Exhibit 10.2

 

 

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PDL BioPharma, Inc.
1400 Seaport Blvd.
Redwood City, CA 94063

 

 

 

 

May 2, 2008

 

 

 

 

Mark McCamish

 

                RE: RETENTION BONUSES AND SEVERANCE BENEFITS

 

Dear Mark:

 

We view your contributions as an officer of PDL BioPharma, Inc. (“PDL”) as
important to our efforts to transition to a streamlined biotech company and our
long-term success.  Acknowledging this, the Compensation Committee of the Board
of Directors of PDL recently approved retention bonuses and certain severance
benefits for you.

 

Retention Bonuses

 

Subject to your continued employment in good standing with PDL through the
applicable bonus dates (each, a “Bonus Date”) and the terms and conditions of
this letter agreement (this “Letter Agreement”), you will earn, and PDL will pay
you, the “Retention Bonuses” set forth below:

 

·                  September 30, 2008 - $69,000.00

·                  June 30, 2009 - $69,000.00

·                  December 31, 2009 - $92,000.00

 

Subject to the terms and conditions of this Letter Agreement, each Retention
Bonus would be paid with the next regular paycheck following the applicable
Bonus Date.

 

Notwithstanding the foregoing or anything else in this Letter Agreement, if
prior to a Bonus Date PDL terminates your employment without “Cause” (as that
term is defined in PDL’s 2005 Equity Incentive Plan (the “2005 Plan”)), then on
the date of such employment termination you would, subject to the last sentence
in this paragraph, earn a prorated amount of the portion of the next Retention
Bonus that you otherwise would have earned.  If such employment termination
occurs before September 30, 2008, the foregoing proration would be based on the
number of months between March 4, 2008 and such termination date, rounded up to
the nearest whole month.  Otherwise, such proration would be based on the number
of months between the last Bonus Date and the date of such termination, rounded
up to the

 

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nearest whole month.  Any portion of your Retention Bonuses that would be
payable pursuant to this paragraph would be earned provided that you sign, and
do not revoke, PDL’s form of release agreement (“Release Agreement”), and we
would pay such portion of your Retention Bonus promptly after the effective date
of your Release Agreement and in any event, provided that your Release Agreement
has become effective, within 60 days after your termination date.

 

Notwithstanding the terms of PDL’s Executive Retention and Severance Plan (the
“ERSP”) or the preceding paragraph, should your employment be terminated without
Cause following a “Change in Control” (as that term is defined in and determined
under PDL’s 2005 Equity Incentive Plan) and prior to December 31, 2009 and
provided you sign, and do not revoke, the Release Agreement, we would pay you
the full amount of your Retention Bonuses that you have not yet earned promptly
after the effective date of your Release Agreement and, in any event, provided
that your Release Agreement has become effective, within 60 days of the date of
your employment termination.

 

Notwithstanding the foregoing or anything else in this Letter Agreement, you
agree that you will not earn any portion of your Retention Bonuses pursuant to
either of the two preceding paragraphs and this Letter Agreement will
immediately terminate if PDL terminates your employment in connection with the
transfer of PDL’s biotechnology-related assets to a wholly owned subsidiary of
PDL (“NewBio”), provided, that NewBio offers you a comparable employment
position and agrees to provide you a retention bonus (or retention bonuses if
such employment termination occurs before June 30, 2009) on terms and conditions
consistent with this Letter Agreement.

 

If PDL terminates your employment for Cause or you voluntarily terminate your
employment, then you would not receive any portion of your Retention Bonuses
that you have not earned.

 

You agree that, subject to the terms of the ERSP, none of your Retention Bonuses
would be “grossed up” and will be subject to all applicable payroll withholdings
and deductions.

 

Severance Benefit Prior to a Change in Control

 

Subject to the last paragraph under this heading, if prior to a Change in
Control (i) we terminate your employment without Cause; (ii) you remain in good
standing through your employment termination date; and (iii) you sign and
deliver to PDL the Release Agreement within 21 days of your receipt of the
Release Agreement and you do not revoke the Release Agreement, you would be
eligible for the following severance package:

 

·                  Severance pay (payable in a lump sum and subject to tax
withholding) equal to (A) one year of your annual base salary plus (B) 100% of
your target annual bonus (subject to tax withholding and without giving effect
to any company performance or other multiplier);

·                  12 months company-paid COBRA benefits (provided you timely
elect COBRA coverage);

·                  Six months of outplacement services; and

 

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·                  Acceleration of the vesting of 50% of the total number of
shares originally subject to each of your stock options (i.e., two years of
vesting).

 

The foregoing severance payment would be paid in a lump sum within 30 days
following the date of your employment termination, provided that your Release
Agreement has become effective in accordance with its terms prior to such 30th
day. The option acceleration set forth above would be effective on the date your
Release Agreement has become effective.

 

For clarity, the foregoing severance benefits and option acceleration are
intended to apply to your separation from service with PDL under circumstances
in which the benefits under the ERSP would not be available to you, and in all
cases, you are entitled only to either the severance and option acceleration
benefits described above, or, if applicable, those under the ERSP.

 

Notwithstanding the foregoing or anything else in this Letter Agreement, you
agree that you will not earn any severance benefits and option acceleration
under this Letter Agreement and this Letter Agreement will immediately terminate
if PDL terminates your employment in connection with the transfer of PDL’s
biotechnology-related assets to NewBio, provided, that NewBio offers you a
comparable employment position and agrees to provide you severance benefits and
option acceleration on terms and conditions consistent with this Letter
Agreement.

 

Additional Provisions

 

Notwithstanding anything contained in this Letter Agreement to the contrary, no
amount payable pursuant to this Letter Agreement on account of your termination
of employment which constitutes a “deferral of compensation” within the meaning
of the Treasury Regulations issued pursuant to Section 409A of the Internal
Revenue Code (the “Section 409A Regulations”) will be paid unless and until you
have incurred a “separation from service” within the meaning of the Section 409A
Regulations.  Furthermore, if you are a “specified employee” within the meaning
of the Section 409A Regulations as of the date of your separation from service,
no amount that constitutes a deferral of compensation which is payable on
account of your separation from service will paid to you before the date (the
“Delayed Payment Date”) which is first day of the seventh month after the date
of your separation from service or, if earlier, the date of your death following
such separation from service.  All such amounts that would, but for this
paragraph, become payable prior to the Delayed Payment Date will be accumulated
and paid on the Delayed Payment Date.

 

PDL intends that income provided to you pursuant to this Letter Agreement will
not be subject to taxation under Section 409A of the Internal Revenue Code.  The
provisions of this Letter Agreement shall be interpreted and construed in favor
of satisfying any applicable requirements of Section 409A.  However, PDL does
not guarantee any particular tax effect for income provided to you pursuant to
this letter.  In any event, except for PDL’s responsibility to withhold
applicable income and employment taxes from compensation paid

 

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or provided to you, PDL will not be responsible for the payment of any
applicable taxes incurred by you on compensation paid or provided to you
pursuant to this Letter Agreement.

 

Except as otherwise provided in this Letter Agreement, all of the other terms
and conditions of your employment relationship with PDL will continue to apply. 
This Letter Agreement is not intended change the “at will” nature of your
employment with PDL.  You would continue to be free to resign at any time, just
as PDL would be free to terminate your employment at any time, with or without
cause.

 

The terms of this Letter Agreement, when accepted by you, supersede, with the
exception of the ERSP, all prior arrangements, whether written or oral, and
understandings regarding the subject matter of this Letter Agreement and, except
as provided in the ERSP, shall be the exclusive agreement for the determination
of any payments and benefits you are due upon the events described in this
letter agreement.

 

On behalf of the Compensation Committee and the Board of Directors I would like
to thank you for your many contributions and for your continued support and
dedication to PDL.

 

To indicate your acceptance of the terms of this Letter Agreement, please sign
and date this Letter Agreement in the space provided below and return it to Gwen
Carscadden, Director of Human Resources by May 16, 2008.

 

Sincerely,

 

 

 

L. Patrick Gage, Ph.D.

Interim Chief Executive Officer

 

 

AGREED AND ACKNOWLEDGED:

 

 

 

 

 

/s/ Mark McCamish

 

Mark McCamish

 

Senior Vice President and Chief Medical Officer

 

 

 

May 14, 2008

 

Date

 

 

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