Unassociated Document


    EXHIBIT 10.1

    
 

    


    
      

    

    


     

    TAX
      ALLOCATION AGREEMENT

     

    by
      and between

     

    ACACIA
      RESEARCH CORPORATION

     

    and

     

    COMBIMATRIX
      CORPORATION

     

     

    
      	 
	
               

              December
                21, 2006

               

            


    

    


     

      
        

      

    

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF CONTENTS

     

    Page

     

    
      	ARTICLE I DEFINITIONS 	
               1

            
	
              Section
                1.01    General 

            	
               1

            
	
              Section
                1.02    Schedules,
                etc 

            	
               6

            
	 	 
	ARTICLE II FILING OF TAX RETURNS; PAYMENT
              OF
              TAXES; REFUNDS 	
               6

            
	
              Section
                2.01    Preparation
                of Tax Returns 

            	
               6

            
	
              Section
                2.02    Payment
                of Taxes 

            	
               8

            
	
              Section
                2.03    Tax
                Refunds and Carrybacks 

            	
               10

            
	
              Section
                2.04    Allocation
                of Straddle Period Taxes 

            	
               11

            
	 	 
	ARTICLE III TAX INDEMNIFICATION; TAX
              CONTESTS 	
               12

            
	
              Section
                3.01    Indemnification 

            	
               12

            
	
              Section
                3.02    CombiMatrix
                Tax Acts 

            	
               13

            
	
              Section
                3.03    Notice
                of Indemnity 

            	
               14

            
	
              Section
                3.04    Payments 

            	
               14

            
	
              Section
                3.05    Tax
                Contests 

            	
               16

            
	 	 
	
              ARTICLE IV OPTIONS; COMPENSATION PAYMENTS; INTEREST
                CHARGE FOR LATE PAYMENTS; CURRENCY CALCULATIONS; 

              EFFECTIVE
                TIME OF TRANSACTIONS 

            	
               16

            
	
              Section
                4.01    Stock
                Options; Restricted Shares 

            	
               16

            
	
              Section
                4.02    Compensation
                Payments

            	
               18

            
	
              Section
                4.03    Change
                in Law

            	
               18

            
	
              Section
                4.04    Interest
                Charge for Late Payments

            	
               18

            
	
              Section
                4.05    Currency
                Calculations

            	
               19

            
	
              Section
                4.06    Effective
                Time of Transaction

            	
               19

            
	 	 
	ARTICLE V COOPERATION AND EXCHANGE OF
              INFORMATION 	
               19

            
	
              Section
                5.01    Inconsistent
                Actions

            	
               19

            
	
              Section
                5.02    Cooperation
                and Exchange of Information

            	
               19

            
	
              Section
                5.03    Tax
                Records

            	
               20

            
	 	 
	ARTICLE VI MISCELLANEOUS 	
               20

            
	
              Section
                6.01    Entire
                Agreement; Construction

            	
               20

            
	
              Section
                6.02    Effectiveness

            	
               21

            
	
              Section
                6.03    Survival
                of Agreements

            	
               21

            
	
              Section
                6.04    Governing
                Law

            	
               21

            
	
              Section
                6.05    Notices

            	
               21

            
	
              Section
                6.06    Amendments

            	
               21

            
	
              Section
                6.07    Successors
                and Assigns

            	
               21

            
	
              Section
                6.08    Captions;
                Currency

            	
               21

            
	
              Section
                6.09    Severability

            	
               21

            
	
              Section
                6.10    Parties
                in Interest

            	
               22

            


    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
                6.11    Schedules

            	
               22

            
	
              Section
                6.12    Termination

            	
               22

            
	
              Section
                6.13    Waivers;
                Remedies

            	
               22

            
	
              Section
                6.14    Counterparts

            	
               22

            
	
              Section
                6.15    Performance

            	
               22

            
	
              Section
                6.16    Interpretation

            	
               22

            
	
              Section
                6.17    Dispute
                Resolution

            	
               23

            


    

     

    
      	
              SCHEDULE
                1.01

               

            	
              COMBIMATRIX
                TAX GROUP MEMBERS

               

            
	
              SCHEDULE
                2.01(f)

               

            	
              TAX
                RETURNS TO BE FILED BY NON-RESPONSIBLE PARTY

               

            
	
              SCHEDULE
                3.02(a)

               

            	
              COMBIMATRIX
                TAX ACT

               

            
	
              SCHEDULE
                3.02(b)

               

            	
              COMBIMATRIX
                TAX REPRESENTATION LETTER

               

            
	
              SCHEDULE
                3.02(c)

            	
              PRE-DISTRIBUTION
                TAX-FREE TRANSACTIONS

            


    

    


    


    


    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

       

    

    TAX
      ALLOCATION AGREEMENT

     

    THIS
      TAX
      ALLOCATION 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”).

     

    RECITALS

     

    A.  The
      Acacia Board (as defined herein) has determined that it is appropriate and
      desirable, subject to the terms and conditions contained in the Distribution
      Agreement by and between Acacia and CombiMatrix dated as of the date hereof
      (“Distribution
      Agreement”)
      for
      Acacia to distribute on a pro rata basis to holders of shares of CBMX Tracking
      Stock (as defined herein) the outstanding shares of CombiMatrix Common Stock
      (as
      defined herein) owned by Acacia.

     

    B.  Acacia
      and CombiMatrix wish to provide for and agree upon the allocation between the
      Acacia Tax Group (as defined herein) and the CombiMatrix Tax Group (as defined
      herein) of all responsibilities, liabilities and benefits relating to or
      affecting Taxes (as defined herein) paid or payable by either of them for all
      taxable periods, whether beginning before, on or after the Distribution Date
      (as
      defined herein).

     

    AGREEMENT

     

    NOW,
      THEREFORE, in consideration of the premises and of the respective agreements
      contained in this Agreement, the parties hereto 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). Any capitalized term not otherwise defined in this Agreement
      shall have the meaning ascribed to it in the Distribution
      Agreement.

     

    “Acacia”
shall
      have the meaning ascribed thereto in the preamble.

     

    “Acacia
      Board”
shall
      mean the Board of Directors of Acacia or a duly authorized committee
      thereof.

     

    “Acacia
      Business”
shall
      have the meaning ascribed thereto that term in the Distribution
      Agreement.

     

    “Acacia/CombiMatrix
      Tax Group”
shall
      mean any corporation or other legal entity which is a member of the Acacia
      Tax
      Group or the CombiMatrix Tax Group but only with respect to taxable periods
      (or
      portions thereof) ending on or before or including the Distribution
      Date.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    “Acacia
      Group Employees and Former Employees”
shall
      mean individuals (i) who are employees of any member of the Acacia Tax
      Group on the date of the event giving rise to a deduction in respect of any
      Compensation Payments made to such individuals or Stock Options or Restricted
      Stock held by such individuals, or (ii) whose most recent employment with any
      member of the Acacia Tax Group or the CombiMatrix Tax Group prior to such date
      was more closely associated with the Acacia Business or some other business
      rather than the CombiMatrix Business.

     

    “Acacia
      Restricted Stock”
shall
      mean shares of CBMX Tracking Stock subject to restrictions on transferability
      and subject to a substantial risk of forfeiture.

     

    “Acacia
      Tax Group”
shall
      mean (i) Acacia, (ii) any corporation or other legal entity which Acacia
      directly or indirectly owns immediately following the Distribution Date other
      than a member of the CombiMatrix Tax Group, and (iii) any other corporation
      or
      other legal entity which Acacia directly or indirectly owned at any time prior
      to the Distribution Date (but only with respect to the period such corporation
      or other entity was so owned by Acacia) other than a member of the CombiMatrix
      Tax Group.

     

    “Actually
      Realized”
shall
      mean, for purposes of determining the timing of any Taxes (or related Tax cost
      or benefit) relating to any payment, transaction, occurrence or event, the
      time
      at which the amount of Taxes (including estimated Taxes) payable by any person
      is increased above or reduced below, as the case may be, the amount of Taxes
      that such person would be required to pay but for the payment, transaction,
      occurrence or event.

     

    “CBMX
      Tracking Stock”
shall
      mean the Acacia Research-CombiMatrix Common, par value of $0.001 per share,
      of
      Acacia.

     

    “CBMX
      Stock Options”
shall
      mean options to acquire CBMX Tracking Stock.

     

    “Code”
shall
      mean the Internal Revenue Code of 1986, as amended, or any successor
      legislation.

     

    “CombiMatrix”
shall
      have the meaning ascribed thereto in the preamble.

     

    “CombiMatrix
      Business”
shall
      have the meaning ascribed thereto that term in the Distribution
      Agreement.

     

    “CombiMatrix
      Common Stock”
shall
      mean the Common Stock, par value $0.001 per share, of CombiMatrix.

     

    “CombiMatrix
      Common Stock Options”
shall
      mean options to acquire CombiMatrix Common Stock.

     

    “CombiMatrix
      Group Employees and Former Employees”
shall
      mean individuals (i) who are employees of any member of the CombiMatrix Tax
      Group on the date of the event giving rise to a deduction in respect of any
      Compensation Payments made to such individuals or Stock Options held by such
      individuals or (ii) whose most recent employment with any member of the Acacia
      Tax Group or the CombiMatrix Tax Group prior to such date was more closely
      associated with the CombiMatrix Business or some other business rather than
      the
      Acacia Business.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    “CombiMatrix
      Tax Act”
shall
      have the meaning set forth in Section 3.02(a).

     

    “CombiMatrix
      Tax Group”
shall
      mean (i) CombiMatrix and (ii) any corporation or other legal entity set forth
      on
      Schedule 1.01.

     

    “CombiMatrix
      Tax Representation Letter”
shall
      mean the letter delivered by CombiMatrix to Acacia on the Distribution Date,
      substantially in the form set forth in Schedule 3.02(b).

     

    “Compensation
      Payments”
shall
      mean all non-qualified employee benefit plan and welfare benefit plan payments
      made under the Employee Matters Agreement dated the date hereof by and between
      Acacia and CombiMatrix.

     

    “Distribution”
shall
      mean the distribution of the CombiMatrix Common Stock on a pro rata basis to
      holders of CBMX Tracking Stock on the Distribution Date pursuant to the
      Distribution Agreement.

     

    “Distribution
      Agreement”
shall
      have the meaning ascribed thereto in Recital A of this Agreement.

     

    “Distribution
      Transaction”
shall
      mean any transaction undertaken in connection with the
      Distribution.

     

    “Distribution
      Date”
shall
      mean the date on which the Distribution occurs (or, if different, the date
      on
      which the Distribution is deemed to occur for U.S. federal Income Tax purposes).
      For purposes of this Agreement, the Distribution shall be deemed effective
      as of
      5:00 p.m. (Pacific Standard Time) on the Distribution Date.

     

    “Foreign
      Income Tax”
shall
      mean any Income Tax other than a U.S. federal, state or local Income
      Tax.

     

    “Foreign
      Income Tax Returns”
shall
      mean any Income Tax Return which is not a U.S. federal, state or local Income
      Tax Return.

     

    “Income
      Tax”
shall
      mean (a) any Tax based upon, measured by, or calculated with respect to (i)
      net
      income or profits (including, but not limited to, any capital gains, minimum
      Tax
      and any Tax on items of Tax preference, but not including sales, use, real
      or
      personal property, gross or net receipts, transfer or similar Taxes) or (ii)
      multiple bases (including, but not limited to, corporate franchise, doing
      business or occupation Taxes) if one or more of the bases upon which such Tax
      may be based, measured by, or calculated with respect to, is described in clause
      (i) above, or (b) any U.S. state or local franchise Tax; including in the case
      of each of (a) and (b) any related interest and any penalties, additions to
      such
      Tax or additional amounts imposed with respect thereto by any Tax
      Authority.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    “Income
      Tax Benefit”
shall
      mean for any taxable period the excess of (i) the hypothetical Income Tax
      liability of the taxpayer for the taxable period calculated as if the Timing
      Difference or Reverse Timing Difference, as the case may be, had not occurred
      but with all other facts unchanged, over (ii) the actual Income Tax liability
      of
      the taxpayer for the taxable period, calculated taking into account the Timing
      Difference or Reverse Timing Difference, as the case may be (treating an Income
      Tax refund or credit as a negative Income Tax liability for purposes of such
      calculation).

     

    “Income
      Tax Detriment”
shall
      mean for any taxable period the excess of (i) the actual Income Tax liability
      of
      the taxpayer for the taxable period, calculated taking into account the Timing
      Difference or Reverse Timing Difference, as the case may be, over (ii) the
      hypothetical Income Tax liability of the taxpayer for the taxable period,
      calculated as if the Timing Difference or Reverse Timing Difference, as the
      case
      may be, had not occurred but with all other facts unchanged (treating an Income
      Tax refund or credit as a negative Income Tax liability for purposes of such
      calculation).

     

    “Income
      Tax Return”
shall
      mean any Tax Return that relates to Income Taxes.

     

    “Indemnitee”
shall
      have the meaning set forth in Section 3.03.

     

    “Indemnitor”
shall
      have the meaning set forth in Section 3.03.

     

    “Indemnity
      Issue”
shall
      have the meaning set forth in Section 3.03.

     

    “IRS”
shall
      mean the Internal Revenue Service.

     

    “Non-Income
      Tax”
shall
      mean any Tax other than an Income Tax.

     

    “Person”
shall
      mean any individual, partnership, joint venture, corporation, limited liability
      entity, trust, unincorporated organization or other entity (including a
      governmental entity).

     

    “Post-Distribution
      Taxable Period”
shall
      mean a taxable period beginning after the Distribution Date.

     

    “Post-Distribution
      Tax Act”
shall
      have the meaning set forth in Section 3.01(a).

     

    “Post-Tax
      Indemnification Period”
shall
      mean any Post-Distribution Taxable Period and that portion of any Straddle
      Period that begins on the day after the Distribution Date.

     

    “Pre-Distribution
      Taxable Period”
shall
      mean a taxable period ending on or before the Distribution Date.

     

    “Restricted
      Stock”
shall
      mean CBMX Restricted Stock or CombiMatrix Restricted Stock.

     

    “Reverse
      Timing Difference”
shall
      mean an increase in income, gain or recapture, or a decrease in deduction,
      loss
      or credit, as calculated for Income Tax purposes, of the taxpayer for the Tax
      Indemnification Period coupled with an increase in deduction, loss or credit,
      or
      a decrease in income, gain or recapture, of the taxpayer for any Post-Tax
      Indemnification Period.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    “Rights”
shall
      have the meaning ascribed thereto in the Distribution Agreement.

     

    “Separation
      Agreements”
shall
      have the meaning ascribed thereto in the Distribution Agreement.

     

    “Stock
      Options”
shall
      mean CombiMatrix Common Stock Options or CBMX Tracking Stock
      Options.

     

    “Straddle
      Period”
shall
      mean a taxable period that includes but does not end on the Distribution
      Date.

     

    “Tax”
and
      “Taxes”
shall
      mean all forms of taxation, whenever created or imposed, and whether of the
      United States or elsewhere, and whether imposed by a federal, state, municipal,
      governmental, territorial, local, foreign or other body, and without limiting
      the generality of the foregoing, shall include net income, gross income, gross
      receipts, sales, use, value added, ad valorem, transfer, recording, franchise,
      profits, license, lease, service, service use, payroll, wage, withholding,
      employment, unemployment insurance, workers compensation, social security,
      excise, severance, stamp, business license, business organization, occupation,
      premium, property, environmental, windfall profits, customs, duties, alternative
      minimum, estimated or other taxes, fees, premiums, assessments or charges of
      any
      kind whatever imposed or collected by any governmental entity or political
      subdivision thereof, together with any related interest and any penalties,
      additions to such tax or additional amounts imposed with respect thereto by
      any
      Tax Authority.

     

    “Tax
      Authority”
shall
      mean, with respect to any Tax, any governmental entity, quasi-governmental
      body
      or political subdivision thereof that imposes such Tax and the agency (if any)
      charged with the determination or collection of such Tax for such entity, body
      or subdivision.

     

    “Tax
      Group”
shall
      mean the Acacia Tax Group or the CombiMatrix Tax Group, as the case may
      be.

     

    “Tax
      Indemnification Period”
shall
      mean any Pre-Distribution Taxable Period and that portion of any Straddle Period
      that ends on the Distribution Date.

     

    “Tax
      Return”
shall
      mean any return, filing, questionnaire, information return, election or other
      document required or permitted to be filed, including requests for extensions
      of
      time, filings made with respect to estimated tax payments, claims for refund
      and
      amended returns that may be filed, for any period with any Tax Authority
      (whether domestic or foreign) in connection with any Tax (whether or not a
      payment is required to be made with respect to such filing).

     

    “Timing
      Difference”
means
      an increase in income, gain or recapture, or a decrease in deduction, loss
      or
      credit, as calculated for Income Tax purposes, of the taxpayer for any Post-Tax
      Indemnification Period coupled with an increase in deduction, loss or credit,
      or
      a decrease in income, gain or recapture, of the taxpayer for the Tax
      Indemnification Period.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    Section
      1.02  Schedules,
      etc.
      References to a “Schedule”
are,
      unless otherwise specified, to a Schedule attached to this Agreement; references
      to “Section”
or
      “Article”
are,
      unless otherwise specified, to one of the Sections or Articles of this
      Agreement; references to “sub-section”
are,
      unless the context otherwise requires, references to the section in which the
      reference appears; and references to this Agreement include the
      Schedules.

     

    ARTICLE
      II

     

    FILING
      OF TAX RETURNS; PAYMENT OF TAXES; REFUNDS

     

    Section
      2.01  Preparation
      of Tax Returns.

     

    (a)  United
      States Federal Income Tax Returns.

     

    (i)  Acacia
      shall prepare and file or cause to be prepared and filed all U.S. federal Income
      Tax Returns (including amendments thereto) which are required to be filed in
      respect of (A) a member of the Acacia/CombiMatrix Tax Group for any
      Pre-Distribution Taxable Period or Straddle Period or (B) a member of the Acacia
      Tax Group for any Post-Distribution Taxable Period. CombiMatrix hereby
      irrevocably designates, and agrees to cause each of its affiliates to so
      designate, Acacia as its agent to take any and all actions necessary or
      incidental to the preparation and filing of such U.S. federal Income Tax Returns
      of Acacia’s affiliated group.

     

    (ii)  All
      U.S.
      federal Income Tax Returns (including amendments thereto) required to be filed
      in respect of a member of the CombiMatrix Tax Group which are not the
      responsibility of the Acacia Tax Group are the responsibility of the CombiMatrix
      Tax Group.

     

    (b)  United
      States State and Local Income Tax Returns.

     

    (i)  Acacia
      shall prepare and file or cause to be prepared and filed all U.S. state and
      local Income Tax Returns (including amendments thereto) which are required
      to be
      filed in respect of (A) a member of the Acacia/CombiMatrix Tax Group for any
      Pre-Distribution Taxable Period or Straddle Period including consolidated,
      combined and unitary Tax Returns including a member of the CombiMatrix Tax
      Group, (B) any member of the CombiMatrix Tax Group for any Pre-Distribution
      Period or Straddle Period in which it conducts or has conducted both an Acacia
      business and a CombiMatrix business or (C) a member of the Acacia Tax Group
      for
      any Post-Distribution Taxable Period. CombiMatrix hereby irrevocably designates,
      and agrees to cause each of its affiliates to so designate, Acacia as its agent
      to take any and all actions necessary or incidental to the preparation and
      filing of such U.S. state and local Income Tax Returns of members of the Acacia
      Tax Group.

     

    (ii)  All
      U.S.
      state and local Income Tax Returns (including amendments thereto) required
      to be
      filed in respect of a member of the CombiMatrix Tax Group which are not the
      responsibility of the Acacia Tax Group shall be the responsibility of the
      CombiMatrix Tax Group.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

       

    

    (c)  Foreign
      Income Tax Returns.

     

    (i)  Acacia
      shall prepare and file or cause to be prepared and filed all Foreign Income
      Tax
      Returns (including amendments thereto) which are required to be filed in respect
      of (A) a member of the Acacia Tax Group for any Pre-Distribution Taxable Period
      or Straddle Period, (B) a member of the CombiMatrix Tax Group for any
      Pre-Distribution Period or Straddle Period in which it conducts, or has
      conducted, both an Acacia business and a CombiMatrix business, or (C) a member
      of the Acacia Tax Group for any Post-Distribution Taxable Period. CombiMatrix
      hereby irrevocably designates, and agrees to cause each of its affiliates to
      so
      designate, Acacia as its agent to take any and all actions necessary or
      incidental to the preparation and filing of such Foreign Income Tax Returns
      of
      members of the Acacia Tax Group.

     

    (ii)  All
      Foreign Income Tax Returns (including amendments thereto) required to be filed
      in respect of a member of the CombiMatrix Tax Group which are not the
      responsibility of the Acacia Tax Group shall be the responsibility of the
      CombiMatrix Tax Group.

     

    (d)  Non-Income
      Tax Returns.

     

    (i)  Acacia
      shall prepare and file or cause to be prepared and filed all Tax Returns
      (including amendments thereto) which are Non-Income Tax Returns which are
      required to be filed in respect of (A) a member of the Acacia Tax Group for
      any
      Pre-Distribution Taxable Period or Straddle Period), (B) any member of the
      CombiMatrix Tax Group for any Pre-Distribution Period or Straddle Period in
      which it conducts or has conducted both an Acacia business and a CombiMatrix
      business or (C) a member of the Acacia Tax Group for any Post-Distribution
      Taxable Period. CombiMatrix hereby irrevocably designates, and agrees to cause
      each of its affiliates to so designate, Acacia as its agent to take any and
      all
      actions necessary or incidental to the preparation and filing of such non-U.S.
      federal Income Tax Returns.

     

    (ii)  All
      Non-Income Tax Returns (including amendments thereto) required to be filed
      in
      respect of a member of the CombiMatrix Tax Group which are not the
      responsibility of the Acacia Tax Group shall be the responsibility of the
      CombiMatrix Tax Group.

     

    (e)  Consistent
      with Past Practice; Review by Non-Responsible Party.
      Unless
      Acacia and CombiMatrix otherwise agree in writing, all Tax Returns (including
      amendments thereto) described in this Section 2.01 filed after the date of
      this
      Agreement for Pre-Distribution Taxable Periods or Straddle Periods, in the
      absence of a controlling change in law or circumstances, shall be prepared
      on a
      basis consistent with the elections, accounting methods, conventions and
      principles of taxation used for the most recent taxable periods for which Tax
      Returns involving similar matters have been filed. Upon the request of the
      non-responsible party, the party responsible under this Section 2.01 for
      preparation of a particular Tax Return for Pre-Distribution Taxable Periods
      or
      Straddle Periods shall make available a draft of such Tax Return (or relevant
      portions thereof) for review and comment by such non-responsible party. Subject
      to the provisions of this Agreement, all decisions relating to the preparation
      of Tax Returns shall be made in the sole discretion of the party responsible
      under this Agreement for such preparation.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

       

    

    (f)  Responsibility
      for Filing.
      Although, pursuant to this Agreement, Acacia or CombiMatrix may be responsible
      for filing a particular Tax Return, Acacia and CombiMatrix have agreed that
      the
      actual preparation and filing of certain Tax Returns will be done by the
      non-responsible party. Schedule 2.01(f) attached hereto sets forth a schedule
      specifying such Tax Returns. Acacia and CombiMatrix may agree from time to
      time
      to additions to or deletions from Schedule 2.01(f).

     

    Section
      2.02  Payment
      of Taxes.

     

    (a)  United
      States Federal Income Taxes.
      Except
      as otherwise provided in this Agreement:

     

    (i)  Acacia
      shall pay or cause to be paid, on a timely basis, all Taxes due with respect
      to
      the consolidated U.S. federal Income Tax liability for (A) all members of the
      Acacia Tax Group for any Pre-Distribution Taxable Period or Straddle Period,
      including consolidated Tax Returns also including a member of the CombiMatrix
      Tax Group, and (B) any member of the Acacia Tax Group for any Post-Distribution
      Taxable Period, provided,
      however,
      that
      CombiMatrix, on behalf of the CombiMatrix Tax Group hereby assumes and agrees
      to
      pay directly to or at the direction of Acacia, at least five days prior to
      the
      date payment (including estimated payment) thereof is due, the share of such
      U.S. federal Income Tax liability of any member of the CombiMatrix Tax Group
      attributable to the CombiMatrix business, assets or activities allocated between
      the Acacia Tax Group, on the one hand, and the CombiMatrix Tax Group, on the
      other hand, determined in a manner analogous to that set forth in Treasury
      Regulation Section 1.1552-1(a)(2).

     

    (ii)  CombiMatrix
      shall pay or cause to be paid, on a timely basis, all U.S. federal Income Taxes
      of the CombiMatrix Tax Group which are not the responsibility of the Acacia
      Tax
      Group.

     

    (b)  United
      States State and Local Income Taxes.
      Except
      as otherwise provided in this Agreement:

     

    (i)  Acacia
      shall pay or cause to be paid, on a timely basis, all Taxes due with respect
      to
      the state and local Income Tax liability for (A) all members of the Acacia
      Tax
      Group for any Pre-Distribution Taxable Period or Straddle Period, including
      consolidated, combined and unitary Tax Returns also including a member of the
      CombiMatrix Tax Group, (B) any member of the CombiMatrix Tax Group for any
      Pre-Distribution Period or Straddle Period in which it conducts or has conducted
      both an Acacia business and a CombiMatrix business, and (C) any member of
      the Acacia Tax Group for any Post-Distribution Taxable Period, provided,
      however,
      that
      CombiMatrix, on behalf of the CombiMatrix Tax Group hereby assumes and agrees
      to
      pay directly to or at the direction of Acacia, at least five days prior to
      the
      date payment (including estimated payment) thereof is due, the share of such
      U.S. state and local Income Tax liability of any member of the CombiMatrix
      Tax
      Group attributable to the CombiMatrix business, assets or activities allocated
      between the Acacia Tax Group, on the one hand, and the CombiMatrix Tax Group,
      on
      the other hand, determined in a manner analogous to that set forth in Treasury
      Regulation Section 1.1552-1(a)(2).

     

    
      
        
        

      

      
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    (ii)  CombiMatrix
      shall pay or cause to be paid, on a timely basis, all U.S. state and local
      Income Taxes of the CombiMatrix Tax Group which are not the responsibility
      of
      the Acacia Tax Group.

     

    (c)  Foreign
      Income Taxes.
      Except
      as otherwise provided in this Agreement:

     

    (i)  Acacia
      shall pay or cause to be paid, on a timely basis, all Taxes due with respect
      to
      the Foreign Income Tax liability for (A) all members of the Acacia Tax Group
      for
      any Pre-Distribution Taxable Period or Straddle Period, (B) any member of the
      CombiMatrix Tax Group for any Pre-Distribution Period or Straddle Period in
      which it conducts, or has conducted, both an Acacia business and a CombiMatrix
      business, or (C) any member of the Acacia Tax Group for any Post-Distribution
      Taxable Period, provided,
      however,
      that
      CombiMatrix, on behalf of the CombiMatrix Tax Group hereby assumes and agrees
      to
      pay directly to or at the direction of Acacia, at least five days prior to
      the
      date payment (including estimated payment) thereof is due, the share of such
      Foreign Income Tax liability of any member of the CombiMatrix Tax Group
      attributable to the CombiMatrix business, assets or activities allocated between
      the Acacia Tax Group, on the one hand, and the CombiMatrix Tax Group, on the
      other hand, determined in a manner analogous to that set forth in Treasury
      Regulation Section 1.1552-1(a)(2).

     

    (ii)  CombiMatrix
      shall pay or cause to be paid, on a timely basis, all Foreign Income Taxes
      which
      are not the responsibility of the Acacia Tax Group.

     

    (d)  Non-Income
      Taxes.
      Except
      as otherwise provided in this Agreement:

     

    (i)  Acacia
      shall pay or cause to be paid, on a timely basis, all Taxes which are Non-Income
      Taxes due with respect to the Tax liability for (A) all members of the Acacia
      Tax Group for any Pre-Distribution Taxable Period, Straddle Period or
      Post-Distribution Taxable Period, (B) any member of the CombiMatrix Tax Group
      for any Pre-Distribution Period or Straddle Period in which it conducts or
      has
      conducted both an Acacia business and a CombiMatrix business and (C) a member
      of
      the Acacia Tax Group for any Post-Distribution Taxable Period, provided,
      however,
      that
      CombiMatrix, on behalf of the CombiMatrix Tax Group hereby assumes and agrees
      to
      pay directly to or at the direction of Acacia, at least five days prior to
      the
      date payment (including estimated payment) thereof is due, the share of such
      Non-Income Tax liability of any member of the CombiMatrix Tax Group,
      attributable to the CombiMatrix business, assets or activities.

     

    (ii)  CombiMatrix
      shall pay or cause to be paid, on a timely basis, all Taxes which are Non-Income
      Taxes which are not the responsibility of the Acacia Tax Group.

     

    (e)  Employment
      Taxes.
      CombiMatrix shall pay or cause to be paid, on a timely basis, all employment
      Taxes for all Pre-Distribution Taxable Periods, Straddle Periods and
      Post-Distribution Taxable Periods attributable to (I) any employee of the
      CombiMatrix Tax Group on the day following the Distribution Date or (II) any
      individual who was neither an employee of the CombiMatrix Tax Group or the
      Acacia Tax Group on the day following the Distribution Date but whose most
      recent employment prior to the Distribution Date with any member of the
      CombiMatrix Tax Group or the Acacia Tax Group was more closely associated with
      the CombiMatrix Business rather than the Acacia Business.

     

    
      
        
        

      

      
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    (f)  Post-Distribution
      Date Taxes.
      Except
      as otherwise provided in this Agreement, all Taxes for all Post-Distribution
      Taxable Periods shall be paid or caused to be paid by the party responsible
      under this Agreement for filing the Tax Returns pursuant to which such Taxes
      are
      due or, if no such Tax Returns are due, by the party liable for such
      Taxes.

     

    (g)  Credit
      for Prior Tax Payments.
      To the
      extent any member of a Tax Group has made a payment of Taxes (including
      estimated Taxes) on or before the Distribution Date, the party liable for paying
      such Taxes under this Agreement shall be entitled to treat the payment as having
      been paid or caused to have been paid by such party, and such party shall not
      be
      required to reimburse the party which actually paid such Taxes.

     

    (h)  Responsibility
      for Payment; Notice of Payment Due.
      Although Acacia or CombiMatrix may be responsible for paying a particular Tax
      liability, Acacia and CombiMatrix may agree that the actual payment to a Taxing
      Authority of certain Tax liabilities will be made by the non-responsible party.
      Acacia and CombiMatrix may agree to prepare a schedule setting forth such Tax
      liabilities and may agree from time to time to additions to or deletions from
      such schedule. In each case where Acacia or CombiMatrix, as the case may be,
      is
      required to make payment of Taxes to the other party, Acacia or CombiMatrix,
      as
      the case may be shall notify the other party as to the amount of Taxes due
      from
      the other party at least five days prior to the date payment (including
      estimated payment) is due.

     

    Section
      2.03  Tax
      Refunds and Carrybacks.

     

    (a)  Retention
      and Payment of Tax Refunds.
      Except
      as otherwise provided in this Agreement, Acacia shall be entitled to retain,
      and
      to receive within ten days after Actually Realized by the CombiMatrix Tax Group,
      the portion of all refunds or credits of Taxes for which the Acacia Tax Group
      is
      liable pursuant to Section 2.02 or Section 3.01(a) or is treated as having
      paid
      or caused to have been paid pursuant to Section 2.02(d), and CombiMatrix shall
      be entitled to retain, and to receive within ten days after Actually Realized
      by
      the Acacia Tax Group, the portion of all refunds or credits of Taxes for which
      the CombiMatrix Tax Group is liable pursuant to Section 2.02 or Section 3.01(b)
      or is treated as having paid or caused to have been paid pursuant to Section
      2.02(d). The amount of any refund or credit of Taxes to which Acacia or
      CombiMatrix is entitled to retain or receive pursuant to the foregoing sentence
      shall be reduced to take account of any Taxes incurred by the CombiMatrix Tax
      Group, in the case of a refund or credit to which Acacia is entitled, or the
      Acacia Tax Group, in the case of a refund or credit to which CombiMatrix is
      entitled, upon the receipt of such refund or credit.

     

    (b)  Carrybacks;
      Carryforwards.
      Unless
      the parties otherwise agree in writing, CombiMatrix shall elect and shall cause
      each member of the CombiMatrix Tax Group to elect, where permitted by law,
      to
      carry forward any net operating loss, net capital loss, charitable contribution
      or other item arising after the Distribution Date that could, in the absence
      of
      such election, be carried back to a Pre-Distribution Taxable Period. Except
      as
      otherwise provided in this Agreement, notwithstanding the provisions of Section
      2.03(a), (i) any refund or credit of Taxes resulting from the carryback of
      any
      item of Taxes attributable to the CombiMatrix Tax Group arising in a Post-Tax
      Indemnification Period to a Tax Indemnification Period shall be for the account
      and benefit of the CombiMatrix Tax Group, (ii) any refund or credit of Taxes
      resulting from the carryback of any item of Taxes attributable to the Acacia
      Tax
      Group arising in a Post-Tax Indemnification Period to a Tax Indemnification
      Period shall be for the account and benefit of the Acacia Tax Group, and (iii)
      any refund or credit of Taxes resulting from a carryback of any item of federal
      Income Taxes attributable to the Acacia/CombiMatrix Tax Group (including
      derivative state and local refunds or credits) shall be for the account and
      benefit of the party to this Agreement that generated such benefit, which shall
      be determined on a case-by-case basis by a nationally recognized accounting
      firm
      selected by Acacia and reasonably satisfactory to CombiMatrix.

     

    
      
        
        

      

      
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    (c)  Refund
      Claims.
      Acacia
      shall be permitted to file at Acacia’s sole expense, and CombiMatrix shall
      reasonably cooperate with Acacia in connection with, any claims for refund
      of
      Taxes to which Acacia is entitled pursuant to this Section 2.03 or any other
      provision of this Agreement. Acacia shall reimburse CombiMatrix for any
      reasonable out-of-pocket costs and expenses incurred by any member of the
      CombiMatrix Tax Group in connection with such cooperation. CombiMatrix shall
      be
      permitted to file at CombiMatrix’s sole expense, and Acacia shall reasonably
      cooperate with CombiMatrix in connection with, any claims for refunds of Taxes
      to which CombiMatrix is entitled pursuant to this Section 2.03 or any other
      provision of this Agreement. CombiMatrix shall reimburse Acacia for any
      reasonable out-of-pocket costs and expenses incurred by any member of the Acacia
      Tax Group in connection with such cooperation.

     

    Section
      2.04  Allocation
      of Straddle Period Taxes.
      In the
      case of any Straddle Period:

     

    (a)  Periodic
      Taxes.
      (i) The
      periodic Taxes of a member of the Acacia Tax Group or the CombiMatrix Tax Group
      or its business, assets or activities that are not based on income or receipts
      (e.g.,
      property Taxes) for the portion of any Straddle Period ending on the
      Distribution Date shall be computed based on the ratio of the number of days
      in
      such portion of the Straddle Period and the number of days in the entire taxable
      period; and (ii) the periodic taxes of a member of the Acacia Tax Group or
      the
      CombiMatrix Tax Group or its business, assets or activities that are not based
      on income or receipts for the portion of any Straddle Period beginning on the
      day after the Distribution Date shall be computed based on the ratio of the
      number of days in such portion of the Straddle Period and the number of days
      in
      the entire taxable period.

     

    (b)  Non-Periodic
      Taxes.
      (i) The
      Taxes of a member of the Acacia Tax Group or the CombiMatrix Tax Group or its
      business, assets or activities for that portion of any Straddle Period ending
      on
      the Distribution Date (other than Taxes described in Section 2.04(a) above),
      shall be computed on a “closing-of-the-books” basis as if such taxable period
      ended as of the close of business on the Distribution Date, and, in the case
      of
      any Taxes of a member of the Acacia Tax Group or the CombiMatrix Tax Group
      or
      its business, assets or activities with respect to any equity interest in any
      partnership or other “flowthrough” entity, as if the taxable period of such
      partnership or other “flowthrough” entity ended on the Distribution Date; and
      (ii) the Taxes of a member of the Acacia Tax Group or the CombiMatrix Tax Group
      or its business, assets or activities for that portion of any Straddle Period
      beginning after the Distribution Date (other than Taxes described in Section
      2.04(a) above), shall be computed on a “closing-of-the-books” basis as if such
      taxable period began on the day after the Distribution Date, and, in the case
      of
      any Taxes of a member of the Acacia Tax Group or the CombiMatrix Tax Group
      or
      its business, assets or activities with respect to any equity interest in any
      partnership or other “flowthrough” entity, as if the taxable period of such
      partnership or other “flowthrough” entity began as of the day after the
      Distribution Date.

     

    
      
        
        

      

      
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    (c)  The
      Taxes
      of the Acacia Tax Group and the CombiMatrix Tax Group with respect to any Tax
      Return for a Straddle Period which includes a member of each of the Acacia
      Tax
      Group and the CombiMatrix Tax Group or their respective businesses, assets
      or
      activities shall be allocated between the Acacia Tax Group, on the one hand,
      and
      the CombiMatrix Tax Group, on the other hand, determined in a manner analogous
      to that set forth in Treasury Regulation Section 1.1552-1(a)(2).

     

    ARTICLE
      III


     

    TAX
      INDEMNIFICATION; TAX CONTESTS

     

    Section
      3.01  Indemnification.

     

    (a)  Acacia
      Indemnification.
      Subject
      to Section 3.01(b) and Section 3.02, Acacia shall indemnify, defend and hold
      harmless each member of the CombiMatrix Tax Group and each of their respective
      shareowners, directors, officers, employees and agents and each of the heirs,
      executors, successors and assigns of any of the foregoing from and
      against:

     

    (i)  all
      Taxes
      of the Acacia Tax Group other than any Taxes for which CombiMatrix is liable
      pursuant to Section 2.02(e);

     

    (ii)  all
      Taxes
      of the CombiMatrix Tax Group for all Pre-Distribution Taxable Periods and all
      Straddle Periods for which Acacia is liable pursuant to Section 2.02 or
      3.02;

     

    (iii)  all
      liability as a result of Treasury Regulation Section 1.1502-6(a) (which imposes
      several liability on members of an affiliated group that file a U.S. federal
      consolidated Income Tax return) or comparable U.S. state or local provision
      for
      Income Taxes of any person which is or has ever been affiliated with any member
      of the Acacia/CombiMatrix Tax Group or with which any member of the
      Acacia/CombiMatrix Tax Group joins or has ever joined (or is or has ever been
      required to join) in filing any consolidated, combined or unitary Income Tax
      Return for any Tax period ending on or before or including the Distribution
      Date
      except to the extent the CombiMatrix Tax Group is liable for such Taxes pursuant
      to Section 2.02 or 3.02;

     

    (iv)  all
      Taxes
      for any Tax period (whether beginning before, on or after the Distribution
      Date)
      that would not have been payable but for the breach by any member of the Acacia
      Tax Group of any representation, warranty, covenant or obligation under this
      Agreement;

     

    (v)  all
      liability for a breach by any member of the Acacia Tax Group of any
      representation, warranty, covenant or obligation under this
      Agreement;

     

    
      
        
        

      

      
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    (vi)  all
      Taxes
      imposed in connection with the transactions contemplated by the Separation
      Agreements or any other agreement entered into for the purpose of implementing
      the Distribution;

     

    (vii)  all
      Taxes
      for which Acacia is liable pursuant to Section 3.02; and

     

    (viii)  all
      liability for any reasonable legal, accounting, appraisal, consulting or similar
      fees and expenses relating to the foregoing.

     

    Notwithstanding
      the foregoing and subject to Section 3.01(b) and Section 3.02, Acacia shall
      not
      indemnify, defend or hold harmless any member of the CombiMatrix Tax Group
      from
      any liability for Taxes attributable to any action (including the making of
      an
      election under Section 338 of the Code) taken by any member of the CombiMatrix
      Tax Group after the Distribution (other than any such action expressly required
      or otherwise expressly contemplated by the Separation Agreements or any other
      agreement entered into for the purpose of implementing the Distribution or
      taken
      in the ordinary course of business) (a “Post-Distribution
      Tax Act”).

     

    (b)  CombiMatrix
      Indemnification.
      CombiMatrix shall be liable for, and shall indemnify, defend and hold harmless
      each member of the Acacia Tax Group and each of the respective shareowners,
      directors, officers, employees and agents and each of the heirs, executors,
      successors and assigns of any of the foregoing from and against:

     

    (i)  all
      Taxes
      of any member of the CombiMatrix Tax Group (other than Taxes for which Acacia
      provides indemnification pursuant to Section 3.01(a));

     

    (ii)  all
      Taxes
      for which CombiMatrix is liable pursuant to Section 2.02(e).

     

    (iii)  all
      Taxes
      for any Tax period (whether beginning before, on or after the Distribution
      Date)
      that would not have been payable but for the breach by any member of the
      CombiMatrix Tax Group of any representation, warranty, covenant or obligation
      under this Agreement;

     

    (iv)  all
      liability for a breach by any member of the CombiMatrix Tax Group of any
      representation, warranty, covenant or obligation under this
      Agreement;

     

    (v)  all
      Taxes
      for which CombiMatrix is liable pursuant to Section 3.02;

     

    (vi)  all
      Taxes
      attributable to a Post-Distribution Tax Act; and

     

    (vii)  all
      liability for any reasonable legal, accounting, appraisal, consulting or similar
      fees and expenses relating to the foregoing.

     

    Section
      3.02  CombiMatrix
      Tax Acts.

     

    (a)  Notwithstanding
      Section 3.01, CombiMatrix agrees to indemnify, defend and hold harmless each
      member of the Acacia Tax Group and each of the respective shareowners,
      directors, officers, employees and agents and each of the heirs, executors,
      successors and assigns of any of the foregoing from and against any Taxes
      resulting from any CombiMatrix Tax Act. A CombiMatrix Tax Act shall mean any
      action specified on Schedule 3.02(a) attached hereto.

     

    
      
        
        

      

      
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    (b)  CombiMatrix
      shall, and shall cause each member of the CombiMatrix Tax Group to, comply
      with
      and take no action inconsistent with the CombiMatrix Tax Representation Letter,
      unless, pursuant to a favorable ruling letter obtained from the IRS which is
      satisfactory to Acacia or the advice of Greenberg Traurig, LLP or other
      nationally recognized tax counsel to Acacia, which advice shall be satisfactory
      to Acacia, such act or omission would not adversely affect the U.S. federal
      Income Tax consequences of the Distribution to Acacia or the shareowners of
      Acacia. Notwithstanding Sections 3.01(b)(iv), 3.01(b)(v), and 3.01(b)(vii),
      the
      parties intend that the sole remedy for breach of the covenants contained in
      this Section 3.02(b) shall be as set forth in Section 3.02(a).

     

    (c)  Notwithstanding
      the foregoing, a CombiMatrix Tax Act shall not include any transaction or action
      specifically disclosed or specifically described in any of the Separation
      Agreements or, except as specifically set forth in Schedule 3.02(c) occurring
      on
      or prior to the Distribution Date, any action taken on or prior to the
      Distribution Date. A CombiMatrix Tax Act shall not include any action on the
      part of any member of the Acacia Tax Group.

     

    Section
      3.03  Notice
      of Indemnity.
      Whenever a party hereto (hereinafter an “Indemnitee”)
      becomes aware of the existence of an issue raised by any Tax Authority which
      could reasonably be expected to result in a determination that would increase
      the liability for any Tax of the other party hereto or any member of its Tax
      Group for any Tax period or require a payment hereunder by the other party
      (hereinafter an “Indemnity
      Issue”),
      the
      Indemnitee shall in good faith promptly give notice to such other party
      (hereinafter the “Indemnitor”)
      of
      such Indemnity Issue. The failure of the Indemnitee to give such notice shall
      not relieve the Indemnitor of its obligations under this Agreement, except
      to
      the extent such Indemnitor or a member of its Tax Group is actually prejudiced
      by such failure to give notice.

     

    Section
      3.04  Payments.

     

    (a)  Timing
      Adjustments.

     

    (i)  Timing
      Differences.
      If a
      Tax audit proceeding or an amendment of a Tax Return results in a Timing
      Difference, and such Timing Difference results in a decrease in an indemnity
      obligation Acacia has or would otherwise have under Section 3.01(a) and/or
      an
      increase in the amount of a Tax refund or credit to which Acacia is entitled
      under Section 2.03, then in each Post-Tax Indemnification Period in which the
      CombiMatrix Tax Group Actually Realizes an Income Tax Detriment, Acacia shall
      pay to CombiMatrix an amount equal to such Income Tax Detriment; provided,
      however,
      that
      the aggregate payments which Acacia shall be required to make under this Section
      3.04(a)(i) with respect to any Timing Difference shall not exceed the aggregate
      amount of the Income Tax Benefits realized by the Acacia Tax Group for all
      taxable periods and the CombiMatrix Tax Group for all Tax Indemnification
      Periods as a result of such Timing Difference. Acacia shall make all such
      payments within ten days after CombiMatrix notifies Acacia that the relevant
      Income Tax Detriment has been Actually Realized.

     

    
      
        
        

      

      
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    (ii)  Reverse
      Timing Differences.
      If a
      Tax audit proceeding or an amendment to a Tax Return results in a Reverse Timing
      Difference, and such Reverse Timing Difference results in an increase in an
      indemnity payment obligation of Acacia under Section 3.01(a) and/or a decrease
      in the amount of a Tax refund or credit to which Acacia is or would otherwise
      be
      entitled under Section 2.03, then in each Post-Tax Indemnification Period in
      which the CombiMatrix Tax Group Actually Realizes an Income Tax Benefit,
      CombiMatrix shall pay to Acacia within ten days after CombiMatrix has Actually
      Realized such Income Tax Benefit an amount equal to such Income Tax Benefit,
      provided,
      however,
      that
      the aggregate payments which CombiMatrix shall be required to make under this
      Section 3.04(a)(ii) with respect to Reverse Timing Differences shall not exceed
      the aggregate amount of the Income Tax Detriments realized by the CombiMatrix
      Tax Group and the Acacia Tax Group for all Tax Indemnification Periods as a
      result of such Reverse Timing Difference.

     

    (b)  Time
      for Payment.
      Except
      as otherwise provided in this Section 3.04(b), any indemnity payment required
      to
      be made pursuant to this Agreement shall be paid within thirty days after the
      indemnified party makes written demand upon the indemnifying party, provided
      that in no event shall such payment be required to be made earlier than five
      (5)
      Business Days prior to the date on which the relevant Taxes (including estimated
      Taxes) are required to be paid (or would be required to be paid if no such
      Taxes
      are due) to the relevant Tax Authority.

     

    (c)  Payments
      Net of Taxes and Tax Benefits.
      The
      amount of any payment under this Agreement shall be (i) reduced to take into
      account any net Tax benefit realized by the recipient’s Tax Group arising from
      the incurrence or payment by such recipient’s Tax Group of any amount in respect
      of which such payment is made and (ii) increased to take into account any net
      Tax cost incurred by the recipient’s Tax Group as a result of the receipt or
      accrual of payments hereunder (grossed-up for such increase), in each case
      determined by treating the recipient as recognizing all other items of income,
      gain, loss, deduction or credit before recognizing any item arising from the
      receipt of accrual of any payment hereunder. Except as otherwise provided in
      this Agreement or unless the parties otherwise agree to an alternative method
      for determining the present value of any such anticipated Tax benefit or Tax
      cost, any payment hereunder shall initially be made without regard to this
      section and shall be increased or reduced to reflect any such net Tax cost
      (including gross-up) or net Tax benefit only after the recipient’s Tax Group has
      Actually Realized such Tax cost or Tax benefit.

     

    (d)  Right
      to Offset.
      Any
      party making a payment under this Agreement shall have the right to reduce
      any
      such payment by any undisputed amounts owed to it by the other party to this
      Agreement.

     

    (e)  Characterization
      of Payments.
      It is
      the intention of the parties to this Agreement that 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, 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
      3.05  Tax
      Contests.
      The
      Indemnitor and its representatives, at the Indemnitor’s expense, shall be
      entitled to participate (a) in all conferences, meetings and proceedings with
      any Tax Authority, the subject matter of which is or includes an Indemnity
      Issue
      and (b) in all appearances before any court, the subject matter of which is
      or
      includes an Indemnity Issue. The party who has responsibility for filing the
      Tax
      Return under this Agreement (the “Responsible
      Party”)
      with
      respect to which there could be an increase in liability for any Tax or with
      respect to which a payment could be required hereunder shall have the right
      to
      decide as between the parties hereto how such matter is to be dealt with and
      finally resolved with the appropriate Tax Authority and shall control all audits
      and similar proceedings. If no Tax Return is or was required to be filed in
      respect of an Indemnity Issue, the Indemnitor shall be treated as the
      Responsible Party with respect thereto. The Responsible Party agrees to
      cooperate in the settlement of any Indemnity Issue with the other party and
      to
      take such other party’s interests into account.

     

    ARTICLE
      IV

     

    OPTIONS;
      COMPENSATION PAYMENTS;

    INTEREST
      CHARGE FOR LATE PAYMENTS;

    CURRENCY
      CALCULATIONS; EFFECTIVE TIME OF TRANSACTIONS

     

    Section
      4.01  Stock
      Options; Restricted Shares.

     

    (a)  Stock
      Option Adjustments.
      CBMX
      Tracking Stock Options outstanding at the time of the Distribution will be
      adjusted in accordance with the terms of the Employee Matters Agreement. Acacia
      Restricted Shares outstanding at the time of the Distribution will be adjusted
      in accordance with the terms of the underlying plan and award for such Acacia
      Restricted Shares and the Distribution Agreement.

     

    (b)  Tax
      Deductions.
      Notwithstanding anything to the contrary in this Agreement, unless the IRS
      issues a contrary private letter ruling to Acacia or CombiMatrix, or Acacia
      and
      CombiMatrix otherwise agree in writing, (i) the Acacia Tax Group (and not the
      CombiMatrix Tax Group) shall claim any Post-Distribution Date Tax deductions
      in
      respect of CBMX Tracking Stock Options exercised by, or Acacia Restricted Shares
      held by, Acacia Group Employees and Former Employees, (ii) the Acacia Tax Group
      (and not the CombiMatrix Tax Group) shall claim any Post-Distribution Date
      Tax
      deductions in respect of CombiMatrix Common Stock Options exercised by, or
      CombiMatrix Restricted Shares held by, Acacia Group Employees and Former
      Employees and Acacia shall pay to CombiMatrix the amount received as a result
      of
      any Tax benefit realized in respect of such Tax deductions within ten days
      after
      such amount is Actually Realized by Acacia, (iii) the CombiMatrix Tax Group
      (and
      not the Acacia Tax Group) shall claim any Post-Distribution Date Tax deductions
      in respect of CBMX Tracking Stock Options exercised by, or Acacia Restricted
      Shares held by, CombiMatrix Group Employees and Former Employees and CombiMatrix
      shall pay to Acacia the amount received as a result of any Tax benefit realized
      in respect of such Tax deductions within ten days after such amount is Actually
      Realized by CombiMatrix, and (iv) the CombiMatrix Tax Group (and not the Acacia
      Tax Group) shall claim the Post-Distribution Date Tax deductions in respect
      of
      the CombiMatrix Common Stock Options exercised by, or CombiMatrix Restricted
      Shares held by, CombiMatrix Group Employees and Former Employees.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

       

    

    (c)  Notices,
      Withholding, Reporting.

     

    (i)  Acacia
      shall promptly notify CombiMatrix of any post-Distribution Date event giving
      rise to income to any CombiMatrix Group Employees and Former Employees in
      connection with the CBMX Tracking Stock Options and Acacia Restricted Shares
      and, if required by law, CombiMatrix shall withhold applicable Taxes and satisfy
      applicable Tax reporting obligations in connection therewith. Acacia shall
      within ten days of demand thereof reimburse CombiMatrix for all reasonable
      out-of-pocket expenses incurred in connection with the CBMX Tracking Stock
      Options and Acacia Restricted Shares, including with respect to incremental
      Tax
      reporting obligations and any incremental employment Tax obligations; provided
      that CombiMatrix shall use reasonable efforts to collect any such amounts
      required to be paid by CombiMatrix Group Employees and Former Employees from
      such CombiMatrix Group Employees and Former Employees.

     

    (ii)  CombiMatrix
      shall promptly notify Acacia of any post-Distribution Date event giving rise
      to
      income to any non-CombiMatrix Group Employees and Former Employees in connection
      with the CombiMatrix Common Stock Options and CombiMatrix Restricted Shares
      and,
      if required by law, Acacia shall withhold applicable Taxes and satisfy
      applicable Tax reporting obligations in connection therewith. CombiMatrix shall
      within ten days of demand thereof reimburse Acacia for all reasonable
      out-of-pocket expenses incurred in connection with the CombiMatrix Common Stock
      Options and CombiMatrix Restricted Shares, including with respect to incremental
      Tax reporting obligations and any incremental employment Tax obligations;
      provided that Acacia shall use reasonable efforts to collect any such amounts
      required to be paid by non-CombiMatrix Group Employees and Former Employees
      from
      such non-CombiMatrix Group Employees and Former Employees.

     

    (d)  Tax
      Audit Adjustments.
      Notwithstanding the provisions of Section 4.01(b), in the event a Tax audit
      proceeding shall determine (by settlement or otherwise), or the parties
      otherwise determine pursuant to Section 4.03, that all or a portion of the
      Tax
      deductions in respect of CBMX Tracking Stock Options and Acacia Restricted
      Shares or CombiMatrix Common Stock Options and CombiMatrix Restricted Shares
      should have been claimed by the CombiMatrix Tax Group or the Acacia Tax Group,
      respectively, the CombiMatrix Tax Group or the Acacia Tax Group, respectively,
      shall claim such Tax deductions (by an amended Tax Return or otherwise) and
      shall pay to Acacia or CombiMatrix, as the case may be, the amount of any Tax
      refund or credit arising in respect of such Tax deduction within ten days after
      such Tax refund or credit is Actually Realized by the CombiMatrix Tax Group
      or
      the Acacia Tax Group, as the case may be.

     

    (e)  Status
      of Directors.
      For
      purposes of this Section 4.01 (except as it relates to employment and
      withholding Taxes), (i) Acacia or CombiMatrix Common Stock Options and
      Restricted Shares held by present or former non-employee members of the Acacia
      Board of Directors shall be treated as held by present or former employees
      of
      Acacia, (ii) Acacia or CombiMatrix Common Stock Options and Restricted Shares
      held by present or former non-employee members of the CombiMatrix Board of
      Directors shall be treated as held by present or former employees of
      CombiMatrix, and (iii) notwithstanding (i) or (ii) above, Acacia or CombiMatrix
      Common Stock Options and Restricted Shares held by individuals who, as of the
      Distribution Date, were both non-employee members of the Acacia Board of
      Directors and non-employee members of the CombiMatrix Board of Directors shall
      be treated as (A) employees of Acacia with respect to CBMX Tracking Stock
      Options exercised by, or Acacia Restricted Shares held by, such individuals
      and
      (B) employees of CombiMatrix with respect to CombiMatrix Common Stock Options
      exercised by, or CombiMatrix Restricted Shares held by, such
      individuals.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

       

    

    Section
      4.02  Compensation
      Payments.

     

    (a)  Tax
      Deductions.
      Notwithstanding anything to the contrary in this Agreement, unless Acacia and
      CombiMatrix otherwise agree in writing, (i) the CombiMatrix Tax Group (and
      not
      the Acacia Tax Group) shall claim the Post-Distribution Date Tax deductions
      in
      respect of Compensation Payments paid by the CombiMatrix Tax Group to all other
      CombiMatrix Group Employees and Former Employees, and (ii) the Acacia Tax Group
      (and not the CombiMatrix Tax Group) shall claim the Post-Distribution Date
      Tax
      deductions in respect of Compensation Payments paid by the Acacia Tax Group
      to
      all other CombiMatrix Group Employees and Former Employees.

     

    (b)  Notices,
      Withholding, Reporting.
      The
      party responsible for making the Compensation Payments pursuant to the Employee
      Matters Agreement shall withhold applicable Taxes and satisfy applicable Tax
      reporting obligations in connection with the Compensation Payments made to
      all
      CombiMatrix Group Employees and Former Employees.

     

    (c)  Tax
      Audit Adjustments.
      Notwithstanding the provisions of Section 4.02(a), in the event a Tax audit
      proceeding shall determine (by settlement or otherwise), or the parties
      otherwise determine pursuant to Section 4.03, that all or a portion of the
      Tax
      deductions in respect of Compensation Payments paid to CombiMatrix Group
      Employees and Former Employees was not available to the party claiming the
      Tax
      deduction, then the appropriate party shall claim such Tax deductions (by an
      amended Tax Return or otherwise) and shall pay to the party which had previously
      claimed such Tax deduction, within ten days after such Tax deduction has been
      Actually Realized by the such appropriate party, the amount of the resulting
      Tax
      benefit to such appropriate party.

     

    Section
      4.03  Change
      in Law.
      Notwithstanding the agreement with respect to reporting of Tax items and the
      claiming of the deductions set forth in Article 4 of this Agreement, neither
      the
      CombiMatrix Tax Group nor the Acacia Tax Group shall have any obligation to
      report any such Tax items or claim such deductions as set forth in such Article
      in the event that either such party determines, based on an opinion of
      nationally recognized tax counsel, which opinion shall be satisfactory to the
      other party, that there is no substantial authority to support reporting such
      Tax items or claiming such deductions on a Tax Return filed by such party as
      a
      result of a change in or amendment to any law or regulation, or any change
      in
      the official interpretation thereof, effective or occurring after the date
      of
      this Agreement, and such Tax Group provides prompt notice to the other Tax
      Group
      of any such determination.

     

    Section
      4.04  Interest
      Charge for Late Payments.
      Any
      amount due and owing by one party to the other party pursuant to this Agreement
      that is not paid when due shall bear interest from the due date thereof until
      paid at a rate equal to the JPMorgan Chase Bank base rate in effect from time
      to
      time during such period plus 1%.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

       

    

    Section
      4.05  Currency
      Calculations.
      All
      currency calculations shall be made in accordance with Section 7.09 of the
      Distribution Agreement.

     

    Section
      4.06  Effective
      Time of Transaction.
      Acacia
      and CombiMatrix agree that any transaction that, pursuant to the Distribution
      Agreement, is expressly effective immediately after the Time of Distribution
      shall be treated for federal Income Tax purposes as occurring at the beginning
      of the day following the Distribution Date.

     

    ARTICLE
      V


     

    COOPERATION
      AND EXCHANGE OF INFORMATION

     

    Section
      5.01  Inconsistent
      Actions.
      Each
      party to this Agreement agrees (i) to, and to cause each of the relevant members
      of its Tax Group to, report the Distribution as a transaction described in
      Section 368(a)(1)(D) of the Code on all Tax Returns and other filings, (ii)
      to
      use its best efforts to ensure that the Distribution receives such treatment
      for
      U.S. federal Income Tax purposes and (iii) that, unless it has obtained the
      prior written consent of the other party, it (and the members of its Tax Group)
      shall not take any action inconsistent with, or fail to take any action required
      by, the Separation Agreements.

     

    Section
      5.02  Cooperation
      and Exchange of Information.
      Each
      party hereto agrees to provide, and to cause each member of its Tax Group to
      provide, such cooperation and information as such other party shall request,
      on
      a timely basis, in connection with the preparation or filing of any Tax Return
      or claim for Tax refund not inconsistent with this Agreement or in conducting
      any Tax audit, Tax dispute, or otherwise in respect of Taxes or to carry out
      the
      provisions of this Agreement. To the extent necessary to carry out the purposes
      of this Agreement and subject to the other provisions of this Agreement, such
      cooperation and information shall include without limitation the non-exclusive
      designation of an officer of Acacia as an officer of CombiMatrix and each of
      its
      affiliates (for the purpose of signing Tax Returns, cashing refund checks,
      pursuing refund claims, dealing with Tax Authorities and defending audits);
      promptly forwarding to the other party, where relevant, copies of appropriate
      notices and forms or other communications received from or sent to any Tax
      Authority which relate to the Tax Indemnification Period; providing copies
      of
      all relevant Tax Returns for the Tax Indemnification Period, together with
      accompanying schedules and related workpapers, documents relating to rulings
      or
      other determinations by Tax Authorities, including without limitation, foreign
      Tax Authorities, and records concerning the ownership and Tax basis of property,
      which either party may possess; and making its employees involved in the
      research and development process available to the other party and having such
      employees provide such assistance as the other party may require for such
      purposes, provided, however, that neither party shall be obligated to provide
      the other party Tax Returns, documentation or other information of a proprietary
      or confidential nature for purposes of verifying any calculation, and provided
      further, that in any such case where one party does not provide the other party
      with Tax Returns, documentation or information because it is proprietary or
      confidential, both parties shall cooperate in developing mutually acceptable
      procedures including retaining a mutually agreeable accounting firm to review
      such Tax Returns, documentation or information for purposes of verifying such
      calculation. Subject to the rights of the CombiMatrix Tax Group under the other
      provisions of this Agreement, such officer shall have the authority to execute
      powers of attorney (including Form 2848) on behalf of each member of the
      CombiMatrix Tax Group with respect to Tax Returns for the Tax Indemnification
      Period. Each party to this Agreement shall make, or shall cause its affiliates
      to make, its employees and facilities available on a mutually convenient basis
      to provide an explanation of any documents or information provided
      hereunder.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

       

    

    Section
      5.03  Tax
      Records.

     

    (a)  Acacia
      and CombiMatrix agree to (and to cause each member of their respective Tax
      Group
      to) (i) retain all Tax Returns, related schedules and workpapers, and all
      material records and other documents as required under Section 6001 of the
      Code
      and the regulations promulgated thereunder relating thereto existing on the
      date
      hereof or created through the Distribution Date, for a period of at least ten
      years following the Distribution Date and (ii) allow the party to this
      Agreement, at times and dates reasonably acceptable to the retaining party,
      to
      inspect, review and make copies of such records, as Acacia and CombiMatrix
      may
      reasonably deem necessary or appropriate from time to time. In addition, after
      the expiration of such ten-year period, such Tax Returns, related schedules
      and
      workpapers, and material records shall not be destroyed or otherwise disposed
      of
      at any time, unless, prior to such destruction or disposal, (A) the party
      proposing to destroy or otherwise dispose of such records shall provide no
      less
      than 30 days’ prior written notice to the other party, specifying in reasonable
      detail the records proposed to be destroyed or disposed of and (B) if a
      recipient of such notice shall request in writing prior to the scheduled date
      for such destruction or disposal that any of the records proposed to be
      destroyed or disposed of be delivered to such requesting party, the party
      proposing the destruction or disposal shall promptly arrange for the delivery
      of
      such requested records at the expense of the party requesting such
      records.

     

    (b)  Notwithstanding
      anything in this Agreement to the contrary, if any party fails to comply with
      the requirements of Section 5.05(a) hereof, the party failing so to comply
      shall
      be liable for, and shall hold the other party, harmless from, any Taxes
      (including without limitation, penalties for failure to comply with the record
      retention requirements of the Code) and other costs resulting from such party’s
      failure to comply.

     

    ARTICLE
      VI

     

    MISCELLANEOUS

     

    Section
      6.01  Entire
      Agreement; Construction.
      This
      Agreement, the Distribution Agreement, the other Separation Agreements,
      including any annexes, schedules and exhibits hereto or thereto, and other
      agreements and documents referred to herein and therein, will together
      constitute the entire agreement between the parties with respect to the subject
      matter hereof and thereof and will supersede all prior negotiations, agreements
      and understandings of the parties of any nature, whether oral or written, with
      respect to such subject matter. Notwithstanding any other provisions in the
      Separation Agreements to the contrary, in the event and to the extent that
      there
      is a conflict relating to Taxes between the provisions of this Agreement and
      the
      provisions of the Distribution Agreement or any other Separation Agreement,
      the
      provisions of this Agreement will control.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

       

    

    Section
      6.02  Effectiveness.
      All
      covenants and agreements of the parties contained in this Agreement shall be
      subject to and conditioned upon the Distribution becoming
      effective.

     

    Section
      6.03  Survival
      of Agreements.
      Except
      as otherwise contemplated by the Separation Agreements, all covenants and
      agreements of the parties contained in this Agreement will remain in full force
      and effect and survive the Time of Distribution.

     

    Section
      6.04  Governing
      Law.
      This
      Agreement will be governed by and construed in accordance with the internal
      laws
      of the State of Delaware applicable to contracts made and to be performed
      entirely within such State, without regard to the conflicts of law principles
      of
      such State.

     

    Section
      6.05  Notices.
      All
      notices, requests, claims, demands and other communications required or
      permitted to be given hereunder will be in writing and will be delivered by
      hand, telecopied, e-mailed or sent, postage prepaid, by registered, certified
      or
      express mail or reputable overnight courier service and will be deemed given
      when so delivered by hand or telecopied, when e-mail confirmation is received
      if
      delivered by e-mail, or three (3) Business Days after being so mailed (one
      (1)
      Business Day in the case of express mail or overnight courier service). All
      such
      notices, requests, claims, demands and other communications will be addressed
      as
      set forth in Section 7.04 of the Distribution Agreement, or pursuant to such
      other instructions as may be designated in writing by the party to receive
      such
      notice.

     

    Section
      6.06  Amendments.
      This
      Agreement may not be amended, modified or supplemented except by a written
      agreement executed by Acacia and CombiMatrix.

     

    Section
      6.07  Successors
      and Assigns.
      Neither
      party to this Agreement will convey, assign or otherwise transfer any of its
      rights or obligations under this Agreement without the prior written consent
      of
      the other party in its sole and absolute discretion other than as expressly
      provided herein, any party may (without obtaining any consent) assign any of
      its
      rights hereunder to a successor to all or any part of its business. Any such
      conveyance, assignment or transfer requiring the prior written consent of
      another party which is made without such consent will be void ab
      initio.
      No
      assignment of this Agreement will relieve the assigning party of its obligations
      hereunder.

     

    Section
      6.08  Captions;
      Currency.
      The
      article, section and paragraph captions herein and the table of contents hereto
      are for convenience of reference only, do not constitute part of this Agreement
      and will not be deemed to limit or otherwise affect any of the provisions
      hereof. Unless otherwise specified, all references herein to numbered articles
      or sections are to articles and sections of this Agreement and all references
      herein to schedules are to schedules to this Agreement. Unless otherwise
      specified, all references contained in this Agreement or in any schedule
      referred to herein to dollars or “$” shall mean U.S. dollars.

     

    Section
      6.09  Severability.
      If any
      provision of this Agreement or the application thereof to any person or
      circumstance is determined by a court of competent jurisdiction to be invalid,
      void or unenforceable, the remaining provisions hereof, or the application
      of
      such provision to persons or circumstances other than those as to which it
      has
      been held invalid or unenforceable, will remain in full force and effect and
      will in no way be affected, impaired or invalidated thereby. If the economic
      or
      legal substance of the transactions contemplated hereby is affected in any
      manner adverse to any party as a result thereof, the parties will negotiate
      in
      good faith in an effort to agree upon a suitable and equitable substitute
      provision to effect the original intent of the parties.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

       

    

    Section
      6.10  Parties
      in Interest.
      Except
      for the provisions of Article III relating to Tax Indemnification, this
      Agreement is solely for the benefit of the parties hereto and the respective
      members of their Tax Group and should not be deemed to confer upon third parties
      (including any employee of Acacia or CombiMatrix or of any Acacia or CombiMatrix
      subsidiary) any remedy, claim, reimbursement, claim of action or other right
      in
      excess of those existing without reference to this Agreement.

     

    Section
      6.11  Schedules.
      All
      schedules attached hereto are hereby incorporated in and made a part of this
      Agreement as if set forth in full herein. Capitalized terms used in the
      schedules hereto but not otherwise defined therein will have the respective
      meanings assigned to such terms in this Agreement.

     

    Section
      6.12  Termination.
      This
      Agreement may be terminated and the Distribution abandoned at any time prior
      to
      the Distribution Date by and in the sole discretion of the Acacia Board without
      the approval of CombiMatrix or Acacia’s shareowners. In the event of such
      termination, neither party will have any liability of any kind to the other
      party on account of such termination.

     

    Section
      6.13  Waivers;
      Remedies.
      No
      failure or delay by any party hereto in exercising any right, power or privilege
      hereunder will operate as a waiver thereof, nor will any waiver on the part
      of
      any party hereto of any right, power or privilege hereunder operate as a waiver
      of any other right, power or privilege hereunder, nor will any single or partial
      exercise of any right, power or privilege hereunder preclude any other or
      further exercise thereof or the exercise of any other right, power or privilege
      hereunder. Subject to Section 6.17, the rights and remedies herein provided
      are
      cumulative and are not exclusive of any rights or remedies which the parties
      may
      otherwise have at law or in equity.

     

    Section
      6.14  Counterparts.
      This
      Agreement may be executed in separate counterparts, each such counterpart being
      deemed to be an original instrument, and all such counterparts will together
      constitute the same agreement. This Agreement may be executed and delivered
      by
      telecopier with the same force and effect as if it were a manually executed
      and
      delivered counterpart.

     

    Section
      6.15  Performance.
      Each
      party hereto will cause to be performed, and hereby guarantees the performance
      of all actions, agreements and obligations set forth herein to be performed
      by
      any subsidiary or any member of such party’s Tax Group.

     

    Section
      6.16  Interpretation.
      Any
      reference to any federal, state, local, or foreign law shall be deemed also
      to
      refer to all rules and regulations promulgated thereunder, unless the context
      requires otherwise. For the purposes of this Agreement, (i) words in the
      singular shall be held to include the plural and vice
      versa
      and
      words of one gender shall be held to include the other gender as the context
      requires, (ii) the terms “hereof”, “herein”, and “herewith” and words of similar
      import shall, unless otherwise stated, be construed to refer to this Agreement
      as a whole and not to any particular provision of this Agreement and (iii)
      the
      word “including” and words of similar import when used in this Agreement shall
      mean “including, without limitation”.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

       

    

    Section
      6.17  Dispute
      Resolution.
      Any
      dispute, claim or controversy arising out of or relating to any provision of
      this Agreement or the breach, performance or validity thereof will be resolved
      in accordance with the procedures set forth in Section 7.05 of the Distribution
      Agreement.

     

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    


    [Signature
      Page to Tax Allocation Agreement]


     

    IN
      WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
      duly
      authorized officers of the parties as of the date first hereinabove
      written.

     

     

    
      	 	
              ACACIA
                RESEARCH CORPORATION

               

               

              By:
                        /s/ Paul
                Ryan                                                                    

                   Name:  
                Paul
                Ryan

                    
Title:    
                President
                and Chairman of Board 

               

            
	 	
              COMBIMATRIX
                CORPORATION

               

               

              By:          
                /s/ Amit
                Kumar                                                               

                    Name:   
                Amit
                Kumar

                     
Title:     
                President

            


    

    


    


    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    


    Schedule
      1.01

     

    CombiMatrix
      Tax Group, Members

     

    
      	
              Existing
                Companies

            	
              Country

            
	
              1.
                CombiMatrix Corporation

            	
              US

            
	
              2.
                CombiMatrix K.K.

            	
              Japan

            
	
              3.
                Advanced Material Sciences

            	
              US

            
	
              4.
                CombiMatrix Molecular Diagnostics, Inc.

            	
              US

            
	
              5.
                CombiMatrix International Holding Corporation

            	
              US

            
	
              6.
                Leuchemix, Inc.

            	
              US

            


    

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    



    Schedule
      2.01(f)

    Tax
      Returns To Be Filed By Non-Responsible Party

     

    None

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      3.02(a)

     

    CombiMatrix
      Tax Act

     

    The
      actions which shall constitute a “CombiMatrix
      Tax Act”
shall
      mean:

     

    § 355
      Split-off Reorganization of CombiMatrix

     

    
      	 	
              --

            	
              The
                failure of CombiMatrix to directly continue the active conduct of
                the
                historic businesses conducted throughout the five-year period prior
                to the
                Distribution Date using its employees and/or those of its subsidiaries
                to
                perform active and substantial management and operational
                functions.

            


    

     

    
      	 	
              --

            	
              The
                consummation of any transaction or transactions (including making
                any
                change in equity structure (in terms of either value or voting power),
                or
                transactions pursuant to any agreement, understanding, arrangement
                or
                substantial negotiations of any member of the Acacia Tax Group or
                any
                member of the CombiMatrix Tax Group occurring prior to, on or after
                the
                Distribution) pursuant to which one or more persons acquire directly
                or
                indirectly stock possessing 50% or more of the total combined voting
                power
                of all classes of stock of CombiMatrix (or any successor thereto)
                entitled
                to vote or stock possessing 50% or more of the total value of all
                classes
                of stock of CombiMatrix (or are treated as acquiring such interest
                pursuant to Section 355(e) as a result of the acquisition of assets
                of
                CombiMatrix or otherwise) taking into account as may be relevant
                under
                Section 355(e) acquisitions of stock of Acacia or CombiMatrix (or
                any
                successor thereto) occurring prior to, on or after the
                Distribution.

            


    

     

    
      	 	
              --

            	
              The
                liquidation or partial liquidation of CombiMatrix, the merger into
                or
                consolidation with any corporation, or the sale or other disposition
                of
                the assets of CombiMatrix, other than (i) sales or dispositions in
                the
                ordinary course of business or (ii) transactions described in Section
                368(a)(2)(C) of the Code.

            


    

     

    
      	 	
              --

            	
              The
                failure of the Distribution to qualify as a Code Section 368(a)(1)(D)
                split-off reorganization because of a transfer of assets held by
                CombiMatrix to an affiliate in a transaction described in Section
                351 or
                Section 118 of the Code.

            


    

     

    
      	 	
              --

            	
              The
                failure of CombiMatrix to satisfy the “active trade or business” test of
                Section 355(b) of the Code.

            


    

     

    
      	 	
              --

            	
              The
                failure of the distribution of the stock of CombiMatrix to satisfy
                the
                Code Section 355 “control” requirement because of negotiations, agreements
                or arrangements prior to the Distribution that are associated with
                a
                post-Distribution event.

            


    

     

    
      	 	
              --

            	
              Any
                act or conduct undertaken by CombiMatrix or any member of the CombiMatrix
                Tax Group which causes the Distribution to be taxable to Acacia or
                any
                member of the Acacia Tax Group.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    Schedule
      3.02(b)

     

    CombiMatrix
      Tax Representation Letter

     

    CombiMatrix
      Corporation

    6500
      Harbour Heights Parkway

    Suite
      301

    Mukilteo,
      WA 98275

    
 

    December
      [__], 2006

    Acacia
      Research Corporation

    500
      Newport Center Dr., 7th Floor

    Newport
      Beach, CA 92660

     

    Dear
      Sirs:

     

    In
      connection with the proposed Distribution, as that term is defined and described
      in the Distribution Agreement dated as of December [___], 2006 (the
“Distribution Agreement”), between Acacia Research Corporation., a Delaware
      corporation (“Acacia”), and CombiMatrix Corporation, a Delaware corporation and
      a wholly owned subsidiary of Acacia (“CombiMatrix”), Greenberg Traurig, LLP
      (“GT”) will render its opinion (“Opinion”) with respect to certain United States
      federal income tax consequences of the Distribution. In connection with the
      issuance of the Opinion, GT has requested from Acacia, and Acacia has agreed
      to
      provide to GT, certain representations and warranties concerning CombiMatrix
      and
      the Distribution (“Acacia Tax Representations”). Acacia, in turn, has requested
      from CombiMatrix certain representation and warranties to enable Acacia to
      provide the Acacia Tax Representations. 

     

    Accordingly,
      the undersigned officer of CombiMatrix hereby represents and certifies to
      Acacia, after due inquiry and investigation, that the facts which are described
      herein are true, correct and complete in all material respects, and further
      certifies as follows (capitalized terms used herein and not otherwise defined
      herein shall have the respective meanings attributed thereto in the Tax
      Allocation Agreement, dated as of December [___], 2006 (the “Tax Allocation
      Agreement”) between Acacia and CombiMatrix):

     

    1.    CombiMatrix
      was incorporated in California in 1995, reincorporated in Delaware in 2000,
      and
      reorganized on December 13, 2002, as the result of a forward triangular tax-free
      merger into a wholly-owned subsidiary of Acacia. CombiMatrix files its federal
      income tax returns on a December 31 year basis.

    


    2.    Immediately
      prior to the Distribution, CombiMatrix will have outstanding one class of stock,
      the CombiMatrix Common Stock, all of which will be owned by Acacia.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    3.    To
      the
      best of CombiMatrix’s knowledge, CombiMatrix has not been a United States real
      property holding corporation, as defined in Section 897(c)(2) of the Code,
      at
      any time during the five-year period ending on the date of the Distribution,
      and
      CombiMatrix will not be a United States real property holding corporation
      immediately after the Distribution.

    


    4.    To
      the
      best of CombiMatrix’s knowledge, there are no planned or intended stock
      issuances, redemptions or dispositions of the stock of CombiMatrix aside from
      (i) any necessary recapitalization of CombiMatrix Common Stock prior to the
      Distribution so that the number of outstanding shares of CombiMatrix Common
      Stock are equal to the number of outstanding shares of Acacia
      Research--CombiMatrix common stock (the “Tracking Stock”), (ii) the payment
      of cash in lieu of fractional shares in the Distribution, (iii) the
      issuance of any CombiMatrix Common Stock in connection with various benefit
      plans or upon the exercise of any warrants (described in 10 below), and
 (iv) the issuance of shares in a financing that is not part of a plan or
      series of related transactions pursuant to which one or more persons will
      acquire, directly or indirectly, a 50% or greater interest (measured by either
      vote or value) in CombiMatrix. The payment of cash in lieu of fractional
      shares of CombiMatrix is solely for the purposes of avoiding the expense and
      inconvenience to CombiMatrix of issuing fractional shares and does not represent
      separately bargained-for consideration. The method used for handling fractional
      share interests is designed to limit the amount of cash received by any one
      shareholder to less than the value of one full share of CombiMatrix Common
      Stock.

    


    5.    Acacia
      has maintained “control” of CombiMatrix within the meaning of Sections
      368(a)(1)(D) and 368(c) of the Code since December 13, 2002. Taking into account
      the CombiMatrix fractional shares, as described above, Acacia’s shareholders
      will be in “control” of CombiMatrix immediately after the
      Distribution.

    


    6.    The
      fair
      market value of the CombiMatrix Common Stock and other consideration to be
      received by each shareholder of Acacia will be approximately equal to the fair
      market value of the CombiMatrix Tracking Stock surrendered by the shareholders
      in the exchange.

    


    7.    Immediately
      prior to the Distribution, Acacia will recapitalize CombiMatrix so that the
      number of outstanding shares of CombiMatrix Common Stock are equal to the number
      of outstanding shares of CombiMatrix Tracking Stock.

    


    8.    CombiMatrix
      will not have any debt (long-term or short-term) owed to unrelated third party
      creditors at the time of the Distribution.

    


    9.    Any
      intercompany debt owed by CombiMatrix and its subsidiaries to Acacia and its
      subsidiaries will be settled and eliminated. No intercompany debt will exist
      between the Acacia Tax Group and the CombiMatrix Tax Group immediately after
      the
      Distribution other than (1) intercompany debt that will be repaid in connection
      with the Distribution and (ii) certain obligations pursuant to the Distribution
      Agreement.

    


    10.         
      At
      the
      time of Distribution, CombiMatrix will issue to the persons specified on
Schedule
      1,
      warrants to purchase a number of shares of CombiMatrix Common Stock
      (“CombiMatrix Warrant”), in respect of a warrant currently held by such persons
      to purchase the number of shares of CombiMatrix Tracking Stock (“AR-CBMX
      Warrant”). At the time of the Distribution, the AR-CBMX Warrant will be adjusted
      to become, in addition to the AR-CBMX Warrant, the CombiMatrix Warrant. The
      exercise prices of the CombiMatrix Warrant and the AR-CBMX Warrant and the
      number of shares subject to such warrants will be adjusted using a formula
      that
      will ensure that (1) the aggregate intrinsic values of the warrants
      immediately before and after the Distribution are the same, (2) the ratio
      of the exercise price per warrant to the market value per share is the same
      immediately before and after the Distribution, and (3) the vesting
      provisions and exercise period of the CombiMatrix Warrant are the same as the
      original vesting provisions and exercise period of the AR-CBMX
      Warrant.

    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    11.    None
      of
      the CombiMatrix Warrants should be considered a stock interest.

    


    12.    Aside
      from the CombiMatrix Common Stock outstanding at the time of the Distribution,
      CombiMatrix will have no stock interests outstanding at the time of the
      Distribution.

    


    13.    None
      of
      the shareholders of Acacia will receive debt securities of CombiMatrix in the
      Distribution.

    


    14.    Acacia
      has no debt security holders. No debt securities are to be exchanged in the
      Distribution.

    


    15.    The
      stock
      options to be issued by CombiMatrix as compensation to employees, directors
      and/or independent contractors (i) will contain customary terms and
      conditions, (ii) will be granted in connection with the performance of
      services for CombiMatrix or a person related to the grantor under section
      355(d)(7)(A) of the Code, (iii) will not be excessive by reference to the
      services performed, (iv) will be nontransferable within the meaning of
      Treasury Regulation Section 1.83-3(d) immediately after the Distribution or
      within six months thereafter, and (v) will not have a readily ascertainable
      fair market value as defined in Treasury Regulation Section 1.83-7(b)
      immediately after the Distribution and within six months
      thereafter.

    


    16.    For
      each
      of the past five years, (a) CombiMatrix has directly conducted the
      CombiMatrix Business, and (b) the CombiMatrix Business has had gross
      receipts and operating expenses representative of the active conduct of a trade
      or business, and, in this connection, has had employees performing active and
      substantial management and operational functions. There have been no substantial
      operational changes to the CombiMatrix Business since August 30, 2006, the
      date
      Internal Revenue Service issued a Private Letter Ruling to Acacia regarding
      the
      Distribution, a copy of which is attached as Exhibit
      1
      hereto.

    


    17.    The
      employee payroll expense, headcount information and description of employees’
titles, functions and types of duties set forth in Exhibit
      2
      attached
      hereto and relating to the CombiMatrix Business are true, correct and complete
      in all material respects.

    


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    18.    There
      has
      not been a substantial change in the type of business conducted or the method
      of
      conducting the CombiMatrix Business during the five-year period ending on the
      date hereof.

     

    19.    The
      assets and businesses which were acquired within the past five (5) years in
      taxable transactions, do not form part of the assets and businesses upon which
      CombiMatrix or any of its businesses relies to satisfy the active conduct of
      a
      trade or business test set forth in Section 355(b)(2).

    


    20.    None
      of
      the real property, intellectual property, or other intangible property
      historically occupied or used by the CombiMatrix Business will be separated
      in
      the transaction from its business.

    


    21.    The
      gross
      assets of the CombiMatrix Business trade or business to be directly conducted
      by
      CombiMatrix and relied upon by CombiMatrix to satisfy the active trade or
      business requirement of Section 355(b) will have a fair market value that is
      five percent (5%) or more of the total fair market value of the gross assets
      of
      CombiMatrix immediately following the Distribution.

    


    22.    Following
      the Distribution, Acacia and CombiMatrix will each continue the active conduct
      of its business, independently and with its separate employees. Additionally,
      following the Distribution, neither Acacia nor CombiMatrix will share the
      services of any employees, and there are no planned or intended substantial
      reductions in business activity for any active business.

    


    23.    Payments,
      if any, made in connection with all continuing transactions between Acacia
      and
      CombiMatrix (or any of their affiliates) after the Distribution will be for
      fair
      market value based on terms and conditions arrived at by the parties bargaining
      at arm’s length.

    


    24.    CombiMatrix
      has no plan or intention not to continue, and during the one-year period
      following the Distribution will continue, the active conduct of its businesses,
      as constituted immediately after the Distribution, independently and with its
      separate employees, and it will use a significant portion of its business assets
      as so constituted in such businesses.

    


    25.    CombiMatrix
      is not an investment company within the meaning the Section 368(a)(2)(F)(iii)
      and (iv) of the Code.

    


    26.    CombiMatrix
      has no plan or intention to, and will not during the one-year period following
      the Distribution, liquidate, merge with any other corporation or sell or
      otherwise dispose of any of its historic assets or businesses subsequent to
      the
      Distribution, except for (a) sales or dispositions in the ordinary course
      of business, (b) transactions described in Section 368(a)(2)(C) of the
      Code, or (c) sales or other dispositions of assets of such corporation
      having a gross fair market value (determined based on disposition proceeds,
      including the assumption of debt) that in the aggregate does not exceed fifty
      percent (50%) of the total fair market value of such company’s
      assets.

    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    27.    At
      the
      time of the Distribution, CombiMatrix will not have outstanding any warrants,
      options, convertible securities, or any other type of right pursuant to which
      any person could acquire stock in CombiMatrix, except for certain employee
      stock
      options and the AR-CBMX Warrants.

     

    28.    CombiMatrix
      has no plan or intention to, and for a period of one (1) year following the
      Distribution will not, transfer or cause to be transferred any assets held
      by
      CombiMatrix to an affiliate in a transaction described in Section 351 or Section
      118 of the Code.

    


    29.    The
      Distribution transaction is not used principally as a device for the
      distribution of the earnings and profits of Acacia or CombiMatrix or
      both.

    


    30.    For
      purposes of Section 355(d), immediately after the Distribution, no person
      (determined after applying Section 355(d)(7)) will hold stock possessing fifty
      percent (50%) or more of the total combined voting power of all classes of
      CombiMatrix stock entitled to vote, or fifty percent (50%) or more of the total
      value of shares of all classes of CombiMatrix stock, that was acquired by
      purchase (as defined in Sections 355(d)(5) and (8)) during the five-year period
      (determined after applying Section 355(d)(6)) ending on the date of the
      Distribution.

    


    31.    The
      Distribution is not part of a plan or series of related transactions (within
      the
      meaning of Section 1.355-7T) pursuant to which one or more persons will acquire,
      directly or indirectly, stock possessing a 50-percent or greater interest
      (within the meaning of Section 355(d)(4)) in Acacia or CombiMatrix (including
      any predecessor or successor of any such corporation). 

    


    32.    During
      the two (2)-year period beginning on the Distribution Date, CombiMatrix will
      not
      engage in any transaction or transactions which is part of a plan (or series
      of
      related transactions) related to the Distribution pursuant to which one or
      more
      persons acquire directly or indirectly stock representing a fifty percent (50%)
      or greater interest in CombiMatrix or will be treated as acquiring such interest
      pursuant to Section 355(e) as a result of the acquisition of assets of
      CombiMatrix or otherwise, all within the meaning of Section 355(e).

    


    IN
      WITNESS WHEREOF, I have, on behalf of the Company, executed this CombiMatrix
      Tax
      Representation Letter this December [___], 2006.

     

    
      	 	
               

                  /s/ Amit
                Kumar                                                      
                

              Amit Kumar

              President and Chief Executive
                Officer 

            


    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    Schedule
      3.02(c)

     

    Pre-Distribution
      Tax-Free Transactions

     

    Contribution
      of stock of CombiMatrix K.K. by Acacia to CombiMatrix Corporation. Contribution
      of stock of Advanced Material Sciences by Acacia to CombiMatrix
      Corporation.