**Exhibit10.3**

 

**COMBIMATRIXCORPORATION**

**EXECUTIVECHANGE OF CONTROL SEVERANCE PLAN**

 

CombiMatrixCorporation, a Delaware corporation (the “**Company**”) hasadopted this Executive Change of Control Severance Plan (the “**Plan**”), effective as of November 10, 2009, for thebenefit of certain key employees of the Participating Company Group.

 

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

 

The Board hasdetermined, therefore, that appropriate steps should be taken to reinforce andencourage the continued attention and dedication of its members of managementof the Company to their assigned duties without distraction in the face ofpotentially disturbing circumstances arising from any possible Change ofControl of the Company.

 

The Company herebyadopts this Plan for the benefit of its employees who are eligible as providedin the Plan.

 

# **Section 1.**                                          Definitions.

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## ***1.1***                                      “Accounting Firm” means the accounting firm engaged by theCompany for general audit purposes immediately prior to the Change of ControlDate or, if such firm is unable or unwilling to perform the calculationsrequired under this Plan, such other national accounting firm as shall bedesignated by agreement between the Participant to whom Section 4.1applies and the Company.

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## ***1.2***                                      “Base Salary” means the Participant’s annual base salary as ineffect during the last regularly scheduled payroll period immediately precedingsuch Participant’s Date of Termination.  Base Salary does not include anybonuses, commissions, fringe benefits, overtime, car allowances, otherirregular payments or any other compensation except base salary.

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

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## ***1.4***                                      “Cause” means a (i) felony conviction; or (ii) willfuldisclosure of material trade secrets or other material confidential informationrelated to the business of a Participating Company; or (iii) willful andcontinued failure to substantially perform the same duties as in effect priorto the Change of Control for the Participating Company (other than any suchfailure resulting from physical or mental incapacity or any actual oranticipated failure resulting from a resignation for Good Reason) after awritten demand for substantial performance is delivered by the Company, whichdemand identifies the specific actions which the Company believes constitutewillful and continued failure substantially to perform duties, and which performanceis not substantially corrected within ten (10) days of receipt of suchdemand.  For purposes of the previous sentence, no act or failure to actshall be deemed “willful” unless done, or omitted to be done, with willfulmalfeasance or gross negligence and without reasonable belief that action oromission was not materially adverse to the best interest of the ParticipatingCompany Group.

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## ***1.5***                                      “Change of Control” means a Change of Control of the Company ofa nature that would be required to be reported in response to Item 6(e) ofSchedule 14A of Regulation 14A promulgated under the Exchange Act, whether ornot the Company is then subject to such reporting requirement; provided,however, that anything in this Plan to the contrary notwithstanding, a Changeof Control shall be deemed to have occurred if:

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### **(a)**                      any individual, partnership,firm, corporation, association, trust, unincorporated organization or otherentity or person, or any syndicate or group deemed to be a person under Section 14(d)(2) ofthe Exchange Act, is or becomes the “beneficial owner” (as defined in Rule 13d-3of the General Rules and Regulations under the Exchange Act), directly orindirectly, of securities of the Company 

 

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### **representing 50% or more of the combined votingpower of the Company’s then outstanding securities entitled to vote in theelection of directors of the Company;**

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### **(b)**                     during any period of two (2) consecutiveyears (not including any period prior to the Effective Date), individuals whoat the beginning of such period constituted the Board and any new directors,whose election by the Board or nomination for election by the Company’sstockholders was approved by a vote of at least a majority of the directorsthen still in office who either were directors at the beginning of the periodor whose election or nomination for election was previously so approved (the “IncumbentDirectors”), cease for any reason toconstitute a majority thereof;

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### **(c)**                     there occurs a reorganization,merger, consolidation or other corporate transaction involving the Company (a “Transaction”), in each case with respect towhich the stockholders of the Company immediately prior to such Transaction donot, immediately after the Transaction, own securities representing more than50% of the combined voting power of the Company, a parent of the Company orother corporation resulting from such Transaction (counting, for this purpose,only those securities held by the Company’s stockholders immediately after theTransaction that were received in exchange for, or represent their continuingownership of, securities of the Company held by them immediately prior to theTransaction);

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### **(d)**                     all or substantially all of theassets of the Company are sold, liquidated or distributed; or

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

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## ***1.6***                                      “Change of Control Date” means the date on which the Change ofControl occurs.  Notwithstanding the first sentence of this definition, ifa Participant’s employment with the Participating Company Group terminatesprior to the Change of Control Date and it is reasonably demonstrated that suchtermination (a) was at the request of the third party who has taken stepsreasonably calculated to effect the Change of Control or (b) otherwisearose 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 suchParticipant’s termination of employment.

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## ***1.7***                                      “Code” means the Internal Revenue Code of 1986, as amended, andany successor provisions thereto.

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

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

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## ***1.10***                                “Date of Termination” means the date of a Participant’stermination of employment with the Participating Company Group as determined inaccordance with Section 3.6.

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## ***1.11***                                “Disability” means a Participant’s (a) incapacity due tophysical or mental illness which causes such Participant’s absence from thefull-time performance of his or her duties with the Participating Company Groupfor six (6) consecutive months and (b) such Participant’s failure toreturn to full-time performance of his or her duties for the ParticipatingCompany Group within thirty (30) days after written Notice of Termination dueto Disability is given to a Participant.  Any question as to the existenceof Disability upon which a Participant and the Participating Company Groupcannot agree shall be determined by a qualified independent physician selectedby 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 immediatefamily), and approved by the Participating Company Group.  The determinationof such physician made in writing to the Participating Company Group shall befinal and conclusive for all purposes of this Plan

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## ***1.12***                                “Effective Date” means November 10, 2009.

 

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

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

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## ***1.15***                                “ERISA” means the Employee Retirement Income Security Act of1974, as amended.

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## ***1.16***                                “Exchange Act” means the Securities Exchange Act of 1934, asamended, and any successor provisions thereto.

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## ***1.17***                                “Good Reason” means a Participant’s resignation of employmentduring the Term as a result of any of the following:

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### **(a)**                      A meaningful and detrimentalalteration in such Participant’s position, titles, or the nature or status ofresponsibilities (including reporting responsibilities) from those in effectimmediately prior to the Change of Control Date;

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### **(b)**                     A reduction by the ParticipatingCompany Group in such Participant’s Base Salary as in effect immediately priorto the Change of Control Date or as the same may be increased from time to timethereafter;

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

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### **(d)**                     The failure by the ParticipatingCompany Group to pay or provide to such Participant with any material item ofcompensation or benefits promptly when due;

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

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### **(f)**                        A material breach by theParticipating Company Group of the provisions of this Plan;

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

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## ***1.18***                                “Group I Participant” means the Chief Executive Officer of theCompany on the Change of Control Date, so long as he is not a party to anyother retention and/or severance agreement with the Participating Company Groupthat is not otherwise waived in accordance with Section 3.9.

 

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## ***1.19***                                “Group II Participant” means each senior management-levelemployee of a Participating Company who (i) is not a party to any otherretention and/or severance agreement with the Participating Company Group thatis not otherwise waived in accordance with Section 3.9, (ii) is not aGroup I Participant and (iii) who, on the Change of Control Date, was a Section 16Officer.

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## ***1.20***                                “Involuntary Termination” means (i) a Participant’s involuntarytermination of employment with the Participating Company Group during the Termother than for death, Disability or Cause or (ii) a Participant’sresignation of employment with the Participating Company Group during the Termfor Good Reason.

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

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## ***1.22***                                “Participating Company Group” means the Company and any presentor future United States parent and/or United States direct or indirectsubsidiary corporations of the Company that have been designated by the Boardas a “Participating Company” for purposes of this Plan (all of which along withthe Company being individually referred to as a “ParticipatingCompany” and collectively referred to as the “ParticipatingCompanyGroup”).  For purposes of this Plan, a parent or subsidiary corporationshall be defined in Sections 424(e) and 424(f) of the Code and shallinclude entities related to the Company by similar ownership levels that arenot corporations.

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## ***1.23***                                “Participant” means each Group I Participant and each Group IIParticipant.

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## ***1.24***                                “Plan” means this CombiMatrix Corporation Executive Change ofControl Severance Plan.

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

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## ***1.26***                                “Regulations” means the proposed, temporary and finalregulations under Section 280G of the Code or any successor provisionthereto.

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

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

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## ***1.29***                                “Severance Multiple” means (a) with respect to Group IParticipants, one (1), and (b) with respect to Group IIParticipants, one-half (0.5).

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## ***1.30***                                “Term” means the period of a Participant’s employment thatcommences on the Change of Control Date and shall continue until the secondanniversary of the Change of Control Date.

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# **Section 2.**                                            Employment During the Term.  During the Term, thefollowing terms and conditions shall apply to a Participant’s employment withthe Participating Company Group:

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## ***2.1***                                      Titles; Reporting and Duties.  A Participant’s position, title, nature and status ofresponsibilities and reporting obligations shall be no less favorable thanthose that such Participant enjoyed immediately prior to the Change of ControlDate.

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

 

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## ***2.3***                                      Incentive Compensation.  A Participant shall be eligible to participate in eachlong-term incentive plan or arrangement established by the ParticipatingCompany Group for its employees at such Participant’s level of seniority inaccordance with the terms and provisions of such plan or arrangement and at alevel consistent with the Participating Company Group’s practices applicable toeach 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 andfringe benefit plans and arrangements that the Participating Company Groupprovides to its employees in accordance with the terms of such plans andarrangements, which shall be no less favorable to such Participant, in theaggregate, than the terms and provisions available to other similarly situatedemployees of the Participating Company Group.

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

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# **Section 3.**                                            Severance Benefits.  In the event of aParticipant’s Involuntary Termination, the terminated Participant shall beentitled to the following:

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## ***3.1***                                      Payment of Wages and Accrued Vacation.  The Company shall pay to such terminated Participant withinfive (5) days of the date of such Involuntary Termination the full amountof any earned but unpaid Base Salary through the Date of Termination at therate 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 unusedvacation time which such Participant may have accrued as of the Date ofTermination.

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## ***3.2***                                      Payment of Cash Severance.  Subject to execution of a release of claims as described in Section 10below, the Company shall pay to such terminated Participant an amount equal tothe 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 paymentswhich such terminated Participant is entitled to receive under any other noticeor severance pay and/or retention plan or arrangement sponsored by anyParticipating Company.  Except as otherwise provided in Sections 3.10 and4.1 below, these cash payments will be made in a lump sum on the day followingthe Release Effective Date.

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

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

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## ***3.5***                                      Other Benefit Plans. A terminated Participant’s participation and rights in other benefit plans asmay be provided by the Participating Company Group at the time of his/herInvoluntary Termination shall be governed solely by the terms and conditions ofsuch plans, if any.

 

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

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

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## ***3.8***                                      Withholding. Amounts paid to a Participant hereunder shall be subject to all applicablefederal, state and local withholding taxes.

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## ***3.9***                                      Waiver of Any Other Participating Company Retention/Severance Agreement.  A terminated Participant may elect, in his or her solediscretion, to waive each and every prior retention and/or severance agreemententered into between a Participating Company and such terminated Participant(the “Other Severance Benefits”) in order to participate and receive the Severance Benefits providedunder this Plan. Such waiver shall be in writing in such form as may reasonablybe specified by the Plan Administrator and shall be filed with the Company inaccordance with such rules and procedures as may be reasonably establishedby the Plan Administrator.  TheParticipant may elect to waive the Other Severance Benefits at any time priorto receiving a payment under such benefits.

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## ***3.10***                                Application of Section 409A.  Notwithstanding any other provision of this Plan, to the extentthat (i) one or more of the payments or benefits received or to bereceived by a Participant pursuant to this Plan would constitute deferredcompensation subject to the requirements of Code Section 409A, and (ii) theParticipant is a “specified employee” within the meaning of Code Section 409A,then such payment or benefit (or portion thereof) will be delayed until theearliest date following the Participant’s “separation from service” with theParticipating Company Group within the meaning of Code Section 409A onwhich the Company can provide such payment or benefit to the Participantwithout the Participant’s incurrence of any additional tax or interest pursuantto Code Section 409A, with all remaining payments or benefits duethereafter occurring in accordance with the original schedule.  Inaddition, this Plan and the payments and benefits to be provided hereunder areintended to comply in all respects with the applicable provisions of Code Section 409A.

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# **Section 4.**                                            Limitation on Payment of Benefits.

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## ***4.1***                                      Parachute Payments. In the event that it is determined by the Accounting Firm that any amountpayable to a Participant under this Plan, alone or when aggregated with anyother amount payable or benefit provided to such Participant pursuant to anyother plan or arrangement of the Participating Company Group, would constitutean “excess parachute payment” within the meaning of Section 280G of theCode, then notwithstanding the other provisions of this Plan, the amountspayable will not exceed the amount which produces the greatest after-taxbenefit to the Participant.  For purposes of the foregoing, the greatestafter-tax benefit will be determined within thirty (30) days of the occurrenceof the event giving rise to such payment to the Participant.  The Companyshall request a determination in writing by the Accounting Firm of whether thefull amount of the payments to the Participant, or a lesser amount, will resultin the greatest after-tax benefit to the Participant.  As soon aspracticable thereafter, the Accounting Firm shall determine and report to theCompany and the Participant the amount of such payments and benefits whichwould produce the greatest after-tax benefit to the Participant.  For thepurposes of such determination, the Accounting Firm may rely on reasonable,good faith interpretations concerning the 

 

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## ***applicationof Sections 280G and 4999 of the Code.  The Company and theParticipant shall furnish to the Accounting Firm such information and documentsas the Accounting Firm may reasonably request in order to make their requireddetermination.  The Company shall bear all fees and expenses theAccounting Firm may reasonably charge in connection with its servicescontemplated by this Section.  If a reduced amount of the payments willgive rise to the greatest after tax benefit, the reduction in the payments andbenefits shall occur in the following order unless the Participant elects in writinga different order prior to the last day of the year preceding the date on whichthe event that triggers the payment occurs: (i) reduction of cashpayments; (ii) cancellation of accelerated vesting of equity awards otherthan stock options; (iii) cancellation of accelerated vesting of stockoptions; and (iv) reduction of other benefits paid to theParticipant.  In the event that acceleration of compensation from theParticipant’s equity awards is to be reduced, such acceleration of vestingshall be canceled in the reverse order of the date of grant unless theParticipant elects in writing a different order for cancellation prior to thelast day of the year preceding the date on which the event that triggers thepayment occurs.***

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

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## ***4.3***                                      Indebtedness of Participant.  If a Participant is indebted to the Participating Company Groupat his or her Date of Termination, the Company reserves the right to offset anybenefits under this Plan by the amount of such indebtedness.

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# **Section 5.**                                            Plan Administration, Amendmentand Termination.

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

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## ***5.2***                                      Composition of Plan Administrator.

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### **(a)**                      Prior to the Change of ControlDate, the “Plan Administrator” shall be the CompensationCommittee of the Board.

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

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### **(c)**                          After the Change of Control Date,in the event that a member of the Plan Administrator is unwilling or unable tocontinue to serve as a member of the Plan Administrator, the members of thePlan Administrator shall, by majority vote, elect sufficient additionalmembers, so that they replace all departing members or at least have a minimumof two members.  Such additional members should be persons who wereemployed by the Company prior to the Change of Control to the extent reasonablypossible.

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## ***5.3***                                      The members of the Plan Administrator shall not receive compensationfor their services on the Plan Administrator.  The Participating CompanyGroup shall indemnify and hold harmless members of the Plan Administrator fromand against all liabilities, claims, demands and costs, including reasonableattorneys’ fees and expenses of legal proceedings, incurred by the members ofthe Plan Administrator which arise as a result of membership on the PlanAdministrator.

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## ***5.4***                                      Powers and Responsibilities.  The Plan Administrator shall have all powers necessary toenable it properly to carry out its duties with respect to the complete controlof the administration of the Plan.  Not in 

 

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## ***limitation,but in amplification of the foregoing, the Plan Administrator shall have thepower and authority in its discretion to:***

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### **(a)**                      Determine which employees of theParticipating Company Group shall participate under the Plan and their level ofparticipation;

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

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### **(c)**                      Adopt amendments to the Plandocument which are deemed necessary or desirable bring these documents intocompliance with all applicable laws and regulations, including but not limitedto Code Section 409A and the guidance thereunder; and

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### **(d)**                     Establish procedures fordetermining who the members of the Plan Administrator shall be after a Changeof Control and/or for electing additional members of the Plan Administratorpursuant to Section 5.2.

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

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## ***5.6***                                      Plan Amendment. The PlanAdministratormay amend or terminate the Plan and the benefits provided hereunder at anytimeprior to the Change in Control Date. After the Change in Control Date, the Plan may not be amended or terminated, without the prior writtenconsent of each Participant, with respect to that Participant’s participation under thePlan.

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## ***5.7***                                      Plan Termination. This Plan shall terminate automatically five (5) years from the EffectiveDate unless extended by the Company or unless a Change of Control shall haveoccurred prior thereto, in which case the Plan shall terminate following thelater of the date which is at least twenty-four (24) months after theoccurrence of a Change of Control or the payment of all Severance Benefits dueunder the Plan.

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# **Section 6.**                                            Claims for Benefits.  Any person who believeshe or she is entitled to benefits under this Plan may submit a claim forbenefits.  The claim must be in writing and should state the claimant’sreasons for claiming these benefits.  The claims should be sent to thePlan Administrator.  If the claim is denied, in whole or in part, writtennotice of the denial will be provided within ninety (90) days of initialreceipt of the claim.  Such notice will include an explanation of thefactors on which the denial is based and what, if any, additional informationis needed to support the claim.  Further review of the claim may beobtained by filing a written request for review.  An individual whoseclaim for benefits is denied may file a request for review with the PlanAdministrator within sixty (60) days.  After receiving a request forreview, 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 theclaimant in writing of the need for an extension.  The PlanAdministrator’s decision will be in writing, setting forth the specific reasonsfor the decision, as well as specific references to the Plan provisions uponwhich the decision is based.

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# **Section 7.**                                            Legal Fees and Expenses.  The Company shall pay orreimburse a Participant for all costs and expenses (including, withoutlimitation, court costs and reasonable legal fees and expenses which reflectcommon practice with respect to the matters involved) incurred by suchParticipant 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) arisingout of or challenging the validity, advisability or enforceability of this Planor any provision thereof.  The payments or reimbursements provided forherein shall be paid by the Participating Company Group promptly (but in noevent more than five (5) business days) following receipt of a writtenrequest for payment or reimbursement, as the case may be.  It is intendedthat each installment of payments under this Section 7 is a separate“payment” for purposes 

 

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

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# **Section 8.**                                            Miscellaneous.

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

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

## *** ***

## ***8.3***                                      Source of Payments. All payments provided under this Plan, other than payments made pursuant to anyother Participating Company Group employee benefit plan which providesotherwise, shall be paid in cash from the general funds of the ParticipatingCompany Group, and no special or separate fund shall be established, and noother segregation of assets made, to assure payment.  To the extent thatany person acquires a right to receive payments from the Participating CompanyGroup hereunder, such right shall be no greater than the right of an unsecuredcreditor of the Participating Company Group.

## *** ***

## ***8.4***                                      Notice. For the purpose of this Plan, notices and all other communications provided forin this Plan shall be in writing and shall be deemed to have been duly givenwhen 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 aParticipant at the address set forth in the Participating Company Group’spayroll records or to such other address as either party may have furnished tothe other in writing in accordance herewith, except that notice of change ofaddress shall be effective only upon receipt.

## *** ***

## ***8.5***                                      Nonalienation of Benefits.  No benefit under the Plan may be assigned, transferred, pledgedas security for indebtedness or otherwise encumbered by any Participant orsubject to any legal process for the payment of any claim against aParticipant.

## *** ***

## ***8.6***                                      Validity. The invalidity or unenforceability of any provision of this Plan shall notaffect 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 ofreference 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 theState 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 orindirect, by purchase, merger, consolidation or otherwise) to all orsubstantially all of the business or assets of the Company expressly to assumeand to agree to perform the obligations under this Plan in the same manner andto the same extent that the Company would be required to perform it if no suchsuccession had taken place; provided, however, that no such assumption shallrelieve the Company of its obligations hereunder.  As used in this Section 9,the “Company” shallinclude the Company as defined in Section 1.9 and any successor to itsbusiness and/or assets which assumes and agrees to perform the obligationsarising under this Plan by operation of law or otherwise.

## *** ***

## ***9.2***                                      Enforceability; Beneficiaries.  This Plan shall be binding upon and inure to the benefit ofeach Participant (and such Participant’s personal representatives and heirs)and the Company and any organization which succeeds to substantially all of thebusiness or assets of the Company, whether by means of merger, consolidation, 

 

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## ***acquisitionof all or substantially all of the assets of the Company or otherwise,including, without limitation, as a result of a Change of Control or byoperation of law.  This Plan shall inure to the benefit of and beenforceable 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 hereunderif such Participant had continued to live, all such amounts, unless otherwiseprovided herein, shall be paid in accordance with the terms of this Plan tosuch Participant’s devisee, legatee or other designee or, if there is no suchdesignee, to such Participant’s estate.***

## *** ***

# **Section 10.**                                      Release of Claims.  As a condition to thereceipt of Severance Benefits, each Participant must execute and allow tobecome effective a release of claims in a form satisfactory to the PlanAdministrator , with such execution occurring not prior to the Date ofTermination and not later than 45 days after the Participant’s receiptthereof.  The date on which such release becomes effective is the “ReleaseEffective Date”.  No Severance Benefits shall be paid to aParticipant under this Plan prior to the Release Effective Date.  The formof release shall not cause the Participant to waive or release any claims orrights a Participant may have to be indemnified by the Company under applicablelaw or the terms of any then-effective indemnification agreement orobligation.  The form of the releaseshall follow the example attached as Exhibits A and B, updated as necessary forany changes in the law.

# ** **

To record theadoption of the Plan as set forth herein, effective as of****November 10,2009, CombiMatrix Corporation hascaused its duly authorized officer to execute the same this 10th day ofNovember, 2009.

 

 
|                          |        CombiMatrix  Corporation |
|-------------------------------|--------------------------------------------------------------------|
|                          |                                                               |   |
|                          |                                                               |   |
| Dated: November 10, 2009 | By:                                                                | /s/ AMIT KUMAR, PH.D. |
|                          |                                                               | Amit Kumar, Ph.D. |
|                          |                                                               | President and CEO |

 

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**EXHIBIT A**

 

**RELEASEAGREEMENT**

**(ForEmployees Age 40 or Older)**

 

I understand andagree completely to the terms set forth in the CombiMatrix CorporationExecutive Change of Control Severance Plan (the “**Plan**”).  Certain capitalized terms used in thisRelease Agreement are defined in the Plan.

 

I hereby confirmmy obligations under the Company’s proprietary information and inventionsagreement.

 

[I acknowledgethat I have read and understand Section 1542 of the California Civil Codewhich reads as follows: **“A general release doesnot extend to claims which the creditor does not know or suspect to exist inhis favor at the time of executing the release, which if known by him must havematerially affected his settlement with the debtor.”**  I hereby expressly waive and relinquish allrights and benefits under that section and any law of any jurisdiction ofsimilar effect with respect to my release of any claims I may have against theCompany.]

 

In exchange forthe benefits I am receiving under the Plan to which I am otherwise notentitled, I hereby generally and completely release the Company and itsdirectors, 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 knownand 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 notlimited to: (1) all claims arising out of or in any way related to myemployment with the Company or the termination of that employment; (2) allclaims related to my compensation or benefits from the Company, includingsalary, bonuses, commissions, vacation pay, expense reimbursements, severancepay, fringe benefits, stock, stock options, or any other ownership interests inthe Company; (3) all claims for breach of contract, wrongful termination,and breach of the implied covenant of good faith and fair dealing; (4) alltort claims, including claims for fraud, defamation, emotional distress, anddischarge in violation of public policy; and (5) all federal, state, andlocal statutory claims, including claims for discrimination, harassment,retaliation, attorneys’ fees, or other claims arising under the federal CivilRights Act of 1964 (as amended), the federal Americans with Disabilities Act of1990, 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 notinclude any indemnification obligations the Company may have to me.

 

I acknowledge thatI am knowingly and voluntarily waiving and releasing any rights I may haveunder ADEA.  I also acknowledge that theconsideration given under the Plan for the waiver and release in the precedingparagraph hereof is in addition to anything of value to which I was alreadyentitled.  I further acknowledge that Ihave been advised by this writing, as required by the ADEA, that: (A) my waiver and release do not apply to any rightsor claims that may arise on or after the date I execute this Release Agreement; (B) I have theright to consult with an attorney prior to executing this Release Agreement; (C) I havetwenty-one (21) days to consider this Release Agreement (although I may chooseto voluntarily execute it earlier); (D) I have seven (7) daysfollowing my execution of this Release Agreement to revoke it; and (E) this ReleaseAgreement shall not be effective until the date upon which the revocationperiod has expired, which shall be the eighth (8th)day after I execute this Release Agreement.

 
|       | **EMPLOYEE** |
|------------|--------------|
| ** ** |         |
|       |         |
|       | Name:        |   |
|       |         |   |
|       | Date:        |   |

 

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**EXHIBIT B**

 

**RELEASEAGREEMENT**

**(ForEmployees  Under Age 40)**

 

I understand andagree completely to the terms set forth in the CombiMatrix Corporation Changeof Control Severance Plan (the “**Plan**”).  Certain capitalized terms used in thisRelease Agreement are defined in the Plan.

 

I hereby confirmmy obligations under the Company’s proprietary information and inventionsagreement.

 

[I acknowledgethat I have read and understand Section 1542 of the California Civil Codewhich reads as follows: **“A general release doesnot extend to claims which the creditor does not know or suspect to exist inhis favor at the time of executing the release, which if known by him must havematerially affected his settlement with the debtor.”**  I hereby expressly waive and relinquish allrights and benefits under that section and any law of any jurisdiction ofsimilar effect with respect to my release of any claims I may have against theCompany.]

 

In exchange forthe benefits I am receiving under the Plan to which I am otherwise notentitled, I hereby generally and completely release the Company and itsdirectors, officers, employees, shareholders, partners, agents, attorneys, predecessors,successors, parent and subsidiary entities, insurers, affiliates, and assignsfrom 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, oromissions occurring prior to my signing this Agreement.  This general release includes, but is notlimited to: (1) all claims arising out of or in any way related to myemployment with the Company or the termination of that employment; (2) allclaims related to my compensation or benefits from the Company, includingsalary, bonuses, commissions, vacation pay, expense reimbursements, severancepay, fringe benefits, stock, stock options, or any other ownership interests inthe Company; (3) all claims for breach of contract, wrongful termination,and breach of the implied covenant of good faith and fair dealing; (4) alltort claims, including claims for fraud, defamation, emotional distress, anddischarge in violation of public policy; and (5) all federal, state, andlocal statutory claims, including claims for discrimination, harassment,retaliation, attorneys’ fees, or other claims arising under the federal CivilRights Act of 1964 (as amended), the federal Americans with Disabilities Act of1990, and the California Fair Employment and Housing Act (as amended).   This release shall not include anyindemnification obligations the Company may have to me.

 

I understand thatI have seven (7) days to consider this Release Agreement (although I mayvoluntarily execute it earlier).

 
|       | **EMPLOYEE** |
|------------|--------------|
| ** ** |         |
|       | Name:        |   |
|       |         |   |
|       | Date:        |   |

 

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