Exhibit 10.1

SETTLEMENT AGREEMENT

This Settlement Agreement ("Agreement") is made and entered into as of this 30th day of September, 2002 (the
"Effective Date"), by and between Nanogen, Inc., a Delaware corporation ("Nanogen"), on the one
hand, and CombiMatrix Corporation, a Delaware corporation ("CombiMatrix"), Donald D. Montgomery, Ph.D., an individual
("Montgomery"), and Acacia Research Corporation, a Delaware corporation ("Acacia"), on the other hand.
Nanogen, CombiMatrix, and Montgomery are collectively referred to as the "Parties".

R E C I T A L S:

A.    Certain
disputes and controversies have arisen between the Parties. On November 28, 2000, Nanogen filed the lawsuitNanogen, Inc. v.
Donald D. Montgomery and CombiMatrix Corp., Case No. 00CV2369 in the Southern District of California. In response, Montgomery and CombiMatrix filed a counterclaim in the
action against Nanogen. This litigation, including all claims and counter-claims contained therein, is referred to herein as "the Action." More specifically, the dispute between the parties concerns
the inventorship and ownership of the currently issued claims of the U.S. Patent Nos. 6,093,302 (the "302 Patent") and 6,280,595 (the "595 Patent") and of foreign equivalents of said claims
(collectively the "Disputed Technology").

B.    The
Parties desire to settle their disputes regarding the Action and the Disputed Technology on the terms and conditions set forth below. The Parties do not intend to
release any other claims unless specifically set forth below. The Parties agree that Montgomery and Nanogen are still bound by the Settlement Agreement of February 26, 1996 (the "1996
Settlement Agreement"), which unless specifically modified herein, remains in full force and effect.

NOW,
THEREFORE, in consideration of mutual covenants and agreements contained herein, the Parties agree as follows:

1.Dismissals with Prejudice. Nanogen hereby agrees to dismiss with prejudice its claims in the Action. Montgomery and
CombiMatrix hereby agree to dismiss with prejudice their counterclaims in the Action. Nanogen, Montgomery and CombiMatrix each agree to sign the Stipulation for Dismissal with Prejudice of All Claims
and Counter Claims attached hereto asExhibit "A"within 24 hours after Nanogen's receipt of the CombiMatrix Capital Stock as required by
Paragraph 3(c) below. CombiMatrix shall cause the stipulation to be filed with the Court, and shall provide the other parties with a filed-stamped copy of the Stipulation immediately upon
receipt.

2.Payment by CombiMatrix and Montgomery. CombiMatrix and Montgomery agree to make settlement payments of a total of one
million dollars ($1,000,000.00) to Nanogen as follows:



3.Delivery of Stock by CombiMatrix. CombiMatrix agrees to transfer to Nanogen stock as described below:



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4.Payment by CombiMatrix of Twelve and One-Half Percent (12.5%) Royalty.



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5.Security Interest: As security for its obligations under this Agreement (including any obligation to pay liquidated
damages to Nanogen pursuant to this Agreement), CombiMatrix hereby grants to Nanogen a lien and security interest in the Patents. CombiMatrix and Montgomery agree to cooperate fully with Nanogen in
completing and filing a UCC-1 financing statement, and Patent and Trademark Office Form 1595 (a recordation cover sheet and the security agreement) in order to record Nanogen's
security interest in the Patents. CombiMatrix hereby warrants and represents that there are no other security interests or liens against the Patents as of the effective date hereof. Notwithstanding
the foregoing,without the necessity of any additional document being executed by Nanogen for the purpose of effecting a subordination, Nanogen's
security interest or lien granted hereby shall be automatically subject and subordinate to, at all times, any and all licenses of any type or kind, whether exclusive or nonexclusive, expressed or
implied, whether such licenses presently exist or are hereafter executed or granted by CombiMatrix, or its successor in interest, with respect to rights under the Patents (collectively, the
"Licenses"). Any person or entity licensing any rights pursuant to any of the Licenses (a "Licensee") shall be deemed to be a Licensee in the ordinary course of business in accordance with
Section 9321 of the California Commercial Code, or any other similar statute. Within ten (10) days of CombiMatrix's, or its successor in interest's, written request, Nanogen, or its
successor in interest, shall execute a written subordination agreement, or similar document, that fully and unconditionally subordinates the security interest and/or lien created hereunder to the
interests of a Licensee consistent with the provisions of this Paragraph. If the security interest or lien granted hereunder is foreclosed upon, or a conveyance in lieu of foreclosure is made for any
reason, Nanogen, or its successor in interest, hereby agrees to honor and be bound by all Licenses so long as the Licensee performs its material obligations under the License for the benefit of
Nanogen or its successor. However, unless Nanogen or its successor consents in writing, neither Nanogen nor its successor shall be required to perform the affirmative obligations of CombiMatrix under
such License. If, notwithstanding the foregoing, any License is terminated as result of Nanogen's, or its successor in interest's, foreclosure, or acceptance of a conveyance in lieu of foreclosure, a
new license between Nanogen, or the new owner of the Patent if not Nanogen, and any terminated Licensee shall be

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deemed created, with no further instrument required, on the same terms as any License that terminated so long as the Licensee is required to perform its material obligations under the License for the
benefit of Nanogen or its successor and, unless Nanogen or its successor consents in writing, neither Nanogen nor its successor shall be required to perform the affirmative obligations of CombiMatrix
under such License. Nanogen, or the new owner of the Patent if not Nanogen, and any
terminated Licensee shall execute a new license agreement on the same terms as the particular terminated License, at the request of either so long as the Licensee is required to perform its material
obligations under the License for the benefit of Nanogen or its successor and, unless Nanogen or its successor consents in writing, neither Nanogen nor its successor shall be required to perform the
affirmative obligations of CombiMatrix under such License.

6.Ownership of Patents.



7.Limited Covenant Not to Sue. CombiMatrix, and its licensees or successors-in-interest to the
Patents, agree to not seek to enforce the Patents against Nanogen, or its licensees or successors-in-interest, or to not seek damages from Nanogen, its licensees or
successors-in-interest for past, present or future infringement of the Patents, other than for any activities involving methods or processes for the extension or synthesis of
nucleic acids by electrochemical deprotection of a functionalized chemical group.

8.Release of Claims and Reservation of Rights.



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9.Liquidated Damages. The Parties acknowledge that, in agreeing as part of the settlement of the Action to dismiss its
Complaint with prejudice, Nanogen is taking the risk that CombiMatrix will (i) liquidate, wind up or dissolve (or suffer any liquidation, windup or dissolution), (ii) suspend its
operations other than in the ordinary course of business, (iii) be unable to generally pay its debts

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(including its payrolls) as such debts become due, (iv) make a general assignment for the benefit of creditors; (v) file a voluntary petition in bankruptcy or a petition or
answer seeking reorganization, to effect a plan or other arrangement with creditors or any other relief under the Bankruptcy Code or under any other state or federal law relating to bankruptcy or
reorganization granting relief to debtors, (vi) be adjudicated a bankrupt, or shall make an assignment for the benefit of creditors, or shall apply for or consent to the appointment of any
custodian, receiver or trustee for all or any substantial part of CombiMatrix's property, or (vii) materially breach this Agreement without curing the material breach within thirty
(30) days of receiving written notice of such breach from Nanogen and the existence of one or more material breaches has been determined by a non-appealable, final judicial
determination that CombiMatrix or Montgomery is in material breach of this Agreement. In such event, CombiMatrix agrees to pay Nanogen as liquidated damages the following: (a).The unpaid amount, if
any, of the $1 million payment provided for in Paragraph 2, plus (b). A sum determined by multiplying $1.5 million times the number of years remaining from the initial time of
default to the last to expire of the Patents as provided for in paragraph 4(c). In the event that CombiMatrix challenges the applicability of this provision or if this provision is held to be
void and unenforceable for any reason, Nanogen shall be entitled to any and all other damages and remedies otherwise provided at law, including attorneys' fees.

The
obligation to pay liquidated damages is secured by the Patents as provided in Paragraph 5, above.

10.Consideration. This Agreement, and the releases given herein, and the dismissals referenced herein, are supported by the
mutual promises and covenants contained in this Agreement, and in the other agreements referenced herein, which the Parties agree constitute good and valuable consideration.

11.Own Costs. Each party shall bear its own costs and expenses, including attorney's fees, in connection with the Action and
the negotiation and execution of this Agreement.

12.Entire Agreement. This Agreement and the agreements referenced herein are the entire agreements among the parties
here/thereto with respect to the subject matter(s) here/thereof, and they supersede all prior and contemporaneous oral and written agreements and discussions between/among such parties with respect to
such matter(s), except for the 1996 Settlement Agreement. In the event of an inconsistency between this Agreement and the 1996 Settlement Agreement, the terms of this Agreement shall apply. This
Agreement may be amended only by an agreement in writing, signed by each of the signatories to this Agreement.

13.Not Severable. The terms and conditions of this Agreement are not severable. However, if any provision of this Agreement
is held by a court of competent jurisdiction to be unenforceable or contrary to law, it shall be modified where praticable to the extent necessary so as to be enforceable (giving effect to the
intention of the Parties) and the remaining provisions of this Agreement shall not be affected.

14.Warranties. As a condition of this Agreement, each of the Parties represents and warrants to each of the other Parties
hereto that there has been no assignment, conveyance or transfer or purported assignment, transfer or conveyance by it of any interest in any of the Released Claims. Further, each of the Parties
represents and warrants that it is the sole owner and party-in-interest regarding its respective released claims. In the event that any claim or demand should be made or
litigation instituted against any Party or Parties arising out of or with respect to the Released Claims, the Party or Parties in breach of the foregoing representation and warranty shall indemnify
and hold the other Party or Parties harmless from and against such claim, demand or litigation, including all attorneys' fees and costs incurred with respect to such matters.

15.Transfer of Patents. Any transfer of ownership (other than by license or sublicense) of the Patents by CombiMatrix shall
be subject to CombiMatrix's obligations to Nanogen set forth in this Agreement.

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16.Settlement Not an Admission. Settlement of the Action, including all negotiations leading to the settlement, the payment
of consideration therefore, the contents of this Agreement and any documents executed in connection herewith are not intended to constitute and shall not constitute any admission or concession of any
kind.

17.Attorney's Fees. Should any dispute arise between the parties hereto or their legal representatives, successors and
assigns concerning any provision of this Agreement or the rights and duties of any person in relation thereto, the party prevailing in such dispute shall be entitled, in addition to any other relief
that may be granted, to recover attorneys' fees and legal costs in connection with such dispute.

18.Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the respective successors,
assigns and legal representatives of the Parties hereto. Nothing in this Agreement, express or implied, is intended to confer upon any person other than the Parties hereto, or their respective
successors, heirs and assigns, any rights or benefits under or by reason of this Agreement.

19.Governing Law. This Agreement shall be governed and construed under applicable federal law and the laws of the State of
California, excluding any conflict of law provisions. Each party irrevocably consents to the exclusive personal jurisdiction of the federal and state courts located in San Diego or Orange County,
California, as applicable, for any matter arising out of or relating to this Settlement Agreement.

20.Binding Effect. This Agreement shall inure to the benefit of, and shall be binding upon, the parties hereto and their
respective legal representatives, successors and assigns.

21.Execution and Counterparts. This Agreement may be executed in any number of original counterparts. Any such counterpart,
when executed, shall constitute an original of this Agreement, and all such counterparts together shall constitute one and the same Agreement. However, this Agreement will not be deemed effective
until each Party has executed at least one original counterpart of this Agreement. True and correct copies may be used in lieu of the original. A facsimile signature shall be deemed to constitute an
effective signature hereunder, provided that any Party submitting a facsimile signature shall immediately provide each other Party with an original signature via overnight delivery.

22.Further Assurances. The Parties hereby agree to execute such further documents or instruments as may be reasonably
necessary or appropriate to carry out the intention of this Agreement.

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IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.

| |  | NANOGEN, INC.              
| |  | ---------------------------
| |  | By:                        
| |  | COMBIMATRIX CORPORATION    
| |  | By:                        
| |  | By:                        
| |  | ACACIA RESEARCH CORPORATION
| |  | By:                        

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EXHIBIT "A"  STIPULATION FOR DISMISSAL

F.
T. Alexandra Mahaney (State Bar Number 125984)
William C. Tayler (State Bar Number 171704)
BROBECK, PHLEGER & HARRISON LLP
12390 El Camino Real
San Diego, CA 92130-2081
Telephone: (858) 720-2500
Facsimile: (858) 720-2555

Attorney
for Plaintiff/Counterdefendant NANOGEN, INC.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA

|NANOGEN, INC., a Delaware Corporation, |                                          |             | ) | Case No. 00 CV 2369 JM (RBB)
|-------------------------------------- | ---------------------------------------- | ----------- | - | ----------------------------
|                                       |                                          |             |   |                             
|                                       |                                          | Plaintiff,  |   |                             
|                                       |                                          |             |   |                             
|                                       |                                          |             |   |                             
|                                       | v.                                       |             |   |                             
|DONALD D. MONTGOMERY, an               |                                          |             | ) |                             
|                                       | Individual, and COMBIMATRIX CORP., a     |             |   | )                           
|                                       | a Delaware Corporation, and a California |             |   | )                           
|                                       | Corporation,                             |             |   | )                           
|                                       |                                          |             |   |                             
|                                       |                                          | Defendants. |   |                             
|                                       |                                          |             |   |                             
|                                       |                                          |             |   |                             
|AND RELATED COUNTERCLAIMS              |                                          |             | ) |                             
|                                       |                                          |             |   |                             
|                                       |                                          |             |   |                             
|                                       |                                          |             |   |                             
|                                       |                                          |             |   |                             
|                                       |                                          |             |   |                             

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Exhibit 10.1

TO ALL PARTIES AND THEIR COUNSEL OF RECORD:

NOTICE
IS HEREBY GIVEN THAT plaintiff/counterdefendant Nanogen, Inc. ("Nanogen") and defendants/counterclaimants Donald Montgomery ("Montgomery"), and CombiMatrix Corp.
("CombiMatrix"), by and through their respective counsel of record, stipulate to the voluntary dismissal with prejudice of all claims and counterclaims made in this action. Each party will bear its
own costs and attorney's fees.

NOTICE
IS ALSO GIVEN that this dismissal with prejudice is made pursuant to and in accordance with the terms of the Settlement Agreement and Release between the parties dated
September 30, 2002.

|DATED: September 30, 2002 |  | BROBECK, PHLEGER & HARRISON LLP
|------------------------- |  | -------------------------------
|                          |  | By:                            
|DATED: September 30, 2002 |  | CAMPBELL & FLORES              
|                          |  | By:                            
|DATED: September 30, 2002 |  | CORBETT & STEELMAN             
|                          |  | By:                            

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EXHIBIT "B"SUBSCRIPTION AGREEMENT

THIS
SUBSCRIPTION AGREEMENT ("Agreement") is entered into as of this 30th day of September, 2002, by and between CombiMatrix Corporation,
a Delaware corporation ("CombiMatrix"), and Nanogen, Inc., a Delaware corporation ("Nanogen").

R E C I T A L S:

A.    CombiMatrix,
Nanogen, Donald D. Montgomery and Acacia Research Corporation, a Delaware corporation ("Acacia"), have
entered into a Settlement Agreement ("Settlement Agreement") of even date pursuant to which CombiMatrix has agreed to issue a certain number of shares
of its Common Stock to Nanogen.

B.    Under
the terms of the Settlement Agreement, CombiMatrix has agreed to issue shares of its Common Stock to Nanogen provided that Nanogen first enters into a subscription
agreement substantially in the form of this Agreement.

C.    Under
the terms of the Settlement Agreement, CombiMatrix has also agreed to issue additional shares of its Common Stock from time to time as described therein, provided
that for each issuance of shares, Nanogen enters into a subscription agreement substantially in the form of this Agreement.

D.    The
parties now desire to enter into this Agreement to set forth their agreement and understanding with respect to the issuance of such shares of Common Stock and to set
forth certain rights and obligations of the parties with respect to such shares.

A G R E E M E N T:

NOW,
THEREFORE, to implement the foregoing and in consideration of the mutual promises, covenants and agreements contained herein and in the Settlement Agreement, the parties hereto
hereby agree as follows:



In full satisfaction of the agreement to issue shares of CombiMatrix Common Stock to Nanogen pursuant to Section 3(c) of the Settlement Agreement,
CombiMatrix hereby issues four million sixteen thousand three hundred forty six (4,016,346) shares of CombiMatrix Common Stock (the "Shares") to Nanogen
and Nanogen hereby agrees to acquire ownership of the Shares.

Promptly
after the execution and delivery of this Agreement by the parties hereto, CombiMatrix shall deliver to Nanogen a stock certificate representing the Shares.

Nanogen's Representations, Warranties and Covenants.Nanogen hereby acknowledges, represents and warrants to, and agrees
with, CombiMatrix as follows:

Investment Intention; Capacity to Protect Interests.Nanogen is acquiring the Shares solely for its own account for
investment and not with a view to or for sale in connection with any distribution thereof. Nanogen will not, directly or indirectly, offer, transfer, sell, pledge, hypothecate or otherwise dispose of
any of the Shares or any securities into which the Shares may convert (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of any of the Shares), except in compliance with the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations of the Securities and Exchange Commission (the
"Commission") thereunder, and in compliance with applicable state and foreign securities laws, if any. The entire legal and beneficial interest of the
Shares is being acquired, and will be held, for Nanogen's account only, and neither in whole or in part for any other person or entity. Nanogen has received from CombiMatrix and read a copy of
CombiMatrix's quarterly and annual financial statements for the last two fiscal years, the Form 10-K filed with the Commission by

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Acacia for the fiscal year ended December 31, 2002, a copy of the Form 10-Q filed with the Commission by Acacia for the fiscal quarter ended June 30, 2002 and all
publicly available filings made by Acacia with the Commission on or after June 30, 2002. Nanogen has had a reasonable opportunity to ask questions of and receive answers from a person or
persons on behalf of CombiMatrix regarding CombiMatrix and the Shares and all such questions have been answered to Nanogen's full satisfaction. Nanogen has a pre-existing business or
personal relationship with CombiMatrix or one or more of its officers, directors or controlling persons and by reason of Nanogen's business or financial experience or the business or financial
experience of its professional advisors who are unaffiliated with and who are not compensated by CombiMatrix or any affiliate or selling agent of CombiMatrix, directly or
indirectly, has the capacity to evaluate the merits and risks of an investment in CombiMatrix and to protect Nanogen's own interests in connection with this transaction. Nanogen is not relying on
CombiMatrix with respect to the tax or other economic considerations of acquiring the Shares and has obtained, or has had the opportunity to obtain, the advice of Nanogen's own legal, tax and other
advisors. Nanogen is a corporation with at least $5,000,000 in assets and it was not formed for the purpose of acquiring the Shares.

Place of Business.Nanogen's principal place of business is in San Diego, California.

Economic Risks.Nanogen has adequate means of providing for its current financial needs and contingencies, is able to bear
the substantial economic risks of owning the Shares for an indefinite period of time, has no need for liquidity in such investment and could afford a complete loss of such investment. NANOGEN
UNDERSTANDS AND ACKNOWLEDGES THAT ITS ACQUISITION OF THE SHARES INVOLVES A HIGH DEGREE OF RISK AND IS SUBJECT TO A RISK OF LOSS OF ALL OR A SUBSTANTIAL PART OF THE VALUE OF THE SHARES.

Tax Consequences.Nanogen understands that any acquisition or disposition of stock involves certain tax risks and therefore
Nanogen has consulted its own tax advisors regarding all applicable tax consequences of the transactions contemplated by this Agreement.

Restricted Securities.Nanogen understands that the issuance of the Shares has not been registered under the Act, the Shares
must be held indefinitely unless subsequently registered under the Act or an exemption from such registration is available (such as Rule 144 under the Act). CombiMatrix, or any successor, shall
register the Shares in the next registration statement that is declared effective by the SEC after the date of this Subscription Agreement, including but not limited to, the current
form S-4 filed by CombiMatrix's parent, Acacia Reseach Corporation, with the Commission.

Disposition Under the Act.Nanogen understands that the Shares are restricted securities within the meaning of
Rule 144 promulgated under the Act; that the exemption from registration under Rule 144 will not be available in any event for at least one year from the date of issuance of the Shares,
and even then will not be available unless (i) a public trading market then exists for CombiMatrix Common Stock, (ii) adequate information concerning CombiMatrix is then available to the
public, and (iii) other terms and conditions of Rule 144 are complied with; and that any sale of the Shares may be made only in limited amounts in accordance with such terms and
conditions. There can be no assurance that the requirements of Rule 144 will be met or that the Shares will ever be saleable. Nanogen represents that it is aware or has been made aware by its
advisors of the provisions of Rule 144 and understands the resale limitations imposed thereby and by the Act.

Further Limitations on Disposition.Without in any way limiting the other representations set forth in this agreement,
Nanogen further agrees that it shall in no event make any disposition of all or any portion of the Shares or any securities into which the Shares convert unless and until:

(A) There
is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with said registration statement; (B) the
resale provisions of Rule 144(k) are available in the opinion of counsel to CombiMatrix; or (C)(1) Nanogen shall have

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notified CombiMatrix of the proposed disposition and shall have furnished CombiMatrix with a detailed statement of the circumstances surrounding the proposed disposition, (2) Nanogen shall
have furnished CombiMatrix with an opinion of Nanogen's counsel to the effect that such disposition will not require registration of such shares under the Act, and (3) such opinion of Nanogen's
counsel shall have been concurred with by counsel for CombiMatrix and CombiMatrix shall have advised Nanogen of such concurrence; and,

Any
transferee of the Shares (including any spouse of such transferee) agrees in writing to be bound by all terms of this Agreement.

Compliance with Rule 144.If any of the Shares are to be disposed of in accordance with Rule 144, Nanogen shall
transmit to CombiMatrix an executed copy of Form 144 (if required by Rule 144) no later than the time such form is required to be transmitted to the Commission for filing and such other
documentation as Nanogen may reasonably require to assure compliance with Rule 144 in connection with such disposition.

Stop Transfer Notice and Refusal to Transfer.Nanogen agrees that, in order to ensure compliance with the terms of this
Agreement, CombiMatrix may issue appropriate stop transfer instructions to its transfer agent, if any, and that if CombiMatrix transfers its own securities, it may make appropriate notations to the
same effect in its own records. Nanogen further agrees that CombiMatrix shall not be required to (i) transfer on its books any shares of CombiMatrix Common Stock that have been sold or
otherwise transferred in violation of any provision of this Agreement or (ii) treat as an owner of shares of CombiMatrix Common Stock or to accord the right to vote or pay dividends to Nanogen
or any transferee to whom any such shares have been transferred in violation of any provision of this Agreement. If the Shares are exchanged for securities issued by another company, such other
company shall have all the same rights of CombiMatrix provided in this Section 3(i).

Legends.The certificate or certificates representing the Shares shall bear the following legend or a legend substantially
equivalent thereto along with any other legends that may be required by any other agreement or by any federal, state or foreign securities laws:

"THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF UNLESS THEY HAVE BEEN REGISTERED UNDER THE ACT AND QUALIFIED UNDER ANY APPLICABLE STATE OR FOREIGN SECURITIES LAWS OR, IN THE OPINION OF
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SHARES, SUCH OFFER, SALE, TRANSFER, ASSIGNMENT OR OTHER DISPOSITION IS EXEMPT FROM SUCH REGISTRATION AND QUALIFICATION. THE OFFER,
SALE, TRANSFER ASSIGNMENT OR ANY OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO FURTHER RESTRICTIONS SET FORTH IN THE SUBSCRIPTION AGREEMENT BETWEEN THE ISSUER AND THE
ORIGINAL HOLDER OF THESE SHARES DATED SEPTEMBER 30, 2002 AND FURTHER RIGHTS DESCRIBED IN THE SETTLEMENT AGREEMENT BETWEEN THE ISSUER, THE HOLDER AND CERTAIN OTHER PARTIES, DATED SEPTEMBER 30, 2002,
COPIES OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES."

Good Standing and Enforceability.Nanogen has been duly incorporated and validly exists in good standing under the laws of
the state of Delaware. This Agreement has been duly authorized, executed and delivered by Nanogen and constitutes a valid and legally binding obligation of Nanogen enforceable against Nanogen in
accordance with its terms.

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Accuracy of Information.All statements about Nanogen in this Agreement are true, complete and correct in all material
respects as of the date of this Agreement. The representations, warranties and agreements of Nanogen contained in this Agreement shall survive the execution and delivery of this Agreement and the
issuance of the Shares.

Representations and Warranties by CombiMatrix.CombiMatrix represents and warrants to Nanogen that (a) CombiMatrix has
been duly incorporated and validly exists in good standing under the laws of the state of Delaware, (b) this Agreement has been duly authorized, executed and delivered by CombiMatrix and
constitutes a valid and legally binding obligation of CombiMatrix enforceable against CombiMatrix in accordance with its terms and (c) the Shares, when issued and delivered in accordance with
the terms hereof and the Settlement Agreement, will be duly and validly issued, fully paid and nonassessable, and free and clear of any liens or encumbrances other than those created pursuant to this
Agreement, or otherwise in connection with the transactions contemplated hereby.

Right of First Refusal.This Section 4 applies only so long as CombiMatrix Common Stock is not publicly traded.

If
at any time a bona fide offer is received by Nanogen from a third party to purchase all or a portion of the Shares, and Nanogen desires to transfer all or a portion of the Shares to
such third party, then Nanogen shall give written notice (the "Offering Notice") thereof to CombiMatrix. The Offering Notice shall specify Nanogen's
intent to transfer all or a portion of the Shares including the exact number of shares intended to be transferred (the "Transfer Shares"), the
consideration to be received for the Transfer Shares, the identity and address of the proposed purchaser, the terms of payment and any and all other terms and conditions upon which Nanogen intends to
so transfer the Transfer Shares.

For
a period of three (3) business days (the "Sales Option Period") following the date of delivery of the Offering Notice to
CombiMatrix (the "Effective Date"), CombiMatrix or any other party designated by CombiMatrix shall have the right, but not the obligation, to purchase
all, but not less than all, of the Transfer Shares by giving written notice thereof to Nanogen within such Sales Option Period.

If
CombiMatrix or its designee elects to purchase the Transfer Shares, then CombiMatrix or its designee, as the case may be, shall have the option, in CombiMatrix's or such designee's
sole and absolute discretion, to elect to purchase the Transfer Shares pursuant to the payment terms set forth in the Offering Notice.

Unless
otherwise agreed to by Nanogen and CombiMatrix or its designee, as the case may be, the closing (the "Closing") of a purchase by
CombiMatrix or its designee of the Transfer Shares shall be held at the principal executive office of CombiMatrix on the third (3rd) business day following the expiration of the Sales
Option Period. At the Closing, Nanogen shall deliver the appropriate transfer documents to transfer the Transfer Shares to CombiMatrix or its designees, as the case may be, and CombiMatrix or its
transfer agent shall transfer the Transfer Shares on the books and records of CombiMatrix. In connection with such delivery, Nanogen shall simultaneously deliver a written certificate representing
that the Transfer Shares are delivered to CombiMatrix or its designee, as the case may be, free and clear of all liens, claims, pledges, or encumbrances of any kind and to the extent necessary, and
any other instruments of transfer which may be reasonably required by CombiMatrix, its designee and/or Nanogen in order to effectively transfer the Transfer Shares to CombiMatrix or its designee, as
the case may be.

If
CombiMatrix or its designee, as the case may be, does not elect to purchase all of the Transfer Shares pursuant to the procedures set forth above in this Section 4, then
Nanogen may transfer all, but not less than all, of the Transfer Shares to the proposed transferee set forth in the Offering Notice, providing such transfer (i) is completed within ninety
(90) days after the expiration of the Sales Option Period, (ii) is made at the price and terms designated in the Offering Notice, and (iii) the proposed

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transferee, and any spouse thereof if applicable, agrees to be bound by the terms and provisions this Agreement, with such transferee, and any spouse thereof if applicable, assuming the same rights
and obligations of Nanogen under this Agreement for this purpose (with Nanogen also retaining all its rights and obligations under this Agreement if it continues to own a portion of the Shares after
such transfer). If the Transfer Shares are not so transferred within the ninety (90) days following the expiration of the Sales Option Period, then all of the Shares shall again be subject to
all of the
restrictions of this Agreement and Nanogen shall be precluded from transferring all or any part of the Shares unless it complies with the terms of this Agreement.

Miscellaneous.

Notices.All notices and other communications required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been given if delivered personally or sent by certified or express mail, return receipt requested, postage prepaid, or by any recognized international equivalent of such mail
delivery, to CombiMatix or Nanogen, as the case may be, at the following addresses or to such other address as CombiMatrix or Nanogen, as the case may be, shall specify by notice to the other:

if
to CombiMatrix, to CombiMatrix at:

CombiMatrix
Corporation
6500 Harbour Heights Parkway
Ste.301
Mukilteo, WA 98275
Attention: Amit Kumar

with
a copy to:

Mark
J. Kelson, Esq.
Allen Matkins Leck Gamble & Mallory LLP,
1901 Avenue of the Stars, Suite 1800
Century City, California 90067-6019

if
to Nanogen, to Nanogen at:

Nanogen, Inc.
10398 Pacific Center Court
San Diego, CA 92121
Attention: Vice President, Legal Affairs and Secretary

All
such notices and communications shall be deemed to have been received on the date of delivery if delivered personally or on the third business day after the mailing thereof.

Adjustment for Stock Split.All references to the number of Shares in this Agreement shall be appropriately adjusted to
reflect any stock split, stock dividend, combination, reclassification or the like applicable to the Shares which may be made by CombiMatrix after the date of this Agreement.

Attorney's Fees.Should any dispute arise between the parties hereto or their legal representatives, successors and assigns
concerning any provision of this Agreement or the rights and duties of any person in relation thereto, the party prevailing in such dispute shall be entitled, in addition to any other relief that may
be granted, to recover attorneys' fees and legal costs in connection with such dispute.

Successor and Assigns.CombiMatrix may assign any of its rights under this Agreement to single or multiple assignees, and
this Agreement shall inure to the benefit of the legal representatives, successors and assigns of CombiMatrix. Nanogen may not assign any of its rights or obligations under this Agreement without the
prior written consent of CombiMatrix.

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Governing Law.This Agreement shall be governed and construed under the internal laws of the State of Delaware, regardless of
any laws on choice of law or conflicts of law of any jurisdiction.

Binding Effect.Subject to the restrictions on transfer and assignment set forth herein, this Agreement shall inure to the
benefit of, and shall be binding upon, the parties hereto and their respective legal representatives, successors and assigns.

Execution and Counterparts.This Agreement may be executed in any number of original counterparts. Any such counterpart, when
executed, shall constitute an original of this Agreement, and all such counterparts together shall constitute one and the same Agreement. However, this Agreement will not be deemed effective until
each party has executed at least one original counterpart of this Agreement. True and correct copies may be used in lieu of the original. A facsimile signature shall be deemed to constitute an
effective signature hereunder, provided that any party submitting a facsimile signature shall immediately provide each other party with an original signature via overnight delivery.

Further Assurances.The parties hereby agree to execute such further documents or instruments as may be reasonably necessary
or appropriate to carry out the intention of this Agreement.

Headings.The section and other headings contained in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.

Severability.If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect, and such invalid or unenforceable provision shall be replaced with a
provision that approximates the substance and spirit of the invalid or unenforceable provision as closely as possible without being invalid or unenforceable.

Entire Agreement.This Agreement and the Settlement Agreement constitute the entire agreement of the parties and supersede in
their entirety all prior undertakings and agreements of CombiMatrix and Nanogen with respect to the subject matter thereof.

Amendment.This agreement may not be amended, modified or supplemented without the written agreement of both parties.

IN
WITNESS WHEREOF, CombiMatrix and Nanogen have executed this Agreement as of the date first above written.

COMBIMATRIX
CORPORATION, a Delaware corporation

By:
/s/AMIT KUMAR
Name: Amit Kumar
Title: President and CEO

NANOGEN, INC.,
a Delaware corporation

By:/s/WILLIAM
FRANZBLAU
Name: William Franzblau
Title: Vice President, Legal Affairs and Secretary

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