) solely if such Licensed Product  was manufactured by or on behalf of SeaGen and paid for by Merck under a SeaGen Supply                                       -145-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     Agreement, SeaGen shall pay to Merck the price for such inventory (and work-in-progress) paid  by Merck to SeaGen under such SeaGen Supply Agreement plus the costs of transportation to  SeaGen (provided that, in each case ((i) and (ii)) if any of the foregoing amounts have already been  included in the calculation of Allowable Development Costs or Allowable Commercialization  Costs and shared equally between the Parties hereunder (for example, the Cost of Goods  Manufactured of any clinical supplies of the Licensed Product that were already included as  Allowable Development Costs) then SeaGen shall only be required to pay for the remaining half  of the applicable costs in the foregoing clauses (i) and (ii) pursuant to this Section 14.7.5(d)), which  costs shall be paid by SeaGen to Merck within [ * ] days after receipt of an invoice therefor.                     (e)   Licenses.  Merck shall, and effective upon termination of this  Agreement hereby does, grant, on behalf of itself and its Affiliates (and hereby causes its Affiliates  to grant), to SeaGen under [ * ] the “Reversion Product”) and necessary for SeaGen to continue  the Development and Commercialization of the Reversion Product, in each case, with a right to  grant and authorize sublicenses through multiple tiers, a non-exclusive, perpetual, irrevocable,  royalty-free, fully paid-up, license to import, use, sell, offer to sell and otherwise commercialize  the Reversion Product in the Field for the Territory, [ * ] to the [ * ], pursuant to this Agreement,  [ * ] has [ * ] or has [ * ] for the [ * ] or [ * ], the “SeaGen Continuing Combinations”). In  addition, the licenses and provisions set forth in Section 2.3.2 shall survive with respect to the use  of the Reversion Product in the SeaGen Continuing Combinations, but solely for SeaGen to use  those Promotional Materials and packaging and labeling for the SeaGen Continuing Combinations  existing as of the effective date of termination to promote and commercialize the SeaGen  Continuing Combination (and for no other purposes) and subject to the terms and conditions set  forth in Section 2.3.2, mutatis mutandis.  In addition, Merck shall, and effective upon termination  of this Agreement hereby does, grant, on behalf of itself and its Affiliates (and hereby causes its  Affiliates to grant), to SeaGen a fully-paid, royalty-free, Co-Exclusive (with Merck and its  Affiliates) right and license, with the right to grant sublicenses through multiple tiers (subject to  Section 2.6), under [ * ], to seek and obtain regulatory approval for, import, use, sell and offer to  sell (including Commercialize) and otherwise exploit the applicable Licensed Product for use in  the corresponding SeaGen Continuing Combination.  In furtherance of the foregoing, Merck shall,  and hereby does, grant on behalf of itself and its Affiliates (and hereby causes its Affiliates to  grant) to SeaGen a right of reference to any INDs, MAAs and Marketing Authorizations for the  Reversion Product that are Controlled by Merck or any of its Affiliates as of the effective date of  termination, which right of reference shall be for use in connection with the Reversion Product for  use in the SeaGen Continuing Combinations in the Field for the Territory.  At the request of  SeaGen, Merck shall provide to SeaGen a cross-reference letter or similar communication to the  applicable Governmental Authority to effectuate such right of reference.                       (f)   Transition of Contracts.  Merck shall, at SeaGen’s cost (provided  that if this Agreement is terminated by Merck under Section 14.2 or by SeaGen pursuant to Section  14.4.2 for Merck’s material breach, then SeaGen shall not be required to reimburse Merck for such  costs), assign (to the extent assignable and without penalty to Merck or its Affiliate), upon request  of SeaGen within [ * ] days after the effective date of termination, any agreements with Third Party  subcontractors and vendors (including Distributors) that are solely and exclusively for the  Licensed Product to Develop, Manufacture or otherwise Commercialize the Licensed Product;  provided that, to the extent any such Third Party agreement is not assignable to SeaGen, Merck                                       -146-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     shall, at SeaGen’s cost, reasonably cooperate with SeaGen to assist SeaGen to arrange to continue   to receive such services for a reasonable time (not to exceed [ * ]) after termination.  If such costs   are to be borne by SeaGen as set forth in this Section 14.7.5(f), SeaGen shall pay Merck for the   costs of such activities, which costs shall be paid by SeaGen to Merck within [ * ] after receipt of   an invoice therefor.                      (g)   Combination Products with Merck Proprietary Products.  In the  event that as of the date of termination of this Agreement, the Parties are conducting Clinical Trials  hereunder for, or are Commercializing hereunder, a Licensed Product that is a Combination  Product that is co-formulated with any Merck Proprietary Product, then the Parties shall negotiate  in good faith to enter into a separate agreement to address the rights and responsibilities of the  Parties with respect to such Combination Product following termination of this Agreement.                        (h)   Conditions.  Notwithstanding the foregoing provisions of this   Section 14.7.5, the foregoing transfers, assignments and licenses by Merck shall be provided on   an “as is” basis (without any representations and warranties).                 14.7.6 Continuing Payments from SeaGen to Merck.  In the event that Merck   terminates this Agreement under Section 14.4.1, 14.5 or 14.6, the following shall apply:                     (a)   SeaGen shall pay to Merck, on a Continuing Product-by-Continuing  Product basis, an amount equal to the Applicable Percentage of the aggregate net sales of the  applicable Continuing Product sold by any Continuing Party (which net sales shall be calculated,   on a Continuing Product-by-Continuing Product basis, in a manner consistent with the definition   of “Licensed Product Net Sales” hereunder, mutatis mutandis) during the applicable Continuing   Payment Term (which Continuing Product Term shall be determined on a Continuing Product-by-  Continuing Product and country-by-country basis) (the “Continuing Product Payments”).  For   purposes of this Section 14.7.6, the following terms shall have the following meanings:            “Applicable Percentage” means, [ * ]                            (i)   “Continuing Party” means [ * ].                            (ii)  “Continuing Payment Term” means, [ * ].                            (iii) “Continuing Product” means [ * ].                            (iv)  “Recoupment Amount” means [ * ].                         (b)   The Continuing Product Payments shall be paid to Merck on a   quarterly basis, and in connection therewith, (i) [ * ] after the end of each calendar quarter during   which any Continuing Product was sold, SeaGen shall provide to Merck a report setting forth the   net sales (including the calculation thereof) and the Continuing Product Payments payable thereon,   and SeaGen shall remit payment of the Continuing Product Payments to Merck simultaneously   with the delivery of each such report, (ii) the provisions of Sections 10.5, 10.6 and 10.7 shall apply,   mutatis mutandis, and (iii) from and after such time as the aggregate Continuing Product Payments                                        -147-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     for all Continuing Products paid to Merck pursuant to Section 14.7.6(a) equal the Recoupment   Amount, the provisions of Schedule 14.7.6 shall apply.                        (c)   Payment Conditions for Continuing Product. All Continuing   Product Payments are subject to the following conditions: (i) only one Continuing Product  Payment shall be due with respect to the same unit of Continuing Product; (ii) no Continuing  Product Payment shall be due upon the sale or other transfer among SeaGen or its Affiliates or any  other Continuing Party for resale purposes, but in such cases the payment shall be due and   calculated upon the applicable Continuing Party’s net sales of the Continuing Product (which net   sales shall be calculated in a manner consistent with the definition of “Licensed Product Net Sales”   hereunder, mutatis mutandis) to the first independent Third Party; and (iii) no Continuing Product  Payments shall accrue on the disposition of Continuing Product by any Continuing Party as  samples (promotion or otherwise) or as donations (e.g., to non-profit institutions or government  agencies for a non-commercial purpose) or for development (per the defined term “Develop”,  mutatis mutandis)) activities.                 14.7.7 Licenses from SeaGen to Merck.  The licenses and rights of reference  granted to Merck as set forth in Section 2.2.3 shall survive any termination of this Agreement with  respect to the applicable Merck Proprietary Products for use in each Merck Proprietary  Combination, but solely if Merck (or its designee) [ * ] to the [ * ] to the [ * ] for the [ * ] in such   [ * ] such a [ * ] pursuant to [ * ] the “Merck Continuing Combinations”).  In addition, the   licenses and provisions set forth in Section 2.2.4 shall survive with respect to the applicable Merck   Proprietary Products for use in the Merck Continuing Combinations, but subject to the terms and   conditions set forth in Section 2.2.4, mutatis mutandis.            14.8  Milestone Payments. For clarity, Merck shall still be obligated to make any   Milestone Payment to SeaGen with respect to any Milestone Event achieved during the period   commencing on the date of notice of termination of this Agreement and ending on the effective   date of termination of this Agreement; provided, however, that Merck shall not be obligated to   make such Milestone Payments to SeaGen with respect [ * ] if the [ * ] is a [ * ] of such [ * ] to   such [ * ]of any [ * ] pursuant to [ * ].           14.9  Effect of Expiration or Termination; Survival.  Expiration or termination of this   Agreement shall not relieve the Parties of any obligation accruing upon or prior to such expiration   or termination.  Any expiration or termination of this Agreement shall be without prejudice to the   rights of either Party against the other Party accrued or accruing under this Agreement upon or   prior to expiration or termination, including the obligation to share Allowable Development Costs,   Allowable Commercialization Costs and Allowable Joint IP Costs incurred prior to such expiration   or termination in accordance with this Agreement, and to share the Licensed Product Net Sales   from Licensed Product sold prior to such expiration or termination, and Sublicensee Revenues   received with respect to Licensed Product prior to the date of expiration or termination, and   (subject to Section 14.8) the obligation to pay Milestone Payments with respect to Milestone   Events achieved prior to the date of expiration or termination, in each case, in accordance with the   provisions of Article 10, and in furtherance thereof, the Parties shall conduct a final accounting in   accordance with the provisions of Section 10.4 as soon as reasonably practicable following   expiration or termination of this Agreement to effectuate such sharing and payments.  In addition,                                        -148-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     nothing in this Section 14.9 or otherwise shall relieve any Party from liability for any breach of   this Agreement occurring prior to such expiration or termination or any Shared Liability Action   arising from Licensed Product sold or administered prior to such expiration or termination.  In   addition, the provisions of Sections 2.4.1, 5.2.7, 5.3.4 (first sentence only, and for a period of time   consistent with Applicable Law for record retention), 5.5.7 (with respect to units of Licensed   Products administered or sold prior to the expiration or termination of this Agreement), 6.8 (with  respect to units of Licensed Products administered or sold prior to the expiration or termination of  this Agreement), 7.7 (with respect to units of Licensed Products administered or sold prior to the  expiration or termination of this Agreement), 10.5 (with respect to payments that are accrued but   unpaid at the time of expiration or termination, or otherwise to the extent applicable), 10.6 (for the   period set forth therein), 10.7, 11.6 (for the time period set forth therein), 11.7, 12.3, 14.7, 14.8   and 14.9 and Articles 1 (to the extent the definitions are used in other surviving provisions), 9 (for   the time period set forth therein, but not Section 9.5), 13, 15 and 16 (but not Section 16.4.2(b),   other than Section 16.4.2(b)(iii)(H)), shall survive any termination of this Agreement.                                ARTICLE 15  TAX MATTERS          15.1  Tax Partnership.  It is expressly agreed that SeaGen and Merck shall be   independent contractors and that neither Party is assuming liability through, and nothing herein is   intended to create, any partnership or agency arrangement between SeaGen and Merck for tax   purposes in any jurisdiction in which any activities contemplated by this Agreement and associated   agreements are undertaken; provided, however, that the Parties intend that the arrangement   between the Parties hereunder shall be treated as a partnership for United States federal and state  income tax purposes only (the “Tax Partnership”), and in connection therewith, Merck is  authorized and shall file an election with the United States Internal Revenue Service (and any  applicable state Governmental Authority in the United States) to the extent necessary for the  arrangement hereunder to be treated as a partnership for United States federal income tax purposes  (and state income tax purposes, as applicable).  Except as otherwise agreed to by SeaGen and  Merck in writing, neither Merck nor SeaGen shall file any returns or take any tax reporting  positions inconsistent with the characterization of the arrangement hereunder as a Tax Partnership.            15.2  Tax Information Sharing.  Each Party shall cooperate in providing any   information reasonably requested by the other Party to enable such other Party to report the   transactions contemplated by this Agreement on any required tax returns (including information   returns), to respond to any request for information from the United States Internal Revenue Service   or other taxing authority and to comply with its financial reporting obligations in connection with   the financial reporting for taxes.  In connection the foregoing, Merck shall use commercially   reasonable efforts to provide SeaGen with estimates of its share of the Tax Partnership’s profit and   loss in advance of SeaGen’s annual Form 10-K filing deadline.          15.3  Tax Returns of Tax Partnership.  Merck shall prepare, or cause to be prepared,   and file on a timely basis with the appropriate authorities, annual income and other required tax   returns for the Tax Partnership, including IRS Form 1065 and any similar tax returns filed with   any state or local jurisdiction, and SeaGen shall reasonably cooperate with Merck in connection   therewith, including by timely providing to Merck all documents and information in SeaGen’s   control or possession that are reasonably requested by Merck and that are required to accurately                                        -149-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     fill out the Tax Partnership tax return (including any related information returns) by Merck or any   of its Affiliates, it being understood that SeaGen shall have the right to make appropriate redactions   of information unrelated to activities undertaken pursuant to this Agreement.  Schedule 15.3 sets   forth the procedures to be used in allocating tax items of the Tax Partnership to Merck and SeaGen.    SeaGen shall have the right to review any tax returns of the Tax Partnership prepared, or caused   to be prepared, by Merck, in each case in advance of their submission and Merck shall obtain   SeaGen’s consent to the filing of such return, including with respect to any elections or other   determinations made in such returns, which consent shall not be unreasonably withheld,   conditioned or delayed.  Merck shall have all powers needed to perform its duties, including the   power to retain all attorneys and accountants of its choice in connection therewith, and to make  any US federal, state, or local tax elections with SeaGen’s consent, which shall not be unreasonably  withheld, conditioned or delayed.  Notwithstanding the foregoing, the tax elections listed in  Schedule 15.3 shall not require SeaGen’s consent.  The Tax Partnership shall apply the [ * ] method   of allocation under Section [ * ] for any contributions of property deemed to be made to the Tax   Partnership, except as otherwise agreed by SeaGen and Merck in writing.  Merck shall take steps   to have the Tax Partnership elect under Section 6221(b) of the U.S. Internal Revenue Code (the   “Code”), as amended by the Bipartisan Budget Act of 2015, P.L. 114-74 (together with any   subsequent amendments thereto, Treasury Regulations promulgated thereunder, and published   administrative interpretations thereof, collectively, the “BBA”) (such election, the “6221(b)   election”) not to be subject to partnership-level audit proceedings.  Merck is hereby designated the   “partnership representative” of the Tax Partnership for all years governed by this Agreement and   the “designated individual” shall be an officer or employee of Merck.  To the extent that the Tax   Partnership is not eligible to make the 6221(b) election, (a) Merck shall represent the Tax   Partnership in any disputes, controversies or proceedings with the Internal Revenue Service or   with any state or local taxing authority and is hereby authorized to take any and all actions that it   is permitted to take when acting in that capacity, (b) SeaGen shall have the right to participate in   all material tax proceedings (including for the avoidance of doubt audits) of the Tax Partnership   and shall have the right to consent to the settlement thereof (such consent not to be unreasonably   withheld, conditioned or delayed), (c) SeaGen shall have the right to be notified of all tax   proceedings, (d) the Tax Partnership shall make the election provided by Section 6226 of the Code   in respect of any underpayments of tax resulting from an audit of the Tax Partnership and (e) the   foregoing provisions related to the BBA shall survive termination of this Agreement and the   termination of the Tax Partnership, and shall remain binding on each party for the period of time   necessary to resolve with the Internal Revenue Service (or any other applicable taxing authority)   all tax matters relating to the Tax Partnership.            15.4  Additional Matters.  Notwithstanding Section 15.1 or any other provision of this   Agreement, the Parties do not intend to create a partnership under the laws of any jurisdiction,   except the Parties intend to create a Tax Partnership, and the Parties shall take positions   accordingly for accounting and tax purposes with any applicable Governmental Authority in any   other jurisdiction in which any activities contemplated by this Agreement and associated   agreements are undertaken.  To the extent that the activities contemplated by this Agreement are   treated in any such other jurisdiction as a partnership for purposes of computing Merck’s or   SeaGen’s tax liability in such jurisdiction, the Parties agree that, to the extent permissible under   the Applicable Law of such jurisdiction, items of partnership income and deduction will be                                        -150-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   allocated in a manner that, as close as possible, places the Parties in the same position as if no  deemed partnership were created.                            ARTICLE 16  MISCELLANEOUS         16.1  Use of Affiliates.  Either Party shall have the right to exercise its rights and perform  its obligations under this Agreement and the Ancillary Agreements either itself or through any of  its Affiliates. In addition, in each case where a Party’s Affiliate has an obligation pursuant to this  Agreement or any Ancillary Agreement or performs an obligation pursuant to this Agreement or  any Ancillary Agreement, (a) such Party shall cause and compel such Affiliate to perform such  obligation and comply with the terms of this Agreement or such Ancillary Agreement and (b) any  breach of the terms or conditions of this Agreement or any Ancillary Agreement by such Affiliate  shall be deemed a breach by such Party of such terms or conditions.          16.2  Interpretation.  Except where the context expressly requires otherwise, (a) the use  of any gender herein shall be deemed to encompass references to either or both genders, and the  use of the singular shall be deemed to include the plural (and vice versa), (b) the words “include”,  “includes” and “including” and words of similar import shall be deemed to be followed by the  phrase “without limitation”, (c) the word “will” shall be construed to have the same meaning and  effect as the word “shall”, (d) any definition of or reference to any agreement, instrument or other  document herein shall be construed as referring to such agreement, instrument or other document  as from time to time amended, supplemented or otherwise modified (subject to any restrictions on  such amendments, supplements or modifications set forth herein), (e) any reference herein to any  Person shall be construed to include the Person’s successors and assigns, (f) the words “herein”,  “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this  Agreement in its entirety and not to any particular provision hereof, (g) all references herein to  Sections, Exhibits or Schedules shall be construed to refer to Sections, Exhibits or Schedules of  this Agreement, and references to this Agreement include all Exhibits and Schedules hereto, (h)  the word “notice” means notice in writing (whether or not specifically stated) and shall include  notices, consents, approvals and other written communications contemplated under this  Agreement, (i) provisions that require that a Party, the Parties or any committee hereunder “agree”,  “consent” or “approve” or the like shall require that such agreement, consent or approval be  specific and in writing, whether by written agreement, letter, approved minutes or otherwise (but  excluding e-mail and instant messaging), (j) references to any specific law, rule or regulation, or  article, section or other division thereof, shall be deemed to include the then-current amendments  thereto or any replacement or successor law, rule or regulation thereof and (k) the word “or” is  disjunctive but not necessarily exclusive.         16.3  Force Majeure.  Neither Party shall be held liable to the other Party nor be deemed  to have defaulted under or breached this Agreement for failure or delay in performing any  obligation under this Agreement to the extent such failure or delay is caused by or results from any  event or cause beyond the reasonable control of the affected Party or any of its Affiliates,  potentially including embargoes, war, acts of war (whether war be declared or not), acts of  terrorism, insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances,  global shortages of energy, raw materials or supplies, epidemics, pandemics, fire, floods, or other  acts of God, or acts, omissions or delays in acting by any Governmental Authority (each such event                                       -151-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

   or cause, a “Force Majeure”).  The affected Party shall notify the other Party of such force  majeure circumstances as soon as reasonably practical, and shall promptly undertake  Commercially Reasonable Efforts necessary to cure such Force Majeure circumstances.  Notwithstanding the foregoing, no Force Majeure shall relieve a Party of any payment obligations  hereunder.          16.4  Assignment.                 16.4.1 Except as provided in this Section 16.4, this Agreement may not be assigned  or otherwise transferred (however structured, whether by merger, acquisition, sale of all or  substantially all of its assets to which this Agreement relates or otherwise), nor may any right or  obligation hereunder be assigned or transferred, by either Party, without the prior written consent  of the other Party; provided, however, that (a) Merck or SeaGen may assign this Agreement or any  of its rights and obligations hereunder, in whole or in part, to (i) [ * ] or (ii) [ * ], provided that in  the event of an assignment to [ * ] the Parties shall [ * ]; and provided that, in each case of the  foregoing clauses (i) and (ii), the assigning Party shall [ * ], (b) Merck may assign this Agreement  and its rights and obligations hereunder to [ * ], and (c) SeaGen may assign this Agreement and its  rights and obligations hereunder to [ * ], in each case of (a), (b) and (c), without the prior written  consent of the other Party.  Any attempted assignment not in accordance with this Section 16.4  shall be null, void and unenforceable.  Any permitted assignee shall assume all assigned  obligations of its assignor under this Agreement.  The terms and conditions of this Agreement shall  be binding upon, and shall inure to the benefit of, the Parties hereto and their respective successors  and permitted assigns.                16.4.2 Change of Control.  Whether or not this Agreement is assigned pursuant  to Section 16.4.1, the Parties agree as follows:                      (a)   The rights to Patent Rights, Know-How or other intellectual  property rights of any successor-in-interest of a Party as a result of a Change of Control of such  Party or any Person that becomes an Affiliate of a Party through any Change of Control of such  Party, that were controlled by such successor or Person (and not such Party or any of its Affiliates  prior to such Change of Control) immediately prior to such Change of Control (other than as a  result of a license or other grant of rights, covenant or assignment by such Party or its other  Affiliates to, or for the benefit of, such Person), will not be deemed to be “Controlled” by such  Party for purposes of this Agreement and will be automatically excluded from the rights licensed  to the other Party under this Agreement, provided in each case except to the extent that any such  Patent Rights, Know-How or other intellectual property rights (i) are actually used in the course  of such Party’s or such Third Party successor-in-interest’s performance of activities under this  Agreement, or (ii) was otherwise licensed or sublicensed (as applicable) by such Third Party to  such Party, or any Persons that were Affiliates of such Party, in each case under this sub-part (ii),  prior to such Change of Control (as applicable) (such excluded Know How, Patent Rights or other  intellectual property rights, “Acquiring Person Intellectual Property”).                       (b)   In the event of a Change of Control of SeaGen with a Third Party  (such Third Party, together with its affiliates immediately prior to the Change of Control,                                       -152-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

     collectively the “SeaGen Acquiror”), [ * ], then notwithstanding anything to the contrary   contained herein (including Section 4.1) or in any Ancillary Agreement, the following shall apply:                             (i)   Sensitive Information.  Following the consummation of  any such Change of Control of SeaGen, SeaGen and its Affiliates (including the SeaGen Acquiror)  shall [ * ] implement reasonable procedures [ * ] to restrict access to [ * ] (collectively, the  “Sensitive Information”)[ * ].  Without limiting the foregoing, from and after the consummation  of the Change of Control, [ * ]; and                           (ii)  [ * ].  With respect to any [ * ], such [ * ] shall be performed  in accordance with this Agreement [ * ]; provided that, in connection therewith (and  notwithstanding anything to the contrary contained herein), the following shall apply:                                  (A)   with respect to any [ * ], Merck shall [ * ] and in the  event that Merck [ * ], the Parties shall [ * ] in good faith [ * ], as soon as reasonably practicable,  [ * ];                                  (B)   notwithstanding the provisions of [ * ] Merck shall [  * ]; provided that [ * ] shall not (x) [ * ] without the consent of [ * ], or (y) [ * ] without the consent  of [ * ] unless [ * ]; and                                 (C)   notwithstanding the foregoing provisions of this  Section 16.4.2(b)(ii) or anything to the contrary contained herein, Merck shall [ * ] in which case  such [ * ] and the provisions of [ * ] shall apply (in lieu of the provisions of this Section  16.4.2(b)(ii)) with respect to [ * ].                             (iii) [ * ].  Notwithstanding anything to the contrary contained  herein [ * ] but subject to [ * ] from and after the consummation of such Change of Control [ * ],  Merck shall [ * ]; provided that, in connection therewith, the following shall apply:                                  (A)   such [ * ] shall not be [ * ].  Merck shall be [ * ] (and,  except for [ * ] as set forth in the following clause (C), if applicable, SeaGen shall [ * ];                                  (B)   prior to [ * ], Merck shall [ * ];                                  (C)   if SeaGen is [ * ], SeaGen shall [ * ]; provided that  Merck shall [ * ] (but, for clarity, such [ * ] shall not be [ * ];                                   (D)   Merck shall have [ * ]; provided that, [ * ] only the [  * ] (or such other [ * ]) shall be [ * ];                                 (E)   SeaGen shall [ * ] for the [ * ];                                   (F)   Merck shall [ * ]; provided that, notwithstanding the  foregoing,  Merck shall [ * ], in each case, [ * ].  Any [ * ] shall, as between the Parties, [ * ] and   shall be [ * ] (and the [ * ] shall be [ * ]); provided that such [ * ] shall be deemed to be [ * ];                                        -153-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

                                   (G)   Merck shall [ * ]; provided that [ * ] shall [ * ] any   such [ * ] for [ * ]; and                                  (H)   notwithstanding the provisions of [ * ] upon [ * ]   SeaGen shall [ * ] and Merck shall [ * ].                             For clarity, (1) [ * ] shall be deemed to be a [ * ] (notwithstanding   that [ * ] and that such [ * ]), (2) the Parties hereby agree and acknowledge that the [ * ] shall apply  to [ * ] notwithstanding that [ * ], and (3) Merck [ * ] as set forth in [ * ].                            (iv)  [ * ].  From and after the consummation of such Change of  Control, (A) SeaGen shall [ * ] any [ * ], in each case, for the [ * ] and (B) the [ * ] of such [ * ],  as applicable, in the foregoing clause (A) shall [ * ].  For clarity, SeaGen shall [ * ] in accordance  with this Agreement; provided that such [ * ] shall be [ * ] in accordance with Applicable Laws.                           (v)   [ * ].  Notwithstanding anything to the contrary contained  herein [ * ] but subject to [ * ] from and after the consummation of such Change of Control during  the remainder of the Term, SeaGen shall [ * ]; provided that, in connection therewith, the following  shall apply:                                  (A)   such [ * ] shall not be [ * ].  SeaGen shall be [ * ]   (and, except for [ * ] as set forth in the following clause (C), if applicable, Merck shall [ * ];                                   (B)   prior to [ * ] SeaGen shall [ * ];                                   (C)   if Merck is [ * ], Merck shall [ * ]; provided that   SeaGen shall [ * ] (but, for clarity, such [ * ] shall not be [ * ];                                    (D)   SeaGen shall have [ * ]; provided that, i[ * ] only the   [ * ] (or such other [ * ]) shall be [ * ];                                   (E)   Merck shall [ * ] for the [ * ];                                    (F)   SeaGen shall [ * ]; provided that, notwithstanding the   foregoing,  SeaGen shall [ * ], in each case, [ * ].  Any [ * ] shall, as between the Parties, [ * ] and   shall be [ * ] (and the [ * ] shall be [ * ]); provided that such [ * ] shall be deemed to be [ * ]; and                                   (G)   SeaGen shall [ * ]; provided that [ * ] shall [ * ] any   such [ * ] for [ * ].                             For clarity, (1) [ * ] shall be deemed to be a [ * ] (notwithstanding   that [ * ] and that such [ * ]), (2) the Parties hereby agree and acknowledge that [ * ] shall apply to   [ * ] notwithstanding that [ * ], and (3) SeaGen [ * ] as set forth in Section 2.4.2, mutatis mutandis.                            (vi)  [ * ].  From and after the consummation of such Change of   Control, (A) Merck shall [ * ] any [ * ], in each case, for the [ * ] and (B) the [ * ] of such [ * ], as   applicable, in the foregoing clause (A) shall [ * ].  For clarity, Merck shall [ * ] in accordance with   this Agreement; provided that [ * ] shall be [ * ] in accordance with Applicable Laws.                                       -154-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

                             (vii) [ * ].                                    (A)   In the event that Merck [ * ] in any country or region  [ * ] then at the request of Merck, SeaGen [ * ] shall [ * ], and the Parties shall promptly update   the [ * ] in connection therewith [ * ].  For clarity, the [ * ] shall be [ * ].                                   (B)    In the event that SeaGen [ * ] in any country or region  [ * ] then at the request of SeaGen, Merck [ * ] shall [ * ], and the Parties shall promptly update [  * ] in connection therewith [ * ].  For clarity, the [ * ] shall be [ * ].                              (viii) [ * ].  Notwithstanding the provisions of [ * ] from and after   the consummation of such Change of Control with a SeaGen Acquiror, the following shall apply:                                  (A)   if Merck [ * ], then if [ * ] as a result of (x) [ * ] or  (y) [ * ]; and                                  (B)   no [ * ] shall be [ * ].                            For clarity, notwithstanding the foregoing, all other [ * ] shall [ * ]  from and after the consummation of such Change of Control with a SeaGen Acquiror (including  that [ * ] as a result of [ * ] (irrespective of [ * ]), and, for clarity, without [ * ]), the [ * ].         16.5  Severability.  If any one or more of the provisions contained in this Agreement is  held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the  remaining provisions contained herein shall not in any way be affected or impaired thereby, unless  the absence of the invalidated provision(s) adversely affects the substantive rights of a Party.  The  Parties shall, in such an instance, use their reasonable best efforts to replace the invalid, illegal or  unenforceable provision(s) with valid, legal and enforceable provision(s) that, insofar as practical,  implement the purposes of this Agreement.         16.6  Notices.  All notices which are required or permitted pursuant to this Agreement  shall be in writing in the English language and will be sufficient and deemed to have been duly  given when (a) sent by facsimile transmission (receipt verified), provided further that a copy is  promptly sent by an internationally recognized overnight delivery service (receipt requested)  (although the sending of the fax shall be when the notice is deemed to have been given), or (b) the  earlier of when received by the addressee or five (5) Business Days after it was sent, if delivered  personally, sent by internationally-recognized overnight courier or sent by registered or certified  mail, postage prepaid, return receipt requested, addressed as follows:          if to SeaGen, to: Seattle Genetics, Inc.                            21823 30th Drive St                            Bothell, WA 98021                           Fax: [ * ]                           Email: [ * ]                            Attention:  General Counsel                                                                   -155-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

           if to Merck, to:  Merck Sharp & Dohme Corp.                           2000 Galloping Hill Road                           Kenilworth, NJ 07033-1310                           Attention: Office of Secretary                           Email: [ * ]                                                                with a copy to:   Merck Sharp & Dohme Corp.                           2000 Galloping Hill Road                           Mail Stop K-1-4161                           Kenilworth, NJ 07033                           Attention:  SVP, Corporate Development                                     or to such other address(es) as the Party to whom notice is to be given may have furnished   to the other Party in writing in accordance herewith.  This Section 16.6 is not intended to govern   the day-to-day business communications necessary between the Parties in performing their   obligations under the terms of this Agreement.           16.7  Applicable Law.  This Agreement shall be governed by and construed in   accordance with the Applicable Law of the State of New York, United States, and the patent law   of the United States without reference to any rules of conflict of laws or renvoi that might otherwise   refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.    The United Nations Convention on Contracts for the International Sale of Goods (CISG) of 11   April 1980 shall not be applicable.          16.8  Dispute Resolution.                16.8.1 The Parties shall negotiate in good faith and use reasonable efforts to settle   any dispute, controversy or claim arising from or related to this Agreement or any Ancillary   Agreement, including the formation, existence, validity, enforceability, performance,   interpretation, breach, or termination hereof or thereof (a “Dispute”).  If the Parties do not fully   resolve any such Dispute within [ * ] after a party first notifies the other Party of such Dispute, and   a Party wishes to pursue the matter, then, except as otherwise set forth herein, each such Dispute   that is not an “Excluded Claim” (as defined below) shall be finally resolved in accordance with   Section 16.8.2; provided, however, that, notwithstanding the foregoing, any decisions that are   subject to the final decision-making authority of a given Party (or mutual agreement of the Parties,   as applicable) or the JSC, as expressly set forth in this Agreement, including Section 3.2.4(b), will  not be subject to the provisions of this Section 16.8 so long as such decisions are made in  accordance with this Agreement.               16.8.2 Executive Review; Arbitration.                     (a)   In the event the Parties have not resolved such Dispute within such  [ * ] as set forth in Section 16.8.1 and such Disputed has not previously been submitted to the  Senior Executives or [ * ] for resolution, then either Party (through the Alliance Managers) may  elect to formally submit such issue to the Parties’ applicable Senior Executives for resolution.  In                                        -156-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     the event that the Senior Executives are unable to resolve a given issue referred to the Senior   Executives in accordance with this Section [ * ] after the dispute is formally submitted to the Senior   Executives for resolution, then either Party (through the Alliance Managers) may elect to formally   submit such issue to the Parties’ respective [ * ] for resolution.                       (b)   In the event that the Parties’ respective [ * ] are unable to resolve a  given issue referred to the [ * ] in accordance with Section 16.8.2(a) within [ * ] after the dispute  is formally submitted to the [ * ] for resolution, then either Party may submit such Dispute to be  finally settled by arbitration administered in accordance with the procedural rules of the American  Arbitration Association (“AAA”) in effect at the time of submission, as modified by this Section  16.8.2(a). The arbitration will be governed by the Applicable Laws of the state of New York.  The  arbitration will be heard and determined by three (3) arbitrators who are retired judges or attorneys  with at least ten (10) years of relevant experience in the pharmaceutical industry, each of whom  will be impartial and independent.  Each Party will appoint one (1) arbitrator and the third (3rd)  arbitrator will be selected by the two (2) Party-appointed arbitrators, or, failing agreement within  thirty (30) days following appointment of the second arbitrator, by AAA.  Such arbitration will  take place in New York, New York.  The arbitration award so given will be a final and binding  determination of the dispute, will be fully enforceable in any court of competent jurisdiction, and  will not include any damages expressly prohibited by Section 13.6.  Fees, costs and expenses of  arbitration are to be divided by the Parties in the following manner: Merck will pay for the  arbitrator it chooses, SeaGen will pay for the arbitrator it chooses, and the Parties will share  payment for the third arbitrator.  Except in a proceeding to enforce the results of the arbitration or  as otherwise required by Applicable Law, neither Party nor any arbitrator may disclose the  existence, content or results of any arbitration hereunder without the prior written consent of both  Parties (each such consent not to be unreasonably withheld, delayed or conditioned).  In no event  shall an arbitration be initiated after the date when commencement of a legal or equitable  proceeding based on the dispute, controversy or claim would be barred, consistent with Section  16.7, by the applicable New York statute of limitations.                     (c)   Either Party may apply to the arbitrators for interim injunctive relief  until the arbitration award is rendered or the controversy is otherwise resolved.  Either Party also  may, without waiving any remedy under this Agreement, seek from any court having jurisdiction  any injunctive or provisional relief necessary to protect its rights or property pending the  arbitration award.                       (d)   The Parties agree that, in the event of a good faith dispute over the  nature or quality of performance under this Agreement, neither Party may terminate this  Agreement until final resolution of the dispute through arbitration or other judicial determination,  and any cure period shall commence thereafter.  The Parties further agree that any payments made  pursuant to this Agreement pending resolution of the dispute shall be promptly refunded if an  arbitrator determines that such payments are not due.                       (e)   As used in this Section 16.8, the term “Excluded Claim” means a  dispute, controversy or claim that concerns (i) the validity or infringement of a patent, trademark,  copyright or trade secret, or (ii) any antitrust, anti-monopoly or competition Applicable Law or                                        -157-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

     regulation, whether or not statutory.  Any action concerning Excluded Claims identified in clauses   (i) or (ii) of this Section 16.8.2(e) may be brought in any court having jurisdiction.          16.9  Entire Agreement; Amendments.  This Agreement, together with the Schedules   and Exhibits hereto, and the Ancillary Agreements and the DPA contain the entire understanding   of the Parties with respect to the subject matter hereof.  Any other express or implied agreements   and understandings, negotiations, writings and commitments, either oral or written, in respect to   the subject matter hereof are superseded by the terms of this Agreement, including that certain   Mutual Non-Disclosure Agreement between the Parties (or their respective Affiliates) dated as of   [ * ] (as amended, the “Existing CDA”), to the extent that such Existing CDA relates to the subject   matter hereof (provided that Confidential Information related to the subject matter hereof and   disclosed under such Existing CDA shall be deemed to be disclosed hereunder).  In the event of   any conflict between the terms and conditions of the CTC and the terms and conditions of this   Agreement, the terms and conditions of this Agreement shall govern. The Schedules and Exhibits   to this Agreement are incorporated herein by reference and shall be deemed a part of this   Agreement.  This Agreement may be amended, or any term hereof modified, only by a written   instrument duly executed by authorized representatives of each of the Parties.  In the event of a   conflict between the terms of this Agreement and one or more Ancillary Agreements, the terms of   this Agreement shall govern unless the relevant Ancillary Agreement expressly states that, with   respect to the terms subject to the conflict, the Ancillary Agreement governs over this Agreement.          16.10 Export Controls.  This Agreement is made subject to any restrictions concerning   the export of products or technical information from the United States, or other countries that may   be imposed on or related to the Parties from time to time, in each case, under Applicable Law.    Each Party agrees that it will not export, directly or indirectly, any technical information acquired   from the other Party under this Agreement or any products using such technical information to a   location or in a manner that at the time of export requires an export license or other governmental   approval, without first obtaining the written consent to do so from the appropriate Governmental   Authority in accordance with Applicable Law.           16.11 Headings.  The captions to the Articles, Sections and subsections hereof are not a   part of this Agreement, but are merely for convenience to assist in locating and reading the Articles   and Sections hereof.          16.12 Independent Contractors.  It is expressly agreed that SeaGen and Merck shall be   independent contractors hereunder, and neither SeaGen nor Merck shall have the authority to make   any statements, representations or commitments of any kind, or to take any action, which shall be   binding on the other Party, without the prior written consent of the other Party.  Except as otherwise   set forth in Article 15, it is understood and agreed that the relationship of the two Parties shall not   constitute a partnership, joint venture or agency for tax or any other purposes.           16.13 Third-Party Beneficiaries.  None of the provisions of this Agreement shall be for  the benefit of or enforceable by any Third Party, including any creditor of any Party hereto, and  no Third Party shall obtain any right under any provision of this Agreement or shall by reason of   any such provision make any claim in respect of any debt, liability or obligation (or otherwise)   against any Party hereto.  Notwithstanding the foregoing, Sections 13.1 and 13.2 are intended to                                        -158-   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED                   

 

   benefit, in addition to the Parties, the other SeaGen Indemnified Parties and Merck Indemnified  Parties, but this Agreement is enforceable only by the Parties.         16.14 Waiver.  The waiver by either Party of any right hereunder, or of any failure of the  other Party to perform, or of any breach by the other Party, shall not be deemed a waiver of any  other right hereunder or of any other breach by or failure of such other Party whether of a similar  nature or otherwise. Any waivers under this Agreement must be in writing to be effective.          16.15 Cumulative Remedies.  Except as expressly set forth in this Agreement, no remedy  referred to in this Agreement is intended to be exclusive, but each shall be cumulative and in  addition to any other remedy referred to in this Agreement or otherwise available under Applicable  Law or in equity, including the right to seek damages, specific performance and other remedies  under Applicable Law or in equity.         16.16 Waiver of Rule of Construction.  Each Party has had the opportunity to consult  with counsel in connection with the review, drafting and negotiation of this Agreement.   Accordingly, the rule of construction that any ambiguity in this Agreement shall be construed  against the drafting Party shall not apply.         16.17 Business Day Requirements.  In the event that any notice or other action is  required to be taken by a Party under this Agreement on a day that is not a Business Day, then  such notice or other action shall be deemed to be required to be taken on the next occurring  Business Day.         16.18 Counterparts.  This Agreement may be executed in counterparts with the same  effect as if both Parties had signed the same document.  All such counterparts shall be deemed an  original, shall be construed together, and shall constitute one and the same instrument.  Any such  counterpart, to the extent delivered by means of a fax machine or by .pdf, .tif, .gif, .jpeg or similar  attachment to electronic mail (any such delivery, an “Electronic Delivery”) shall be treated in all  manner and respects as an original executed counterpart and shall be considered to have the same  binding legal effect as if it were the original signed version thereof delivered in person.  No Party  hereto shall raise the use of Electronic Delivery to deliver a signature or the fact that any signature  or agreement or instrument was transmitted or communicated through the use of Electronic  Delivery as a defense to the formation of a contract, and each Party forever waives any such  defense, except to the extent that such defense relates to lack of authenticity.         16.19 Further Actions.  Each Party will execute, acknowledge and deliver such further  instruments, and do all such other ministerial, administrative or similar acts, as may be reasonably  necessary or appropriate in order to carry out the purposes and intent of this Agreement.                                        [Signature page follows]                                        -159-  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED                   

 

                  IN WITNESS WHEREOF, the Parties have executed this License and Collaboration  Agreement as of the Effective Date.      MERCK SHARP & DOHME CORP.      BY:         /s/ Robert M. Davis                    NAME:       Robert M. Davis                        TITLE:   Executive Vice President, Global Services, and             Chief Financial Officer, Merck & Co., Inc. and            Authorized Officer, Merck Sharp & Dohme Corp.          SEATTLE GENETICS, INC.      BY:        /s/ Clay B. Siegall                           NAME:     Clay B. Siegall, Ph.D.                   TITLE:    President and Chief Executive Officer                           Signature Page to License and Collaboration Agreement   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                                  Schedule 1.26                                                                                             European Collaboration Territory                                                                   [ * ]                                        [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                    Schedule 1.39                                                                    Cost of Goods Manufactured    “Cost of Goods Manufactured” shall mean the fully allocated cost of manufacturing the Licensed  Product or Licensed Compound, calculated in a manner that is consistent with the Lead  Manufacturing Party’s standard practices for its products, consistently applied and in accordance  with Accounting Standards, and consisting of the following components:      [ * ]   {2 pages omitted}                                                                           [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                                 Schedule 1.133                                                                                             SeaGen Existing CMO Agreements                                                               [ * ]                                                                               [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                                 Schedule 1.134                                                                                                 SeaGen Existing In-Licenses    [ * ]                                                                                      [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                                 Schedule 1.139                                                                                                         SeaGen Patents                                                   (see attached)                                                           [ * ]  {30 pages omitted}                                                                                                         [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                                 Schedule 1.152                                                                                                          SGN-LIV-1-A                                                                                                                       [ * ]                                          [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                                 Schedule 1.153                                                                                                          SGN-LIV-1-B                                                                [ * ]                                                                                   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                                 Schedule 1.154                                                                                                          SGN-LIV-1-C                                                                                                                        [ * ]                                                                                  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                                   Schedule 2.7                                                                                               Permitted Distributor Countries      [ * ]                                                                                       [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                                  Schedule 2.9.2                                                                                  Next Generation Compound Criteria - SGN-LIV-1-C                                                             [ * ]    {2 pages omitted}                                                                                    [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                                   Schedule 6.8                                             Certain Costs of Recalls   [ * ]                                                                                                                                                                                                       [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                                   Schedule 7.9                                   Certain Terms for Supply Agreements                                                  (see attached)      [ * ]   {11 pages omitted}                                                                                                                                         [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                                                                                              Schedule 9.6.1                                                  Press Release                                                                                                            (see attached)                                                                                   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                                                                                                                                                                                                               Seattle Genetics and Merck Announce Two Strategic Oncology                                  Collaborations                                                 Companies to Co-Develop and Co-Commercialize Seattle Genetics’ Antibody-Drug Conjugate   Ladiratuzumab Vedotin Globally; Merck to Acquire $1 Billion Equity Stake in Seattle Genetics Common                                       Stock                                              Companies Enter Exclusive License and Co-Development Agreement to Accelerate Global Reach of       TUKYSA for HER2-Postive Cancers in Regions Outside the United States, Canada and Europe                                                            Seattle Genetics to Host Conference Call Today at 9:00 a.m. ET                                              BOTHELL, Wash. and KENILWORTH, N.J. – September 14, 2020 – Seattle Genetics, Inc. (Nasdaq:   SGEN) and Merck (NYSE: MRK), known as MSD outside the United States and Canada, today   announced two new strategic oncology collaborations.      The companies will globally develop and commercialize Seattle Genetics’ ladiratuzumab vedotin, an   investigational antibody-drug conjugate (ADC) targeting LIV-1, which is currently in phase 2 clinical   trials for breast cancer and other solid tumors. The collaboration will pursue a broad joint development   program evaluating ladiratuzumab vedotin as monotherapy and in combination with Merck’s anti-PD-1   therapy KEYTRUDA® (pembrolizumab) in triple-negative breast cancer, hormone receptor-positive  breast cancer and other LIV-1-expressing solid tumors. Under the terms of the agreement, Seattle  Genetics will receive a $600 million upfront payment and Merck will make a $1.0 billion equity  investment in 5.0 million shares of Seattle Genetics common stock at a price of $200 per share. In  addition, Seattle Genetics is eligible for progress-dependent milestone payments of up to $2.6 billion.      Separately, Seattle Genetics has granted Merck an exclusive license to commercialize TUKYSA®  (tucatinib), a small molecule tyrosine kinase inhibitor, for the treatment of HER2-positive cancers, in  Asia, the Middle East and Latin America and other regions outside of the U.S., Canada and Europe.  Seattle Genetics will receive $125 million from Merck as an upfront payment and is eligible for progress- dependent milestones of up to $65 million.    “Collaborating with Merck on ladiratuzumab vedotin will allow us to accelerate and broaden its  development program in breast cancer and other solid tumors, including in combination with Merck’s  KEYTRUDA, while also positioning us to leverage our U.S. and European commercial operations,” said  Clay Siegall, Ph.D., President and Chief Executive Officer of Seattle Genetics. “The strategic           [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED 

 

    collaboration for TUKYSA will help us reach more patients globally and benefit from the established  commercial strength of one of the world’s premier pharmaceutical companies.”    “These two strategic collaborations will enable us to further diversify Merck’s broad oncology portfolio  and pipeline, and to continue our efforts to extend and improve the lives of as many patients with cancer  as possible,” said Dr. Roger M. Perlmutter, President, Merck Research Laboratories. “We look forward to  working with the team at Seattle Genetics to advance the clinical program for ladiratuzumab vedotin,  which has shown compelling signals of efficacy in early studies, and to bring TUKYSA to even more  patients with cancer around the world.”     Ladiratuzumab Vedotin Collaboration Details   Under the terms of the agreement, Seattle Genetics and Merck will collaborate and equally share costs on   the global development of ladiratuzumab vedotin and other LIV-1-targeting ADCs. The companies have   agreed to jointly develop and share future costs and profits for ladiratuzumab vedotin on a 50:50 basis   worldwide. Merck will pay Seattle Genetics $600 million upfront and make a $1.0 billion equity   investment in 5.0 million shares of Seattle Genetics common stock at a price of $200 per share. In   addition, Seattle Genetics will be eligible to receive up to $2.6 billion in milestone payments, including   $850 million in development milestones and $1.75 billion in sales milestones.       The companies will jointly develop and commercialize ladiratuzumab vedotin and equally share profits   worldwide. The companies will co-commercialize in the U.S. and Europe. Seattle Genetics will be   responsible for marketing applications for approval in the U.S. and Canada, and will record sales in the   U.S., Canada and Europe. Merck will be responsible for marketing applications for approval in Europe   and in countries outside the U.S. and Canada, and will record sales in countries outside the U.S., Europe   and Canada. Including the upfront payment, equity investment proceeds and potential milestone   payments, Seattle Genetics is eligible to receive up to $4.2 billion.      The closing of the equity investment is contingent on completion of review under the Hart-Scott-Rodino  Antitrust Improvements Act of 1976 (HSR Act).    TUKYSA Collaboration Details  Under the terms of the agreement, Merck has been granted exclusive rights to commercialize TUKYSA in  Asia, the Middle East and Latin America and other regions outside of the U.S., Canada and Europe.  Seattle Genetics retains commercial rights and will record sales in the U.S., Canada and Europe. Merck  will be responsible for marketing applications for approval in its territory, supported by the positive  results from the HER2CLIMB clinical trial.     Merck will also co-fund a portion of the TUKYSA global development plan, which encompasses several  ongoing and planned trials across HER2-positive cancers, including breast, colorectal, gastric and other  cancers set forth in a global product development plan. Seattle Genetics will continue to lead ongoing  TUKYSA global development planning and operational execution. Merck will solely fund and conduct  country-specific clinical trials necessary to support anticipated regulatory applications in its territory.    Seattle Genetics will receive from Merck $125 million as an upfront payment and is eligible to receive  progress-dependent milestones of up to $65 million. Seattle Genetics will also receive $85 million in  prepaid research and development payments to be applied to Merck’s global development funding  obligations. In addition, Seattle Genetics would receive tiered royalties on sales of TUKYSA in Merck’s  territory.             [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED 

 

    The financial impact of these collaborations is not included in Seattle Genetics’ 2020 guidance.    Seattle Genetics Conference Call Details    Seattle Genetics’ management will host a conference call to discuss these collaborations today at 6:00   a.m. Pacific Time (PT); 9:00 a.m. Eastern Time (ET). The event will be simultaneously webcast and   available for replay from the Seattle Genetics website at www.seattlegenetics.com, under the Investors   section. Investors may also participate in the conference call by calling 844-763-8274 (domestic) or +1  412-717-9224 (international). The conference ID is 10147850.       About Ladiratuzumab Vedotin   Ladiratuzumab vedotin is a novel investigational ADC targeted to LIV-1. Most metastatic breast cancers   express LIV-1, which also has been detected in several other cancers, including lung, head and neck,   esophageal and gastric. Ladiratuzumab vedotin utilizes Seattle Genetics’ proprietary ADC technology and   consists of a LIV-1-targeted monoclonal antibody linked to a potent microtubule-disrupting agent,   monomethyl auristatin E (MMAE) by a protease-cleavable linker. This novel ADC is designed to bind to   LIV-1 on cancer cells and release the cell-killing agent into target cells upon internalization.  Ladiratuzumab vedotin may also cause antitumor activity through other mechanisms, including activation  of an immune response by induction of immunogenic cell death.    About TUKYSA (tucatinib)  TUKYSA is an oral, small molecule tyrosine kinase inhibitor (TKI) of HER2, a protein that contributes to  cancer cell growth. TUKYSA in combination with trastuzumab and capecitabine was approved by the  U.S. Food and Drug Administration (FDA) in April 2020 for adult patients with advanced unresectable or  metastatic HER2-positive breast cancer, including patients with brain metastases, who have received one  or more prior anti-HER2-based regimens in the metastatic setting. In addition, TUKYSA received  approval in Canada, Singapore, Australia and Switzerland under the Project Orbis initiative of the FDA  Oncology Center of Excellence that provides a framework for concurrent submission and review of  oncology products among international partners. A marketing application is under review in the European  Union.    TUKYSA is being evaluated in several ongoing clinical trials and additional studies are planned. Current  trials include the following:       •  HER2CLIMB-02: a randomized, double-blind phase 3 trial evaluating TUKYSA in combination         with T-DM1 (trastuzumab emtansine; Kadcyla®) versus T-DM1 in first- and second-line         metastatic HER2-positive breast cancer.      •  CompassHER2 RD: a randomized, double-blind phase 3 trial of TUKYSA in combination with         T-DM1 versus T-DM1 in the adjuvant breast cancer setting for patients at high risk of relapse.      •  MOUNTAINEER: a pivotal phase 2 trial evaluating TUKYSA in combination with trastuzumab         (Herceptin®) in metastatic HER2-positive colorectal cancer.      •  MOUNTAINEER-02: a randomized phase 2/3 trial evaluating TUKYSA in combination with         trastuzumab, ramucirumab and paclitaxel versus ramucirumab and paclitaxel in second-line        metastatic HER2-positive gastric or gastroesophageal junction adenocarcinoma (GEC).      •  Gastrointestinal cancers: a phase 1 trial evaluating TUKYSA in combination with trastuzumab         and oxaliplatin-based chemotherapy in metastatic HER2-positive colorectal, gastric/         gastroesophageal junction and gallbladder cancers.       For additional information, visit www.clinicaltrials.gov.             [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED 

 

    TUKYSA Important Safety Information      Warnings and Precautions    •  Diarrhea – TUKYSA can cause severe diarrhea including dehydration, hypotension, acute kidney      injury, and death. In HER2CLIMB, 81% of patients who received TUKYSA experienced diarrhea,      including 12% with Grade 3 diarrhea and 0.5% with Grade 4 diarrhea. Both patients who developed      Grade 4 diarrhea subsequently died, with diarrhea as a contributor to death. The median time to onset      of the first episode of diarrhea was 12 days and the median time to resolution was 8 days. Diarrhea      led to dose reductions of TUKYSA in 6% of patients and discontinuation of TUKYSA in 1% of      patients. Prophylactic use of antidiarrheal treatment was not required on HER2CLIMB.            If diarrhea occurs, administer antidiarrheal treatment as clinically indicated. Perform diagnostic tests      as clinically indicated to exclude other causes of diarrhea. Based on the severity of the diarrhea,      interrupt dose, then dose reduce or permanently discontinue TUKYSA.      •     •  Hepatotoxicity – TUKYSA can cause severe hepatotoxicity. In HER2CLIMB, 8% of patients who      received TUKYSA had an ALT increase >5 × ULN, 5% had an AST increase >5 × ULN, and 1.5%      had a bilirubin increase >3 × ULN (Grade ≥3). Hepatotoxicity led to dose reduction of TUKYSA in      8% of patients and discontinuation of TUKYSA in 1.5% of patients.            Monitor ALT, AST, and bilirubin prior to starting TUKYSA, every 3 weeks during treatment, and as      clinically indicated. Based on the severity of hepatoxicity, interrupt dose, then dose reduce or      permanently discontinue TUKYSA.      •     •  Embryo-Fetal Toxicity – TUKYSA can cause fetal harm. Advise pregnant women and females of      reproductive potential risk to a fetus. Advise females of reproductive potential, and male patients with      female partners of reproductive potential, to use effective contraception during TUKYSA treatment      and for at least 1 week after the last dose.       Adverse Reactions      Serious adverse reactions occurred in 26% of patients who received TUKYSA. Serious adverse reactions   in ≥2% of patients who received TUKYSA were diarrhea (4%), vomiting (2.5%), nausea (2%), abdominal   pain (2%), and seizure (2%). Fatal adverse reactions occurred in 2% of patients who received TUKYSA   including sudden death, sepsis, dehydration, and cardiogenic shock.      Adverse reactions led to treatment discontinuation in 6% of patients who received TUKYSA; those   occurring in ≥1% of patients were hepatotoxicity (1.5%) and diarrhea (1%).  Adverse reactions led to   dose reduction in 21% of patients who received TUKYSA; those occurring in ≥2% of patients were   hepatotoxicity (8%) and diarrhea (6%).      The most common adverse reactions in patients who received TUKYSA (≥20%) were diarrhea, palmar-  plantar erythrodysesthesia, nausea, fatigue, hepatotoxicity, vomiting, stomatitis, decreased appetite,   abdominal pain, headache, anemia, and rash.      Lab Abnormalities      In HER2CLIMB, Grade ≥3 laboratory abnormalities reported in ≥5% of patients who received TUKYSA   were: decreased phosphate, increased ALT, decreased potassium, and increased AST. The mean increase          [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED 

 

    in serum creatinine was 32% within the first 21 days of treatment with TUKYSA. The serum creatinine  increases persisted throughout treatment and were reversible upon treatment completion. Consider  alternative markers of renal function if persistent elevations in serum creatinine are observed.    Drug Interactions    •   Strong CYP3A or Moderate CYP2C8 Inducers: Concomitant use may decrease TUKYSA activity.      Avoid concomitant use of TUKYSA.    •  Strong or Moderate CYP2C8 Inhibitors: Concomitant use of TUKYSA with a strong CYP2C8      inhibitor may increase the risk of TUKYSA toxicity; avoid concomitant use. Increase monitoring for      TUKYSA toxicity with moderate CYP2C8 inhibitors.      •  CYP3A Substrates: Concomitant use may increase the toxicity associated with a CYP3A substrate.      Avoid concomitant use of TUKYSA where minimal concentration changes may lead to serious or      life-threatening toxicities. If concomitant use is unavoidable, decrease the CYP3A substrate dosage.   •  P-gp Substrates: Concomitant use may increase the toxicity associated with a P-gp substrate.      Consider reducing the dosage of P-gp substrates where minimal concentration changes may lead to      serious or life-threatening toxicity.       Use in Specific Populations      •  Lactation: Advise women not to breastfeed while taking TUKYSA and for at least 1 week after the      last dose.    •  Renal Impairment: Use of TUKYSA in combination with capecitabine and trastuzumab is not      recommended in patients with severe renal impairment (CLcr < 30 mL/min), because capecitabine is      contraindicated in patients with severe renal impairment.      •  Hepatic Impairment: Reduce the dose of TUKYSA for patients with severe (Child-Pugh C) hepatic      impairment.       For more information, please see the full Prescribing Information for TUKYSA here.      About KEYTRUDA® (pembrolizumab) Injection, 100 mg   KEYTRUDA is an anti-PD-1 therapy that works by increasing the ability of the body’s immune system to   help detect and fight tumor cells. KEYTRUDA is a humanized monoclonal antibody that blocks the   interaction between PD-1 and its ligands, PD-L1 and PD-L2, thereby activating T lymphocytes which   may affect both tumor cells and healthy cells.      Merck has the industry’s largest immuno-oncology clinical research program. There are currently more   than 1,200 trials studying KEYTRUDA across a wide variety of cancers and treatment settings. The   KEYTRUDA clinical program seeks to understand the role of KEYTRUDA across cancers and the   factors that may predict a patient's likelihood of benefitting from treatment with KEYTRUDA, including   exploring several different biomarkers.       Selected KEYTRUDA® (pembrolizumab) Indications     Melanoma    KEYTRUDA is indicated for the treatment of patients with unresectable or metastatic melanoma.       KEYTRUDA is indicated for the adjuvant treatment of patients with melanoma with involvement of   lymph node(s) following complete resection.           [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED 

 

            Non-Small Cell Lung Cancer  KEYTRUDA, in combination with pemetrexed and platinum chemotherapy, is indicated for the first-line  treatment of patients with metastatic nonsquamous non-small cell lung cancer (NSCLC), with no EGFR  or ALK genomic tumor aberrations.    KEYTRUDA, in combination with carboplatin and either paclitaxel or paclitaxel protein-bound, is  indicated for the first-line treatment of patients with metastatic squamous NSCLC.    KEYTRUDA, as a single agent, is indicated for the first-line treatment of patients with NSCLC  expressing PD-L1 [tumor proportion score (TPS) ≥1%] as determined by an FDA-approved test, with no  EGFR or ALK genomic tumor aberrations, and is stage III where patients are not candidates for surgical  resection or definitive chemoradiation, or metastatic.    KEYTRUDA, as a single agent, is indicated for the treatment of patients with metastatic NSCLC whose  tumors express PD-L1 (TPS ≥1%) as determined by an FDA-approved test, with disease progression on  or after platinum-containing chemotherapy. Patients with EGFR or ALK genomic tumor aberrations  should have disease progression on FDA-approved therapy for these aberrations prior to receiving  KEYTRUDA.          Small Cell Lung Cancer   KEYTRUDA is indicated for the treatment of patients with metastatic small cell lung cancer (SCLC) with  disease progression on or after platinum-based chemotherapy and at least 1 other prior line of therapy.  This indication is approved under accelerated approval based on tumor response rate and durability of  response. Continued approval for this indication may be contingent upon verification and description of  clinical benefit in confirmatory trials.           Head and Neck Squamous Cell Cancer  KEYTRUDA, in combination with platinum and fluorouracil (FU), is indicated for the first-line treatment  of patients with metastatic or with unresectable, recurrent head and neck squamous cell carcinoma  (HNSCC).     KEYTRUDA, as a single agent, is indicated for the first-line treatment of patients with metastatic or with  unresectable, recurrent HNSCC whose tumors express PD-L1 [combined positive score (CPS) ≥1] as  determined by an FDA-approved test.     KEYTRUDA, as a single agent, is indicated for the treatment of patients with recurrent or metastatic head  and neck squamous cell carcinoma (HNSCC) with disease progression on or after platinum-containing  chemotherapy.           Classical Hodgkin Lymphoma  KEYTRUDA is indicated for the treatment of adult and pediatric patients with refractory classical  Hodgkin lymphoma (cHL), or who have relapsed after 3 or more prior lines of therapy. This indication is  approved under accelerated approval based on tumor response rate and durability of response. Continued  approval for this indication may be contingent upon verification and description of clinical benefit in the  confirmatory trials.     Primary Mediastinal Large B-Cell Lymphoma           [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED 

 

    KEYTRUDA is indicated for the treatment of adult and pediatric patients with refractory primary  mediastinal large B-cell lymphoma (PMBCL), or who have relapsed after 2 or more prior lines of therapy.  This indication is approved under accelerated approval based on tumor response rate and durability of  response. Continued approval for this indication may be contingent upon verification and description of  clinical benefit in confirmatory trials. KEYTRUDA is not recommended for treatment of patients with  PMBCL who require urgent cytoreductive therapy.           Urothelial Carcinoma  KEYTRUDA is indicated for the treatment of patients with locally advanced or metastatic urothelial  carcinoma (mUC) who are not eligible for cisplatin-containing chemotherapy and whose tumors express  PD-L1 [combined positive score (CPS) ≥10], as determined by an FDA-approved test, or in patients who  are not eligible for any platinum-containing chemotherapy regardless of PD-L1 status. This indication is  approved under accelerated approval based on tumor response rate and duration of response. Continued  approval for this indication may be contingent upon verification and description of clinical benefit in  confirmatory trials.     KEYTRUDA is indicated for the treatment of patients with locally advanced or metastatic urothelial  carcinoma (mUC) who have disease progression during or following platinum-containing chemotherapy  or within 12 months of neoadjuvant or adjuvant treatment with platinum-containing chemotherapy.     KEYTRUDA is indicated for the treatment of patients with Bacillus Calmette-Guerin (BCG)- unresponsive, high-risk, non-muscle invasive bladder cancer (NMIBC) with carcinoma in situ (CIS) with  or without papillary tumors who are ineligible for or have elected not to undergo cystectomy.           Microsatellite Instability-High or Mismatch Repair Deficient Cancer  KEYTRUDA is indicated for the treatment of adult and pediatric patients with unresectable or metastatic  microsatellite instability-high (MSI-H) or mismatch repair deficient (dMMR)         •  solid tumors that have progressed following prior treatment and who have no satisfactory           alternative treatment options, or        •  colorectal cancer that has progressed following treatment with fluoropyrimidine, oxaliplatin,           and irinotecan.   This indication is approved under accelerated approval based on tumor response rate and durability of  response. Continued approval for this indication may be contingent upon verification and description of  clinical benefit in the confirmatory trials. The safety and effectiveness of KEYTRUDA in pediatric  patients with MSI-H central nervous system cancers have not been established.           Microsatellite Instability-High or Mismatch Repair Deficient Colorectal Cancer  KEYTRUDA is indicated for the first-line treatment of patients with unresectable or metastatic MSI-H or  dMMR colorectal cancer (CRC).     Gastric Cancer  KEYTRUDA is indicated for the treatment of patients with recurrent locally advanced or metastatic  gastric or gastroesophageal junction (GEJ) adenocarcinoma whose tumors express PD-L1 (CPS ≥1) as  determined by an FDA-approved test, with disease progression on or after two or more prior lines of  therapy including fluoropyrimidine- and platinum-containing chemotherapy and if appropriate,  HER2/neu-targeted therapy. This indication is approved under accelerated approval based on tumor  response rate and durability of response. Continued approval for this indication may be contingent upon  verification and description of clinical benefit in the confirmatory trials.                  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED 

 

    Esophageal Cancer  KEYTRUDA is indicated for the treatment of patients with recurrent locally advanced or metastatic  squamous cell carcinoma of the esophagus whose tumors express PD-L1 (CPS ≥10) as determined by an  FDA-approved test, with disease progression after one or more prior lines of systemic therapy.           Cervical Cancer  KEYTRUDA is indicated for the treatment of patients with recurrent or metastatic cervical cancer with  disease progression on or after chemotherapy whose tumors express PD-L1 (CPS ≥1) as determined by an  FDA-approved test. This indication is approved under accelerated approval based on tumor response rate  and durability of response. Continued approval for this indication may be contingent upon verification  and description of clinical benefit in the confirmatory trials.     Hepatocellular Carcinoma  KEYTRUDA is indicated for the treatment of patients with hepatocellular carcinoma (HCC) who have  been previously treated with sorafenib. This indication is approved under accelerated approval based on  tumor response rate and durability of response. Continued approval for this indication may be contingent  upon verification and description of clinical benefit in the confirmatory trials.     Merkel Cell Carcinoma  KEYTRUDA is indicated for the treatment of adult and pediatric patients with recurrent locally advanced  or metastatic Merkel cell carcinoma (MCC). This indication is approved under accelerated approval based  on tumor response rate and durability of response. Continued approval for this indication may be  contingent upon verification and description of clinical benefit in the confirmatory trials.           Renal Cell Carcinoma  KEYTRUDA, in combination with axitinib, is indicated for the first-line treatment of patients with  advanced renal cell carcinoma (RCC).       Tumor Mutational Burden-High   KEYTRUDA is indicated for the treatment of adult and pediatric patients with unresectable or metastatic   tumor mutational burden-high (TMB-H) [≥10 mutations/megabase (mut/Mb)] solid tumors, as determined   by an FDA-approved test, that have progressed following prior treatment and who have no satisfactory   alternative treatment options. This indication is approved under accelerated approval based on tumor   response rate and durability of response. Continued approval for this indication may be contingent upon   verification and description of clinical benefit in the confirmatory trials. The safety and effectiveness of   KEYTRUDA in pediatric patients with TMB-H central nervous system cancers have not been established.      Cutaneous Squamous Cell Carcinoma   KEYTRUDA is indicated for the treatment of patients with recurrent or metastatic cutaneous squamous   cell carcinoma (cSCC) that is not curable by surgery or radiation.      Selected Important Safety Information for KEYTRUDA    Immune-Mediated Pneumonitis   KEYTRUDA can cause immune-mediated pneumonitis, including fatal cases. Pneumonitis occurred in   3.4% (94/2799) of patients with various cancers receiving KEYTRUDA, including Grade 1 (0.8%), 2   (1.3%), 3 (0.9%), 4 (0.3%), and 5 (0.1%). Pneumonitis occurred in 8.2% (65/790) of NSCLC patients   receiving KEYTRUDA as a single agent, including Grades 3-4 in 3.2% of patients, and occurred more   frequently in patients with a history of prior thoracic radiation (17%) compared to those without (7.7%).   Pneumonitis occurred in 6% (18/300) of HNSCC patients receiving KEYTRUDA as a single agent,          [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED 

 

   including Grades 3-5 in 1.6% of patients, and occurred in 5.4% (15/276) of patients receiving  KEYTRUDA in combination with platinum and FU as first-line therapy for advanced disease, including  Grades 3-5 in 1.5% of patients.     Monitor patients for signs and symptoms of pneumonitis. Evaluate suspected pneumonitis with  radiographic imaging. Administer corticosteroids for Grade 2 or greater pneumonitis. Withhold  KEYTRUDA for Grade 2; permanently discontinue KEYTRUDA for Grade 3 or 4 or recurrent Grade 2  pneumonitis.           Immune-Mediated Colitis   KEYTRUDA can cause immune-mediated colitis. Colitis occurred in 1.7% (48/2799) of patients  receiving KEYTRUDA, including Grade 2 (0.4%), 3 (1.1%), and 4 (<0.1%). Monitor patients for signs  and symptoms of colitis. Administer corticosteroids for Grade 2 or greater colitis. Withhold KEYTRUDA  for Grade 2 or 3; permanently discontinue KEYTRUDA for Grade 4 colitis.           Immune-Mediated Hepatitis (KEYTRUDA) and Hepatotoxicity (KEYTRUDA in Combination  With Axitinib)   Immune-Mediated Hepatitis  KEYTRUDA can cause immune-mediated hepatitis. Hepatitis occurred in 0.7% (19/2799) of patients  receiving KEYTRUDA, including Grade 2 (0.1%), 3 (0.4%), and 4 (<0.1%). Monitor patients for changes  in liver function. Administer corticosteroids for Grade 2 or greater hepatitis and, based on severity of liver  enzyme elevations, withhold or discontinue KEYTRUDA.          Hepatotoxicity in Combination With Axitinib  KEYTRUDA in combination with axitinib can cause hepatic toxicity with higher than expected  frequencies of Grades 3 and 4 ALT and AST elevations compared to KEYTRUDA alone. With the  combination of KEYTRUDA and axitinib, Grades 3 and 4 increased ALT (20%) and increased AST  (13%) were seen. Monitor liver enzymes before initiation of and periodically throughout treatment.  Consider more frequent monitoring of liver enzymes as compared to when the drugs are administered as  single agents. For elevated liver enzymes, interrupt KEYTRUDA and axitinib, and consider administering  corticosteroids as needed.           Immune-Mediated Endocrinopathies   KEYTRUDA can cause adrenal insufficiency (primary and secondary), hypophysitis, thyroid disorders,  and type 1 diabetes mellitus. Adrenal insufficiency occurred in 0.8% (22/2799) of patients, including  Grade 2 (0.3%), 3 (0.3%), and 4 (<0.1%). Hypophysitis occurred in 0.6% (17/2799) of patients, including  Grade 2 (0.2%), 3 (0.3%), and 4 (<0.1%). Hypothyroidism occurred in 8.5% (237/2799) of patients,  including Grade 2 (6.2%) and 3 (0.1%). The incidence of new or worsening hypothyroidism was higher in  1185 patients with HNSCC (16%) receiving KEYTRUDA, as a single agent or in combination with  platinum and FU, including Grade 3 (0.3%) hypothyroidism. Hyperthyroidism occurred in 3.4%  (96/2799) of patients, including Grade 2 (0.8%) and 3 (0.1%), and thyroiditis occurred in 0.6% (16/2799)  of patients, including Grade 2 (0.3%). Type 1 diabetes mellitus, including diabetic ketoacidosis, occurred  in 0.2% (6/2799) of patients.     Monitor patients for signs and symptoms of adrenal insufficiency, hypophysitis (including  hypopituitarism), thyroid function (prior to and periodically during treatment), and hyperglycemia. For  adrenal insufficiency or hypophysitis, administer corticosteroids and hormone replacement as clinically  indicated. Withhold KEYTRUDA for Grade 2 adrenal insufficiency or hypophysitis and withhold or  discontinue KEYTRUDA for Grade 3 or Grade 4 adrenal insufficiency or hypophysitis. Administer                                [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

   hormone replacement for hypothyroidism and manage hyperthyroidism with thionamides and beta- blockers as appropriate. Withhold or discontinue KEYTRUDA for Grade 3 or 4 hyperthyroidism.  Administer insulin for type 1 diabetes, and withhold KEYTRUDA and administer antihyperglycemics in  patients with severe hyperglycemia.          Immune-Mediated Nephritis and Renal Dysfunction   KEYTRUDA can cause immune-mediated nephritis. Nephritis occurred in 0.3% (9/2799) of patients  receiving KEYTRUDA, including Grade 2 (0.1%), 3 (0.1%), and 4 (<0.1%) nephritis. Nephritis occurred  in 1.7% (7/405) of patients receiving KEYTRUDA in combination with pemetrexed and platinum  chemotherapy. Monitor patients for changes in renal function. Administer corticosteroids for Grade 2 or  greater nephritis. Withhold KEYTRUDA for Grade 2; permanently discontinue for Grade 3 or 4 nephritis.     Immune-Mediated Skin Reactions   Immune-mediated rashes, including Stevens-Johnson syndrome (SJS), toxic epidermal necrolysis (TEN)  (some cases with fatal outcome), exfoliative dermatitis, and bullous pemphigoid, can occur. Monitor  patients for suspected severe skin reactions and based on the severity of the adverse reaction, withhold or  permanently discontinue KEYTRUDA and administer corticosteroids. For signs or symptoms of SJS or  TEN, withhold KEYTRUDA and refer the patient for specialized care for assessment and treatment. If  SJS or TEN is confirmed, permanently discontinue KEYTRUDA.           Other Immune-Mediated Adverse Reactions   Immune-mediated adverse reactions, which may be severe or fatal, can occur in any organ system or  tissue in patients receiving KEYTRUDA and may also occur after discontinuation of treatment. For  suspected immune-mediated adverse reactions, ensure adequate evaluation to confirm etiology or exclude  other causes. Based on the severity of the adverse reaction, withhold KEYTRUDA and administer  corticosteroids. Upon improvement to Grade 1 or less, initiate corticosteroid taper and continue to taper  over at least 1 month. Based on limited data from clinical studies in patients whose immune-related  adverse reactions could not be controlled with corticosteroid use, administration of other systemic  immunosuppressants can be considered. Resume KEYTRUDA when the adverse reaction remains at  Grade 1 or less following corticosteroid taper. Permanently discontinue KEYTRUDA for any Grade 3  immune-mediated adverse reaction that recurs and for any life-threatening immune-mediated adverse  reaction.     The following clinically significant immune-mediated adverse reactions occurred in less than 1% (unless  otherwise indicated) of 2799 patients: arthritis (1.5%), uveitis, myositis, Guillain-Barré syndrome,  myasthenia gravis, vasculitis, pancreatitis, hemolytic anemia, sarcoidosis, and encephalitis. In addition,  myelitis and myocarditis were reported in other clinical trials, including classical Hodgkin lymphoma,  and postmarketing use.     Treatment with KEYTRUDA may increase the risk of rejection in solid organ transplant recipients.  Consider the benefit of treatment vs the risk of possible organ rejection in these patients.           Infusion-Related Reactions   KEYTRUDA can cause severe or life-threatening infusion-related reactions, including hypersensitivity  and anaphylaxis, which have been reported in 0.2% (6/2799) of patients. Monitor patients for signs and  symptoms of infusion-related reactions. For Grade 3 or 4 reactions, stop infusion and permanently  discontinue KEYTRUDA.     Complications of Allogeneic Hematopoietic Stem Cell Transplantation (HSCT)                                 [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

   Immune-mediated complications, including fatal events, occurred in patients who underwent allogeneic  HSCT after treatment with KEYTRUDA. Of 23 patients with cHL who proceeded to allogeneic HSCT  after KEYTRUDA, 6 (26%) developed graft-versus-host disease (GVHD) (1 fatal case) and 2 (9%)  developed severe hepatic veno-occlusive disease (VOD) after reduced-intensity conditioning (1 fatal  case). Cases of fatal hyperacute GVHD after allogeneic HSCT have also been reported in patients with  lymphoma who received a PD-1 receptor–blocking antibody before transplantation. Follow patients  closely for early evidence of transplant-related complications such as hyperacute graft-versus-host disease  (GVHD), Grade 3 to 4 acute GVHD, steroid-requiring febrile syndrome, hepatic veno-occlusive disease  (VOD), and other immune-mediated adverse reactions.     In patients with a history of allogeneic HSCT, acute GVHD (including fatal GVHD) has been reported  after treatment with KEYTRUDA. Patients who experienced GVHD after their transplant procedure may  be at increased risk for GVHD after KEYTRUDA. Consider the benefit of KEYTRUDA vs the risk of  GVHD in these patients.           Increased Mortality in Patients With Multiple Myeloma  In trials in patients with multiple myeloma, the addition of KEYTRUDA to a thalidomide analogue plus  dexamethasone resulted in increased mortality. Treatment of these patients with a PD-1 or PD-L1  blocking antibody in this combination is not recommended outside of controlled trials.     Embryofetal Toxicity  Based on its mechanism of action, KEYTRUDA can cause fetal harm when administered to a pregnant  woman. Advise women of this potential risk. In females of reproductive potential, verify pregnancy status  prior to initiating KEYTRUDA and advise them to use effective contraception during treatment and for 4  months after the last dose.     Adverse Reactions   In KEYNOTE-006, KEYTRUDA was discontinued due to adverse reactions in 9% of 555 patients with  advanced melanoma; adverse reactions leading to permanent discontinuation in more than one patient  were colitis (1.4%), autoimmune hepatitis (0.7%), allergic reaction (0.4%), polyneuropathy (0.4%), and  cardiac failure (0.4%). The most common adverse reactions (≥20%) with KEYTRUDA were fatigue  (28%), diarrhea (26%), rash (24%), and nausea (21%).     In KEYNOTE-002, KEYTRUDA was permanently discontinued due to adverse reactions in 12% of 357  patients with advanced melanoma; the most common (≥1%) were general physical health deterioration  (1%), asthenia (1%), dyspnea (1%), pneumonitis (1%), and generalized edema (1%). The most common  adverse reactions were fatigue (43%), pruritus (28%), rash (24%), constipation (22%), nausea (22%),  diarrhea (20%), and decreased appetite (20%).     In KEYNOTE-054, KEYTRUDA was permanently discontinued due to adverse reactions in 14% of 509  patients; the most common (≥1%) were pneumonitis (1.4%), colitis (1.2%), and diarrhea (1%). Serious  adverse reactions occurred in 25% of patients receiving KEYTRUDA. The most common adverse  reaction (≥20%) with KEYTRUDA was diarrhea (28%).     In KEYNOTE-189, when KEYTRUDA was administered with pemetrexed and platinum chemotherapy  in metastatic nonsquamous NSCLC, KEYTRUDA was discontinued due to adverse reactions in 20% of  405 patients. The most common adverse reactions resulting in permanent discontinuation of KEYTRUDA  were pneumonitis (3%) and acute kidney injury (2%). The most common adverse reactions (≥20%) with                                 [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

   KEYTRUDA were nausea (56%), fatigue (56%), constipation (35%), diarrhea (31%), decreased appetite  (28%), rash (25%), vomiting (24%), cough (21%), dyspnea (21%), and pyrexia (20%).     In KEYNOTE-407, when KEYTRUDA was administered with carboplatin and either paclitaxel or  paclitaxel protein-bound in metastatic squamous NSCLC, KEYTRUDA was discontinued due to adverse  reactions in 15% of 101 patients. The most frequent serious adverse reactions reported in at least 2% of  patients were febrile neutropenia, pneumonia, and urinary tract infection. Adverse reactions observed in  KEYNOTE-407 were similar to those observed in KEYNOTE-189 with the exception that increased  incidences of alopecia (47% vs 36%) and peripheral neuropathy (31% vs 25%) were observed in the  KEYTRUDA and chemotherapy arm compared to the placebo and chemotherapy arm in KEYNOTE-407.     In KEYNOTE-042, KEYTRUDA was discontinued due to adverse reactions in 19% of 636 patients with  advanced NSCLC; the most common were pneumonitis (3%), death due to unknown cause (1.6%), and  pneumonia (1.4%). The most frequent serious adverse reactions reported in at least 2% of patients were  pneumonia (7%), pneumonitis (3.9%), pulmonary embolism (2.4%), and pleural effusion (2.2%). The  most common adverse reaction (≥20%) was fatigue (25%).     In KEYNOTE-010, KEYTRUDA monotherapy was discontinued due to adverse reactions in 8% of 682  patients with metastatic NSCLC; the most common was pneumonitis (1.8%). The most common adverse  reactions (≥20%) were decreased appetite (25%), fatigue (25%), dyspnea (23%), and nausea (20%).     Adverse reactions occurring in patients with SCLC were similar to those occurring in patients with other  solid tumors who received KEYTRUDA as a single agent.    In KEYNOTE-048, KEYTRUDA monotherapy was discontinued due to adverse events in 12% of 300  patients with HNSCC; the most common adverse reactions leading to permanent discontinuation were  sepsis (1.7%) and pneumonia (1.3%). The most common adverse reactions (≥20%) were fatigue (33%),  constipation (20%), and rash (20%).     In KEYNOTE-048, when KEYTRUDA was administered in combination with platinum (cisplatin or  carboplatin) and FU chemotherapy, KEYTRUDA was discontinued due to adverse reactions in 16% of  276 patients with HNSCC. The most common adverse reactions resulting in permanent discontinuation of  KEYTRUDA were pneumonia (2.5%), pneumonitis (1.8%), and septic shock (1.4%). The most common  adverse reactions (≥20%) were nausea (51%), fatigue (49%), constipation (37%), vomiting (32%),  mucosal inflammation (31%), diarrhea (29%), decreased appetite (29%), stomatitis (26%), and cough  (22%).     In KEYNOTE-012, KEYTRUDA was discontinued due to adverse reactions in 17% of 192 patients with  HNSCC. Serious adverse reactions occurred in 45% of patients. The most frequent serious adverse  reactions reported in at least 2% of patients were pneumonia, dyspnea, confusional state, vomiting,  pleural effusion, and respiratory failure. The most common adverse reactions (≥20%) were fatigue,  decreased appetite, and dyspnea. Adverse reactions occurring in patients with HNSCC were generally  similar to those occurring in patients with melanoma or NSCLC who received KEYTRUDA as a  monotherapy, with the exception of increased incidences of facial edema and new or worsening  hypothyroidism.     In KEYNOTE-087, KEYTRUDA was discontinued due to adverse reactions in 5% of 210 patients with  cHL. Serious adverse reactions occurred in 16% of patients; those ≥1% included pneumonia,  pneumonitis, pyrexia, dyspnea, GVHD, and herpes zoster. Two patients died from causes other than                                [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

   disease progression; 1 from GVHD after subsequent allogeneic HSCT and 1 from septic shock. The most  common adverse reactions (≥20%) were fatigue (26%), pyrexia (24%), cough (24%), musculoskeletal  pain (21%), diarrhea (20%), and rash (20%).     In KEYNOTE-170, KEYTRUDA was discontinued due to adverse reactions in 8% of 53 patients with  PMBCL. Serious adverse reactions occurred in 26% of patients and included arrhythmia (4%), cardiac  tamponade (2%), myocardial infarction (2%), pericardial effusion (2%), and pericarditis (2%). Six (11%)  patients died within 30 days of start of treatment. The most common adverse reactions (≥20%) were  musculoskeletal pain (30%), upper respiratory tract infection and pyrexia (28% each), cough (26%),  fatigue (23%), and dyspnea (21%).     In KEYNOTE-052, KEYTRUDA was discontinued due to adverse reactions in 11% of 370 patients with  locally advanced or metastatic urothelial carcinoma. Serious adverse reactions occurred in 42% of  patients; those ≥2% were urinary tract infection, hematuria, acute kidney injury, pneumonia, and  urosepsis. The most common adverse reactions (≥20%) were fatigue (38%), musculoskeletal pain (24%),  decreased appetite (22%), constipation (21%), rash (21%), and diarrhea (20%).     In KEYNOTE-045, KEYTRUDA was discontinued due to adverse reactions in 8% of 266 patients with  locally advanced or metastatic urothelial carcinoma. The most common adverse reaction resulting in  permanent discontinuation of KEYTRUDA was pneumonitis (1.9%). Serious adverse reactions occurred  in 39% of KEYTRUDA-treated patients; those ≥2% were urinary tract infection, pneumonia, anemia, and  pneumonitis. The most common adverse reactions (≥20%) in patients who received KEYTRUDA were  fatigue (38%), musculoskeletal pain (32%), pruritus (23%), decreased appetite (21%), nausea (21%), and  rash (20%).     In KEYNOTE-057, KEYTRUDA was discontinued due to adverse reactions in 11% of 148 patients with  high-risk NMIBC. The most common adverse reaction resulting in permanent discontinuation of  KEYTRUDA was pneumonitis (1.4%). Serious adverse reactions occurred in 28% of patients; those ≥2%  were pneumonia (3%), cardiac ischemia (2%), colitis (2%), pulmonary embolism (2%), sepsis (2%), and  urinary tract infection (2%). The most common adverse reactions (≥20%) were fatigue (29%), diarrhea  (24%), and rash (24%).     Adverse reactions occurring in patients with MSI-H or dMMR CRC were similar to those occurring in  patients with melanoma or NSCLC who received KEYTRUDA as a monotherapy.    Adverse reactions occurring in patients with gastric cancer were similar to those occurring in patients  with melanoma or NSCLC who received KEYTRUDA as a monotherapy.     Adverse reactions occurring in patients with esophageal cancer were similar to those occurring in patients  with melanoma or NSCLC who received KEYTRUDA as a monotherapy.     In KEYNOTE-158, KEYTRUDA was discontinued due to adverse reactions in 8% of 98 patients with  recurrent or metastatic cervical cancer. Serious adverse reactions occurred in 39% of patients receiving  KEYTRUDA; the most frequent included anemia (7%), fistula, hemorrhage, and infections [except  urinary tract infections] (4.1% each). The most common adverse reactions (≥20%) were fatigue (43%),  musculoskeletal pain (27%), diarrhea (23%), pain and abdominal pain (22% each), and decreased appetite  (21%).                                    [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

     Adverse reactions occurring in patients with hepatocellular carcinoma (HCC) were generally similar to   those in patients with melanoma or NSCLC who received KEYTRUDA as a monotherapy, with the   exception of increased incidences of ascites (8% Grades 3-4) and immune-mediated hepatitis (2.9%).   Laboratory abnormalities (Grades 3-4) that occurred at a higher incidence were elevated AST (20%),   ALT (9%), and hyperbilirubinemia (10%).       Among the 50 patients with MCC enrolled in study KEYNOTE-017, adverse reactions occurring in   patients with MCC were generally similar to those occurring in patients with melanoma or NSCLC who   received KEYTRUDA as a monotherapy. Laboratory abnormalities (Grades 3-4) that occurred at a higher   incidence were elevated AST (11%) and hyperglycemia (19%).       In KEYNOTE-426, when KEYTRUDA was administered in combination with axitinib, fatal adverse   reactions occurred in 3.3% of 429 patients. Serious adverse reactions occurred in 40% of patients, the   most frequent (≥1%) were hepatotoxicity (7%), diarrhea (4.2%), acute kidney injury (2.3%), dehydration   (1%), and pneumonitis (1%). Permanent discontinuation due to an adverse reaction occurred in 31% of   patients; KEYTRUDA only (13%), axitinib only (13%), and the combination (8%); the most common   were hepatotoxicity (13%), diarrhea/colitis (1.9%), acute kidney injury (1.6%), and cerebrovascular   accident (1.2%). The most common adverse reactions (≥20%) were diarrhea (56%), fatigue/asthenia   (52%), hypertension (48%), hepatotoxicity (39%), hypothyroidism (35%), decreased appetite (30%),   palmar-plantar erythrodysesthesia (28%), nausea (28%), stomatitis/mucosal inflammation (27%),   dysphonia (25%), rash (25%), cough (21%), and constipation (21%).       Adverse reactions occurring in patients with TMB-H cancer were similar to those occurring in patients   with other solid tumors who received KEYTRUDA as a single agent.      Adverse reactions occurring in patients with cSCC were similar to those occurring in patients with   melanoma or NSCLC who received KEYTRUDA as a monotherapy.      Lactation    Because of the potential for serious adverse reactions in breastfed children, advise women not to   breastfeed during treatment and for 4 months after the final dose.       Pediatric Use    There is limited experience in pediatric patients. In a trial, 40 pediatric patients (16 children aged 2 years   to younger than 12 years and 24 adolescents aged 12 years to 18 years) with various cancers, including   unapproved usages, were administered KEYTRUDA 2 mg/kg every 3 weeks. Patients received   KEYTRUDA for a median of 3 doses (range 1–17 doses), with 34 patients (85%) receiving 2 doses or   more. The safety profile in these pediatric patients was similar to that seen in adults; adverse reactions   that occurred at a higher rate (≥15% difference) in these patients when compared to adults under 65 years   of age were fatigue (45%), vomiting (38%), abdominal pain (28%), increased transaminases (28%), and   hyponatremia (18%).       Please see Prescribing Information for KEYTRUDA (pembrolizumab) at    https://www.merck.com/product/usa/pi_circulars/k/keytruda/keytruda_pi.pdf   and Medication Guide for KEYTRUDA at    https://www.merck.com/product/usa/pi_circulars/k/keytruda/keytruda_mg.pdf      About Seattle Genetics  Seattle Genetics, Inc. is a global biotechnology company that discovers, develops and commercializes          [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED 

 

    transformative cancer medicines to make a meaningful difference in people’s lives. ADCETRIS®  (brentuximab vedotin) and PADCEV® (enfortumab vedotin-ejfv) use the company’s industry-leading   antibody-drug conjugate (ADC) technology. ADCETRIS is approved in certain CD30-expressing   lymphomas, and PADCEV is approved in certain metastatic urothelial cancers. TUKYSA® (tucatinib), a  small molecule tyrosine kinase inhibitor, is approved in certain HER2-positive metastatic breast cancers.  The company is headquartered in the Seattle, Washington area, with locations in California, Switzerland  and the European Union. For more information on our robust pipeline, visit www.seattlegenetics.com and   follow @SeattleGenetics on Twitter.      Merck’s Focus on Cancer    Our goal is to translate breakthrough science into innovative oncology medicines to help people with   cancer worldwide. At Merck, the potential to bring new hope to people with cancer drives our purpose   and supporting accessibility to our cancer medicines is our commitment. As part of our focus on cancer,   Merck is committed to exploring the potential of immuno-oncology with one of the largest development   programs in the industry across more than 30 tumor types. We also continue to strengthen our portfolio   through strategic acquisitions and are prioritizing the development of several promising oncology   candidates with the potential to improve the treatment of advanced cancers. For more information about   our oncology clinical trials, visit www.merck.com/clinicaltrials.      About Merck   For more than 125 years, Merck, known as MSD outside of the United States and Canada, has been   inventing for life, bringing forward medicines and vaccines for many of the world’s most challenging   diseases in pursuit of our mission to save and improve lives. We demonstrate our commitment to patients   and population health by increasing access to health care through far-reaching policies, programs and   partnerships. Today, Merck continues to be at the forefront of research to prevent and treat diseases that   threaten people and animals – including cancer, infectious diseases such as HIV and Ebola, and emerging   animal diseases – as we aspire to be the premier research-intensive biopharmaceutical company in the   world. For more information, visit www.merck.com and connect with us on Twitter, Facebook,   Instagram, YouTube and LinkedIn.      Forward Looking Statements for Seattle Genetics    Certain of the statements made in this press release are forward looking, such as those, among others,   relating to Seattle Genetics’ sale of shares of its common stock to Merck, receipt of upfront payments and   potential receipt of milestone payments under the ladiratuzumab vedotin and TUKYSA collaborations   and potential royalty payments under the TUKYSA collaboration; the potential to broaden and advance   the development of ladiratuzumab vedotin and TUKYSA and accelerate the availability of TUKYSA to   additional cancer patients around the world; as well as any other statements that are not historical fact.   Actual results or developments may differ materially from those projected or implied in these forward-  looking statements. Factors that may cause such a difference include, without limitation, risks and   uncertainties related to: the completion of the sale of Seattle Genetics common stock to Merck including   the ability to obtain clearance under the HSR Act; Seattle Genetics’ ability to maintain the ladiratuzumab   vedotin and TUKYSA collaborations, including the risk that if Merck were to breach or terminate either   collaboration, Seattle Genetics would not obtain the anticipated financial and other benefits of the   collaboration and the development and/or commercialization of ladiratuzumab vedotin or TUKYSA could   be delayed, perhaps substantially; the possibility that Seattle Genetics and Merck may not be successful in   their development efforts under either collaboration and that, even if successful, Seattle Genetics and   Merck may be unable to successfully commercialize ladiratuzumab vedotin and TUKYSA; and the   duration and severity of the COVID-19 pandemic and resulting global economic, financial, and healthcare   system disruptions. More information about the risks and uncertainties faced by Seattle Genetics is          [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED 

 

    contained under the caption “Risk Factors” included in the company’s Quarterly Report on Form 10-Q for  the quarter ended June 30, 2020 filed with the Securities and Exchange Commission. Seattle Genetics  disclaims any intention or obligation to update or revise any forward-looking statements, whether as a  result of new information, future events or otherwise, except as required by law.     Forward-Looking Statement of Merck & Co., Inc., Kenilworth, N.J., USA  This news release of Merck & Co., Inc., Kenilworth, N.J., USA (the “company”) includes “forward- looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities  Litigation Reform Act of 1995. These statements are based upon the current beliefs and expectations of  the company’s management and are subject to significant risks and uncertainties. There can be no  guarantees with respect to pipeline products that the products will receive the necessary regulatory  approvals or that they will prove to be commercially successful. If underlying assumptions prove  inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in  the forward-looking statements.    Risks and uncertainties include but are not limited to, general industry conditions and competition;  general economic factors, including interest rate and currency exchange rate fluctuations; the impact of  the global outbreak of novel coronavirus disease (COVID-19); the impact of pharmaceutical industry  regulation and health care legislation in the United States and internationally; global trends toward health  care cost containment; technological advances, new products and patents attained by competitors;  challenges inherent in new product development, including obtaining regulatory approval; the company’s  ability to accurately predict future market conditions; manufacturing difficulties or delays; financial  instability of international economies and sovereign risk; dependence on the effectiveness of the  company’s patents and other protections for innovative products; and the exposure to litigation, including  patent litigation, and/or regulatory actions.    The company undertakes no obligation to publicly update any forward-looking statement, whether as a  result of new information, future events or otherwise. Additional factors that could cause results to differ  materially from those described in the forward-looking statements can be found in the company’s 2019  Annual Report on Form 10-K and the company’s other filings with the Securities and Exchange  Commission (SEC) available at the SEC’s Internet site (www.sec.gov).                                                                                     ###                                            CONTACTS:    Seattle Genetics  Investors:  Peggy Pinkston, 425-527-4160  ppinkston@seagen.com      Media:   Monique Greer, 425-527-4641  mgreer@seagen.com      Merck   Investors:   Peter Dannenbaum, 908-740-1037          [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED 

 

   Peter.dannenbaum@merck.com    Media:  Pam Eisele, 267-305-3558  Pamela.eisele@merck.com                                                                                          [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                                  Schedule 11.2                                         SeaGen Disclosure Schedules                                                              [ * ]                                                                                 [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                                 Schedule 11.3.1                                                                                                  Regulatory Documentation        [ * ]                                                                                  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                                  Schedule 13.4                                                        [ * ]                                                  (See Attached)    [ * ]    {4 pages omitted}                                             [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                     Schedule 14.7.6                         Continuing Product Payment Reduction    The provisions of this Schedule 14.7.6 shall only apply [ * ].    (a)   Generic Product. If in a particular Calendar Quarter during the Continuing Payment Term   in a given country, one or more Third Parties is or are selling a Generic Product in the Field in a   country and the aggregate net sales of the [ * ] Continuing Product sold by the Continuing Parties   (which net sales shall be calculated in a manner consistent with the definition of “Licensed Product   Net Sales” hereunder, mutatis mutandis) in such country during such Calendar Quarter (or any   Calendar Quarter thereafter) are less than [ * ] percent ([ * ]%) of the average quarterly aggregate   net sales of the Continuing Product (which net sales shall be calculated in a manner consistent with   the definition of “Licensed Product Net Sales”, mutatis mutandis) sold by the Continuing Parties   in such country over the [ * ] immediately prior to the Calendar Quarter during which the first such   Generic Product was sold in such country (the “Generic Reduction Trigger”), then in such case   the Applicable Percentage for calculation of the Continuing Product Payment for such Continuing   Product in such country during the Continuing Payment Term shall, commencing with such   Calendar Quarter in which the Generic Reduction Trigger occurred and thereafter for the   remainder of the Continuing Payment Term in such country, be reduced by [ * ] percent ([ * ]%)  of the amount otherwise payable under Section 14.7.6, subject to clause (c) of this Schedule 14.7.6.    For purposes of the foregoing, “Generic Product” means with respect to a Continuing Product, a   product: (A) with the same pharmaceutically active ingredient(s); (B) that has obtained Marketing   Authorization (excluding Pricing Approval) from the applicable Regulatory Authority by means   of a procedure for establishing equivalence to the Continuing Product or otherwise in reliance on   data generated for the Continuing Product; and (C) is legally marketed in such country by or under   the authority of an entity other than the Continuing Party.    (b)   Third Party Payments. If any Continuing Party believes that it is necessary or reasonably   useful to obtain a license or similar rights to intellectual property rights of a Third Party or Third   Parties in order for such Continuing Party to Develop, Manufacture or Commercialize the   Continuing Product (“Third Party License(s)”), then SeaGen shall have the right to credit [ * ] ([   * ]%) percent of [ * ] actually paid by any Continuing Party with respect to the Continuing Product   under any such Third Party License(s) against Continuing Product Payments otherwise payable   hereunder with respect to units of Continuing Product subject to such payment obligations under   such Third Party License. Subject to clause (c) of this Schedule 14.7.6, such credit against   Continuing Product Payments payable hereunder shall be allocated as follows: (a) [ * ] percent ([  * ]%) of [ * ] payable under a Third Party License with respect the Continuing Product shall be  creditable against Continuing Product Payments payable under Section 14.7.6 with respect to units  of the Continuing Product; and (b) [ * ] percent ([ * ]%) of [ * ] shall be creditable against   Continuing Product Payments payable under Section 14.7.6 with respect units of the Continuing   Product.  Notwithstanding the foregoing, if SeaGen is not able to fully credit any of the amounts   paid by any Continuing Party in a given Calendar Quarter, then SeaGen shall be entitled to carry   forward such right of credit to future Calendar Quarters with respect to such excess amount and   continue applying such credit on a Calendar Quarterly basis thereafter until fully utilized.          [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED 

 

     (c)   Royalty Floor. The reductions in clauses (a) and (b) of this Schedule 14.7.6 are   cumulative, provided that in no event shall the Applicable Percentage applicable to net sales of the   Continuing Product (which net sales shall be calculated in a manner consistent with the definition   of “Licensed Product Net Sales”, mutatis mutandis) sold by any Continuing Party in such country   during any Calendar Quarter in the Continuing Payment Term on a country-by-country basis, fall   below (as a result of the reductions in clauses (a) and (b) of this Schedule 14.7.6) a rate that is [ *  ] percent ([ * ]%) of the Applicable Percentage rates otherwise payable pursuant to Section 14.7.6.  Notwithstanding the foregoing, if SeaGen is not able to fully utilize any of the reductions or credits  in clauses (a) and (b) of this Schedule 14.7.6 in a given Calendar Quarter as a result of the foregoing  limitation, then SeaGen shall be entitled to carry forward such reduction or credit to future  Calendar Quarters with respect to such excess amount and continue applying such reduction or  credit on a Calendar Quarterly basis thereafter until fully utilized.                                                  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED 

 

                                                  Schedule 15.3                                     Partnership Tax Related Provisions   [ * ]    {7 pages omitted}                                                                                           [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                               Annex 1 to Schedule 15.3                                                Initial Capital Accounts                                                                  [ * ]                                                                                                            [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED 

 

                                                    Exhibit A                                                                                                   Initial Development Plan                                                           [ * ]                                          [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSEDexhibit10210q2020q3

 [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED.                                                                       Exhibit 10.2                                                                                                                                                   Execution Version                                                                                                          STOCK PURCHASE AGREEMENT            THIS STOCK PURCHASE AGREEMENT (“Agreement”) is entered into as of September 13,  2020 (the “Execution Date”), by and between Merck Sharp & Dohme Corp., a New Jersey  corporation, having a place of business at 2000 Galloping Hill Road Kenilworth, NJ 07033-1310  (“Merck”), and Seattle Genetics, Inc., a Delaware corporation, having a place of business at  21823 30th Drive S.E., Bothell, WA 98021 (“Seagen”). The capitalized terms used herein and   not otherwise defined have the meanings given to them in Appendix 1.                                       RECITAL          Seagen has agreed to sell, and Merck has agreed to purchase, shares of Common Stock   subject to and in accordance with the terms and provisions of this Agreement.                                     AGREEMENT          For good and valuable consideration, Merck and Seagen agree as follows:    Section 1. SALE AND PURCHASE OF STOCK          1.1   Purchase of Stock. Subject to the terms and conditions of this Agreement, at the   Closing, Seagen will issue and sell to Merck, and Merck will purchase from Seagen, 5,000,000   shares of Common Stock (the “Shares”) at a price per share equal to (i) the volume-weighted   average trading price of Seagen’s Common Stock during the 30-day period ending on the   Business Day that is four Business Days prior to the Execution Date rounded to the nearest   dollar, to be calculated and agreed to by each of Merck and Seagen (the “Base Price”), plus (ii)   the amount that shall cause the total per share purchase price to equal $200.00 (such amount, the   “Premium”), resulting in an aggregate purchase price of $1,000,000,000 (the Base Price plus the   Premium, the “Purchase Price”). Seagen and Merck acknowledge and agree that [ * ] or in any   administrative or legal proceedings concerning [ * ].          1.2   Payment.  At the Closing, Merck will pay the Purchase Price by wire transfer of   immediately available funds in accordance with wire instructions provided by Seagen to Merck   at least two (2) Business Days prior to the Closing, and Seagen will deliver the Shares in   restricted book-entry form to Merck and Seagen shall cause the transfer agent to deliver written   confirmation of the book-entry delivery of the Shares to Merck.          1.3   Closing.                (a)   Closing. The closing of the transaction contemplated by Section 1.1 (the   “Closing”) will be held at the offices of Seagen within three (3) Business Days after the   conditions to closing set forth in Section 6 are satisfied or waived for the Closing (other than      

 

those conditions that by their nature are to be satisfied or waived at the Closing) or at such other  place, time and/or date as may be jointly designated by Merck and Seagen for the Closing.                 (b)   Closing Deliverables.                      (i)   At the Closing, Seagen will deliver to Merck:                            (1)   a duly executed cross-receipt in form and substance  reasonably satisfactory to each party (the “Cross-Receipt”);                            (2)   a legal opinion of Seagen’s counsel dated as of the Closing  Date, in the form of Exhibit A hereto; and                           (3)   a certificate of the secretary of Seagen dated as of the  Closing Date certifying that attached thereto is a true and complete copy of all resolutions  adopted by the Board authorizing the execution, delivery and performance of this Agreement and  the transactions contemplated hereby and that all such resolutions are in full force and effect and  are all the resolutions adopted in connection with the transactions contemplated hereby as of the  Closing Date.                     (ii)  At the Closing, Merck will deliver to Seagen a duly-executed  Cross-Receipt.   Section 2. REPRESENTATIONS AND WARRANTIES OF SEAGEN         Except as otherwise specifically contemplated by this Agreement, Seagen hereby  represents and warrants to Merck that:         2.1   Private Placement.  Neither Seagen nor any person acting on its behalf, has,  directly or indirectly, made any offers or sales of any security or solicited any offers to buy any  security, under any circumstances that would require registration of the Shares under the  Securities Act. Subject to the accuracy of the representations made by Merck in Section 3, the  Shares will be issued and sold to Merck in compliance with applicable exemptions from the  registration and prospectus delivery requirements of the Securities Act.          2.2   Organization and Qualification.  Seagen and each of its Subsidiaries have been  duly organized or formed, as applicable, and are validly existing and in good standing (where  such concept is recognized under the laws of the jurisdiction in which they are organized and  formed) under the laws of their respective jurisdictions of organization, with full corporate power  and authority to conduct their respective businesses as currently conducted.  Seagen and each of  its Subsidiaries are duly qualified to do business and is in good standing in every jurisdiction  (where such concept is recognized) in which the nature of the business conducted by them or  property owned by them makes such qualification necessary, except where the failure to be so  qualified or in good standing, as the case may be, would not reasonably be expected to have a  Material Adverse Effect.                                        2  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,  HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE  HARM IF PUBLICLY DISCLOSED. 

 

       2.3   Authorization; Enforcement.  Seagen has all requisite corporate power and   authority to enter into and to perform its obligations under this Agreement, to consummate the   transactions contemplated hereby and to issue the Shares in accordance with the terms hereof.    The execution, delivery and performance of this Agreement by Seagen and the consummation by   it of the transactions contemplated hereby (including the issuance of the Shares at the Closing in   accordance with the terms hereof) have been duly authorized by the Board and no further   consent or authorization of Seagen, the Board, or its stockholders is required.  This Agreement   has been duly executed by Seagen and constitutes a legal, valid and binding obligation of Seagen   enforceable against Seagen in accordance with its terms, except as enforceability may be limited   by applicable bankruptcy, insolvency, reorganization, or moratorium or similar Laws affecting   creditors’ and contracting parties’ rights generally.          2.4   Issuance of Shares.  The Shares are duly authorized and, upon issuance in   accordance with the terms of this Agreement, will be validly issued, fully paid and non-  assessable and will not be subject to preemptive rights or other similar rights of stockholders of   Seagen.          2.5   SEC Documents, Financial Statements.                  (a)   The Common Stock is registered pursuant to Section 12(b) of the   Exchange Act.  Seagen has delivered or made available (by filing on the SEC's electronic data   gathering and retrieval system (EDGAR)) to Merck complete copies of its most recent Annual   Report on Form 10-K and its most recent Quarterly Report on Form 10-Q, and any report on   Form 8-K, in each case filed with the SEC after January 1, 2020 and prior to the Execution Date   (the “SEC Documents”).  As of its date, each SEC Document complied in all material respects   with the requirements of the Exchange Act, and other Laws applicable to it, and, as of its date,   such SEC Documents did not contain any untrue statement of a material fact or omit to state a   material fact required to be stated therein or necessary in order to make the statements therein, in   light of the circumstances under which they were made, not misleading.                 (b)   The consolidated financial statements, together with the related notes and   schedules, of Seagen included in the SEC Documents comply as to form in all material respects   with all applicable accounting requirements and the published rules and regulations of the SEC   and all other applicable rules and regulations with respect thereto.  Such consolidated financial   statements, together with the related notes and schedules, have been prepared in accordance with   GAAP applied on a consistent basis during the periods involved (except (i) as may be otherwise   indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim   statements, to the extent they may not include footnotes or may be condensed or summary   statements), and fairly present in all material respects the financial condition of Seagen and its   consolidated subsidiaries as of the dates thereof and the results of operations and cash flows for   the periods then ended (subject, in the case of unaudited statements, to normal year-end audit  adjustments).               (c)   The Common Stock is listed on Nasdaq, and Seagen has taken no action  designed to, or which to its knowledge is likely to have the effect of, terminating the registration  of the Common Stock under the Exchange Act or delisting the Common Stock from Nasdaq. As                                       3   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,   HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE   HARM IF PUBLICLY DISCLOSED. 

 

 of the date of this Agreement, Seagen has not received any notification that, and has no   knowledge that, the SEC or Nasdaq is contemplating terminating such registration or listing.          2.6   Internal Controls; Disclosure Controls and Procedures.  Seagen maintains, on   its behalf and on behalf of its Subsidiaries, internal control over financial reporting as defined in   Rule 13a-15(f) under the Exchange Act. Seagen maintains, on its behalf and on behalf of its   Subsidiaries, a system of disclosure controls and procedures (as defined in Rules 13a-15(e) under  the Exchange Act) that has been designed to ensure that information required to be disclosed by  Seagen in reports that it files or submits under the Exchange Act is recorded, processed,  summarized and reported within the time periods specified in the SEC’s rules and forms,  including controls and procedures designed to ensure that such information is accumulated and  communicated to Seagen’s management as appropriate to allow timely decisions regarding  required disclosure. Each of the principal executive officer and the principal financial officer of  Seagen has made all certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act  of 2002 with respect to all SEC Documents.         2.7   Capitalization and Voting Rights               (a)   The authorized capital of Seagen as of the Execution Date consists of:  (i) 250,000,000 shares of Common Stock of which, as of September 8, 2020, (x) 175,060,976  shares were issued and outstanding, (y) 10,557,680 shares were reserved for future issuance  pursuant to Seagen’s equity incentive, long-term incentive and employee stock purchase plans  (collectively, the “SGEN Benefit Plans”), and (z) 11,095,160 shares were issuable upon the  exercise of stock options outstanding or issuable upon vesting of restricted stock unit awards  outstanding, and (ii) 5,000,000 shares of Preferred Stock, of which no shares are issued and  outstanding as of the date of this Agreement. All of the issued and outstanding shares of  Common Stock (A) have been duly authorized and validly issued, (B) are fully paid and non- assessable and (C) were issued in compliance in all material respects with all applicable federal  and state securities Laws and not in violation of any preemptive rights.               (b)   All of the authorized shares of Common Stock are entitled to one (1) vote  per share.                (c)   Except as described or referred to in the SEC Documents, as of September  13, 2020, there were not: (i) any outstanding equity securities, options, warrants, rights  (including conversion or preemptive rights) or other agreements pursuant to which Seagen is or  may become obligated to issue, sell or repurchase any shares of its capital stock or any other  securities of Seagen or any of its Subsidiaries other than equity securities that may have been  granted or that Seagen is obligated to grant pursuant to the SGEN Benefit Plans, which plans are  described in the SEC Documents, or (ii) any restrictions on the transfer of capital stock of  Seagen other than pursuant to federal or state securities Laws or as set forth in this Agreement.               (d)   Except as described or referred to in the SEC Documents, Seagen is not a  party to or subject to any agreement or understanding relating to the voting of shares of capital  stock of Seagen or the giving of written consents by a stockholder or director of Seagen.         2.8   No Conflicts; Government Consents and Permits.                                      4   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,   HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE   HARM IF PUBLICLY DISCLOSED. 

 

             (a)   The execution, delivery and performance of this Agreement by Seagen   and the consummation by Seagen of the transactions contemplated hereby (including the   issuance of the Shares) will not (i) conflict with or result in a violation of any provision of the   charter or by-laws or similar organizational documents of Seagen or any of its Subsidiaries, (ii)   violate or conflict with, or result in a breach of any provision of, or constitute a default under,   any agreement, indenture, or instrument to which Seagen or any of its Subsidiaries is a party, or   (iii) result in a violation of any Law (including United States federal and state securities Laws   and regulations and regulations of any self-regulatory organizations) applicable to Seagen or any  of its Subsidiaries, except in the case of clauses (ii) and (iii) only, for such conflicts, breaches,   defaults, and violations as would not reasonably be expected to have a Material Adverse Effect   on Seagen or result in a liability for Merck.                 (b)   Seagen is not required to obtain any consent, authorization or order of, or   make any filing or registration with, any court or governmental agency or any regulatory or self-  regulatory agency or any other third party in order for it to execute, deliver or perform any of its   obligations under this Agreement in accordance with the terms hereof, or to issue and sell the   Shares in accordance with the terms hereof other than such as have been made or obtained, and   except for (i) any post-closing filings required to be made under federal or state securities Laws,   (ii) any required filings or notifications regarding the issuance or listing of additional shares with   Nasdaq, and (iii) the applicable premerger notification and waiting period requirements of the   HSR Act, and such other Antitrust Law as may be applicable to the Agreement.          2.9   Litigation. Except as set forth in the SEC Documents, there is no action, suit,  proceeding or investigation pending (of which Seagen has received notice or otherwise has   knowledge) or, to Seagen’s knowledge, threatened, against Seagen or any of its Subsidiaries,   except where such action, suit, proceeding or investigation, as the case may be, would not   reasonably be expected to have a Material Adverse Effect.          2.10  Licenses and Other Rights; Compliance with Laws. Seagen and its   Subsidiaries have all franchises, permits, licenses and other rights and privileges (“Permits”)   necessary to permit them to own their respective properties and to conduct their respective   businesses as presently conducted (including all such certificates, authorizations and permits   required by the FDA or any other federal, state or foreign agencies or bodies engaged in the   regulation of pharmaceuticals or biologics) and are in compliance thereunder, except where the   failure to so possess such Permits or to be in compliance thereunder would not reasonably be   expected to have a Material Adverse Effect. To Seagen’s knowledge, neither Seagen nor any of   its Subsidiaries has taken any action that would interfere with their ability to renew all such  Permits, except where the failure to renew such Permits would not reasonably be expected to  have a Material Adverse Effect. Seagen and each of its Subsidiaries is and has been in  compliance with all Laws applicable to its business, properties and assets, and to the approved  products sold by it, except where the failure to be in compliance would not reasonably be  expected to have a Material Adverse Effect.                                        5   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,   HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE   HARM IF PUBLICLY DISCLOSED. 

 

      2.11  Intellectual Property.               (a)   The Intellectual Property that is owned by Seagen or its Subsidiaries is  owned free from any liens or restrictions, except for those liens or restrictions that would not  reasonably be expected to have a Material Adverse Effect. To Seagen’s knowledge, all of  Seagen’s and its Subsidiaries’ Intellectual Property Licenses that are material to Seagen and its  Subsidiaries, taken as a whole, are in full force and effect in accordance with their terms, are free  of any liens or restrictions except for those liens or restrictions that would not reasonably be  expected to have a Material Adverse Effect, and to Seagen’s knowledge, neither Seagen nor its  Subsidiaries, nor any other party thereto, is in material breach of any such material Intellectual  Property License.  To Seagen’s knowledge, no event has occurred that with notice or lapse of  time or both (i) would constitute a breach or default of any such material Intellectual Property  License or (ii) would result in the termination thereof, or (iii) would cause or permit the  acceleration or other change of any right or obligation or the loss of any benefit thereunder by  Seagen or its Subsidiaries except (1) in the case of each of clauses (i) through (iii) as would not  reasonably be expected to have a Material Adverse Effect, or (2) as set forth in any such  Intellectual Property License.                   (b)   Except as set forth in the SEC Documents, to Seagen’s knowledge, there is  no legal claim or demand of any person or any proceeding that is pending or overtly threatened  in writing, (i) challenging the right of Seagen or any of its Subsidiaries in respect of any  Intellectual Property of Seagen or any of its Subsidiaries, or (ii) claiming that any default exists  under any Intellectual Property License, except, in the case of clauses (i) and (ii) above, where  any such claim, demand or proceeding would not reasonably be expected to have a Material  Adverse Effect.                (c)   Except as set forth in the SEC Documents: (i) Seagen or one of its  Subsidiaries owns, free of any lien or encumbrance except for those liens or encumbrances that  would not reasonably be expected to have a Material Adverse Effect, or, to Seagen’s knowledge,  has a valid license, or an enforceable right to use, as it is used or held for use, all U.S. and non- U.S. patents, trade secrets, know-how, trademarks, service marks, copyrights, and other  proprietary and Intellectual Property rights, and all grants and applications with respect to the  foregoing (collectively, the “Proprietary Rights”) necessary for the conduct of Seagen’s and its  Subsidiaries’ respective businesses, except where the failure to own or have any of the foregoing  would not reasonably be expected to have a Material Adverse Effect (such Proprietary Rights  owned by or licensed to Seagen collectively, the “Seagen Rights”); and (ii) to Seagen’s  knowledge, Seagen and its Subsidiaries have taken reasonable measures to protect the Seagen  Rights, consistent with prudent commercial practices in the biotechnology industry, except  where failure to take such measures would not reasonably be expected to have a Material  Adverse Effect.          2.12  Clinical Trials. Except as would not reasonably be expected to have a Material  Adverse Effect, the studies, tests and clinical trials, conducted by or on behalf of Seagen or any  of its Subsidiaries that are described in the SEC Documents were and, if still pending, are being,  conducted in accordance with experimental protocols, procedures and controls pursuant to,  where applicable, accepted professional scientific standards; the descriptions of the results of                                      6  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,  HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE  HARM IF PUBLICLY DISCLOSED. 

 

 such studies, tests and trials contained in the SEC Documents are accurate in all material   respects; and neither Seagen nor any of its Subsidiaries has received any notices or   correspondence from the FDA or any foreign, state or local governmental body exercising   comparable authority requiring the termination, suspension or material modification of any   studies, tests or preclinical or clinical trials conducted by or on behalf of Seagen or any of its   Subsidiaries, which termination, suspension or material modification would reasonably be   expected to have a Material Adverse Effect.           2.13  Absence of Certain Changes.                (a)   Except as disclosed in the SEC Documents filed prior to the Execution   Date, since December 31, 2019, no change or event has occurred, except where such change or   event has not had, and would not reasonably be expected to have, a Material Adverse Effect on   Seagen.                 (b)   Except as set forth in the SEC Documents filed prior to the Execution   Date or as contemplated by this Agreement or the Collaboration Agreements, since December   31, 2019, (i) Seagen has not declared or paid any dividends, or authorized or made any   distribution upon or with respect to any class or series of its capital stock, and (ii) neither Seagen   nor any of its Subsidiaries has sold, exchanged or otherwise disposed of any of its assets or rights   that are material to Seagen and its Subsidiaries taken as a whole.                (c)   Since December 31, 2019, neither Seagen nor any of its Subsidiaries has   admitted in writing its inability to pay its debts generally as they become due, filed or consented   to the filing against it of a petition in bankruptcy or a petition to take advantage of any   insolvency act, made an assignment for the benefit of creditors, consented to the appointment of   a receiver for itself or for the whole or any substantial part of its property, or had a petition in   bankruptcy filed against it, been adjudicated a bankrupt, or filed a petition or answer seeking   reorganization or arrangement under the federal bankruptcy Laws or any other Laws of the   United States or any other jurisdiction.          2.14  Not an Investment Company. Seagen is not, and after receipt of the Purchase  Price, will not be, an “investment company” as defined in the Investment Company Act of 1940,  as amended.          2.15  No Integration. Seagen has not, directly or through any agent, sold, offered for  sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the  Securities Act) which is or will be integrated with the Shares sold pursuant to this Agreement in  a manner that would require the registration of the Shares under the Securities Act.         2.16  Foreign Corrupt Practices. Neither Seagen nor any Subsidiary of Seagen, nor to  Seagen’s knowledge, any agent or other person acting on behalf of Seagen, has (a) directly or  indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful  expenses related to foreign or domestic political activity, (b) made any unlawful payment to  foreign or domestic government officials or employees or to any foreign or domestic political  parties or campaigns from corporate funds, (c) failed to disclose fully any contribution made by  Seagen or any of Seagen’s Subsidiaries (or made by any person acting on its behalf of which                                      7   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,   HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE   HARM IF PUBLICLY DISCLOSED. 

 

 Seagen is aware) which is in violation of Law, or (d) violated in any material respect any   provision of the Foreign Corrupt Practices Act of 1977, as amended, or any applicable non-U.S.   anti-bribery Law.          2.17  Office of Foreign Assets Control. Neither Seagen nor, to Seagen’s knowledge,   any director, officer, agent, employee or Affiliate of Seagen is currently subject to any U.S.   sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department.    Section 3. REPRESENTATIONS AND WARRANTIES OF MERCK         Except as otherwise specifically contemplated by this Agreement, Merck hereby  represents and warrants to Seagen that:         3.1   Authorization; Enforcement. Merck has the requisite corporate power and  authority to enter into this Agreement and to consummate the transactions contemplated hereby.   Merck has taken all necessary corporate action to authorize the execution, delivery and  performance of this Agreement.  Upon the execution and delivery of this Agreement, this  Agreement will constitute a valid and binding obligation of Merck enforceable against Merck in  accordance with its terms, except as enforceability may be limited by applicable bankruptcy,  insolvency, reorganization, moratorium or similar Laws affecting creditors’ and contracting  parties’ rights generally.         3.2   No Conflicts; Government Consents and Permits.                (a)   The execution, delivery and performance of this Agreement by Merck and   the consummation by Merck of the transactions contemplated hereby (including the purchase of   the Shares) will not (i) conflict with or result in a violation of any provision of Merck’s   Certificate of Incorporation or Bylaws, (ii) violate or conflict with, or result in a breach of any   provision of, or constitute a default under, any agreement, indenture, or instrument to which   Merck is a party, or (iii) result in a violation of any Law (including United States federal and   state securities Laws and regulations and regulations of any self-regulatory organizations)  applicable to Merck, except in the case of clauses (ii) and (iii) only, for such conflicts, breaches,   defaults, and violations as would not reasonably be expected to have a Material Adverse Effect   on Merck or result in a liability for Seagen.                 (b)   Merck is not required to obtain any consent, authorization or order of, or   make any filing or registration with, any court or governmental agency or any regulatory or self-  regulatory agency in order for it to execute, deliver or perform any of its obligations under this   Agreement in accordance with the terms hereof, or to purchase the Shares in accordance with the   terms hereof other than such as have been made or obtained and except for the applicable   premerger notification and waiting period requirements of the HSR Act, and such other Antitrust   Law as may be applicable to the Agreement.            3.3   Investment Purpose.  Merck is purchasing the Shares for its own account and not  with a present view toward the public distribution thereof and has no arrangement or  understanding with any other persons regarding the distribution of such Shares except as would  not result in a violation of the Securities Act.  Merck will not, directly or indirectly, offer, sell,                                      8   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,   HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE   HARM IF PUBLICLY DISCLOSED. 

 

 pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise   acquire or take a pledge of) any of the Shares except in accordance with the Securities Act and to   the extent permitted by Section 5.1.            3.4   Reliance on Exemptions.  Merck understands that Seagen intends for the Shares   to be offered and sold to it in reliance upon specific exemptions from the registration   requirements of United States federal and state securities Laws and that Seagen is relying upon   the truth and accuracy of, and Merck’s compliance with, the representations, warranties,   agreements, acknowledgments and understandings of Merck set forth herein in order to   determine the availability of such exemptions and the eligibility of Merck to acquire the Shares.          3.5   Accredited Investor; Access to Information.  Merck is an “accredited investor”   as defined in Regulation D under the Securities Act and is knowledgeable, sophisticated and   experienced in making, and is qualified to make decisions with respect to investments in shares   presenting an investment decision like that involved in the purchase of the Shares.  Merck has   been furnished with materials relating to the offer and sale of the Shares, that have been   requested by Merck, including the SEC Documents, and Merck has had the opportunity to   review the SEC Documents.  Merck has been afforded the opportunity to ask questions of   Seagen.  Neither such inquiries nor any other investigation conducted by or on behalf of Merck   or its representatives or counsel will modify, amend or affect Merck's right to rely on the truth,   accuracy and completeness of the SEC Documents and Seagen’s representations and warranties   contained in this Agreement.           3.6   Restricted Securities. Merck understands that the Shares will be characterized as   “restricted securities” under the U.S. federal securities Laws inasmuch as they are being acquired   from Seagen in a private placement under Section 4(a)(2) of the Securities Act and that under   such Laws and applicable regulations such Shares may be resold without registration under the   Securities Act only in certain limited circumstances.          3.7   Governmental Review.  Merck understands that no United States federal or state   agency or any other government or governmental agency has passed upon or made any   recommendation or endorsement of the Shares or an investment therein.    Section 4. VOTING AGREEMENT.           4.1   Voting Agreement.               (a)   Merck agrees that at any meeting of stockholders of Seagen or any  adjournment or postponement thereof, except as permitted by Section 4.1(b) below with respect   to Extraordinary Matters, Merck shall (i) after receiving proper notice of any such meeting of   stockholders of Seagen (or, if no notice is required or such notice is properly waived, after notice   from Seagen is given), be present, in person or by proxy, as a holder of Shares at all such   meetings and be counted for the purposes of determining the presence of a quorum at such   meetings and (ii) vote (in person or by proxy, as applicable) all Shares as to which Merck has   beneficial ownership or as to which Merck otherwise exercises voting or dispositive authority in   accordance with the recommendations of the Board with respect to any proposal to be voted   upon at such meeting.                                      9   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,   HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE   HARM IF PUBLICLY DISCLOSED. 

 

             (b)   Extraordinary Matters. Merck may vote with respect to any or all of the   voting securities of Seagen as to which it is entitled to vote or execute a written consent, as it   may determine in its sole discretion, with respect to the following matters, if presented to   Seagen’s stockholders for approval (each such matter being an “Extraordinary Matter”):                      (i)   any transaction which would result in a Change of Control of               Seagen;                       (ii)  the payment of any dividends to any class of stockholders of               Seagen; and                       (iii) any liquidation or dissolution of Seagen.                (c)   No Revocation. The voting agreements contained in this Section 4 are   coupled with an interest and may not be revoked prior to their expiration in accordance with   Section 4.1(d).                (d)   Expiration. The agreements contained in this Section 4 will expire (i) in   part, solely with respect to any Shares sold by Merck to the public or otherwise a non-Affiliate of   Merck upon the execution of the sale of such Shares, and (ii) as a whole on the date that Merck,   together with its Affiliates, beneficially owns less than 1% of the outstanding Common Stock.   For the avoidance of doubt, the agreements contained in this Section 4 shall not limit Merck’s   ability to transfer or resell any Shares, provided that (A) such transfers or resales are effected in   accordance with Section 5.1 or Section 9.10, as applicable, and (B) as a condition to any transfer   or resale to an Affiliate of Merck, such Affiliate shall expressly agree to assume Merck’s   obligations under this Section 4.    Section 5. TRANSFER OR RESALE, LEGENDS AND RULE 144 REPORTING.            5.1   Transfer or Resale.  Merck understands and agrees that:               (a)   the Shares have not been and are not being registered under the Securities  Act or any applicable state securities Laws and, consequently, Merck may have to bear the risk  of owning the Shares for an indefinite period of time because the Shares may not be transferred  unless (i) the resale of the Shares is registered pursuant to an effective registration statement  under the Securities Act; (ii) Merck has delivered to Seagen an opinion of counsel (in form,  substance and scope customary for opinions of counsel in comparable transactions) to the effect  that the Shares to be sold or transferred may be sold or transferred pursuant to an exemption  from such registration; or (iii) the Shares are sold or transferred pursuant to Rule 144; and               (b)   any sale of the Shares made in reliance on Rule 144 may be made only in  accordance with the terms of Rule 144 and, if Rule 144 is not applicable, any resale of the Shares  under circumstances in which the seller (or the person through whom the sale is made) may be  deemed to be an underwriter (as that term is defined in the Securities Act) may require  compliance with some other exemption under the Securities Act or the rules and regulations of  the SEC thereunder.                                         10   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,   HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE   HARM IF PUBLICLY DISCLOSED. 

 

       5.2   Legend.  Merck understands the Shares will bear a restrictive legend in   substantially the following form (and a stop-transfer order may be placed against transfer of the   Shares):             THE SHARES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER   THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE   SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR   HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT   WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR APPLICABLE STATE   SECURITIES LAWS OR A CERTIFICATE AND/OR AN OPINION OF COUNSEL   SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.          5.3   Legend Removal.  The Shares shall not be required to bear the legend set forth in   Section 5.2 (i) after the sale of such Shares pursuant to an effective registration statement under   the Securities Act covering the resale of such Shares, (ii) following any sale of such Shares   pursuant to Rule 144 or (iii) if such Shares are eligible for sale under Rule 144 without the need   to satisfy the current public information requirement under Rule 144 and without volume or   manner-of-sale restrictions.  Seagen agrees that following such time as the legend is no longer   required under this Section 5.3, no later than two (2) Business Days following the delivery by   Merck to Seagen of all of (i) an instrument, whether certificated or uncertificated, representing   the Shares issued with a restrictive legend, (ii) a written request addressed to Seagen that such   restrictive legend be removed, and (iii) customary broker and representation letters in form and   substance reasonably satisfactory to Seagen, Seagen will deliver or cause to be delivered to   Merck an instrument, certificated or uncertificated as directed by Merck, representing such   Shares that is free from such restrictive legend; provided, however, that each party will be   responsible for any fees it incurs in connection with such request and removal.          5.4   Rule 144 Reporting.  With a view to making available to Merck the benefits of   certain rules and regulations of the SEC which may permit the sale of the Shares to the public   without registration, Seagen agrees to use its commercially reasonable efforts to make and keep   current public information with respect to Seagen available, as those terms are understood and   defined in Rule 144, at all times during the period commencing on the Execution Date and   ending on the one-year anniversary of the Closing Date.    Section 6. CONDITIONS TO CLOSING          6.1   Conditions to Obligations of Seagen.  Seagen’s obligation to complete the   purchase and sale of the Shares and deliver the Shares to Merck is subject to the fulfillment or  waiver of the following conditions at or prior to the Closing:                (a)   Receipt of Funds.  Seagen will have received immediately available funds   in the full amount of the Purchase Price for the Shares being purchased hereunder.                (b)   Absence of Litigation.  No proceeding challenging this Agreement or the   transactions contemplated hereby, or seeking to prohibit, alter, prevent or materially delay the   Closing, will have been instituted or be pending before any Governmental Authority.                                        11   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,   HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE   HARM IF PUBLICLY DISCLOSED. 

 

            (c)   No Governmental Prohibition; HSR Clearance.  The sale of the Shares by  Seagen and the purchase of the Shares by Merck will not be prohibited by any applicable Law at  the time of Closing.  Each of the HSR Conditions shall have been satisfied.               (d)   Closing Deliverables.  All closing deliverables as required under  Section 1.3(b) shall have been delivered by Merck to Seagen.           6.2   Conditions to Merck’s Obligations at the Closing.  Merck’s obligation to  complete the purchase and sale of the Shares is subject to the fulfillment or waiver of the  following conditions at or prior to the Closing:               (a)   Absence of Litigation.  No proceeding challenging this Agreement or the  transactions contemplated hereby, or seeking to prohibit, alter, prevent or materially delay the  Closing, will have been instituted or be pending before any Governmental Authority.               (b)   No Governmental Prohibition; HSR Clearance. The sale of the Shares by  Seagen, and the purchase of the Shares by Merck will not be prohibited by any applicable Law at  the time of Closing. Each of the HSR Conditions shall have been satisfied.               (c)   Closing Deliverables.  All closing deliverables as required under  Section 1.3(b) shall have been delivered by Seagen to Merck.   Section 7. TERMINATION.         7.1   Ability to Terminate. This Agreement may be terminated:               (a)   at any time by mutual written consent of Seagen and Merck; or               (b)   by either Seagen or Merck, upon written notice to the other, if the  Antitrust Clearance Date has not occurred on or before November 20, 2020.         7.2   Effect of Termination.  In the event of the termination of this Agreement pursuant  to Section 7.1, (a) this Agreement (except for this Section 7.2, Section 9.1 and Sections 9.3  through 9.15, and any definitions set forth in this Agreement and used in such Sections) shall  forthwith become void and have no effect, without any liability on the part of any party hereto or  its Affiliates, and (b) all filings, applications and other submissions made pursuant to this  Agreement, to the extent practicable, shall be withdrawn from the agency or other person to  which they were made or appropriately amended to reflect the termination of the transactions  contemplated hereby; provided, however, that nothing contained in this Section 7.2 shall relieve  any party from liability for fraud or any intentional or willful breach of this Agreement.   Section 8. DEMAND REGISTRATION RIGHTS.         8.1   Demand Registrations.  At any time beginning on the date that is eighteen (18)  months after the Closing Date, Merck will have the right, subject to Section 8.5 below, to request  registration of its Registrable Securities (which may, at Merck’s request, be shelf registrations  pursuant to Rule 415 promulgated under the Securities Act), which request or requests will                                      12  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,  HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE  HARM IF PUBLICLY DISCLOSED. 

 

 specify the number of Registrable Securities intended to be transferred and the intended method   of distribution of such Registrable Securities. Upon receipt of such request, and subject to   Merck’s compliance with Section 8.3 hereof, Seagen will use its commercially reasonable efforts   to promptly, but in no event later than [ * ] following receipt of such request ([ * ] days following   the receipt of such request if Seagen is not then eligible to register for resale the Registrable   Securities on Form S-3), effect the registration under the Securities Act of the Registrable   Securities so requested to be registered; provided, however, that Seagen will not be required to   prepare and file (x) more than [ * ] registration statements hereunder nor (y) more than one   registration statement within any [ * ], in each case, at the request of Merck pursuant to this   Section 8.1. Notwithstanding the foregoing, Seagen may delay the filing or effectiveness of any   registration of Registrable Securities pursuant to this Section 8.1 or suspend the use of any   registration statement (and Merck hereby agrees not to offer or sell any Registrable Securities   pursuant to such registration statement) for a period of not more than [ * ] if (i) Seagen   reasonably believes that there is or may be in existence material nonpublic information or events   involving Seagen, the failure of which to be disclosed in the prospectus included in the   registration statement could result in a Violation, (ii) all reports required to be filed by Seagen   pursuant to the Exchange Act have not been filed by the required date (without regard to any   extension), (iii) if Seagen furnishes Merck a certificate signed by the principal executive officer   of Seagen stating that in the good faith judgment of the Board, the filing or use of any   registration statement covering Registrable Securities would be seriously detrimental to Seagen  or its stockholders at such time and that the Board concludes, as a result, that it is in the best  interests of Seagen and its stockholders to delay the filing or effectiveness of any registration of  Registrable Securities pursuant to this Section 8.1 or suspend the use of any registration   statement at such time, provided, however, that Seagen may not delay the filing or effectiveness   of any registration of Registrable Securities or suspend the use of any registration statement   pursuant to this clause (iii) for a period of more than [ * ] calendar days, or (iv) the   consummation of any business combination by Seagen has occurred or is probable for purposes   of Rule 3-05 or Article 11 of Regulation S-X promulgated by the SEC or any similar successor   rule. If Seagen will exercise its right to delay the filing or effectiveness or suspend the use of a   registration hereunder, the applicable time period during which the registration statement is to   remain effective will be extended by a period of time equal to the duration of the suspension   period. If so directed by Seagen, Merck will (i) not offer to sell any Registrable Securities   pursuant to the registration statement during the period in which the delay or suspension is in   effect after receiving notice of such delay or suspension; and (ii) use its commercially reasonable   efforts to deliver to Seagen (at Seagen’s expense) all copies, other than permanent file copies   then in Seagen’s possession, of the prospectus relating to such Registrable Securities current at   the time of receipt of such notice. Seagen will use its commercially reasonable efforts to   maintain the continuous effectiveness of the registration statement for up to [ * ] following the   effective date of such registration statement or, if earlier, until the date on which (i) all of the   Registrable Securities included in such registration statement have actually been sold or (ii)   Merck, together with its Affiliates, no longer beneficially owns more than [ * ].          8.2   Registration Expenses.  Seagen will pay all Registration Expenses incurred in  connection with each registration of Registrable Securities pursuant to this Section 8. [ * ] to the   [ * ] in connection with each [ * ].                                       13   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,   HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE   HARM IF PUBLICLY DISCLOSED. 

 

       8.3   Certain Conditions.  It will be a condition of Merck’s rights hereunder to have   Registrable Securities owned by it registered that: (i) Merck will reasonably cooperate with   Seagen by supplying information and executing documents relating to Merck or the securities of   Seagen owned by Merck in connection with such registration; and (ii) Merck will enter into such   undertakings and take such other actions relating to the conduct of the proposed offering that   Seagen may request as being necessary to ensure compliance with federal and state securities   laws and the securities laws of any applicable jurisdiction and the rules or other requirements of   the applicable exchange. In the event of any registration under the Securities Act of any   Registrable Securities pursuant to this Section 8, Seagen will indemnify and hold harmless   Merck, each of its directors, its officers, and its equity holders against such losses, claims,   damages or liabilities (including reimbursement for reasonable and documented legal and other   expenses) to which Merck or any such director, officer or equity holder may become subject   under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses,   claims, damages or liabilities arise out of or are based upon a Violation; provided, however, that  the indemnity agreement contained in this Section 8.3 will not apply to amounts paid in   settlement of any such loss, claim, damage, liability or action if such settlement is effected   without Seagen’s consent, which consent will not be unreasonably withheld, nor will Seagen be   liable in any such case for any such loss, claim, damage, liability or action to the extent that it   arises out of or is based upon a Violation that occurs in reliance upon and in conformity with   written information furnished expressly for use in connection with such registration by any of   such indemnified parties; and provided, further that Merck will indemnify and hold harmless   Seagen, each of its directors, its officers, and each person, if any, who controls Seagen within the   meaning of the Securities Act, and any underwriter, and any other third party, as applicable,   selling securities under such registration statement, against such losses, claims, damages or   liabilities (including reimbursement for reasonable and documented legal and other expenses) to   which Seagen or any such director, officer, controlling person, underwriter or other third party   who may become subject under the Securities Act, the Exchange Act or other federal or state   law, insofar as such losses, claims, damages or liabilities arise out of or are based upon a Merck   Violation, in each case, to the extent (and only to the extent) that such Merck Violation occurs in   reliance upon and in conformity with written information furnished expressly for use in   connection with such registration by any of such indemnifying parties, provided, however, that   the indemnity agreement contained in this Section 8.3 will not apply to amounts paid in   settlement of any such loss, claim, damage, liability or action if such settlement is effected   without Merck’s consent, which consent will not be unreasonably withheld; provided, further,   that in no event shall the obligations of Merck in this Section 8.3 exceed the net proceeds   received by it from the sale of its Registrable Securities related to the matter in which losses or   damages are sought.          8.4   Assignment of Registration Rights.  Merck’s right to request registration of its   Registrable Securities as set forth in Section 8.1 above may be assigned to one or more Affiliates   of Merck as provided in Section 9.10, in each case so long as Merck is not relieved of any   liability or obligations under this Section 8.            8.5   Termination of Registration Rights.  Merck’s right to request registration of its   Registrable Securities as set forth in Section 8.1 above shall terminate automatically on the date                                        14   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,   HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE   HARM IF PUBLICLY DISCLOSED. 

 

 that is five (5) years following the Closing Date or, if earlier, once Merck, together with its   Affiliates, no longer beneficially owns more than [ * ] of the Shares.     Section 9. GOVERNING LAW; MISCELLANEOUS.           9.1   Governing Law; Jurisdiction.  This Agreement will be governed by and  interpreted in accordance with the laws of the State of Delaware without regard to the principles  of conflict of laws that would require the application of the substantive Laws of another  jurisdiction.           9.2   HSR Clearance.               (a)   Subject to the terms and conditions of this Agreement, each of Merck and  Seagen will use its reasonable best efforts to take, or cause to be taken, all actions and to do, or  cause to be done, all things necessary, proper or advisable under applicable Law to consummate  the acquisition of the Shares as soon as practicable after the Execution Date, including taking all  steps as may be necessary, subject to the limitations in this Section 9.2, to obtain all applicable   waiting period expirations or terminations, consents, clearances, waivers, licenses, registrations,   permits, authorizations, orders and approvals. In furtherance and not in limitation of the   foregoing, each of Merck and Seagen agrees to (i) file or cause to be filed with the FTC and the   DOJ any notifications required to be filed under the HSR Act no later than seven (7) Business   Days after the Execution Date (unless otherwise mutually agreed to by the parties), and (ii) use   reasonable best efforts to obtain as promptly as practicable the termination or expiration of any   waiting period under the HSR Act, including by filing as soon as practicable and advisable any   supplemental or additional information which may reasonably be requested by the FTC or the   DOJ or any other Governmental Authority in connection with applicable Antitrust Law; provided   that the obligations in this Section 9.2 shall not require Seagen or Merck or any of its Affiliates   to (x) sell, divest (including through a license or a reversion of licensed or assigned rights), hold   separate, transfer or dispose of, or commit to any behavioral remedy with respect to, any assets,   operations, rights, product lines, businesses or interest therein of Seagen or Merck or any of their   Affiliates (or consent to any of the foregoing actions); or (y) litigate or otherwise formally   oppose any determination (whether judicial or administrative in nature) by a Governmental   Authority seeking to impose any of the restrictions referenced in clause (x). Merck shall be   responsible for the payment of filing fees payable under the HSR Act and any other applicable   Antitrust Law.                (b)   Each of Merck and Seagen shall use reasonable best efforts to provide or   cause to be provided promptly all assistance and cooperation to allow Merck and Seagen to   prepare and submit any filings or submissions under the HSR Act, including providing to Merck   and Seagen, as applicable, any information that it may require for the purpose of any filing,   notification, application or request for further information made in respect of any such filing.               (c)   Each of Merck and Seagen shall, in connection with the transactions  contemplated hereby, and the obtaining of all waiting period expirations or terminations,  consents, clearances, waivers, licenses, orders, registrations, approvals, permits and  authorizations under the HSR Act or any other applicable Antitrust Law, with respect to actions  taken on or after the date of this Agreement, without limitation: (i) promptly notify the other of,                                      15   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,   HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE   HARM IF PUBLICLY DISCLOSED. 

 

 and if in writing, furnish the other with copies of (or, in the case of oral communications, advise   the other of) any material communications from or with any Governmental Authority, including   the FTC and the DOJ, with respect to the Agreement, (ii) cooperate in all respects and consult   with each other in connection with any filing or submission and in connection with any   investigation or other inquiry, (iii) permit the other to review and discuss in advance, and   consider in good faith the view of the other in connection with, any proposed written or oral   communication with any Governmental Authority, (iv) not participate in any substantive meeting   or have any substantive communication with any Governmental Authority unless it has given the   other party a reasonable opportunity to consult with it in advance and, to the extent permitted by   such Governmental Authority, gives the other the opportunity to attend and participate therein,   (v) furnish the other party’s outside legal counsel with copies of all supplemental filings and   substantive communications between it and any such Governmental Authority with respect to the   Agreement; provided that neither party will be required to provide the other party with its board   of directors or internal committee materials; and any materials subject to this Section 9.2(c) may   be restricted to outside counsel and may be redacted or withheld as necessary (A) to comply with   contractual arrangements, (B) to address good faith legal privilege concerns and (C) to comply   with applicable Law, (vi) furnish the other party’s outside legal counsel with such necessary   information and  reasonable assistance as the other party’s outside legal counsel may reasonably   request in connection with its preparation of necessary submissions of information to any such   Governmental Authority, and (vii) use reasonable best efforts to respond as soon as practicable  to reasonable requests for information by any Governmental Authority. Neither Merck nor  Seagen shall commit to or agree with any Governmental Authority to stay, toll, or extend any  applicable waiting period under the HSR Act or other applicable Antitrust Law, or pull and refile  under the HSR Act, without the prior written consent of the other.          9.3   Survival.                (a)   Notwithstanding any investigation made by or on behalf of Seagen or   Merck prior to, on or after the Closing, the representations and warranties contained in this   Agreement (including the exhibits and schedules hereto) and any certificate delivered hereunder   shall survive the Closing and shall terminate on the second anniversary of the Closing Date.                (b)   The covenants of the parties hereto shall survive until fully performed and   discharged, unless otherwise expressly provided herein.          9.4   Counterparts; Electronic Signatures.  This Agreement may be executed and   delivered (including by facsimile transmission or PDF or any other electronically transmitted   signatures such as via DocuSign) in two counterparts, each of which shall be deemed an original,   but all of which together shall constitute one and the same instrument.            9.5   Headings.  The headings of this Agreement are for convenience of reference   only, are not part of this Agreement and do not affect its interpretation.          9.6   Rules of Construction.                (a)   For purposes of this Agreement, whenever the context requires: the   singular number shall include the plural, and vice versa; the masculine gender shall include the                                      16   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,   HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE   HARM IF PUBLICLY DISCLOSED. 

 

 feminine and neuter genders; the feminine gender shall include the masculine and neuter   genders; and the neuter gender shall include the masculine and feminine genders.                (b)   As used in this Agreement, (i) the words “include” and “including,” and   variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be   followed by the words “without limitation”, (ii) the words “hereby,” “herein,” “hereunder” and   “hereto” shall be deemed to refer to this Agreement in its entirety and not to any specific section  of this Agreement and (iii) “or” has the inclusive meaning represented by the phrase “and/or”.                (c)   Except as otherwise indicated, all references in this Agreement to   “Sections” and “Appendix” are intended to refer to Sections of this Agreement, as appropriate,   and Appendix 1 to this Agreement.                (d)   As used in this Agreement, the term “days” means calendar days unless   otherwise specified. When calculating the period of time before which, within which or   following which any act is to be done or step taken pursuant to this Agreement, the date that is   the reference date in calculating such period shall be excluded. If the last day of such period is a   non-Business Day, the period in question shall end on the next succeeding Business Day.                (e)   Unless otherwise indicated, all monetary amounts herein are in United   States dollars.          9.7   Severability.  If any provision of this Agreement should be held invalid, illegal or   unenforceable in any jurisdiction, the parties will negotiate in good faith a valid, legal and   enforceable substitute provision that most nearly reflects the original intent of the parties and all   other provisions hereof will remain in full force and effect in such jurisdiction and will be   liberally construed in order to carry out the intentions of the parties hereto as nearly as may be   possible. Such invalidity, illegality or unenforceability will not affect the validity, legality or   enforceability of such provision in any other jurisdiction.          9.8   Entire Agreement; Amendments.  This Agreement (including any schedules   and appendices hereto and any certificates delivered hereunder) constitute the entire agreement   between the parties hereto with respect to the subject matter hereof.  There are no restrictions,   promises, warranties or undertakings, other than those set forth or referred to herein or therein.    This Agreement supersedes all prior agreements and understandings between the parties hereto   with respect to the subject matter hereof.  No provision of this Agreement may be waived or   amended other than by an instrument in writing signed by the party to be charged with   enforcement.  Any amendment or waiver effected in accordance with this Section 9.8 will be   binding upon Merck and Seagen.          9.9   Notices.  All notices required or permitted hereunder will be in writing and will   be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent   by confirmed email if sent during normal business hours of the recipient, if not, then on the next   Business Day, or (c) one Business Day after deposit with a nationally recognized overnight   courier, specifying next day delivery, with written verification of receipt.  The addresses for such   communications are:                                       17   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,   HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE   HARM IF PUBLICLY DISCLOSED. 

 

       If to Seagen, addressed to:   Seattle Genetics, Inc.                                       21823 30th Drive S.E.                                       Bothell, WA 98021                                       Attention: Chief Executive Officer                                       E-mail: [ * ]         with copies to:               Seattle Genetics, Inc.                                      21823 30th Drive S.E.                                      Bothell, WA 98021                                      Attention: General Counsel                                      E-mail: [ * ]                                       Cooley LLP                                      101 California Street, 5th Floor                                       San Francisco, CA 94111-5800                                       Attention: Chadwick L. Mills                                       E-mail: [ * ]          If to Merck, addressed to:    Merck Sharp & Dohme Corp.                                       2000 Galloping Hill Road                                       Kenilworth, NJ 07033-1310                                       Attention: Office of Secretary                                       Email: [ * ]            With a copy to:               Merck Sharp & Dohme Corp.                                       2000 Galloping Hill Road                                       Mail Stop K-1-4161                                      Kenilworth, NJ  07033                                      Attention:  SVP, Corporate Development                9.10  Successors and Assigns.  This Agreement is binding upon and inures to the  benefit of the parties and their successors and assigns. Seagen will not assign this Agreement or  any rights or obligations hereunder without the prior written consent of Merck, and Merck will  not assign this Agreement or any rights or obligations hereunder without the prior written  consent of Seagen; provided, however, that Merck may assign this Agreement together with all  of the Shares it then owns (subject to Section 4.1(d) and Section 8.4) to any Affiliate of Merck   and any such assignee may assign the Agreement together with all of the Shares it then owns   (subject to Section 4.1(d) and Section 8.4) to Merck or any other Affiliate of Merck, in any such   case, without such consent, provided that the assignee agrees to assume Merck’s obligations   under Section 4 and Section 8 of this Agreement.          9.11  Third Party Beneficiaries.  This Agreement is intended for the benefit of the   parties hereto, their respective permitted successors and assigns, and is not for the benefit of, nor   may any provision hereof be enforced by, any other person.                                        18   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,   HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE   HARM IF PUBLICLY DISCLOSED. 

 

       9.12  Further Assurances.  Each party will do and perform, or cause to be done and   performed, all such further acts and things, and will execute and deliver all other agreements,   certificates, instruments and documents, as the other party may reasonably request in order to   carry out the intent and accomplish the purposes of this Agreement and the consummation of the   transactions contemplated hereby.            9.13  No Strict Construction.  The language used in this Agreement is deemed to be  the language chosen by the parties to express their mutual intent, and no rules of strict  construction will be applied against a party.         9.14  Equitable Relief.  Seagen recognizes that, if it fails to perform or discharge any  of its obligations under this Agreement, any remedy at will not be prohibited by any applicable  Law at the time of Closing may prove to be inadequate relief to Merck. Seagen therefore agrees  that Merck is entitled to seek temporary and permanent injunctive relief or specific performance   in any such case. Merck also recognizes that, if it fails to perform or discharge any of its   obligations under this Agreement, any remedy at will not be prohibited by any applicable Law at   the time of Closing may prove to be inadequate relief to Seagen.  Merck therefore agrees that   Seagen is entitled to seek temporary and permanent injunctive relief or specific performance in   any such case.          9.15  Expenses.  Seagen and Merck are each liable for, and will pay, their own   expenses incurred in connection with the negotiation, preparation, execution and delivery of this   Agreement, including attorneys’ and consultants’ fees and expenses.                                     [Remainder of page intentionally left blank.]                                                                   19   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,   HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE   HARM IF PUBLICLY DISCLOSED. 

 

         IN WITNESS WHEREOF, Merck and Seagen have caused this Agreement to be duly  executed as of the date first above written.                                                 MERCK SHARP & DOHME CORP.                                                                                                                     By:  /s/ Robert M. Davis                                                                                                                                 Name: Robert M. Davis                                                                                                                                    Its:  Executive Vice President, Global Services,                                       and Chief Financial Officer, Merck & Co., Inc.                                       and Authorized Officer, Merck Sharp & Dohme                                       Corp.                                                                                                                                                                                                         SEATTLE GENETICS, INC.                                                                                                                     By:  /s/ Clay B. Siegall                                                                                                                                 Name: Clay B. Siegall, Ph.D.                                                                                                                     Its:   President and Chief Executive Officer                                                                                                                                                                                                                                              [Signature page to Stock Purchase Agreement]                                        20  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED. 

 

                                     APPENDIX 1                                   DEFINED TERMS   “Affiliate” of an entity means any corporation, firm, partnership or other entity that directly or  indirectly through one or more intermediaries controls, is controlled by or is under common  control with it. An entity will be deemed to control another entity if it (i) owns, directly or  indirectly, at least 50% of the outstanding voting securities or capital stock (or such lesser  percentage that is the maximum allowed to be owned by a foreign corporation in a particular  jurisdiction) of such other entity, or has other comparable ownership interest with respect to any  entity other than a corporation; or (ii) has the power, whether pursuant to contract, ownership of  securities or otherwise, to direct the management and policies of the entity.   “Antitrust Clearance Date” means the date on which all of the HSR Conditions have been met.     “Antitrust Law” means the HSR Act, the Sherman Antitrust Act, as amended, the Clayton Act,  as amended, the Federal Trade Commission Act, as amended, and any other applicable Law  designed to prohibit, restrict or regulate actions or transactions having the purpose or effect of  monopolization, restraint of trade or harm to competition.   “Board” means the board of directors of Seagen.   “Business Day” means a day Monday through Friday on which banks are generally open for  business in the State of Washington.   “Change of Control” means, with respect to a party, any (i) direct or indirect acquisition or  license of all or substantially all of the assets of such party, (ii) direct or indirect acquisition by a  person, or group of persons acting in concert, of 50% or more of the voting equity interests of a  party, (iii) tender offer or exchange offer that results in any person, or group of persons acting in  concert, beneficially owning 50% or more of the voting equity interests of a party, or  (iv) merger, consolidation, other business combination or similar transaction involving a party,  pursuant to which any person owns all or substantially all of the consolidated assets, net revenues  or net income of a party, taken as a whole, or which results in the holders of the voting equity  interests of a party immediately prior to such merger, consolidation, business combination or  similar transaction ceasing to hold 50% or more of the combined voting power of the surviving,  purchasing or continuing entity immediately after such merger, consolidation, other business  combination or similar transaction.   “Closing Date” means the date on which the Closing actually occurs.   “Collaboration Agreements” means (i) that certain License and Collaboration Agreement, dated  as of September 13, 2020, by and between Seagen and Merck (the “Liv Agreement”) and (ii)  that certain License and Co-Development Agreement, dated as of September 13, 2020, by and  between Seagen and Merck and Company, Incorporated.   “Common Stock” means shares of Seagen’s common stock, par value $0.001 per share.                                        21  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED.   

 

   “DOJ” means the U.S. Department of Justice.     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and  regulations of the SEC thereunder.   “FDA” means the U.S. Food and Drug Administration or any successor entity.   “FTC” means the U.S. Federal Trade Commission.   “GAAP” means generally accepted accounting principles in the United States of America as  applied by Seagen.   “Governmental Authority” means any Federal, state, provincial, local, municipal, foreign or  other governmental or quasi-governmental authority, including any arbitrator and applicable  securities exchanges, or any department, minister, agency, commission, commissioner, board,  subdivision, bureau, agency, instrumentality, court or other tribunal of any of the foregoing.   “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.   “HSR Conditions” means that: (a) the waiting period (and any extensions thereof, including any  timing agreements entered into with a Governmental Authority under which the parties agree not  to close the transaction) under the HSR Act shall have expired or earlier been terminated; (b) no  judicial or administrative proceeding opposing consummation of all or any part of this  Agreement shall be pending; and (c) no Law, order or injunction (whether temporary,  preliminary or permanent) prohibiting consummation of the transactions contemplated by this  Agreement or any material portion hereof shall be in effect.    “Intellectual Property” shall mean trademarks, trade names, trade dress, service marks,  copyrights, and similar rights (including registrations and applications to register or renew the  registration of any of the foregoing), patents and patent applications, trade secrets, and any other  similar intellectual property rights.     “Intellectual Property License” shall mean any license, permit, authorization, approval, contract  or consent granted, issued by or with any person relating to the use of Intellectual Property.   “Law” means any federal, state, local or foreign constitution, treaty, law, statute, ordinance, rule,  regulation, interpretation, directive, policy, order, writ, decree, injunction, judgment, stay or  restraining order of any Governmental Authority, the terms of any permit, and any other ruling  or decision of, agreement with or by, or any other requirement of, any Governmental Authority.   “Material Adverse Effect” means any change, effect or circumstance, individually or in the  aggregate, (a) that is [ * ] materially adverse to [ * ], or (b) that materially impairs [ * ]; provided,  however, that, none of the following (alone or when aggregated any other effects), shall be  deemed to be a Material Adverse Effect, and none of the following (alone or when aggregated  with any other effects), shall be taken into account for purposes of clause (a) above:  (A) (1)  general market, economic or political conditions or (2) conditions ([ * ], in each case, including                                        22  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS  BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM  IF PUBLICLY DISCLOSED.   

 

     any [ * ], solely to the extent that [ * ]; (B) the execution, delivery or performance of this   Agreement, the Collaboration Agreements and the transactions contemplated hereby and  thereby; or (C) (1) [ * ] changes resulting from [ * ]; (2) any [ * ], with respect to [ * ]; (3) [ * ]   relating to [ * ]; or (4) changes in the [ * ], in and of themselves.   “Merck Violation” means (i) any untrue statement or alleged untrue statement of a material fact  contained in such registration statement or incorporated by reference therein, including any  preliminary prospectus or final prospectus contained therein or any amendments or supplements  thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated  therein, or necessary to make the statements therein not misleading, or (iii) any violation or  alleged violation by Merck of the Securities Act, the Exchange Act, any state securities law or  any rule or regulation promulgated under the Securities Act, the Exchange Act or any state  securities law in connection with the offering covered by such registration statement.   “Nasdaq” means The Nasdaq Stock Market.    “Preferred Stock” means shares of Seagen’s preferred stock, par value $0.001 per share.    “Registrable Securities” means the Shares (including any Common Stock that may be issued or   distributed in respect thereof by way of dividend or split or other distribution, recapitalization or   reclassification); provided, however, that the Shares shall cease to be Registrable Securities upon   the sale to the public either pursuant to a registration statement under the Securities Act or under   Rule 144 (in which case, only such Shares sold shall cease to be Registrable Securities).    “Registration Expenses” means any and all expenses incurred by Seagen in complying with the   provisions of  Section 8, including (i) all SEC and stock exchange or financial regulatory   authority registration and filing fees, (ii) all fees and expenses of complying with securities or   blue sky laws, (iii) all printing, messenger and delivery expenses, (iv) all fees and expenses   incurred in connection with the listing of the Registrable Securities on any securities exchange,   and (v) the fees and disbursements of counsel for Seagen and of its independent public   accountants.    “Rule 144” means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such   Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by   the SEC having substantially the same effect as such Rule.    “SEC” means the United States Securities and Exchange Commission or any successor entity.    “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of   the SEC thereunder.    “Selling Expenses” means all (i) underwriting discounts, commissions, or fees of underwriters,   selling brokers, dealer managers or similar securities industry professionals applicable to an   offering involving Registrable Securities registered pursuant to Section 8 and (ii) fees and   expenses of any legal counsel, accountants and any other advisors of Merck.                                          23   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED.    

 

     “Subsidiaries” means those subsidiaries of Seagen listed in Exhibit 21.1 to Seagen’s Annual   Report on Form 10-K for the year ended December 31, 2019.     “Violation” means (i) any untrue statement or alleged untrue statement of a material fact  contained in such registration statement or incorporated by reference therein, including any  preliminary prospectus or final prospectus contained therein or any amendments or supplements   thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated   therein, or necessary to make the statements therein not misleading, or (iii) any violation or   alleged violation by Seagen of the Securities Act, the Exchange Act, any state securities law or   any rule or regulation promulgated under the Securities Act, the Exchange Act or any state   securities law in connection with the offering covered by such registration statement.                                           24   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS   BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM   IF PUBLICLY DISCLOSED.    

 

                                      EXHIBIT A                                               [●], 2020    Merck Sharp & Dohme Corp.   2000 Galloping Hill Road    Kenilworth, NJ 07033-1310       Re:   Seattle Genetics, Inc.    Ladies and Gentlemen:         We have acted as counsel for Seattle Genetics, Inc., a Delaware corporation (the  “Company”), in connection with the sale of 5,000,000 shares of common stock, par value $0.001  per share (the “Common Stock”), of the Company (the “Shares”) pursuant to that certain Stock   Purchase Agreement, dated as of September 13, 2020 (the “Purchase Agreement”), by and   between the Company and Merck Sharp & Dohme Corp., a New Jersey corporation (the   “Purchaser”).  We are rendering this opinion to you pursuant to Section 1.3(b)(i)(2) of the  Purchase Agreement.  Capitalized terms used but not defined herein have the meanings given to   them in the Purchase Agreement.            In connection with this opinion, we have examined and relied upon the representations   and warranties as to factual matters contained in and made pursuant to the Purchase Agreement   by the various parties and originals or copies, certified to our satisfaction, of such records,   documents, certificates, opinions, memoranda and other instruments as in our judgment are   necessary or appropriate to enable us to render the opinion expressed below.  As to certain   factual matters, we have relied upon a certificate of an officer of the Company and have not   independently verified such matters.           In rendering this opinion, we have assumed, without investigation: (a) the authenticity of   all documents submitted to us as originals; (b) the conformity to originals of all documents   submitted to us as copies; (c) the accuracy, completeness and authenticity of certificates of   public officials; (d) the due authorization, execution and delivery of all documents (except the   due authorization, execution and delivery by the Company of the Purchase Agreement); (e) the   authenticity of all signatures; (f) that all individuals executing and delivering documents had the   legal capacity to so execute and deliver; (g) that the Purchase Agreement is a valid and binding   obligation, enforceable in accordance with its terms against all parties thereto other than the   Company; (h) that there are no extrinsic agreements or understandings among the parties to the   Purchase Agreement or to the Reviewed Agreements (as defined below) that would modify or   interpret the terms of any such agreements or the respective rights or obligations of the parties   thereunder; (i) the valid existence, good standing in the jurisdiction of organization and the   corporate or similar power to enter into, and perform the Purchase Agreement in accordance with   its terms, of each party to the Purchase Agreement (except that such assumption is not made as to   the Company); and (j) compliance by the Purchaser with any state or federal laws applicable to   the transactions contemplated by the Purchaser because of the nature of the Purchaser’s business.   [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,   HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE   HARM IF PUBLICLY DISCLOSED. 

 

           Our opinion is expressed only with respect to the federal laws of the United States of   America, the laws of the State of Washington and the General Corporation Law of the State of   Delaware (the “DGCL”).  We note that the parties to the Purchase Agreement have designated   the laws of the State of Delaware as the laws governing the Purchase Agreement.  Our opinion   below is premised upon the result that would obtain if a Washington court were to apply the   internal laws of the State of Washington (notwithstanding the designation of the laws of the State   of Delaware) to the interpretation and enforcement of the Purchase Agreement.  We express no   opinion as to whether the laws of any particular jurisdiction apply, and no opinion to the extent   that the laws of any jurisdiction other than those identified above are applicable to the subject   matter hereof.             The opinion set forth in this letter is based on the customary practice of lawyers who   regularly give, and lawyers who regularly advise opinion recipients regarding, opinions of the   kind involved, including customary practice as described in bar association reports. In rendering   the opinion below, we are opining only with respect to the specific legal issues expressly set   forth in the numbered paragraphs below, and we render no opinion, whether by implication,   inference or otherwise, as to any other matter or matters.          We express no opinion with respect to compliance with antifraud laws, rules or   regulations relating to securities or the offer and sale thereof; without limiting the generality of   the foregoing, we express no opinion as to (a) the accuracy and completeness of the information   provided by the Company or its representatives to the Purchaser in connection with the offer and   sale of the Shares pursuant to the Purchase Agreement or (b) the past, present or future fair   market value of any securities.          We express no opinion with respect to compliance with fiduciary duties by the   Company’s Board of Directors (“Board”) or stockholders or compliance with safe harbors for  disinterested Board or stockholder approvals; further, we express no opinion as to whether, and  have assumed that, the Purchase Agreement and the transactions contemplated thereby were fair  as to the Company within the meaning of Section 144 of the DGCL and all material facts as to  the interests of the Company’s officers and directors in the Purchase Agreement and the  transactions contemplated thereby have been disclosed to the Board as may be required to  comply with any applicable safe harbor for disinterested Board approvals.           We are not rendering any opinion or assurance as to: (i) any statute, rule, regulation,  ordinance, decree or decisional law relating to antitrust, banking, the environment, land use,  pensions, employee benefits, tax, fraudulent transfer, fraudulent conveyance, usury, bankruptcy,  insolvency, antiterrorism, money laundering, mail fraud, wire fraud, or other criminal activities,  patents, copyrights, trademarks and other intellectual property, health and safety, labor and  employment, national and local emergencies, or criminal and civil forfeiture, laws governing the   legality of investments for regulated entities, (ii) Regulations T, U or X of the Board of   Governors of the Federal Reserve System, (iii) the International Investment and Trade in   Services Survey Act or the implementing regulations thereof, (iv) the Defense Production Act of   1950, as amended, (vi) the Foreign Investment Risk Review Modernization Act of 2018,   including all implementing regulations thereof, (vi) any law, rule or regulation relating to   pharmaceutical products or (vii) local law.  Furthermore, we express no opinion with respect to  state securities or blue sky laws; the Investment Company Act of 1940, as amended (the     [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,   HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE   HARM IF PUBLICLY DISCLOSED. 

 

     “Investment Company Act”), except to the extent specifically set forth in paragraph 7 below); or   laws that place limitations on corporate distributions.          With regard to our opinion in paragraph 1 below with respect to the valid existence and   good standing of the Company and the Company’s qualification to do business as a foreign   corporation, we have relied solely upon certificates of the Secretaries of State of the indicated   jurisdictions as of a recent date.          With regard to our opinion in paragraph 3 below concerning defaults under and any   breaches of any agreement identified on Schedule A hereto (the “Reviewed Agreements”), we   have relied solely upon (i) inquiries of officers of the Company and (ii) an examination of the   Reviewed Agreements in the form provided to us by the Company.  We have made no further   investigation.  Further, with regard to our opinion in paragraph 3 below concerning Reviewed   Agreements, we express no opinion as to (a) financial covenants or similar provisions therein   requiring financial calculations or determinations to ascertain compliance, (b) provisions therein   relating to the occurrence of a “material adverse event” or words of similar import, (c) provisions   therein requiring comparisons between the relative rights of the parties thereto with the rights of   the Purchaser based upon factual determinations or requiring other factual determinations or the   knowledge of facts or other information that are not specifically set forth therein, or (d) any   statement or writing that may constitute parol evidence bearing on interpretation or construction   of the Reviewed Agreements. We have assumed that the Reviewed Agreements are enforceable   in accordance with their terms and that the Reviewed Agreements would be interpreted in   accordance with their plain meaning.           With regard to our opinion in paragraphs 3, 4 and 9 below, we have assumed (i) the   Purchaser is (a) a “qualified institutional buyer” within the meaning of Rule 144A under the   Securities Act of 1933, as amended (the “Securities Act”) or (b) an institutional “accredited   investor” within the meaning of Rule 501 or Regulation D under the Securities Act that is (1) a   sophisticated investor, experienced in investing in private equity transactions and capable of   evaluating investment risks independently, both in general and with regard to all transactions and   investment strategies involving a security or securities and (2) has exercised independent   judgment in evaluating its participation in the purchase of the Shares; (ii) that the Company has a   pre-existing, substantive relationship with the Purchaser that predates the commencement of the  offering of the Shares; (iii) the accuracy of the representations and warranties of the Company  and the Purchaser contained in the Purchase Agreement and the compliance by the Company and  the Purchaser with the covenants contained in the Purchase Agreement; and (iv) that the  Company, any person acting on behalf of the Company, has not offered or sold the Shares by any   form of “general solicitation or general advertising” within the meaning contemplated by Rule   502(c) of Regulation D promulgated under the Securities Act, including but not limited to in any   manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act   with respect to the offer and sale of the Shares. Moreover, our opinion in paragraphs 3, 4 and 9   below addresses the offer and sale of the Shares without regard to any offers or sales of other   securities occurring prior to or subsequent to the date hereof.         With regard to our opinion in paragraph 7 below, we have based our opinion, to the  extent we consider appropriate, on Rule 3a-8 under the Investment Company Act, and a      [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,   HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE   HARM IF PUBLICLY DISCLOSED. 

 

   certificate executed by an officer of the Company as to compliance with the requirements of  Rule 3a-8.  We have conducted no further investigation.         Our opinion is subject to the following additional qualifications and limitations:                  (a) Our opinion is subject to, and may be limited by, (1) applicable                    bankruptcy, reorganization, insolvency, moratorium, fraudulent                    conveyance, debtor and creditor, and similar laws which relate to or affect                    creditors’ rights generally, and (2) general principles of equity (including,                    without limitation, concepts of materiality, reasonableness, good faith and                    fair dealing) regardless of whether considered in a proceeding in equity or                    at law;                  (b) Our opinion is subject to the qualification that (1) the enforceability of                    provisions for indemnification or limitations on liability may be limited by                    applicable law and by public policy considerations, and (2) the availability                    of specific performance, an injunction or other equitable remedies is                    subject to the discretion of the court before which the request is brought;                    and                  (c) We express no opinion with respect to any provision of the Purchase                    Agreement that:  (1) relates to the subject matter jurisdiction of any federal                    court of the United States of America to adjudicate any controversy                    relating to the Purchase Agreement; (2) contains a waiver of an                    inconvenient forum; (3) provides for liquidated damages, buy-in damages,                    default interest, late charges, monetary penalties, prepayment or make-                   whole payments or other economic remedies; (4) relates to advance                    waivers of claims, defenses, rights granted by law, notice, opportunity for                    hearing, evidentiary requirements, statutes of limitations, trial by jury, or                    procedural rights; (5) restricts non-written modifications and waivers; (6)                    provides for the payment of legal and other professional fees where such                    payment is contrary to law or public policy; (7) relates to exclusivity,                    election or accumulation of rights or remedies or would permit the                    exercise of remedies without consideration of the materiality of the breach                    by the Company and the consequence of the breach to the party seeking                    enforcement; (8) authorizes or validates conclusive or discretionary                    determinations; (9) provides that provisions of the Purchase Agreement                    are severable to the extent an essential part of the agreed exchange is                    determined to be invalid and unenforceable; (10) provides that a party’s                    waiver of any breach of any provision of the Purchase Agreement is not to                    be construed as a waiver by such party of any prior breach of such                    provision or of any other provision of the Purchase Agreement; (11)                    provides any party the right to accelerate obligations or exercise remedies                    without notice; (12) provides for a right or remedy that may be held to be                    arbitrary or unconscionable, a penalty or otherwise in violation of public                    policy; (13) relates to choice of law, choice of forum, consent to                    jurisdiction (both as to personal jurisdiction and subject matter                [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,  HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE  HARM IF PUBLICLY DISCLOSED. 

 

                     jurisdiction) or service of process; (14) requires arbitration; (15) provides                    for a covenant not to compete; (16) relates to the voting of the Company’s                    capital stock; or (17) specifies provisions that must be waived in writing,                    to the extent that an oral agreement or implied agreement by trade practice                    or course of conduct has been created that modifies such provision.         On the basis of the foregoing, in reliance thereon and with the qualifications set forth  herein, we are of the opinion that:      1. The Company is a validly existing corporation and in good standing under the laws of the        State of Delaware and is qualified to do business as a foreign corporation in the State of        Washington.       2. The Company has the corporate power to own or lease, as the case may be, to operate its        properties and conduct its business as described in the Company’s Annual Report on        Form 10-K for the year ended December 31, 2019 and to execute, deliver and perform its        obligations under the Purchase Agreement.       3. The execution and delivery of the Purchase Agreement by the Company and the issuance        and sale of the Shares pursuant to the Purchase Agreement do not (a) constitute a default        under or a breach of any Reviewed Agreement, (b) violate any provision of the certificate        of incorporation or bylaws of the Company, or (c) violate the DGCL or any U.S. federal        or Washington state statute, law, rule or regulation that in our experience is typically        applicable to transactions of the nature contemplated by the Purchase Agreement, in each        case of (a) and (c) to the extent the violation of which would materially and adversely        affect the Company and its subsidiaries, taken as a whole.      4. All consents, approvals, authorizations, or orders of, and filings, registrations, and        qualifications with any U.S. federal or Washington state regulatory authority or        governmental body required for the issuance of the Shares has been made or obtained,        other than (a) filings required to be made under U.S. federal or state “blue sky” laws that        may be made properly after the issuance of the Shares or (b) as provided in Section 9.2 of        the Purchase Agreement.      5. The Purchase Agreement has been duly authorized, executed and delivered by the        Company and constitutes a valid and binding agreement of the Company enforceable        against the Company in accordance with its terms.      6. The Company is not, and, after giving effect to the issue and sale of the Shares, will not        be, required to be registered as an “investment company” under the Investment Company        Act.      7. The Shares have been duly authorized and upon issuance and delivery against payment        therefore in accordance with the terms of the Purchase Agreement, will be validly issued,       fully paid and nonassessable.     8. The holders of outstanding shares of capital stock of the Company are not entitled to        preemptive rights, rights of first refusal, rights of first offer or other similar rights to  [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,  HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE  HARM IF PUBLICLY DISCLOSED. 

 

           subscribe for the Shares arising under the DGCL, the certificate of incorporation or         bylaws of the Company or any Reviewed Agreement.       9. The offer and sale of the Shares pursuant to the Purchase Agreement are exempt from the         registration requirements of Section 5 of the Securities Act.            This opinion is furnished only to you in your capacity as the Purchaser of the Shares   under the Purchase Agreement and is solely for your benefit in connection with the transactions   referenced in the first paragraph of this letter. This opinion may not be relied upon by you for   any other purpose, or furnished to, assigned to, quoted to, or relied upon by any other person,   firm or other entity for any purpose (including any person, firm or other entity that acquires   Shares from you) without our prior written consent, which may be granted or withheld in our   sole discretion.           This opinion is limited to the matters expressly set forth in this letter, and no opinion has   been implied, or may be inferred, beyond the matters expressly stated.  This opinion speaks only   as to law and facts in effect or existing as of the date hereof and we undertake no obligation or   responsibility to update or supplement this opinion to reflect any facts or circumstances that may   hereafter come to our attention or any changes in any law that may hereafter occur.          Very truly yours,   Cooley LLP     By:                                                                          [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,   HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE   HARM IF PUBLICLY DISCLOSED. 

 

                                    SCHEDULE  A                                                                      REVIEWED AGREEMENTS   Investor Rights Agreement dated July 8, 2003 among Seattle Genetics, Inc. and certain of its  stockholders.    Registration Rights Agreement, dated September 10, 2015, by and between Seattle Genetics, Inc.  and the persons listed on Schedule A attached thereto.          Lease Agreement dated December 1, 2000 between Seattle Genetics, Inc. and WCM 132-302,  LLC.          First Amendment to Lease dated May 28, 2003 between Seattle Genetics, Inc. and B&N 141- 302, LLC.    Second Amendment to Lease dated July 1, 2008 between Seattle Genetics, Inc. and B&N 141- 302, LLC.    Third Amendment to Lease dated May 9, 2011 between Seattle Genetics, Inc. and B&N 141- 302, LLC.    Fourth Amendment to Lease dated October 24, 2017 between Seattle Genetics, Inc. and SNH  Medical Office Properties Trust, as successor in interest to B&N 141-302, LLC.    Office Lease dated May 9, 2011 between Seattle Genetics, Inc. and WCM Highlands II, LLC.          First Amendment to Office Lease dated October 24, 2017 between Seattle Genetics, Inc. and  SNH Medical Office Properties Trust, as successor in interest to WCM Highlands II, LLC.                                                                     [ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,  HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE  HARM IF PUBLICLY DISCLOSED.

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