ARCA BIOPHARMA, INC. SEVERANCE BENEFIT PLAN

Exhibit 10.3

ARCA BIOPHARMA, INC.

SEVERANCE BENEFIT PLAN

The ARCA Biopharma, Inc. Severance Benefit Plan (the “ Plan ”) is established effective May 26, 2009 (the “ Effective Date ”). The purpose of the Plan is to provide severance benefits to certain eligible employees of ARCA Biopharma, Inc. (the “ Company ”) upon a Qualifying Termination (as such term is defined below) that occurs on or after the Effective Date. This Plan shall provide the exclusive benefits that each Eligible Employee (as such term is defined below) may become eligible to receive upon such event, and shall supersede any other severance plan, policy or practice, whether formal or informal, written or unwritten, previously announced or maintained by the Company covering the Eligible Employees (with the exception of any provisions contained in any equity incentive plan or award agreement providing for accelerated vesting of option shares upon or following a Qualifying Termination). This Plan document also is the Summary Plan Description for the Plan.

(a)      General Rules. Subject to the terms and conditions set forth in this Section 2 and elsewhere in the Plan, the Company will provide Eligible Employees who experience a Qualifying Termination with the benefits set forth in Section 3.

(b)      Definition of “Eligible Employee.” For purposes of this Plan, an Eligible Employee is a full-time regular U.S. employee of the Company who has received a written notice from the Company informing the employee that the employee is an Eligible Employee under the Plan. The determination of whether an employee is an Eligible Employee shall be made by the Plan Administrator, in its sole discretion, and such determination shall be binding and conclusive on all persons. For purposes of this Plan, full-time employees are those regular hire employees who are regularly scheduled to work at least thirty-two (32) hours per week. Neither temporary, leased or seasonal employees nor intern, agency temporary employees, independent contractors, consultants or agents under a written contract or purchase order, and persons so classified as such by the Company (whether or not such classification is upheld on governmental, judicial or other review) are eligible for benefits under the Plan.

(c)      Release Requirement. In order to be eligible to receive any benefits under this Plan, an Eligible Employee must execute a separation agreement containing a general waiver and release within the time frame set forth therein and such release must become effective in accordance with its terms, but in no event later than the 60th day after the Eligible Employee’s termination date. The Company, in its discretion, may modify the form of the required release to comply with applicable law and shall determine the form of the required release, which may be incorporated into a termination agreement or other agreement with the Eligible Employee.

(d)      Exceptions to Benefit Entitlement. An employee, including an employee who is otherwise an Eligible Employee, will not receive benefits under the Plan (or will receive reduced benefits under the Plan) in any of the following circumstances, as determined by the Plan Administrator in its sole discretion:

(1)       The Company terminates the employee’s employment prior to the Effective Date or for reasons other than a Qualifying Termination (such as upon the employee’s death or as a result of the employee’s termination).

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(2)       The employee is covered by any other severance or separation pay plan, policy or practice of the Company or has executed an individually negotiated employment or separation contract or agreement with the Company relating to severance benefits payable upon a Qualifying Termination that is in effect on his or her last day of employment, in which case such employee’s severance benefit, if any, shall be governed by the terms of such individually negotiated employment or separation contract or agreement.

(3)       The employee is rehired by the Company or an affiliate of the Company prior to his or her last day of employment.

(4)       The employee has not signed the Company’s standard form of confidential information and inventions assignment agreement (“ Proprietary Agreement ”) covering the employee’s period of employment with the Company (and with any predecessor) and/or does not confirm in writing that he or she is and shall remain subject to the terms of that agreement.

(5)       The Company determines, in its sole discretion, that the employee’s receipt of severance benefits would not under the circumstances further the purposes of the Plan or would otherwise be inappropriate and not in the best interests of the Company.

(a)      Severance Benefits. Subject to the conditions set forth in Section 2 and elsewhere in this Plan, in the event of an Eligible Employee’s Qualifying Termination, the Eligible Employee shall be eligible for the severance benefits set forth in Appendix A.

(b)      Definition of Qualifying Termination. For purposes of this Plan, a “ Qualifying Termination ” means that the Eligible Employee’s employment is terminated either (x) by the Company without Cause (as defined below) and for reasons other than unsatisfactory performance or (y) by the Eligible Employee immediately prior to or within six (6) months following a Change of Control (as defined below) for Good Reason (as defined below), and in either case such termination satisfies the definition of “separation from service” as defined in Treasury Regulation 1.409A(h)(ii). In the case of a termination without Cause, the termination shall be evidenced by the individual’s receipt of a “ Notice of Termination ” from the Company. The foregoing notwithstanding, the following events shall not constitute a Qualifying Termination: (i) the Eligible Employee resigns his or her employment with the Company at any time, other than a resignation for Good Reason immediately prior to or within six (6) months following a Change of Control or (ii) the Eligible Employee’s employment is terminated due to the Eligible Employee’s death or disability.

(c)      Definitions.

(1)       For purposes of this Plan, “ Cause ” shall mean one or more of the following: (i) indictment or conviction of any crime; (ii) participation in any fraud against the Company; (iii) gross misconduct; (iv) violation or breach of any Company policy, agreement with the Company, or any duty to the Company; or (v) damaging or misappropriating or attempting to damage or misappropriate any property of the Company.

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(2)       “ Change of Control ” shall mean and include any of the following that occurs following the Effective Date:

a.       the sale of all or substantially all of the assets of the Company; or

b.       a merger of the Company with or into another entity in which the stockholders of the Company immediately prior to the closing of the transaction own less than fifty percent (50%) of the ownership interest of the Company immediately following such closing; provided, however , for purposes of determining whether the stockholders of the Company prior to the occurrence of a transaction described above own less than fifty percent (50%) of the voting securities of the relevant entity afterwards, only the lesser of the voting power held by a person either before or after the transaction shall be counted in determining that person’s ownership afterwards.

Once a Change in Control has occurred, no future events shall constitute a Change in Control for purposes of the Plan. The Plan Administrator shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a Change of Control of the Company has occurred pursuant to the above definition, and the date of the occurrence of such Change of Control and any incidental matters relating thereto.

(3)       “ Good Reason ” shall mean that the Eligible Employee voluntarily resigns from all positions he or she then-holds with the Company (or any successor thereto) if and only if:

a.       one of the following actions have been taken without the Eligible Employee’s express written consent:

 (i)        there is a material diminution in the authority, duties or responsibilities of the Eligible Employee;

 (ii)       there is a material reduction in the Eligible Employee’s Base Salary;

 (iii)      the Eligible Employee is required to relocate his or her principal place of employment to a location that would increase the Eligible Employee’s one way commute distance by more than twenty (20) miles from the Eligible Employee’s place of employment immediately prior to such change; or

 (iv)      any acquirer, successor or assignee of the Company materially fails to assume and perform, in all material respects, the obligations of the Company hereunder; and

b.       the Eligible Employee provides written notice to the Company’s General Counsel within the thirty (30)-day period immediately following such action; and

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c.       such action is not remedied by the Company within thirty (30) days following the Company’s receipt of such written notice; and

d.       the Eligible Employee’s resignation is effective not later than sixty (60) days after the expiration of such thirty (30) day cure period.

(d)      Additional Benefits. Notwithstanding the foregoing, the Company may, in its sole discretion, (i) authorize benefits in addition to those benefits set forth in Section 3(a) to Eligible Employees; (ii) waive or modify, in respect to one or more employees or classes of employees, the eligibility requirements for receipt of benefits under this Plan; and/or (iii) modify the method of calculating the amount of benefits to be received under the Plan. The provision of any such additional benefits shall in no way obligate the Company or its affiliates to provide such benefits to any other person, even if similarly situated. An employee for whom any eligibility requirement has been waived or modified, or who is offered benefits under this Plan that are different than, or in addition to, those set forth in Section 3(a) will receive specific written notice that the Plan Administrator is exercising discretion in that regard. Receipt of benefits under this Plan pursuant to such exceptions may be subject to a covenant of confidentiality and non-disclosure and/or to other conditions determined by the Plan Administrator in its sole discretion.

(e)      Certain Reductions. The Company shall reduce an Eligible Employee’s benefits under this Plan by any other severance benefits, pay in lieu of notice, or other similar benefits payable to the Eligible Employee by the Company that become payable in connection with the Eligible Employee’s termination of employment pursuant to (i) any applicable legal requirement, including, without limitation, the Worker Adjustment and Retraining Notification Act, the California Plant Closing Act, or any other similar state law (collectively, “ WARN ”), (ii) a written employment or severance agreement with the Company, or (iii) any Company policy or practice providing for severance, termination pay, or otherwise allowing the Eligible Employee to remain on the payroll for a limited period of time after being given notice of the termination of the Eligible Employee’s employment, and the Plan Administrator shall so construe and implement the terms of the Plan. In the Company’s sole discretion, such reductions may be applied on a retroactive basis, with severance benefits previously paid being re-characterized as payments pursuant to the Company’s statutory obligation.

(f)      Code Section 409A. If the Company (or, if applicable, the successor entity thereto) determines that the severance payments and benefits provided under the Plan (the “ Plan Payments ”) constitute “deferred compensation” under Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”) (Section 409A, together, with any state law of similar effect, “ Section 409A ”) and an Eligible Employee is, at the time of “separation from service” (as defined under Section 409A), a “specified employee” of the Company (or any successor entity thereto), as such term is defined in Section 409A(a)(2)(B)(i) (a “ Specified Employee ”) on his or her separation from service, then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A, the timing of the Plan Payments shall be delayed as follows: on the earlier to occur of (i) the date that is six months and one day after the individual’s separation from service and (ii) the date of the Eligible Employee’s death (such earlier date, the “ Delayed Initial Payment Date ”), the Company (or the successor entity thereto, as applicable) shall (A) pay to the Eligible Employee a lump sum amount equal to the sum of the

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Plan Payments that the Eligible Employee would otherwise have received through the Delayed Initial Payment Date if the commencement of the payment of the Plan Payments had not been delayed pursuant to this Section 3(f) and (B) commence paying the balance of the Plan Payments in accordance with Appendix A. For the avoidance of doubt, it is intended that (1) each installment of the Plan Payments provided on Appendix A is a separate “payment” for purposes of Section 409A, (2) all Plan Payments provided on Appendix A satisfy, to the greatest extent possible, the exemptions from the application of Section 409A provided under of Treasury Regulation 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9)(iii), and (3) the Plan Payments consisting of premiums paid under the Consolidated Omnibus Budget Reconciliation Act of 1985 (together with any state law of similar effect) also satisfy, to the greatest extent possible, the exemptions from the application of Section 409A provided under Treasury Regulation 1.409A-1(b)(9)(v).

(a)      Return of Company Property. An Eligible Employee will not be entitled to any benefit under this Plan unless and until the Eligible Employee returns all Company Property upon his or her termination (or earlier if so requested by the Company). For this purpose, “ Company Property ” means all paper and electronic Company documents (and all copies thereof) created and/or received by the Eligible Employee during his or her period of employment with the Company and other Company property which the Eligible Employee had in his or her possession or control at any time, including, but not limited to, Company files, notes, lab notebooks, drawings, records, plans, forecasts, reports, studies, analyses, proposals, agreements, financial information, research and development information, sales and marketing information, operational and personnel information, specifications, code, software, databases, computer-recorded information, tangible property and equipment (including, but not limited to, leased vehicles, computers, computer equipment, software programs, facsimile machines, mobile telephones, servers), credit and calling cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential information of the Company (and all reproductions thereof in whole or in part). As a condition to receiving benefits under the Plan, Eligible Employees must not make or retain copies, reproductions or summaries of any such Company Property. However, an Eligible Employee is not required to return his or her personal copies of documents evidencing the Eligible Employee’s hire, termination, compensation, benefits and stock options and any other documentation received as a shareholder of the Company.

(b)      Prepayment of Advanced Amounts. An Eligible Employee will not be entitled to any benefit under this Plan if the Eligible Employee previously received an advance(s) for business travel and entertainment expenses unless and until the Eligible Employee (i) properly completes and submits an expense reimbursement form(s) and supporting receipts to his or her manager no later than the Eligible Employee’s last day of employment and (ii) repays (via check payable to “ARCA Biopharma, Inc.”) any amounts advanced but not used and approved for reimbursement.

(c)      Transition of Work. An Eligible Employee will not be entitled to any benefit under this Plan unless and until the Eligible Employee (i) has satisfactorily transitioned his or her work and information concerning his or her work to the Company to the extent requested by the

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Company (including but not limited to completion of exit checklists and properly signed and witnessed lab notebooks) and (ii) has provided the Company with all logins, passwords, passcodes and similar information created by the Eligible Employee for documents, email and electronic files that the Eligible Employee created or used on Company systems.

All severance benefits under the Plan shall be paid