Exhibit 10.2

 

COMBIMATRIX CORPORATION

RESTATED EXECUTIVE CHANGE OF CONTROL SEVERANCE PLAN

 

CombiMatrix Corporation, a Delaware corporation (the “Company”) has adopted this
Executive Change of Control Severance Plan (the “Plan”), effective as of
November 10, 2009 and restated on August 10, 2010, for the benefit of certain
key employees of the Participating Company Group.

 

The Company considers it essential to the best interests of its stockholders to
take reasonable steps to retain its key management personnel.  Further, the
Board of Directors of the Company (the “Board”) recognizes that the uncertainty
and questions which might arise among management in the context of a Change of
Control of the Company could result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders.

 

The Board has determined, therefore, that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of its members of
management of the Company to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from any possible Change of
Control of the Company.

 

The Company hereby adopts this Plan for the benefit of its employees who are
eligible as provided in the Plan.

 

Section 1.              Definitions.

 

1.1             “Accounting Firm” means the accounting firm engaged by the
Company for general audit purposes immediately prior to the Change of Control
Date or, if such firm is unable or unwilling to perform the calculations
required under this Plan, such other national accounting firm as shall be
designated by agreement between the Participant to whom Section 4.1 applies and
the Company.

 

1.2             “Base Salary” means the Participant’s annual base salary as in
effect during the last regularly scheduled payroll period immediately preceding
such Participant’s Date of Termination.  Base Salary does not include any
bonuses, commissions, fringe benefits, overtime, car allowances, other irregular
payments or any other compensation except base salary.

 

1.3             “Board” means the Board of Directors of the Company.

 

1.4             “Cause” means a (i) felony conviction; or (ii) willful
disclosure of material trade secrets or other material confidential information
related to the business of a Participating Company; or (iii) willful and
continued failure to substantially perform the same duties as in effect prior to
the Change of Control for the Participating Company (other than any such failure
resulting from physical or mental incapacity or any actual or anticipated
failure resulting from a resignation for Good Reason) after a written demand for
substantial performance is delivered by the Company, which demand identifies the
specific actions which the Company believes constitute willful and continued
failure substantially to perform duties, and which performance is not
substantially corrected within ten (10) days of receipt of such demand.  For
purposes of the previous sentence, no act or failure to act shall be deemed
“willful” unless done, or omitted to be done, with willful malfeasance or gross
negligence and without reasonable belief that action or omission was not
materially adverse to the best interest of the Participating Company Group.

 

1.5             “Change of Control” means a Change of Control of the Company of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act, whether or
not the Company is then subject to such reporting requirement; provided,
however, that anything in this Plan to the contrary notwithstanding, a Change of
Control shall be deemed to have occurred if:

 

(a)       any individual, partnership, firm, corporation, association, trust,
unincorporated organization or other entity or person, or any syndicate or group
deemed to be a person under Section 14(d)(2) of the Exchange Act, is or becomes
the “beneficial owner” (as defined in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act), directly or indirectly, of securities of
the Company representing 50% or more of the combined voting power of the
Company’s then outstanding securities entitled to vote in the election of
directors of the Company;

 

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(b)       during any period of two (2) consecutive years (not including any
period prior to the Effective Date), individuals who at the beginning of such
period constituted the Board and any new directors, whose election by the Board
or nomination for election by the Company’s stockholders was approved by a vote
of at least a majority of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved (the “Incumbent Directors”), cease for any
reason to constitute a majority thereof;

 

(c)       there occurs a reorganization, merger, consolidation or other
corporate transaction involving the Company (a “Transaction”), in each case with
respect to which the stockholders of the Company immediately prior to such
Transaction do not, immediately after the Transaction, own securities
representing more than 50% of the combined voting power of the Company, a parent
of the Company or other corporation resulting from such Transaction (counting,
for this purpose, only those securities held by the Company’s stockholders
immediately after the Transaction that were received in exchange for, or
represent their continuing ownership of, securities of the Company held by them
immediately prior to the Transaction);

 

(d)       all or substantially all of the assets of the Company are sold,
liquidated or distributed; or

 

(e)       there is a “Change of Control” or a “change in the effective control”
of the Company within the meaning of Section 280G of the Code and the
Regulations.

 

1.6             “Change of Control Date” means the date on which the Change of
Control occurs.  Notwithstanding the first sentence of this definition, if a
Participant’s employment with the Participating Company Group terminates prior
to the Change of Control Date and it is reasonably demonstrated that such
termination (a) was at the request of the third party who has taken steps
reasonably calculated to effect the Change of Control or (b) otherwise arose in
connection with or in anticipation of the Change of Control, then “Change of
Control Date” means the date immediately prior to the date of such Participant’s
termination of employment.

 

1.7             “Code” means the Internal Revenue Code of 1986, as amended, and
any successor provisions thereto.

 

1.8             “Common Stock” means the common stock of the Company.

 

1.9             “Company” means CombiMatrix Corporation, a Delaware Corporation,
and, except in determining under Section 1.5 hereof whether or not any Change of
Control has occurred, shall include any successor to its business and/or assets.

 

1.10           “Date of Termination” means the date of a Participant’s
termination of employment with the Participating Company Group as determined in
accordance with Section 3.6.

 

1.11           “Disability” means a Participant’s (a) incapacity due to physical
or mental illness which causes such Participant’s absence from the full-time
performance of his or her duties with the Participating Company Group for six
(6) consecutive months and (b) such Participant’s failure to return to full-time
performance of his or her duties for the Participating Company Group within
thirty (30) days after written Notice of Termination due to Disability is given
to a Participant.  Any question as to the existence of Disability upon which a
Participant and the Participating Company Group cannot agree shall be determined
by a qualified independent physician selected by the Participant (or, if such
Participant is not able to select a physician, such selection shall be made by
any adult member of the Participant’s immediate family), and approved by the
Participating Company Group.  The determination of such physician made in
writing to the Participating Company Group shall be final and conclusive for all
purposes of this Plan

 

1.12           “Effective Date” means November 10, 2009.

 

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1.13           “Equity Awards” means options, stock appreciation rights, stock
purchase rights, restricted stock, stock bonuses and other awards which consist
of, or relate to, equity securities of the Company, in each case which have been
granted to a Participant under the Equity Plans.  For purposes of this Plan,
Equity Awards shall also include any shares of common stock or other securities
issued pursuant to the terms of an Equity Award.

 

1.14           “Equity Plans” means the CombiMatrix Corporation 2006 Stock
Incentive Plan, and any other equity-based incentive plan or arrangement adopted
or assumed by the Company, and any future equity-based incentive plan or
arrangement adopted or assumed by the Company, but shall not include any
Employee Stock Purchase Plan or any other plan intended to be qualified under
Section 423 of the Code.

 

1.15           “ERISA” means the Employee Retirement Income Security Act of
1974, as amended.

 

1.16           “Exchange Act” means the Securities Exchange Act of 1934, as
amended, and any successor provisions thereto.

 

1.17           “Good Reason” means a Participant’s resignation of employment
during the Term as a result of any of the following:

 

(a)       A meaningful and detrimental alteration in such Participant’s
position, titles, or the nature or status of responsibilities (including
reporting responsibilities) from those in effect immediately prior to the Change
of Control Date;

 

(b)       A reduction by the Participating Company Group in such Participant’s
Base Salary as in effect immediately prior to the Change of Control Date or as
the same may be increased from time to time thereafter;

 

(c)       The relocation of the office of the Participating Company where such
Participant is primarily employed immediately prior to the Change of Control
Date (the “COC Location”) to a location which is more than twenty-five (25)
miles away from the COC Location or the Participating Company’s requiring such
Participant to be based more than twenty-five (25) miles away from the COC
Location (except for required travel on the Participating Company’s business to
an extent substantially consistent with the Participant’s customary business
travel obligations in the ordinary course of business prior to the Change of
Control Date);

 

(d)       The failure by the Participating Company Group to pay or provide to
such Participant with any material item of compensation or benefits promptly
when due;

 

(e)       The failure of the Participating Company Group to obtain an agreement
from any successor to assume and agree to perform the obligations of this Plan,
as contemplated in Section 9.1 hereof or, if the business for which such
Participant’s services are principally performed is sold at any time after a
Change of Control, the failure of the Participating Company Group to obtain such
an agreement from the purchaser of such business;

 

(f)        A material breach by the Participating Company Group of the
provisions of this Plan;

 

provided, however, that an event described above in clause (a), (b), (d) or
(f) shall not constitute Good Reason unless it is communicated by such
Participant to the Company in writing and is not corrected by the Company in a
manner which is reasonably satisfactory to such Participant (including full
retroactive correction with respect to any monetary matter) within 10 days of
the Company’s receipt of such written notice.

 

1.18           RESERVED

 

1.19           RESERVED

 

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1.20           “Involuntary Termination” means (i) a Participant’s involuntary
termination of employment with the Participating Company Group during the Term
other than for death, Disability or Cause or (ii) a Participant’s resignation of
employment with the Participating Company Group during the Term for Good Reason.

 

1.21           “Notice of Termination” means the notice specified in
Section 3.6.

 

1.22           “Participant” means the Chief Executive Officer of the Company on
the change of Control Date, so long as he is not a party to any other retention
and/or severance agreement with the Participating Company Group that is not
otherwise waived in accordance with section 3.0, and each senior
management-level employee of a Participating Company Group that is not otherwise
waived in accordance with Section 3.9, and (ii) on the Change of Control Date,
was a Section 16 Officer.

 

1.23           “Participating Company Group” means the Company and any present
or future United States parent and/or United States direct or indirect
subsidiary corporations of the Company that have been designated by the Board as
a “Participating Company” for purposes of this Plan (all of which along with the
Company being individually referred to as a “Participating Company” and
collectively referred to as the “Participating Company Group”).  For purposes of
this Plan, a parent or subsidiary corporation shall be defined in Sections
424(e) and 424(f) of the Code and shall include entities related to the Company
by similar ownership levels that are not corporations.

 

1.24           “Plan” means this Restated CombiMatrix Corporation Executive
Change of Control Severance Plan.

 

1.25           “Reference Salary” means the greater of (a) the annual rate of a
Participant’s Base Salary from the Participating Company Group in effect
immediately prior to the date of such Participant’s Involuntary Termination or
(b) the annual rate of a Participant’s Base Salary from the Participating
Company Group in effect at any point during the three-year period ending on the
Change of Control Date.

 

1.26           “Regulations” means the proposed, temporary and final regulations
under Section 280G of the Code or any successor provision thereto.

 

1.27           “Section 16 Officer” means an executive of the Company who has
been designated by the Company or is otherwise required to report under
Rule 16(a) of the Exchange Act.

 

1.28           “Severance Benefits” means those benefits provided to a
Participant under this Plan on account of a Change of Control, as determined in
accordance with Section 3.2, 3.3 and 3.4 after the execution of a release of
claims as required by Section 10.

 

1.29           “Severance Multiple” means one-half (0.5).

 

1.30           “Term” means the period of a Participant’s employment that
commences on the Change of Control Date and shall continue until the second
anniversary of the Change of Control Date.

 

Section 2.               Employment During the Term.  During the Term, the
following terms and conditions shall apply to a Participant’s employment with
the Participating Company Group:

 

2.1             Titles; Reporting and Duties.  A Participant’s position, title,
nature and status of responsibilities and reporting obligations shall be no less
favorable than those that such Participant enjoyed immediately prior to the
Change of Control Date.

 

2.2             Base Salary.  A Participant’s Base Salary may not be reduced,
and such Participant’s Base Salary shall be periodically reviewed and increased
in the manner commensurate with increases awarded to other similarly situated
employees of the Participating Company Group.

 

2.3             Incentive Compensation.  A Participant shall be eligible to
participate in each long-term incentive plan or arrangement established by the
Participating Company Group for its employees at such Participant’s level of
seniority in accordance with the terms and provisions of such plan or
arrangement and at a level consistent with the Participating Company Group’s
practices applicable to each Participant prior to the Change of Control Date.

 

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2.4             Benefits.  A Participant shall be eligible to participate in all
retirement, welfare and fringe benefit plans and arrangements that the
Participating Company Group provides to its employees in accordance with the
terms of such plans and arrangements, which shall be no less favorable to such
Participant, in the aggregate, than the terms and provisions available to other
similarly situated employees of the Participating Company Group.

 

2.5             Location.  A Participant shall continue to be employed at a
business location in the metropolitan area in which such Participant was
employed prior to the Change of Control Date and the amount of time that such
Participant is required to travel for business purposes will not be increased in
any significant respect from the amount of business travel required of such
Participant prior to the Change of Control Date.

 

Section 3.               Severance Benefits.  In the event of a Participant’s
Involuntary Termination, the terminated Participant shall be entitled to the
following:

 

3.1             Payment of Wages and Accrued Vacation.  The Company shall pay to
such terminated Participant within five (5) days of the date of such Involuntary
Termination the full amount of any earned but unpaid Base Salary through the
Date of Termination at the rate in effect at the time of the Notice of
Termination, plus a cash payment (calculated on the basis of such Participant’s
Reference Salary) for all unused vacation time which such Participant may have
accrued as of the Date of Termination.

 

3.2             Payment of Cash Severance.  Subject to execution of a release of
claims as described in Section 10 below, the Company shall pay to such
terminated Participant an amount equal to the product of (a) such terminated
Participant’s Reference Salary, multiplied by (b) such terminated Participant’s
Severance Multiple.  This severance payment shall be in lieu of any other cash
severance payments which such terminated Participant is entitled to receive
under any other notice or severance pay and/or retention plan or arrangement
sponsored by any Participating Company.  Except as otherwise provided in
Sections 3.10 and 4.1 below, these cash payments will be made in a lump sum on
the day following the Release Effective Date.

 

3.3             Vesting and Exercise of Equity Awards.  Subject to execution of
a release of claims as described in Section 10 below, and notwithstanding
anything to the contrary contained in an applicable Equity Award agreement, all
Equity Awards held by a terminated Participant shall vest in full and, as
applicable, shall become fully exercisable, as of the Date of Termination,
except as otherwise provided in Sections 3.10 and 4.1 below.  Notwithstanding
anything in this Plan to the contrary, in no event shall the vesting and
exercisability provisions applicable to a terminated Participant under the terms
of an Equity Award be less favorable to such Participant than the terms and
provisions of such awards in effect on the Change of Control Date.

 

3.4             Benefits Continuation.  Subject to execution of a release of
claims as described in Section 10 below, and subject to the terminated
Participant and/or his or her eligible dependents electing continued medical
insurance coverage in accordance with the applicable provisions of state and
federal law (commonly referred to as “COBRA”), the Company shall pay the
terminated Participant’s COBRA premiums for the duration of such COBRA coverage,
or for the period of years equal to the Participant’s Severance Multiple,
whichever is less.  If the terminated Participant’s medical coverage immediately
prior to the Date of Termination included the terminated Participant’s
dependents, the Company paid COBRA premiums shall include the premiums necessary
for such dependents as have elected COBRA coverage.  Notwithstanding the above,
in the event the terminated Participant becomes covered under another employer’s
group health plan (other than a plan which imposes a preexisting condition
exclusion unless the preexisting condition exclusion does not apply) or
otherwise ceases to be eligible for COBRA during the period provided in this
Section 3.4, the Company shall cease payment of the COBRA premiums.

 

3.5             Other Benefit Plans.  A terminated Participant’s participation
and rights in other benefit plans as may be provided by the Participating
Company Group at the time of his/her Involuntary Termination shall be governed
solely by the terms and conditions of such plans, if any.

 

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3.6             Date and Notice of Termination.  Any termination of a
Participant’s employment by a Participating Company or by such Participant
during the Term shall be communicated by a notice of termination to the other
party hereto (the “Notice of Termination”).  The Notice of Termination shall
indicate the specific termination provision in this Plan relied upon and shall
set forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Participant’s employment under the provision so
indicated.  The date of a Participant’s termination of employment with the
Participating Company Group shall be determined as follows:  (i) if employment
is terminated by the Participating Company Group in an Involuntary Termination,
five (5) days after the date the Notice of Termination is provided by the
Participating Company Group, (ii) if employment is terminated by the
Participating Company Group for Cause, the later of the date specified in the
Notice of Termination or ten (10) days following the date such notice is
received by the Participant, and (iii) if the basis of a Participant’s
Involuntary Termination is such Participant’s resignation for Good Reason, the
Date of Termination shall be ten (10) days after the date such Participant’s
Notice of Termination is received by the Company.

 

3.7             No Mitigation or Offset.  A terminated Participant shall not be
required to mitigate the amount of any payment provided for in this Plan by
seeking other employment or otherwise, nor shall the amount of any payment or
benefit provided for in this Plan be reduced (except as set forth in Section 3.4
above) by any compensation earned by such a terminated Participant as the result
of employment by another employer or by retirement benefits paid by the
Participating Company Group or another employer after the Date of Termination or
otherwise.

 

3.8             Withholding.  Amounts paid to a Participant hereunder shall be
subject to all applicable federal, state and local withholding taxes.

 

3.9             Waiver of Any Other Participating Company Retention/Severance
Agreement.  A terminated Participant may elect, in his or her sole discretion,
to waive each and every prior retention and/or severance agreement entered into
between a Participating Company and such terminated Participant (the “Other
Severance Benefits”) in order to participate and receive the Severance Benefits
provided under this Plan. Such waiver shall be in writing in such form as may
reasonably be specified by the Plan Administrator and shall be filed with the
Company in accordance with such rules and procedures as may be reasonably
established by the Plan Administrator.  The Participant may elect to waive the
Other Severance Benefits at any time prior to receiving a payment under such
benefits.

 

3.10           Application of Section 409A.  Notwithstanding any other provision
of this Plan, to the extent that (i) one or more of the payments or benefits
received or to be received by a Participant pursuant to this Plan would
constitute deferred compensation subject to the requirements of Code
Section 409A, and (ii) the Participant is a “specified employee” within the
meaning of Code Section 409A, then such payment or benefit (or portion thereof)
will be delayed until the earliest date following the Participant’s “separation
from service” with the Participating Company Group within the meaning of Code
Section 409A on which the Company can provide such payment or benefit to the
Participant without the Participant’s incurrence of any additional tax or
interest pursuant to Code Section 409A, with all remaining payments or benefits
due thereafter occurring in accordance with the original schedule.  In addition,
this Plan and the payments and benefits to be provided hereunder are intended to
comply in all respects with the applicable provisions of Code Section 409A.

 

Section 4.               Limitation on Payment of Benefits.

 

4.1             Parachute Payments.  In the event that it is determined by the
Accounting Firm that any amount payable to a Participant under this Plan, alone
or when aggregated with any other amount payable or benefit provided to such
Participant pursuant to any other plan or arrangement of the Participating
Company Group, would constitute an “excess parachute payment” within the meaning
of Section 280G of the Code, then notwithstanding the other provisions of this
Plan, the amounts payable will not exceed the amount which produces the greatest
after-tax benefit to the Participant.  For purposes of the foregoing, the
greatest after-tax benefit will be determined within thirty (30) days of the
occurrence of the event giving rise to such payment to the Participant.  The
Company shall request a determination in writing by the Accounting Firm of
whether the full amount of the payments to the Participant, or a lesser amount,
will result in the greatest after-tax benefit to the Participant.  As soon as
practicable thereafter, the Accounting Firm shall determine and report to the
Company and the Participant the amount of such payments and benefits which would
produce the greatest after-tax benefit to the Participant.  For the purposes of
such determination, the Accounting Firm may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code.

 

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The Company and the Participant shall furnish to the Accounting Firm such
information and documents as the Accounting Firm may reasonably request in order
to make their required determination.  The Company shall bear all fees and
expenses the Accounting Firm may reasonably charge in connection with its
services contemplated by this Section.  If a reduced amount of the payments will
give rise to the greatest after tax benefit, the reduction in the payments and
benefits shall occur in the following order unless the Participant elects in
writing a different order prior to the last day of the year preceding the date
on which the event that triggers the payment occurs: (i) reduction of cash
payments; (ii) cancellation of accelerated vesting of equity awards other than
stock options; (iii) cancellation of accelerated vesting of stock options; and
(iv) reduction of other benefits paid to the Participant.  In the event that
acceleration of compensation from the Participant’s equity awards is to be
reduced, such acceleration of vesting shall be canceled in the reverse order of
the date of grant unless the Participant elects in writing a different order for
cancellation prior to the last day of the year preceding the date on which the
event that triggers the payment occurs.

 

4.2             Non-Duplication of Benefits.  Notwithstanding any other
provision in the Plan to the contrary, the benefits provided hereunder shall be
in lieu of any other severance plan and/or retention agreement benefits provided
by any Participating Company and the Severance Benefits and other benefits
provided under this Plan shall be reduced by any severance paid or provided to a
Participant by a Participating Company under any other plan or arrangement.

 

4.3             Indebtedness of Participant.  If a Participant is indebted to
the Participating Company Group at his or her Date of Termination, the Company
reserves the right to offset any benefits under this Plan by the amount of such
indebtedness.

 

Section 5.               Plan Administration, Amendment and Termination.

 

5.1             Administration of the Plan.  The Plan shall be administered by
the Plan Administrator.

 

5.2             Composition of Plan Administrator.

 

(a)       Prior to the Change of Control Date, the “Plan Administrator” shall be
the Compensation Committee of the Board.

 

(b)       After the Change of Control Date, except as otherwise provided in
Section 5.2(c) below, the “Plan Administrator” shall be composed of those
individuals at the Company who held the titles of Chief Executive Officer and
Chief Financial Officer, or titles functionally equivalent thereto immediately
prior to the Change of Control Date, regardless of whether such members’ job
titles have changed or they have left the Company.  The designation of an
individual as holding such title or position shall constitute automatic
appointment to the Plan Administrator.  The members of the Plan Administrator
may appoint additional members to the Plan Administrator

 

(c)       After the Change of Control Date, in the event that a member of the
Plan Administrator is unwilling or unable to continue to serve as a member of
the Plan Administrator, the members of the Plan Administrator shall, by majority
vote, elect sufficient additional members, so that they replace all departing
members or at least have a minimum of two members.  Such additional members
should be persons who were employed by the Company prior to the Change of
Control to the extent reasonably possible.

 

5.3             The members of the Plan Administrator shall not receive
compensation for their services on the Plan Administrator.  The Participating
Company Group shall indemnify and hold harmless members of the Plan
Administrator from and against all liabilities, claims, demands and costs,
including reasonable attorneys’ fees and expenses of legal proceedings, incurred
by the members of the Plan Administrator which arise as a result of membership
on the Plan Administrator.

 

5.4             Powers and Responsibilities.  The Plan Administrator shall have
all powers necessary to enable it properly to carry out its duties with respect
to the complete control of the administration of the Plan.

 

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Not in limitation, but in amplification of the foregoing, the Plan Administrator
shall have the power and authority in its discretion to:

 

(a)       Determine which employees of the Participating Company Group shall
participate under the Plan and their level of participation;

 

(b)       Construe the Plan to determine all questions that shall arise as to
interpretations of the Plan’s provisions, including determination of which
individuals are eligible for Severance Benefits, the amount of Severance
Benefits to which any employee may be entitled, and all other matters pertaining
to the Plan;

 

(c)       Adopt amendments to the Plan document which are deemed necessary or
desirable bring these documents into compliance with all applicable laws and
regulations, including but not limited to Code Section 409A and the guidance
thereunder; and

 

(d)       Establish procedures for determining who the members of the Plan
Administrator shall be after a Change of Control and/or for electing additional
members of the Plan Administrator pursuant to Section 5.2.

 

5.5             Decisions of the Plan Administrator.  Decisions of the Plan
Administrator made in good faith upon any matter within the scope of its
authority shall be final, conclusive and binding upon all persons, including
Participants and their legal representatives.  Any discretion granted to the
Plan Administrator shall be exercised in accordance with such rules and policies
as may be established by the Plan Administrator from time to time.

 

5.6             Plan Amendment.  The Plan Administrator may amend or terminate
the Plan and the benefits provided hereunder at any time prior to the Change in
Control Date.  After the Change in Control Date, the Plan may not be amended or
terminated, without the prior written consent of each Participant, with respect
to that Participant’s participation under the Plan.

 

5.7             Plan Termination.  This Plan shall terminate automatically five
(5) years from the Effective Date unless extended by the Company or unless a
Change of Control shall have occurred prior thereto, in which case the Plan
shall terminate following the later of the date which is at least twenty-four
(24) months after the occurrence of a Change of Control or the payment of all
Severance Benefits due under the Plan.

 

Section 6.               Claims for Benefits.  Any person who believes he or she
is entitled to benefits under this Plan may submit a claim for benefits.  The
claim must be in writing and should state the claimant’s reasons for claiming
these benefits.  The claims should be sent to the Plan Administrator.  If the
claim is denied, in whole or in part, written notice of the denial will be
provided within ninety (90) days of initial receipt of the claim.  Such notice
will include an explanation of the factors on which the denial is based and
what, if any, additional information is needed to support the claim.  Further
review of the claim may be obtained by filing a written request for review.  An
individual whose claim for benefits is denied may file a request for review with
the Plan Administrator within sixty (60) days.  After receiving a request for
review, the Plan Administrator will render a final decision within sixty (60)
days, unless circumstances require an extension of an additional sixty (60) days
for the review.  In this case, the Plan Administrator will notify the claimant
in writing of the need for an extension.  The Plan Administrator’s decision will
be in writing, setting forth the specific reasons for the decision, as well as
specific references to the Plan provisions upon which the decision is based.

 

Section 7.               Legal Fees and Expenses.  The Company shall pay or
reimburse a Participant for all costs and expenses (including, without
limitation, court costs and reasonable legal fees and expenses which reflect
common practice with respect to the matters involved) incurred by such
Participant as a result of any bona fide claim, action or proceeding
(a)  contesting, disputing or enforcing any right, benefits or obligations under
this Plan or (b) arising out of or challenging the validity, advisability or
enforceability of this Plan or any provision thereof.  The payments or
reimbursements provided for herein shall be paid by the Participating Company
Group promptly (but in no event more than five (5) business days) following
receipt of a written request for payment or reimbursement, as the case may be. 
It is intended that each installment of payments under this Section 7 is a
separate “payment” for purposes of Section 409A.

 

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For the avoidance of doubt, it is intended that the payments under this
Section 7 satisfy, to the greatest extent possible, the exemptions from the
application of Code Section 409A provided under Treasury Regulation
1.409A-1(b)(11).

 

Section 8.               Miscellaneous.

 

8.1             No Contract of Employment.  Nothing in this Plan shall be
construed as giving any Participant any right to be retained in the employ of
the Participating Company Group or shall affect the terms and conditions of a
Participant’s employment with the Participating Company Group prior to the
commencement of the Term.

 

8.2             ERISA Plan.  This Plan is intended to be (a) an employee welfare
plan as defined in Section 3(1) of ERISA and (b) a “top-hat” plan maintained for
the benefit of a select group of management or highly compensated employees of
the Participating Company Group.

 

8.3             Source of Payments.  All payments provided under this Plan,
other than payments made pursuant to any other Participating Company Group
employee benefit plan which provides otherwise, shall be paid in cash from the
general funds of the Participating Company Group, and no special or separate
fund shall be established, and no other segregation of assets made, to assure
payment.  To the extent that any person acquires a right to receive payments
from the Participating Company Group hereunder, such right shall be no greater
than the right of an unsecured creditor of the Participating Company Group.

 

8.4             Notice.  For the purpose of this Plan, notices and all other
communications provided for in this Plan shall be in writing and shall be deemed
to have been duly given when delivered or mailed by overnight courier or United
States registered mail, return receipt requested, postage prepaid, addressed to
the Plan Administrator, CombiMatrix Corporation, 6500 Harbour Heights Pkwy.,
Suite #303, Mukilteo, WA 98275, with a copy to the Chief Financial Officer of
the Company, or to a Participant at the address set forth in the Participating
Company Group’s payroll records or to such other address as either party may
have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.

 

8.5             Nonalienation of Benefits.  No benefit under the Plan may be
assigned, transferred, pledged as security for indebtedness or otherwise
encumbered by any Participant or subject to any legal process for the payment of
any claim against a Participant.

 

8.6             Validity.  The invalidity or unenforceability of any provision
of this Plan shall not affect the validity or enforceability of any other
provision of this Plan, which shall remain in full force and effect.

 

8.7             Headings.  The headings contained in this Plan are intended
solely for convenience of reference and shall not affect the rights of the
parties to this Plan.

 

8.8             Governing Law.  This Plan shall be governed by and construed in
accordance with the laws of the State of Washington to the extent such laws are
not preempted by ERISA.

 

Section 9.               Successors; Binding Agreement.

 

9.1             Assumption by Successor.  The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of the Company expressly to
assume and to agree to perform the obligations under this Plan in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place; provided, however, that no such
assumption shall relieve the Company of its obligations hereunder.  As used in
this Section 9, the “Company” shall include the Company as defined in
Section 1.9 and any successor to its business and/or assets which assumes and
agrees to perform the obligations arising under this Plan by operation of law or
otherwise.

 

9.2             Enforceability; Beneficiaries.  This Plan shall be binding upon
and inure to the benefit of each Participant (and such Participant’s personal
representatives and heirs) and the Company and any organization which succeeds
to substantially all of the business or assets of the Company, whether by means
of merger, consolidation, acquisition of all or substantially all of the assets
of the Company or otherwise, including, without limitation, as a result of a
Change of Control or by operation of law.

 

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This Plan shall inure to the benefit of and be enforceable by each Participant’
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.  If a Participant should die while any
amount would still be payable hereunder if such Participant had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Plan to such Participant’s devisee, legatee or
other designee or, if there is no such designee, to such Participant’s estate.

 

Section 10.             Release of Claims.  As a condition to the receipt of
Severance Benefits, each Participant must execute and allow to become effective
a release of claims in a form satisfactory to the Plan Administrator , with such
execution occurring not prior to the Date of Termination and not later than 45
days after the Participant’s receipt thereof.  The date on which such release
becomes effective is the “Release Effective Date”.  No Severance Benefits shall
be paid to a Participant under this Plan prior to the Release Effective Date. 
The form of release shall not cause the Participant to waive or release any
claims or rights a Participant may have to be indemnified by the Company under
applicable law or the terms of any then-effective indemnification agreement or
obligation.  The form of the release shall follow the example attached as
Exhibits A and B, updated as necessary for any changes in the law.

 

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EXHIBIT A

 

RELEASE AGREEMENT

(For Employees Age 40 or Older)

 

I understand and agree completely to the terms set forth in the CombiMatrix
Corporation Restated Executive Change of Control Severance Plan (the “Plan”). 
Certain capitalized terms used in this Release Agreement are defined in the
Plan.

 

I hereby confirm my obligations under the Company’s proprietary information and
inventions agreement.

 

[I acknowledge that I have read and understand Section 1542 of the California
Civil Code which reads as follows: “A general release does not extend to claims
which the creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially affected his
settlement with the debtor.”  I hereby expressly waive and relinquish all rights
and benefits under that section and any law of any jurisdiction of similar
effect with respect to my release of any claims I may have against the Company.]

 

In exchange for the benefits I am receiving under the Plan to which I am
otherwise not entitled, I hereby generally and completely release the Company
and its directors, officers, employees, shareholders, partners, agents,
attorneys, predecessors, successors, parent and subsidiary entities, insurers,
affiliates, and assigns from any and all claims, liabilities and obligations,
both known and unknown, that arise out of or are in any way related to events,
acts, conduct, or omissions occurring prior to my signing this Agreement.  This
general release includes, but is not limited to: (1) all claims arising out of
or in any way related to my employment with the Company or the termination of
that employment; (2) all claims related to my compensation or benefits from the
Company, including salary, bonuses, commissions, vacation pay, expense
reimbursements, severance pay, fringe benefits, stock, stock options, or any
other ownership interests in the Company; (3) all claims for breach of contract,
wrongful termination, and breach of the implied covenant of good faith and fair
dealing; (4) all tort claims, including claims for fraud, defamation, emotional
distress, and discharge in violation of public policy; and (5) all federal,
state, and local statutory claims, including claims for discrimination,
harassment, retaliation, attorneys’ fees, or other claims arising under the
federal Civil Rights Act of 1964 (as amended), the federal Americans with
Disabilities Act of 1990, the federal Age Discrimination in Employment Act of
1967 (as amended) (“ADEA”), and the California Fair Employment and Housing Act
(as amended).    This release shall not include any indemnification obligations
the Company may have to me.

 

I acknowledge that I am knowingly and voluntarily waiving and releasing any
rights I may have under ADEA.  I also acknowledge that the consideration given
under the Plan for the waiver and release in the preceding paragraph hereof is
in addition to anything of value to which I was already entitled.  I further
acknowledge that I have been advised by this writing, as required by the ADEA,
that:  (A) my waiver and release do not apply to any rights or claims that may
arise on or after the date I execute this Release Agreement; (B) I have the
right to consult with an attorney prior to executing this Release Agreement;
(C) I have twenty-one (21) days to consider this Release Agreement (although I
may choose to voluntarily execute it earlier); (D) I have seven (7) days
following my execution of this Release Agreement to revoke it; and (E) this
Release Agreement shall not be effective until the date upon which the
revocation period has expired, which shall be the eighth (8th) day after I
execute this Release Agreement.

 

 

EMPLOYEE

 

 

 

 

 

Name:

 

 

 

 

 

Date:

 

 

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EXHIBIT B

 

RELEASE AGREEMENT

(For Employees Under Age 40)

 

I understand and agree completely to the terms set forth in the CombiMatrix
Corporation Restated Executive Change of Control Severance Plan (the “Plan”). 
Certain capitalized terms used in this Release Agreement are defined in the
Plan.

 

I hereby confirm my obligations under the Company’s proprietary information and
inventions agreement.

 

[I acknowledge that I have read and understand Section 1542 of the California
Civil Code which reads as follows: “A general release does not extend to claims
which the creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially affected his
settlement with the debtor.”  I hereby expressly waive and relinquish all rights
and benefits under that section and any law of any jurisdiction of similar
effect with respect to my release of any claims I may have against the Company.]

 

In exchange for the benefits I am receiving under the Plan to which I am
otherwise not entitled, I hereby generally and completely release the Company
and its directors, officers, employees, shareholders, partners, agents,
attorneys, predecessors, successors, parent and subsidiary entities, insurers,
affiliates, and assigns from any and all claims, liabilities and obligations,
both known and unknown, that arise out of or are in any way related to events,
acts, conduct, or omissions occurring prior to my signing this Agreement.  This
general release includes, but is not limited to: (1) all claims arising out of
or in any way related to my employment with the Company or the termination of
that employment; (2) all claims related to my compensation or benefits from the
Company, including salary, bonuses, commissions, vacation pay, expense
reimbursements, severance pay, fringe benefits, stock, stock options, or any
other ownership interests in the Company; (3) all claims for breach of contract,
wrongful termination, and breach of the implied covenant of good faith and fair
dealing; (4) all tort claims, including claims for fraud, defamation, emotional
distress, and discharge in violation of public policy; and (5) all federal,
state, and local statutory claims, including claims for discrimination,
harassment, retaliation, attorneys’ fees, or other claims arising under the
federal Civil Rights Act of 1964 (as amended), the federal Americans with
Disabilities Act of 1990, and the California Fair Employment and Housing Act (as
amended).   This release shall not include any indemnification obligations the
Company may have to me.

 

I understand that I have seven (7) days to consider this Release Agreement
(although I may voluntarily execute it earlier).

 

 

EMPLOYEE

 

 

 

 

 

Name:

 

 

 

 

 

Date:

 

 

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