Exhibit 10.1

PROTEIN DESIGN LABS, INC.

2002 OUTSIDE DIRECTORS Stock OPTION PLAN

 

Establishment, Purpose and Term of Plan
.
Establishment
. The Protein Design Labs, Inc. 2002 Outside Directors Stock Option Plan (the
"Plan"
) is hereby established effective as of the date of its approval by the
stockholders of the Company, which date is ____________, 2002 (the
"Effective Date"
)
. Purpose
. The purpose of the Plan is to advance the interests of the Company and its
stockholders by providing an incentive to attract, retain and reward persons
performing services as Outside Directors of the Company and by motivating such
persons to contribute to the goals of the Company.
Term of Plan
. The Plan shall continue in effect until the earlier of its termination by the
Board or the date on which all of the shares of Stock available for issuance
under the Plan have been issued and all restrictions on such shares under the
terms of the Plan and the agreements evidencing Options granted under the Plan
have lapsed.

Definitions and Construction
.
Definitions
. Whenever used herein, the following terms shall have their respective meanings
set forth below:
"Board"
means the Board of Directors of the Company. If one or more Committees have been
appointed by the Board to administer the Plan,
"Board"
also means such Committee(s).
"Change in Control"
means the occurrence of any of the following:
 i.   any "person" (as such term is used in Sections 13(d) and 14(d) of the
      Exchange Act, other than a trustee or other fiduciary holding securities
      of the Company under an employee benefit plan of the Company, becomes the
      "beneficial owner" (as defined in Rule 13d-3 promulgated under the
      Exchange Act), directly or indirectly, of securities of the Company
      representing forty percent (40%) or more of (i) the outstanding shares of
      common stock of the Company or (ii) the total combined voting power of the
      Company's then-outstanding securities entitled to vote generally in the
      election of directors;
 ii.  the Company is party to a merger or consolidation which results in the
      holders of the voting securities of the Company outstanding immediately
      prior thereto failing to retain immediately after such merger or
      consolidation direct or indirect beneficial ownership of more than fifty
      percent (50%) of the total combined voting power of the securities
      entitled to vote generally in the election of directors of the Company or
      the surviving entity outstanding immediately after such merger or
      consolidation; or
 iii. the sale or disposition of all or substantially all of the Company's
      assets or consummation of any transaction having similar effect (other
      than a sale or disposition to one or more subsidiaries of the Company).

"Code"
means the Internal Revenue Code of 1986, as amended, and any applicable
regulations promulgated thereunder.
"Committee"
means the committee of the Board, if any, duly appointed to administer the Plan
and having such powers as shall be specified by the Board. Unless the powers of
the Committee have been specifically limited, the Committee shall have all of
the powers of the Board granted herein, including, without limitation, the power
to amend or terminate the Plan at any time, subject to the terms of the Plan and
any applicable limitations imposed by law.
"Company"
means Protein Design Labs, Inc., a Delaware corporation, or any successor
corporation thereto.
"Director"
means a member of the Board.
"Disability"
means the permanent and total disability of the Optionee within the meaning of
Section 22(e)(3) of the Code.
"Employee"
means any person treated as an employee in the records of the Company or any
Parent Corporation or Subsidiary Corporation.
"Exchange Act"
means the Securities Exchange Act of 1934, as amended.
"Fair Market Value"
means, as of any date, the value of a share of Stock or other property as
determined by the Board, in its discretion, subject to the following:
 i.  If, on such date, the Stock is listed on a national or regional securities
     exchange or market system, the Fair Market Value of a share of Stock shall
     be the closing sale price of a share of Stock (or the mean of the closing
     bid and asked prices of a share of Stock if the Stock is so quoted instead)
     as quoted on the Nasdaq National Market, The Nasdaq SmallCap Market or such
     other national or regional securities exchange or market system
     constituting the primary market for the Stock, as reported in the Wall
     Street Journal or such other source as the Board deems reliable. If the
     relevant date does not fall on a day on which the Stock has traded on such
     securities exchange or market system, the date on which the Fair Market
     Value shall be established shall be the last day on which the Stock was so
     traded prior to the relevant date, or such other appropriate day as shall
     be determined by the Board, in its discretion.
 ii. If, on such date, the Stock is not listed on a national or regional
     securities exchange or market system, the Fair Market Value of a share of
     Stock shall be as determined by the Board without regard to any restriction
     other than a restriction which, by its terms, will never lapse.

"Nonstatutory Stock Option"
means an Option not intended to be an incentive stock option within the meaning
of Section 422(b) of the Code.
"Option"
means a right to purchase Stock (subject to adjustment as provided in
Section 4.2) pursuant to the terms and conditions of the Plan. All Options shall
be Nonstatutory Stock Options.
"Option Agreement"
means a written agreement between the Company and an Optionee setting forth the
terms, conditions and restrictions of the Option granted to the Optionee and any
shares of Stock acquired upon the exercise thereof.
"Optionee"
means a person who has been granted one or more Options.
"Outside Director"
means a Director who is not an Employee.
"Parent Corporation"
means any present or future "parent corporation" of the Company, as defined in
Section 424(e) of the Code.
"Predecessor Plan"
means the Protein Design Labs, Inc. Outside Directors Stock Option Plan approved
by the stockholders of the Company on October 20, 1992 and subsequently amended
from time to time.
"Predecessor Plan Option"
means an option granted pursuant to the Predecessor Plan.
"Predecessor Plan Termination Date"
means the earlier of October 20, 2002 or the date on which the Predecessor Plan
is terminated by the Board.
"Prior Employee Option"
means an outstanding Option previously granted by the Company to an individual
who, at the time of such grant, was an Employee and who, subsequent to such
grant, becomes an Outside Director.
"Prior Option"
means an outstanding Option, but in all cases excluding Prior Employee Options,
previously granted by the Company to a Director in his or her capacity as such
pursuant to any of the Company's stock option plans, other than the Predecessor
Plan.
"Securities Act"
means the Securities Act of 1933, as amended.
"Service"
means an Optionee's service with the Company as a Director. An Optionee's
Service shall be deemed to have terminated if the Optionee ceases to be a
Director, even if the Optionee continues or commences to render service to the
Company or to a Parent Corporation or Subsidiary Corporation in a capacity other
than as a Director. An Optionee's Service with the Company shall not be deemed
to have terminated if the Optionee takes any bona fide leave of absence approved
by the Company. Notwithstanding the foregoing, unless otherwise required by law,
the Company may provide that an approved leave of absence shall not be treated
as Service for purposes of determining vesting under the Optionee's Option
Agreement. Subject to the foregoing, the Company, in its discretion, shall
determine whether an Optionee's Service has terminated and the effective date of
such termination.
"Stock"
means the common stock of the Company, as adjusted from time to time in
accordance with Section 4.2.
"Subsidiary Corporation"
means any present or future "subsidiary corporation" of the Company, as defined
in Section 424(f) of the Code.

Construction
. Captions and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of the Plan. Except when
otherwise indicated by the context, the singular shall include the plural and
the plural shall include the singular. Use of the term "or" is not intended to
be exclusive, unless the context clearly requires otherwise.

Administration.
 1. Administration by the Board.

The Plan shall be administered by the Board. All questions of interpretation of
the Plan or of any Option shall be determined by the Board, and such
determinations shall be final and binding upon all persons having an interest in
the Plan or such Option.
Authority of Officer.
The Chief Executive Officer shall have the authority to act on behalf of the
Company with respect to any matter, right, obligation, determination or election
which is the responsibility of or which is allocated to the Company herein.

Shares Subject to Plan.
 1. Maximum Number of Shares Issuable.

Subject to adjustment as provided in Section 4.2, the maximum aggregate number
of shares of Stock that may be issued under the Plan shall be the sum of
(a) 240,000, (b) the number of shares that remain available for grant pursuant
to the Predecessor Plan on the Predecessor Plan Termination Date and (c) the
number of unissued shares subject to each Predecessor Plan Option outstanding on
the Predecessor Plan Termination Date which for any reason expires or is
terminated or canceled. Such shares shall consist of authorized but unissued or
reacquired shares of Stock or any combination thereof. If an outstanding Option
for any reason expires or is terminated or canceled or if unvested shares of
Stock are acquired upon the exercise of an Option subject to a Company
repurchase option and are repurchased by the Company, the shares of Stock
allocable to the unexercised portion of such Option or such unvested repurchased
shares of Stock shall again be available for issuance under the Plan.
Adjustments for Changes in Capital Structure.
In the event of any stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification or similar change in the capital
structure of the Company, appropriate adjustments shall be made in the number
and class of shares subject to the Plan, to the grant of Options pursuant to
Section 6.1, to the rates of vesting pursuant to Section 6.3 and to any
outstanding Options, and in the exercise price per share of any outstanding
Options. If a majority of the shares which are of the same class as the shares
that are subject to outstanding Options are exchanged for, converted into, or
otherwise become shares of another corporation (the
"New Shares"
), the Board may unilaterally amend the outstanding Options to provide that such
Options are exercisable for New Shares. In the event of any such amendment, the
number of shares subject to, and the exercise price per share of, the
outstanding Options shall be adjusted in a fair and equitable manner as
determined by the Board, in its discretion. Notwithstanding the foregoing, any
fractional share resulting from an adjustment pursuant to this Section 4.2 shall
be rounded down to the nearest whole number, and in no event may the exercise
price of any Option be decreased to an amount less than the par value, if any,
of the stock subject to the Option. The adjustments determined by the Board
pursuant to this Section 4.2 shall be final and binding.

Eligibility.

Options may be granted only to those persons who, at the time of grant, are
serving as Outside Directors.

Terms and Conditions of Options.

Options shall be evidenced by Option Agreements specifying the number of shares
of Stock covered thereby, in such form as the Board shall from time to time
establish. No Option or purported Option shall be a valid and binding obligation
of the Company unless evidenced by a fully executed Option Agreement. Option
Agreements may incorporate all or any of the terms of the Plan by reference and
shall comply with and be subject to the following terms and conditions:

Automatic Grant.
Subject to the execution by an Outside Director of an appropriate Option
Agreement, Options shall be granted automatically and without further action of
the Board, as follows:
Initial Option.
Each person who first becomes an Outside Director on or after the Effective Date
(whether upon initial election or appointment to the Board (including following
a break in service as a Director) or upon ceasing to be an Employee while
remaining or simultaneously becoming a Director) shall be granted on the date
such person first becomes an Outside Director an Option to purchase twelve
thousand (12,000) shares of Stock (an
"Initial Option"
), except as follows:
 i.  An Outside Director who holds Prior Employee Option(s) that will continue
     to vest on the basis of such individual's Service as an Outside Director
     shall be granted an Initial Option only upon the date that such Prior
     Employee Option(s) cease to vest.
 ii. Each person who was an Outside Director prior to the Effective Date, and
     who does not have a break in Service as an Outside Director subsequent to
     the Effective Date, shall not be granted an Initial Option.

Annual Option.
Each Outside Director shall be granted on the date of each annual meeting of the
stockholders of the Company which occurs on or after the Effective Date (an
"Annual Meeting"
) immediately following which such person remains an Outside Director an Option
to purchase twelve thousand (12,000) shares of Stock (an
"Annual Option"
); provided, however, that no Annual Option shall be granted to an Outside
Director granted an Initial Option on the same Annual Meeting date, and subject
to the following:
 i.   An Outside Director who holds Prior Employee Option(s) that continue to
      vest on the basis of such individual's Service as an Outside Director
      shall be granted his or her first Annual Option on the date of the Annual
      Meeting immediately following the grant to such individual of an Initial
      Option, as described in Section 6.1(a)(i). The number of shares subject to
      such Annual Option shall be determined in accordance with Section
      6.1(b)(ii).
 ii.  An Annual Option granted to an Outside Director who was granted an Initial
      Option prior to the date of the current Annual Meeting and subsequent to
      the date of the preceding Annual Meeting shall be reduced by a number of
      shares equal to one thousand (1,000) multiplied by the number of months
      (rounded to the nearest whole number) determined by dividing the number of
      days between the date of the preceding Annual Meeting and the date of
      grant of an Initial Option to such Outside Director by thirty (30).
 iii. The first Annual Option granted to an Outside Director who holds
      Predecessor Plan Option(s) or Prior Option(s) shall be granted on the date
      of the Annual Meeting immediately preceding the date on which the
      Predecessor Plan Option(s) or the Prior Option(s), as applicable, are
      scheduled to cease vesting. Such Annual Option shall be reduced by a
      number of shares equal to one thousand (1,000) multiplied by the number of
      months (rounded to the nearest whole number) determined by dividing the
      number of days between the date of grant of such Annual Option and the
      date on which the Predecessor Plan Option(s) or the Prior Option(s), as
      applicable, are scheduled to cease vesting by thirty (30). Notwithstanding
      anything herein to the contrary, if the number of shares subject to such
      Annual Option would be reduced to zero (0) pursuant to the preceding
      sentence, then the first Annual Option shall be granted to such Outside
      Director at the Annual Meeting immediately following the date on which the
      Predecessor Plan Option(s) or the Prior Option(s), as applicable, cease to
      vest, and the number of shares of Stock subject to such Annual Option
      shall be twelve thousand (12,000).

Right to Decline Option.
Notwithstanding the foregoing, any person may elect not to receive an Option by
delivering written notice of such election to the Board no later than the day
prior to the date such Option would otherwise be granted. A person so declining
an Option shall receive no payment or other consideration in lieu of such
declined Option. A person who has declined an Option may revoke such election by
delivering written notice of such revocation to the Board no later than the day
prior to the date such Option would be granted pursuant to Section 6.1(a) or
(b), as the case may be.

Exercise Price.
The exercise price for each Option shall be the Fair Market Value of a share of
Stock on the date of grant of an Option.
Exercisability and Term of Options.
Except as otherwise provided in the Plan or in the Option Agreement evidencing
an Option and provided that the Optionee's Service has not terminated prior to
the relevant date, the Options shall vest and become exercisable as follows:
 a. Each Initial Option and each Annual Option (other than an Annual Option
    described in Section 6.1(b)(i), (ii) or (iii)) shall vest and become
    exercisable at the rate of one thousand (1,000) shares for each full month
    of the Optionee's continuous Service from the date of grant until the Option
    is fully vested.
 b. Each Annual Option described in Section 6.1(b)(i) or (ii) shall vest and
    become exercisable at the rate of one thousand (1,000) shares for each full
    month of the Optionee's continuous Service from the date on which the
    Optionee's Initial Option vests in full until such Annual Option is fully
    vested.
 c. Each Annual Option described in Section 6.1(b)(iii) shall vest and become
    exercisable at the rate of one thousand (1,000) shares for each full month
    of the Optionee's continuous Service from the date on which the Optionee's
    Predecessor Plan Option(s) or Prior Option(s), as applicable, cease to vest
    until such Annual Option is fully vested.

Unless earlier terminated in accordance with the terms of the Plan or the Option
Agreement evidencing an Option, each Option shall terminate and cease to be
exercisable ten (10) years after the date of grant of the Option.

Payment of Exercise Price.
 a. Forms of Consideration Authorized.

Except as otherwise provided below, payment of the exercise price for the number
of shares of Stock being purchased pursuant to any Option shall be made (i) in
cash, by check or cash equivalent, (ii) by tender to the Company, or attestation
to the ownership, of shares of Stock owned by the Optionee having a Fair Market
Value not less than the exercise price, (iii) by the assignment of the proceeds
of a sale or loan with respect to some or all of the shares being acquired upon
the exercise of the Option (including, without limitation, through an exercise
complying with the provisions of Regulation T as promulgated from time to time
by the Board of Governors of the Federal Reserve System) (a
"Cashless Exercise"
), or (iv) by any combination thereof.
Limitations on Forms of Consideration. Tender of Stock
. Notwithstanding the foregoing, an Option may not be exercised by tender to the
Company, or attestation to the ownership, of shares of Stock to the extent such
tender or attestation would constitute a violation of the provisions of any
applicable law, regulation or agreement restricting the redemption of the shares
of Stock. Unless otherwise provided by the Board, an Option may not be exercised
by tender to the Company, or attestation to the ownership, of shares of Stock
unless such shares either have been owned by the Optionee for more than six (6)
months (and not used for another option exercise by attestation during such
period) or were not acquired, directly or indirectly, from the Company.
Cashless Exercise.
The Company reserves, at any and all times, the right, in the Company's sole and
absolute discretion, to establish, decline to approve or terminate any program
or procedures for the exercise of Options by means of a Cashless Exercise.

Tax Withholding. The Company shall have the right, but not the obligation, to
deduct from the shares of Stock issuable upon the exercise of an Option, or to
accept from the Optionee the tender of, a number of whole shares of Stock having
a Fair Market Value equal to all or any part of the federal, state, local and
foreign taxes, if any, required by law to be withheld by the Company with
respect to such Option or the shares of Stock acquired upon the exercise
thereof. Alternatively or in addition, in its discretion, the Company shall have
the right to require the Optionee, by cash payment or otherwise, including by
means of a Cashless Exercise, to make adequate provision for any such tax
withholding obligations of the Company arising in connection with the Option or
the shares of Stock acquired upon the exercise thereof. The Fair Market Value of
any shares of Stock withheld or tendered to satisfy any such tax withholding
obligations shall not exceed the amount determined by the applicable minimum
statutory withholding rates. The Company shall have no obligation to deliver
shares of Stock until the Company's tax withholding obligations have been
satisfied by the Optionee. Effect of Termination of Service.
Option Exercisability
.

Subject to earlier termination of the Option as otherwise provided herein and
unless otherwise provided by the Board in the grant of an Option and set forth
in the Option Agreement, an Option shall be exercisable after an Optionee's
termination of Service as follows:
Disability.
If the Optionee's Service with the Company is terminated because of the
Disability of the Optionee, the Option, to the extent unexercised and
exercisable on the date on which the Optionee's Service terminated, may be
exercised by the Optionee (or the Optionee's guardian or legal representative)
at any time prior to the expiration of twelve (12) months after the date on
which the Optionee's Service terminated, but in any event no later than the date
of expiration of the Option's term as set forth in the Option Agreement
evidencing such Option (the
"Option Expiration Date"
).
Death.
If the Optionee's Service with the Company is terminated because of the death of
the Optionee, the Option, to the extent unexercised and exercisable on the date
on which the Optionee's Service terminated, may be exercised by the Optionee's
legal representative or other person who acquired the right to exercise the
Option by reason of the Optionee's death at any time prior to the expiration of
twelve (12) months after the date on which the Optionee's Service terminated,
provided that such period shall be extended by the number of days between the
date on which the Optionee's Service terminated and the date on which the
executor, personal representative or administrator of the Optionee's estate
determines the person who acquired the right to exercise the Option by reason of
the Optionee's death. Notwithstanding the foregoing, in no event shall the
option be exercisable following the Option Expiration Date. The Optionee's
Service shall be deemed to have terminated on account of death if the Optionee
dies within three (3) months after the Optionee's termination of Service.
Other Termination of Service.
If the Optionee's Service with the Company terminates for any reason, except
Disability or death, the Option, to the extent unexercised and exercisable by
the Optionee on the date on which the Optionee's Service terminated, may be
exercised by the Optionee within six (6) months (or such longer period of time
as determined by the Board, in its discretion) after the date on which the
Optionee's Service terminated, but in any event no later than the Option
Expiration Date.

Extension if Exercise Prevented by Law. Notwithstanding the foregoing, if the
exercise of an Option within the applicable time periods set forth in
Section 6.6(a) is prevented by the provisions of Section 10 below, the Option
shall remain exercisable until ninety (90) days after the date the Optionee is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date. Extension if Optionee Subject to
Section 16(b). Notwithstanding the foregoing, if a sale within the applicable
time periods set forth in Section 6.6(a) of shares acquired upon the exercise of
the Option could subject the Optionee to suit under Section 16(b) of the
Exchange Act, the Option shall remain exercisable until the earliest to occur of
(i) the thirtieth (30th) day following the date on which a sale of such shares
by the Optionee would no longer be subject to such suit, (ii) the two hundred
tenth (210th) day after the Optionee's termination of Service, or (iii) the
Option Expiration Date. Standard Forms of Option Agreement.
Outside Director Stock Option Agreement.
Each Option shall comply with and be subject to the terms and conditions set
forth in the appropriate form of Option Agreement approved by the Board
concurrently with its adoption of the Plan and as amended from time to time.
Authority to Vary Terms.
The Board shall have the authority from time to time to vary the terms of the
standard form of Option Agreement described in this Section 7 either in
connection with the grant or amendment of an individual Option or in connection
with the authorization of a new standard form or forms; provided, however, that
the terms and conditions of any such new, revised or amended standard form or
forms of Option Agreement are not inconsistent with the terms of the Plan.

Change in Control.

In the event of a Change in Control, any unexercisable or unvested portions of
outstanding Options and any shares acquired upon the exercise thereof shall be
immediately exercisable and vested in full as of the date ten (10) days prior to
the date of the Change in Control. The exercise or vesting of any Option and any
shares acquired upon the exercise thereof that was permissible solely by reason
of this Section 8 shall be conditioned upon the consummation of the Change in
Control. In addition, the surviving, continuing, successor, or purchasing
corporation or parent corporation thereof, as the case may be (the "Acquiring
Corporation"), may either assume the Company's rights and obligations under
outstanding Options or substitute for outstanding Options substantially
equivalent options for the Acquiring Corporation's stock. Any Options which are
neither assumed or substituted for by the Acquiring Corporation in connection
with the Change in Control nor exercised as of the date of the Change in Control
shall terminate and cease to be outstanding effective as of the date of the
Change in Control. Notwithstanding the foregoing, if the corporation the stock
of which is subject to the outstanding Options immediately prior to a Change in
Control described in Section 2.1(b)(i) is the surviving or continuing
corporation and immediately after such Change in Control less than fifty percent
(50%) of the total combined voting power of its voting stock is held by another
corporation or by other corporations that are members of an affiliated group
within the meaning of Section 1504(a) of the Code without regard to the
provisions of Section 1504(b) of the Code, the outstanding Options shall not
terminate unless the Board otherwise provides in its discretion.

Transferability of Options.

During the lifetime of the Optionee, an Option shall be exercisable only by the
Optionee or the Optionee's guardian or legal representative. No Option shall be
assignable or transferable by the Optionee, except by will or by the laws of
descent and distribution. Notwithstanding the foregoing, an Option shall be
assignable or transferable to the extent permitted by the Board and set forth in
the Option Agreement evidencing such Option.

Compliance with Securities Law.

The grant of Options and the issuance of shares of Stock upon exercise of
Options shall be subject to compliance with all applicable requirements of
federal, state or foreign law with respect to such securities. Options may not
be exercised if the issuance of shares of Stock upon exercise would constitute a
violation of any applicable federal, state or foreign securities laws or other
law or regulations or the requirements of any stock exchange or market system
upon which the Stock may then be listed. In addition, no Option may be exercised
unless (a) a registration statement under the Securities Act shall at the time
of exercise of the Option be in effect with respect to the shares of Stock
issuable upon exercise of the Option or (b) in the opinion of legal counsel to
the Company, the shares of Stock issuable upon exercise of the Option may be
issued in accordance with the terms of an applicable exemption from the
registration requirements of the Securities Act. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any,
deemed by the Company's legal counsel to be necessary to the lawful issuance and
sale of any shares of Stock hereunder shall relieve the Company of any liability
in respect of the failure to issue or sell such shares of Stock as to which such
requisite authority shall not have been obtained. As a condition to the exercise
of any Option, the Company may require the Optionee to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the Company.

Termination or Amendment of Plan.

The Board may terminate or amend the Plan at any time. However, without the
approval of the Company's stockholders, there shall be (a) no increase in the
maximum aggregate number of shares of Stock that may be issued under the Plan
(except by operation of the provisions of Section 4.2), and (b) no material
change in the class of persons eligible to receive Options. No termination or
amendment of the Plan shall affect any then outstanding Option unless expressly
provided by the Board. In any event, no termination or amendment of the Plan may
adversely affect any then outstanding Option without the consent of the
Optionee, unless such termination or amendment is necessary to comply with any
applicable law, regulation or rule.

IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that the
foregoing sets forth the Protein Design Labs, Inc. 2002 Outside Directors Stock
Option Plan as adopted by the Board on ____________, 2002 and approved by the
stockholders on _____, 2002.

__________________________

Douglas O. Ebersole
Secretary

legal/common/equity plans/DirPlans/2002 DirPlans/

Final 2002 Plan/Final Plan (04-17-02) clean

 

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PLAN HISTORY

 

________, 2002

Board adopts Plan, with an initial share reserve equal to the sum of (a) 240,000
shares, (b) the number of shares remaining available for grant under the
Predecessor Plan upon its termination (_________ shares as of date of Plan
adoption), and (c) the number of unissued shares subject to options outstanding
under the Predecessor Plan upon its termination which expire or are terminated
or canceled (__________ shares are subject to Predecessor Plan options as of the
date of Plan adoption)..

________, 2002

Stockholders approve the Plan.

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STANDARD FORM OF

PROTEIN DESIGN LABS, INC.

2002 OUTSIDE DIRECTORS STOCK OPTION PLAN

OUTSIDE DIRECTOR STOCK OPTION AGREEMENT

 

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PROTEIN DESIGN LABS, INC.

STOCK OPTION AGREEMENT (OUTSIDE DIRECTOR)

Protein Design Labs, Inc. has granted to the individual (the "Optionee") named
in the Notice of Grant of Stock Option (the "Notice") to which this Stock Option
Agreement (Outside Director) (the "Option Agreement") is attached an option (the
"Option") to purchase certain shares of Stock upon the terms and conditions set
forth in this Option Agreement and the Notice. The Option has been granted
pursuant to the Protein Design Labs, Inc. 2002 Outside Directors Stock Option
Plan (the "Plan"). By signing the Notice, the Optionee represents that the
Optionee is familiar with the terms and provisions of this Option Agreement and
accepts the Option subject to all of the terms and provisions hereof. The
Optionee agrees to accept as final and binding all decisions or interpretations
of the Board upon any questions arising under the Notice, this Option Agreement
or the Plan.

Definitions and Construction.
 1. Definitions.

Whenever used herein, capitalized terms shall have the meanings assigned in the
Notice or as set forth below:
"Board"
means the Board of Directors of the Company. If one or more Committees have been
appointed by the Board to administer the Plan,
"Board"
also means such Committee(s).
"Change in Control"
means the occurrence of any of the following:
 i.   any "person" (as such term is used in Sections 13(d) and 14(d) of the
      Exchange Act, other than a trustee or other fiduciary holding securities
      of the Company under an employee benefit plan of the Company, becomes the
      "beneficial owner" (as defined in Rule 13d-3 promulgated under the
      Exchange Act), directly or indirectly, of securities of the Company
      representing forty percent (40%) or more of (i) the outstanding shares of
      common stock of the Company or (ii) the total combined voting power of the
      Company's then-outstanding securities entitled to vote generally in the
      election of directors;
 ii.  the Company is party to a merger or consolidation which results in the
      holders of the voting securities of the Company outstanding immediately
      prior thereto failing to retain immediately after such merger or
      consolidation direct or indirect beneficial ownership of more than fifty
      percent (50%) of the total combined voting power of the securities
      entitled to vote generally in the election of directors of the Company or
      the surviving entity outstanding immediately after such merger or
      consolidation; or
 iii. the sale or disposition of all or substantially all of the Company's
      assets or consummation of any transaction having similar effect (other
      than a sale or disposition to one or more subsidiaries of the Company).

"Code"
means the Internal Revenue Code of 1986, as amended, and any applicable
regulations promulgated thereunder.
"Committee"
means the committee of the Board, if any, duly appointed to administer the Plan
and having such powers as shall be specified by the Board. Unless the powers of
the Committee have been specifically limited, the Committee shall have all of
the powers of the Board granted herein, including, without limitation, the power
to amend or terminate the Plan at any time, subject to the terms of the Plan and
any applicable limitations imposed by law.
"Company"
means Protein Design Labs, Inc., a Delaware corporation, or any successor
corporation thereto.
"Director"
means a member of the Board.
"Disability"
means the permanent and total disability of the Optionee within the meaning of
Section 22(e)(3) of the Code.
"Employee"
means any person treated as an employee in the records of the Company or any
Parent Corporation or Subsidiary Corporation.
"Exchange Act"
means the Securities Exchange Act of 1934, as amended.
"Fair Market Value"
means, as of any date, the value of a share of Stock or other property as
determined by the Board, in its discretion, subject to the following:
 i.  If, on such date, the Stock is listed on a national or regional securities
     exchange or market system, the Fair Market Value of a share of Stock shall
     be the closing sale price of a share of Stock (or the mean of the closing
     bid and asked prices of a share of Stock if the Stock is so quoted instead)
     as quoted on the Nasdaq National Market, The Nasdaq SmallCap Market or such
     other national or regional securities exchange or market system
     constituting the primary market for the Stock, as reported in the Wall
     Street Journal or such other source as the Board deems reliable. If the
     relevant date does not fall on a day on which the Stock has traded on such
     securities exchange or market system, the date on which the Fair Market
     Value shall be established shall be the last day on which the Stock was so
     traded prior to the relevant date, or such other appropriate day as shall
     be determined by the Board, in its discretion.
 ii. If, on such date, the Stock is not listed on a national or regional
     securities exchange or market system, the Fair Market Value of a share of
     Stock shall be as determined by the Board without regard to any restriction
     other than a restriction which, by its terms, will never lapse.

"Parent Corporation"
means any present or future "parent corporation" of the Company, as defined in
Section 424(e) of the Code.
"Securities Act"
means the Securities Act of 1933, as amended.
"Service"
means the Optionee's service with the Company as a Director. The Optionee's
Service shall be deemed to have terminated if the Optionee ceases to be a
Director, even if the Optionee continues or commences to render service to the
Company or to a Parent Corporation or Subsidiary Corporation in a capacity other
than as a Director. The Optionee's Service with the Company shall not be deemed
to have terminated if the Optionee takes any bona fide leave of absence approved
by the Company. Notwithstanding the foregoing, unless otherwise required by law,
the Company may provide that an approved leave of absence shall not be treated
as Service for purposes of determining vesting under the Option Agreement.
Subject to the foregoing, the Company, in its discretion, shall determine
whether the Optionee's Service has terminated and the effective date of such
termination.
"Stock"
means the common stock of the Company, as adjusted from time to time in
accordance with Section 9.
"Subsidiary Corporation"
means any present or future "subsidiary corporation" of the Company, as defined
in Section 424(f) of the Code.

Construction.
Captions and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of this Option Agreement.
Except when otherwise indicated by the context, the singular shall include the
plural and the plural shall include the singular. Use of the term "or" is not
intended to be exclusive, unless the context clearly requires otherwise.

Tax Status of Option.

This Option is intended to be a Nonstatutory Stock Option and shall not be
treated as an "incentive stock option" within the meaning of Section 422(b) of
the Code.

Administration.

All questions of interpretation concerning this Option Agreement shall be
determined by the Board. All determinations by the Board shall be final and
binding upon all persons having an interest in the Option. The Chief Executive
Officer shall have the authority to act on behalf of the Company with respect to
any matter, right, obligation, or election which is the responsibility of or
which is allocated to the Company herein.

Exercise of the Option.
 1. Right to Exercise.

Except as otherwise provided herein, the Option shall be exercisable prior to
the termination of the Option (as provided in Section 6) in an amount not to
exceed that portion of the Number of Option Shares (as adjusted pursuant to
Section 9) which have become Vested Shares less the number of shares previously
acquired upon exercise of the Option.
Method of Exercise.
Exercise of the Option shall be by written notice to the Company which must
state the election to exercise the Option, the number of whole shares of Stock
for which the Option is being exercised and such other representations and
agreements as to the Optionee's investment intent with respect to such shares as
may be required pursuant to the provisions of this Option Agreement. The written
notice must be signed by the Optionee and must be delivered to the Chief
Financial Officer, Controller or Stock Administrator of the Company, or other
authorized representative of the Company, prior to the termination of the Option
as set forth in Section 6, accompanied by full payment of the aggregate Exercise
Price for the number of shares of Stock being purchased and the tax withholding
obligations, if any, as provided in Section 4.4. The Option shall be deemed to
be exercised upon receipt by the Company of such written notice, the aggregate
Exercise Price, and tax withholding obligations, if any.
Payment of Exercise Price.
 a. Forms of Consideration Authorized.

Except as otherwise provided below, payment of the aggregate Exercise Price for
the number of shares of Stock for which the Option is being exercised shall be
made (i) in cash, by check or cash equivalent, (ii) by tender to the Company, or
attestation to the ownership, of shares of Stock owned by the Optionee having a
Fair Market Value not less than the Exercise Price, (iii) by means of a Cashless
Exercise, as defined in Section 4.3(b)(ii), or (iv) by any combination of the
foregoing.
Limitation on Forms of Consideration
.
Tender of Stock.
Notwithstanding the foregoing, the Option may not be exercised by tender to the
Company, or attestation to the ownership, of shares of Stock to the extent such
tender or attestation would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of shares of Stock. The
Option may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock unless such shares either have been owned by the
Optionee for more than six (6) months (and not used for another option exercise
by attestation during such period) or were not acquired, directly or indirectly,
from the Company.
Cashless Exercise.
A "
Cashless Exercise
" means the assignment in a form acceptable to the Company of the proceeds of a
sale or loan with respect to some or all of the shares of Stock acquired upon
the exercise of the Option pursuant to a program or procedure approved by the
Company (including, without limitation, through an exercise complying with the
provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System). The Company reserves, at any and all
times, the right, in the Company's sole and absolute discretion, to decline to
approve or terminate any such program or procedure.

Tax Withholding. At the time the Option is exercised, in whole or in part, or at
any time thereafter as requested by the Company, the Optionee hereby authorizes
withholding from any amounts payable to the Optionee, and otherwise agrees to
make adequate provision for (including by means of a Cashless Exercise to the
extent permitted by the Company), any sums required to satisfy the federal,
state, local and foreign tax withholding obligations of the Company, if any,
which arise in connection with the Option. Certificate Registration. Except in
the event the Exercise Price is paid by means of a Cashless Exercise, the
certificate for the shares of Stock as to which the Option is exercised shall be
registered in the name of the Optionee, or, if applicable, in the names of the
heirs of the Optionee. Restrictions on Grant of the Option and Issuance of
Shares. The grant of the Option and the issuance of shares of Stock upon
exercise of the Option shall be subject to compliance with all applicable
requirements of federal, state or foreign law with respect to such securities.
The Option may not be exercised if the issuance of shares of Stock upon exercise
would constitute a violation of any applicable federal, state or foreign
securities laws or other law or regulations or the requirements of any stock
exchange or market system upon which the Stock may then be listed. In addition,
the Option may not be exercised unless (i) a registration statement under the
Securities Act shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (ii) in the
opinion of legal counsel to the Company, the shares of Stock issuable upon
exercise of the Option may be issued in accordance with the terms of an
applicable exemption from the registration requirements of the Securities Act.
THE OPTIONEE IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE
FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO
EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. Questions
concerning this restriction should be directed to the Legal Department of the
Company. The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company's legal counsel to be
necessary to the lawful issuance and sale of any shares of Stock subject to the
Option shall relieve the Company of any liability in respect of the failure to
issue or sell such shares as to which such requisite authority shall not have
been obtained. As a condition to the exercise of the Option, the Company may
require the Optionee to satisfy any qualifications that may be necessary or
appropriate, to evidence compliance with any applicable law or regulation and to
make any representation or warranty with respect thereto as may be requested by
the Company. Fractional Shares. The Company shall not be required to issue
fractional shares of Stock upon the exercise of the Option. Nontransferability
of the Option.

The Option may be exercised during the lifetime of the Optionee only by the
Optionee or the Optionee's guardian or legal representative and may not be
assigned or transferred in any manner except by will or by the laws of descent
and distribution. Following the death of the Optionee, the Option, to the extent
provided in Section 7, may be exercised by the Optionee's legal representative
or by any person empowered to do so under the deceased Optionee's will or under
the then applicable laws of descent and distribution.

Termination of the Option.

The Option shall terminate and may no longer be exercised after the first to
occur of (a) the Option Expiration Date, (b) the last date for exercising the
Option following termination of the Optionee's Service as described in
Section 7, or (c) a Change in Control to the extent provided in Section 8.

Effect of Termination of Service.
 1. Option Exercisability.

Disability.
If the Optionee's Service with the Company is terminated because of the
Disability of the Optionee, the Option, to the extent unexercised and
exercisable on the date on which the Optionee's Service terminated, may be
exercised by the Optionee (or the Optionee's guardian or legal representative)
at any time prior to the expiration of twelve (12) months after the date on
which the Optionee's Service terminated, but in any event no later than the
Option Expiration Date.
Death.
If the Optionee's Service with the Company is terminated because of the death of
the Optionee, the Option, to the extent unexercised and exercisable on the date
on which the Optionee's Service terminated, may be exercised by the Optionee's
legal representative or other person who acquired the right to exercise the
Option by reason of the Optionee's death at any time prior to the expiration of
twelve (12) months after the date on which the Optionee's Service terminated,
provided that such period shall be extended by the number of days between the
date on which the Optionee's Service terminated and the date on which the
executor, personal representative or administrator of the Optionee's estate
determines the person who acquired the right to exercise the Option by reason of
the Optionee's death. Notwithstanding the foregoing, in no event shall the
option be exercisable following the Option Expiration Date. The Optionee's
Service shall be deemed to have terminated on account of death if the Optionee
dies within three (3) months after the Optionee's termination of Service.
Other Termination of Service.
If the Optionee's Service with the Company terminates for any reason, except
Disability or death, the Option, to the extent unexercised and exercisable by
the Optionee on the date on which the Optionee's Service terminated, may be
exercised by the Optionee within six (6) months (or such longer period of time
as determined by the Board, in its discretion) after the date on which the
Optionee's Service terminated, but in any event no later than the Option
Expiration Date.

Extension if Exercise Prevented by Law. Notwithstanding the foregoing, if the
exercise of the Option within the applicable time periods set forth in
Section 7.1 is prevented by the provisions of Section 4.6, the Option shall
remain exercisable until ninety (90) days after the date the Optionee is
notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date. Extension if Optionee Subject to
Section 16(b). Notwithstanding the foregoing, if a sale within the applicable
time periods set forth in Section 7.1 of shares acquired upon the exercise of
the Option would subject the Optionee to suit under Section 16(b) of the
Exchange Act, the Option shall remain exercisable until the earliest to occur of
(i) the thirtieth (30th) day following the date on which a sale of such shares
by the Optionee would no longer be subject to such suit, (ii) the two hundred
tenth (210th) day after the Optionee's termination of Service, or (iii) the
Option Expiration Date. Change in Control.

In the event of a Change in Control, any unexercisable or unvested portions of
the Option and any shares acquired upon the exercise thereof shall be
immediately exercisable and vested in full as of the date ten (10) days prior to
the date of the Change in Control. The exercise or vesting of the Option and any
shares acquired upon the exercise thereof that was permissible solely by reason
of this Section 8 shall be conditioned upon the consummation of the Change in
Control. In addition, the surviving, continuing, successor, or purchasing
corporation or parent corporation thereof, as the case may be (the "Acquiring
Corporation"), may either assume the Company's rights and obligations under the
Option or substitute for the Option a substantially equivalent option for the
Acquiring Corporation's stock. The Option shall terminate and cease to be
outstanding effective as of the date of the Change in Control to the extent that
the Option is neither assumed or substituted for by the Acquiring Corporation in
connection with the Change in Control nor exercised as of the date of the Change
in Control. Notwithstanding the foregoing, if the corporation the stock of which
is subject to the Option immediately prior to a Change in Control described in
Section 1.1(b)(i) is the surviving or continuing corporation and immediately
after such Change in Control less than fifty percent (50%) of the total combined
voting power of its voting stock is held by another corporation or by other
corporations that are members of an affiliated group within the meaning of
Section 1504(a) of the Code without regard to the provisions of Section 1504(b)
of the Code, the Option shall not terminate unless the Board otherwise provides
in its sole discretion.

Adjustments for Changes in Capital Structure.

In the event of any stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification, or similar change in the
capital structure of the Company, appropriate adjustments shall be made in the
number, Exercise Price and class of shares of stock subject to the Option. If a
majority of the shares which are of the same class as the shares that are
subject to the Option are exchanged for, converted into, or otherwise become
(whether or not pursuant to an Ownership Change Event) shares of another
corporation (the "New Shares"), the Board may unilaterally amend the Option to
provide that the Option is exercisable for New Shares. In the event of any such
amendment, the Number of Option Shares and the Exercise Price shall be adjusted
in a fair and equitable manner, as determined by the Board, in its sole
discretion. Notwithstanding the foregoing, any fractional share resulting from
an adjustment pursuant to this Section 9 shall be rounded down to the nearest
whole number, as determined by the Board, and in no event may the Exercise Price
be decreased to an amount less than the par value, if any, of the stock subject
to the Option. The adjustments determined by the Board pursuant to this
Section 9 shall be final and binding.

Rights as a Stockholder.

The Optionee shall have no rights as a stockholder with respect to any shares of
Stock covered by the Option until the date of the issuance of a certificate for
the shares of Stock for which the Option has been exercised (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company). No adjustment shall be made for dividends, distributions
or other rights for which the record date is prior to the date such certificate
is issued, except as provided in Section 9.

Legends.

The Company may at any time place legends referencing any applicable federal,
state or foreign securities law restrictions on all certificates representing
shares of Stock subject to the provisions of this Option Agreement. The Optionee
shall, at the request of the Company, promptly present to the Company any and
all certificates representing shares of Stock acquired pursuant to the Option in
the possession of the Optionee in order to carry out the provisions of this
Section 11.

Arbitration.

In the event any dispute between the parties to this Option Agreement arises out
of, or in connection with, this Option Agreement, the parties to this Option
Agreement agree that all such disputes shall, upon the written request of one
(1) party delivered to the other party, be submitted to the American Arbitration
Association in the county in which the Company's principal offices are located,
to be fully, finally and exclusively resolved by binding arbitration. The
parties to this Option Agreement hereby waive their respective rights to have
any such disputes or claims tried to a judge or jury. This arbitration provision
shall not apply to any claims for injunctive relief by the parties to this
Option Agreement.

The arbitrator shall have the power to enter any award that could be entered by
a judge of the Superior Court of the State of California or the United States
District Court, and only such power, and shall follow the law. The arbitrator
shall issue the award in writing and state the essential findings and
conclusions on which the award is based. The parties to this Option Agreement
agree to abide by and perform any valid award rendered by the arbitrator and
judgment on the award may be entered in any court of competent jurisdiction. The
arbitrator shall award to the prevailing party in any such arbitration
reasonable expenses, including attorneys' fees and costs, incurred in connection
with the dispute.

Miscellaneous Provisions.
 1. Binding Effect.

Subject to the restrictions on transfer set forth herein, this Option Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective heirs, executors, administrators, successors and assigns. Termination
or Amendment. The Board may terminate or amend the Plan or the Option at any
time; provided, however, that except as provided in Section 8 in connection with
a Change in Control, no such termination or amendment may adversely affect the
Option or any unexercised portion hereof without the consent of the Optionee
unless such termination or amendment is necessary to comply with any applicable
law or government regulation. No amendment or addition to this Option Agreement
shall be effective unless in writing. Notices. Any notice required or permitted
hereunder shall be given in writing and shall be deemed effectively given
(except to the extent that this Option Agreement provides for effectiveness only
upon actual receipt of such notice) upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail, with postage and
fees prepaid, addressed to the other party at the address of such party as set
forth in the Notice or at such other address as such party may designate in
writing from time to time to the other party. Integrated Agreement. This Option
Agreement and the Notice constitute the entire understanding and agreement of
the Optionee and the Company with respect to the subject matter contained herein
and therein, and there are no agreements, understandings, restrictions,
representations, or warranties among the Optionee and the Company with respect
to such subject matter other than those as set forth or provided for herein or
therein. To the extent contemplated herein, the provisions of this Option
Agreement shall survive any exercise of the Option and shall remain in full
force and effect. Applicable Law. This Option Agreement shall be governed by the
laws of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within the State
of California.

--------------------------------------------------------------------------------

Optionee: ___________________________

Date: ___________________________

PROTEIN DESIGN LABS, INC.

STOCK OPTION (OUTSIDE DIRECTOR)

EXERCISE NOTICE

Protein Design Labs, Inc.
Attention: Stock Administrator
34801 Campus Drive
Fremont, CA 94555

Ladies and Gentlemen:

1. Option. I was granted a nonstatutory stock option ("Option") to purchase
shares of the common stock ("Shares") of Protein Design Labs, Inc. ("Company")
pursuant to the Company's 2002 Outside Directors Stock Option Plan (the "Plan")
as follows:

Grant Number:

________________________

Date of Option Grant:

________________________

Number of Option Shares:

________________________

Exercise Price per Share:

$ _______________________

2. Exercise of Option. I hereby elect to exercise the Option to purchase the
following number of shares, all of which have vested in accordance with my
Option Agreement:

No. of Shares Purchased:

________________________

Total Exercise Price:

$_______________________

3. Payment. I enclose payment in full of the total exercise price for the Shares
in the following form(s), as authorized by my Option Agreement:

Cash:

$ ______________________

Check:

$ ______________________

Tender of Company Stock:

Contact Stock Administrator for additional forms

Cashless exercise (same-day sale):

Contact Stock Administrator for additional forms

4. Tax Withholding. I will make adequate provision for federal, state, local and
foreign tax withholding obligations of the Company, if any, in connection with
my exercise of the Option and my subsequent disposition of the Shares.

5. Optionee Information.

My address is:

 

 

__________________________________________________________________

 

__________________________________________________________________

 

My Social Security Number is: ________________________________________

I understand that I am purchasing the Shares pursuant to the terms of the Plan
and my Option Agreement, a copy of which I have received and have carefully read
and understand.

Very truly yours,

 

 

____________________________________

(Signature)

____________________________________

(Optionee's Name Printed)

 

Receipt of the above is hereby acknowledged:
PROTEIN DESIGN LABS, INC.

By:__________________________

Title: _______________________

Dated: _________________________

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