Exhibit
10.5


 


	
  

  	
   

  	
  PDL
  BioPharma, Inc.

  1400 Seaport Blvd.
 Redwood City, CA 94063 

  



 


July 11, 2008


 


Richard Murray


[Address]


[City, State zip]


 


Re: Additional
Retention Bonuses


 


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 additional retention
bonuses 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:


 


·      July 31,
2008 - $25,000


·      October 31,
2008 - $25,000


·      January 31,
2009 - $25,000


 


Subject to the terms and conditions of this Letter
Agreement, each Retention Bonus would be paid with your first regular paycheck following
the applicable Bonus Date.  These
Retention Bonuses are in addition to the retention bonuses previously awarded
to you by the Compensation Committee pursuant to the Letter Agreement between
you and PDL dated May 2, 2008 (the “First Retention Agreement”).


 


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 October 31, 2008, the


 

















 


foregoing proration would be based on the
number of months between June 19, 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.


 


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 


 


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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.


 


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 and the First
Retention Agreement, 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, Human Resources
Department by June 30, 2008.


 


Sincerely,


 


 


Andrew
Guggenhime


Senior Vice President and Chief
Financial Officer


 


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AGREED AND ACKNOWLEDGED:


 


 


	
  /s/ Richard Murray

  	
   

  
	
  Richard
  Murray

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  July 15, 2008

  	
   

  
	
  Date

  	
   

  



 


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