Exhibit 10.1


 


Execution Copy


 


STOCKHOLDERS AGREEMENT


 


This STOCKHOLDERS AGREEMENT, dated as of December 16,
2009, is between Facet Biotech Corporation, a Delaware corporation (the “Company”), and The Baupost Group,
L.L.C., Baupost Value Partners, L.P.-IV, SAK Corporation and Seth A. Klarman
(collectively, the “Baupost Entities”).


 


RECITALS:


 


WHEREAS, as of the date hereof, the Baupost Entities
Beneficially Own (as defined below) an aggregate of 3,506,875 shares of common
stock, par value $0.01 per share, of the Company (“Common Stock”),
including the associated rights to purchase shares of Series A Preferred
Stock of the Company (“Rights”) issued pursuant to the Rights Agreement
(as defined below), which represents approximately 14.0% of the shares of
Common Stock outstanding as of the date hereof;


 


WHEREAS, pursuant to the terms of the Rights
Agreement, the Rights will become exercisable under certain circumstances,
including if a person becomes an Acquiring Person (as defined in the Rights
Agreement) by acquiring Beneficial Ownership (as defined below) of 15% or more
of the outstanding shares of Common Stock; and


 


WHEREAS, the Baupost Entities desire to have the
ability to purchase additional shares of Common Stock and have requested that
the Company amend the terms of the Rights Agreement so as to permit the Baupost
Entities to purchase such shares without causing the Rights to become
exercisable, and the Board has determined that it is in the best interest of
the Company’s stockholders to enter into such an amendment;


 


NOW, THEREFORE, in consideration of the foregoing
premises and of the mutual covenants and obligations hereinafter set forth, the
parties hereto hereby agree as follows:


 


ARTICLE I



DEFINITIONS


 


Section 1.1.   Certain Defined Terms.  As used herein, the following terms shall
have the following meanings:


 


“Acquiring Person” shall have the
meaning set forth in the Rights Agreement.


 


“Affiliate” and “Associate”
shall have the meaning set forth in the Rights Agreement.


 


“Agreement”
shall mean this Stockholders Agreement as it may be amended, supplemented,
restated or modified from time to time in accordance with the terms hereof.


 


“Beneficial Owner”, “Beneficially
Own” and “Beneficial Ownership” shall have the meaning set forth in
the Rights Agreement.


 


“Board” shall mean the Company’s board
of directors.


 

















 


“Business
Day” shall mean any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized by law to be closed in New York,
New York or San Francisco, California.


 


“Baupost Group” shall mean the Baupost
Entities, and all Affiliates and Associates of the Baupost Entities.


 


“Baupost Ownership Percentage” shall mean, at any time, the percentage of the
outstanding shares of Common Stock Beneficially Owned by the Baupost Group.


 


“Common Stock” shall have the meaning
set forth in the Recitals.


 


“Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder from time to time.


 


“Effective Date” shall have the meaning
set forth in Section 2.1.


 


“Exempted Shares” shall have the
meaning set forth in Section 2.2.


 


A Person shall be deemed the “Full Owner”
of, shall be deemed to “Fully Own” and shall be deemed to have “Full
Ownership” of, any securities if such Person not only Beneficially Owns
such securities but also owns all economic and pecuniary interest in such
securities and retains all voting rights (other than the proxy granted to the
Company pursuant to this Agreement), with there being no hedging transaction,
derivative transaction or other transaction resulting in any form of synthetic
ownership of such securities by any other Person (other than broad-based index
options, broad-based index futures and broad-based publicly traded market
baskets of stock approved for trading by the appropriate federal government
authority).


 


“Grantee” shall have the meaning set
forth in Section 3.2.


 


“Person”
shall mean any individual, corporation, limited liability company, limited or
general partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, other entity, government or any agency or
political subdivision thereof or any group pursuant to Section 13(d)(3) of
the Exchange Act comprised of two or more of the foregoing.


 


“Proportionate Voting” shall have the
meaning set forth in Section 3.1.


 


“Recommended Voting” shall have the
meaning set forth in Section 3.1.


 


“Rights” shall have the meaning set
forth in the Recitals.


 


“Rights Agreement” shall mean the
Rights Agreement, dated as of September 7, 2009, between the Company and
Mellon Investor Services LLC, as Rights Agent, as it may be amended,
supplemented, restated or modified from time to time in accordance with the
terms hereof and thereof, or any successor rights agreement adopted substantially
concurrently with the termination thereof or with the redemption of the Rights.


 


“Rights Amendment” shall have the
meaning set forth in Section 2.1.


 


2

















 


“Subject
Shares” shall mean as of a given date that number of shares of
Common Stock, if any, by which the aggregate Beneficial Ownership by the
Baupost Group of shares of Common Stock exceeds fifteen percent (15%) of the
outstanding shares of Common Stock on such date.


 


“Transfer”
shall mean, directly or indirectly, to sell, transfer, assign, pledge,
encumber, hypothecate or similarly dispose of (by operation of law or
otherwise), either voluntarily or involuntarily, or to enter into any contract,
option or other arrangement or understanding with respect to the sale,
transfer, assignment, pledge, encumbrance, hypothecation or similar disposition
of (by operation of law or otherwise), any Common Stock or any interest in any
Common Stock, including by tendering (or announcing an intention to tender)
into any tender offer, regardless of whether such Common Stock or interest is
purchased pursuant to such tender offer. 
For purposes of this Agreement, the term Transfer shall include the sale
of an Affiliate or Associate of any Baupost Entity or the Baupost Entity’s
interest in an Affiliate or Associate that Beneficially Owns shares of Common
Stock.


 


Section 1.2.  
Methodology for Calculations.  For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including any calculation for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) under the
Exchange Act as in effect on the date hereof.


 


ARTICLE II



ACQUISITION OF EXEMPTED SHARES


 


Section 2.1.  
Amendment of Rights Agreement.  If
the Rights are still then redeemable pursuant to Section 23 of the Rights
Agreement, the Company agrees to adopt an amendment to the Rights Agreement in
the form attached as Exhibit A hereto (the “Rights Amendment”) as
soon as practicable after execution hereof, and in any event within one (1) Business
Day of the date of this Agreement (the date of effectiveness of such Rights
Amendment, the “Effective Date”), which Rights Amendment will provide
that the acquisition by the Baupost Entities of the Exempted Shares, subject to
the terms and conditions provided herein and in the Rights Amendment, will not
result in any Baupost Entity becoming an Acquiring Person.


 


Section 2.2.  
Exempted Shares Definition.  The “Exempted
Shares” (a) shall consist of one share less than such number as would
result in a Baupost Ownership Percentage of twenty percent (20%) and (b) must
(i) consist solely of shares of Common Stock, and not include any common
stock equivalents or derivative securities and (ii) be Fully-Owned by the
Baupost Entities.


 


ARTICLE III



VOTING


 


Section 3.1.  
Voting .  Each of the Baupost
Entities hereby irrevocably and unconditionally agrees that during the term of
this Agreement, so long as the Baupost Ownership Percentage is equal to or
greater than fifteen percent (15%), at any meeting of the stockholders of 


 


3

















 


the
Company, however called, including any adjournment or postponement thereof, and
in connection with any written consent of the stockholders of the Company, each
Baupost Entity shall, and shall cause all Affiliates and Associates which
Beneficially Own any Subject Shares to, in each case to the fullest extent that
such matters are submitted for the vote or written consent of the Stockholder
and that the Subject Shares are entitled to vote thereon or consent thereto,
vote (or cause to be voted), in person or by proxy, or deliver (or cause to be
delivered) a written consent covering, all of the Subject Shares as to which
such Baupost Entity controls the right to vote either (i) in the same
proportion as the stockholders of the Company other than the Baupost Group vote
with respect to such matter (voting in such manner, “Proportionate Voting”)
or (ii) in accordance with the recommendation of the Board to the
stockholders of the Company with respect to such matter (voting in such manner,
“Recommended Voting”).  All
Subject Shares must be voted in Proportionate Voting or Recommended Voting as
provided in this Section 3.1, with the Baupost Entities having the right
to make the election between Proportionate Voting and Recommended Voting,
provided that if no such election is made by the Baupost Entities,
Proportionate Voting shall apply.  The
obligations of the Baupost Entities specified in this Section 3.1 shall
apply whether or not any action is recommended by the Board.


 


Section 3.2.  
Irrevocable Proxy.  Each of the
Baupost Entities hereby irrevocably appoints as its proxy, Andrew Guggenhime
and Francis Sarena, in their respective capacities as officers of the Company,
and any individual who shall hereafter succeed to any such officer of the
Company, and any other Person designated in writing by the Company  (collectively, the “Grantees”), each
of them individually, with full power of substitution, to vote or execute
written consents solely with respect to the Subject Shares in accordance with Section 3.1
hereof and, in the discretion of the Grantees, with respect to any proposed
adjournments of any annual or special meetings of the stockholders of the
Company.  This proxy is coupled with an interest and shall be irrevocable,
and each of the Baupost Entities will take such further action or execute such
other instruments as may be necessary to effectuate the intent of this proxy
and hereby revokes any proxy previously granted by any Baupost Entity with
respect to the Subject Shares that would otherwise conflict with the proxy
granted by this Section 3.2. The Company may terminate this proxy with
respect to the Stockholder at any time at its sole election by written notice
provided to the Baupost Entities.  Notwithstanding anything to the
contrary in this Agreement, the proxy granted by this Section 3.2 shall
terminate and be of no further force and effect upon valid termination of this
Agreement in accordance with Section 4.2 hereof.  Each Baupost Entity hereby ratifies and
confirms all that such irrevocable proxy may lawfully do or cause to be done by
virtue hereof.  Any Baupost Entity that
is not the record owner of the Subject Shares of which it is the Beneficial
Owner shall use reasonable efforts to cause the record owner of such Subject
Shares to execute and deliver an irrevocable proxy conforming to the provisions
of this Section 3.2.


 


Section 3.3.  
Quorum.  The Baupost Entities
shall be under no obligation with respect to any shares of Common Stock that it
Beneficially Owns, other than the Subject Shares as provided in Section 3.1,
to be present in person or represented by proxy at any meetings of
securityholders of the Company or to vote such shares of Common Stock.


 


4

















 


ARTICLE IV



MISCELLANEOUS


 


Section 4.1.  
Conflicting Agreements.  Each
party represents and warrants that it has not granted and is not a party to any
proxy, voting trust or other agreement that is inconsistent with or conflicts
with any provision of this Agreement.


 


Section 4.2.  
Termination.


 


(a)   This Agreement shall automatically terminate
upon the earlier of (i) expiration of the Rights Agreement or (ii) redemption
of the Rights by the Company except in connection with the substantially
concurrent adoption of a successor rights agreement.


 


(b)   Nothing in this Section 4.2 shall be
deemed to release any party from any liability for any willful and material
breach of this Agreement or to impair the right of any party to compel specific
performance by any other party of its obligations under this Agreement.


 


Section 4.3.  
Ownership Information.  The
Baupost Entities shall deliver to the Company promptly (but in no event more
than two (2) Business Days) after any Transfer of shares of Common Stock,
an accurate written report specifying the shares of Common Stock Transferred in
such transaction and the number of shares of Common Stock owned by the Baupost
Group after giving effect to such transaction; provided, however,
that no such report need be delivered with respect to any Transfer of shares of
Common Stock by the Baupost Group that is reported in a statement on Schedule
13D or a Form 4 filed with the Securities and Exchange Commission and
delivered to the Company by the Baupost Entities in accordance with Section 13(d) or
Section 16 of the Exchange Act, as applicable.  The Company shall be entitled to rely on the
most recently delivered report, statement on Schedule 13D, Form 4 or other
notice for all purposes of this Agreement, unless the Baupost Entities shall
have updated such information by delivery of a subsequent report, statement on
Schedule 13D, Form 4 or notice.


 


Section 4.4.  
Amendment and Waiver.  This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto. 
The failure of any party to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such provisions and shall
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.


 


Section 4.5.  
Severability.  If any provision of
this Agreement shall be declared by any court of competent jurisdiction to be
illegal, void or unenforceable, all other provisions of this Agreement shall
not be affected and shall remain in full force and effect.


 


Section 4.6.  
Entire Agreement.  Except as
otherwise expressly set forth herein, this Agreement, the Rights Amendment and
the Rights Agreement embody the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, that may have related to the subject matter hereof in
any way.  Without limiting the generality
of the foregoing, to the extent that any of the terms hereof are inconsistent
with the rights or obligations of the Baupost Entities under any other
agreement with the Company, the terms of this Agreement shall govern.


 


5

















 


Section 4.7.  
Successors and Assigns.  Neither
this Agreement nor any of the rights or obligations of any party under this
Agreement shall be assigned, in whole or in part (except by operation of law
pursuant to a merger whose purpose is not to avoid the provisions of this
Agreement), by any party without the prior written consent of the other
party.  Subject to the foregoing, this
Agreement shall bind and inure to the benefit of and be enforceable by the
parties hereto and their respective successors and permitted assigns.


 


Section 4.8.  
Counterparts.  This Agreement may
be executed in separate counterparts each of which shall be an original and all
of which taken together shall constitute one and the same agreement.


 


Section 4.9.  
Remedies.  Each party hereto
acknowledges that money damages would not be an adequate remedy in the event
that each and every one of the covenants or agreements in this Agreement are
not performed in accordance with their terms, and it is therefore agreed that,
in addition to and without limiting any other remedy or right it may have, the
non-breaching party will have the right to an injunction, temporary restraining
order or other equitable relief in any court of competent jurisdiction
enjoining any such breach and enforcing specifically each and every one of the
terms and provisions hereof.  Each party
hereto agrees not to oppose the granting of such relief in the event a court
determines that such a breach has occurred, and to waive any requirement for
the securing or posting of any bond in connection with such remedy.  All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning
of the exercise of any thereof by any party shall not preclude the simultaneous
or later exercise of any other such right, power or remedy by such party.


 


Section 4.10.  
Notices.  Any notice, request,
claim, demand or other communication under this Agreement shall be in writing,
shall be either personally delivered, sent by reputable overnight courier
service (charges prepaid), sent by facsimile to the address for such Person set
forth below or such other address as the recipient party has specified by prior
written notice to the other parties hereto and shall be deemed to have been
given hereunder on (i) the date of delivery if sent by messenger, (ii) on
the Business Day following the Business Day on which delivered to a recognized
courier service if sent by overnight courier or (iii) upon confirmation of
receipt, if sent by fax.


 


If to the Company:


 


Facet
Biotech Corporation


1500
Seaport Boulevard


Redwood
City, CA 94063


Attention:
General Counsel

Fax: 650-454-2000


 


with a copy (which shall not constitute
notice) to:


 


Simpson
Thacher & Bartlett LLP


2550 Hanover Street

Palo Alto, CA 94304

Attention:                 Richard Capelouto


Kirsten Jensen


Fax: 650-251-5002


 


6

















 


If to the Baupost Entities:


 


The
Baupost Group, L.L.C.

10 St. James Avenue, Suite 1700

Boston, Massachusetts 02116

Attention: Scott A. Stone

Fax: 617-451-7337


 


with a copy (which shall not constitute
notice) to:


 


Ropes &
Gray LLP

One International Place 

Boston, Massachusetts 02110

Attention: Gregory D. Sheehan, Esq.

Facsimile:  617-951-7050


 


Section 4.11.  
Governing Law; Consent to Jurisdiction. 
This Agreement shall be governed in all respects by the laws of the
State of Delaware.  Any disagreement,
issue, dispute, claim, demand or controversy arising out of or relating to this
Agreement (each, a “Dispute”) shall be brought only in the Court of
Chancery of the State of Delaware.  Each
of the parties hereby irrevocably consents to the jurisdiction of such court
(and of the appropriate appellate court therefrom) in any such Dispute and irrevocably
waives, to the fullest extent permitted by law, any objection that it may now
or hereafter have to the laying of the venue of any such Dispute in such court
and that any such Dispute which is brought in such court has been brought in an
inconvenient forum.  Process in any such
Dispute may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. 
Without limiting the foregoing, each party agrees that service of
process on such party as provided in Section 4.10 shall be deemed
effective service of process on such party. 
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.


 


Section 4.12.  
Change in Law, Etc.  In the event any law, rule or
regulation comes into force or effect (including by amendment) which conflicts
with the terms and conditions of this Agreement, or any court of competent
jurisdiction shall issue a final, non-appealable order invalidating or
enjoining the performance of any provision hereof, the parties shall negotiate
in good faith to revise this Agreement to achieve the parties’ intention set
forth herein.


 


Section 4.13.  
Interpretation.  The headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.  Whenever the words “include”, “includes” or “including”
are used in this Agreement, they shall be deemed to be followed by the words “without
limitation”.  The words “hereof “, “herein”
and “hereunder” and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Article, Section and Exhibit references are to this
Agreement unless otherwise specified. 
The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.


 


7

















 


IN WITNESS WHEREOF, the parties hereto have
executed this Stockholders Agreement as of the date first written above.


 


	
  FACET
  BIOTECH CORPORATION

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Andrew Guggenhime

  	
   

  
	
  Name:

  	
  Andrew
  Guggenhime

  	
   

  
	
  Title:

  	
  Senior
  Vice President and

  	
   

  
	
   

  	
  Chief
  Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  THE BAUPOST GROUP, L.L.C.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Seth A. Klarman

  	
   

  
	
  Name:

  	
  Seth
  A. Klarman

  	
   

  
	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  BAUPOST VALUE PARTNERS,
  L.P. —IV

  	
   

  
	
  By: The Baupost Group,
  L.L.C., its managing general partner

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Seth A. Klarman

  	
   

  
	
  Name:

  	
  Seth
  A. Klarman

  	
   

  
	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  SAK CORPORATION

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Seth A. Klarman

  	
   

  
	
  Name:

  	
  Seth
  A. Klarman

  	
   

  
	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/
  Seth A. Klarman

  	
   

  
	
  Seth A. Klarman

  	
   

  



 


8
















 


EXHIBIT A


 


AMENDMENT NO. 2 TO RIGHTS AGREEMENT


 


This Amendment No. 2
to Rights Agreement (this “Amendment”) is entered into as of December 16,
2009 by and between Facet Biotech Corporation, a Delaware corporation (the “Company”),
and Mellon Investor Services LLC, a New Jersey limited liability company, as
Right Agent (the “Rights Agent”).


 


RECITALS:


 


WHEREAS, the Company and the Rights Agent have
previously entered into a Rights Agreement dated as of September 7, 2009,
as amended on December 15, 2009 (the “Agreement”; capitalized terms
used but not defined herein shall have the meaning set forth in the Agreement);


 


WHEREAS, pursuant to Section 27
of the Agreement, for so long as the Rights are redeemable, the Company may in
its sole and absolute discretion amend any provision of the Agreement in any
respect without the approval of any holders of the Rights, as evidenced by a
writing signed by the Company and the Rights Agent;


 


WHEREAS, as of the date
hereof, the Rights are redeemable; and


 


WHEREAS, the Board of
Directors has deemed it fair, desirable and in the best interests of the
Company and its stockholders to allow the acquisition by certain existing
Company stockholders of additional shares of Common Stock without any such
stockholder becoming an Acquiring Person, and to amend the Agreement
accordingly as set forth below to permit such transaction, and has duly
authorized any officer of the Company to execute and deliver this Amendment.


 


NOW, THEREFORE, in consideration of the premises and
mutual agreements hereinafter set out and of other consideration (the receipt
and sufficiency of which are acknowledged), the parties hereto agree as
follows:


 


1.     Amendment
of Section 1(a) of the Agreement. 
The definition of “Acquiring Person” in Section 1(a) of the Agreement
is hereby amended and supplemented by amending and restating the last two
sentences thereof in their entirety and replacing them with the following three
sentences:


 


“Notwithstanding
anything contained in this Section 1(a) to the contrary, solely in
the case of any Person who is one of the BVF Entities (as defined below) and
with respect to no other Person: (A) a reference to “20%” shall be
substituted for each reference to “15%” in the foregoing provisions of this Section 1(a),
so as to permit the Beneficial Ownership of up to 20% of the Common Stock of
the Company by such BVF Entities pursuant to, and only if the BVF Entities are
acting in compliance with, the terms of the Stockholders Agreement, dated as of
December 15, 2009 between the Company and the BVF Entities and (B) in
the event that the BVF Ownership Percentage is greater than 15% and less than
20%, in the event of any Transfer (as defined below) by a BVF Entity, upon the
occurrence of any such Transfer such references shall automatically be deemed
replaced by references to the then-current BVF Ownership Percentage plus one
share of Common Stock, solely to the extent such then-current BVF Ownership
Percentage is both


 

















 


lower than the
previously applicable BVF Ownership Percentage and less than 20%, unless and
until such then-current BVF Ownership Percentage is less than 15%, at which
time all such references shall revert to “15%” and no additional changes shall
be made pursuant to this clause (B). 
Notwithstanding anything contained in this Section 1(a) to the
contrary, solely in the case of any Person who is one of the Baupost Entities
(as defined below) and with respect to no other Person: (A) a reference to
“20%” shall be substituted for each reference to “15%” in the foregoing
provisions of this Section 1(a), so as to permit the Beneficial Ownership
of up to 20% of the Common Stock of the Company by such Baupost Entities
pursuant to, and only if the Baupost Entities are acting in compliance with,
the terms of the Stockholders Agreement, dated as of December [16], 2009
between the Company and the Baupost Entities and (B) in the event that the
Baupost Ownership Percentage is greater than 15% and less than 20%, in the
event of any Transfer (as defined below) by a Baupost Entity, upon the occurrence
of any such Transfer such references shall automatically be deemed replaced by
references to the then-current Baupost Ownership Percentage plus one share of
Common Stock, solely to the extent such then-current Baupost Ownership
Percentage is both lower than the previously applicable Baupost Ownership
Percentage and less than 20%, unless and until such then-current Baupost
Ownership Percentage is less than 15%, at which time all such references shall
revert to “15%” and no additional changes shall be made pursuant to this clause
(B).  For purposes of this
definition:  “BVF Entities” shall
mean Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P., BVF
Investments, L.L.C., Investment 10, L.L.C., BVF Partners L.P., BVF Inc. and
Mark N. Lampert; “BVF Ownership Percentage” means, at any time, the
percentage of the outstanding Common Stock Beneficially Owned in the aggregate
by the BVF Entities and all Affiliates and Associates thereof as of such time; “Baupost
Entities” shall mean [The Baupost Group, L.L.C., Baupost Value Partners,
L.P.-IV, SAK Corporation and Seth A. Klarman]; “Baupost  Ownership
Percentage” means, at any time, the percentage of the outstanding Common
Stock Beneficially Owned in the aggregate by the Baupost Entities and all Affiliates
and Associates thereof as of such time; and solely as used in this Section 1(a),
“Transfer” shall mean, directly or indirectly, to sell, transfer,
assign, pledge, encumber, hypothecate or similarly dispose of (by operation of
law or otherwise), either voluntarily or involuntarily, or to enter into any
contract, option or other arrangement or understanding with respect to the
sale, transfer, assignment, pledge, encumbrance, hypothecation or similar
disposition of (by operation of law or otherwise), any Common Stock or any
interest in any Common Stock, including by tendering (or announcing an
intention to tender) into any tender offer, regardless of whether such Common
Stock or interest is purchased pursuant to such tender offer, and for such
purpose the term “Transfer” shall include (1) in the case of any BVF
Entity, the sale of an Affiliate or Associate of any BVF Entity or the BVF
Entity’s interest in an Affiliate or Associate that Beneficially Owns shares of
Common Stock and (2) in the case of any Baupost Entity, the sale of an
Affiliate or Associate of any Baupost Entity or the Baupost Entity’s interest
in an Affiliate or Associate that Beneficially Owns shares of Common Stock.”


 


2.     Governing Law.  This
Amendment and the Agreement, as amended hereby, shall be governed by and
construed in accordance with the laws of the State of Delaware, provided, however, that all provisions regarding
the rights, duties, obligations and liabilities of the Rights Agent shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed entirely within such state.


 


A-2

















 


3.     Effect
of Amendment.  Except as expressly
modified hereby, the Agreement remains in full force and effect.  Upon the execution and delivery hereof, as of
the day and year first above written, the Agreement shall thereupon be deemed
to be amended and supplemented as hereinabove set forth as fully and with the
same effect as if the amendments and supplements made hereby were originally
set forth in the Agreement, and this Amendment and the Agreement shall
henceforth be read, taken and construed as one and the same instrument, but
such amendments and supplements shall not operate so as to render invalid or
improper any action heretofore taken under the Agreement.


 


4.     Descriptive
Headings.  Section headings in
this Amendment are included herein for convenience of reference only and shall
not constitute a part of this Amendment for any other purpose.


 


5.     Counterparts.  This Amendment may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Amendment and all of which, when taken together, will be deemed to constitute
one and the same agreement.  The exchange
of copies of this Amendment and of signature pages by facsimile or
electronic transmission shall constitute effective execution and delivery of
this Amendment as to the parties hereto and may be used in lieu of the original
Amendment for all purposes.  Signatures
of the parties hereto transmitted electronically or by facsimile shall be
deemed to be their original signatures for all purposes.


 


6.     Severability.  If any term, provision or restriction of this
Amendment is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions or
restriction of this Amendment shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.


 


[Signature Page Follows]


 


A-3

















 


IN WITNESS WHEREOF, the parties hereto have
caused this Amendment to be executed as of the day and year first above
written.


 


	
   

  	
  FACET BIOTECH CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  MELLON INVESTOR SERVICES LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name: 

  	
  Asa Drew

  
	
   

  	
  Title:

  	
  Vice President &
  Senior Relationship Manager

  



 


A-4