**Exhibit10.3**

 

 

**310 Goddard, Suite 150**

**Irvine, CA 92618**

 

**tel. 949.753.0624**

**fax 949.753.0510**

 

**www.combimatrix.com**

 

 

Aug11, 2010

 

R.Judd Jessup

[Address]

 

DearJudd,

 

Weare pleased to offer you the position of President and Chief Executive Officerfor CombiMatrix Corporation (“CBMX”) with the following terms.

 

Youwill be expected to perform various duties consistent with your position andaccording to the needs of the company. You will report to the Chairman of the Board of Directors.  Of course, CBMX may change your duties fromtime to time as it deems necessary during the course of employment.

 

**Start date**

Yourstart date will be August 23, 2010.

 

**Cash Compensation Equity and Benefits**

Yourcompensation packages with CBMX will be as follows:

 

**Base Salary**

Yourbase pay will be $16,153.85 on a bi-weekly basis (which is equivalent to$420,000 annually) less payroll deductions and applicable taxes.

 

**Benefits**

Youwill be eligible for the following standard CBMX benefits, which include paidtime off, health insurance, dental and vision care, and stock options. You willbe eligible to earn and accrue 15 paid days off per year as well as eight (8) additionalcompany-designated holidays.  You will beeligible for health benefits beginning on the first day of the month followingyour date of hire.  Details about thesebenefits will be provided to you upon acceptance of this offer.  CBMX may modify benefits from time to time asit deems necessary.  You will also beeligible to participate in CBMX’s Executive Change of Control Severance Plan(the “Plan”), as amended.

 

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Youwill be eligible to participate in all other corporate benefits offered toemployees of CBMX, providing that you meet all eligibility requirements of thoseplans.

 

**Equity**

Youwill receive a stock option grant of 400,000 shares of Common Stock of CBMX atan exercise price equal to 100% of the fair market value of the company’scommon stock on the date of the grant. Such option will be subject to vesting overfour (4) years so long as you continue to be employed with the CBMX, with25% of the shares subject to such option vesting on your one-year anniversarydate and the remaining 75% on a monthly vesting schedule of 1/48th of the original grant per month over thesubsequent three (3) years.

 

**Management Bonus**

Subjectto board approval in its discretion, you will also be eligible to receive anannual performance bonus. Bonus is based on both company and individualperformance as determined by the Compensation Committee of the Board ofDirectors. Bonus payments will be subject to payroll deductions and allrequired withholdings.

 

**Additional Information Regarding Employment at CBMX**

Asa Company employee, you will be expected to abide by Company rules andregulations and acknowledge in writing that you have read the Company’sPolicies and Procedures that will govern the terms and conditions of youremployment. The Company’s Policies and Procedures may be modified from time totime at the sole discretion of the Company.

 

Inyour work for CBMX, you will be expected not to use or disclose anyconfidential information, including trade secrets, of any former employer orother person to whom you have an obligation of confidentiality. You agree thatyou will not bring onto CBMX premises any unpublished documents or propertybelonging to any former employer or other person to whom you have an obligationof confidentiality. In the performance of your duties for CBMX you will beexpected to use only that information which is generally known and used bypersons with training and experience comparable to your own, which is commonknowledge in the industry or otherwise legally in the public domain, or whichis otherwise provided or developed by CBMX.

 

Youremployment with CBMX is not for a guaranteed or definite period of time.Rather, your employment relationship is “at will”. This means that you mayterminate your employment with CBMX at any time and for any reason whatsoeversimply by notifying the company. Likewise, CBMX may terminate your employmentat any time and for any reason whatsoever, with or without cause or advancenotice. This at-will employment relationship cannot be changed except inwriting signed by the Chairman of the Board.

 

Bysigning this offer letter, you are acknowledging that you have never been andare not currently debarred, excluded or banned from any federal healthcareprogram. Your signature further acknowledges that you have not been convictedof a felony involving fraud or deceit. You agree to notify CBMX immediately should you become debarred,excluded or banned from any federal healthcare program or should you beconvicted of a felony involving fraud or deceit.

 

Pleasenote that this offer of employment is contingent upon the results of an outsidebackground check on you being without any adverse disclosures whatsoever.Criminal, social security number, driving record, and or degree verificationscreenings may be performed.  We reservethe right, in our sole discretion, to rescind this offer based on the resultsof the background check.

 

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**Conditions of Employment**

This offer of employment is contingent on thefollowing:

 

1.    **Employment Authorization**. You must produce within three workingdays of hire, documentation showing identity and eligibility to work in theUnited States.

2.    **Satisfactory Reference and BackgroundCheck**. This offeris contingent upon receiving satisfactory references and an acceptablebackground check.

3.    **Employee Intellectual PropertyAgreement**. Thisoffer is contingent upon your execution of the Employee Intellectual PropertyAgreement.

4.    **Conflict of Interest**. Without pre-approval from the companyyou cannot perform work for others in a field of similar interest to CBMX.

5.    **Non-Disparagement**. During your employment and after youare no longer an employee of CBMX, regardless of the reason for not being anemployee, you agree not to make any disparaging statements to any current orformer Company employees, customers, or any media or to any other personconcerning the Company or any of its Affiliates. A disparaging statement is anycomment oral or written, which would tend to cause humiliation or embarrassmentor cause the recipient to question the business condition, integrity, competenceor good character of the Company or any of its Affiliates.

 

**Confidential and Trade SecretInformation of a Former Employer or Other Third Party**

By signing this offer letter you represent that yourperformance of all of the terms of this agreement will not breach any agreementto keep in confidence information acquired by you in confidence or in trustprior to or outside your employment with CBMX. You agree that you havedisclosed all agreements that you have entered into with prior employers thatcontain provisions that extend beyond the employment relationship. You have notbrought and will not bring will not bring with you to CBMX for use in theperformance of your duties any materials, documents or information of a formeremployer or third party that are not generally available to the public unlessyou have obtained the express written authorization from the owner for theirpossession and use by and for CBMX.  Youfurther represent that execution of this agreement, employments with CBMX andthe performance of your proposed duties to CBMX in the development of itsbusiness will not violate any obligations you have to any former employer andunderstand that CBMX does not want you to violate agreements with any formeremployer.

Initial R.J.J.

 

This letter together with conditions of employmentforms the complete and exclusive statement of the terms of your employment withCBMX. The employment terms in this letter supersede any other agreements orpromises made to you by anyone, whether oral or written.  This Agreement will be binding upon yourheirs, executors, administrators and other legal representatives and will befor the benefit of CBMX, its successors, and assigns.

 

Please sign, date and return this letter byAugust 12, 2010, if you wish to accept employment with CBMX under theterms described above.

 

Judd, we are confident you will be an outstandingleader for CBMX and look forward to your favorable reply.

 

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| Sincerely,            |   |   |
|-----------------------|--------|--------|
|                  |   |   |
|                  |   |   |
| /s/ MARK MCGOWAN      |   |   |
| Mark McGowan          |   |   |
| Chairman of the Board |   |   |
|                       |        |        |  |  |

 

 

Accepted by:

 

 
| /s/ R. JUDD JESSUP |                 |   |
|--------------------|----------------------|--------|
| R. Judd Jessup     |                 |   |
|               |                 |   |
|               | August 11, 2010 |   |
|                    |                      |        |  |  |

 

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