**Exhibit 10.2**

 

**SETTLEMENT AGREEMENT**

 

This Settlement Agreement (the “SETTLEMENTAGREEMENT”) is entered into effective on January 27, 2010, by and betweenPlaintiffs-Appellees ACACIA RESEARCH CORPORATION and COMBIMATRIX CORPORATION (“PLAINTIFFS”),and Defendant-Appellant NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA(“NATIONAL UNION”), with reference to the following facts:

 

**R E C I T A L S**

 

A.                                                                                                       Effective January 22, 1999, NATIONAL UNION issued to PLAINTIFFS its Directors,Officers and Corporate Liability Insurance Policy, D & O****Gold No. 857-85-90. (hereinafter referred to as the “POLICY”).

 

B.                                                                                                       On November 28, 2000, Nanogen, Inc., sued CombiMatrixCorporation and Dr. Donald D. Montgomery in United States District Court forthe Southern District of California as Case Number 00CV2369JM (RBB), which wassubsequently submitted as a Claim to NATIONAL UNION under the POLICY andassigned Claim Number 297-011357 (hereinafter the “CLAIM”), and which lawsuitwas thereafter settled.

 

C.                                                                                                       On April 22, 2005, ACACIA RESEARCH CORPORATION filed its Complaintagainst NATIONAL UNION in the Superior Court of the State of California for theCounty of Orange. The case was subsequently removed by NATIONAL UNION to theUnited States District Court for the Central District of California, WesternDivision, and PLAINTIFFS thereafter prosecuted the action as Case Number SA CV05-501 PSG (MLGx) (hereinafter referred to as the “ACTION”).

 

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D.                                                                                                            On May 22, 2008, the Court entered its Amended Judgment in theACTION in favor of PLAINTIFFS and against NATIONAL UNION (hereinafter referredto as the “JUDGMENT”).

 

E.                                                                                                             On May 20, 2008, NATIONAL UNION filed its Notice of Appeal, whichappeal remains pending before the United States Court of Appeals for the NinthCircuit as Case Number 08-55834 (hereinafter referred to as the “APPEAL”).

 

F.                                                                                                              PLAINTIFFS and NATIONAL UNION are collectively referred to herein as the “PARTIES.”

 

G.                                                                                                            The PARTIES are now desirous of resolving their dispute, and to concludethe ACTION.

 

**AGREEMENT**

 

WHEREFORE, in consideration ofthe covenants, conditions, acknowledgments, representations, and promises setforth herein, the adequacy and sufficiency of which consideration is herebyexpressly acknowledged by the Parties, it is agreed to, by and between thePARTIES, as follows:

 

1.**                                                                                                             ****Terms of Payment**. No later than February 12,2010, NATIONAL UNION shall pay to PLAINTIFFS the sum of Twenty-Five MillionDollars ($25,000,000.00).

 

2.**                                                                                                             ****Form of Payment**. The PAYMENT of$25,000,000.00 shall be made by NATIONAL UNION to PLAINTIFFS no later than February 12,2010, by a wire transfer to the Corbett, Steelman & Specter AttorneyClient Trust Account, Account # 02 02 000287, Routing # (ABA #)122243703, at Commerce National Bank, 4040 MacArthur Boulevard, Suite 100,Newport Beach, CA 92660, (949) 474-1020.

 

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3.**                                                                                                             ****Effect of Settlement on Judgment****.** NATIONAL UNION’s timely PAYMENT, as above,shall fully satisfy NATIONAL UNION’s obligations to PLAINTIFFS under the POLICYand under the JUDGMENT. Timely payment as set forth in Paragraphs 1 and 2 aboveshall be treated as a material term of the SETTLEMENT AGREEMENT, and time shallbe treated as of the essence. The failure of NATIONAL UNION to make such paymentshall permit PLAINTIFFS to recover collection of the JUDGMENT in full. In theevent that NATIONAL UNION makes the PAYMENT set forth in Paragraph 1, above, infull, by February 12, 2010, then PLAINTIFFS shall cause to be executed andshall file a joint stipulated dismissal of the ACTION with prejudice, pursuantto Federal Rule of Civil Procedure 41, no later than February 19,2010. The PARTIES shall take all other actions necessary to ensure that theDismissal is entered by the Clerk of the United States District Court.

 

4.**                                                                                                             ****Dismissal of Appeal with Prejudice.** Upon theexecution and delivery of this SETTLEMENT AGREEMENT, NATIONAL UNION shallimmediately cause to be executed a “Joint Request for Dismissal (withPrejudice)” of the APPEAL, and shall further cause such Dismissal to be filedwith the United States Court of Appeals for the Ninth Circuit no later than January 28,2010. The PARTIES shall take all other actions necessary to ensure that theDismissal is entered by the Clerk of the United States Court of Appeals for theNinth Circuit. As part of the Joint Request for Dismissal, the PARTIES willwithdraw all requests for sanctions currently pending in the Ninth Circuit,including but not limited to the motion that PLAINTIFFS filed with that Courton January 14, 2009, as resolved in part in that Court’s order of March 16,2009.

 

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5.**                                                                                                             ****Further Action by the PARTIES.** In addition toexecuting this SETTLEMENT AGREEMENT, making the PAYMENT set forth above, and executingand filing the Dismissals, each of the PARTIES further agrees to do all otherthings necessary, if any, including, but not limited to, the execution of anyadditional documents necessary to effectuate the intent and purposes of theSETTLEMENT AGREEMENT, to cause entry of the above-referenced Dismissals, and soas to cause the ACTION and the APPEAL to be dismissed with prejudice, upon theoccurrence of the conditions specified, and pursuant to the terms, set forthherein.

 

6.**                                                                                                             ****Mutual Releases****.**

 

a.              **Release of NATIONAL UNION****.** PLAINTIFFS, on their own behalf and onbehalf of their officers, directors, parents, subsidiaries and affiliatedcorporations, present and former agents, employees, independent contractors,attorneys, predecessors, successors, and assigns, and each of them, and all ofthose claiming by, through, under or in concert with it, or any of them, herebyabsolutely, forever and fully, generally and specifically release and dischargeNATIONAL UNION, and its present and former agents, employees, attorneys,independent contractors, officers, directors, parents, subsidiaries andaffiliated corporations, predecessors, successors and assigns, and each ofthem, from any and all claims, contentions, rights, debts, liabilities,demands, accounts, accountings, reckonings, obligations, duties, promises,costs, expenses (including but not limited to, attorneys’ fees), liens,subrogation rights, indemnification rights, damages, losses, actions, andcauses of action, of any kind whatsoever, whether based upon contract, tort,statute or any other legal or equitable theory of recovery, and whether fixedor contingent, matured or unmatured, liquidated or unliquidated, known or unknown, suspected or unsuspected, which are based upon, arising out of,or in any way related to, directly or indirectly, the POLICY, the ACTION, orthe CLAIM giving rise thereto.

 

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b.              **Release ofPLAINTIFFS****.**NATIONAL UNION, on its own behalf and on behalf of its officers, directors,parents, subsidiaries and affiliated corporations, present and former agents,employees, attorneys, predecessors, successors, and assigns, and each of them,and all of those claiming by, through, under or in concert with it, or any ofthem, hereby absolutely, forever and fully, generally and specifically releaseand discharge PLAINTIFFS and their present and former agents, employees,attorneys, independent contractors, officers, directors, parents, subsidiariesand affiliated corporations, partners, joint venturers, attorneys,predecessors, successors and assigns, and each of them, from any and allclaims, contentions, rights, debts, liabilities, demands, accounts,accountings, reckonings, obligations, duties, promises, costs, expenses(including but not limited to, attorneys’ fees), liens, subrogation rights,indemnification rights, damages, losses, actions, and causes of action, of anykind whatsoever, whether based upon contract, tort, statute or any other legalor equitable theory of recovery, and whether fixed or contingent, matured orunmatured, liquidated or unliquidated, known or unknown, suspected orunsuspected, based upon, arising out of, or in any way related to, directly orindirectly, the POLICY, the ACTION or the CLAIM giving rise thereto.

 

7.                                                                                                              **Waiver of California*****Civil Code*****Section 1542****.** The PARTIES hereby waive any and all rights or benefits which they mayhave with respect to their respective claims under Section 1542 of theCalifornia *Civil Code,*whichprovides that:

 

**“A GENERAL RELEASE DOES NOT EXTENDTO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR ATTHE TIME OF EXECUTING THE RELEASE, KNOWN BY HIM MUST HAVE MATERIALLY AFFECTEDHIS SETTLEMENT WITH THE DEBTOR.”**

 

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The PARTIES hereby represent and warrant that theyunderstand the effect of this waiver and of *Civil Code*Section 1542 and that they are represented andhave been fully advised of the effect of this general release by an attorneylicensed to practice law.

 

8.**                                                                                                             ****Release of Unknown Claims****.** The PARTIES acknowledgethat they may hereafter discover claims and/or facts now unknown orunsuspected, or in addition to, or different from, those which they now know orbelieve to be true at present with respect to the POLICY or the ACTION.Nevertheless, the PARTIES intend by the releases in this SETTLEMENT AGREEMENTto release fully, finally, and forever all of their respective claims, whethersuch claims are known or unknown, suspected or unsuspected, based upon thePOLICY or the ACTION.

 

9.**                                                                                                             ****Releases Do Not Apply to SETTLEMENT AGREEMENT****.** The releases set forthabove are not intended to, and shall not, extend to, apply to or otherwiserelease, excuse or discharge any rights, privileges, benefits, duties orobligations of any of the PARTIES granted or existing by reason of, orotherwise arising under, this SETTLEMENT AGREEMENT.

 

10.**                                                                                                      ****Representations and Warranties Regarding Claims****.** The PARTIES representand warrant to each other that they: (a) are the lawful owners ofeverything released hereunder; (b) have all necessary power and authorityto execute, deliver and perform this SETTLEMENT AGREEMENT, including anynecessary consent or approval from any person, and including the absence of anyduty or obligation that would prevent, or be put in breach or default by, suchAgreement; and (c) have not heretofore transferred or attempted totransfer all or any part of any such thing in any manner whatsoever, including byway of subrogation or operation of law. 

 

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The PARTIES agree to indemnify and hold harmless eachother with respect to any liability, cost, expense, or claim pertaining to orarising from any assertion of any such obligation or transfer or lack of suchpower or authority.

 

11.**                                                                                                 ****Binding Effect****.** This SETTLEMENT AGREEMENT and all documents referred to herein, shallbind and inure to the benefit of each of the PARTIES and their respectivesuccessors. Except as expressly provided herein, this SETTLEMENT AGREEMENT isnot for the benefit of any person not: (a) a Party; (b) *identified*as a beneficiary herein; or (c) *identified*herein as a person or entity released hereby, andis not intended to constitute a third party beneficiary contract. A person orentity shall be deemed *identified*herein only if referenced by name *(i.e.,*“John Jones”) or category *(i.e.,*“successors,” “predecessors,” etc.).

 

12.**                                                                                                 ****Assignment of Rights.** Concurrent with the execution of thisSETTLEMENT AGREEMENT by the PARTIES, PLAINTIFFS shall execute and deliver toNATIONAL UNION an Assignment and Assumption Agreement (“Assignment Agreement”)in the form attached hereto as Exhibit A, pursuant to which PLAINTIFFSsell, transfer, assign, convey, and set over unto NATIONAL UNION, and itsaffiliates, successors and assigns, on a quitclaim basis, all of their rights,title, claims and interest in and to reimbursement and/or payment of any kindunder the Excess Liability Policy issued by Royal Insurance Company of Americato Acacia Research Corporation, policy number P SF001831 (the “Royal ExcessPolicy”), and the Excess Liability Policy issued by Federal Insurance Companyto Acacia Research Corporation, policy number 8158-94-96 KCO (the “FederalExcess Policy”) (jointly the “EXCESS CARRIERS”), with respect to the actionsand proceedings listed in the Recitals herein.

 

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NATIONAL UNION shall have all right, title and interestincluding all claims, actions, causes of action and/or remedies that thePLAINTIFFS have or may hereafter have against the Royal Insurance Company ofAmerica under the Royal Excess Policy and against Federal Insurance Companyunder the Federal Excess Policy, including, but not limited to, the right tosue in the name of, or for the benefit of, PLAINTIFFS, subject to all defensesand claims available to the EXCESS CARRIERS against PLAINTIFFS or NATIONALUNION. PLAINTIFFS hereby represent and warrant that, other than the Policiesissued by the EXCESS CARRIERS, there are no other or additional excess or otherpolicies pursuant to which PLATINFFS will seek recovery for the events and actswhich gave rise to the CLAIM, the ACTION, and/or this AGREEMENT. PLAINTIFFSshall cooperate in all respects as may be reasonably requested by NATIONALUNION in providing any and all assistance and documentary evidence to NATIONALUNION, including, without limitation, attendance on reasonable notice andwithout subpoena at examinations before trial and at a trial and the productionupon reasonable request by NATIONAL UNION of documents, in respect of theirclaims, demands and causes of action that it has or may hereafter have againstthe Royal Excess Policy and the Federal Excess Policy, at NATIONAL UNION’sexpense. PLAINTIFFS also covenant and agree that they have neither assigned,nor expressly released nor expressly discharged the Royal Excess Policy or theFederal Excess Policy. By this assignment, PLAINTIFFS do not make anyrepresentation regarding the validity of such claims, and NATIONAL UNION shallbear the sole risk, responsibility and cost in prosecuting such claims,including the possibility that such claims may be unsuccessful or without meritor subject to defenses or setoffs. This Assignment shall be governed by andconstrued in accordance with the laws of the State of California.

 

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13.**                                                                                                      ****No Precedential Value****.** ThisSETTLEMENT AGREEMENT is a compromise under the unique circumstances presentedherein, and shall have no precedential value with respect to any other claimwhich has been or may be submitted for coverage under any policy of insuranceissued by NATIONAL UNION or any other member company of American InternationalGroup.

 

14.**                                                                                                      ****Final Integrated Agreement****.** ThisSETTLEMENT AGREEMENT and the documents referred to herein constitute theentire, final and binding understanding between the PARTIES. There are no otherstatements or representations, written or oral, express or implied, which havebeen made or received and relied upon in entering into this SETTLEMENTAGREEMENT; and all prior discussions, statements, and negotiations which haveoccurred prior to the Effective Date of this SETTLEMENT AGREEMENT shall bedeemed superseded by and merged into this SETTLEMENT AGREEMENT, and shall notbe used for any purpose whatsoever.

 

15.                                                                                                       **Understanding of Settlement; Voluntary Agreement****.** Each of the PARTIES understands and agrees to this settlement, thisSETTLEMENT AGREEMENT, and the other terms and conditions contained herein, andin the other documents referred to herein, and has relied upon its ownjudgment, belief, knowledge, understanding and expertise after carefulconsultation with its own legal counsel concerning the legal effect of thissettlement and all of the terms of this SETTLEMENT AGREEMENT. Each of thePARTIES enters into this SETTLEMENT AGREEMENT, and the other terms andconditions contained herein, and the other documents referred to herein,knowingly and voluntarily, in the total absence of any fraud, mistake, duress,coercion, or undue influence and after careful thought and reflection aboutthis SETTLEMENT AGREEMENT, and the terms and conditions containedherein, and the other documents referred to herein and, accordingly, by signingthis SETTLEMENT AGREEMENT, and the Dismissal, each Party hereto signifies fullunderstanding, agreement and acceptance thereof. 

 

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Each of the PARTIES has fully and completely investigatedthe facts pertaining to this settlement, SETTLEMENT AGREEMENT and all matterspertaining thereto as deemed necessary by each.

 

16.                                                                                                       **Disclosure of Terms.** ThePARTIES agree that the terms of this SETTLEMENT AGREEMENT, and all negotiationsleading up to this AGREEMENT, will be considered confidential. Unless requiredto make disclosure pursuant to the order of a court or other governmentauthority of competent jurisdiction, the PARTIES will not disclose any of theterms or negotiations to anyone other than as necessary to their directors,officers, employees, attorneys, accountants, auditors, regulators, underwriters,governmental or administrative agencies, and/or reinsurers, or as required byregulation or law governing the mandatory disclosure by publicly tradedcompanies, or the contents and disclosure of financial statements. Beforemaking disclosure of the SETTLEMENT AGREEMENT in litigation, including but notlimited to the fact of the SETTLEMENT AGREEMENT or its terms, the Party seekingto make disclosure will make a good faith effort to have a protective orderentered governing any such disclosure. Notwithstanding the foregoing, if anyshareholder initiates communications with PLAINTIFFS concerning the settlement,PLAINTIFFS may privately disclose the amount of the settlement, but not theidentity of the payor or any other information concerning the settlement, itsterms, or this SETTLEMENT AGREEMENT.

 

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17.                                                                                                       **Costs Associated with ACTION.** The PARTIES expressly agreethat they shall each be liable and responsible hereafter for their ownattorneys’ fees, costs and expenses incurred in connection with the ACTION, thenegotiation and execution of the SETTLEMENT AGREEMENT and this settlement, andshall and do waive any right to seek recovery thereof from any other Partyhereto.

 

18.                                                                                                       **Ambiguities or Uncertainties****.** ThisSETTLEMENT AGREEMENT, and any ambiguities or uncertainties herein, shall beequally and fairly interpreted and construed without reference to the identityof the Party or Parties preparing this document on the express understandingand agreement that the PARTIES participated equally in the negotiation andpreparation of this SETTLEMENT AGREEMENT, or that each of the PARTIES have hadequal opportunity to do so. Accordingly, the PARTIES hereby waive the benefitof California *Civil Code*Section 1654,and any successor or amended statute, providing that in cases of uncertainty,the language of a contract should be interpreted most strongly against theParty who caused the uncertainty to exist.

 

19.                                                                                                       **Survival of Executory Provisions****.** Any and allexecutory provisions of this SETTLEMENT AGREEMENT and the documents referred toherein shall survive the consummation of this settlement and shall continue infull force and effect until fully performed and satisfied.

 

20.                                                                                                       **California Law****.** Thissettlement and SETTLEMENT AGREEMENT shall be governed by, and construed andinterpreted in accordance with, the laws of the State of California, and anyaction relating hereto shall be filed in the Federal Court for the CentralDistrict of the State of California.

 

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21.                                                                                                       **Severability****.** In the eventthat any provision(s) of this SETTLEMENT AGREEMENT as applied to any ofthe PARTIES or to any circumstance should be adjudged by a court of competentjurisdiction to be void, voidable, invalid or unenforceable, such provisionshall be deemed severed from this SETTLEMENT AGREEMENT and the remainingportions hereof shall remain in full force and effect as if the invalid orunenforceable provision(s) had not been a part of this SETTLEMENTAGREEMENT.

 

22.                                                                                                       **Waiver, Modification and Amendment****.** No breach ofthis SETTLEMENT AGREEMENT, or of any provision herein, can be waived except byan express written waiver executed by the Party waiving such breach. Waiver ofany one breach shall not be deemed a waiver of any other breach of the same orother provisions of this SETTLEMENT AGREEMENT. This SETTLEMENT AGREEMENT may beamended, altered, modified or otherwise changed in any respect or particularonly by a writing duly executed by each of the PARTIES or their authorizedrepresentatives.

 

23.                                                                                                       **Multiple Counterparts****.** ThisSETTLEMENT AGREEMENT, and any document referred to herein, may be executed inany number of counterparts, each of which may be deemed an original and all ofwhich together shall constitute a single instrument.

 

24.                                                                                                       **Telefacsimile Signatures****.** ThisSETTLEMENT AGREEMENT, and any document referred to herein and relating to itmay be executed and transmitted to any of the PARTIES by telefacsimile, whichtelefacsimile shall be deemed to be, and may be utilized in all respects as, anoriginal document for all purposes.

 

25.                                                                                                       **Captions****.** Sections,paragraphs and other captions or headings contained in this SETTLEMENTAGREEMENT are inserted as a matter of convenience and for reference, and in no waydefine, limit, extend or otherwise describe the scope or intent of thisSETTLEMENT AGREEMENT or any provision hereof and shall not affect in any waythe meaning or interpretation of this SETTLEMENT AGREEMENT.

 

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26.                                                                                                       **Recitals****.** The Recitalsset forth at the beginning of this SETTLEMENT AGREEMENT shall not be admissible toprove the truth of the matters asserted therein in any action or proceedinginvolving any of the PARTIES (other than an action or proceeding brought toenforce the terms of this SETTLEMENT AGREEMENT), nor do any of the PARTIESintend such Recitals to constitute admissions of fact by any of them.

 

27.                                                                                                       **Miscellaneous****.** In thelanguage of this document and the documents referred to herein, singular andplural numbers, and masculine, feminine and neuter genders, shall be deemed toinclude all others, and the word “person” shall include corporations,partnerships and every other entity, as the context may require.

 

28.                                                                                                       **Effective Date****.** The term “EffectiveDate” shall mean and refer to January 27, 2010, and this SETTLEMENTAGREEMENT shall be effective as of such date.

 

**IN WITNESS WHEREOF,**the PARTIESevidence their agreement, consent and acceptance of this SETTLEMENT AGREEMENTby executing this SETTLEMENT AGREEMENT in the spaces provided below:

 

 
| DATED:  January 27, 2010 | **ACACIA RESEARCH CORPORATION,**a |
|-------------------------------|-----------------------------------|
|                          | Delaware  Corporation             |
|                          |                              |
|                          |                              |
|                          | By:                               | /s/  Robert L. Harris |
|                          |                              | Robert  L. Harris |
|                          | Title:                            | President |

 

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| DATED: January 27, 2010              | **COMBIMATRIXCORPORATION,**                                                                       |
|-------------------------------------------|---------------------------------------------------------------------------------------------------|
|                                      | a Delaware Corporation                                                                            |
|                                      |                                                                                              |
|                                      |                                                                                              |
|                                      | By:                                                                                               | /s/ Amit Kumar |
|                                      |                                                                                              | Amit Kumar |
|                                      | Title:                                                                                            | President |
|                                      |                                                                                              |
|                                      |                                                                                              |
| DATED: January 27, 2010              | **CHARTIS  CLAIMS, INC., on behalf of NATIONAL UNION FIRE INSURANCE COMPANY OF  PITTSBURGH, PA,** |
|                                      | a Pennsylvania insurance company                                                                  |
|                                      |                                                                                              |
|                                      |                                                                                              |
|                                      | By:                                                                                               | /s/ Lauren Levy |
|                                      |                                                                                              | Lauren Levy |
|                                      | Title:                                                                                            | Vice President |
|                                      |                                                                                              |   |
|                                      |                                                                                              |   |
| **APPROVED AS TO FORM AND CONTENT:** |                                                                                              |   |
|                                      |                                                                                              |   |
|                                      |                                                                                              |   |
| CORBETT, STEELMAN & SPECTER      | SIDLEY  AUSTIN LLP                                                                                |
|                                      |                                                                                              |
|                                      |                                                                                              |
| By:                                       | /s/ Richard B. Specter                                                                            |   | By: | /s/  Eric A. Shumsky |
|                                      |                                                                                              |   |   | Eric  A. Shumsky |
|                                      | Richard  B. Specter                                                                               |   |   |
|                                      |                                                                                              |   |
| Attorneys  for PLAINTIFFS                 | Attorneys  for NATIONAL UNION                                                                     |
|                                           |                                                                                                   |  |  |  |  |

 

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EXHIBIT A

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

The undersigned, ACACIA RESEARCH CORPORATION ANDCOMBIMATRIX CORPORATION (“Assignors”), hereby assign, transfer, sell, convey,and set over unto NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH,PENNSYLVANIA (“Assignee”), on a quitclaim basis, for good and valuableconsideration, receipt of which is hereby acknowledged by Assignors, all ofAssignors’ rights, title, claims, and interest in and to reimbursement and/orpayment of any kind under the Excess Liability Policy issued by Royal InsuranceCompany of America to Acacia Research Corporation, policy number P SF00183, andthe Excess Liability Policy issued by Federal Insurance Company to AcaciaResearch Corporation, policy number 8158-94-96 KCO, (collectively the “ExcessPolicies”), subject to the terms and conditions of this Assignment Agreement;and the Assignee hereby also agrees as follows:

 

1.                                      Inconsideration of Assignee’s agreements contained herein, the Assignors, subjectto paragraph 3(A) hereof, hereby assign to Assignee all of their legalrights under the Excess Policies to recover reimbursement of legal fees, costs,and expenses incurred by Assignors, together with any bad faith refusal todefend claims, and, subject to paragraph 3(B) hereof, hereby assigns toAssignee all of their legal rights under the Excess Policies to recoverindemnity for any judgment or settlement in any of the Actions and Proceedingsthat are the subject of that certain Settlement Agreement (“SettlementAgreement”) executed by the parties dated January 27, 2010 (the “Assignment”),under the Excess Policies, with respect to those claims submitted under thepolicy issued by Assignee to Acacia Research Corporation (the “Policy”) forcertain legal proceedings that are the subject of the Settlement Agreement.

 

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2.                                      The Assignorsshall execute all papers required and do everything that may be reasonablynecessary to secure Assignee’s rights pursuant to this Assignment Agreement,including the execution of such documents as reasonably requested by Assigneeto maintain a declaratory judgment action under the Excess Policies in place,and instead, of Assignors. In the event Assignee opts to pursue declaratoryrelief actions, Assignee shall have no obligation to pay the wages of anyemployee of Assignors that may be required to provide deposition or trialtestimony in connection with such action. In the event that any of Assignors’employees requests legal counsel for deposition or trial, in any actioncommenced by Assignee pursuant to this Assignment Agreement, Assignee’s choiceof counsel will represent such employee(s) and Assignee will pay suchcounsel’s legal fees, costs, and expenses.

 

3.                                      (A) Actions forRecovery of Defense Costs. By entering into thisAssignment Agreement, Assignee is not obligated to bring a declaratory judgmentaction or any claim under the Excess Policies. Even if Assignee decides not toinstitute any such litigation for the recovery of attorneys’ fees, costs,expenses, or bad faith refusal to defend claims, Assignors agree that, inaccordance with the terms of this Assignment Agreement, they hereby waive theright to and cannot file any such an action against their insurance carriers.

 

In the event Assignee decides to commence litigationunder either of the Excess Policies to seek reimbursement of attorneys’ fees,costs, expenses, or bad faith penalties resulting from a duty to defend,Assignee shall have the sole discretion to settle such claims. To the extentAssignee obtains a recovery of legal fees, costs, expenses, or bad faithrecovery arising from a refusal to defend, under the Excess Policies„ bydeclaratory judgment or otherwise, the Assignors acknowledge and agree thatthey have relinquished any and all rights to such recovery to Assignee pursuantto this Assignment Agreement.

 

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(B) Actions for Recovery of Indemnity.Assignors assign to Assignee all rights they may have under the Excess Policieswith respect to any settlement or judgment against Assignors, or any of them,in any of the actions or proceedings which are the subject of the SettlementAgreement. Even if Assignee decides not to institute any such litigation forrecovery of indemnity, Assignors agree that, in accordance with the terms ofthis Assignment Agreement, they hereby waive the right to and cannot file anysuch an action against their insurance carriers. To the extent Assignee obtainsa recovery of indemnity, under the Excess Policies, by declaratory judgment orotherwise, the Assignors acknowledge and agree that they have relinquished anyand all rights to such recovery to Assignee pursuant to this AssignmentAgreement.

 

4.                                      By this assignment,Assignors do not make any representation regarding the validity of claims underthe Excess Policies and Assignee shall bear the sole risk, responsibility andcost in prosecuting such claims, including the possibility that such claims maybe unsuccessful or without merit or subject to defense or setoff.

 

5.                                      Assignors agreeto cooperate with Assignee in the commencement and prosecution of a declaratoryjudgment action under the Excess Policies, at Assignee’s sole expense. Assigneewill provide Assignors with copies of all pleadings filed in connection withsuch declaratory judgment action, and the Assignors may associate with Assigneein prosecution of the declaration judgment action to the extent that issuesraised therein may affect the reputation or day-to-day business of Assignors. 

 

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Assigneeagrees to refrain from taking any action which would be contrary to anyconfidentiality agreement between the parties or any protective or other courtorder in the actions and proceedings that are the subject of the SettlementAgreement, if any.

 

6.                                      PLAINTIFFShereby represent and warrant that, other than the Policies issued by the EXCESSCARRIERS, there are no other or additional excess or other policies pursuant towhich PLATINFFS will seek recovery for the events and acts which gave rise tothe CLAIM, the ACTION, and/or this AGREEMENT.

 

7.                                      In the eventthat a difference of opinion arises between Assignors and Assignee as to anymatters omitted from this Assignment Agreement, the parties agree to use theirbest efforts to reach a mutually acceptable resolution.

 

8.                                      No failure onthe part of Assignee to exercise, and no delay in exercising, any of its rightsunder this Assignment Agreement shall be construed or deemed to be a waiverthereof.

 

9.                                      Assignors andAssignee agree that this Assignment Agreement shall not constitute, nor beconstrued as: (I) an admission by Assignee of any liability for or withrespect to the actions and proceedings that are the subject of the SettlementAgreement; (II) an admission by Assignee that it has any liability for theactions or proceedings under the Policy; and/or (III) a waiver byAssignors or Assignee of any of their respective rights, privileges, anddefenses under the Policy, at law or in equity, and all such rights aremutually reserved.

 

10.                               If any part orparts of this Assignment Agreement are determined to be null and void, theremainder of the Assignment Agreement shall be given full force and effect.

 

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11.                               This AssignmentAgreement shall not be construed as a waiver by Assignors or Assignees of anyof their rights, privileges, and/or defenses, under the Policy, at law, and inequity, with respect to any monies paid in satisfaction of the settlement thatis the subject of the Settlement Agreement.

 

12.                               This AssignmentAgreement inures to the benefit of Assignee, its successors and assignsforever.

 

13.                               The partiesfurther agree that this Agreement does not in any way resolve any indemnityissues under the Excess Policies, or any of them, arising from the actions andproceedings that are the subject of the Settlement Agreement.

 

14.                               This Agreementmay be executed in any number of counterparts, each of which when executed anddelivered shall be deemed an original, but which together shall constitute oneinstrument. Delivery of executed signature pages hereof by facsimiletransmission shall constitute effective and binding execution and delivery ofthis Agreement.

 

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IN WITNESS WHEREOF, Assignors and Assignee have dulyexecuted this Agreement as of this 27th day of January 2010.

 

ASSIGNORACACIA RESEARCH CORPORATION:

 
| DATED:  January 27, 2010                                                | **ACACIA RESEARCH CORPORATION,**a                                                                |
|------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------|
|                                                                         | Delaware  Corporation                                                                            |
|                                                                         |                                                                                             |
|                                                                         |                                                                                             |
|                                                                         | By:                                                                                              | /s/  Robert L. Harris, II |
|                                                                         |                                                                                             | Robert  L. Harris, II |
|                                                                         | Title:                                                                                           | President |
|                                                                         |                                                                                             |
|                                                                         |                                                                                             |
| ASSIGNOR  COMBIMATRIX CORPORATION:                                           |                                                                                             |
|                                                                         |                                                                                             |
| DATED:  January 27, 2010                                                | **COMBIMATRIX CORPORATION,**a                                                                    |
|                                                                         | Delaware  Corporation                                                                            |
|                                                                         |                                                                                             |
|                                                                         |                                                                                             |
|                                                                         | By:                                                                                              | /s/  Amit Kumar |
|                                                                         |                                                                                             | Amit  Kumar |
|                                                                         | Title:                                                                                           | President |
|                                                                         |                                                                                             |   |
|                                                                         |
| ASSIGNEE NATIONAL UNION  FIRE INSURANCE COMPANY OF PITTSBURGH, PENNSYLVANIA: |
|                                                                         |                                                                                             |
| DATED:  January 27, 2010                                                | **CHARTIS CLAIMS, INC., on behalf of NATIONAL UNION FIRE  INSURANCE COMPANY OF PITTSBURGH, PA,** |
|                                                                         | a  Pennsylvania insurance company                                                                |
|                                                                         |                                                                                             |
|                                                                         |                                                                                             |
|                                                                         | By:                                                                                              | /s/  Lauren Levy |
|                                                                         |                                                                                             | Lauren  Levy |
|                                                                         | Title:                                                                                           | Vice  President |
|                                                                              |                                                                                                  |  |  |  |

 

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