DISTRIBUTION AGREEMENT

EXHIBIT 10.2

DISTRIBUTION AGREEMENT

by and between

ACACIA RESEARCH CORPORATION

and

COMBIMATRIX CORPORATION

December 21, 2006

TABLE OF CONTENTS

SCHEDULES

DISTRIBUTION AGREEMENT

This Distribution Agreement (this " Agreement ") is made and entered into as of December 21, 2006, by and between Acacia Research Corporation, a Delaware corporation (" Acacia "), and CombiMatrix Corporation, a Delaware corporation and, as of the date hereof, a wholly-owned subsidiary of Acacia (" CombiMatrix "). Capitalized terms used in this Agreement shall have the meanings set forth in Section 1.01.

RECITALS

A.    The Acacia Board has determined that it is appropriate and desirable to distribute all outstanding shares of CombiMatrix Common Stock on a pro rata basis to the holders of CombiMatrix Tracking Stock.

B.    Subject to the terms and conditions contained herein, immediately prior to the Distribution, Acacia and the Acacia Subsidiaries will transfer the CombiMatrix Subsidiaries to CombiMatrix as more fully described in this Agreement (the " Contribution ").

C.    Acacia and CombiMatrix have determined that it is appropriate and desirable to set forth the principal corporate transactions required to effect the Contribution and the Distribution and certain other agreements that will govern certain matters relating to the Contribution and the Distribution and the relationship of Acacia, CombiMatrix and the respective members of the Acacia Group and the CombiMatrix Group following the Contribution and the Distribution.

AGREEMENT

Accordingly, in consideration of the premises and of the respective agreements and covenants contained in this Agreement, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01     General . As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

" Acacia " shall have the meaning set forth in the preamble.

" Acacia Assets " means the following:

(a)    all rights of any member of the Acacia Group under any Separation Agreement to which it is or becomes a party;

(b)    all Assets which are expressly allocated to any member of the Acacia Group pursuant to the Employee Matters Agreement or the Tax Allocation Agreement;

(c)    the following specifically enumerated Assets which immediately prior to the Time of Distribution are owned by Acacia or any of its Subsidiaries (including Persons comprising the CombiMatrix Group), in each case whether or not such Assets are used in or relate to the Acacia Business or the CombiMatrix Business:

(i)    all Acacia Bank Accounts;

(ii)   all Acacia Cash;

(iii)   all Accounts Receivable other than CombiMatrix Accounts Receivable;

(iv)   all Inventories other than CombiMatrix Inventories;

(v)    all Securities;

(vi)   all Machinery and Equipment other than CombiMatrix Machinery and Equipment;

(vii)   all Real Property other than CombiMatrix Real Property;

(viii)   all Patents and Trademarks other than those set forth on Schedule 1.01(d);

(ix)     all rights in, and to the use of, the Acacia Marks, other than as provided for in Section 5.02;

(x)      all Policies and all rights, benefits and privileges thereunder and related thereto (including the right to receive any and all return premiums with respect thereto), other than rights with respect to Policies to the extent provided in Sections 5.01(b) and 5.01(c); and

(d)    all other Assets which immediately prior to the Time of Distribution are owned by Acacia or any of its Subsidiaries (including Persons comprising the CombiMatrix Group) that are not CombiMatrix Assets; and

(e)    all rights, causes of action and claims of Acacia or any of its Subsidiaries (including Persons comprising the CombiMatrix Group) to the extent relating to any asset described in clauses (a) through (d) above.

Anything contained herein to the contrary notwithstanding, assets described in paragraphs (b) and (c) of the definition of "CombiMatrix Assets" will not be included in Acacia Assets.

" Acacia Bank Accounts " means all bank accounts of Acacia or any of its Subsidiaries (including Persons comprising the CombiMatrix Group) immediately prior to the Time of Distribution, other than CombiMatrix Bank Accounts.

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" Acacia Board " means the Board of Directors of Acacia or a duly authorized committee thereof.

" Acacia Business " means (a) the businesses and operations engaged in prior to the Time of Distribution by Persons comprising the Pre-Distribution Group (but with respect to each such Person who has ceased to be an Affiliate of Acacia or its predecessors, only businesses engaged in prior to the time that such Person comprising the Pre-Distribution Group ceased to be an Affiliate of Acacia or its predecessors) of acquiring, developing, licensing and enforcing patents rights, including (i) assisting patent holders in developing additional claims for their patents, (ii) assisting patent holders in protecting their patented inventions from unauthorized use, and (iii) generating revenue from the licensing of patents and, if necessary, enforcing patents; and (b) activities related primarily to the foregoing, other than any businesses, operations or activities included in the CombiMatrix Business.

" Acacia Cash " means all (i) cash (including cash in bank accounts), cash on hand, cash equivalents, funds, certificates of deposit, similar instruments and travelers checks held by Acacia or any of its Subsidiaries and Affiliates (including Persons comprising the CombiMatrix Group) immediately prior to the Time of Distribution and (ii) cash deposits held by third parties securing or otherwise collateralizing obligations of Acacia or any of its Subsidiaries or Affiliates (including Persons comprising CombiMatrix Group) immediately prior to the Time of Distribution, other than, in the case of each of the foregoing clauses (i) and (ii), CombiMatrix Cash.

" Acacia Expenses " means all out-of-pocket fees, costs and expenses of Acacia or any of its Subsidiaries (including Persons comprising the CombiMatrix Group) incurred prior to the Time of Distribution in connection with effecting the Contribution, the Distribution, the preparation, execution and delivery of the Separation Agreements and the consummation of the Contribution and the Distribution, other than CombiMatrix Expenses.

" Acacia Group " means Acacia and the Acacia Subsidiaries.

" Acacia Indemnitees " mean each member of the Acacia Group and each of their respective Representatives and Affiliates and each of the heirs, executors, successors and permitted assigns of any of the foregoing.

" Acacia Liabilities " means the following:

(a)    all Liabilities of any member of the Acacia Group under any Separation Agreement to which it is or becomes a party;

(b)    all Liabilities for which any member of the Acacia Group is expressly made responsible pursuant to the Employee Matters Agreement or the Tax Allocation Agreement;

(c)    the specifically enumerated Liabilities of Acacia or any of its Subsidiaries (including Persons comprising the CombiMatrix Group) identified on Schedule 1.01(a), in each case whether or not such Liabilities relate to the Acacia Business, Acacia Assets, the CombiMatrix Business or CombiMatrix Assets:

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(d)    all other Liabilities of Acacia or any of its Subsidiaries (including Persons comprising the CombiMatrix Group) in respect of operations engaged in prior to the Time of Distribution that are not CombiMatrix Liabilities.

Anything contained herein to the contrary notwithstanding, Liabilities described in paragraphs (b) and (c) of the definition of "CombiMatrix Liabilities" will not be included in Acacia Liabilities.

" Acacia Marks " means the names, trademarks, trade names, domain names and service marks "Acacia", "Acacia Research Corporation", Digital Media Technology", "Digital Media" and "DMT" and all corporate symbols and logos related thereto and all names, trademarks, trade names, domain names and service marks which include the words "Acacia", "Acacia Research Corporation", "Digital Media Technology" and "DMT" or any derivatives thereof and any other name, mark or symbol of the Acacia Group, including, without limitation, names, marks or symbols connoting "Acacia" or "DMT" which constitute a formative thereof.

" Acacia Subsidiary " means each Subsidiary of Acacia other than CombiMatrix and the CombiMatrix Subsidiaries.

" Action " means, with respect to any Person, any actual or threatened or future action, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Entity or any claims or other legal matters that have been or may be asserted by or against, or otherwise affect, such Person.

" Affiliate " means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person; provided , however , that for purposes of the Separation Agreements, following the Time of Distribution, neither Acacia nor any Acacia Subsidiary shall be deemed to be an Affiliate of any member of the CombiMatrix Group and neither CombiMatrix nor any CombiMatrix Subsidiary shall be deemed to be an Affiliate of any member of the Acacia Group. For purposes of the immediately preceding sentence, the term "control" (including, with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.

" Agreement " shall have the meaning set forth in the preamble.

" American Stock Exchange " means the American Stock Exchange LLC.

" Asset/Liability Allocation Matter " shall have the meaning set forth in Section 2.01(b).

" Assigning Party " shall have the meaning set forth in Section 2.07.

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" Business Day " means any day other than a Saturday, Sunday or other day when banks are authorized or required by law to be closed in California.

" Bylaws " means CombiMatrix’s amended Bylaws in the form attached hereto as Schedule 1.01(b).

" CBMX Tracking Stock " means Acacia Research-CombiMatrix Common Stock, par value $0.001 per share.

" Certificate of Incorporation " means CombiMatrix’s restated certificate of incorporation in the form attached hereto as Schedule 1.01(c).

" Claims Administration " means the processing of claims made under Policies, including the reporting of claims to the insurance carrier, management and defense of claims, and providing for appropriate releases upon settlement of claims.

" Claims Made Policies " shall have the meaning set forth in Section 5.01(b)(ii).

" Code " means the Internal Revenue Code of 1986, as amended, or any successor legislation.

" CombiMatrix " shall have the meaning set forth in the preamble.

" CombiMatrix Accounts Receivable " mean the Accounts Receivable set forth on the CombiMatrix Accounting Ledgers immediately prior to the Time of Distribution.

" CombiMatrix Assets " means the following:

(a)    all rights of any member of the CombiMatrix Group under any Separation Agreement to which it is or becomes a party;

(b)    all Assets which are expressly allocated to any member of the CombiMatrix Group pursuant to the Employee Matters Agreement or the Tax Allocation Agreement;

(c)    the following specifically enumerated Assets which immediately prior to the Time of Distribution are owned by Acacia or any of its Subsidiaries (including Persons comprising the CombiMatrix Group):

(i)    the CombiMatrix Bank Accounts;

(ii)   the CombiMatrix Cash (subject to Section 2.04(b));

(iii)   the CombiMatrix Accounts Receivable;

(iv)   the CombiMatrix Inventories;

(v)    the CombiMatrix Machinery and Equipment;

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(vi)   the CombiMatrix Real Property;

(vii)   the Patents and Trademarks set forth on Schedule 1.01(d);

(viii)   all assets identified in Schedule 1.01(d) as CombiMatrix’s;

(d)    the following Assets (other than those described in paragraphs (b) and (c) of the definition of "Acacia Assets") which immediately prior to the Time of Distribution are owned by Acacia or any of its Subsidiaries (including Persons comprising the CombiMatrix Group) and which are used exclusively in or relate exclusively to the CombiMatrix Business, as the same shall exist as of such time:

(i)    Contracts;

(ii)   advances, performance and surety bonds, and interests as beneficiary under letters of credit and other similar instruments and all proceeds thereof;

(iii)   Permits;

(iv)   credits, prepayments and prepaid expenses;

(v)    claims, causes of action, rights under express or implied warranties, guarantees and indemnities and similar rights, rights of recovery, rights of set-off, rights of subrogation and all other rights of any kind (including the right to receive mail and other communications); and

(vi)   goodwill, going concern value and other intangible assets not otherwise included in clauses (a) through (q) of the definition of "Assets";

(e)    the following Assets (other than those described in paragraphs (b) and (c) of the definition of "Acacia Assets") which immediately prior to the Time of Distribution are owned by Acacia or any of its Subsidiaries (including Persons comprising the CombiMatrix Group) and which are used 75% or more in or relate 75% or more to the CombiMatrix Business, as the same shall exist as of such time:

(i)    Data and Records; and

(ii)   Trade Secrets; and

(f)    all rights, causes of action and claims of Acacia or any of its Subsidiaries (including Persons comprising the CombiMatrix Group) to the extent relating to any asset described in clauses (a) through (e) above.

Anything contained herein to the contrary notwithstanding, assets described in paragraphs (b) and (c) of the definition of "Acacia Assets" will not be included in CombiMatrix Assets.

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" CombiMatrix Bank Accounts " means all bank accounts which are solely in the name of one or more members of the CombiMatrix Group immediately prior to the Time of Distribution.

" CombiMatrix Board " means the Board of Directors of CombiMatrix.

" CombiMatrix Business " means (a) the business and operations engaged in prior to the Time of Distribution by the members of the Pre-Distribution Group (but with respect to each such member who has ceased to be an Affiliate of Acacia or its predecessors, only businesses engaged in prior to the time that such member of the Pre-Distribution Group ceased to be an Affiliate of Acacia or its predecessors) of (i) developing and licensing products for use by academic and industrial researchers to develop various pharmaceutical, biotechnology and other applications and (ii) developing and licensing additional proprietary products that have, and can be used for, such diverse applications as drug target discovery and validations, genotyping, pathogen detection and/or agricultural analysis; and (b) activities related primarily to the foregoing.

" CombiMatrix Cash " means (i) the following to the extent set forth on the CombiMatrix Accounting Ledgers immediately prior to the Time of Distribution or located at Locations of the CombiMatrix Business at the Time of Distribution: cash in CombiMatrix Bank Accounts, cash on hand, cash equivalents, funds, certificates of deposits, similar instruments and travelers checks and (ii) cash deposits held by third parties securing or otherwise collateralizing obligations relating to the CombiMatrix Business immediately prior to the Time of Distribution.

" CombiMatrix Common Stock " means the common stock, par value $.00l per share, of CombiMatrix.

" CombiMatrix Expenses " means the following out-of-pocket fees, costs and expenses of Acacia or any of its Subsidiaries (including Persons comprising the CombiMatrix Group), in each case, whether incurred and/or paid before, at or after the Time of Distribution: all out-of-pocket fees, costs and expenses of the transfer agent and registrar for the CombiMatrix Common Stock.

" CombiMatrix Financial Instruments " means those credit facilities, guaranties, foreign currency forward exchange contracts, comfort letters, letters of credit and similar instruments related to the CombiMatrix Business under which any member of the Acacia Group has any primary, secondary, contingent, joint, several or other Liability.

" CombiMatrix Group " means CombiMatrix and the CombiMatrix Subsidiaries.

" CombiMatrix Indemnitees " means each member of the CombiMatrix Group and each of their respective Representatives and Affiliates and each of the heirs, executors, successors and permitted assigns of any of the foregoing.

" CombiMatrix Inventories " means the Inventories set forth on the CombiMatrix Accounting Ledgers immediately prior to Time of Distribution.

" CombiMatrix Liabilities " means the following:

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(a)    all Liabilities of any Person comprising the CombiMatrix Group under any Separation Agreement to which it is or becomes a party;

(b)    all Liabilities for which any Person comprising the CombiMatrix Group is expressly made responsible pursuant to the Employee Matters Agreement or the Tax Allocation Agreement;

(c)    the specifically enumerated Liabilities of CombiMatrix or any of its Subsidiaries set forth on Schedule 1.01(e), in each case whether or not such Liabilities relate to the Acacia Business, Acacia Assets, the CombiMatrix Business or CombiMatrix Assets; and

(d)    all Liabilities (other than those described in paragraphs (b) and (c) of the definition of "Acacia Liabilities") of Acacia or any of its Subsidiaries (including Persons comprising the CombiMatrix Group) to the extent based upon, arising out of or relating to the CombiMatrix Assets or the CombiMatrix Business, including:

(i)    all Liabilities (including Liabilities arising out of any breaches or violations) to the extent relating to the CombiMatrix’s Business based upon, arising out of or relating to Contracts (whether or not such Contracts constitute CombiMatrix Assets) (including any primary, secondary, contingent or other obligations, such as under guaranties or indemnities, in respect of such Contracts); and

(ii)   the Actions set forth on Schedule 1.01(e).

Anything contained herein to the contrary notwithstanding, Liabilities described in paragraphs (b) and (c) of the definition of "Acacia Liabilities" will not be included in CombiMatrix Liabilities.

" CombiMatrix Machinery and Equipment " means the Machinery and Equipment set forth on the CombiMatrix Accounting Ledgers immediately prior to the Time of Distribution.

" CombiMatrix Real Property " means the Real Property set forth on Schedule 1.01(f)

" CombiMatrix Subsidiary " means each Person listed on Schedule 1.01(g).

" CombiMatrix/May 2003 Warrant " shall have the meaning set forth in Section 5.03(a).

" CombiMatrix/Piper 2005 Warrant " shall have the meaning set forth in Section 5.03(b).

" CombiMatrix/Oppenheimer Warrant " shall have the meaning set forth in Section 5.03(c).

" Commission " means the Securities and Exchange Commission.

" Consents " means consents, approvals, waivers, clearances, exemptions, allowances, novations, authorizations, filings, registrations and notifications.

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" Contracts " means all agreements, personal property leases, contracts (including employee contracts), licenses, memoranda of understanding, letters of intent, sales orders, purchase orders, open bids and other commitments, including in each case, all amendments, modifications and supplements thereto and waivers and consents thereunder, but excluding real property leases.

" Contribution " shall have the meaning set forth in the recitals.

" Conveyance Instruments " means, collectively, the various agreements, stock powers, certificates of title, instruments of conveyance and assignment, and other instruments and documents to be entered into to effect the transfer of Subsidiaries contemplated by the transactions described in Sections 2.01(b) and (c).

" Data and Records " means financial, accounting, corporate, operating, design, manufacturing, test and other data and records (in each case, in whatever form or medium, including electronic media), including books, records, notes, sales and sales promotional material and data, advertising materials, credit information, cost and pricing information, customer, supplier and agent lists, other records pertaining to customers, business plans, reference catalogs, payroll and personnel records and procedures, blue-prints, research and development files, data and laboratory books, sales order files, litigation files, minute books, stock ledgers, stock transfer records and other similar data and records.

" Dispute " shall have the meaning set forth in Section 7.05.

" Distribution " means the distribution, on the basis provided for in Section 3.01, to the holders of CBMX Tracking Stock of the shares of CombiMatrix Common Stock owned by Acacia on the Distribution Date.

" Distribution Agent " means the distribution agent selected by Acacia to distribute CombiMatrix Common Stock in connection with the Distribution.

" Distribution Date " means the date determined by the Acacia Board in accordance with Section 3.01 as the date as of which the Distribution will be effected.

" Employee Matters Agreement " means the Employee Matters Agreement dated as of the date hereof entered into prior to the Time of Distribution by and between Acacia and CombiMatrix.

" Former Business " means any corporation, partnership, entity, division, business unit, business, assets, plants, product line, operations or contract (including any assets and liabilities comprising the same) that has been sold, conveyed, assigned, transferred or otherwise disposed of or divested (in whole or in part) by any member of the Pre-Distribution Group or the operations, activities or production of which has been discontinued, abandoned, completed or otherwise terminated (in whole or in part) by any member of the Pre-Distribution Group.

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" Governmental Entity " means any government or any court, arbitral tribunal, administrative agency or commission or other governmental or regulatory authority or agency, federal, state, local, domestic, foreign or international.

" Group " means the Acacia Group or the CombiMatrix Group, as applicable.

" Indemnifiable Losses " means any and all losses, Liabilities, claims, damages, deficiencies, obligations, fines, payments, Taxes, Liens, costs and expenses, matured or unmatured, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, known or unknown, whenever arising and whether or not resulting from Third Party Claims (including the costs and expenses of any and all Actions; all amounts paid in connection with any demands, assessments, judgments, settlements and compromises relating thereto; interest and penalties with respect thereto; out-of-pocket expenses and reasonable attorneys’, accountants’ and other experts’ fees and expenses reasonably incurred in investigating, preparing for or defending against any such Actions or in asserting, preserving or enforcing an Indemnitee’s rights hereunder; and any losses that may result from the granting of injunctive relief as a result of any such Actions).

" Indemnifying Party " shall have the meaning set forth in Section 4.04(a).

" Indemnitee " means any of the Acacia Indemnitees or the CombiMatrix Indemnitees who or which is entitled to seek indemnification under this Agreement.

" Indemnity Reduction Amounts " shall have the meaning set forth in Section 4.04(a).

" Information " means all records, books, contracts, instruments, computer data and other data and information (in each case, in whatever form or medium, including electronic media).

" Insurance Proceeds " means monies (a) received by an insured from an insurance carrier, (b) paid by an insurance carrier on behalf of an insured or (c) received from any third party in the nature of insurance, contribution or indemnification in respect of any Liability.

" Liabilities " means any and all claims, debts, liabilities, commitments and obligations of whatever nature, whether fixed, contingent or absolute, matured or unmatured, liquidated or unliquidated, accrued or not accrued, known or unknown, due or to become due, whenever or however arising and whether or not the same would be required by generally accepted accounting principles to be reflected as a liability in financial statements or disclosed in the notes thereto, including all costs and expenses relating thereto and those claims, debts, liabilities, commitments and obligations:

(a)    based upon, arising out of or relating to any law, statute, rule, regulation, judgment, order, decision or consent decree of any Governmental Entity or any noncompliance therewith or breach or violation of any thereof;

(b)    in respect of accounts payable;

(c)    in respect of outstanding checks;

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(d)    based upon, arising out of or relating to workers’ compensation, automobile liability, general liability, product liability, intellectual property liability and other claims and matters (whether direct or for indemnification of any Person or otherwise, and whether insured or uninsured);

(e)    based upon, arising out of or relating to Actions or any award of any arbitrator of any kind;

(f)    in respect of salary, bonuses, incentive payments, severance payments and other compensation payments and all Taxes and withholdings related thereto;

(g)    in respect of employee welfare and fringe benefits (including claims for medical and disability benefits);

(h)    based upon, arising out of or relating to environmental matters (including the presence, release or threatened release of hazardous materials or any other environmental conditions or the violation of any environmental laws), including all removal, remediation and cleanup costs, investigatory costs, settlement costs, governmental response costs, natural resources damages, property damages, personal injury damages and all other costs and damages;

(i)    based upon, arising out of or relating to Contracts;

(j)    based upon, arising out of or relating to torts (whether based on negligence, strict liability or otherwise) or infringements; and

(k)    in respect of products and services, including warranty liabilities, deferred revenues, product liability claims and liabilities in respect of the return, repair or replacement of products.

" Liability Allocation Matter " shall have the meaning set forth in Section 2.01(b).

" Lien " means any lien, security interest, pledge, mortgage, charge, restriction, retention of title agreement or other encumbrance of whatever nature.

" Machinery and Equipment " means machinery, equipment, tooling, vehicles, furniture and fixtures (other than real property fixtures), leasehold improvements, repair parts, tools, plant, laboratory and office equipment and supplies, computer hardware and software, computer networking equipment, engineering and design equipment, test equipment and other tangible personal property (other than tangible personal property included in other categories of assets in the definition of "Assets"), together with any rights or claims arising out of maintenance or service contracts relating thereto or the breach of any express or implied warranty by the manufacturers or sellers of any of such assets or any component part thereof.

" Occurrence Basis Policies " shall have the meaning set forth in Section 5.01(b)(i).

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" Oppenheimer Warrant " means any warrant issued in Acacia’s registered direct offering in December 2006 in which Oppenheimer & Co. Inc. acted as the placement agent.

" Permits " means licenses, permits, authorizations, Consents, certificates, registrations, variances, franchises and other approvals from any Governmental Entity, including those relating to environmental matters.

" Person " means any individual, partnership, joint venture, corporation, limited liability entity, trust, unincorporated organization or other entity (including a Governmental Entity).

" May 2003 Warrant " means any warrant issued in Acacia’s May 2003 private placement transaction.

" Piper 2005 Warrant " means any warrant issued in Acacia’s registered direct offering in September 2005 in which Piper Jaffrey & Co. acted as the placement agent.

" Policies " means all insurance policies, insurance contracts and claim administration contracts of any kind of Acacia and its Subsidiaries (including Persons comprising the CombiMatrix Group) and their predecessors which were or are in effect at any time at or prior to the Time of Distribution (other than insurance policies, insurance contracts and claim administration contracts established in contemplation of the Distribution to cover only CombiMatrix and its Subsidiaries after the Time of Distribution), including primary, excess and umbrella, commercial general liability, fiduciary liability, product liability, automobile, aircraft, property and casualty, business interruption, directors and officers liability, employment practices liability, workers’ compensation, crime, errors and omissions, special accident, cargo and employee dishonesty insurance policies and captive insurance company arrangements, together with all rights, benefits and privileges thereunder.

" Pre-Distribution Group " means (a) each of Acacia, the Subsidiaries of Acacia existing immediately prior to the Time of Distribution (including Persons comprising the CombiMatrix Group) and Persons that have ceased to be Subsidiaries of Acacia prior to the Time of Distribution, (b) each of the predecessors of each of the foregoing and (c) each of the Persons that have ceased to be Subsidiaries and other Affiliates of each of the foregoing and their predecessors prior to the Time of Distribution.

" Privileged Information " means, with respect to a Group, Information regarding a member of such Group, or any of its operations, employees, assets or Liabilities (whether in documents or stored in any other form or known to its employees or agents) that is or may be protected from disclosure pursuant to the attorney-client privilege, the work product doctrine or other applicable privileges, that a member of the other Group has or may come into possession of or has obtained or may obtain access to pursuant to this Agreement or otherwise.

" Real Property " means real property (including land, plants, buildings, real property fixtures and improvements) and real property interests (including real property leases, easements and rights of way, occupancy or use).

" Recipient Party " shall have the meaning set forth in Section 2.08.

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" Record Date " means the close of business on the forty-fifth (45 ^th ) Trading Day following the effective date of the Registration Statement.

" Representative " means, with respect to any Person, any of such Person’s directors, officers, employees, agents, consultants, advisors, accountants, attorneys and representatives.

" Registration Statement " means the registration statement on Form S-1 filed by CombiMatrix with the Commission to effect the registration of the CombiMatrix Common Stock pursuant to the Securities Act, including all amendments thereto filed by CombiMatrix with the Commission prior to the Time of Distribution.

" Securities " means all short-term and long-term investments, banker’s acceptances, shares of stock, notes, bonds, debentures, evidences of indebtedness, certificates of interest or participation in profit-sharing agreements, collateral-trust certificates, preorganization certificates or subscriptions, transferable shares, puts, calls, straddles, options, investment contracts, voting trusts and certificates and other securities of any kind (other than ownership interests in Subsidiaries).

" Securities Act " means the Securities Act of 1933, as amended.

" Separation Agreements " means, collectively, this Agreement, the Employee Matters Agreement, the Tax Allocation Agreement, the Conveyance Instruments, and any other agreement entered into between Acacia and CombiMatrix in connection with the Contribution and the Distribution.

" Subsidiary " means, with respect to any Person, any corporation or other organization, whether incorporated or unincorporated, of which such Person or any Subsidiaries of such Person controls or owns, directly or indirectly, more than 50% of the stock or other equity interest, or more than 50% of the voting power entitled to vote on the election of members to the board of directors or similar governing body. Notwithstanding the foregoing, the term "Subsidiary" shall also mean, with respect to CombiMatrix, the following entities: (i) Leuchemix, a California corporation, and (ii) CombiMatrix K.K., a Japanese corporation.

" Tax " and " Taxes " shall have the meaning set forth in the Tax Allocation Agreement.

" Tax Allocation Agreement " means the Tax Allocation Agreement dated as of the date hereof entered into prior to the Time of Distribution by and between Acacia and CombiMatrix.

" Third Party Claim " shall have the meaning set forth in Section 4.05(a).

" Time of Distribution " means the close of business on the Distribution Date.

" Trade Secrets " means (a) trade secrets and confidential business and technical information (including ideas, research and development, know-how, formulas, technology, compositions, manufacturing and production processes and techniques, technical data, engineering, production and other designs, drawings, engineering notebooks, industrial models, mask works, semiconductor chip topographies, software and specifications and any other information meeting the definition of a trade secret under the Uniform Trade Secrets Act); (b) computer and electronic data processing programs and software, both source code and object code (including data and related documentation, flow charts, diagrams, descriptive texts and programs, computer print-outs, underlying tapes, computer databases and similar items), computer applications and operating programs; and (c) all copies and tangible embodiments of any or all of the foregoing (in whatever form or medium, including electronic media).

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" Trading Day " shall have the meaning as set forth in Acacia’s Amended and Restated Certificate of Incorporation.

ARTICLE II

THE CONTRIBUTION

Section 2.01    Intercorporate Reorganization.

(a)    Prior to the Time of Distribution, Acacia and CombiMatrix will take all actions necessary to increase the outstanding shares of CombiMatrix Common Stock so that, immediately prior to the Distribution, Acacia will hold a number of shares of CombiMatrix Common Stock (rounded down to the nearest whole share) equal to the aggregate number of shares of CombiMatrix Tracking Stock (excluding treasury shares held by Acacia) issued and outstanding as of the Record Date.

(b)    As of the Time o f Distribution

(i)    Acacia and each Acacia Subsidiary shall convey, assign and transfer, or cause to be conveyed, assigned and transferred, to CombiMatrix any and all right, title and interest of Acacia and each of the Acacia Subsidiaries in the CombiMatrix Subsidiaries;

(ii)   CombiMatrix and the CombiMatrix Subsidiaries shall not have any right, title or interest in or to any Acacia Subsidiary or Acacia Asset;

(iii)   Acacia shall unconditionally assume and undertake to pay, perform and discharge, in a timely manner and in accordance with the terms thereof, all Liabilities of CombiMatrix and the CombiMatrix Subsidiaries that are Acacia Liabilities; and

(iv)    CombiMatrix shall unconditionally assume and undertake to pay, perform and discharge, in a timely manner and in accordance with the terms thereof, all Liabilities of Acacia and the Acacia Subsidiaries that are CombiMatrix Liabilities.

If at any time or from time to time (whether at or after the Time of Distribution) any member of the Acacia Group shall receive or otherwise possess any CombiMatrix Asset or interest in a CombiMatrix Subsidiary, such member will promptly convey, assign and transfer, or cause to be conveyed, assigned and transferred, such CombiMatrix Asset or interest in a CombiMatrix Subsidiary to CombiMatrix. If at any time or from time to time (whether at or after the Time of Distribution) any member of the CombiMatrix Group shall receive or otherwise possess any Acacia Asset or interest in an Acacia Subsidiary, such member will promptly convey, assign and transfer, or cause to be conveyed, assigned and transferred, such Acacia Asset or interest in an Acacia Subsidiary to Acacia. Prior to any such transfer, the Person receiving or possessing such Asset or interest in a Subsidiary will hold such Asset or interest in a Subsidiary in trust for the benefit of the Person entitled thereto (at the expense of the Person entitled thereto).

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If at any time or from time to time (whether at or after the Time of Distribution) either Acacia or CombiMatrix determines that the other party (or any member of such other party’s respective Group) shall not have unconditionally assumed any Liabilities that are allocated to such other party (or a member of such other party’s respective Group) pursuant to this Agreement, the Employee Matters Agreement or the Tax Allocation Agreement, such other party will promptly execute and deliver, or cause to be executed and delivered, all such documents and instruments and will take, or cause to be taken, all such actions as the requesting party may reasonably request to unconditionally assume, or cause to be unconditionally assumed, such Liabilities.

Solely for purposes of implementing the terms of this Agreement, during the period beginning on the date of this Agreement and ending twelve months after the Distribution Date, Acacia and CombiMatrix agree to discuss the allocation of any Asset or Liability of Acacia and its Subsidiaries (including Persons comprising the CombiMatrix Group) that either of them reasonably believes should be or should have been allocated differently than pursuant to the terms of this Agreement (an " Asset/Liability Allocation Matter "). The Acacia Chief Executive Officer will designate an employee of Acacia and the CombiMatrix Chief Executive Officer will designate an employee of CombiMatrix who will discuss an appropriate resolution of any Asset/Liability Allocation Matter. If within thirty days of the receipt of the notification of an Asset/Liability Allocation Matter by either Acacia or CombiMatrix pursuant to this paragraph, or such other time as Acacia and CombiMatrix may agree, the designees have not reached a mutually acceptable resolution of the Asset/Liability Allocation Matter, the matter will be referred for discussion to the Acacia Chief Executive Officer and the CombiMatrix Chief Executive Officer. Should a mutually acceptable resolution of the Asset/Liability Allocation Matter not be reached within thirty days following the referral to them, the terms and conditions of this Agreement shall remain in full force and effect, unamended, unmodified and unsupplemented. In no event shall the terms and conditions of this Agreement be amended, modified or supplemented other than in accordance with the provisions of Section 7.07. Nothing in this paragraph shall affect the right of any party to resort to the dispute resolution provisions of Section 7.05 in respect of any dispute, claim or controversy arising out of an alleged breach of any provision of this Agreement.

(c)    Acacia will take, or cause to be taken, the actions described on Schedule 2.01(c) in connection with the operation of the Acacia Business.

(d)    In connection with the transfers of Subsidiaries and the assumptions of Liabilities contemplated by subsections (b) and (c) of this Section 2.01, Acacia and CombiMatrix will execute or cause to be executed by the appropriate entities the Conveyance Instruments. The transfer of capital stock contemplated by such subsections will be effected by means of delivery of stock certificates duly endorsed or accompanied by duly executed stock powers and notation on the stock record books of the corporation or other legal entities involved and, to the extent required by applicable law, by notation on appropriate registries.

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(e)    Each of Acacia (on behalf of itself and each other member of the Acacia Group) and CombiMatrix (on behalf of itself and each other member of the CombiMatrix Group) understands and agrees that, except as expressly set forth in any Separation Agreement or any other agreement or document contemplated by any Separation Agreement, no party to any Separation Agreement, or any other agreement or document contemplated by any Separation Agreement either has or is, in such agreement or otherwise, representing or warranting in any way as to Assets, Subsidiaries, businesses or Liabilities retained, conveyed, assigned, transferred or assumed as contemplated hereby or thereby, as to any consents or approvals required in connection with the transactions contemplated by the Separation Agreements, as to the value or freedom from any Lien of, or any other matter concerning any Assets, Liabilities or Subsidiaries of, such party, or as to the absence of any defenses or rights of setoff or freedom from counterclaim with respect to any claim or other Assets or Subsidiaries of any party, or as to the legal sufficiency of any assignment, document or instrument delivered hereunder or thereunder to convey title to any Asset or Subsidiary or thing of value upon the execution, delivery or filing thereof. Except as may expressly be set forth in any Separation Agreement, all Assets and Subsidiaries being transferred or retained as contemplated by any Separation Agreement are being transferred, or are being retained, on an "as is", "where is" basis and the respective transferees shall bear the economic and legal risks that any conveyance shall prove to be insufficient or that the title to any Asset or Subsidiary shall be other than good and marketable and free and clear of any Lien.

(f)    It is the intention of the parties that payments made by the parties to each other after the Time of Distribution pursuant to this Agreement, the Employee Matters Agreement or the Tax Allocation Agreement are to be treated as relating back to the transactions occurring prior to the Time of Distribution pursuant to this Section 2.01 as an adjustment to the transfers of Assets, Subsidiaries and Liabilities contemplated by this Section 2.01, and Acacia and CombiMatrix will, and will cause the Acacia Subsidiaries and the CombiMatrix Subsidiaries, respectively, to, take positions consistent with such intention with any Tax authority, unless with respect to any payment any party receives an opinion of counsel reasonably acceptable to the other party to the effect that there is no substantial authority for such a position.

Section 2.02     Financial Instruments .

(a)    CombiMatrix will (from and after the Time of Distribution, at its expense) take or cause to be taken all actions, and enter into (or cause the CombiMatrix Subsidiaries to enter into) such agreements and arrangements, as shall be necessary to effect the release of and substitution for each member of the Acacia Group, effective as of the Time of Distribution, from all primary, secondary, contingent, joint, several and other Liabilities in respect of CombiMatrix Financial Instruments (it being understood that all Liabilities in respect of CombiMatrix Financial Instruments are CombiMatrix Liabilities).

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(b)    CombiMatrix’s obligations under Section 2.02(a) will continue to be applicable to all CombiMatrix Financial Instruments identified at any time by Acacia, whether before, at or after the Time of Distribution.

Section 2.03     Intercompany Accounts and Arrangements .

(a)     Elimination of Intercompany Accounts .

(i)    Except as set forth in Section 2.03(a)(ii) or on Schedule 2.03(a), Acacia, on behalf of itself and each other member of the Acacia Group, on the one hand, and CombiMatrix, on behalf of itself and each other member of the CombiMatrix Group, on the other hand, hereby settle and eliminate, by cancellation or transfer to a member of the other Group (whether to cancel or transfer and the manner thereof will be determined by Acacia), effective as of the Time of Distribution, all intercompany receivables, payables and other balances (including intercompany cash management balances) existing immediately prior to the Time of Distribution between Acacia and/or any Acacia Subsidiary, on the one hand, and CombiMatrix and/or any CombiMatrix Subsidiary, on the other hand.

(ii)    The provisions of Section 2.03(a)(i) will not apply to any intercompany receivables, payables and other balances arising under any Separation Agreement, including those arising under Section 2.04 or incurred in connection with the payment by any party of any expenses which are required to be paid or reimbursed by the other party pursuant to Section 4.08.

(b)     Intercompany Agreements .

(i)    Except as set forth in Section 2.03(b)(ii), in furtherance of the releases and other provisions of Section 4.01, CombiMatrix, on behalf of itself and each other member of the CombiMatrix Group, and Acacia, on behalf of itself and each other member of the Acacia Group, hereby terminate any and all agreements, arrangements, commitments or understandings in existence as of the Time of Distribution, whether or not in writing, between or among CombiMatrix and/or any CombiMatrix Subsidiary, on the one hand, and Acacia and/or any Acacia Subsidiary, on the other hand. No such terminated agreement, arrangement, commitment or understanding (including any provision thereof which purports to survive termination) shall be of any further force or effect after the Time of Distribution.

(ii)   The provisions of Section 2.03(b)(i) will not apply to any of the following agreements, arrangements, commitments or understandings (or to any of the provisions thereof): (A) the Separation Agreements and each other agreement, instrument or document expressly contemplated by any Separation Agreement to be entered into by any party hereto or any of the members of their respective Groups; (B) any agreements, arrangements, commitments or understandings listed or described on Schedule 2.03(b); (C) any agreements, arrangements, commitments or understandings to which any Person other than the parties hereto and their respective Affiliates is a party; and (D) any other agreements, arrangements, commitments or understandings that any Separation Agreement expressly contemplates will survive the Time of Distribution.

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(c)     Funding of Outstanding Checks .

(i)    CombiMatrix or a CombiMatrix Subsidiary will fund all amounts in respect of checks that are outstanding immediately prior to the Time of Distribution and presented for payment at or after the Time of Distribution in CombiMatrix Bank Accounts.

(ii)   Acacia or an Acacia Subsidiary will fund all amounts in respect of checks that are outstanding immediately prior to the Time of Distribution and presented for payment at or after the Time of Distribution in Acacia Bank Accounts.

(iii)   The provisions of this Section 2.04(c) with respect to funding of outstanding checks will not affect in any way, and will be subject to, all other provisions of this Agreement providing for the reimbursement of any amounts or the allocation of any Liabilities, including Section 4.08.

(d)     Payments .

(i)    CombiMatrix will, and will cause the CombiMatrix Subsidiaries to, forward to Acacia (for the account of Acacia or the applicable Acacia Subsidiary) any payments in respect of accounts receivable constituting Acacia Assets received by CombiMatrix or any of the CombiMatrix Subsidiaries after the Time of Distribution, whether received in lock boxes, via wire transfer or otherwise, by the first Business Day of the week after the week during which such payment is received. Such amounts will be forwarded by wire transfer (to an Acacia’s bank account designated in writing by Acacia) in the case of payments received within thirty days after the Time of Distribution and by check in the case of payments received thereafter.

(ii)    Acacia will, and will cause the Acacia Subsidiaries to, forward to CombiMatrix (for the account of CombiMatrix or the applicable CombiMatrix Subsidiary) any payments in respect of accounts receivable constituting CombiMatrix Assets received by Acacia or any of the Acacia Subsidiaries after the Time of Distribution, whether received in lock boxes, via wire transfer or otherwise, by the first business day of the week after the week during which such payment is received. Such amounts will be forwarded by wire transfer (to a CombiMatrix’s bank account designated in writing by CombiMatrix) in the case of payments received within thirty days after the Time of Distribution and by check in the case of payments received thereafter.

Section 2.04     The CombiMatrix Board . Prior to the Time of Distribution, CombiMatrix and Acacia will take all actions which may be required to elect or otherwise appoint as directors of CombiMatrix the persons named on Schedule 2.04 to constitute the board of directors of CombiMatrix at the Time of Distribution.

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Section 2.05    Resignations, Transfer of Stock Held as Nominee.

(a)    Acacia will cause all of its employees and directors and all of the employees and directors of each other member of the Acacia Group to resign, effective not later than the Time of Distribution, from all boards of directors or similar governing bodies of CombiMatrix or any other member of the CombiMatrix Group on which they serve, and from all positions as officers of CombiMatrix or any other member of the CombiMatrix Group in which they serve, except as otherwise specified on Schedule 2.05. CombiMatrix will cause all of its employees and directors and all of the employees and directors of each other member of the CombiMatrix Group to resign, effective not later than the Time of Distribution, from all boards of directors or similar governing bodies of Acacia or any other member of the Acacia Group on which they serve, and from all positions as officers of Acacia or any other member of the Acacia Group in which they serve, except as otherwise specified on Schedule 2.05.

(b)    Acacia will cause each of its employees, and each of the employees of the other members of the Acacia Group, who holds stock or similar evidence of ownership of any CombiMatrix Group entity as nominee for such entity pursuant to the laws of the country in which such entity is located to transfer such stock or similar evidence of ownership to the Person so designated by CombiMatrix to be such nominee as of and after the Time of Distribution. CombiMatrix will cause each of its employees, and each of the employees of the other members of the CombiMatrix Group, who holds stock or similar evidence of ownership of any Acacia Group entity as nominee for such entity pursuant to the laws of the country in which such entity is located to transfer such stock or similar evidence of ownership to the Person so designated by Acacia to be such nominee as of and after the Time of Distribution.

(c)    Acacia will cause each of its employees and each of the employees of the other members of the Acacia Group to revoke or withdraw their express written authority, if any, to act on behalf of any CombiMatrix Group entity as an agent or representative therefor after the Time of Distribution. CombiMatrix will cause each of its employees and each of the employees of the other members of the CombiMatrix Group to revoke or withdraw their express written authority, if any, to act on behalf of any Acacia Group entity as an agent or representative therefor after the Time of Distribution.

Section 2.06     CombiMatrix Certificate of Incorporation and Bylaws . Prior to the Time of Distribution, (a) the CombiMatrix Board will (i) approve the Certificate of Incorporation and will cause the same to be filed with the Secretary of State of the State of Delaware and (ii) adopt the Bylaws, and (b) Acacia, as sole shareholder of CombiMatrix, will approve the Certificate of Incorporation.

Section 2.07     Consents . Prior to and after the Distribution Date, Acacia and CombiMatrix will, and will cause the Acacia Subsidiaries and the CombiMatrix Subsidiaries, respectively, to, use their commercially reasonable efforts (as requested by the other party) to obtain, or to cause to be obtained, all Consents necessary for the transfer of all Assets, Subsidiaries and Liabilities contemplated to be transferred pursuant to this Article II; provided , however , that none of Acacia (or any of the Acacia Subsidiaries) or CombiMatrix (or any of the CombiMatrix Subsidiaries) shall be obligated to pay any consideration or offer or grant any financial accommodation in connection therewith. Anything contained herein to the contrary notwithstanding, this Agreement shall not constitute an agreement to assign any Contract or Permit if an assignment or attempted assignment of the same without the Consent of any other party or parties thereto or other required Consent would constitute a breach thereof or of any applicable law or in any way impair the rights of any member of the Acacia Group or the CombiMatrix Group thereunder. If any such Consent is not obtained or if an attempted assignment would be ineffective or would impair any rights of any member of either

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Group under any such Contract or Permit so that the contemplated assignee hereunder (the " Recipient Party ") would not receive all such rights, then after the Time of Distribution (x) the party contemplated hereunder to assign such Contract or Permit (the " Assigning Party ") will use commercially reasonable efforts (it being understood that such efforts shall not include any requirement of the Assigning Party to pay any consideration or offer or grant any financial accommodation) to provide or cause to be provided to the Recipient Party the benefits of any such Contract or Permit and the Assigning Party will promptly pay or cause to be paid to the Recipient Party when received all moneys and properties received by the Assigning Party with respect to any such Contract or Permit and (y) the Recipient Party will pay, perform and discharge on behalf of the Assigning Party all of the Assigning Party’s Liabilities thereunder in a timely manner and in accordance with the terms thereof. If and when such Consents are obtained, the transfer of the applicable Contract or Permit shall be effected as promptly following the Time of Distribution as shall be practicable in accordance with the terms of this Agreement. To the extent that any transfers and assumptions contemplated by this Article II shall not have been consummated on or prior to the Time of Distribution, the parties shall cooperate to effect such transfers as promptly following the Time of Distribution as shall be practicable, it nonetheless being agreed and understood by the parties that no party shall be liable in any manner to any other party for any failure of any of the transfers contemplated by this Article II to be consummated prior to the Time of Distribution.

ARTICLE III

THE DISTRIBUTION

Section 3.01    The Distribution.

(a)    Subject to Section 3.04, prior to the Time of Distribution, Acacia will deliver to the Distribution Agent, for the benefit of holders of record of CombiMatrix Tracking Stock as of the Record Date, a number of shares of CombiMatrix Common Stock (rounded down to the nearest whole share) equal to the number of shares of CombiMatrix Tracking Stock issued and outstanding as of the Record Date (excluding treasury shares held by Acacia), and Acacia will instruct the Distribution Agent to make book-entry credits on the Distribution Date or as soon thereafter as practicable for each holder of record of CombiMatrix Tracking Stock as of the Record Date, or the designated transferee or transferees of such holder, for a number of shares of CombiMatrix Common Stock (rounded down to the nearest whole share) equal to the number of shares of CombiMatrix Tracking Stock so held by such holder of record as of the Record Date (excluding treasury shares held by Acacia). The Distribution will be effective as of the Time of Distribution.

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(b)    Acacia and CombiMatrix each will provide to the Distribution Agent all information (including information necessary to make appropriate book-entry credits) and share certificates, in each case, as may be required in order to complete the Distribution on the basis of one share of CombiMatrix Common Stock for every one share of CombiMatrix Tracking Stock (excluding treasury shares held by Acacia).

Section 3.02     Fractional Shares . Anything contained herein to the contrary notwithstanding, no fractional shares of CombiMatrix Common Stock will be distributed to holders of CombiMatrix Tracking Stock in the Distribution. Holders that are otherwise entitled to receive less than one whole share of CombiMatrix Common Stock in the Distribution will receive cash in lieu of such fractional share as contemplated hereby. As soon as practicable after the Distribution Date, Acacia will direct the Distribution Agent to determine in accordance with its customary practice the number of fractional shares of CombiMatrix Common Stock otherwise allocable to holders of record or beneficial owners of CombiMatrix Tracking Stock as of the Record Date, to aggregate all such fractional shares and sell as soon as practicable the whole shares obtained by aggregating such fractional shares either in open market transactions or otherwise, in each case at then prevailing trading prices, and to cause to be distributed to each such holder or for the benefit of each such beneficial owner, in lieu of any fractional share, such holder’s or owner’s ratable share of the proceeds of such sale, after making appropriate deductions of the amount required to be withheld for federal income tax purposes and after deducting an amount equal to all brokerage charges, commissions and transfer taxes attributed to such sale. Acacia will direct the Distribution Agent to seek to aggregate the shares of CombiMatrix Tracking Stock that may be held by any such beneficial owner thereof through more than one account in determining the fractional share allocable to such beneficial owner.

Section 3.03     Cooperation Prior to the Distribution . Prior to the Distribution:

(a)    Acacia and CombiMatrix will prepare the Registration Statement which will include appropriate disclosure concerning CombiMatrix, its business, operations and management, the Contribution, the Distribution and such other matters as Acacia and CombiMatrix may determine and as may be required by law. Acacia and CombiMatrix will prepare, and CombiMatrix will file with the Commission, the Registration Statement. CombiMatrix will use its commercially reasonable efforts to cause the Registration Statement to become effective under the Securities Act as soon as practicable following the filing thereof. Promptly after effectiveness of the Registration Statement and prior to the Distribution, Acacia will mail to the holders of CombiMatrix Tracking Stock the Registration Statement.

(b)    Acacia and CombiMatrix will cooperate in preparing, filing with the Commission and causing to become effective any registration statements or amendments thereof which are required to reflect the establishment of, or amendments to, any employee benefit and other plans contemplated by the Employee Matters Agreement.

(c)    Acacia and CombiMatrix will take all such action as may be necessary or appropriate under the securities or "blue sky" laws of the states or other political subdivisions of the United States and the securities laws of any applicable foreign countries or other political subdivisions thereof in connection with the transactions contemplated by this Agreement.

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(d)    Acacia and CombiMatrix will cause to be prepared, and CombiMatrix will file and use its commercially reasonable efforts to have approved, an application for the listing on the American Stock Exchange or another exchange approved by each of Acacia and CombiMatrix of the CombiMatrix Common Stock to be distributed in the Distribution.

Section 3.04     Acacia Board Action Conditions to the Distribution . The Acacia Board will in its discretion establish the Record Date and the Distribution Date and all appropriate procedures in connection with the Distribution, but in no event will the Distribution occur prior to such time as each of the following conditions shall have been satisfied or shall have been waived by the Acacia Board in accordance with Section 3.05:

(a)    the Acacia Board shall be reasonably satisfied that (i) Acacia will have sufficient surplus under Section 170 of the Delaware General Corporation Law to permit the Distribution and (ii) after giving effect to the Contribution and the Distribution, each of Acacia and CombiMatrix will not be insolvent and will not have unreasonably small capital with which to engage in its respective businesses;

(b)    the Acacia Board shall have given final approval of the Distribution;

(c)    the Acacia Board shall have received a favorable opinion issued by Greenberg Traurig LLP confirming that the Distribution should qualify as a tax-free reorganization within the meaning of Section 368(a)(i)(d) of the Code;

(d)    the Acacia Board shall have received a favorable private letter ruling issued by the Internal Revenue Service confirming that the Distribution will qualify as a tax-free reorganization within the meaning of Section 368(a)(i)(d) of the Code;

(e)    all material Consents which are required to effect the Contribution and the Distribution shall have been obtained and shall be in full force and effect;

(f)    the Registration Statement shall have become effective under the Securities Act;

(g)    the Certificate of Incorporation and the Bylaws each shall have been adopted and be in effect;

(h)    the transactions contemplated by Section 2.01, and Section 2.03(a) shall have been consummated in all material respects;

(i)    Acacia and CombiMatrix shall have entered into each of the Separation Agreements to which they are parties and each such agreement shall be in full force and effect;

(j)    no order, injunction or decree issued by any court of competent jurisdiction or other legal restraint or prohibition preventing consummation of the Contribution or the Distribution shall be in effect;

(k)    no suit, action or proceeding by or before any court of competent jurisdiction or other Governmental Entity shall have been commenced and be pending to restrain or challenge the Contribution or Distribution, and no inquiry shall have been received that in the reasonable judgment of the Acacia Board may lead to such a suit, action or proceeding; and provided, that the satisfaction of such conditions will not create any obligation on the part of Acacia to effect or seek to effect the Contribution or the Distribution or in any way limit Acacia’s right to terminate this Agreement set forth in Section 7.13 or alter the consequences of any such termination from those specified in Section 7.13.

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Section 3.05     Waiver of Conditions . Any or all of the conditions set forth in Section 3.04 may be waived, in whole or in part, in the sole discretion of the Acacia Board. The conditions set forth in Section 3.04 are for the sole benefit of Acacia and shall not give rise to or create any duty on the part of Acacia or the Acacia Board to waive or not waive any such conditions.

ARTICLE IV

MUTUAL RELEASE; INDEMNIFICATION; EXPENSES

Section 4.01     Mutual Release . Effective as of the Time of Distribution and except as otherwise specifically set forth in the Separation Agreements, each of Acacia, on behalf of itself and each other member of the Acacia Group, on the one hand, and CombiMatrix, on behalf of itself and each other member of the CombiMatrix Group, on the other hand, hereby releases and forever discharges the other party and its Subsidiaries, and its and their respective officers, directors, agents, record and beneficial security holders (including trustees and beneficiaries of trusts holding such securities), advisors and Representatives (in each case, in their respective capacities as such) and their respective heirs, executors, administrators, successors and assigns, of and from all debts, demands, actions, causes of action, suits, accounts, covenants, contracts, agreements, damages, claims and Liabilities whatsoever of every name and nature, both in law and in equity, which the releasing party has or ever had or ever will have, which arise out of or relate to events, circumstances or actions taken by such other party occurring or failing to occur or any conditions existing at or prior to the Time of Distribution; provided , however , that the foregoing general release shall not apply to (i) any Liabilities or other obligations (including Liabilities with respect to payment, reimbursement, indemnification or contribution) under the Separation Agreements or assumed, transferred, assigned, allocated or arising under any of the Separation Agreements (including any Liability that the parties may have with respect to payment, performance, reimbursement, indemnification or contribution pursuant to any Separation Agreement for claims brought against the parties by third Persons or any Indemnitee), and the foregoing release will not affect any party’s right to enforce the Separation Agreements or Financing Agreements in accordance with their terms or (ii) any Liability arising from or relating to any agreement, arrangement, commitment or undertaking described in Section 2.02(b)(ii), or (iii) any Liability the release of which would result in the release of any Person other than a Person released pursuant to this Section 4.01 ( provided , that the parties agree not to bring suit or permit any of their Subsidiaries to bring suit against any member of the other Group with respect to any Liability to the extent such member of the other Group would be released with respect to such Liability by this Section 4.01 but for this clause (iii)).

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Each of Acacia and CombiMatrix acknowledges that it has been advised by its legal counsel and is familiar with the provisions of California Civil Code Section 1542, which provides as follows:

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR."

Being aware of such Code section, each of Acacia, on behalf of itself and each of the Acacia Subsidiaries, and CombiMatrix, on behalf of itself and each of the CombiMatrix Subsidiaries, hereby expressly waives any rights it may have under California Civil Code Section 1542, as well as any other statutes or common law principles of similar effect.

Section 4.02     Indemnification by Acacia . Subject to the provisions of this Article IV, Acacia shall indemnify, defend and hold harmless the CombiMatrix Indemnitees from and against, and pay or reimburse, as the case may be, the CombiMatrix Indemnitees for, all Indemnifiable Losses, as incurred, suffered by any CombiMatrix Indemnitee to the extent based upon, arising out of or relating to the following:

(a)    the Acacia Liabilities (including the failure by Acacia or any other member of the Acacia Group to pay, perform or otherwise discharge the Acacia Liabilities in accordance with their terms), whether such Indemnifiable Losses are based upon, arise out of or relate to events, occurrences, actions, omissions, facts, circumstances or conditions occurring, existing or asserted before, at or after the Time of Distribution;

(b)    the breach by any member of the Acacia Group of any agreement or covenant contained in a Separation Agreement which does not by its express terms expire at the Time of Distribution; and

(c)    the enforcement by the CombiMatrix Indemnitees of their rights to be indemnified, defended and held harmless under this Section 4.02.

Section 4.03     Indemnification by CombiMatrix . Subject to the provisions of this Article IV, CombiMatrix shall indemnify, defend and hold harmless the Acacia Indemnitees from and against, and pay or reimburse, as the case may be, the Acacia Indemnitees for, all Indemnifiable Losses, as incurred, suffered by any Acacia Indemnitee to the extent based upon, arising out of or relating to the following:

(a)    the CombiMatrix Liabilities (including the failure by CombiMatrix or any other member of the CombiMatrix Group to pay, perform or otherwise discharge the CombiMatrix Liabilities in accordance with their terms), whether such Indemnifiable Losses are based upon, arise out of or relate to events, occurrences, actions, omissions, facts, circumstances or conditions occurring, existing or asserted before, at or after the Time of Distribution;

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(b)    any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or any omission or alleged omission to state in the Registration Statement a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except in each case with respect to information relating to the Acacia Group provided by Acacia expressly for use in the Registration Statement;

(c)    the breach by any member of the CombiMatrix Group of any agreement or covenant contained in a Separation Agreement which does not by its express terms expire at the Time of Distribution; the use by members of the CombiMatrix Group of any names, trademarks, trade names, domain names, service marks or corporate symbols or logos pursuant to Section 5.02; and the enforcement by the Acacia Indemnitees of their rights to be indemnified, defended and held harmless under this Section 4.03.

Section 4.04    Limitations on Indemnification Obligations.

(a)    The amount which any party (an "Indemnifying Party") is or may be required to pay to an Indemnitee in respect of Indemnifiable Losses or other Liability for which indemnification is provided under this Agreement shall be reduced by any amounts actually received (including Insurance Proceeds actually received) by or on behalf of such Indemnitee (net of increased insurance premiums and charges related directly and solely to the related Indemnifiable Losses and costs and expenses (including reasonable legal fees and expenses) incurred by such Indemnitee in connection with seeking to collect and collecting such amounts) in respect of such Indemnifiable Losses or other Liability (such net amounts are referred to herein as "Indemnity Reduction Amounts"). If any Indemnitee receives any Indemnity Reduction Amounts in respect of an Indemnifiable Loss for which indemnification is provided under this Agreement after the full amount of such Indemnifiable Loss has been paid by an Indemnifying Party or after an Indemnifying Party has made a partial payment of such Indemnifiable Loss and such Indemnity Reduction Amounts exceed the remaining unpaid balance of such Indemnifiable Loss, then the Indemnitee shall promptly remit to the Indemnifying Party an amount equal to the excess (if any) of (A) the amount theretofore paid by the Indemnifying Party in respect of such Indemnifiable Loss, less (B) the amount of the indemnity payment that would have been due if such Indemnity Reduction Amounts in respect thereof had been received before the indemnity payment was made. An insurer or other third party who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of the indemnification provisions hereof, have any subrogation rights with respect thereto, it being expressly understood and agreed that no insurer or any other third party shall be entitled to any benefit they would not be entitled to receive in the absence of the indemnification provisions by virtue of the indemnification provisions hereof.

(b)    In determining the amount of any Indemnifiable Losses, such amount shall be (i) reduced to take into account any net Tax benefit realized by the Indemnitee arising from the incurrence or payment by the Indemnitee of such Indemnifiable Losses and (ii) increased to take into account any net Tax cost incurred by the Indemnitee as a result of the receipt or accrual of payments hereunder (grossed-up for such increase), in each case determined by treating the Indemnitee as recognizing all other items of income, gain, loss, deduction or credit before recognizing any item arising from such Indemnifiable Losses. It is the intention of the parties that indemnity payments made pursuant to this Agreement are to be treated as relating back to the Distribution as an adjustment to capital ( i.e ., capital contribution or distribution), and the parties shall not take any position inconsistent with such intention before any Tax Authority (as defined in the Tax Allocation Agreement), except to the extent that a final determination (as defined in Section 1313 of the Code) with respect to the recipient party causes any such payment not to be so treated.

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Section 4.05    Procedures Relating to Indemnification.

(a)    If a claim or demand is made against an Indemnitee, or an Indemnitee shall otherwise learn of an assertion, by any Person who is not a party to this Agreement (or an Affiliate thereof) as to which an Indemnifying Party may be obligated to provide indemnification pursuant to this Agreement (a "Third Party Claim"), such Indemnitee will notify the Indemnifying Party in writing, and in reasonable detail, of the Third Party Claim reasonably promptly after becoming aware of such Third Party Claim; provided, however, that failure to give such notification will not affect the indemnification provided hereunder except to the extent the Indemnifying Party shall have been actually prejudiced as a result of such failure. Thereafter, the Indemnitee will deliver to the Indemnifying Party, promptly after the Indemnitee’s receipt thereof, copies of all material notices and documents (including court papers) received or transmitted by the Indemnitee relating to the Third Party Claim.

(b)    If a Third Party Claim is made against an Indemnitee, the Indemnifying Party will be entitled to participate in or to assume the defense thereof (in either case, at the expense of the Indemnifying Party) with counsel selected by the Indemnifying Party and reasonably satisfactory to the Indemnitee.

If the Indemnifying Party elects to assume the defense of a Third Party Claim, the Indemnifying Party will not be liable to the Indemnitee for any legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof; provided , that if in the Indemnitee’s reasonable judgment a conflict of interest exists in respect of such claim or if the Indemnifying Party shall have assumed responsibility for such claim with any reservations or exceptions, such Indemnitee will have the right to employ separate counsel reasonably satisfactory to the Indemnifying Party to represent such Indemnitee and in that event the reasonable fees and expenses of such separate counsel (but not more than one separate counsel for all Indemnitees similarly situated) shall be paid by such Indemnifying Party. If the Indemnifying Party assumes the defense of any Third Party Claim, the Indemnitee will have the right to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the Indemnifying Party, it being understood that the Indemnifying Party will control such defense. The Indemnifying Party will be liable for the fees and expenses of counsel employed by the Indemnitee for any period during which the Indemnifying Party has failed to assume the defense thereof. If the Indemnifying Party assumes the defense of any Third Party Claim, the Indemnifying Party will promptly supply to the Indemnitee copies of all material correspondence and documents relating to or in connection with such Third Party Claim and keep the Indemnitee fully informed of all material developments relating to or in connection with such Third Party Claim (including providing to the Indemnitee on reasonable request updates and summaries as to the status thereof). If the Indemnifying Party chooses to defend a Third Party Claim, the parties hereto will cooperate in the defense thereof (such cooperation to be at the expense, including reasonable legal fees and expenses, of the Indemnifying Party), which cooperation shall include the retention in accordance with this Agreement and (upon the Indemnifying Party’s request) the provision to the Indemnifying Party of records and information which are reasonably relevant to such Third Party Claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.

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(c)    No Indemnifying Party will consent to any settlement, compromise or discharge (including the consent to entry of any judgment) of any Third Party Claim without the Indemnitee’s prior written consent (which consent will not be unreasonably withheld); provided , that if the Indemnifying Party assumes the defense of any Third Party Claim, the Indemnitee will agree to any settlement, compromise or discharge of such Third Party Claim which the Indemnifying Party may recommend and which by its terms obligates the Indemnifying Party to pay the full amount of Indemnifiable Losses in connection with such Third Party Claim and unconditionally and irrevocably releases the Indemnitee and its Affiliates completely from all Liability in connection with such Third Party Claim; provided , however , that the Indemnitee may refuse to agree to any such settlement, compromise or discharge (x) that provides for injunctive or other nonmonetary relief affecting the Indemnitee or any of its Affiliates or (y) that, in the reasonable opinion of the Indemnitee, would otherwise materially adversely affect the Indemnitee or any of its Affiliates. Whether or not the Indemnifying Party shall have assumed the defense of a Third Party Claim, the Indemnitee will not (unless required by law) admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim without the Indemnifying Party’s prior written consent (which consent will not be unreasonably withheld).

(d)    Any claim on account of Indemnifiable Losses which does not involve a Third Party Claim will be asserted by reasonably prompt written notice given by the Indemnitee to the Indemnifying Party from whom such indemnification is sought. The failure by any Indemnitee so to notify the Indemnifying Party will not relieve the Indemnifying Party from any liability which it may have to such Indemnitee under this Agreement, except to the extent that the Indemnifying Party shall have been actually prejudiced by such failure.

(e)    In the event of payment in full by an Indemnifying Party to any Indemnitee in connection with any Third Party Claim, such Indemnifying Party will be subrogated to and shall stand in the place of such Indemnitee as to any events or circumstances in respect of which such Indemnitee may have any right or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim or against any other Person. Such Indemnitee will cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right or claim.

Section 4.06     Remedies Cumulative . Subject to the provisions of Section 7.05, the remedies provided in this Article IV shall be cumulative and shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

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Section 4.07     Indemnification Under Tax Allocation Agreement . Notwithstanding anything in this Agreement to the contrary, indemnification in respect of Tax matters will be governed exclusively by the Tax Allocation Agreement.

Section 4.08    Expenses.

(a)    Except as otherwise set forth in any Separation Agreement, (i) all Acacia Expenses will be charged to and paid by Acacia and (ii) all CombiMatrix Expenses will be charged to and paid by CombiMatrix.

(b)    Within ten days after the Distribution Date, CombiMatrix will reimburse Acacia (by wire transfer to a bank account designated in writing by CombiMatrix) for all amounts in respect of CombiMatrix Expenses paid by Acacia or any of its Subsidiaries (including Persons comprising the CombiMatrix Group) before or at the Time of Distribution and notified in writing by Acacia to CombiMatrix within five days after the Distribution Date. From time to time thereafter, promptly after Acacia’s request therefor, and in any event within ten days after any such request, CombiMatrix will reimburse Acacia (by wire transfer to the same bank account referred to in the preceding sentence) for all CombiMatrix Expenses paid by Acacia or any of its Subsidiaries before, at or after the Time of Distribution (other than as previously reimbursed by CombiMatrix pursuant to the preceding sentence). Acacia will, at the request of CombiMatrix, provide CombiMatrix with appropriate documentation to support CombiMatrix Expenses required to be reimbursed to Acacia pursuant to this Section 4.08(b).

(c)    Within ten days after the Distribution Date, Acacia will reimburse CombiMatrix (by wire transfer to a bank account designated in writing by Acacia for all amounts in respect of Acacia Expenses paid by CombiMatrix or any of its Subsidiaries (including Persons comprising the Acacia Group) before or at the Time of Distribution and notified in writing by CombiMatrix to Acacia within five days after the Distribution Date. From time to time thereafter, promptly after CombiMatrix’s request therefor, and in any event within ten days after any such request, Acacia will reimburse CombiMatrix (by wire transfer to the same bank account referred to in the preceding sentence) for all Acacia Expenses paid by CombiMatrix or any of its Subsidiaries before, at or after the Time of Distribution (other than as previously reimbursed by Acacia pursuant to the preceding sentence). CombiMatrix will, at the request of Acacia, provide Acacia with appropriate documentation to support Acacia Expenses required to be reimbursed to CombiMatrix pursuant to this Section 4.08(c).

(d)    Except as otherwise set forth in any Separation Agreement, and subject in all events to the provisions of Section 4.08(a), all out-of-pocket costs and expenses incurred following the Time of Distribution in connection with implementation of the transactions contemplated by the Separation Agreements will be charged to and paid by the party for whose benefit the expenses are incurred, with any out-of-pocket expenses which cannot be allocated on such basis to be split equally between Acacia and CombiMatrix.

(e)    The third-party costs and expenses of the Registration Statement shall be shared between Acacia and CombiMatrix equally. Within a reasonable time Following the Time of Distribution and receipt of an invoice from Acacia, including any back-up documentation reasonable requested by CombiMatrix, CombiMatrix shall reimburse Acacia for its share of such costs and expenses.

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ARTICLE V

CERTAIN OTHER MATTERS

Section 5.01     Insurance .

(a)     Coverage . Subject to the provi