January
6, 2011

    


    


    Ms.
Caroline Krumel

    


    


    Dear
Caroline:

    


    On behalf
of PDL BioPharma, Inc. (‘PDL’ or ‘we’), I am pleased to extend to you an
employment offer for the position of Vice President of Finance and Principal
Accounting Officer reporting to PDL’s Chief Financial Officer (the
‘CFO’).  Your employment with PDL will begin on January 17, 2011 (the
‘Employment Date’).

    


    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, provided that any such service
obligation is not materially increased beyond what you have disclosed to
us.

    


    Your base
salary (as in effect from time to time, ‘Base Salary’) will be $230,000
annually, less applicable taxes and withholdings, and will be payable in
accordance PDL’s payroll procedures.  Your annual target bonus will be
set at thirty percent (30%) of your annual Base Salary.  Your bonus
will be based on your contribution to PDL’s achievement of its goals and
objectives and your individual performance during this period as determined by
the CFO and the Compensation Committee of the Board.  The Compensation
Committee of the Board is in the process of developing a long-term incentive
plan after expiration of the former plan in December 2010 and, when finalized,
you will be eligible to participate in that plan when it is
adopted.

    


    If you
are terminated without Cause or resign for Good Reason you will receive, a lump
sum cash payment equal to fifty percent (50%) of the sum of your annual base
salary and target bonus provided that such payment shall be contingent upon your
signing a release of all claims against PDL.

    


    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 willful 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 CFO 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 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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

      
        Ms.
Caroline Krumel

        January
6, 2011

        Page
2

      

    

    


    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 less senior corporate officer than the CFO; (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.

    


    PDL has 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.  In addition, you will
receive four weeks of paid vacation in addition to PDL’s holiday
schedule.

    


    PDL will
provide assistance to you to rent housing in Nevada proximate to PDL’s
offices.  PDL will pay you a housing allowance of $3,000 per month for
the duration of your employment by PDL.  In addition, to defray your
moving expenses, PDL will reimburse you for such expenses up to
$10,000.

    


    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 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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

      
        Ms.
Caroline Krumel

        January
6, 2011

        Page
3

      

    

    


    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.

    


    The terms
of this offer are subject to satisfactory completion of a background inquiry and
approval by PDL’s Board of Directors. 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 Christine Larson.  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.

    


    


    Sincerely,

     

    
      
        	PDL
      BioPharma, Inc.	 	 	Accepted
      by:	 
	 	 	 	 	 
	
                /s/
      Christine R. Larson

              	 	 	
                /s/
      Caroline Krumel

              	 
	 	 	 	 	 
	Christine
      R. Larson	 	 	Caroline
      Krumel	 
	Vice
      President & CFO	 	 	 	 
	PDL
      BioPharma, Inc.	 	 	 	 
	 	 	 	      
                January 7,
      2011

                Date