Exhibit 10.3


 


	
   

  

  	
   

  	
  PDL BioPharma, Inc.

  1400 Seaport Blvd.

  Redwood City, CA 94063

  



 


 


 


 


May 2,
2008


 


 


 


 


Richard
Murray


 


                Re: Retention Bonuses and Severance Benefits


 


Dear
Richard:


 


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 - $81,000.00


·                  June 30,
2009 - $81,000.00


·                  December 31,
2009 - $108,000.00


 


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 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


·                  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).


 


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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 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.


 


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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/ Richard
  Murray

  	
   

  
	
  Richard
  Murray

  	
   

  
	
  Executive
  Vice President and Chief Scientific Officer

  	
   

  
	
   

  	
   

  
	
  May 15,
  2008

  	
   

  
	
  Date

  	
   

  



 


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