Exhibit 10.1


 


November 4, 2008


 


Mr. John McLaughlin


[*]


[*]


 


Dear John:


 


On behalf of PDL BioPharma, Inc. (‘PDL’
or ‘we’), I am pleased to extend to you an employment offer for the position of
Senior Advisor.  Your employment with PDL
will begin on November 6, 2008 (the ‘Employment Date’).


 


As we have discussed, PDL is undertaking to
spin off of its biotechnology operations into a separate publicly traded
company, currently named Facet Biotech Corporation (‘Facet’ and such spin-off
transaction, the ‘Spin-off’).  You and
PDL agree that, subject to and in connection with the Spin-off, PDL shall
appoint you, effective as of the Spin-off date, as its President and Chief
Executive Officer, reporting to its Board of Directors (the ‘Board’), and you
would continue to be employed on the terms and conditions set forth in this
offer letter (the ‘Offer Letter’) and you agree to accept such appointment on
such terms and conditions.  While we plan
to complete the Spin-off by the end of 2008, it is possible for various reasons
that the Spin-off may not occur by that time or at all.  If PDL does not complete the Spin-off, for
any reason, within six (6) months following the Employment Date (the ‘Spin-off
Period’), you will be entitled to resign and PDL will pay to you, within five (5) days
of your separation from service, a special lump sum severance amount equal to
six (6) months’ Base Salary; provided, however, that you
tender your resignation no later than three (3) months following the end of the
Spin-off Period.


 


You agree that you will devote your full
business time and efforts to PDL.  You
agree that you will not engage in any other business or serve in any position
with or as a consultant or adviser to any other corporation or entity
(including as a member of such corporation’s or entity’s board of directors or
other governing or advising body), without the prior written consent of the
Board.  Notwithstanding the foregoing,
but only for so long as such activities in the aggregate do not materially interfere
with your duties hereunder or create a business or fiduciary conflict, you will
not be prohibited from (i) participating in charitable, civic,
educational, professional, community or industry affairs (including membership
on boards of directors), (ii) managing your passive personal investments,
and (iii) continuing your service in the positions that you held as of the
date of this Offer Letter, which positions you have disclosed to the Board and
set forth on Appendix A hereto, provided that any such service obligation is
not materially increased beyond what you have disclosed to us.


 

















 


Your monthly base salary (as in effect from
time to time, ‘Base Salary’) will be $41,666.67 ($500,000/annually), less
applicable taxes and withholdings, and will be payable in accordance PDL’s
payroll procedures.  Your Base Salary
shall be reviewed each year but will not be subject to decrease unless such
decrease is part of an overall reduction effected for executive officers of
PDL.  Your annual target bonus will be
set at fifty percent (50%) of your annual Base Salary.  Your bonus with respect to 2008 service will
be prorated from the Employment Date and based on your contribution to PDL’s
achievement of its 2008 goals and objectives during 2008 and your individual
performance during this period as determined by the Board or the Compensation
Committee of the Board.  Your annual
bonus payout and the applicable performance goals for subsequent years will be
determined annually by the Board or the Compensation Committee.


 


Effective fifteen (15) days following the
Spin-off date, PDL will grant you a special retention incentive award (the ‘Special
Retention Incentive’) comprised of two components: (i) the right to
receive $700,000 in cash; and (ii) a number of unvested restricted shares
of PDL common stock with a Grant Value equal to $300,000.  For this purpose, ‘Grant Value’ means the
average of the closing prices of PDL’s common stock for the first ten (10) trading
days following the Spin-off date. 
Subject to your continued employment, the Special Retention Incentive
will vest and become payable upon the earlier to occur of (i) the second
anniversary of the Spin-off date, or (ii) a Monetization Event.  For purposes of this Offer Letter, ‘Monetization
Event’ means (i) a merger or sale of PDL or a sale of all or substantially
all of PDL’s assets, or (ii) any securitization or other monetization of
all or substantially all of PDL’s assets. 
In the event any dividends or other distributions are paid on PDL’s
common stock following the grant of the Special Retention Incentive but prior
to the vesting and payment thereof, the amount of the dividends or other
distributions payable on the restricted stock component of the Special
Retention Incentive shall be withheld, credited to an account in your name, and
shall vest and become payable if and when the Special Retention Incentive vests
and becomes payable.


 


If you are terminated without Cause or resign
for Good Reason following your accession to the Chief Executive Officer
position, but prior to your entitlement to the Special Retention Incentive, you
will receive, within five (5) days of your separation from service, a lump
sum cash payment equal to the sum of your annual base salary and target bonus.


 


For purposes of this Offer Letter, ‘Cause’
means the occurrence of any of the following: (i) your intentional theft,
dishonesty, willful misconduct, breach of fiduciary duty for personal profit,
or falsification of any PDL documents or records; (ii) your material
failure to abide by the PDL’s code of conduct or other written policies
(including, without limitation, policies relating to confidentiality and
reasonable workplace conduct); (iii) your material and intentional
unauthorized use, misappropriation, destruction or diversion of any tangible or
intangible asset or corporate opportunity of PDL (including, without
limitation, your improper use or disclosure of PDL confidential or proprietary
information); (iv) any willfull act by you that has a material detrimental
effect on PDL’s reputation or business; (v) your repeated failure or
inability to perform any reasonable assigned duties after written notice from
the Board of, and a reasonable opportunity to cure, such failure or inability; (vi) any
material breach by you of any employment, service, non-disclosure,
non-competition, non-solicitation or other similar agreement between 


 


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you and PDL, which breach is not cured
pursuant to the terms of such agreement or within twenty (20) days of receiving
written notice of such breach; (vii) your conviction (including any plea
of guilty or nolo contendere) of any criminal act involving fraud, dishonesty,
misappropriation or moral turpitude, or which impairs your ability to perform
your duties with PDL.  For purposes of
the foregoing, no act or omission will be deemed ‘willful’ unless done, or
omitted to be done, by you without a reasonable good faith belief that you were
acting in the best interest of PDL.


 


For purposes of this Offer Letter, ‘Good
Reason’ means the occurrence of any of the following conditions without your
informed written consent: (i) a material diminution in your authority,
duties or responsibilities, causing your position to be of materially lesser
rank or responsibility within PDL; (ii) a requirement that you report to a
corporate officer or other employee rather than directly to the Board or the
board of directors of PDL’s parent; (iii) a material reduction in your
Base Salary or bonus, unless reductions comparable in amount and duration are
concurrently made for all other PDL officers; or (iv) any action or
inaction by a PDL that constitutes, with respect to the you, a material breach
of this Offer Letter.


 


We currently also offer to our employees a
welfare benefits package, including a comprehensive medical policy and dental
plan, as well as life insurance coverage, in which you will be eligible to
participate in accordance with PDL guidelines. 
You acknowledge that in connection with the Spin-off, PDL will transfer
its welfare benefit plans to Facet and PDL would need to establish a new set of
welfare benefit plans following the Spin-off. 
The new welfare benefit plans to be established following the Spin-off
will be reasonably comparable to those currently maintained by the company, and
to the extent the transition involves your making a COBRA or similar election
in connection with the Spin-off and PDL’s transfer of its welfare benefit plans
to Facet, PDL will reimburse you for the incremental cost of the transitional
coverage provided pursuant to any such election.


 


Your employment with PDL will not be for a
set term, and you will be an at-will employee. 
As a PDL employee, you will be free to resign at any time, just as we
will be free to terminate your employment at any time, with or without Cause.  There will be no express or implied
agreements to the contrary.  By signing
this Offer Letter, you agree to waive any right to participate in the PDL  Executive Retention and Severance Plan or any
other severance plan maintained by PDL from time to time.


 


PDL intends that payments and benefits
provided to you pursuant to this Offer Letter be exempt from or comply with all
applicable requirements of Section 409A of the Internal Revenue Code of
1986, as amended.  Any ambiguities in
this Offer Letter shall be construed in a manner consistent with such intent.


 


For purposes of federal immigration law, you
will be required to provide PDL documentary evidence of your identity and
eligibility for employment in the United States.


 


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To indicate your acceptance of our offer,
please sign and date this Offer Letter in the space provided below and return
it, along with a signed copy of the enclosed Proprietary Information and
Invention Assignment Agreement, to Francis Sarena in the enclosed
envelope.  By executing this Offer
Letter, you hereby represent that your execution hereof and performance of your
obligations hereunder do not and will not contravene or otherwise conflict with
any other agreement to which you are a party or any other legal obligation
applicable to you.  This Offer Letter,
along with the Proprietary Information and Invention Assignment Agreement,
supersedes any prior representations or agreements, whether written or oral,
with respect to our offer of employment to you. 
This Offer Letter may not be modified or amended except by a written
agreement, signed by PDL and you.


 


We are very excited at the prospect of your
joining PDL.  This offer will remain open
until November 6, 2008, at which time it will expire if not previously
accepted.


 


Sincerely,


 


	
  PDL BioPharma, Inc.

  	
   

  	
  Accepted by:

  
	
   

  	
   

  	
   

  
	
  /s/ Francis Sarena

  	
   

  	
  /s/ John McLaughlin

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Francis Sarena 

  Vice President, General Counsel

  and Secretary

  	
   

  	
  John McLaughlin

  
	
   

  	
   

  	
  11/04/08

  
	
   

  	
   

  	
  Date

  



 


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Appendix A


 


Current Board Positions


Peak Surgical, private commercial stage
medical device company


Seattle Genetics, public development stage
biotech company


 


Current Consultancies


Anesiva, Inc., a public commercial stage
biotech company, which expires on June 30, 2009