Document:

Exhibit
10.3

 

COMBIMATRIX
CORPORATION

EXECUTIVE
CHANGE OF CONTROL SEVERANCE PLAN

 

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

 

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

 

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

 

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

 

Section 1.                                          Definitions.

 

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

 

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

 

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

 

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

 

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

 

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

 

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representing 50% or more of the combined voting
power of the Company’s then outstanding securities entitled to vote in the
election of directors of the Company;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.12                                “Effective Date” means November 10, 2009.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.23                                “Participant” means each Group I Participant and each Group II
Participant.

 

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

 

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

 

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

 

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

 

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

 

1.29                                “Severance Multiple” means (a) with respect to Group I
Participants, one (1), and (b) with respect to Group II
Participants, one-half (0.5).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 4.                                            Limitation on Payment of Benefits.

 

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

 

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application
of Sections 280G and 4999 of the Code.  The Company and the
Participant shall furnish to the Accounting Firm such information and documents
as the Accounting Firm may reasonably request in order to make their required
determination.  The Company shall bear all fees and expenses the
Accounting Firm may reasonably charge in connection with its services
contemplated by this Section.  If a reduced amount of the payments will
give rise to the greatest after tax benefit, the reduction in the payments and
benefits shall occur in the following order unless the Participant elects in writing
a different order prior to the last day of the year preceding the date on which
the event that triggers the payment occurs: (i) reduction of cash
payments; (ii) cancellation of accelerated vesting of equity awards other
than stock options; (iii) cancellation of accelerated vesting of stock
options; and (iv) reduction of other benefits paid to the
Participant.  In the event that acceleration of compensation from the
Participant’s equity awards is to be reduced, such acceleration of vesting
shall be canceled in the reverse order of the date of grant unless the
Participant elects in writing a different order for cancellation prior to the
last day of the year preceding the date on which the event that triggers the
payment occurs.

 

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

 

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

 

Section 5.                                            Plan Administration, Amendment
and Termination.

 

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

 

5.2                                      Composition of Plan Administrator.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

Section 8.                                            Miscellaneous.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 9.                                            Successors; Binding Agreement.

 

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

 

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

 

9

 

acquisition
of all or substantially all of the assets of the Company or otherwise,
including, without limitation, as a result of a Change of Control or by
operation of law.  This Plan shall inure to the benefit of and be
enforceable by each Participant’ personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. 
If a Participant should die while any amount would still be payable hereunder
if such Participant had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Plan to
such Participant’s devisee, legatee or other designee or, if there is no such
designee, to such Participant’s estate.

 

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

 

To record the
adoption of the Plan as set forth herein, effective as of  November 10,
2009, CombiMatrix Corporation has
caused its duly authorized officer to execute the same this 10th day of
November, 2009.

 

 

	
   

  	
         CombiMatrix
  Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated: November 10, 2009

  	
  By:

  	
  /s/ AMIT KUMAR, PH.D.

  
	
   

  	
   

  	
  Amit Kumar, Ph.D.

  
	
   

  	
   

  	
  President and CEO

  

 

10

 

EXHIBIT A

 

RELEASE
AGREEMENT

(For
Employees Age 40 or Older)

 

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

 

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

 

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

 

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

 

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

 

	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  

 

11

 

EXHIBIT B

 

RELEASE
AGREEMENT

(For
Employees  Under Age 40)

 

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

 

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

 

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

 

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

 

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

 

	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  

 

12Exhibit 10.01

 

Memorandum of Terms of
Settlement

 

1.                                       Whitney Information Network, Inc.,
WIN CR 11 Trust, and their respective affiliates, successors and assigns
(collectively, “WIN”) and Russell A. Whitney (“Whitney”), on the one hand, and
M. Barry Strudwick (“Strudwick”), Susan Weiss and Car] Weiss (Susan and Carl
Weiss collectively referred to as “Weiss”), on the other hand, agree to enter
into a binding and enforceable settlement agreement on the record in open Court
on or before Monday, September 14, 2009, or as soon after as the Court
will permit.

 

2.                                       WIN will pay to Strudwick and Weiss a
total principal amount of $3.8 million as follows:

 

a.                                       $600,000 no later than September 30,
2009;

 

b.                                      $200,000 no later than October 25,
2009;

 

c.                                       $200,000 no later than November 25,
2009;

 

d.                                      $200,000 no later than December 25,
2009;

 

e.                                       WIN will enter into a commercially
reasonable promissory note (“First Note”) in the amount of $2.3 million payable
in equal quarterly payments payable over 3 years with payments commencing on January 15,
2010 and occurring on the 15th day of each succeeding quarter until paid over 3
years.  Quarterly payments of simple interest will be payable on
outstanding principal at the rate of 6% per annum.  Late payments will
accrue interest at the rate of 8% per annum.  Payments will be in default
if not made within ten (10) days of the due date.  In the event of
default, the total unpaid First Note amount becomes immediately due and
payable.  The First Note will be governed by the laws of New York. 
The First Note will be secured by any interests of WIN, Whitney and any WIN and
Whitney related entities, directly or indirectly, in MDM and the Hotel (see
paragraph 5 below) and WIN’s interest in Tranquility Bay (see paragraph 6
below).  WIN will use commercially reasonably efforts to substitute the
aforementioned security with a Letter of Credit from a United States bank in
the amount of any then unpaid balance on the First Note, and will take such
commercially reasonably steps as necessary on a quarterly basis to obtain such
Letter of Credit.  WIN may prepay the First Note, in whole or in part, at
any time and from time to time.  The parties agree to the jurisdiction of
Judge Tomlinson to enforce the First Note and to enter a judgment thereon if
there is a default.

 

f.                                         WIN will enter into a second commercially
reasonable promissory note (“Second Note”) in the amount of $300,000.  The
Second Note is payable over four years, of which WIN will pay interest only in
years one through three, and principal and interest in year four.  WIN’s
payments will be payable in equal quarterly payments with payments commencing
on January 15, 2010 and occurring on the 15th day of each succeeding
quarter.  The Second Note will accrue simple interest at the rate of 8%
per annum.  Payments will be in default if not made within ten (10) days
of the due date.  In the event of default, the total unpaid Second Note
amount becomes immediately due and payable.  The Second Note will be
governed by the laws of New York.  The Second Note will be secured by any
interests of WIN, Whitney and any WIN and Whitney related entities, directly or
indirectly, in MDM and the Hotel (see paragraph 5 below) and WIN’s interest in
Tranquility Bay (see paragraph 6 below).  WIN will use commercially reasonably
efforts to substitute the aforementioned security with a Letter of Credit from
a United States bank in the amount of any then unpaid balance on the Second
Note, and will take such commercially reasonably steps as necessary on a
quarterly basis to obtain such Letter of Credit.  WIN may prepay the
Second Note, in whole or in part, at any time and from time to time.  The
parties agree to the jurisdiction of Judge Tomlinson to enforce the Second Note
and to enter a judgment thereon if there is a default.

 

g.                                      In the event that WIN pays in full the
First Note and the $1,200,000 (pursuant to subparagraphs 2(a) thru 2(d))
on or before 12 months after the date this agreement is placed on the record
(see paragraph 1 above), the principal of the Second Note will be reduced by
$150,000.

 

h.                                      All WIN payments will be made payable to
the Law Office of Arnold M.  Weiner, which will receive them on behalf of
Strudwick and Weiss.

 

 

3.                                       The parties (for themselves, their
agents, entities, and business associates) mutually release any and all claims
they may have against one another, their business associates, entities and
attorneys except that: (i) all claims of WIN against Whitney and Whitney
against WIN are preserved, and (ii) all claims of WIN and Whitney against
Caputo, CPR, Rothstein, RRA, Rothstein Rosenfeldt Adler Consulting Group, and
Roger Stone are preserved.  WIN and Whitney also recognize that they are
releasing any and all claims they may have against William Ramirez and any of
Strudwick’s and Weiss’s attorneys (including Garcia, etc).  Excluding
claims as preserved in (i) and (ii) of this paragraph, all released
persons and entities will sign mutual global releases.

 

4.                                       The parties will cooperate in dismissing
all pending litigation between and among them.  The parties will also
cooperate as reasonably necessary to request that any criminal or
quasi-criminal prosecutions involving any of the parties and this litigation be
terminated.  The parties intend that this settlement end all litigation between
and among WIN and Whitney, on the one hand, and Strudwick and Weiss, on the
other hand, including each party’s respective business associates and entities,
and the parties are unaware of any contemplated additional claims and
litigation other than potential claims as referenced in subparagraphs 3(i) and
3(ii) above.

 

5.                                       Within 3 business days after the
agreement is placed on the record, Weiss will place into escrow (Law Offices of
Arnold Weiner) her shares in MDM and the Hotel.  Upon receipt by Strudwick
and Weiss of the first $1,200,000 in payments (pursuant to subparagraphs 2(a) through
(d) above), the escrow agent  will surrender to WIN Weiss’s shares in Monterey Del
Mar and the Hotel.  The parties will fully cooperate and take steps
reasonably necessary to effectuate the surrender of such shares.  Weiss also agrees to withdraw in writing any
claim of right to manage MDM and the Hotel, and agrees to relinquish any claim
to being an officer or director of MDM or the Hotel and to provide further
assurances as may be reasonably necessary to facilitate the transfer of MDM and
the Hotel.  Weiss further recognizes that she will not receive any payment
for her shares other than the payments as provided herein to Strudwick and
Weiss.

 

a.                                       All proceeds from the sale of MDM and the
Hotel payable to WIN, Whitney and any WIN and Whitney related entities,
directly or indirectly, whether for equity or debt, will be directly payable to
Strudwick and Weiss toward payment of any unpaid First Note and Second Note
amounts to either pay off the First Note and Second Note in full or be applied
to the principal so that the First Note and Second Note are paid off sooner.

 

6.                                       The Note will also be secured by WIN’s
interest in Tranquility Bay in Lee County, Florida.  In the event of
default by WIN on the First Note or Second Note, Strudwick and Weiss may
foreclose on WIN’s interest in the Tranquility Bay.  WIN may substitute as
security other comparable or better security, such as a Letter of Credit from a
United States bank or interest in real property valued at equal or greater
value.

 

7.                                       This settlement will be reduced to
writing but this settlement is not contingent upon being so reduced to writing,
The writing will include neutral recitals without admissions by any
party.  The parties agree that any disputes pertaining to this settlement
and its enforcement shall be decided by Judge Tomlinson.  In the event any terms are not spelled out herein and
the parties cannot agree, the parties agree to submit such issues to Judge
Tomlinson for her determination, which determination shall be binding on the
parties, final and not subject to appeal.  All parties to this agreement
consent to Judge Tomlinson exercising such jurisdiction.

 

 

	
  /s/ K. Stewart
  Evans, Jr.

  	
   

  	
  /s/ Arnold M. Weiner

  
	
  K. Stewart Evans, Jr.
  as counsel to

  	
   

  	
  Arnold M. Weiner, as
  counsel to

  
	
  Whitney Information
  Network, Inc.

  	
   

  	
  M. Barry Strudwick

  
	
  and WIN CRII Trust

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ David J. Shuster

  	
   

  	
  /s/ Paul Aloe

  
	
  David J. Shuster, as
  counsel to

  	
   

  	
  Paul Aloe, as counsel
  to Susan Weiss

  
	
  Russell A. Whitney

  	
   

  	
  and Carl Weiss

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