Document:

FY2001 10K Exhibit 10.16

                                                                         Exhibit 10.16

PROTEIN DESIGN LABS, INC.

OUTSIDE DIRECTORS STOCK OPTION PLAN

(As amended October 18, 2001)

 

1.Purpose. The Protein Design Labs, Inc. Outside Directors
Stock Option Plan (the "Plan") is established to create additional incentive for
the non-employee directors of Protein Design Labs, Inc. and any successor
corporation thereto (collectively referred to as the "Company"), to promote the
financial success and progress of the Company and any present or future parent
and/or subsidiary corporations of the Company (all of whom along with the
Company being individually referred to as a "Participating Company" and
collectively referred to as the "Participating Company Group"). The Plan is
effective as of October 20, 1992, the date on which it was first approved by the
stockholders of the Company (the "Effective Date"). For purposes of the Plan, a
parent corporation and a subsidiary corporation shall be as defined in sections
424(e) and 424(f) of the Internal Revenue Code of 1986, as amended (the
"Code").

2.Administration. The Plan shall be administered by the Board
of Directors of the Company (the "Board") and/or by a duly appointed committee
of the Board having such powers as shall be specified by the Board. Any
subsequent references herein to the Board shall also mean the committee if such
committee has been appointed and, unless the powers of the committee have been
specifically limited, the committee shall have all of the powers of the Board
granted herein, including, without limitation, the power to terminate or amend
the Plan at any time, subject to the terms of the Plan and any applicable
limitations imposed by law. The Board shall have no authority, discretion, or
power to select which non-employee directors of the Company will receive options
under the Plan, to set the exercise price of the options granted under the Plan,
to determine the number of shares of common stock to be granted under an option
or the time at which any options are to be granted, to establish the duration of
option grants, or alter any other terms or conditions specified in the Plan,
except in the sense of administering or amending the Plan subject to the
provisions of the Plan. All questions of interpretation of the Plan or of any
options granted under the Plan (an "Option") shall be determined by the Board,
and such determinations shall be final and binding upon all persons having an
interest in the Plan and/or any Option. The Chief Executive Officer, President
or General Counsel of the Company 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.

3.Eligibility and Type of Option. Options may be granted only
to directors of the Company who are not employees of the Company or any present
parent and/or subsidiary corporations of the Company ("Outside Directors").
Options granted to Outside Directors shall be nonqualified stock options; that
is, options which are not treated as having been granted under section 422(b) of
the Code.

4.Shares Subject to Option. Options shall be for the purchase
of shares of the authorized but unissued common stock or treasury shares of
common stock of the Company (the "Stock"), subject to adjustment as provided in
paragraph 8 below. The maximum number of shares of Stock which may be issued
under the Plan shall be two hundred thousand (200,000) shares. In the event that
any outstanding Option for any reason expires or is terminated and/or shares of
Stock subject to repurchase are repurchased by the Company, the shares allocable
to the unexercised portion of such Option, or such repurchased shares, may again
be subject to an Option grant.

5.Time for Granting Options. All Options shall be granted, if
at all, within ten (10) years from the Effective Date.

6.Terms, Conditions and Form of Options. Each Option granted
pursuant to the Plan shall be evidenced by a written agreement between the
Company and the Outside Director granted such Option (the "Optionee") specifying
the number of shares of Stock covered thereby, in substantially the form
attached hereto as Exhibit A (the "Option Agreement"), which written
agreement may incorporate all or any of the terms of the Plan by reference and
shall comply with and be subject to the following terms and conditions:

(a)Automatic Grant of Options. Subject to execution by
each Outside Director of an Option Agreement, options shall be granted
automatically and without further action of the Board, as follows:

(i)Each person who is newly appointed or elected as an
Outside Director after February 6, 1997 or who becomes an Outside Director as a
result of ceasing to be an employee of the Company or any parent or subsidiary
corporation of the Company after June 29, 2000 (a "Future Outside Director")
shall be granted an Option for thirty thousand (30,000) shares of Stock upon the
date such person becomes an Outside Director.

(ii)Each Outside Director shall be granted an Option for
thirty thousand (30,000) shares of Stock upon the fifth Anniversary Date (as
defined below) and each subsequent five year Anniversary Date thereafter (e.g.,
10th, 15th, etc.) of such Outside Director.

(iii)The Anniversary Date of each Outside Director shall be
the date the Outside Director became an Outside Director except that if he or
she elected not to receive an option at that time under paragraph 6(a)(iv) then
his or her Anniversary Date shall be the date upon which he or she was first
granted an Option under the Plan. If an Outside Director subsequently elects not
to receive an Option and later revokes that election, his or her Anniversary
Date may be adjusted as provided in paragraph 6(a)(iv).

(iv)Notwithstanding the foregoing, any Outside Director may
elect not to receive an Option granted pursuant to this paragraph 6(a) by
delivering written notice of such election to the Board no later than the day
prior to the date such Option would otherwise be granted. A person so declining
an Option shall receive no payment or other consideration in lieu of such
declined Option. An Outside Director who has declined an Option may revoke such
election by delivering written notice of such revocation to the Board no later
than the date on which the Option would otherwise have been granted to such
Outside Director, in which event such Outside Director shall be automatically
granted such Option on the date on which it would otherwise have been
granted.

(v)Notwithstanding any other provision of the Plan, no Option
shall be granted to any individual on his or her Anniversary Date when he or she
is no longer serving as an Outside Director of the Company on such Anniversary
Date.

(b)Option Exercise Price. The Option exercise price per
share of Stock for an Option shall be the fair market value of a share of the
common stock of the Company on the date of the granting of the Option. Where
there is a public market for the common stock of the Company, the fair market
value per share of Stock shall be the mean of the bid and asked prices of the
common stock of the Company on the date of the granting of the Option, as
reported in the Wall Street Journal (or, if not so reported, as otherwise
reported by the National Association of Securities Dealers Automated Quotation
("NASDAQ") System) or, in the event the common stock of the Company is listed on
the NASDAQ National Market System or a national or regional securities exchange,
the fair market value per share of Stock shall be the closing price on such
National Market System or exchange on the date of the granting of the Option, as
reported in the Wall Street Journal. If the date of the granting of an Option
does not fall on a day on which the common stock of the Company is trading on
the NASDAQ National Market System or other national or regional securities
exchange, the date on which the Option exercise price per share shall be
established shall be the last day on which the common stock of the Company was
so traded prior to the date of the granting of the Option.

(c)Exercise Period and Exercisability of Options. An
Option granted pursuant to the Plan shall be exercisable for a term of ten (10)
years. Options granted pursuant to the Plan shall become exercisable over a
sixty (60) month period commencing one (1) month after the date of grant as
provided in the form of Option Agreement.

(d)Payment of Option Exercise Price. Payment of the Option
exercise price for the number of shares of Stock being purchased pursuant to any
Option shall be made (i) in cash, by check, or in cash equivalent,
(ii) by the assignment of the proceeds of a sale of some or all of the
shares being acquired upon the exercise of an Option (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), or (iii) by any combination thereof. The Company reserves, at any
and all times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve and/or terminate any program and/or procedure for
the exercise of Options by means of an assignment of the proceeds of a sale of
some or all of the shares of Stock to be acquired upon such exercise.

(e)Transfer of Control. A "Transfer of Control" shall be
deemed to have occurred in the event any of the following occurs with respect to
the Company:

(i)any "person" (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), other than a trustee or other fiduciary holding securities of the
Company under an employee benefit plan of the Company, becomes the "beneficial
owner" (as defined in Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of securities of the Company representing forty percent
(40%) or more of (1) the outstanding shares of common stock of the Company
or (2) the total combined voting power of the Company's then-outstanding
securities entitled to vote generally in the election of directors;

(ii)the Company is party to a merger or consolidation which
results in the holders of the voting securities of the Company outstanding
immediately prior thereto failing to retain immediately after such merger or
consolidation direct or indirect beneficial ownership of more than fifty percent
(50%) of the total combined voting power of the securities entitled to vote
generally in the election of directors of the Company or the surviving entity
outstanding immediately after such merger or consolidation; or

(iii)the sale or disposition of all or substantially all of
the Company's assets or consummation of any transaction having similar effect
(other than a sale or disposition to one or more subsidiaries of the
Company).

In the event of a Transfer of Control, each Optionee serving as a member
of the Board immediately prior to such Transfer of Control shall be credited,
effective immediately prior to the consummation of such Transfer of Control,
with an additional twelve (12) months of continuous service as a director of the
Company for the purpose of determining the vesting and exercisability of each
outstanding Option then held by such Optionee. Furthermore, the surviving,
continuing, successor, or purchasing corporation or parent thereof, as the case
may be (the "Acquiring Corporation"), shall either assume the Company's rights
and obligations under outstanding stock option agreements or substitute options
for the Acquiring Corporation's stock for such outstanding Options unless the
Company's Board otherwise agrees. In the event that, with the Board's consent,
the Acquiring Corporation elects not to assume or substitute for such
outstanding Options in connection with a Transfer of Control, the Board may, but
shall not be obligated to, provide that any unexercisable and/or unvested
portion of the outstanding Options shall be immediately exercisable and vested
in full as of a date prior to the Transfer of Control, as the Board so
determines. The exercise and/or vesting of any Option that was permissible
solely by reason of this paragraph 6(e) shall be conditioned upon the
consummation of the Transfer of Control. Any Options which are neither assumed
or substituted for by the Acquiring Corporation nor exercised as of the
consummation of the Transfer of Control shall terminate effective as of such
consummation.

7.Authority to Vary Terms. The Board shall have the authority
from time to time to vary the terms of the Option Agreement either in connection
with the grant of an individual Option or in connection with the authorization
of a new standard form or forms; provided, however, that the terms and
conditions of such revised or amended standard form or forms of Option Agreement
shall be in accordance with the terms of the Plan. Such authority shall include,
but not by way of limitation, the authority to grant Options which are
immediately exercisable subject to the Company's right to repurchase any
unvested shares of Stock acquired by the Optionee on exercise of an Option in
the event such Optionee's service as a director of the Company is terminated for
any reason.

8.Effect of Change in Stock Subject to Plan. Appropriate
adjustments shall be made in the number and class of shares of Stock subject to
the Plan and to any outstanding Options and in the Option exercise price of any
outstanding Options in the event of a stock dividend, stock split, reverse stock
split, combination, reclassification, or like change in the capital structure of
the Company.

9.Options Non-Transferable. Except as may be permitted by the
Board and expressly provided in an Option agreement granted by the Board,
Options may not be assigned or transferred by an Optionee except by will or by
the laws of descent and distribution.

10.Termination or Amendment of Plan. The Board, including any
duly appointed committee of the Board, may terminate or amend the Plan at any
time; provided, however, that without the approval of the stockholders of the
Company, there shall be (a) no increase in the total number of shares of Stock
covered by the Plan (except by operation of the provisions of paragraph 8
above), and (b) no expansion in the class of persons eligible to receive
Options. In any event, no amendment may adversely affect any then outstanding
Option, or any unexercised portion thereof, without the consent of the
Optionee.

IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies
that the foregoing sets forth the Protein Design Labs, Inc. Outside Directors
Stock Option Plan as approved by the stockholders at the Annual Meeting
Stockholders on October 20, 1992 and subsequently amended by the Board on
October 17, 1996, February 6, 1997, June 29, 2000 and October 18, 2001.

Date:

By:

Douglas O. Ebersole 

Secretary

 

EXHIBIT A

 

PROTEIN DESIGN LABS, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

FOR OUTSIDE DIRECTORS

 

Protein Design Labs, Inc., a Delaware corporation (the "Company"), hereby
grants to
             
;             &
nbsp;  (the "Optionee") an option to purchase a total of thirty
thousand (30,000) shares of the common stock of the Company (the "Number of
Option Shares") under the Protein Design Labs, Inc. Outside Directors Stock
Option Plan (the "Plan"), at an exercise price of
$         per share and in the
manner and subject to the provisions of this Option Agreement (the "Option").
The grant, in all respects, is subject to the terms and conditions of this
Option Agreement and the Plan, the provisions of which are incorporated by
reference herein. Unless otherwise provided in this Option Agreement, defined
terms shall have the meaning given to such terms in the Plan.

1.Grant of the Option. The Option is granted effective as of
             
;          (the "Date of Option
Grant"). The Number of Option Shares and the exercise price per share of the
Option are subject to adjustment from time to time as provided in the Plan.

2.Status of the Option. The Option is intended to be a
nonqualified stock option and shall not be treated as an incentive stock option
as described in section 422 of the Internal Revenue Code of 1986, as
amended.

3.Term of the Option. The Option shall terminate and may no
longer be exercised on the first to occur of (i) the date ten (10) years
after the Date of Option Grant (the "Option Term Date"), (ii) the last date for
exercising the Option following termination of the Optionee's service as a
director of the Company as described in paragraph 6 below, or (iii) upon a
Transfer of Control of the Company as described in the Plan.

4.Exercise of the Option.

(a)Right to Exercise. The Option shall first become
exercisable on the date occurring one (1) month after the Date of Option Grant
(the "Initial Exercise Date"). The Option shall be exercisable on and after the
Initial Exercise Date and prior to the termination of the Option in the amount
equal to the Number of Option Shares multiplied by the Vested Ratio as set forth
below less the number of shares previously acquired upon exercise of the
Option:

 

	
 
	
Vested Ratio

	
Prior to Initial Exercise Date
	
0

	
On Initial Exercise Date, provided the Optionee has continuously served as a
director of Company from the Date of Option Grant until the Initial Exercise
Date
	
1/60

	
Plus
	
 

	
For each full month of the Optionee's continuous service as a director of the
Company from the Initial Exercise Date
	
1/60

	
In no event shall the Vested Ratio exceed 1/1.
	
 

In no event shall the Option be exercisable for more shares than the Number
of Option Shares. Notwithstanding the foregoing, the Option may not be exercised
more frequently than twice in any continuous twelve (12) month period; provided,
however, that the foregoing restriction shall not apply so as to prevent an
exercise (i) following termination of the Optionee's service as a director of
the Company as described in paragraph 6 below or (ii) during the thirty (30) day
period immediately preceding a Transfer of Control of the Company as described
in the Plan.

(b)Method of Exercise. The Option may be exercised by
written notice to the Company which must state the election to exercise the
Option, the number of shares of stock for which the Option is being exercised
and such other representations and agreements as to the Optionee's investment
intent with respect to such shares as may be required pursuant to the provisions
of this Option Agreement and the Plan. The written notice must be signed by the
Optionee and must be delivered in person, by facsimile or by certified or
registered mail, return receipt requested, to the President of the Company, or
other authorized representative of the Participating Company Group, prior to the
termination of the Option as set forth in paragraph 3 above, accompanied by full
payment of the exercise price for the number of shares of stock being purchased
in a form permitted under the terms of the Plan.

(c)Withholding. At the time the Option is exercised, in
whole or in part, or at any time thereafter as requested by the Company, the
Optionee shall make adequate provision for the foreign, federal and state tax
withholding obligations of the Company, if any, which arise in connection with
the Option including, without limitation, obligations arising upon (i) the
exercise, in whole or in part, of the Option, (ii) the transfer, in whole or in
part, of any shares of stock acquired on exercise of the Option, or (iii) the
lapsing of any restriction with respect to any shares acquired on exercise of
the Option.

(d)Certificate Registration. The certificate or
certificates for the shares of stock as to which the Option shall be exercised
shall be registered in the name of the Optionee, or, if applicable, the heirs of
the Optionee.

(e)Restriction on Grant of the Option and Issuance of
Shares. The grant of the Option and the issuance of shares of stock on
exercise of the Option shall be subject to compliance with all of the applicable
requirements of federal or state law with respect to such securities. The Option
may not be exercised if the issuance of shares of stock upon such exercise would
constitute a violation of any applicable federal or state securities laws or
other law or regulation. In addition, no Option may be exercised unless (i) a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), shall at the time of exercise of the Option be in effect with
respect to the shares of stock 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. As a
condition to the exercise of the Option, the Company may require the Optionee 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.

(f)Fractional Shares. The Company shall not be required to
issue fractional shares of stock upon the exercise of the Option.

5.Non-Transferability of the Option. The Option may be
exercised during the lifetime of the Optionee only by the Optionee and may not
be assigned or transferred in any manner except by will or by the laws of
descent and distribution.

6.Termination of Service as a Director.

(a)Termination of Director Status. If the Optionee ceases
to be a director of the Company for any reason except death or disability within
the meaning of section 22(e)(3) of the Code, the Option, to the extent
unexercised and exercisable by the Optionee on the date on which the Optionee
ceased to be a director, may be exercised by the Optionee at any time prior to
the expiration of three (3) months from the date on which the Optionee's service
as a director of the Company terminated, but in any event no later than the
Option Term Date. If the Optionee ceases to be a director of the Company because
of the death or disability of the Optionee within the meaning of section
22(e)(3) of the Code, the Option, to the extent unexercised and exercisable by
the Optionee on the date on which the Optionee ceased to be a director, may be
exercised by the Optionee (or the Optionee's legal representative) at any time
prior to the expiration of twelve (12) months from the date on which the
Optionee's service as a director of the Company terminated, but in any event no
later than the Option Term Date. The Optionee's service as a director of the
Company shall be deemed to have terminated on account of death if the Optionee
dies within three (3) months after the Optionee's termination of service as a
director of the Company. Except as provided in this paragraph 6, an Option shall
terminate and may not be exercised after the Optionee ceases to be a director of
the Company.

(b)Extension of Exercise Prevented by Law. Notwithstanding
the foregoing, if the exercise of the Option within the applicable time periods
set forth above is prevented because the issuance of shares of stock upon such
exercise would constitute a violation of any applicable federal or state
securities law or other law or regulation, the Option shall remain exercisable
until three (3) months after the date the Optionee is notified by the Company
that the Option is exercisable, but in any event no later than the Option Term
Date.

(c)Extension if Optionee Subject to Section 16(b).
Notwithstanding the foregoing, if the exercise of the Option within the
applicable time periods set forth above would subject the Optionee to suit under
Section 16(b) of the Exchange Act, the Option shall remain exercisable until the
earliest to occur of (i) the tenth (10th) day following the date on which the
Optionee would no longer be subject to such suit, (ii) the one hundred and
ninetieth (190th) day after the Optionee's termination of service as a director
of the Company and (iii) the Option Term Date.

7.Rights as a Stockholder. The Optionee shall have no rights
as a stockholder with respect to any shares of stock covered by the Option until
the date of the issuance of a certificate or certificates for the shares for
which the Option has been exercised. No adjustment shall be made for dividends
or distributions or other rights for which the record date is prior to the date
such stock certificate or certificates are issued, except as provided in the
Plan.

8.Legends. The Company may at any time place legends
referencing any applicable federal or state securities law restrictions on all
certificates representing shares of stock subject to the provisions of this
Option Agreement. The Optionee shall, at the request of the Company, promptly
present to the Company any and all certificates representing shares of stock
acquired pursuant to the Option in the possession of the Optionee in order to
effectuate the provisions of this paragraph.

9.Binding Effect. This Option Agreement shall inure to the
benefit of the successors and assigns of the Company and be binding upon the
Company and the Optionee and the Optionee's heirs, executors, administrators,
successors and assigns.

10.Termination or Amendment. The Board, including any duly
appointed committee of the Board, may terminate or amend the Plan and/or the
Option at any time subject to any limitations described in the Plan; provided,
however, that no such termination or amendment may adversely affect the Option
or any unexercised portion hereof without the consent of the Optionee.

11.Integrated Agreement. This Option Agreement and the Plan
constitute the entire understanding and agreement of the Optionee and the
Company with respect to the subject matter contained herein and therein, and
there are no agreements, understandings, restrictions, representations, or
warranties among the Optionee and the Company other than those as set forth or
provided for herein or therein. To the extent contemplated herein and therein,
the provisions of this Option Agreement and the Plan shall survive any exercise
of the Option and shall remain in full force and effect.

12.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.Arbitration. 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 one (1) party delivered to the other party, be submitted
and settled by arbitration in Palo Alto, 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
paragraph 13. 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:

(a)Each party will appoint one person 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)
persons so chosen will select a third impartial arbitrator. The majority
decision of the arbitrators will be final and conclusive 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 paragraph 13(a),
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.

(b)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.

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

(d)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 conclusive upon the parties
to the arbitration.

(e)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.
PROTEIN DESIGN LABS, INC.

By: ______________________

Title: ____________________

The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement and the Plan and hereby accepts the Option
subject to all of the terms and provisions thereof. 

The undersigned acknowledges receipt of a copy of the Plan.

 

 

Date: _______________________

 

Signature:

PROTEIN DESIGN LABS, INC.

AMENDMENT OF NONQUALIFIED STOCK OPTION AGREEMENT

FOR OUTSIDE DIRECTOR

Protein Design Labs, Inc. (the "Company") hereby amends,
effective October 18, 2001, the Nonqualified Stock Option Agreement (the
"Agreement") evidencing an option (the "Option") granted by
the Company on _________________ to ___________________________ (the
"Optionee") to purchase shares of the Company's common stock.  This
Amendment is made pursuant to paragraph 10 of the Agreement which provides that
the Board of Directors of the Company or a duly appointed committee thereof (the
"Board") may amend the Agreement at any time so long as the amendment
does not adversely affect the Option without the consent of the Optionee.  The
Board approved this Amendment at its meeting on October 18, 2001.

1.The Agreement is amended by adding thereto the following
provisions, which shall supersede any contrary provisions set forth in the stock
option plan pursuant to which the Option was granted:

A "Transfer of Control" shall be deemed to have occurred in the
event any of the following occurs with respect to the Company:

(i)any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), other than a trustee or other fiduciary
holding securities of the Company under an employee benefit plan of the Company,
becomes the "beneficial owner" (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
the Company representing forty percent (40%) or more of (1) the outstanding
shares of common stock of the Company or (2) the total combined voting
power of the Company's then-outstanding securities entitled to vote generally in
the election of directors;

(ii)the Company is party to a merger or consolidation which results
in the holders of the voting securities of the Company outstanding immediately
prior thereto failing to retain immediately after such merger or consolidation
direct or indirect beneficial ownership of more than fifty percent (50%) of the
total combined voting power of the securities entitled to vote generally in the
election of directors of the Company or the surviving entity outstanding
immediately after such merger or consolidation; or

(iii)the sale or disposition of all or substantially all of the
Company's assets or consummation of any transaction having similar effect (other
than a sale or disposition to one or more subsidiaries of the Company).

In the event of a Transfer of Control, provided that the Optionee is
serving as a member of the Board immediately prior to such Transfer of Control,
the Optionee shall be credited, effective immediately prior to the consummation
of such Transfer of Control, with an additional twelve (12) months of continuous
service as a director of the Company for the purpose of determining the vesting
and exercisability of the Option, provided that it is then outstanding.
Furthermore, the surviving, continuing, successor, or purchasing corporation or
parent thereof, as the case may be (the "Acquiring Corporation"),
shall either assume the Company's rights and obligations under the Agreement or
substitute an option for the Acquiring Corporation's stock for such outstanding
Option unless the Board otherwise agrees.  In the event that, with the Board's
consent, the Acquiring Corporation elects not to assume or substitute for such
outstanding Option in connection with a Transfer of Control, the Board may, but
shall not be obligated to, provide that any unexercisable and/or unvested
portion of the outstanding Option shall be immediately exercisable and vested in
full as of a date prior to the Transfer of Control, as the Board so determines.
The exercise and/or vesting of the Option that was permissible solely by reason
of this paragraph shall be conditioned upon the consummation of the Transfer of
Control.  To the extent that the Option is neither assumed or substituted for by
the Acquiring Corporation nor exercised as of the consummation of the Transfer
of Control, it shall terminate effective as of such consummation.

2.Except as set forth herein, all other terms and conditions of the
Agreement shall remain in full force and effect.

This Amendment is executed by a duly authorized officer on behalf of the
Company.

PROTEIN DESIGN LABS, INC.

 

By:_____________________

Douglas O. Ebersole, Secretary

 

Date:______________________FY2001 10K Exhibit 10.27

                                                                         Exhibit 10.27

PROTEIN DESIGN LABS, INC.

                  1999 Stock OPTION PLAN

(as amended effective as of June 14, 2001

                  and as adjusted for 2:1 stock splits effective

                  in August 2000 and October 2001)

	Establishment, Purpose and Term of Plan.

	Establishment.  The Protein Design Labs, Inc. 1999 Stock Option Plan
(the "Plan") is hereby established effective as of the
date on which it is approved by the stockholders of the Company (the
"Effective Date").

	Purpose.  The purpose of the Plan is to advance the interests of the
Participating Company Group and its stockholders by providing an incentive to
attract, retain and reward Persons performing services for the Participating
Company Group and by motivating such Persons to contribute to the goals of the
Participating Company Group.

	Term of Plan.  The Plan shall continue in effect until the earlier of
its termination by the Board or the date on which all of the shares of Stock
available for issuance under the Plan have been issued and all restrictions on
such shares under the terms of the Plan and the agreements evidencing Options
granted under the Plan have lapsed.  However, all Incentive Stock Options shall
be granted, if at all, within ten (10) years from the Effective Date.

	Definitions and Construction.

	Definitions.  Whenever used herein, the following terms shall have
their respective meanings set forth below:

	"Board" means the Board of Directors of the Company.

	"Code" means the Internal Revenue Code of 1986, as
amended, and any applicable regulations promulgated thereunder.

	"Company" means Protein Design Labs, Inc., a
Delaware corporation, or any successor corporation thereto.

	"Consultant" means any Person, including an advisor,
engaged by a Participating Company to render services other than as an Employee
or a Director.

	"Director" means a member of the Board.

	"Disability" means the permanent and total
disability of the Optionee within the meaning of Section 22(e)(3) of the
Code.

	"Employee" means any Person treated as an employee
in the records of a Participating Company and, with respect to any Incentive
Stock Option granted to such Person, who is an employee for purposes of
Section 422 of the Code; provided, however, that neither service as a
Director nor payment of a director's fee shall be sufficient to constitute
employment for purposes of the Plan.

	"Exchange Act" means the Securities Exchange Act of
1934, as amended.

	"Fair Market Value" means, as of any date, the value
of a share of Stock or other property as determined by the Board, in its
discretion, subject to the following:

	If, on such date, the Stock is listed on a national or regional securities
exchange or market system, the Fair Market Value of a share of Stock shall be
the closing sale price of a share of Stock (or the mean of the closing bid and
asked prices of a share of Stock if the Stock is so quoted instead) as quoted on
the Nasdaq National Market, The Nasdaq SmallCap Market or such other national or
regional securities exchange or market system constituting the primary market
for the Stock, as reported in the Wall Street Journal or such other
source as the Board deems reliable.  If the relevant date does not fall on a day
on which the Stock has traded on such securities exchange or market system, the
date on which the Fair Market Value shall be established shall be the last day
on which the Stock was so traded prior to the relevant date, or such other
appropriate day as shall be determined by the Board, in its discretion.
	If, on such date, the Stock is not listed on a national or regional
securities exchange or market system, the Fair Market Value of a share of Stock
shall be as determined by the Board without regard to any restriction other than
a restriction which, by its terms, will never lapse.

	"Incentive Stock Option" means an Option intended to
be (as set forth in the Option Agreement) and which qualifies as an incentive
stock option within the meaning of Section 422(b) of the Code.

	"Insider" means an officer or a Director of the
Company or any other Person whose transactions in Stock are subject to
Section 16 of the Exchange Act.

	"Nonstatutory Stock Option" means an Option not
intended to be (as set forth in the Option Agreement) or which does not qualify
as an Incentive Stock Option.

	"Option" means a right to purchase Stock (subject to
adjustment as provided in Section 4.2) pursuant to the terms and conditions
of the Plan.  An Option may be either an Incentive Stock Option or a
Nonstatutory Stock Option.

	"Option Agreement" means a written agreement between
the Company and an Optionee setting forth the terms, conditions and restrictions
of the Option granted to the Optionee and any shares of Stock acquired upon the
exercise thereof.

	"Optionee" means a Person who has been granted one
or more Options.

	"Parent Corporation" means any present or future
"parent corporation" of the Company, as defined in Section 424(e)
of the Code.

	"Participating Company" means the Company or any
Parent Corporation or Subsidiary Corporation.

	"Participating Company Group" means, at any point in
time, all corporations collectively which are then Participating Companies.

	"Person" means a natural person.

	"Predecessor Plan" means the Protein Design Labs,
Inc. 1991 Stock Option Plan as in effect immediately prior to the Predecessor
Plan Termination Date.

	"Predecessor Plan Termination Date" means the
earlier of December 11, 2001 or the date on which the Predecessor Plan is
terminated in accordance with its terms.

	"Section 162(m)" means Section 162(m) of
the Code.

	"Securities Act" means the Securities Act of 1933,
as amended.

	"Service" means an Optionee's employment or service
with the Participating Company Group, whether in the capacity of an Employee, a
Director or a Consultant.  Unless otherwise provided by the Board, an Optionee's
Service shall not be deemed to have terminated merely because of a change in the
capacity in which the Optionee renders Service to the Participating Company
Group or a change in the Participating Company for which the Optionee renders
such Service, provided that there is no interruption or termination of the
Optionee's Service.  Furthermore, an Optionee's Service with the Participating
Company Group shall not be deemed to have terminated if the Optionee takes any
bona fide leave of absence approved by the Company; provided, however, that if
any such leave exceeds ninety (90) days, on the one hundred eighty-first (181st)
day following the commencement of such leave any Incentive Stock Option held by
the Optionee shall cease to be treated as an Incentive Stock Option and instead
shall be treated thereafter as a Nonstatutory Stock Option unless the Optionee's
right to return to Service with the Participating Company Group is guaranteed by
statute or contract.  Notwithstanding the foregoing, unless otherwise required
by law, the Company may provide that an approved leave of absence shall not be
treated as Service for purposes of determining vesting under the Optionee's
Option Agreement.  An Optionee's Service shall be deemed to have terminated
either upon an actual termination of Service or upon the corporation for which
the Optionee performs Service ceasing to be a Participating Company.  Subject to
the foregoing, the Company, in its discretion, shall determine whether an
Optionee's Service has terminated and the effective date of such
termination.

	"Stock" means the common stock of the Company, as
adjusted from time to time in accordance with Section 4.2.

	"Subsidiary Corporation" means any present or future
"subsidiary corporation" of the Company, as defined in
Section 424(f) of the Code.

	"Ten Percent Owner Optionee" means an Optionee who,
at the time an Option is granted to the Optionee, owns stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of a Participating Company within the meaning of Section 422(b)(6) of
the Code.

	Construction.  Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan.  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.

	Administration.

	Administration by the Board.  The Plan shall be administered by the
Board.  All questions of interpretation of the Plan or of any Option shall be
determined by the Board, and such determinations shall be final and binding upon
all Persons having an interest in the Plan or such Option.

	Authority of Officers.  The Chief Executive Officer shall have the
authority to act on behalf of the Company with respect to any matter, right,
obligation, determination or election which is the responsibility of or which is
allocated to the Company herein.

	Administration with Respect to Insiders.  With respect to
participation by Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to Section 12 of the
Exchange Act, the Plan shall be administered in compliance with the
requirements, if any, of Rule 16b-3 promulgated under the Exchange
Act.

	Committee Complying with Section 162(m).  If a Participating
Company is a "publicly held corporation" within the meaning of
Section 162(m), the Board may establish a committee of "outside
directors" within the meaning of Section 162(m) to approve the grant
of any Option which might reasonably be anticipated to result in the payment of
employee remuneration that would otherwise exceed the limit on employee
remuneration deductible for income tax purposes pursuant to
Section 162(m).

	Powers of the Board.  In addition to any other powers set
forth in the Plan and subject to the provisions of the Plan, the Board shall
have the full power and authority, in its discretion:

	to determine the Persons to whom, and the time or times at which, Options
shall be granted and the number of shares of Stock to be subject to each
Option;
	to designate Options as Incentive Stock Options or Nonstatutory Stock
Options;
	to determine the Fair Market Value of shares of Stock or other property in
the event such property is proposed as consideration for, or as collateral for
any promissory note given as, payment for the exercise of an Option;
	to determine the terms, conditions and restrictions applicable to each
Option (which need not be identical) and any shares of Stock acquired upon the
exercise thereof, including, without limitation, (i) the exercise price of
the Option, (ii) the method of payment for shares of Stock purchased upon
the exercise of the Option, (iii) the method for satisfaction of any tax
withholding obligation arising in connection with the Option or such shares of
Stock, including by the withholding or delivery of shares of Stock,
(iv) the timing, terms and conditions of the exercisability of the Option
or the vesting of any shares of Stock acquired upon the exercise thereof,
(v) the time of the expiration of the Option, (vi) the effect of the
Optionee's termination of Service with the Participating Company Group on any of
the foregoing, and (vii) all other terms, conditions and restrictions
applicable to the Option or such shares of Stock not inconsistent with the terms
of the Plan;
	to approve one or more forms of Option Agreement;
	to amend, modify, extend, cancel, renew, or grant a new Option in
substitution for, any Option or to waive any restrictions or conditions
applicable to any Option or any shares acquired upon the exercise thereof;
	to accelerate, continue, extend or defer the exercisability of any Option or
the vesting of any shares acquired upon the exercise thereof, including with
respect to the period following an Optionee's termination of Service with the
Participating Company Group;
	to prescribe, amend or rescind rules, guidelines and policies relating to
the Plan, or to adopt supplements to, or alternative versions of, the Plan,
including, without limitation, as the Board deems necessary or desirable to
comply with the laws of, or to accommodate the tax policy or custom of, foreign
jurisdictions whose citizens may be granted Options; and
	to correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any Option Agreement and to make all other determinations and take
such other actions with respect to the Plan or any Option as the Board may deem
advisable to the extent consistent with the Plan and applicable law.

	Shares Subject to Plan.

	Maximum Number of Shares Issuable.  Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock
that may be issued under the Plan shall be the sum of (a) seven million and
seven hundred and seventy thousand (7,700,000), (b) the number of shares that
remained available for grant pursuant to the Predecessor Plan on the Predecessor
Plan Termination Date and (c) the number of unissued shares subject to each
option outstanding under the Predecessor Plan on the Predecessor Plan
Termination Date which for any reason expires or is terminated or canceled.
Such shares shall consist of authorized but unissued or reacquired shares of
Stock or any combination thereof.  Notwithstanding the foregoing, except as
adjusted pursuant to Section 4.2, in no event shall more than seven million and
seven hundred and seventy thousand (7,700,000) shares of Stock be cumulatively
available for issuance pursuant to the exercise of Incentive Stock Options (the
"ISO Share Limit").  If an outstanding Option for any
reason expires or is terminated or canceled or if unvested shares of Stock are
acquired upon the exercise of an Option subject to a Company repurchase option
and are repurchased by the Company, the shares of Stock allocable to the
unexercised portion of such Option or such unvested repurchased shares of Stock
shall again be available for issuance under the Plan.

	Adjustments for Changes in Capital Structure.  In the event of any
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number and class of shares subject
to the Plan and to any outstanding Options, in the ISO Share Limit set forth in
Section 4.1, in the Section 162(m) Grant Limit set forth in Section 5.4, and in
the exercise price per share of any outstanding Options.  If a majority of the
shares which are of the same class as the shares that are subject to outstanding
Options are exchanged for, converted into, or otherwise become (whether or not
pursuant to an Ownership Change Event, as defined in Section 8.1) shares of
another corporation (the "New Shares"), the Board may
unilaterally amend the outstanding Options to provide that such Options are
exercisable for New Shares.  In the event of any such amendment, the number of
shares subject to, and the exercise price per share of, the outstanding Options
shall be adjusted in a fair and equitable manner as determined by the Board, in
its discretion.  Notwithstanding the foregoing, any fractional share resulting
from an adjustment pursuant to this Section 4.2 shall be rounded down to
the nearest whole number, and in no event may the exercise price of any Option
be decreased to an amount less than the par value, if any, of the stock subject
to the Option.  The adjustments determined by the Board pursuant to this
Section 4.2 shall be final and binding.

	Eligibility and Option Limitations.

	Persons Eligible for Options.  Options may be granted only to
Employees, Consultants and Directors.  For purposes of the foregoing sentence,
"Employees," "Consultants" and "Directors" shall
include prospective Employees, prospective Consultants and prospective Directors
to whom Options are granted in connection with written offers of employment or
other service relationship with the Participating Company Group.  Eligible
Persons may be granted more than one (1) Option.

	Option Grant Restrictions.  Any Person who is not an Employee on the
effective date of the grant of an Option to such Person may be granted only a
Nonstatutory Stock Option.  An Incentive Stock Option granted to a prospective
Employee upon the condition that such Person become an Employee shall be deemed
granted effective on the date such Person commences service as an Employee with
a Participating Company, with an exercise price determined as of such date in
accordance with Section 6.1.

	Fair Market Value Limitation.  To the extent that options
designated as Incentive Stock Options (granted under all stock option plans of
the Participating Company Group, including the Plan) become exercisable by an
Optionee for the first time during any calendar year for stock having an
aggregate Fair Market Value greater than One Hundred Thousand Dollars
($100,000), the portion of such options which exceeds such amount shall be
treated as Nonstatutory Stock Options.  For purposes of this Section 5.3,
options designated as Incentive Stock Options shall be taken into account in the
order in which they were granted, and the Fair Market Value of stock shall be
determined as of the time the option with respect to such stock is granted.  If
the Code is amended to provide for a different limitation from that set forth in
this Section 5.3, such different limitation shall be deemed incorporated
herein effective as of the date and with respect to such Options as required or
permitted by such amendment to the Code.  If an Option is treated as an
Incentive Stock Option in part and as a Nonstatutory Stock Option in part by
reason of the limitation set forth in this Section 5.3, the Optionee may
designate which portion of such Option the Optionee is exercising.  In the
absence of such designation, the Optionee shall be deemed to have exercised the
Incentive Stock Option portion of the Option first.  Separate certificates
representing each such portion shall be issued upon the exercise of the
Option.

	Section 162(m) Grant Limit.  Subject to adjustment as provided
in Section 4.2, no Employee or prospective Employee shall be granted one or
more Options within any fiscal year of the Company which in the aggregate are
for the purchase of more than four hundred thousand (400,000) shares (the
"Section 162(m) Grant Limit").  An Option which
is canceled in the same fiscal year in which it was granted shall continue to be
counted against the Section 162(m) Grant Limit for such period.

	Terms and Conditions of Options.

Options shall be evidenced by Option Agreements specifying the number
of shares of Stock covered thereby, in such form as the Board shall from time to
time establish.  No Option or purported Option shall be a valid and binding
obligation of the Company unless evidenced by a fully executed Option Agreement.
Option Agreements may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and
conditions:

	Exercise Price.  The exercise price for each Option shall be
established in the discretion of the Board; provided, however, that (a) the
exercise price per share for an Incentive Stock Option shall be not less than
the Fair Market Value of a share of Stock on the effective date of grant of the
Option and (b) no Incentive Stock Option granted to a Ten Percent Owner
Optionee shall have an exercise price per share less than one hundred ten
percent (110%) of the Fair Market Value of a share of Stock on the effective
date of grant of the Option.  Notwithstanding the foregoing, an Incentive Stock
Option may be granted with an exercise price lower than the minimum exercise
price set forth above if such Option is granted pursuant to an assumption or
substitution for another option in a manner qualifying under the provisions of
Section 424(a) of the Code.

	Exercise Period.  Options shall be exercisable at such time or times,
or upon such event or events, and subject to such terms, conditions, performance
criteria, and restrictions as shall be determined by the Board and set forth in
the Option Agreement evidencing such Option; provided, however, that (a) no
Incentive Stock Option shall be exercisable after the expiration of ten (10)
years after the effective date of grant of such Option, (b) no Incentive
Stock Option granted to a Ten Percent Owner Optionee shall be exercisable after
the expiration of five (5) years after the effective date of grant of such
Option, and (c) no Option granted to a prospective Employee, prospective
Consultant or prospective Director may become exercisable prior to the date on
which such Person commences Service with a Participating Company.  Subject to
the foregoing, unless otherwise specified by the Board in the grant of an
Option, any Option granted hereunder shall have a term of ten (10) years from
the effective date of grant of the Option.

	Payment of Exercise Price.

	Forms of Consideration Authorized.  Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by check
or cash equivalent, (ii) by tender to the Company, or attestation to the
ownership, of shares of Stock owned by the Optionee having a Fair Market Value
not less than the exercise price, (iii) by the assignment of the proceeds
of a sale or loan with respect to some or all of the shares being acquired upon
the exercise of the Option (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) (a
"Cashless Exercise"), (iv) provided that the Optionee is
an Employee and in the Board's sole discretion at the time the Option is
exercised, by cash for a portion of the aggregate exercise price not less than
the par value of the shares being acquired and the Optionee's promissory note in
a form approved by the Board for the balance of the aggregate exercise price,
(v) by such other consideration as may be approved by the Board from time
to time to the extent permitted by applicable law, or (vi) by any
combination thereof.  The Board may at any time or from time to time, by
approval of or by amendment to the standard forms of Option Agreement described
in Section 7, or by other means, grant Options which do not permit all of
the foregoing forms of consideration to be used in payment of the exercise price
or which otherwise restrict one or more forms of consideration.

	Limitations on Forms of Consideration.

	Tender of Stock.  Notwithstanding the foregoing, an Option may not be
exercised by tender to the Company, or attestation to the ownership, of shares
of Stock to the extent such tender or attestation would constitute a violation
of the provisions of any law, regulation or agreement restricting the redemption
of the shares of Stock.  Unless otherwise provided by the Board, an Option may
not be exercised by tender to the Company, or attestation to the ownership, of
shares of Stock unless such shares either have been owned by the Optionee for
more than six (6) months or were not acquired, directly or indirectly, from the
Company.

	Cashless Exercise.  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 procedures for the exercise of Options by
means of a Cashless Exercise.

	Payment by Promissory Note.  No promissory note shall be permitted if
the exercise of an Option using a promissory note would be a violation of any
law.  Any permitted promissory note shall be on such terms as the Board shall
determine.  The Board shall have the authority to permit or require the Optionee
to secure any promissory note used to exercise an Option with the shares of
Stock acquired upon the exercise of the Option or with other collateral
acceptable to the Board.  Unless otherwise provided by the Board, if the Company
at any time is subject to the regulations promulgated by the Board of Governors
of the Federal Reserve System or any other governmental entity affecting the
extension of credit in connection with the Company's securities, any promissory
note shall comply with such applicable regulations, and the Optionee shall pay
the unpaid principal and accrued interest, if any, to the extent necessary to
comply with such applicable regulations.

	Tax Withholding.  The Company shall have the right, but not
the obligation, to deduct from the shares of Stock issuable upon the exercise of
an Option, or to accept from the Optionee the tender of, a number of whole
shares of Stock having a Fair Market Value equal to all or any part of the
federal, state, local and foreign taxes, if any, required by law to be withheld
by the Participating Company Group with respect to such Option or the shares of
Stock acquired upon the exercise thereof.  Alternatively or in addition, in its
discretion, the Company shall have the right to require the Optionee, through
payroll withholding, cash payment or otherwise, including by means of a Cashless
Exercise, to make adequate provision for any such tax withholding obligations of
the Participating Company Group arising in connection with the Option or the
shares of Stock acquired upon the exercise thereof.  The Company shall have no
obligation to deliver shares of Stock until the Participating Company Group's
tax withholding obligations have been satisfied by the Optionee.

	Effect of Termination of Service.

	Option Exercisability.  Subject to earlier termination of the
Option as otherwise provided herein and unless otherwise provided by the Board
in the grant of an Option and set forth in the Option Agreement, an Option shall
be exercisable after an Optionee's termination of Service as follows:

	Disability.  If the Optionee's Service with the Participating Company
Group is terminated because of the Disability of the Optionee, the Option, to
the extent unexercised and exercisable on the date on which the Optionee's
Service terminated, may be exercised by the Optionee (or the Optionee's guardian
or legal representative) at any time prior to the expiration of twelve (12)
months after the date on which the Optionee's Service terminated, but in any
event no later than the date of expiration of the Option's term as set forth in
the Option Agreement evidencing such Option (the "Option Expiration
Date").

	Death.  If the Optionee's Service with the Participating Company
Group is terminated because of the death of the Optionee, the Option, to the
extent unexercised and exercisable on the date on which the Optionee's Service
terminated, may be exercised by the Optionee's legal representative or other
Person who acquired the right to exercise the Option by reason of the Optionee's
death at any time prior to the expiration of twelve (12) months after the date
on which the Optionee's Service terminated, but in any event no later than the
Option Expiration Date.  The Optionee's Service shall be deemed to have
terminated on account of death if the Optionee dies within three (3) months
after the Optionee's termination of Service.

	Termination After Change in Control.  If the Optionee's Service with
the Participating Company Group ceases as a result of Termination After Change
in Control (as defined below), then (1) the Option, to the extent unexercised on
the date on which the Optionee's Service terminated, may be exercised by the
Optionee (or the Optionee's guardian or legal representative) at any time prior
to the expiration of six (6) months after the date on which the Optionee's
Service terminated, but in any event no later than the Option Expiration Date,
and (2) the exercisability and vesting of the Option shall be accelerated
effective as of the date on which the Optionee's Service terminated to such
extent, if any, as shall have been determined by the Board, in its discretion,
and set forth in the Option Agreement.  Notwithstanding the foregoing, if it is
determined that the provisions or operation of this Section 6.5(a)(iii) would
preclude treatment of a Change in Control as a "pooling-of-interests"
for accounting purposes and provided further that in the absence of the
preceding sentence such Change in Control would be treated as a "pooling-
of-interests" for accounting purposes, then this Section 6.5(a)(iii) shall
be void ab initio, and the vesting and exercisability of the Option shall
be determined under any other applicable provision of the Plan or the Option
Agreement evidencing such Option.

	Other Termination of Service.  If the Optionee's Service with the
Participating Company Group terminates for any reason, except Disability, death,
or Termination After Change in Control, the Option, to the extent unexercised
and exercisable by the Optionee on the date on which the Optionee's Service
terminated, may be exercised by the Optionee within three (3) months (or
such longer period of time as determined by the Board, in its discretion) after
the date on which the Optionee's Service terminated, but in any event no later
than the Option Expiration Date.

	Extension if Exercise Prevented by Law.  Notwithstanding the
foregoing, if the exercise of an Option within the applicable time periods set
forth in Section 6.5(a) is prevented by the provisions of Section 11
below, the Option shall remain exercisable until ninety (90) days after the date
the Optionee is notified by the Company that the Option is exercisable, but in
any event no later than the Option Expiration Date.

	Extension if Optionee Subject to Section 16(b).
Notwithstanding the foregoing, if a sale within the applicable time periods set
forth in Section 6.5(a) of shares acquired upon the exercise of the Option
would subject the Optionee to suit under Section 16(b) of the Exchange Act,
the Option shall remain exercisable until the earliest to occur of (i) the
thirtieth (30th) day following the date on which a sale of such shares by the
Optionee would no longer be subject to such suit, (ii) the two hundred
tenth (210th) day after the Optionee's termination of Service, or (iii) the
Option Expiration Date.

	Certain Definitions.  The following terms shall have their
respective meanings set forth below:

	"Termination After Change in Control" shall mean
either of the following events occurring within twelve (12) months after a
Change in Control:

 

	termination by the Participating Company Group of the Optionee's Service
with the Participating Company Group for any reason other than for Cause (as
defined below); or
	the Optionee's resignation from all capacities in which the Optionee is
then rendering Service to the Participating Company Group within a reasonable
period of time following an event constituting a Constructive Termination (as
defined below).

Notwithstanding any provision herein to the contrary, Termination After
Change in Control shall not include any termination of the Optionee's Service
with the Participating Company Group which (1) is for Cause (as defined below);
(2) is a result of the Optionee's death or disability; (3) is a result
of the Optionee's voluntary termination of Service other than upon a
Constructive Termination; or (4) occurs prior to the effectiveness of a Change
in Control.

	"Cause" shall mean any of the following: (1) the
Optionee's theft, dishonesty, or falsification of any Participating Company
documents or records; (2) the Optionee's improper use or disclosure of a
Participating Company's confidential or proprietary information; (3) any action
by the Optionee which has a detrimental effect on a Participating Company's
reputation or business; (4) the Optionee's failure or inability to perform any
reasonable assigned duties after written notice from the Participating Company
Group of, and a reasonable opportunity to cure, such failure or inability; (5)
any material breach by the Optionee of any employment agreement between the
Optionee and the Participating Company Group, which breach is not cured pursuant
to the terms of such agreement; or (6) the Optionee's conviction (including any
plea of guilty or nolo contendere) of any criminal act which impairs the
Optionee's ability to perform his or her duties with the Participating Company
Group.

	"Constructive Termination" shall mean any one or
more of the following:

	without the Optionee's express written consent, any assignment to the
Optionee of any duties, or any limitation of the Optionee's responsibilities,
substantially inconsistent with the Optionee's positions, duties,
responsibilities and status with a Participating Company immediately prior to
the date of the Change in Control;
	without the Optionee's express written consent, the relocation of the
principal place of the Optionee's Service to a location that is more than fifty
(50) miles from the Optionee's principal place of Service immediately prior to
the date of the Change in Control, or the imposition of travel requirements
substantially more demanding of the Optionee than such travel requirements
existing immediately prior to the date of the Change in Control;
	any failure by a Participating Company to pay, or any material reduction
by a Participating Company of, (A) the Optionee's base salary in effect
immediately prior to the date of the Change in Control, or (B) the
Optionee's bonus compensation, if any, in effect immediately prior to the date
of the Change in Control (subject to applicable performance requirements with
respect to the actual amount of bonus compensation earned by the Optionee);
or
	any failure by a Participating Company to (A) continue to provide
the Optionee with the opportunity to participate, on terms not materially less
favorable than those in effect for the benefit of any employee group which
customarily includes a Person holding the employment position or a comparable
position with the Participating Company then held by the Optionee, in any
benefit or compensation plans and programs, including, but not limited to, the
Participating Company's life, disability, health, dental, medical, savings,
profit sharing, stock purchase and retirement plans, if any, in which the
Optionee was participating immediately prior to the date of the Change in
Control, or their equivalent, or (B) provide the Optionee with all other
fringe benefits (or their equivalent) from time to time in effect for the
benefit of any employee group which customarily includes a Person holding the
employment position or a comparable position with the Participating Company then
held by the Optionee.

	Standard Forms of Option Agreement.

	Incentive Stock Options.  Unless otherwise provided by the
Board at the time the Option is granted, an Option designated as an "Incentive Stock Option" shall comply with and be subject to
the terms and conditions set forth in the appropriate form of Incentive Stock
Option Agreement approved by the Board concurrently with its adoption of the
Plan and as amended from time to time.

	Nonstatutory Stock Option Agreement.  Unless otherwise provided by
the Board at the time the Option is granted, an Option designated as a
"Nonstatutory Stock Option" shall comply with and be subject to the
terms and conditions set forth in the appropriate form of Nonstatutory Stock
Option Agreement approved by the Board concurrently with its adoption of the
Plan and as amended from time to time.

	Authority to Vary Terms.  The Board shall have the authority from
time to time to vary the terms of any of the standard forms of Option Agreement
described in this Section 7 either in connection with the grant or
amendment of an individual Option or in connection with the authorization of a
new standard form or forms; provided, however, that the terms and conditions of
any such new, revised or amended standard form or forms of Option Agreement are
not inconsistent with the terms of the Plan.

	Change in Control.

	Definitions.  The following terms shall have their respective
meanings set forth below:

	An "Ownership Change Event" shall be deemed to have
occurred if any of the following occurs with respect to the Company: (i) the
direct or indirect sale or exchange in a single or series of related
transactions by the stockholders of the Company of more than fifty percent (50%)
of the voting stock of the Company; (ii) a merger or consolidation in which the
Company is a party; (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or (iv) a liquidation or
dissolution of the Company.
	A "Change in Control" shall mean an Ownership Change
Event or a series of related Ownership Change Events (collectively, the
"Transaction") wherein the stockholders of the Company
immediately before the Transaction do not retain immediately after the
Transaction, in substantially the same proportions as their ownership of shares
of the Company's voting stock immediately before the Transaction, direct or
indirect beneficial ownership of more than fifty percent (50%) of the total
combined voting power of the outstanding voting stock of the Company or the
corporation or corporations to which the assets of the Company were transferred
(the "Transferee Corporation(s)"), as the case
may be.  For purposes of the preceding sentence, indirect beneficial ownership
shall include, without limitation, an interest resulting from ownership of the
voting stock of one or more corporations which, as a result of the Transaction,
own the Company or the Transferee Corporation(s), as the case may be, either
directly or through one or more subsidiary corporations.  The Board shall have
the right to determine whether multiple sales or exchanges of the voting stock
of the Company or multiple Ownership Change Events are related, and its
determination shall be final, binding and conclusive.

	Effect of Change in Control on Options.  In the event of a Change in
Control, the surviving, continuing, successor, or purchasing corporation or
parent corporation thereof, as the case may be (the "Acquiring
Corporation"), may either assume the Company's rights and
obligations under outstanding Options or substitute for outstanding Options
substantially equivalent options for the Acquiring Corporation's stock.  In the
event the Acquiring Corporation elects not to assume or substitute for
outstanding Options in connection with a Change in Control, the exercisability
and vesting of each such outstanding Option held by an Optionee whose Service
has not terminated prior to such date shall be accelerated effective as of the
date ten (10) days prior to the date of the Change in Control to such extent, if
any, as shall have been determined by the Board, in its discretion, and set
forth in the Option Agreement evidencing such Option.  The exercise or vesting
of any Option that was permissible solely by reason of this Section 8.2 and
the provisions of such Option Agreement shall be conditioned upon the
consummation of the Change in Control.  Any Options which are neither assumed or
substituted for by the Acquiring Corporation in connection with the Change in
Control nor exercised as of the date of the Change in Control shall terminate
and cease to be outstanding effective as of the date of the Change in Control.
Notwithstanding the foregoing, if the corporation the stock of which is subject
to the outstanding Options immediately prior to an Ownership Change Event
described in Section 8.1(a)(i) constituting a Change in Control is the
surviving or continuing corporation and immediately after such Ownership Change
Event less than fifty percent (50%) of the total combined voting power of its
voting stock is held by another corporation or by other corporations that are
members of an affiliated group within the meaning of Section 1504(a) of the
Code without regard to the provisions of Section 1504(b) of the Code, the
outstanding Options shall not terminate unless the Board otherwise provides in
its discretion.

	Provision of Information.

Each Optionee shall be given access to information concerning the
Company equivalent to that information generally made available to the Company's
common stockholders.

	Transferability of Options.

During the lifetime of the Optionee, an Option shall be exercisable
only by the Optionee or the Optionee's guardian or legal representative.  No
Option shall be assignable or transferable by the Optionee, except by will or by
the laws of descent and distribution.  Notwithstanding the foregoing, a
Nonstatutory Stock Option shall be assignable or transferable to the extent
permitted by the Board and set forth in the Option Agreement evidencing such
Option.

	Compliance with Securities Law.

The grant of Options and the issuance of shares of Stock upon
exercise of Options shall be subject to compliance with all applicable
requirements of federal, state or foreign law with respect to such securities.
Options 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,
no Option may be exercised unless (a) a registration statement under the
Securities Act shall at the time of exercise of the Option be in effect with
respect to the shares of Stock issuable upon exercise of the Option or
(b) in the opinion of legal counsel to the Company, the shares of Stock
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 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 of Stock hereunder shall
relieve the Company of any liability in respect of the failure to issue or sell
such shares of Stock as to which such requisite authority shall not have been
obtained.  As a condition to the exercise of any Option, the Company may require
the Optionee 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.

	Termination or Amendment of Plan.

The Board may terminate or amend the Plan at any time.  However,
subject to changes in applicable law, regulations or rules that would permit
otherwise, without the approval of the Company's stockholders, there shall be
(a) no increase in the maximum aggregate number of shares of Stock that may
be issued under the Plan (except by operation of the provisions of
Section 4.2), (b) no change in the class of Persons eligible to
receive Incentive Stock Options, and (c) no other amendment of the Plan
that would require approval of the Company's shareholders under any applicable
law, regulation or rule.  No termination or amendment of the Plan shall affect
any then outstanding Option unless expressly provided by the Board.  In any
event, no termination or amendment of the Plan may adversely affect any then
outstanding Option without the consent of the Optionee, unless such termination
or amendment is required to enable an Option designated as an Incentive Stock
Option to qualify as an Incentive Stock Option or is necessary to comply with
any applicable law, regulation or rule.

IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies
that the foregoing sets forth the Protein Design Labs, Inc. 1999 Stock Option
Plan as adopted by the Board on April 29, 1999.

 

______________________________

Douglas O. Ebersole

Secretary

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