**Exhibit10.2**

 

**COMBIMATRIX CORPORATION**

**RESTATED EXECUTIVE CHANGE OF CONTROL SEVERANCE PLAN**

 

CombiMatrix Corporation, a Delaware corporation (the“**Company**”) has adopted this ExecutiveChange 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 bestinterests of its stockholders to take reasonable steps to retain its keymanagement personnel.  Further, the Board of Directors of the Company (the“**Board**”) recognizes that the uncertaintyand questions which might arise among management in the context of a Change ofControl of the Company could result in the departure or distraction of managementpersonnel to the detriment of the Company and its stockholders.

 

The Board has determined, therefore, thatappropriate steps should be taken to reinforce and encourage the continuedattention and dedication of its members of management of the Company to theirassigned duties without distraction in the face of potentially disturbingcircumstances arising from any possible Change of Control of the Company.

 

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

 

**Section 1.****             ****Definitions.**

 

1.1             “Accounting Firm” means the accounting firmengaged by the Company for general audit purposes immediately prior to theChange of Control Date or, if such firm is unable or unwilling to perform thecalculations required under this Plan, such other national accounting firm asshall be designated by agreement between the Participant to whomSection 4.1 applies and the Company.

 

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

 

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

 

1.4             “Cause” means a (i) felony conviction;or (ii) willful disclosure of material trade secrets or other materialconfidential information related to the business of a Participating Company; or(iii) willful and continued failure to substantially perform the sameduties as in effect prior to the Change of Control for the ParticipatingCompany (other than any such failure resulting from physical or mentalincapacity or any actual or anticipated failure resulting from a resignationfor Good Reason) after a written demand for substantial performance isdelivered by the Company, which demand identifies the specific actions whichthe Company believes constitute willful and continued failure substantially toperform duties, and which performance is not substantially corrected within ten(10) days of receipt of such demand.  For purposes of the previoussentence, no act or failure to act shall be deemed “willful” unless done, oromitted to be done, with willful malfeasance or gross negligence and withoutreasonable belief that action or omission was not materially adverse to thebest interest of the Participating Company Group.

 

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

 

(a)       any individual,partnership, firm, corporation, association, trust, unincorporated organizationor other entity or person, or any syndicate or group deemed to be a personunder Section 14(d)(2) of the Exchange Act, is or becomes the “beneficialowner” (as defined in Rule 13d-3 of the General Rules and Regulationsunder the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of thecombined voting power of the Company’s then outstanding securities entitled tovote 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 EffectiveDate), individuals who at the beginning of such period constituted the Boardand any new directors, whose election by the Board or nomination for electionby the Company’s stockholders was approved by a vote of at least a majority ofthe directors then still in office who either were directors at the beginningof the period or whose election or nomination for election was previously soapproved (the “**Incumbent****Directors**”),cease for any reason to constitute a majority thereof;

 

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

 

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

 

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

 

1.6             “Change of Control Date” means the date onwhich the Change of Control occurs.  Notwithstanding the first sentence ofthis definition, if a Participant’s employment with the Participating CompanyGroup terminates prior to the Change of Control Date and it is reasonablydemonstrated that such termination (a) was at the request of the thirdparty who has taken steps reasonably calculated to effect the Change of Controlor (b) otherwise arose in connection with or in anticipation of the Changeof Control, then “Change of Control Date” means the date immediately prior tothe date of such Participant’s termination of employment.

 

1.7             “Code” means the Internal Revenue Code of1986, as amended, and any successor provisions thereto.

 

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

 

1.9             “Company” means CombiMatrix Corporation, aDelaware Corporation, and, except in determining under Section 1.5 hereofwhether or not any Change of Control has occurred, shall include any successorto its business and/or assets.

 

1.10           “Date of Termination” means the date of aParticipant’s termination of employment with the Participating Company Group asdetermined in accordance with Section 3.6.

 

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

 

1.12           “Effective Date” means November 10,2009.

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)       A reduction by theParticipating Company Group in such Participant’s Base Salary as in effectimmediately prior to the Change of Control Date or as the same may be increasedfrom time to time thereafter;

 

(c)       The relocation of theoffice of the Participating Company where such Participant is primarilyemployed 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 COCLocation or the Participating Company’s requiring such Participant to be basedmore than twenty-five (25) miles away from the COC Location (except forrequired travel on the Participating Company’s business to an extentsubstantially consistent with the Participant’s customary business travelobligations in the ordinary course of business prior to the Change of ControlDate);

 

(d)       The failure by theParticipating Company Group to pay or provide to such Participant with anymaterial item of compensation or benefits promptly when due;

 

(e)       The failure of theParticipating Company Group to obtain an agreement from any successor to assumeand agree to perform 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;

 

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

 

provided, however, that an event described above inclause (a), (b), (d) or (f) shall not constitute Good Reason unlessit is communicated by such Participant to the Company in writing and is notcorrected by the Company in a manner which is reasonably satisfactory to suchParticipant (including full retroactive correction with respect to any monetarymatter) 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) aParticipant’s involuntary termination of employment with the ParticipatingCompany Group during the Term other than for death, Disability or Cause or(ii) a Participant’s resignation of employment with the ParticipatingCompany Group during the Term for Good Reason.

 

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

 

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

 

1.23           “Participating Company Group” means theCompany and any present or future United States parent and/or United Statesdirect or indirect subsidiary corporations of the Company that have beendesignated 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 collectivelyreferred to as the “**Participating CompanyGroup**”).  For purposes of thisPlan, a parent or subsidiary corporation shall be defined in Sections 424(e) and424(f) of the Code and shall include entities related to the Company bysimilar ownership levels that are not corporations.

 

1.24           “Plan” means this Restated CombiMatrixCorporation 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 ParticipatingCompany Group in effect immediately prior to the date of such Participant’sInvoluntary Termination or (b) the annual rate of a Participant’s BaseSalary from the Participating Company Group in effect at any point during thethree-year period ending on the Change of Control Date.

 

1.26           “Regulations” means the proposed, temporaryand final regulations under Section 280G of the Code or any successorprovision thereto.

 

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

 

1.28           “Severance Benefits” means those benefitsprovided to a Participant under this Plan on account of a Change of Control, asdetermined in accordance with Section 3.2, 3.3 and 3.4 after the executionof 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’semployment that commences on the Change of Control Date and shall continueuntil the second anniversary of the Change of Control Date.

 

Section 2.               EmploymentDuring the Term.  During the Term,the following terms and conditions shall apply to a Participant’s employmentwith 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 noless favorable than those that such Participant enjoyed immediately prior tothe Change of Control Date.

 

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

 

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

 

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2.4             Benefits.  A Participant shall be eligible toparticipate in all retirement, welfare and fringe benefit plans andarrangements that the Participating Company Group provides to its employees inaccordance with the terms of such plans and arrangements, which shall be noless favorable to such Participant, in the aggregate, than the terms andprovisions available to other similarly situated employees of the ParticipatingCompany Group.

 

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

 

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

 

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

 

3.2             Payment of Cash Severance.  Subject to execution of a release ofclaims as described in Section 10 below, the Company shall pay to suchterminated Participant an amount equal to the product of (a) suchterminated Participant’s Reference Salary, multiplied by (b) suchterminated Participant’s Severance Multiple.  This severance payment shallbe in lieu of any other cash severance payments which such terminatedParticipant is entitled to receive under any other notice or severance payand/or retention plan or arrangement sponsored by any ParticipatingCompany.  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 ReleaseEffective Date.

 

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

 

3.4             Benefits Continuation.  Subject to execution of a release ofclaims as described in Section 10 below, and subject to the terminatedParticipant and/or his or her eligible dependents electing continued medicalinsurance coverage in accordance with the applicable provisions of state andfederal law (commonly referred to as “**COBRA**”),the Company shall pay the terminated Participant’s COBRA premiums for theduration of such COBRA coverage, or for the period of years equal to theParticipant’s Severance Multiple, whichever is less.  If the terminatedParticipant’s medical coverage immediately prior to the Date of Terminationincluded the terminated Participant’s dependents, the Company paid COBRApremiums 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.

 

3.5             Other Benefit Plans.  A terminated Participant’s participationand rights in other benefit plans as may be provided by the Participating CompanyGroup at the time of his/her Involuntary Termination shall be governed solelyby 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’semployment by a Participating Company or by such Participant during the Termshall 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 inthis Plan relied upon and shall set forth in reasonable detail the facts andcircumstances claimed to provide a basis for termination of the Participant’semployment under the provision so indicated.  The date of a Participant’stermination of employment with the Participating Company Group shall bedetermined as follows:  (i) if employment is terminated by theParticipating Company Group in an Involuntary Termination, five (5) daysafter the date the Notice of Termination is provided by the ParticipatingCompany Group, (ii) if employment is terminated by the ParticipatingCompany Group for Cause, the later of the date specified in the Notice ofTermination or ten (10) days following the date such notice is received bythe Participant, and (iii) if the basis of a Participant’s InvoluntaryTermination is such Participant’s resignation for Good Reason, the Date ofTermination shall be ten (10) days after the date such Participant’s Noticeof Termination is received by the Company.

 

3.7             No Mitigation or Offset.  A terminated Participant shall not berequired to mitigate the amount of any payment provided for in this Plan byseeking other employment or otherwise, nor shall the amount of any payment orbenefit provided for in this Plan be reduced (except as set forth inSection 3.4 above) by any compensation earned by such a terminatedParticipant as the result of employment by another employer or by retirementbenefits paid by the Participating Company Group or another employer after theDate of Termination or otherwise.

 

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

 

3.9             Waiver of Any Other Participating CompanyRetention/Severance Agreement.  A terminated Participant may elect, in hisor her sole discretion, to waive each and every prior retention and/orseverance agreement entered into between a Participating Company and suchterminated Participant (the “**Other SeveranceBenefits**”) in order to participate and receive the SeveranceBenefits provided under this Plan. Such waiver shall be in writing in such formas may reasonably be specified by the Plan Administrator and shall be filedwith the Company in accordance with such rules and procedures as may bereasonably established by the Plan Administrator.  The Participant may elect to waive the OtherSeverance Benefits at any time prior to receiving a payment under suchbenefits.

 

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

 

Section 4.               Limitationon Payment of Benefits.

 

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

 

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

 

4.2             Non-Duplication of Benefits.  Notwithstanding any other provision inthe Plan to the contrary, the benefits provided hereunder shall be in lieu ofany other severance 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.

 

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

 

Section 5.               PlanAdministration, Amendment and Termination.

 

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

 

5.2             Composition of Plan Administrator.

 

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

 

(b)       After the Change ofControl Date, except as otherwise provided in Section 5.2(c) below,the “**Plan Administrator**” shall becomposed of those individuals at the Company who held the titles of ChiefExecutive Officer and Chief Financial Officer, or titles functionally equivalentthereto immediately prior to the Change of Control Date, regardless of whethersuch members’ job titles have changed or they have left the Company.  Thedesignation of an individual as holding such title or position shall constituteautomatic appointment to the Plan Administrator.  The members of the Plan Administrator mayappoint additional members to the Plan Administrator

 

(c)       After the Change ofControl Date, in the event that a member of the Plan Administrator is unwillingor unable to continue to serve as a member of the Plan Administrator, themembers of the Plan Administrator shall, by majority vote, elect sufficientadditional members, so that they replace all departing members or at least havea minimum of two members.  Such additional members should be persons whowere employed by the Company prior to the Change of Control to the extentreasonably possible.

 

5.3             The members of the Plan Administrator shall notreceive compensation for their services on the Plan Administrator.  TheParticipating Company Group shall indemnify and hold harmless members of thePlan 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 ofmembership on the Plan Administrator.

 

5.4             Powers and Responsibilities.  The Plan Administrator shall have allpowers necessary to enable it properly to carry out its duties with respect tothe 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 employeesof the Participating Company Group shall participate under the Plan and theirlevel of participation;

 

(b)       Construe the Plan todetermine all questions that shall arise as to interpretations of the Plan’sprovisions, including determination of which individuals are eligible forSeverance Benefits, the amount of Severance Benefits to which any employee maybe entitled, and all other matters pertaining to the Plan;

 

(c)       Adopt amendments to thePlan document 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

 

(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.

 

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

 

5.6             Plan Amendment.  The Plan Administrator may amend orterminate the Plan and the benefits provided hereunder at any time prior to theChange in Control Date.  After the Changein Control Date, the Plan may not be amended or terminated, without the priorwritten consent of each Participant, with respect to that Participant’sparticipation under the Plan.

 

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

 

Section 6.               Claimsfor Benefits.  Any person whobelieves he or she is entitled to benefits under this Plan may submit a claimfor benefits.  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 Plan Administrator’sdecision will be in writing, setting forth the specific reasons for thedecision, as well as specific references to the Plan provisions upon which thedecision is based.

 

Section 7.               LegalFees and Expenses.  The Company shallpay or reimburse 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 orobligations under this Plan or (b) arising out of or challenging thevalidity, advisability or enforceability of this Plan or any provisionthereof.  The payments or reimbursements provided for herein shall be paidby the Participating Company Group promptly (but in no event more than five(5) business days) following receipt of a written request for payment orreimbursement, as the case may be.  It is intended that each installmentof payments under this Section 7 is a separate “payment” for purposes ofSection 409A.

 

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Forthe avoidance of doubt, it is intended that the payments under thisSection 7 satisfy, to the greatest extent possible, the exemptions fromthe application of Code Section 409A provided under Treasury Regulation1.409A-1(b)(11).

 

Section 8.               Miscellaneous.

 

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

 

8.2             ERISA Plan.  This Plan is intended to be (a) anemployee welfare plan as defined in Section 3(1) of ERISA and(b) a “top-hat” plan maintained for the benefit of a select group ofmanagement 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 employeebenefit plan which provides otherwise, shall be paid in cash from the generalfunds of the Participating Company Group, and no special or separate fund shallbe established, and no other segregation of assets made, to assurepayment.  To the extent that any person acquires a right to receivepayments from the Participating Company Group hereunder, such right shall be nogreater than the right of an unsecured creditor of the Participating CompanyGroup.

 

8.4             Notice.  For the purpose of this Plan, notices andall other communications provided for in this Plan shall be in writing andshall be deemed to have been duly given when delivered or mailed by overnightcourier or United States registered mail, return receipt requested, postageprepaid, addressed to the Plan Administrator, CombiMatrix Corporation, 6500Harbour Heights Pkwy., Suite #303, Mukilteo, WA 98275, with a copy to theChief Financial Officer of the Company, or to a Participant at the address setforth in the Participating Company Group’s payroll records or to such otheraddress as either party may have furnished to the other in writing inaccordance herewith, except that notice of change of address shall be effectiveonly upon receipt.

 

8.5             Nonalienation of Benefits.  No benefit under the Plan may beassigned, transferred, pledged as security for indebtedness or otherwiseencumbered by any Participant or subject to any legal process for the paymentof any claim against a Participant.

 

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

 

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

 

8.8             Governing Law.  This Plan shall be governed by andconstrued in accordance with the laws of the State of Washington to the extentsuch 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 expresslyto assume and to agree to perform the obligations under this Plan in the samemanner and to the same extent that the Company would be required to perform itif no such succession had taken place; provided, however, that no suchassumption shall relieve the Company of its obligations hereunder.  Asused in this Section 9, the “**Company**”shall include the Company as defined in Section 1.9 and any successor toits business 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 andinure to the benefit of each Participant (and such Participant’s personalrepresentatives and heirs) and the Company and any organization which succeedsto substantially all of the business or assets of the Company, whether by meansof merger, consolidation, acquisition of all or substantially all of the assetsof the Company or otherwise, including, without limitation, as a result of aChange of Control or by operation of law.

 

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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.             Releaseof Claims.  As a condition tothe receipt 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 “**Release Effective Date**”.  No SeveranceBenefits shall be paid to a Participant under this Plan prior to the ReleaseEffective Date.  The form of release shall not cause the Participant towaive or release any claims or rights a Participant may have to be indemnifiedby the Company under applicable law or the terms of any then-effectiveindemnification agreement or obligation. The form of the release shall follow the example attached as Exhibits Aand 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 agreecompletely to the terms set forth in the CombiMatrix Corporation RestatedExecutive Change of Control Severance Plan (the “**Plan**”).  Certain capitalized terms used in thisRelease Agreement are defined in the Plan.

 

I hereby confirm myobligations under the Company’s proprietary information and inventionsagreement.

 

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

 

In exchange for the benefitsI am receiving under the Plan to which I am otherwise not entitled, Ihereby generally and completely release the Company and its directors,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, 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 that I amknowingly and voluntarily waiving and releasing any rights I may have underADEA.  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 applyto any rights or claims that may arise on or after the date I execute thisRelease Agreement; (B) I have the right to consult with an attorney priorto executing this Release Agreement; (C) I have twenty-one (21) days toconsider this Release Agreement (although I may choose to voluntarily executeit earlier); (D) I have seven (7) days following my execution of thisRelease Agreement to revoke it; and (E) this Release Agreement shall notbe effective until the date upon which the revocation period has expired, whichshall be the eighth (8th) day after Iexecute this Release Agreement.

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

 

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**EXHIBIT B**

 

**RELEASE AGREEMENT**

**(For Employees Under Age 40)**

 

I understand and agreecompletely to the terms set forth in the CombiMatrix Corporation RestatedExecutive Change of Control Severance Plan (the “**Plan**”).  Certain capitalized terms used in thisRelease Agreement are defined in the Plan.

 

I hereby confirm myobligations under the Company’s proprietary information and inventionsagreement.

 

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

 

In exchange for the benefitsI am receiving under the Plan to which I am otherwise not entitled, Ihereby generally and completely release the Company and its directors,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 Civil Rights Act of1964 (as amended), the federal Americans with Disabilities Act of 1990, and theCalifornia Fair Employment and Housing Act (as amended).   This release shall not include anyindemnification obligations the Company may have to me.

 

I understand that I haveseven (7) days to consider this Release Agreement (although I mayvoluntarily execute it earlier).

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

 

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