Document:

Exhibit 10.9

 

Indemnity Agreement

 

This
Indemnity Agreement (this “Agreement”), dated as of                                     ,
2008, is made by and between Facet Biotech Corporation, a Delaware corporation
(the “Company”), and                                                     ,
an individual (the “Indemnitee”).

 

Background

 

A.            The Company is aware
that competent and experienced persons are increasingly reluctant to serve as
directors, officers or agents of corporations unless they are protected by comprehensive
liability insurance or indemnification, due to increased exposure to litigation
costs and risks resulting from their service to such corporations, and due to
the fact that the exposure frequently bears no reasonable relationship to the
compensation of such directors, officers and other agents.

 

B.            The statutes and
judicial decisions regarding the duties of directors and officers are often
difficult to apply, ambiguous, or conflicting, and therefore fail to provide
such directors, officers and agents with adequate, reliable knowledge of legal
risks to which they are exposed or information regarding the proper course of
action to take.

 

C.            Plaintiffs often seek
damages in such large amounts and the costs of litigation may be so enormous
(whether or not the case is meritorious), that the defense and/or settlement of
such litigation is often beyond the personal resources of directors, officers
and other agents.

 

D.            The Company believes
that it is unfair for its directors, officers and agents and the directors,
officers and agents of its subsidiaries to assume the risk of huge judgments
and other expenses which may occur in cases in which the director, officer or
agent received no personal profit and in cases where the director, officer or
agent was not culpable.

 

E.             The Company
recognizes that the issues in controversy in litigation against a director,
officer or agent of a corporation such as the Company or its subsidiaries are
often related to the knowledge, motives and intent of such director, officer or
agent, that he is usually the only witness with knowledge of the essential
facts and exculpating circumstances regarding such matters, and that the long
period of time which usually elapses before the trial or other disposition of
such litigation often extends beyond the time that the director, officer or
agent can reasonably recall such matters and may extend beyond the normal time
for retirement for such director, officer or agent with the result that he,
after retirement or in the event of his death, his spouse, heirs, executors or
administrators, may be faced with limited ability and undue hardship in
maintaining an adequate defense, which may discourage such a director, officer
or agent from serving in that position.

 

F.             Based upon their
experience as business managers, the Board of Directors of the Company (the “Board”)
has concluded that, to retain and attract talented and experienced individuals
to serve as directors, officers and agents of the Company and its subsidiaries
and to encourage such individuals to take the business risks necessary for the
success of the Company and its subsidiaries, it is necessary for the Company to
contractually indemnify its directors, officers and agents and the directors,
officers and agents of its subsidiaries, and to assume for itself maximum
liability for expenses and damages in connection with claims against such 

 

 

directors, officers and
agents in connection with their service to the Company and its subsidiaries,
and has further concluded that the failure to provide such contractual
indemnification could result in great harm to the Company and its subsidiaries
and the Company’s stockholders.

 

G.            Section 145 of
the General Corporation Law of Delaware, under which the Company is organized (“Section 145”),
empowers the Company to indemnify its directors, officers, employees and agents
by agreement and to indemnify persons who serve, at the request of the Company,
as the directors, officers, employees or agents of other corporations or
enterprises, and expressly provides that the indemnification provided by Section 145
is not exclusive.

 

H.            The Company desires
and has requested the Indemnitee to serve or continue to serve as a director,
officer or agent of the Company and/or one or more subsidiaries of the Company
free from undue concern for claims for damages arising out of or related to
such services to the Company and/or one or more subsidiaries of the Company.

 

I.              Indemnitee is
willing to serve, or to continue to serve, the Company and/or one or more
subsidiaries of the Company, provided that
he is furnished the indemnity provided for in this Agreement.

 

Agreement

 

The
Company and Indemnitee, intending to be legally bound, agree as follows:

 

1.             Definitions.

 

(a)           Agent.  For the purposes of this Agreement, “agent”
of the Company means any person who is or was a director, officer, employee or
other agent of the Company or a subsidiary of the Company; or is or was serving
at the request of, for the convenience of, or to represent the interests of the
Company or a subsidiary of the Company as a director, officer, employee or
agent of another foreign or domestic corporation, partnership, joint venture,
trust or other enterprise; or was a director, officer, employee or agent of a
foreign or domestic corporation which was a predecessor corporation of the
Company or a subsidiary of the Company, or was a director, officer, employee or
agent of another enterprise at the request of, for the convenience of, or to
represent the interests of such predecessor corporation.

 

(b)           Expenses.  For purposes of this Agreement, “expenses”
include all out-of-pocket costs of any type or nature whatsoever (including,
without limitation, all attorneys’ fees and related disbursements), actually
and reasonably incurred by the Indemnitee in connection with either the
investigation, defense or appeal of a proceeding or establishing or enforcing a
right to indemnification under this Agreement or Section 145 or otherwise;
provided, however,
that “expenses” shall not include any judgments, fines, ERISA excise taxes or
penalties, or amounts paid in settlement of a proceeding.

 

(c)           Proceeding.  For the purposes of this Agreement, “proceeding”
means any threatened, pending, or completed action, suit or other proceeding,
whether civil, criminal, administrative, or investigative.

 

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(d)           Subsidiary.  For purposes of this Agreement, “subsidiary”
means any corporation of which more than 50% of the outstanding voting
securities is owned directly or indirectly by the Company, by the Company and
one or more other subsidiaries, or by one or more other subsidiaries.

 

2.             Agreement to Serve.  The Indemnitee agrees to serve and/or
continue to serve as agent of the Company, at its will (or under separate
agreement, if such agreement exists), in the capacity Indemnitee currently
serves as an agent of the Company, so long as he is duly appointed or elected
and qualified in accordance with the applicable provisions of the Bylaws of the
Company or any subsidiary of the Company or until such time as he tenders his
resignation in writing; provided, however, that nothing contained in this Agreement is
intended to create any right to continued employment by Indemnitee.

 

3.             Liability
Insurance.

 

(a)           Maintenance
of D&O Insurance.  The Company
hereby covenants and agrees that, so long as the Indemnitee shall continue to
serve as an agent of the Company and thereafter so long as the Indemnitee shall
be subject to any possible proceeding by reason of the fact that the Indemnitee
was an agent of the Company, the Company, subject to Section 3(c), shall
promptly obtain and maintain in full force and effect directors’ and officers’
liability insurance (“D&O Insurance”) in reasonable amounts from
established and reputable insurers.

 

(b)           Rights
and Benefits.  In all policies of
D&O Insurance, the Indemnitee shall be named as an insured in such a manner
as to provide the Indemnitee the same rights and benefits as are accorded to
the most favorably insured of the Company’s directors, if the Indemnitee is a
director; or of the Company’s officers, if the Indemnitee is not a director of
the Company but is an officer; or of the Company’s key employees, if the
Indemnitee is not a director or officer but is a key employee.

 

(c)           Limitation
on Required Maintenance of D&O Insurance.  Notwithstanding the foregoing, the Company
shall have no obligation to obtain or maintain D&O Insurance if the Company
determines in good faith that such insurance is not reasonably available, the
premium costs for such insurance are disproportionate to the amount of coverage
provided, the coverage provided by such insurance is limited by exclusions so
as to provide an insufficient benefit, or the Indemnitee is covered by similar
insurance maintained by a subsidiary of the Company.

 

4.             Mandatory
Indemnification.  Subject to Section 9,
the Company shall indemnify the Indemnitee as follows:

 

(a)           Third
Party Actions.  If the Indemnitee is
a person who was or is a party or is threatened to be made a party to any
proceeding (other than an action by or in the right of the Company) by reason
of the fact that he is or was an agent of the Company, or by reason of anything
done or not done by him in any such capacity, the Company shall indemnify the
Indemnitee against any and all expenses and liabilities of any type whatsoever
(including, but not limited to, judgments, fines, ERISA excise taxes and
penalties, and amounts paid in settlement) actually and reasonably incurred by
him in connection with the investigation, defense, settlement or appeal of such
proceeding, provided the Indemnitee acted in good
faith and in a manner he 

 

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reasonably
believed to be in or not opposed to the best interests of the Company and its
stockholders, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.

 

(b)           Derivative
Actions.  If the Indemnitee is a
person who was or is a party or is threatened to be made a party to any
proceeding by or in the right of the Company by reason of the fact that he is
or was an agent of the Company, or by reason of anything done or not done by
him in any such capacity, the Company shall indemnify the Indemnitee against
all expenses actually and reasonably incurred by him in connection with the
investigation, defense, settlement, or appeal of such proceeding, provided the Indemnitee acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Company and its stockholders; except that no indemnification under this Section 4(b) shall
be made in respect to any claim, issue or matter as to which such person shall
have been finally adjudged to be liable to the Company by a court of competent
jurisdiction unless and only to the extent that the court in which such
proceeding was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such amounts
which the court shall deem proper.

 

(c)           Actions
where Indemnitee is Deceased.  If the
Indemnitee is a person who was or is a party or is threatened to be made a
party to any proceeding by reason of the fact that he is or was an agent of the
Company, or by reason of anything done or not done by him in any such capacity,
and if prior to, during the pendency of after completion of such proceeding
Indemnitee becomes deceased, the Company shall indemnify the Indemnitee’s
heirs, executors and administrators against any and all expenses and
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes and penalties, and amounts paid in settlement)
actually and reasonably incurred to the extent Indemnitee would have been entitled
to indemnification pursuant to Sections 4(a) or 4(b) were
Indemnitee still alive.

 

(d)           Limitations.  Notwithstanding the foregoing, the Company
shall not be obligated to indemnify the Indemnitee for expenses or liabilities
of any type whatsoever (including, but not limited to, judgments, fines, ERISA
excise taxes and penalties, and amounts paid in settlement) for which payment
is actually made to or on behalf of Indemnitee under a valid and collectible
insurance policy of D&O Insurance, or under a valid and enforceable
indemnity clause, by-law or agreement.

 

5.             Partial
Indemnification.  If the Indemnitee
is entitled under any provision of this Agreement to indemnification by the
Company for some or a portion of any expenses or liabilities of any type
whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes
and penalties, and amounts paid in settlement) incurred by him in the
investigation, defense, settlement or appeal of a proceeding, but not entitled,
however, to indemnification for all of the total amount hereof, the Company
shall nevertheless indemnify the Indemnitee for such total amount except as to
the portion hereof to which the Indemnitee is not entitled.

 

6.             Mandatory
Advancement of Expenses.  Subject to Section 9(a),
the Company shall advance all expenses incurred by the Indemnitee in connection
with the investigation, defense, settlement or appeal of any proceeding to
which the Indemnitee is a party or is threatened to be made a party by reason
of the fact that the Indemnitee is or was an agent of the 

 

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Company.  Indemnitee hereby undertakes to repay such
amounts advanced only if, and to the extent that, it shall be determined
ultimately that the Indemnitee is not entitled to be indemnified by the Company
as authorized hereby.  The advances to be
made under this Agreement shall be paid by the Company to the Indemnitee within
twenty (20) days following delivery of a written request therefor by the
Indemnitee to the Company.  In the event
that the Company fails to pay expenses as incurred by the Indemnitee as
required by this paragraph, Indemnitee may seek mandatory injunctive relief
from any court having jurisdiction to require the Company to pay expenses as
set forth in this paragraph.  If
Indemnitee seeks mandatory injunctive relief pursuant to this paragraph, it
shall not be a defense to enforcement of the Company’s obligations set forth in
this paragraph that Indemnitee has an adequate remedy at law for damages.

 

7.             Notice and Other
Indemnification Procedures.

 

(a)           Notice
by Indemnitee.  Promptly after
receipt by the Indemnitee of notice of the commencement of or the threat of
commencement of any proceeding, the Indemnitee shall, if the Indemnitee
believes that indemnification with respect thereto may be sought from the
Company under this Agreement, notify the Company of the commencement or threat
of commencement thereof.

 

(b)           Notice
by Company.  If, at the time of the
receipt of a notice of the commencement of a proceeding pursuant to Section 7(a),
the Company has D&O Insurance in effect, the Company shall give prompt
notice of the commencement of such proceeding to the insurers in accordance
with the procedures set forth in the respective policies.  The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of the
Indemnitee, all amounts payable as a result of such proceeding in accordance
with the terms of such policies.

 

(c)           Defense.  In the event the Company shall be obligated
to pay the expenses of any proceeding against the Indemnitee, the Company, if
appropriate, shall be entitled to assume the defense of such proceeding, with
counsel approved by the Indemnitee, upon the delivery to the Indemnitee of
written notice of its election so to do. 
After delivery of such notice, approval of such counsel by the
Indemnitee and the retention of such counsel by the Company, the Company will
not be liable to the Indemnitee under this Agreement for any fees of counsel
subsequently incurred by the Indemnitee with respect to the same proceeding, provided that (i) the Indemnitee shall have the right
to employ his counsel in any such proceeding at the Indemnitee’s expense; and (ii) if
(A) the employment of counsel by the Indemnitee has been previously
authorized by the Company, (B) the Indemnitee shall have reasonably
concluded that there may be a conflict of interest between the Company and the
Indemnitee in the conduct of any such defense, or (C) the Company shall
not, in fact, have employed counsel to assume the defense of such proceeding,
then the fees and expenses of Indemnitee’s counsel shall be at the expense of
the Company.

 

8.             Determination of
Right to Indemnification.

 

(a)           Successful
Defense.  To the extent the
Indemnitee has been successful on the merits or otherwise in defense of any
proceeding (including, without limitation, an action by or in the right of the
Company) to which the Indemnitee was a party by reason of the fact that he 

 

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is or was an agent
of the Company at any time, the Company shall indemnify the Indemnitee against
all expenses of any type whatsoever actually and reasonably incurred by him in
connection with the investigation, defense or appeal of such proceeding.

 

(b)           Other
Situations.  In the event that Section 8(a) is
inapplicable, the Company shall also indemnify the Indemnitee unless, and
except to the extent that, the Company shall prove by clear and convincing
evidence in a forum listed in Section 8(c) that the Indemnitee has
not met the applicable standard of conduct required to entitle the Indemnitee
to such indemnification.

 

(c)           Selection
of Forum.  The Indemnitee shall be
entitled to select the forum in which the validity of the Company’s claim under
Section 8(b) that the Indemnitee is not entitled to indemnification
will be heard from among the following:

 

(i)            A quorum
of the Board consisting of directors who are not parties to the proceeding for
which indemnification is being sought;

 

(ii)           The
stockholders of the Company;

 

(iii)          Legal
counsel selected by the Indemnitee, and reasonably approved by the Board, which
counsel shall make such determination in a written opinion; or

 

(iv)          A panel of
three arbitrators, one of whom is selected by the Company, another of whom is
selected by the Indemnitee and the last of whom is selected by the first two
arbitrators so selected.

 

(d)           Submission
to Forum.  As soon as practicable,
and in no event later than thirty (30) days after written notice of the
Indemnitee’s choice of forum pursuant to Section 8(c), the Company shall,
at its own expense, submit to the selected forum in such manner as the
Indemnitee or the Indemnitee’s counsel may reasonably request, its claim that
the Indemnitee is not entitled to indemnification; and the Company shall act in
the utmost good faith to assure the Indemnitee a complete opportunity to defend
against such claim.

 

(e)           Application
to Court of Chancery. 
Notwithstanding a determination by any forum listed in Section 8(c) that
Indemnitee is not entitled to indemnification with respect to a specific
proceeding, the Indemnitee shall have the right to apply to the Court of
Chancery of Delaware, the court in which that proceeding is or was pending or
any other court of competent jurisdiction, for the purpose of enforcing the
Indemnitee’s right to indemnification pursuant to this Agreement.

 

(f)            Expenses
Related to this Agreement. 
Notwithstanding any other provision in this Agreement to the contrary,
the Company shall indemnify the Indemnitee against all expenses incurred by the
Indemnitee in connection with any hearing or proceeding under this Section 8
involving the Indemnitee and against all expenses incurred by the Indemnitee in
connection with any other proceeding between the Company and the Indemnitee
involving the interpretation or enforcement of the rights of the Indemnitee
under this Agreement unless a court of competent jurisdiction finds that each
of the claims and/or defenses of the Indemnitee in any such proceeding was
frivolous or made in bad faith.

 

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9.             Exceptions.  Any other provision in this Agreement to the
contrary notwithstanding, the Company shall not be obligated pursuant to the
terms of this Agreement:

 

(a)           Claims
Initiated by Indemnitee.  To
indemnify or advance expenses to the Indemnitee with respect to proceedings or
claims initiated or brought voluntarily by the Indemnitee and not by way of
defense, unless (i) such indemnification is expressly required to be made
by law, (ii) the proceeding was authorized by the Board, (iii) such
indemnification is provided by the Company, in its sole discretion, pursuant to
the powers vested in the Company under the General Corporation Law of Delaware
or (iv) the proceeding is brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law or otherwise
as required under Section 145;

 

(b)           Lack
of Good Faith.  To indemnify the
Indemnitee for any expenses incurred by the Indemnitee with respect to any
proceeding instituted by the Indemnitee to enforce or interpret this Agreement,
if a court of competent jurisdiction determines that each of the material
assertions made by the Indemnitee in such proceeding was not made in good faith
or was frivolous; or

 

(c)           Unauthorized
Settlements.  To indemnify the
Indemnitee under this Agreement for any amounts paid in settlement of a
proceeding unless the Company consents to such settlement, which consent shall
not be unreasonably withheld.

 

10.           Non-exclusivity.  The provisions for indemnification and
advancement of expenses set forth in this Agreement shall not be deemed
exclusive of any other rights which the Indemnitee may have under any provision
of law, the Company’s Certificate of Incorporation or Bylaws, the vote of the
Company’s stockholders or disinterested directors, other agreements, or
otherwise, both as to action in his official capacity and to action in another
capacity while occupying his position as an agent of the Company, and the
Indemnitee’s rights under this Agreement shall continue after the Indemnitee
has ceased acting as an agent of the Company and shall inure to the benefit of
the heirs, executors and administrators of the Indemnitee.

 

11.           Enforcement.  Any right to indemnification or advances
granted by this Agreement to Indemnitee shall be enforceable by or on behalf of
Indemnitee in any court of competent jurisdiction if (i) the claim for
indemnification or advances is denied, in whole or in part, or (ii) no
disposition of such claim is made within ninety (90) days of request
therefor.  Indemnitee, in such
enforcement action, if successful in whole or in part, shall be entitled to be
paid also the expense of prosecuting his claim. 
It shall be a defense to any action for which a claim for indemnification
is made under this Agreement (other than an action brought to enforce a claim
for expenses pursuant to Section 6, provided that
the required undertaking has been tendered to the Company) that Indemnitee is
not entitled to indemnification because of the limitations set forth in
Sections 4 and 9.  Neither the
failure of the Company (including its Board of Directors or its stockholders)
to have made a determination prior to the commencement of such enforcement
action that indemnification of Indemnitee is proper in the circumstances, nor
an actual determination by the Company (including its Board of Directors or its
stockholders) that such indemnification is improper, shall be a defense to the
action or create a presumption that Indemnitee is not entitled to
indemnification under this Agreement or otherwise.

 

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12.           Subrogation.  In the event the Company is obligated to make
a payment under this Agreement, the Company shall be subrogated to the extent of
such payment to all of the rights of recovery under an insurance policy or any
other indemnity agreement covering the Indemnitee, who shall execute all
documents required and shall do all acts that may be necessary to secure such
rights and to enable the Company effectively to bring suit to enforce such
rights.

 

13.           Survival of Rights.

 

(a)           All
agreements and obligations of the Company contained in this Agreement shall
continue during the period Indemnitee is an agent of the Company and shall
continue thereafter so long as Indemnitee shall be subject to any possible
claim or threatened, pending or completed action, suit or proceeding, whether
civil, criminal, arbitrational, administrative or investigative, by reason of
the fact that Indemnitee was serving in the capacity referred to in this
Agreement.

 

(b)           The
Company shall require any successor to the Company (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Company, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place.

 

14.           Interpretation of
Agreement.  It is understood that the
Company and Indemnitee intend this Agreement to be interpreted and enforced so
as to provide indemnification to the Indemnitee to the fullest extent permitted
by law including those circumstances in which indemnification would otherwise
be discretionary.

 

15.           Severability.  If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, (i) the validity, legality and enforceability of the remaining
provisions of the Agreement (including without limitation, all portions of any
paragraphs of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby, and (ii) to
the fullest extent possible, the provisions of this Agreement (including,
without limitation, all portions of any paragraph of this Agreement containing
any such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent manifested by the provision held invalid, illegal or
unenforceable and to give effect to Section 14.

 

16.           Modification and
Waiver.  No supplement, modification
or amendment of this Agreement shall be binding unless executed in writing by
both of the Company and Indemnitee.  No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provisions of this Agreement (whether or not
similar) nor shall such waiver constitute a continuing waiver.

 

17.           Notices.  All notices and other communications
hereunder shall be in writing and shall be deemed given if properly addressed: (a) if
delivered personally or by commercial delivery service, on the day of delivery;
or (b) if delivered by registered or certified mail (return receipt
requested), or first class mail, three business days after mailing.  Notices shall be deemed 

 

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to be properly
addressed to either party if addressed to the following addresses (or at such
other address for a party as shall be specified by like notice):

 

If to the Company:               Facet Biotech Corporation

1400 Seaport Boulevard

Redwood City, CA 
94063

Attention: 
General Counsel

 

If to Indemnitee:                   To the address
set forth on the signature page to this Agreement

 

18.           Governing Law.  This Agreement shall be governed exclusively
by and construed according to the laws of the State of Delaware as applied to
contracts between Delaware residents entered into and to be performed entirely
within Delaware.

 

The
Company and Indemnitee have entered into this Agreement effective as of the
date first above written.

 

	
  Facet Biotech Corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Indemnitee’s name]

  
	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
  Ttile:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
							

 

9Exhibit 10.10

 

Form of Facet Offer Letter for CEO

 

[Date]

 

Mr. Faheem Hasnain

[Address]

[City, State Zip]

 

Dear Faheem:

 

On behalf of Facet Biotech Corporation (“Facet” or “we”),
I am pleased to extend to you an employment offer for the position of President
and Chief Executive Officer, reporting to our Board of Directors (the “Board”).  Also, you will be appointed to the Board
effective as of the date you become President and Chief Executive Officer.  Your employment with Facet will begin on [                    ]
(the “Employment Date”).

 

You agree that you will devote your full business time and efforts to Facet.  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 monthly base salary for this position (as in effect from time to
time, “Base Salary”) will be $45,833.33 ($550,000/annually), less
applicable taxes and withholdings, and will be payable in accordance Facet’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
Facet.  Your annual target bonus will be
set at 75% of your annual Base Salary. 
Your bonus with respect to 2008 service will be prorated based on your
start date with PDL BioPharma, Inc. (“PDL”) and based on your
contribution to PDL’s and Facet’s achievement of 2008 goals and objectives during
2008 and your individual performance during this period as determined by the 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.

 

In lieu of your participation in the Facet relocation policy applicable
to your position with Facet (except as provided in the next sentence),
beginning on the commencement of your employment with Facet and ending on the
earlier of the date of your termination of employment with Facet or the second
anniversary of the date of your commencement of employment with PDL, Facet will
pay to you a monthly housing allowance of $6,000.00 (except to the extent of
any such housing allowance pre-paid by PDL). 
In addition, Facet will reimburse you for reasonable moving expenses
from you current residence in San Diego, California to the San Francisco Bay
area in accordance with Facet’s relocation policy applicable to your position
with Facet, reduced by the sum of any such moving expenses reimbursed to you by
PDL.  Any reimbursement of expenses or in-kind benefit you are entitled to
receive pursuant to this paragraph shall be subject to the following: (i) such
reimbursements shall be paid no later than the last day of your taxable year
following the taxable year in which the expense was incurred, (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits to be provided, during any taxable year
shall not affect the expenses eligible for reimbursement, or in-kind benefits
to be provided, in any other taxable year, and (iii) the right
to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

 

We also offer to our employees other incentive programs and a 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 company guidelines.

 

The Compensation Committee of the Board will grant to you (i) an
option (the “Facet Option”) to purchase 300,000 shares of common stock
of Facet, reduced pro rata to the extent that you exercise any portion of the
option to purchase shares of common stock of PDL granted to you upon the
commencement of your employment with PDL, with an exercise price per share
equal to the fair market value of a share of our common stock on the grant date,
and (ii) a restricted stock award (the “Facet Stock Award”) for 100,000
shares of common stock of Facet, reduced pro rata to the extent that you vest
in any of the restricted shares of common stock of PDL granted to you upon the
commencement of your employment with PDL. 
The Facet Option and Facet Stock Award will be granted under Facet’s
2008 Equity Incentive Plan (the “Equity Plan”) and will be subject to
your execution of a Notice of Grant of Stock Option and Notice of Grant of
Restricted Stock Award in the forms attached hereto, respectively, and the
terms and conditions of the Equity Plan and applicable award agreement and
Facet’s Retention and Severance Plan (the “Facet Severance Plan”),
subject to your entry into an agreement to participate in the Facet Severance
Plan.  Subject to your continued
employment with Facet, the Facet Option will vest with respect to one-fourth of
the shares one year after the date you started your employment with PDL (the “PDL
Start Date”) and the remainder will vest in 

 

2

 

36 equal monthly increments commencing with the month following the
first anniversary of the PDL Start Date.  Subject to your continued
employment with Facet, the Facet Stock Award will vest with respect to
one-fourth of the shares annually, with the first such installment vesting on
the date one year after the PDL Start Date. 
We expect that the Facet Option and the Facet Stock Award will be
granted approximately 20 trading days after the spin-off of Facet from PDL.  Beginning with the second year following the
commencement of your employment with PDL, you shall be eligible for annual
equity awards in an amount commensurate with your title and position at Facet,
as determined by the Compensation Committee of the Board in its discretion,
taking into account your, PDL’s and Facet’s performance over the preceding
year.

 

Your employment with Facet as President and Chief Executive Officer
will not be for a set term, and you will be an at-will employee.  As a Facet 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.  Facet will designate you a “Participant” in
the Facet Severance Plan, subject to your entry into an agreement to
participate in such plan.  The Facet
Severance Plan will include, with respect to your participation in such plan, a
“gross-up” payment provision substantially similar to that set forth in Section 6.1
of the PDL BioPharma, Inc. Retention and Severance Plan for Chief
Executive Officer attached as Exhibit B to the offer letter employment
agreement between you and PDL, dated September 17, 2008.  In the event that your employment with Facet
terminates, you will be entitled to receive the applicable benefits provided
under the Facet Severance Plan, subject to its terms and conditions.

 

Facet intends that income provided to you pursuant to this letter
agreement will not be subject to taxation under Section 409A of the
Internal Revenue Code of 1986, as amended. 
The provisions of this letter agreement shall be interpreted and
construed in favor of satisfying any applicable requirements of Section 409A.

 

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

 

[Remainder of Page Intentionally Blank]

 

3

 

To indicate your acceptance of our offer, please sign and date this
letter in the space provided below and return it, along with a signed copy of
the enclosed Proprietary Information and Invention Assignment Agreement, to                   
in the enclosed envelope.  This 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 letter may not be modified or amended except by a written
agreement, signed by Facet and you.

 

Sincerely,

 

	
  Facet Biotech Corporation

  	
   

  	
  Accepted by:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Faheem Hasnain

  
	
  Chairperson of the Board

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date

  

 

4

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