(d) **Employee Benefits.**During the Executive’s Employment, the Executive will be entitled toparticipate in the employee benefit plans of general applicability to other employees of theCompany, as in effect from time to time, including, without limitation, the Company’s groupmedical, dental, vision, disability, life insurance, director and officer liability insurance andflexible-spending account plans. The Company reserves the right to cancel or change the benefitplans and programs it offers to its employees at any time.               (e) **Service Definition**. For purposes of Section 3(b) of this Agreement, “Service” shall meanservice by the Executive as an employee, director and/or consultant of the Company (or anysubsidiary or parent or affiliated entity of the Company).          3. **Vacation and Indemnification.**               (a) **Vacation**. The Executive will be eligible for paid vacation in accordance with theCompany’s vacation policy. Under the Company’s current vacation policy, the Executive is eligiblefor three (3) weeks per year of paid vacation and would become eligible for four (4) weeks per yearof paid vacation commencing on the third anniversary of the Executive’s employment with theCompany.               (b) **Indemnification**. The Company shall indemnify the Executive to the maximum extentpermitted by applicable law and the Company’s bylaws with respect to the Executive’s Service.During the Executive’s Employment, the Company shall maintain directors’ and officers’ liabilityinsurance for the Executive’s benefit on terms and conditions no less favorable than the terms andconditions generally applicable to the Company’s other senior executives. The Company’sobligations under this Section 3(b) shall survive termination of the Executive’s Service and alsotermination or expiration of this Agreement.          4. **Business Expenses.**During his Employment, the Executive shall be authorized to incurnecessary and reasonable travel, entertainment and other business expenses in connection with hisduties hereunder. The Company shall promptly reimburse the Executive for such expenses uponpresentation of appropriate supporting documentation, all in accordance with the Company’sgenerally applicable policies.          5. **Term of Employment.**               (a) **Employment-at-Will**. The Company and the Executive hereby acknowledge that the Executive’sEmployment is at-will. The Company may terminate the Executive’s Employment with or without Cause,by giving the Executive thirty (30) days’ advance notice in writing. The Executive may terminatehis Employment by giving the Company thirty (30) days’ advance notice in writing. The Executive’sEmployment shall terminate automatically in the event of his death.               (b) **Rights Upon Termination**. Upon the termination of the Executive’s Employment for anyreason (including death or Disability (as defined below)), the Executive shall be entitled to thecompensation, benefits and reimbursements described in this Agreement through the effective date ofthe termination (the “Termination Date”), and theCompany shall make the following payments to the Executive (or his beneficiary) on his
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Termination Date: (i) all unpaid salary and unpaid vacation accrued through the Termination Date,(ii) any accrued, unpaid bonuses for any fiscal year of the Company ended prior to the TerminationDate and (iii) any unreimbursed business expenses. The Executive may also be eligible for otherpost-Employment payments and benefits as provided in this Agreement or pursuant to other agreementsor plans with the Company. Upon the Termination Date, the Executive shall have no further rightsto receive compensation or benefits from the Company except as set forth in Section 6 and pursuantto the terms of any benefit plans (including without limitation any equity compensation plans) ofthe Company in which the Executive is a participant.          6. **Termination Benefits.**               (a) **Severance Pay**. If there is an Involuntary Termination (as defined below) of theExecutive’s Employment, then subject to the Executive’s execution, delivery and non-revocation of aRelease (defined below) within the time period described below, following the Executive’s“separation from service” within the meaning of Section 409A, the Company shall pay the Executive asingle lump sum of cash in an amount equal to the sum of twelve (12) months of the Executive’s thenannual Base Compensation (not giving effect to any reduction in Base Compensation made inconnection with such Involuntary Termination or giving rise to Good Reason). The cash lump sumamount payable under this Section 6(a) shall be made to the Executive on the first payroll date inthe month following the month containing the Release Deadline. The Executive shall also receivethe benefits provided in Sections 6(b) and 6(c), and all such payments and benefits shall not besubject to mitigation or offset (except as specified in Section 6(b)). In order to be entitled toreceive the severance described in this Section 6(a) (including the benefits provided in Sections6(b), 6(c) and, if applicable, 6(d)), the Executive must execute, deliver and not revoke theRelease within forty-five (45) calendar days following the Executive’s separation from service (thedate that is forty-five (45) calendar days following the Executive’s separation from service is the“Release Deadline”). The Company shall furnish the Release to the Executive on the date of hisInvoluntary Termination. The “Release” shall be a general release of all litigation and otherclaims by the Executive and on Executive’s behalf in a form satisfactory to the Company.Notwithstanding the foregoing, if the Executive’s Involuntary Termination occurs in 2008, an amountof the severance pay otherwise payable under this Section 6(a) in a lump sum equal to the amountthat would have been payable under the Prior Agreement (had it been in effect on the date of suchInvoluntary Termination) shall instead be paid in twelve (12) equal monthly installments commencingon the first payroll date in the month following the month containing the Release Deadline.               (b) **Health Insurance**. If the Executive is entitled to receive the severance payment inSection 6(a), and if the Executive elects to continue his (and his dependents’) health insurancecoverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), then theCompany shall pay up to twelve (12) months of the Executive’s monthly premium under COBRA, providedthat the Company’s obligation to pay the monthly premium shall cease at such time as the Executivecommences receiving substantially equivalent health insurance coverage in connection with newemployment and that the Company may require that the Executive substantiate his COBRA coverage.
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               (c) **Equity Vesting**. If the Executive is entitled to receive the payments in Section 6(a),then the time-based vesting restrictions shall immediately lapse on an additional number of sharesof Company common stock under all of the Executive’s outstanding Compensatory Equity that is equalto the number of shares that would have time-vested if the Executive had continued in employmentfor twelve (12) additional months following the Termination Date. In addition, the Executive shallhave three (3) months following the Termination Date to exercise any of his outstandingCompensatory Equity (subject to the original term duration of each equity grant).               (d) **Effect of Change in Control**. If there is an Involuntary Termination of the Executive’sEmployment (i) within the period beginning three (3) months before and ending twelve (12) monthsafter a Change in Control (as defined below) or (ii) more than three (3) months prior to a Changein Control but in connection with a Change in Control (each, a “Qualifying Change in ControlTermination”), then the vesting restrictions shall immediately lapse on all of the Executive’sCompensatory Equity provided that the Executive executes, delivers, and does not revoke theRelease as described in Section 6(a). In addition, in the event of a Qualifying Change in ControlTermination, the Executive will be entitled to all benefits described in Sections 6(a) and 6(b) ofthis Agreement subject to the same terms and conditions and payment dates described above, exceptthat (x) the cash payment amount under Section 6(a) shall be an amount equal to the sum of fifteen(15) months of the Executive’s then annual Base Compensation (not giving effect to any reduction inBase Compensation made in connection with such Involuntary Termination or giving rise to GoodReason) and (y) the Company’s payment of monthly COBRA premiums under Section 6(b) shall be for upto fifteen (15) months. For purposes of the preceding sentence, an Involuntary Termination shallbe deemed to be in connection with a Change in Control if such termination (i) is required by themerger agreement, purchase agreement or other instrument relating to such Change in Control or (ii)is made at the express request of the other party (or parties) to the transaction constituting suchChange in Control.               (e) **Parachute Payments**. In the event that the payments and benefits provided for in thisAgreement and the payments and/or benefits provided to, or for the benefit of, the Executive underany other Company plan or agreement (such payments or benefits are hereinafter collectivelyreferred to as the “Benefits”) (i) constitute “parachute payments” within the meaning of Section280G of the Internal Revenue Code and (ii) but for this Section 6(e), would be subject to theexcise tax imposed by Section 4999 of the Internal Revenue Code (the “Excise Tax”), then theBenefits shall either be:               (i) delivered in full, or               (ii) delivered as to such lesser extent which would result in no portion ofsuch Benefits being subject to the Excise Tax (such reduced amount is hereinafterreferred to as the “Limited Amount”),whichever of the foregoing amounts, taking into account the applicable federal, state and localincome taxes and the Excise Tax, results in the receipt by the Executive on an after-tax basis, ofthe greatest amount of Benefits, notwithstanding that all or some portion of such Benefits may be
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subject to the Excise Tax. If applicable, in order to effectuate the Limited Amount, the Companyshall first reduce those Benefits which are payable in cash and then reduce non-cash payments, ineach case in reverse order beginning with Benefits which are to be paid the farthest in time fromthe date of determination that the Benefits will be limited by (e)(ii) above. Any calculations anddeterminations required under this Section 6(e) shall be made in writing by the Company’sindependent auditor (the “Accountant”) whose determination shall be conclusive and binding. TheExecutive and the Company shall furnish the Accountant such documentation as the Accountant mayreasonably request in order to make a determination. The Company shall pay for all costs that theAccountant may reasonably incur in connection with performing any calculations contemplated by thisSection 6(e).               (f) **“Change in Control” Definition.**For purposes of this Agreement, “Change in Control” shallmean the occurrence of any of the following events:          (i) the consummation of a merger or consolidation of the Company with or intoanother entity or any other corporate reorganization, if the Company’s stockholdersimmediately prior to such merger, consolidation or reorganization cease to directlyor indirectly own immediately after such merger, consolidation or reorganization atleast a majority of the combined voting power of the continuing or survivingentity’s securities outstanding immediately after such merger, consolidation orother reorganization;          (ii) the consummation of the sale, transfer or other disposition of all orsubstantially all of the Company’s assets (other than (1) to a corporation or otherentity of which at least a majority of its combined voting power is owned directlyor indirectly by the Company, (2) to a corporation or other entity owned directly orindirectly by the stockholders of the Company in substantially the same proportionsas their ownership of the common stock of the Company or (3) to a continuing orsurviving entity described in subsection (i) in connection with a merger,consolidation or corporate reorganization which does not result in a Change inControl under subsection (i));          (iii) a change in the composition of the Board, as a result of which fewer thanone-half of the incumbent directors are directors who either (1) had been directorsof the Company on the date twenty-four (24) months prior to the date of the eventthat may constitute a Change in Control (the “original directors”) or (2) wereelected, or nominated for election, to the Board with the affirmative votes of atleast a majority of the aggregate of the original directors who were still in officeat the time of the election or nomination and the directors whose election ornomination was previously so approved;          (iv) the consummation of any transaction as a result of which any personbecomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),directly or indirectly, of securities of the Company representing at leastthirty-five percent (35%) of the total voting power represented by the Company’sthen outstanding voting securities. For purposes of this subsection, theterm “person” shall have the same meaning as when used in sections 13(d)
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and14(d) of the Exchange Act but shall exclude:          (1) a trustee or other fiduciary holding securities under an employeebenefit plan of the Company or an affiliate of the Company;          (2) a corporation or other entity owned directly or indirectly by thestockholders of the Company in substantially the same proportions as theirownership of the common stock of the Company;          (3) the Company; and          (4) a corporation or other entity of which at least a majority of itscombined voting power is owned directly or indirectly by the Company; or          (v) a complete winding up, liquidation or dissolution of the Company.          For purposes of this Section 6(f), a transaction shall not constitute a Change in Control ifits sole purpose is to change the state of the Company’s incorporation or to create a holdingcompany that will be owned in substantially the same proportions by the persons who held theCompany’s securities immediately before such transactions.               (g) **“Cause” Definition.**For all purposes under this Agreement, “Cause” shall mean any of thefollowing committed by the Executive:          (i) Willful failure to follow the reasonable and lawful directions of theBoard;          (ii) Conviction of a felony (or a plea of guilty or *nolo contendere*by theExecutive to a felony) that materially harms the Company;          (iii) Acts of fraud, dishonesty or misappropriation committed by the Executive;          (iv) Willful misconduct by the Executive in the performance of the Executive’smaterial duties required by this Agreement; or          (v) A material breach of this Agreement.          The foregoing is an exclusive list of the acts or omissions that shall be considered “Cause”for the termination of the Executive’s Employment by the Company. With respect to the acts oromissions set forth in clauses (i), (iii), (iv) and (v) above, (x) the Board shall provide theExecutive with thirty (30) days’ advance written notice detailing the basis for the termination ofEmployment for Cause, (y) during the 30-day period after the Executive has received such notice,the Executive shall have an opportunity to cure such alleged Cause events and to presenthis case to the full Board (with the assistance of his own counsel) before any termination forCause is finalized by a vote of a majority of the Board and (z) the Executive shall continue to
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receive the compensation and benefits provided by this Agreement during the 30-day cure period. Inaddition, no act or failure to act of the Executive shall be willful or intentional if performed ingood faith with the reasonable belief that the action or inaction was in the best interest of theCompany.               (h) **“Involuntary Termination” Definition**. For all purposes under this Agreement, “InvoluntaryTermination” shall mean any of the following: (i) termination of the Executive’s Employment by theCompany without Cause or (ii) the Executive’s resignation of Employment for Good Reason.               (i) **“Good Reason” Definition**. For all purposes under this Agreement, “Good Reason” shall meanany of the following that occurs without the Executive’s prior written consent: (i) a materialdiminution in Executive’s authority, duties, or responsibilities, (ii) a material diminution in theExecutive’s Base Compensation, other than any such reduction which is a part of, and generallyconsistent with, a general reduction of officer or employee salaries, (iii) any material breach bythe Company of any material provision of this Agreement, or (iv) a refusal by the Executive,following a request by the Company, to relocate to a facility or location more than forty (40)miles from the Company’s current location; provided, that (A) the Executive provides notice to theCompany of the existence of the applicable condition described in this Section 6(i) within 90 daysof the initial existence of the condition and the Company fails to remedy the condition within 30days thereafter and (B) within the sixty (60) day period immediately following such failureto remedy, the Executive elects to terminate his employment for Good Reason; provided,however, that none of the foregoing shall constitute Good Reason to the extent that theExecutive has agreed in writing to such material change, reduction, breach or refusal.               (j) **“Disability” Definition**. For all purposes under this Agreement, “Disability” shall meanthe Executive’s incapacity due to physical or mental illness to perform his full-time duties withthe Company for a continuous period of three months or an aggregate of six (6) months in anyeighteen (18) month period.          7. **Non-Solicitation, Non-Compete and Non-Disparagement.**               (a) **Non-Solicitation**. During the period commencing on the date of this Agreement andcontinuing until the first anniversary of the Termination Date, the Executive shall not directly orindirectly, personally or through others, solicit, recruit, or attempt to solicit or recruit anyemployee, agent, licensor, content provider, supplier, distributor, customer or partner of theCompany to curtail, cancel or terminate such employment, agency or business relationship that ithas with the Company or its affiliates.               (b) **Non-Compete**. During the period commencing on the date of this Agreement and continuinguntil the first anniversary of the Termination Date, the Executive shall not directly orindirectly, personally or through others, own, manage, operate, control, participate in, performservices for, make any investment in, assist, or otherwise carry on, the Companybusiness or any business that directly competes with the Company business (other than in thecourse of performing duties to Company or any of its affiliates as an employee or other serviceprovider). Notwithstanding the foregoing, nothing contained in this Section 7(b) shall
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limit orotherwise affect the ability of the Executive to own not more than 1.0% of the outstanding capitalstock of any entity that is engaged in a business competitive with Company, provided that suchinvestment is a passive investment and the Executive is not directly or indirectly involved in themanagement or operation of such business or otherwise providing consulting services to suchbusiness.               (c) **Confidential Information**. Except as required in the good faith opinion of the Executivein connection with the performance of the Executive’s duties hereunder or as specifically set forthin this Section 7(e), the Executive shall, in perpetuity, maintain in confidence and shall notdirectly, indirectly or otherwise, use, disseminate, disclose or publish, or use for his benefit orthe benefit of any person, firm, corporation or other entity any confidential or proprietaryinformation or trade secrets of or relating to the Company, including, without limitation,information with respect to the Company’s operations, processes, products, inventions, businesspractices, finances, principals, vendors, suppliers, customers, potential customers, marketingmethods, costs, prices, contractual relationships, regulatory status, business plans, designs,marketing or other business strategies, compensation paid to employees or other terms ofemployment, or deliver to any person, firm, corporation or other entity any document, record,notebook, computer program or similar repository of or containing any such confidential orproprietary information or trade secrets. The Company and the Executive stipulate and agree thatas between them the foregoing matters are important, material and confidential proprietaryinformation and trade secrets and affect the successful conduct of the businesses of the Company(and any successor or assignee of the Company). Upon termination of the Executive’s employmentwith the Company for any reason, the Executive shall promptly deliver to the Company allcorrespondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals,financial documents, or any other documents concerning the Company’s customers, business plans,designs, marketing or other business strategies, products or processes, *provided*that the Executivemay retain his rolodex, address book and similar information.               (d) **Confidential Information, Invention Assignment, Non-Competition and Arbitration Agreement**.Sections 7(a), 7(b) and 7(c) hereinabove shall be in addition to and not in lieu of Sections 2 and9 of the Confidential Information, Invention Assignment, Non-Competition and Arbitration Agreement,dated August 12, 2008 between the Executive and the Company.               (e) **Non-Disparagement**. The Executive and the Company mutually agree not to disparage ordefame, in writing or orally, the other party, and as applicable, its or his services, products,subsidiaries and affiliates, and/or their respective directors, officers, employees, agents, familymembers, successors and assigns. This non-disparagement provision shall not apply to statementsmade by non-management employees of the Company, so long as such statements did not originate fromand were not induced or encouraged (directly or indirectly) by an officer, director or managementemployee of the Company. Notwithstanding the foregoing, nothing in this Section 7(e) shall limitthe ability of the Company or the Executive,as applicable, to provide truthful testimony as required by law or any judicial oradministrative process.
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               (e) **Remedies.**Without limiting the right of the Company to pursue all other legal andequitable rights available to the for violation of the provisions of this Section 7 by theExecutive, it is agreed that (i) other remedies cannot fully compensate the Company for such aviolation, (ii) such a violation will cause the Company irreparable harm which may not beadequately compensated by money damages and (iii) the Company shall each be entitled to temporary,preliminary and permanent injunctive or other equitable relief, without proving actual damages orposting a bond therefore, to prevent a violation, continuing violation or threatened violation ofthe provisions of this Section 7.          8. **Successors.**               (a) **Company’s Successors**. This Agreement shall be binding upon any successor (whether director indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to allor substantially all of the Company’s business and/or assets. For all purposes under thisAgreement, the term “Company” shall include any successor to the Company’s business and/or assetswhich becomes bound by this Agreement.               (b) **Employee’s Successors**. This Agreement and all rights of the Executive hereunder shallinure to the benefit of, and be enforceable by, the Executive’s personal or legal representatives,executors, administrators, successors, heirs, distributees, devisees and legatees.          9. **Section 409A of the Internal Revenue Code**. In the event that the Company determines thatany of the benefits payable under this Agreement would violate Section 409A, then the Company andthe Executive shall, in good faith, agree to implement adjustments needed to comply with Section409A. Additionally, notwithstanding anything contained in this Agreement to the contrary, if theExecutive is deemed by the Company at the time of the Executive’s “separation from service” to be a“specified employee,” each within the meaning of Section 409A, any compensation or benefits towhich the Executive becomes entitled under this Agreement (or any agreement or plan referenced inthis Agreement) in connection with such separation that are subject to Section 409A shall not bemade or commence until the date which is six (6) months after the Executive’s “separation fromservice” (or, if earlier, the Executive’s death). Such deferral shall only be effected to theextent required to avoid adverse tax treatment to the Executive, including (without limitation) theadditional twenty percent (20%) tax for which the Executive would otherwise be liable under Section409A(a)(1)(B) in the absence of such deferral. Upon the expiration of the applicable deferralperiod, any compensation or benefits which would have otherwise been paid during that period(whether in a single lump sum or in installments) in the absence of this Section 9 shall be paid tothe Executive or the Executive’s beneficiary in one lump sum.          10. **Repayment Provisions**. If the Company is required to prepare an accounting restatementdue to its material noncompliance, as a result of the Executive’s misconduct, with any financialreporting requirement under United States securities laws, then,and only if Section 304 of the Sarbanes-Oxley Act of 2002, or a successor provision, is thenin effect, the Company may require the Executive to reimburse the Company for (a) any bonus orother incentive-based or equity-based compensation received by the Executive from the
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Companyduring the 12-month period following the first public issuance or filing with the SecuritiesExchange Commission (whichever first occurs) of the financial documents embodying such financialreporting requirement and (b) any profits realized from the sale of securities of Company duringsuch 12-month period.          11. **Miscellaneous Provisions.**               (a) **Notice**. Notices and all other communications contemplated by this Agreement shall be inwriting and shall be deemed to have been duly given when personally delivered or when mailed byovernight courier, U.S. registered or certified mail, return receipt requested and postage prepaid.In the case of the Executive, mailed notices shall be addressed to him at the home address that hemost recently communicated to the Company in writing. In the case of the Company, mailed noticesshall be addressed to its corporate headquarters, and all notices shall be directed to theattention of its Secretary.               (b) **Modifications and Waivers**. No provision of this Agreement shall be modified, waived ordischarged unless the modification, waiver or discharge is agreed to in writing and signed by theExecutive and by an authorized officer of the Company (other than the Executive). No waiver byeither party of any breach of, or of compliance with, any condition or provision of this Agreementby the other party shall be considered a waiver of any other condition or provision or of the samecondition or provision at another time.               (c) **Whole Agreement**. Except for those agreements or plans referenced herein (includingwithout limitation any Employee Benefits Plans in which the Executive is a participant in as of theEffective Date), this Agreement contains the entire understanding of the parties with respect tothe subject matter hereof and supersedes any other agreements, representations or understandings(whether oral or written and whether express or implied) with respect to the subject matter hereof.In the event of any conflict in terms between this Agreement and any other agreement executed byand between the Executive and the Company, the terms of this Agreement shall prevail and govern.               (d) **Withholding Taxes**. All payments made under this Agreement shall be subject to reductionto reflect taxes or other charges required to be withheld by law.               (e) **Reporting Requirements**. As the Executive is a Section 16 officer, the Company will assistthe Executive and facilitate the Executive’s compliance with applicable Section 16 reportingrequirements.               (f) **Choice of Law**. The validity, interpretation, construction and performance of thisAgreement shall be governed by the laws of the state of Washington (except their provisionsgoverning the choice of law).               (g) **Severability; Blue-Penciling**. The invalidity or unenforceability of any provision orprovisions of this Agreement shall not affect the validity or enforceability of any other provisionhereof, which shall remain in full force and effect. Furthermore, it is the intent, agreement andunderstanding of each party hereto that if, in any action before any court or agency legallyempowered to enforce this Agreement, any term, restriction, covenant or promise
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in this Agreementis found to be unreasonable and for that or any other reason unenforceable, then such term,restriction, covenant or promise shall be deemed modified to the minimum extent necessary to makeit enforceable by such court or agency; provided further that any such court or agency shall havethe power to modify such provision, to the extent necessary to make it enforceable (for the maximumduration and geographic scope permissible), and such provision as so modified shall be enforced.               (h) **Assignment**. The Company may assign its rights under this Agreement to any entity thatexpressly in writing assumes the Company’s obligations hereunder in connection with any sale ortransfer of all or substantially all of the Company’s assets to such entity.               (i) **Counterparts**. This Agreement may be executed in two or more counterparts, each of whichshall be deemed an original, but all of which together shall constitute one and the sameinstrument.
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          **IN WITNESS WHEREOF**, each of the parties has executed this Agreement, in the case of theCompany by its duly authorized officer, as of the Effective Date.         /s/ Scott C. Stromatt   **Scott C. Stromatt, M.D.**       **Trubion Pharmaceuticals, Inc.**