Exhibit 10.5


 


Facet Biotech Corporation


Stock Option Agreement


(For
Participant in Retention and Severance Plan)


 


Facet
Biotech Corporation has granted to the Participant named in the Notice of Grant of Stock Option (the “Grant Notice”)
to which this Stock Option Agreement (the “Option
Agreement”) is attached an Option (the “Option”) to purchase certain
shares of Stock upon the terms and conditions set forth in the Grant Notice and
this Option Agreement.  The Option has
been granted pursuant to and shall in all respects be subject to the terms and
conditions of the Facet Biotech Corporation 2008 Equity Incentive Plan (the “Plan”), as amended to the
Date of Grant, the provisions of which are incorporated herein by
reference.  Further, the Option shall be
subject to the provisions of the Retention and Severance Plan as applicable to
the Participant, and such provisions are incorporated herein by reference.  By signing the Grant Notice, the Participant:
(a) acknowledges receipt of and represents that the Participant has read
and is familiar with the Grant Notice, this Option Agreement, the Plan and a
prospectus for the Plan prepared in connection with the registration with the
Securities and Exchange Commission of shares issuable pursuant to the Option
(the “Plan
Prospectus”), (b) accepts the Option subject to all
of the terms and conditions of the Grant Notice, this Option Agreement and the
Plan and (c) agrees to accept as binding, conclusive and final all
decisions or interpretations of the Committee upon any questions arising under
the Grant Notice, this Option Agreement or the Plan.


 


1.                                       DEFINITIONS AND CONSTRUCTION.


 


1.1                                 Definitions.  Unless otherwise defined herein, capitalized
terms shall have the meanings assigned to such terms in the Grant Notice or the
Plan.  Wherever used herein, the
following terms shall have their respective meanings set forth below:


 


(a)                                  “Change in
Control”
means a Change in Control as defined by the Retention and Severance Plan.


 


(b)                                 “Involuntary
Termination Absent a Change in Control” means an Involuntary Termination Absent
a Change in Control as defined by the Retention and Severance Plan.


 


(c)                                  “Involuntary
Termination Following a Change in Control” means an Involuntary Termination
Following a Change in Control as defined by the Retention and Severance Plan.


 


(d)                                 “Retention
and Severance Plan” means the Facet Biotech Corporation Retention and
Severance Plan, effective                       ,
2008, as amended from time to time, and the Participation Agreement entered
into between the Company and the Participant, pursuant to which the Participant
is a participant in the Retention and Severance Plan.


 


1.2                                 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.


 


2.                                       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.


 


3.                                       ADMINISTRATION.


 


All questions of interpretation concerning the Grant
Notice, this Option Agreement, the Plan or any other form of agreement or other
document employed by the Company in the administration of the Plan or the
Option shall be determined by the Committee. 
All such determinations by the Committee shall be final, binding and
conclusive upon all persons having an interest in the Option, unless fraudulent
or made in bad faith.  Any and all
actions, decisions and determinations taken or made by the Committee in the
exercise of its discretion pursuant to the Plan or the Option or other
agreement thereunder (other than determining questions of interpretation
pursuant to the preceding sentence) shall be final, binding and conclusive upon
all persons having an interest in the Option. 
Any 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, provided the
Officer has apparent authority with respect to such matter, right, obligation,
or election.


 


4.                                       EXERCISE OF THE OPTION.


 


4.1                                 Right to Exercise.  Except as otherwise provided herein, the
Option shall be exercisable on and after the Initial Vesting Date and prior to
the termination of the Option (as provided in Section 6) in an amount not
to exceed the number of Vested Shares less the number of shares previously
acquired upon exercise of the Option.  In
no event shall the Option be exercisable for more shares than the Number of
Option Shares, as adjusted pursuant to Section 9.


 


4.2                                 Method of Exercise.  Exercise of the Option shall be by means of
electronic or written notice (the “Exercise Notice”) in a form
authorized by the Company.  An electronic
Exercise Notice must be digitally signed or authenticated by the Participant in
such manner as required by the notice and transmitted to the Company or an
authorized representative of the Company (including a third-party administrator
designated by the Company).  In the event
that the Participant is not authorized or is unable to provide an electronic
Exercise Notice, the Option shall be exercised by a written Exercise Notice
addressed to the Company, which shall be signed by the Participant and
delivered in person, by certified or registered mail, return receipt requested,
by confirmed facsimile transmission, or by such other means as the Company may
permit, to the Company, or an authorized representative of the Company
(including a third-party administrator designated by the Company).  Each Exercise Notice, whether electronic or
written, must state the Participant’s 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 Participant’s investment
intent with respect to such shares as may be required pursuant to the
provisions of this Option Agreement. 
Further, each Exercise Notice must be received by the Company prior to
the termination of the Option as set forth in Section 6 and must be


 


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accompanied by
full payment of the aggregate Exercise Price for the number of shares of Stock
being purchased.  The Option shall be
deemed to be exercised upon receipt by the Company of such electronic or
written Exercise Notice and the aggregate Exercise Price.


 


4.3                                 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 in cash
equivalent; (ii) if permitted by the Company and subject to the
limitations contained in Section 4.3(b), by means of (1) a Cashless Exercise,
(2) a Net Exercise, or (3) a Stock Tender Exercise; or (iii) any
combination of the foregoing.


 


(b)                                 Limitations on Forms of
Consideration.  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 procedure providing for payment of the
Exercise Price through any of the means described below, including with respect
to the Participant notwithstanding that such program or procedures may be
available to others.


 


(i)                                     Cashless Exercise.  A
“Cashless Exercise”
means the delivery of a properly executed Exercise Notice together with
irrevocable instructions to a broker in a form acceptable to the Company
providing for the assignment to the Company of the proceeds of a sale or loan
with respect to shares of Stock acquired upon the exercise of the Option in an
amount not less than the aggregate Exercise Price for such shares (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).


 


(ii)                                  Net Exercise.  A
“Net Exercise”
means the delivery of a properly executed Exercise Notice electing a procedure
pursuant to which (1) the Company will reduce the number of shares
otherwise issuable to the Participant upon the exercise of the Option by the
largest whole number of shares having a Fair Market Value that does not exceed
the aggregate Exercise Price for the shares with respect to which the Option is
exercised, and (2) the Participant shall pay to the Company in cash the
remaining balance of such aggregate Exercise Price not satisfied by such
reduction in the number of whole shares to be issued.  Following a Net Exercise, the number of
shares remaining subject to the Option, if any, shall be reduced by the sum of (1) the
net number of shares issued to the Participant upon such exercise, and (2) the
number of shares deducted by the Company for payment of the aggregate Exercise
Price.


 


(iii)                               Stock Tender Exercise.  A “Stock Tender Exercise” means
the delivery of a properly executed Exercise Notice accompanied by (1) the
Participant’s tender to the Company, or attestation to the ownership, in a form
acceptable to the Company of whole shares of Stock having a Fair Market Value
that does not exceed the aggregate Exercise Price for the shares with respect
to which the Option is exercised, and (2) the Participant’s payment to the
Company in cash of the remaining balance of such aggregate Exercise Price not
satisfied by such shares’ Fair Market Value. 
A Stock Tender Exercise shall not be permitted if it would constitute a
violation of the provisions of any law, regulation or agreement restricting the
redemption of the Company’s stock.  If
required by the Company, the Option may not be


 


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exercised by tender
to the Company, or attestation to the ownership, of shares of Stock unless such
shares either have been owned by the Participant for a period of time required
by the Company (and not used for another option exercise by attestation during
such period) or were not acquired, directly or indirectly, from the Company.


 


4.4                                 Tax Withholding.


 


(a)                                  In General.  At
the time the Option is exercised, in whole or in part, or at any time
thereafter as requested by a Participating Company, the Participant hereby
authorizes withholding from payroll and any other amounts payable to the
Participant, 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 (including any
social insurance) withholding obligations of the Participating Company Group,
if any, which arise in connection with the Option.  The Company shall have no obligation to
deliver shares of Stock until the tax withholding obligations of the
Participating Company Group have been satisfied by the Participant.


 


(b)                                 Withholding in Shares.  The Company shall
have the right, but not the obligation, to require the Participant to satisfy
all or any portion of a Participating Company’s tax withholding obligations
upon exercise of the Option by deducting from the shares of Stock otherwise
issuable to the Participant upon such exercise a number of whole shares having
a fair market value, as determined by the Company as of the date of exercise,
not in excess of the amount of such tax withholding obligations determined by
the applicable minimum statutory withholding rates.


 


4.5                                 Beneficial Ownership of Shares; Certificate Registration.  The
Participant hereby authorizes the Company, in its sole discretion, to deposit
for the benefit of the Participant with any broker with which the Participant
has an account relationship of which the Company has notice any or all shares
acquired by the Participant pursuant to the exercise of the Option.  Except as provided by the preceding sentence,
a certificate for the shares as to which the Option is exercised shall be
registered in the name of the Participant, or, if applicable, in the names of
the heirs of the Participant.


 


4.6                                 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 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 PARTICIPANT IS CAUTIONED THAT
THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE
SATISFIED.  ACCORDINGLY, THE PARTICIPANT MAY NOT
BE ABLE TO EXERCISE THE OPTION WHEN DESIRED


 


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EVEN THOUGH THE
OPTION IS VESTED.  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 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 Participant 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.


 


4.7                                 Fractional Shares.  The Company shall not be required to issue
fractional shares upon the exercise of the Option.


 


5.                                       NONTRANSFERABILITY OF THE OPTION.


 


During the lifetime of the Participant, the Option
shall be exercisable only by the Participant or the Participant’s guardian or
legal representative.  The Option shall
not be subject in any manner to anticipation, alienation, sale, exchange,
transfer, assignment, pledge, encumbrance, or garnishment by creditors of the
Participant or the Participant’s beneficiary, except transfer by will or by the
laws of descent and distribution. 
Following the death of the Participant, the Option, to the extent
provided in Section 7, may be exercised by the Participant’s legal representative or
by any person empowered to do so under the deceased Participant’s will or under the then
applicable laws of descent and distribution.


 


6.                                       TERMINATION OF THE OPTION.


 


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


 


7.                                       EFFECT OF TERMINATION OF SERVICE.


 


7.1                                 Option Exercisability.  The
Option shall terminate immediately upon the Participant’s termination of
Service to the extent that it is then unvested and shall be exercisable after
the Participant’s termination of Service to the extent it is then vested only
during the applicable time period as determined below and thereafter shall
terminate.


 


(a)                                  Disability.  If the
Participant’s Service terminates because of the Disability of the Participant, the
Option, to the extent unexercised and exercisable for Vested Shares on the date
on which the Participant’s Service terminated, may be exercised by the
Participant (or the Participant’s guardian or legal representative) at any time prior
to the expiration of twelve (12) months after the date on which the Participant’s Service terminated, but in any event no
later than the Option Expiration Date.


 


(b)                                 Death.  If the
Participant’s Service terminates because of the death of the Participant, the
Option, to the extent
unexercised and exercisable for Vested Shares on the date on which the
Participant’s Service terminated, may be exercised by the Participant’s legal
representative or other person who acquired the right to exercise the Option by
reason of the


 


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Participant’s death at any time prior to the expiration of twelve (12)
months after the date on which the Participant’s Service terminated, but in any
event no later than the Option Expiration Date. 
The Participant’s Service shall be deemed to have terminated on account
of death if the Participant dies within ninety (90) days after the Participant’s
termination of Service.


 


(c)                                  Termination
for Cause. 
Notwithstanding any other provision of this Option Agreement to the contrary, if the Participant’s
Service is terminated for Cause or if, following the Participant’s termination
of Service and during any period in which the Option otherwise would remain
exercisable, the Participant engages in any act that would constitute Cause,
the Option shall terminate in its entirety and cease to be exercisable
immediately upon such termination of Service or act.


 


(d)                                 Involuntary Termination
Absent a Change in Control.  If the
Participant’s Service terminates as a result of Involuntary Termination Absent
a Change in Control, then
(i) the Option, to the extent unexercised and exercisable for Vested
Shares on the date on which the Participant’s Service terminated, may be
exercised by the Participant (or the Participant’s guardian or legal
representative) at any time prior to the expiration of ninety (90) days after
the date on which the Participant’s Service terminated, but in any event no
later than the Option Expiration Date, and (ii) the number of Vested
Shares shall be increased as provided by the Retention and Severance Plan;
provided, however, that the cumulative number of Vested Shares shall not exceed
the Number of Option Shares.


 


(e)                                  Involuntary
Termination Following a Change in Control.  If the
Participant’s Service terminates as a result of Involuntary
Termination Following a Change in Control, then (i) the Option, to the extent unexercised
and exercisable for Vested Shares on the date on which the Participant’s
Service terminated, may be exercised by the Participant (or the Participant’s
guardian or legal representative) at any time prior to the expiration of ninety
(90) days after the date on which the Participant’s Service terminated, but in
any event no later than the Option Expiration Date, and (ii) the number of
Vested Shares shall be increased as provided by the Retention and Severance
Plan; provided, however, that the cumulative number of Vested Shares shall not
exceed the Number of Option Shares.


 


(f)                                    Other Termination of
Service.  If the Participant’s Service
terminates for any reason, except Disability, death, Cause, Involuntary Termination
Absent a Change in Control or Involuntary Termination Following a Change in
Control, the Option, to the extent unexercised and exercisable for Vested
Shares by the Participant on the date on which the Participant’s Service
terminated, may be exercised by the Participant within ninety (90) days after
the date on which the Participant’s Service terminated, but in any event no
later than the Option Expiration Date.


 


7.2                                 Extension if Exercise Prevented by Law.  Notwithstanding the foregoing, other than
termination of the Participant’s Service for Cause, 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 the later of (a) thirty (30) days after the date such
exercise first would no longer be prevented by such provisions, or (b) the
end of the applicable time period under Section 7.1, but in any event no
later than the Option Expiration Date.


 


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8.                                       CHANGE IN CONTROL.


 


8.1                                 Effect of Change in Control on Option.  In the event of a Change in Control, except
to the extent that the Committee determines to cash out the Option in
accordance with Section 14.1(c) of the Plan, the Committee in its
discretion shall either (a) arrange for the surviving, continuing,
successor, or purchasing corporation or other business entity or parent
thereof, as the case may be (the “Acquiror”),
to either assume or continue in full force and effect the Company’s rights and
obligations under the Option or substitute for the Option a substantially
equivalent option for the Acquiror’s stock or (b) provided that the
Participant’s Service has not terminated prior to the Change in Control, provide
that the number of Vested Shares shall be increased immediately prior to the
effective time of the Change in Control by an amount determined in accordance
with the Retention and Severance Plan; provided, however, that the cumulative
number of Vested Shares shall not exceed the Number of Option Shares set forth
in the Grant Notice.  Any exercise of the
Option that was permissible solely by reason of this Section shall be
conditioned upon the consummation of the Change in Control.  The Option shall terminate and cease to be
outstanding effective as of the time of consummation of the Change in Control
to the extent that the Option is neither assumed or continued by the Acquiror
in connection with the Change in Control nor exercised as of the effective time
of the Change in Control.


 


8.2                                 Federal Excise Tax Under Section 4999 of the Code.


 


(a)                                  Excess Parachute Payment. 
In the event that any acceleration of vesting pursuant to this Option
Agreement and any other payment or benefit received or to be received by the
Participant would subject the Participant to any excise tax pursuant to Section 4999
of the Code due to the characterization of such acceleration of vesting,
payment or benefit as an excess parachute payment under Section 280G of
the Code, the Participant may elect, in his or her discretion, to reduce the
amount of any acceleration of vesting called for under this Option Agreement in
order to avoid such characterization.


 


(b)                                 Determination by
Independent Accountants.  To aid the
Participant in making any election called for under Section 8.2(a), upon
the occurrence of any event that might reasonably be anticipated to give rise
to acceleration of vesting under Section 8.1, the Company shall promptly
request a determination in writing by independent public accountants selected
by the Company (the “Accountants”).  As soon as practicable thereafter, the
Accountants shall determine and report to the Company and the Participant the
amount of such acceleration of vesting, payments and benefits which would
produce the greatest after-tax benefit to the Participant.  For the purposes of such determination, the
Accountants may rely on reasonable, good faith interpretations concerning the
application of Sections 280G and 4999 of the Code.  The Company and the Participant shall furnish
to the Accountants such information and documents as the Accountants may
reasonably request in order to make their required determination.  The Company shall bear all fees and expenses
the Accountants may reasonably charge in connection with their services
contemplated by this Section.


 


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9.                                       ADJUSTMENTS FOR CHANGES IN
CAPITAL STRUCTURE.


 


Subject to any required action by the stockholders of
the Company and the requirements of Section 409A of the Code to the extent
applicable, in the event of any change in the Stock effected without receipt of
consideration by the Company, whether through merger, consolidation,
reorganization, reincorporation, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, split-up, split-off, spin-off,
combination of shares, exchange of shares, or similar change in the capital
structure of the Company, or in the event of payment of a dividend or
distribution to the stockholders of the Company in a form other than Stock
(excepting normal cash dividends) that has a material effect on the Fair Market
Value of shares of Stock, appropriate and proportionate adjustments shall be
made in the number, Exercise Price and kind of shares subject to the Option, in
order to prevent dilution or enlargement of the Participant’s rights under the
Option.  For purposes of the foregoing,
conversion of any convertible securities of the Company shall not be treated as
“effected without receipt of consideration by the Company.”  Any fractional share resulting from an
adjustment pursuant to this Section shall be rounded down to the nearest
whole number and the Exercise Price shall be rounded up to the nearest whole
cent.  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.  Such adjustments shall be
determined by the Committee, and its determination shall be final, binding and
conclusive.


 


10.                                 RIGHTS AS A STOCKHOLDER,
DIRECTOR, EMPLOYEE OR CONSULTANT.


 


The Participant shall have no rights as a stockholder
with respect to any shares covered by the Option until the date of the issuance
of the shares 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 the shares are issued, except as provided in Section 9.  If the Participant is an Employee, the
Participant understands and acknowledges that, except as otherwise provided in
a separate, written employment agreement between a Participating Company and
the Participant, the Participant’s employment is “at will” and is for
no specified term.  Nothing in this
Option Agreement shall confer upon the Participant any right to continue in the
Service of a Participating Company or interfere in any way with any right of
the Participating Company Group to terminate the Participant’s Service as a Director, an Employee
or Consultant, as the case may be, at any time.


 


11.                                 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 Participant shall,
at the request of the Company, promptly present to the Company any and all
certificates representing shares acquired pursuant to the Option in the
possession of the Participant in order to carry out the provisions of this
Section.


 


12.                                 ARBITRATION.


 


Except as provided by Section 12.6, in the event
a dispute between the parties to this Option Agreement arises out of, in
connection with, or with respect to this Option Agreement, or any breach of
this Option Agreement, such dispute will, on the written request of


 


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one (1) party delivered to the other party, be
submitted and settled by arbitration in San Mateo County, California in
accordance with the rules of the American Arbitration Association then in
effect and will comply with the California Arbitration Act, except as otherwise
specifically stated in this Section. 
Judgment upon the award rendered by the arbitrators may be entered in
any court having jurisdiction.  The
parties submit to the in personam jurisdiction of the Supreme Court of the
State of California for the purpose of confirming any such award and entering judgment
upon the award.  Notwithstanding anything
to the contrary that may now or in the future be contained in the rules of
the American Arbitration Association, the parties agree as follows:


 


12.1                           Each
party will appoint one individual approved by the American Arbitration
Association to hear and determine the dispute within twenty (20) days after
receipt of notice of arbitration from the noticing party.  The two (2) individuals so chosen will
select a third impartial arbitrator.  The
majority decision of the arbitrators will be final and binding upon the parties
to the arbitration.  If either party
fails to designate its arbitrator within twenty (20) days after delivery of the
notice provided for in this Section 12.1, then the arbitrator designated
by the one (1) party will act as the sole arbitrator and will be
considered the single, mutually approved arbitrator to resolve the
controversy.  In the event the parties
are unable to agree upon a rate of compensation for the arbitrators, they will
be compensated for their services at a rate to be determined by the American
Arbitration Association.


 


12.2                           The
parties will enjoy, but are not limited to, the same rights to discovery as
they would have in the United States District Court for the Northern District
of California.


 


12.3                           The
arbitrators will, upon the request of either party, issue a written opinion of
their findings of fact and conclusions of law.


 


12.4                           Upon
receipt by the requesting party of said written opinion, said party will have
the right within ten (10) days to file with the arbitrators a motion to
reconsider, and upon receipt of a timely request the arbitrators will
reconsider the issues raised by said motion and either confirm or change their
majority decision which will then be final and binding upon the parties to the
arbitration.


 


12.5                           The
arbitrators will award to the prevailing party in any such arbitration
reasonable expenses, including attorneys’ fees and costs, incurred in
connection with the dispute.


 


12.6                           The
foregoing provisions of this Section 12 shall not apply to any dispute
with respect to any provision of this Option Agreement governed by the
Retention and Severance Plan.  Any such
dispute shall be resolved as provided by the Retention and Severance Plan.


 


13.                                 MISCELLANEOUS PROVISIONS.


 


13.1                           Termination or Amendment. 
The Committee 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 Participant
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.


 


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13.2                           Further Instruments.  The
parties hereto agree to execute such further instruments and to take such
further action as may reasonably be necessary to carry out the intent of this
Option Agreement.


 


13.3                           Binding Effect.  This
Option Agreement shall inure to the benefit of the successors and assigns of
the Company and, subject to the restrictions on transfer set forth herein, be
binding upon the Participant and the Participant’s heirs, executors, administrators, successors and
assigns.


 


13.4                           Delivery of Documents and Notices.  Any document relating to participation in the
Plan or 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, electronic delivery at the e-mail address, if any,
provided for the Participant by a Participating Company, or upon deposit in the
U.S. Post Office or foreign postal service, by registered or certified mail, or
with a nationally recognized overnight courier service, with postage and fees
prepaid, addressed to the other party at the address shown below that party’s
signature to the Grant Notice or at such other address as such party may
designate in writing from time to time to the other party.


 


(a)                                  Description
of Electronic Delivery.  The Plan documents, which may include but do
not necessarily include: the Plan, the Grant Notice, this Option Agreement, the
Plan Prospectus, and any reports of the Company provided generally to the
Company’s stockholders, may be delivered to the Participant
electronically.  In addition, if
permitted by the Company, the Participant may deliver electronically the Grant Notice
and Exercise Notice called for by Section 4.2 to the Company or to such
third party involved in administering the Plan as the Company may designate
from time to time.  Such means of
electronic delivery may include but do not necessarily include the delivery of
a link to a Company intranet or the Internet site of a third party involved in
administering the Plan, the delivery of the document via e-mail or such other
means of electronic delivery specified by the Company.


 


(b)                                 Consent
to Electronic Delivery.  The
Participant acknowledges that the Participant has read Section 13.4(a) of
this Option Agreement and consents to the electronic delivery of the Plan
documents and, if permitted by the Company, the delivery of the Grant Notice
and Exercise Notice, as described in Section 13.4(a).  The Participant acknowledges that he or she
may receive from the Company a paper copy of any documents delivered
electronically at no cost to the Participant by contacting the Company by
telephone or in writing.  The Participant
further acknowledges that the Participant will be provided with a paper copy of
any documents if the attempted electronic delivery of such documents
fails.  Similarly, the Participant understands
that the Participant must provide the Company or any designated third party
administrator with a paper copy of any documents if the attempted electronic
delivery of such documents fails.  The
Participant may revoke his or her consent to the electronic delivery of documents
described in Section 13.4(a) or may change the electronic mail
address to which such documents are to be delivered (if Participant has
provided an electronic mail address) at any time by notifying the Company of
such revoked consent or revised e-mail address by telephone, postal service or electronic
mail.  Finally, the Participant
understands that he or she is not required to consent to electronic delivery of
documents described in Section 13.4(a).


 


10

















 


13.5                           Integrated Agreement. 
The Grant Notice, this Option Agreement and the Plan, together with the
Retention and Severance Plan and any employment, service or other agreement
between the Participant and a Participating Company referring to the Option,
shall constitute the entire understanding and agreement of the Participant and
the Participating Company Group with respect to the subject matter contained
herein or therein and supersede any prior agreements, understandings,
restrictions, representations, or warranties among the Participant and the
Participating Company Group with respect to such subject matter.  To the extent contemplated herein or therein,
the provisions of the Grant Notice, the Option Agreement and the Plan shall
survive any exercise of the Option and shall remain in full force and effect.


 


13.6                           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.


 


13.7                           Counterparts.  The
Grant Notice may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.


 


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  Participant:

  
	
   

  	
   

  
	
   

  	
           Date:

  



 


STOCK OPTION EXERCISE NOTICE


 


Facet
Biotech Corporation


Stock
Administrator


 


 


Ladies
and Gentlemen:


 


1.                                       Option.  I was granted a nonstatutory stock option
(the “Option”)
to purchase shares of the common stock (the “Shares”)
of Facet Biotech Corporation (the “Company”)
pursuant to the Company’s
2008 Equity Incentive Plan (the “Plan”),
my Notice of Grant of Stock Option (the “Grant Notice”)
and my Stock Option Agreement (the “Option
Agreement”) as follows:


 


Date of 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 are Vested Shares in
accordance with the Grant Notice and the Option Agreement:


 


Total Shares Purchased:


 


Total Exercise Price
(Total Shares  X  Price per Share)                                                                                                       $


 


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


 


TM  Cash:                                                                                                                                                                                                                                                                                                                                                $


 


TM  Check:                                                                                                                                                                                                                                                                                                                                          $


 


TM  Cashless Exercise:                                                                                                                                                                                                                                                                       Contact
Plan Administrator


 


TM  Net Exercise:                                                                                                                                                                                                                                                                                                    Contact
Plan Administrator


 


TM  Stock Tender Exercise:                                                                                                                                                                                                                                                Contact
Plan Administrator


 


4.                                       Tax Withholding.  I authorize payroll withholding and otherwise
will make adequate provision for the federal, state, local and foreign tax
withholding obligations of the Company, if any, in connection with the Option.


 

















 


5.                                       Participant Information.


 


My address is:


 


 


My Social Security Number
is:


 


6.                                       Binding Effect.  I agree that the Shares are being acquired in
accordance with and subject to the terms, provisions and conditions of the
Grant Notice, the Option Agreement and the Plan, to all of which I hereby
expressly assent.  This Agreement shall
inure to the benefit of and be binding upon my heirs, executors,
administrators, successors and assigns.


 


 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Receipt
  of the above is hereby acknowledged.

  	
   

  
	
   

  	
   

  
	
  Facet Biotech Corporation

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
							



 


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