Document:

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                                                                   EXHIBIT 10.23

                         PRODUCT SOLICITATION AGREEMENT

                                     BETWEEN

                                   N-MER, INC.

                                       AND

                                AFFYMETRIX, INC.

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
     HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
        COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT
                              OF 1934, AS AMENDED.

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                         PRODUCT SOLICITATION AGREEMENT

        This Product Solicitation Agreement (this "Agreement"), dated as of this
24th day of October 2001, by and between N-Mer, Inc., a Delaware corporation
having its principal place of business at 670 Almanor Avenue, Sunnyvale,
California 94085 (the "Company"), and Affymetrix, Inc., a Delaware corporation
having its principal place of business at 3380 Central Expressway, Santa Clara,
California 95051 ("Affymetrix"). The Company and Affymetrix will be referred to
individually as a "Party" or collectively as the "Parties."

        1. SCOPE OF ENGAGEMENT.

               1.1 On the terms and conditions of this Agreement, the Company
hereby engages Affymetrix for the term of this Agreement as the exclusive sales
agent to solicit and procure orders throughout the world for the Company's
products (the "Products"); provided, however, that the Company shall have the
right pursuant to Section 1.2 to [***] basis in which case Affymetrix shall be
engaged by the Company as the [***] sales agent to solicit and procure orders
throughout the world for the Products as set forth in Section 1.2.

               1.2 If the Company determines [***] that Affymetrix is in
material breach of Section 4.1 of this Agreement, the Company shall provide
Affymetrix written notice of such determination and shall set forth in such
notice [***] the basis for such determination. Upon receipt of such notice,
representatives of the Company and Affymetrix shall meet as appropriate for a
period not to exceed [***] commencing on the date Affymetrix receives such
notice to discuss whether Affymetrix is in material breach of Section 4.1 of
this Agreement and to define in good faith the [***] to be performed and
achieved by Affymetrix in the Maintenance Period (as defined below) in order to
cure such alleged material breach. Such [***] shall be [***] by Affymetrix and
the Company and shall be [***] of exclusive sales agents of products similar to
the Products and consistent with the terms of this Agreement. In the event that
representatives of the Company and Affymetrix are unable to agree [***] during
such [***] period, the Company may initiate arbitration in respect of such
dispute in accordance with Section 11.7 for the purpose of having the arbitral
tribunal determine, within [***], whether Affymetrix is in material breach of
Section 4.1 of this Agreement and, if so, the appropriate [***] to be performed
and achieved by Affymetrix during the Maintenance Period in order to cure such
alleged material breach. The "Maintenance Period" shall be a period of [***]
commencing on the date that the [***] are agreed between the parties or
determined by the arbitral tribunal. Affymetrix shall [***] agreed between the
parties or determined by the arbitral tribunal pursuant to this Section 1.2
during the Maintenance Period, and the Company shall [***] with Affymetrix and
[***] in order to enable Affymetrix to [***]. In the event that the Company
determines in good faith that Affymetrix has not [***] agreed between the
parties or determined by the arbitral tribunal pursuant to this Section 1.2
during the Maintenance Period and is in material breach of Section 4.1 of this
Agreement (and Affymetrix does not agree with such determination), the Company
shall have the right to initiate arbitration in respect of such dispute in
accordance with Section 11.7; provided, however, that the Company and Affymetrix
shall have the right to have such dispute heard by the same arbitrator that
determined the [***] by Affymetrix during the Maintenance

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
     HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
        COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT
                              OF 1934, AS AMENDED.

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Period (if [***] were determined by arbitration) and, provided further, that the
Parties agree that [***] in connection with any such arbitration and the Parties
shall use their [***] efforts to conclude such arbitration, including the
issuance of any award resulting therefrom, within [***] of the initiation of
such arbitration. Following the expiration of the Maintenance Period and upon
initiation of arbitration by the Company as set forth in the preceding sentence,
the exclusive sales agency set forth in this Agreement shall [***] only until a
final determination of the arbitrator is delivered. In the event that the
arbitral tribunal determines that Affymetrix has not [***] agreed between the
parties or determined by the arbitral tribunal pursuant to this Section 1.2
during the Maintenance Period and is in material breach of Section 4.1 of this
Agreement, then the arbitral tribunal shall provide in its award that the
exclusive sales agency shall [***]. For purposes of clarity, the Company shall
engage Affymetrix as the exclusive sales agent for the Products until the
parties agree otherwise, or until [***]. The terms and conditions of Affymetrix'
[***] sales agent relationship with the Company, [***], shall be [***].

               1.3 Subject to the Company's then current policies (including the
Company's then current credit policies), the Company shall accept [***] orders
submitted by Affymetrix for the Products upon the Company's [***] terms and
conditions unless the Company is unable to fill such orders using its [***]
efforts.

               1.4 All Product sales pursuant to an order submitted by
Affymetrix shall be at the [***] price prescribed by the Company pursuant to
Section 5.3 for such Product, [***].

               1.5 No orders shall be binding on the Company unless and until
accepted by the Company in accordance with the Company's then current policies
and the terms of this Agreement. Affymetrix shall have no right, power or
authority to bind the Company to any order or other obligation.

               1.6 Affymetrix shall have the right to appoint sub-agents, [***].

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
     HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
        COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT
                              OF 1934, AS AMENDED.

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        2. TRADEMARK LICENSE. During the term of this Agreement, subject to the
terms and conditions of this Agreement, the Company grants to Affymetrix a
nonexclusive, worldwide, royalty free license solely to use the service marks,
trademarks, tradenames and any other designations used by the Company in
connection with the Products (collectively, the "Marks"), and the goodwill
associated with such Marks, in connection with Affymetrix' solicitation and
procurement of orders for the Products hereunder; provided, however, that
Affymetrix shall use its [***] efforts to comply with the Company's [***]
trademark policy in Affymetrix' use of the Marks. The Company shall have the
right to audit and inspect, upon advance written notice and during regular
business hours, Affymetrix' use of the Marks.

        3. SERVICE AND SUPPORT. The Company and Affymetrix will cooperate in
good faith to provide service and support to all customers who purchase Products
under orders submitted by Affymetrix, including, without limitation, the
following: (i) the Company shall train one (1) Affymetrix representative,
appointed by Affymetrix and reasonably acceptable to the Company, in the basic
operation of the Products such that such representative is sufficiently skilled
to train other Affymetrix representatives to adequately refer service and
support needs to the appropriate Party; (ii) Affymetrix shall be the principal
contact for customer service and its trained representatives shall refer the
service call to the appropriate Party as follows: the Company shall have the
principal obligation and shall use [***] efforts to provide the service and
customer support for components of the Products not purchased from Affymetrix
pursuant to the Product Development and Supply Agreement, dated as of the date
hereof (the "Supply Agreement"), between the Company and Affymetrix, and
Affymetrix shall have the primary obligation and shall use [***] efforts to
provide service and support for components of the Product purchased by the
Company from Affymetrix. The parties will provide service and support for their
respective components of the Products upon terms and conditions [***].

        4. DUTIES OF AFFYMETRIX.

               4.1 For so long as Affymetrix is the Company's exclusive [***]
sales agent pursuant to Section 1, Affymetrix shall use its [***] efforts to
solicit and procure orders for the Products, including, without limitation, to
(i) distribute the marketing material and other information provided by the
Company pursuant to Section 5.2; and (ii) to provide [***], including, without
limitation, [***], to its sales personnel and third party agents that are
comparable to [***] provided for other similar products sold by or on behalf of
Affymetrix.

               4.2 Whenever Affymetrix procures an order for the Products from a
customer, Affymetrix shall within [***] after Affymetrix' receipt of such order,
forward such order to the Company in such manner as is reasonably determined by
the Company. Each such order shall be in the form of a purchase order as
mutually agreed to by the Parties for Products, and shall contain all
information required to be completed on such form.

               4.3 Subject to Section 5.3, Affymetrix shall [***] quote the
[***] prices and terms for the Products [***] from the Company.

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
     HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
        COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT
                              OF 1934, AS AMENDED.

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               4.4 Affymetrix shall make no representations or warranties
relating to the Products or the Company, except for those that the Company
expressly makes in writing to end-users regarding Products and those otherwise
expressly authorized in writing by the Company.

        5. DUTIES OF THE COMPANY.

               5.1 For so long as Affymetrix is the Company's exclusive sales
agent pursuant to Section 1, the Company shall not solicit or procure orders for
the Products (except through Affymetrix pursuant to this Agreement) nor shall it
appoint any other agents in relation to solicitation or procurement of orders
for the Products.

               5.2 The Company shall market and promote the Products and shall
provide Affymetrix with [***] quantities of any applicable printed and soft copy
(suitable for display on the web) marketing materials for the Products.
Affymetrix will cooperate [***] with the Company to [***] all marketing and
promotional materials regarding products supplied to the Company under the
Supply Agreement or otherwise incorporating Affymetrix trademarks. Affymetrix
shall have the right to use such materials in a reasonable manner solely in
connection with its solicitation and procurement of orders for the Products
pursuant to this Agreement. Affymetrix shall not alter or modify such marketing
materials except by prior written agreement of the Company.

               5.3 The Company shall inform Affymetrix within [***] of any [***]
changes in the price for the Products. At any time after Affymetrix ceases to be
the [***] sales agent of the Company, the Company shall inform Affymetrix within
[***] of the acceptance of a purchase order from an end user for Products [***].
Upon such notice, Affymetrix shall [***].

               5.4 The Company shall use commercially reasonable efforts to
provide Affymetrix with [***] prior written notice of any material changes to
product specifications, manufacturing methods, and marketing and sale
documentation (excluding such changes made by Affymetrix that relate to
components purchased from Affymetrix).

               5.5 The Company shall ship to the end user all Products sold
pursuant to complete orders submitted by Affymetrix and accepted by the Company
pursuant to the terms of this Agreement.

               5.6 The Company represents and warrants to Affymetrix that the
Products (excluding components purchased from Affymetrix) are manufactured in
accordance with all applicable laws and regulations [***]; provided, however,
that the Company's liability under this sentence shall be limited to [***]
During the term of this Agreement, the Company shall maintain product liability
insurance with limits of coverage in an amount [***].

        6. COMMISSION.

               6.1 The Company shall pay Affymetrix a commission equal to [***]
percent ([***]%) of the Commissionable Invoice Price (as defined below) on the
sale of each Product pursuant to an order submitted by Affymetrix. For purposes
of determining when a sale of a

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
     HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
        COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT
                              OF 1934, AS AMENDED.

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Product occurs, the sale shall be deemed to occur on the date of shipment of the
Product to the purchaser of the Product. All commission payments shall be made
within [***] of the end of each [***] in which the sale was made. For purposes
of calculating the commission payable by the Company to Affymetrix hereunder,
the Commissionable Invoice Price shall mean the invoice price of each Product
([***]) less the price paid by the Company to Affymetrix for the components of
each Product purchased from Affymetrix.

               6.2 Each commission payment shall be accompanied by a report
setting forth the Products sold in the previous month, the name of the
purchaser, and the quantity and date of Product purchased, the date of shipment
and calculations used to determine such commissions. The parties agree to
develop mutually satisfactory forms and systems as mutually deemed appropriate
to facilitate the tracking and calculation of Commissionable Invoice Price. Such
reports and all information contained therein shall be Confidential Information
of the Company and subject to the confidentiality obligations of this Agreement,
including, without limitation, Section 10 of this Agreement.

               6.3 The Company shall prepare and keep complete, and accurate
records of all Product purchases and the commissions due therefrom.

               6.4 The Company shall permit an independent certified public
accounting firm of nationally recognized standing appointed by Affymetrix, and
reasonably acceptable to the Company, to examine and audit the Company's records
during reasonable business hours upon at least [***] prior written notice and no
more frequently than [***] per year to the extent necessary to verify the
accuracy of the reports delivered under Section 6.2 above. If such an audit
correctly uncovers a deficiency in payment of commissions payable by the Company
hereunder, the Company shall [***] pay such deficient amount, and if the amount
of any such deficiency is greater than [***] percent ([***]%) of the total
amount due during the audited period, the Company shall bear the reasonable out
of pocket expenses of such accounting firm to conduct such audit, otherwise
Affymetrix shall bear the costs of such audit.

        7. TERM OF AGREEMENT.

               7.1 This Agreement shall become effective on the Closing Date (as
such term is defined in the Preferred Stock Purchase Agreement, dated as of the
date hereof, among Affymetrix, Callida Genomics, Inc. and Hyseq, Inc.) and shall
continue unless terminated in accordance with the terms and conditions hereof.

               7.2 This Agreement may be terminated by either Party for cause by
written notice if the other Party materially breaches any provision of this
Agreement and fails to substantially cure such breach within [***] of written
notice describing the breach and the intent of the notifying Party to terminate
this Agreement in the event such breach is not substantially cured; provided
however, that the [***] in accordance with Section 1.2 of this Agreement shall
not give rise to termination of this Agreement.

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
     HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
        COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT
                              OF 1934, AS AMENDED.

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               7.3 At any time after the expiration of the Option (as such term
is defined in the Option Agreement, dated as of the date hereof, among the
Company, Callida Genomics, Inc. and Affymetrix) and after Affymetrix has [***]
in accordance with Section 1.2, either Party shall have the right to terminate
this Agreement upon [***] written notice of their intention to do so provided
the cumulative amount of Net Sales of Products procured by Affymetrix is less
than $[***] and the Net Sales of Products procured by Affymetrix in the
preceding [***] period is less than $[***]. The term "Net Sales" means the
amounts received by the Company from all sales procured by Affymetrix of any
Product, including non-cash consideration, which shall be reflected in the
Company's books and records maintained in accordance with the accounting
principles used by the Company consistently applied across all of its products,
less the following deductions with respect to such sale, to the extent included
in the amounts invoiced or subsequently actually allowed and taken: [***]. A
"sale" shall exclude [***].

               7.4 The termination of this Agreement shall not release the
Company from the obligation to pay any sum that may be owing to Affymetrix
(whether then or thereafter due) or operate to discharge any liability that had
been incurred by the Company prior to any such termination. Any termination of
this Agreement shall not be an exclusive remedy, but shall be in addition to any
legal or equitable remedies available. Sections 6 (only to the extent the
Company has accepted orders from Affymetrix before such termination or
expiration), 7.4, 8, 9, 10 and 11 shall survive any termination or expiration of
this Agreement.

        8. DISCLAIMER; INDEMNITY.

               8.1 EXCEPT AS OTHERWISE PROVIDED HEREIN, NEITHER PARTY MAKES ANY
WARRANTIES TO THE OTHER PARTY WITH RESPECT TO THE PRODUCTS AND SERVICES AND EACH
DISCLAIMS ALL IMPLIED WARRANTIES INCLUDING WARRANTIES OF MERCHANTABILITY,
FITNESS FOR USE OR PARTICULAR PURPOSE AND NONINFRINGEMENT. EXCEPT AS OTHERWISE
PROVIDED HEREIN, NEITHER PARTY ASSUMES NOR AUTHORIZES ANY OTHER PERSON TO ASSUME
FOR IT ANY LIABILITY IN CONNECTION WITH THE SALE OR USE OF THE PRODUCTS.

               8.2 The Company shall indemnify and hold Affymetrix and its
directors, officers and employees (the "Affymetrix Indemnitees") harmless from
and against all losses, liabilities, damages and expenses (including reasonable
attorneys' fees and costs) resulting from all claims, demands, actions and other
proceedings ("Claims") by any unaffiliated third party to the extent arising
from (a) the breach of any representation, warranty or covenant of the Company
under this Agreement, or (b) [***] liability caused by [***], except in each
case to the extent caused by the breach of any representation, warranty or
covenant of Affymetrix under this Agreement or the gross negligence or willful
misconduct of the Affymetrix Indemnitees or in the event that such Claims are
caused by the components of each Product purchased from Affymetrix.

               8.3 Affymetrix shall indemnify and hold the Company and its
directors, officers and employees (the "Company Indemnitees") harmless from and
against all losses,

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
     HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
        COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT
                              OF 1934, AS AMENDED.

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liabilities, damages and expenses (including reasonable attorneys' fees and
costs) resulting from all claims, demands, actions and other proceedings by any
unaffiliated third party to the extent arising from the breach of any
representation, warranty or covenant of Affymetrix under this Agreement, except
in each case to the extent caused by the breach of any representation, warranty
or covenant of the Company under this Agreement or the gross negligence or
willful misconduct of the Company Indemnitees.

               8.4 A Party (the "Indemnitee") that intends to claim
indemnification under this Section 8 shall promptly notify the other Party (the
"Indemnitor") of any claim, demand, action or other proceeding for which the
Indemnitee intends to claim such indemnification. The Indemnitor shall have the
right to participate in, and to the extent the Indemnitor so desires jointly
with any other indemnitor similarly noticed, to assume the defense thereof with
counsel selected by the Indemnitor; provided, however, that the Indemnitee shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the Indemnitor, if representation of the Indemnitee by the counsel retained
by the Indemnitor would be inappropriate due to actual or potential differing
interests between the Indemnitee and any other party represented by such counsel
in such proceedings. The indemnity obligations under this Section 8 shall not
apply to amounts paid in settlement of any claim, demand, action or other
proceeding if such settlement is effected without the prior express written
consent of the Indemnitor, [***]. The failure to deliver notice to the
Indemnitor within a reasonable time after notice of any such claim or demand, or
the commencement of any such action or other proceeding, if prejudicial to its
ability to defend such claim, demand, action or other proceeding, shall relieve
such Indemnitor of any liability to the Indemnitee under this Section 8 with
respect thereto, but the omission so to deliver notice to the Indemnitor shall
not relieve it of any liability that it may have to the Indemnitee otherwise
than under this Section 8. The Indemnitor may not settle or otherwise consent to
an adverse judgment in any such claim, demand, action or other proceeding, that
diminishes the rights or interests of the Indemnitee, or admits liability or
fault of the Indemnitee, without the prior [***] written consent of the
Indemnitee, [***]. The Indemnitee, its employees and agents, shall reasonably
cooperate with the Indemnitor and its legal representatives in the investigation
of any claim, demand, action or other proceeding covered by this Section 8.

        9. LIABILITY LIMITATION.

        EXCEPT AS SPECIFIED UNDER SECTION 8, NEITHER PARTY WILL BE LIABLE UNDER
ANY SECTION OR SUBJECT MATTER OF THIS AGREEMENT OR UNDER ANY CONTRACT,
NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES.

        10. CONFIDENTIALITY.

               10.1 For a period of [***] from following the expiration of this
Agreement, each Party shall maintain the Confidential Information of the other
Party (including the terms of this Agreement) in strict confidence, and shall
not disclose, divulge, or otherwise communicate such Confidential Information of
the other, or use it for any purpose, except as permitted by this Agreement, and
in order to carry out the terms and objectives of this Agreement; provided,

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
     HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
        COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT
                              OF 1934, AS AMENDED.

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however, that such disclosure shall be solely to: (i) employees who need to know
such Confidential Information in order to perform the receiving Party's
obligations under this Agreement; and (ii) solely upon prior written notice to,
and approval by, the disclosing Party, to third party consultants who are bound
by confidentiality obligations at least as strict as those set forth in this
Agreement. Without limiting the foregoing, the parties will use any and all
[***] precautions to prevent and restrain the unauthorized disclosure of any
Confidential Information of the other Party. The provisions of this paragraph
shall not apply to Confidential Information which:

               (a) was known or used by the receiving Party or its affiliates
without any restriction on disclosure, prior to its date of disclosure to the
receiving Party, as evidenced by the prior written records of the receiving
Party or its affiliates; or

               (b) either before or after the date of the disclosure to the
receiving Party is lawfully disclosed without restriction on disclosure to the
receiving Party or its affiliates by an independent, unaffiliated third party
rightfully in possession of the Confidential Information, provided that if such
Confidential Information is provided to the receiving Party by a third party
rightfully in possession of the Confidential Information, but with restrictions
on disclosure, the receiving Party may use such Confidential Information in
accordance with such restrictions of the third party;

               (c) either before or after the date of the disclosure to the
receiving Party becomes published or generally known to the public through no
fault or omission of the receiving Party or its affiliates;

               (d) is required to be disclosed by the receiving Party or its
affiliates to comply with applicable laws, to comply with a court order, or to
comply with governmental regulations, provided that the receiving Party provides
prior written notice of such disclosure to the other Party and takes [***]
actions to avoid and/or minimize the degree of such disclosure; or

               (e) is independently developed by the receiving Party or its
affiliates without reference to the Confidential Information.

        11. MISCELLANEOUS.

               11.1 Neither Party nor any of its affiliates shall issue any
press release or otherwise publicly disseminate any information relating to this
Agreement without the prior written approval of the other Party, [***], or
except as otherwise required by law.

               11.2 Each Party represents and acknowledges that it has read this
Agreement and fully understands and agrees to its terms, and that each Party has
been represented by counsel in connection with the negotiation and execution of
this Agreement.

               11.3 This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
     HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
        COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT
                              OF 1934, AS AMENDED.

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               11.4 This Agreement shall be construed according to the laws of
California without regard to conflict of law provisions.

               11.5 Any notice, requests, delivery, approval or consent required
or permitted to be given under this Agreement shall be in writing and shall be
deemed to have been sufficiently given if delivered to the Party to whom it is
directed at its address shown below or such other address as such Party shall
have last given by notice to the other Party (referred to herein as "notice").
All notices shall be effective upon receipt.

        If to the Company, addressed to:

                      N-Mer, Inc.
                      670 Almanor Avenue
                      Sunnyvale, CA 94086
                      Attn: Dr. Radoje Drmanac
                      Facsimile Number:   (408) 524-8141

        If to Affymetrix, addressed to:

                      Affymetrix, Inc.
                      3380 Central Expressway
                      Santa Clara, California 95051
                      Attn:  General Counsel
                      Fax:  (408) 481-4709

               11.6 Affymetrix may assign any rights or obligations of this
Agreement to a party who acquires all or substantially all of the assets of
Affymetrix or of that part of the business of Affymetrix to which this Agreement
relates by merger or sale of assets or otherwise. The Company may not assign or
transfer any rights or obligations of this Agreement by merger or sale of assets
or otherwise to a third party or its affiliates without the prior written
consent of Affymetrix which must be obtained and will not be unreasonably
withheld or delayed. For purposes of clarity, any [***] shall be deemed to be a
transfer of rights and obligations hereunder. Any attempted or purported
assignment in violation of the foregoing shall be void. This Agreement shall
inure to the benefit of, and be binding upon, the Parties and their successors
and permitted assigns. Except as otherwise expressly provided herein, the rights
and obligations hereunder may not be assigned or delegated by any Party hereto
without the prior written consent of each other Party hereto.

               11.7 ARBITRATION. In the event of any controversy or claim
relating to, arising out of or in any way connected to any provision of this
Agreement ("Dispute"), the Parties shall seek to settle their differences
amicably between themselves. Any unresolved Dispute shall be finally resolved by
final and binding arbitration. Whenever a Party shall decide to institute
arbitration proceedings, it shall give written notice to that effect to the
other Party. The Party giving such notice shall refrain from instituting the
arbitration proceedings for a period of [***] following such notice to allow the
Parties to attempt to resolve the Dispute between

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
     HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
        COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT
                              OF 1934, AS AMENDED.

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themselves. If the Parties are still unable to resolve the dispute, the Party
giving notice may institute the arbitration proceeding. The procedure for the
arbitration will be as follows: 1. [***] will be chosen in accordance with the
arbitration selection rules of JAMS. The selection process will take a maximum
of [***]. 2. The arbitration will take place under JAMS rules to the extent the
rules are not superceded by the agreements of the party to arbitrate or any
agreed limitation on damages. 3. The letter of allegation and a response shall
be filed with [***] arbitrator within [***] of the selection and agreement of
[***] arbitrator to participate. 4. The Parties agree that [***] in connection
with any arbitration that may take place pursuant to this Section 11.7 and,
therefore, the Parties and [***] arbitrator shall use their [***] efforts to
conclude the arbitration, including the issuance of any award resulting
therefrom, within a maximum of [***] from the time of the filing of the
complaint (or, if applicable, in the time periods otherwise specified in Section
1.2) or letter of allegation with [***] arbitrator. 5. The arbitration shall
take place in the San Francisco Bay Area. 6. [***] Judgment on the award of
[***] arbitrator may be entered in the Superior Court of Santa Clara County in
the State of California. All Parties admit to the jurisdiction of the Superior
Court of Santa Clara County in the State of California for purposes of
enforcement of the award of [***] arbitrator and compelling arbitration in
accordance with this Section 11.7. Except to the extent entry of judgment and
any subsequent enforcement may require disclosure, all matters relating to the
arbitration, including the award, shall be held in confidence by the Parties.
Nothing in this Section 11.7 shall be construed to preclude a Party from seeking
injunctive relief in a court of law for a breach of Section 10 where absent such
relief such Party would suffer irreparable harm.

               11.8 This Agreement and the documents referred to herein,
together with the Letter Agreement, dated as of the date hereof, among
Affymetrix, N-Mer, Callida Genomics, Inc. and Hyseq, Inc., are the full
understanding of the Parties with respect to the subject matter hereof and
supersede all prior understandings and writings relating to the subject matter
herein. No waiver alteration or modification of any of the provisions herein
shall be binding unless in writing and signed by the Parties.

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
     HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
        COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT
                              OF 1934, AS AMENDED.

                                       10
<PAGE>

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

N-MER, INC.

By:    /s/ George B. Rathmann
       --------------------------------------------

Name:  George Rathmann
       --------------------------------------------

Title: Chairman and Interim Chief Executive Officer
       --------------------------------------------

AFFYMETRIX, INC.

By:    /s/ Barbara A. Caulfield
       --------------------------------------------

Name:  Barbara A. Caulfield
       --------------------------------------------

Title: Executive Vice President and General Counsel
       --------------------------------------------

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
     HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
        COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT
                              OF 1934, AS AMENDED.

                                       11<PAGE>
                                                                   EXHIBIT 10.24

                                  N-MER, INC.

                                OPTION AGREEMENT

        This Option Agreement (the "Agreement") is entered into as of October
24, 2001, among Callida Genomics, Inc., a Delaware corporation ("CGI"), N-Mer,
Inc., a Delaware corporation ("N-Mer"), and Affymetrix, Inc., a Delaware
corporation ("Affymetrix").

                                    RECITALS

        WHEREAS, CGI, Hyseq, Inc., a Nevada corporation ("Hyseq"), and
Affymetrix have entered into the Preferred Stock Purchase Agreement, dated as of
the date hereof (the "Stock Purchase Agreement");

        WHEREAS, N-Mer and Affymetrix have entered into the Product Development
and Supply Agreement, dated as of the date hereof (the "Supply Agreement"), and
the Product Solicitation Agreement, dated as of the date hereof (the "Product
Solicitation Agreement");

        WHEREAS, this Agreement is being entered into in order to induce
Affymetrix to enter into the Stock Purchase Agreement, Supply Agreement and
Product Solicitation Agreement and to consummate the transactions contemplated
thereby;

        WHEREAS, N-Mer is a wholly-owned subsidiary of CGI; and

        WHEREAS, CGI wishes to grant Affymetrix an option to acquire 81% of the
capital stock of N-Mer.

        NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto hereby agree as
follows:

                                    ARTICLE I

               SECTION 1.1 DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth below:

        "Affiliate" shall mean with respect to any Person (i) any other Person
that directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with such Person, (ii) or any other
Person owning or controlling 25% or more of the outstanding voting securities of
or other ownership interest in such Person or (iii) any officer, director,
general partner, managing partner or member of such Person.

        "Business Day" shall mean a day other than a Saturday or Sunday on which
commercial banks in New York, New York are not required or permitted under
applicable laws or regulations to close.

        "Capital Lease Obligations" shall mean, with respect to any Person, the
obligation of such Person to pay rent or other amounts under any lease with
respect to any property (whether

<PAGE>

real, personal or mixed) acquired or leased by such Person that is required to
be accounted for under generally accepted accounting principles as a liability
on a consolidated balance sheet of such Person.

        "CGI Shares" shall mean (i) all shares of Series A-1 Preferred Stock,
par value $0.001 per share, of CGI purchased on the Effective Date by Affymetrix
pursuant to the Stock Purchase Agreement, (ii) all Additional Shares (as such
term is defined in the Stock Purchase Agreement) purchased by Affymetrix in a
Qualified Financing pursuant to Article VI of the Stock Purchase Agreement,
(iii) any shares of common stock, par value $0.001 per share, of CGI issued upon
conversion of the foregoing and (iv) any securities issued successively in
exchange for or in respect of the foregoing, whether pursuant to a merger or
consolidation, as a result of any successive stock split or reclassification of,
or stock dividend on, any of the foregoing or otherwise.

        "Closing" shall have the meaning set forth in Section 2.3.

        "Closing Date" shall mean the date of the Closing.

        "Common Stock" shall mean the shares of common stock, par value $0.001
per share, of N-Mer.

        "Co-Sale Consideration" shall mean the gross cash and other property
received as consideration by Affymetrix for the CGI Shares transferred by
Affymetrix in exercise of its co-sale rights under Section 2.1 of the CGI
Stockholders Agreement, which consideration shall be prior to the payment of all
fees, expenses, taxes and other charges paid by Affymetrix in respect thereof.

        "Cumulative N-Mer Array Program Investment" shall mean the cumulative
operating expenses incurred and recognized by N-Mer as reflected in the Income
Statement.

        "Effective Date" shall mean the Closing Date (as such term is defined in
the Stock Purchase Agreement).

        "Excess Indebtedness" shall mean (i) the amount of Indebtedness of N-Mer
as of the Closing minus (ii) $1,000,000.

        "Equity Securities" shall mean any securities having voting rights in
the election of the Board of Directors of CGI not contingent upon default, or
any securities evidencing an ownership interest in CGI, or any securities
convertible into or exercisable for any shares of the foregoing, or any
agreement or commitment to issue any of the foregoing, including, without
limitation, Common Stock and Preferred Stock, par value $0.001 per share, of
CGI.

        "Exercise Notice" shall have the meaning set forth in Section 2.2.

        "First Period" shall mean the period commencing on the Effective Date
and ending on the third anniversary of this Agreement.

        "CGI Stockholders Agreement" shall mean the Stockholders Agreement,
dated as of the date hereof, among CGI, Hyseq and Affymetrix.

                                      -2-
<PAGE>

        "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976 or any successor law, and regulations and rules issued pursuant to that Act
or any successor law.

        "Income Statement" means a statement of income prepared in accordance
with generally accepted accounting principles consistently applied for the
period from the date of this Agreement to the date of delivery of the Exercise
Notice.

        "Indebtedness" shall mean, with respect to any Person, (i) all
obligations of such Person for borrowed money or for the deferred purchase price
of property or services (including all obligations, contingent or otherwise, of
such Person in connection with letters of credit, bankers' acceptances, Interest
Rate Protection Agreement or other similar instruments, including currency
swaps) other than indebtedness to trade creditors and service providers incurred
in the ordinary course of business and payable on usual and customary terms,
(ii) all obligations of such Person evidenced by bonds, notes, debentures or
other similar instruments, (iii) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the remedies available to the seller or
lender under such agreement are limited to repossession or sale of such
property), (iv) all Capital Lease Obligations of such Person, (v) all
obligations of the types described in clauses (i), (ii), (iii) or (iv) above
secured by (or for which the obligee has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in any property (including
accounts, contract rights and other intangibles) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Indebtedness, (vi) all preferred stock issued by such Person which is
redeemable, prior to full satisfaction of the Company's obligations under this
Promissory Note, other than at the option of such Person, (vii) all Indebtedness
of others subject to a Third Party Guaranty by such Person and (viii) all
Indebtedness of any partnership of which such Person is a general partner.

        "Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement or similar hedging arrangement used by a
Person to fix or cap a floating rate of interest on Indebtedness to a negotiated
maximum rate or amount.

        "Lien" shall mean a charge, mortgage, pledge, security interest,
restriction, claim, lien, encumbrance or adverse claim of any nature whatsoever
(other than any restrictions on transfer under state and/or federal securities
laws).

        "N-Mer Field" shall mean have the meaning ascribed to such term in the
Product Development and Supply Agreement, dated as of the date hereof, between
N-Mer and Affymetrix.

        "Notice of Disagreement" shall have the meaning set forth in Section
2.2.

        "Option" shall have the meaning set forth in Section 2.1.

        "Option Purchase Price" shall have the meaning set forth in Section 2.1.

        "Option Shares" shall mean 81% of the total number of shares of Common
Stock outstanding on the Closing Date.

                                      -3-
<PAGE>

        "Person" shall mean an individual, corporation (including any non-profit
corporation), association, general or limited partnership, organization,
business, firm, limited liability company, joint venture, trust, estate, or
other entity, association or organization, whether constituting a separate legal
entity or not.

        "Qualified Financing" shall have the meaning ascribed to such term in
the Stock Purchase Agreement.

        "Securities Act" shall have the meaning set forth in Section 4.2.

        "Second Period" shall mean the period commencing on the first day
following the end of the First Period and ending on the date that is one year
after the commencement of the Second Period.

        "Term" means the First Period, the Second Period and the Third Period.

        "Third Period" shall mean the period commencing on the first day
following the end of the Second Period and ending at 11:59 p.m., California
time, on the date that is one year after the commencement of the Third Period.

        "Third Party Guaranty" means, with respect to any Person, any
obligation, contingent or otherwise, of such Person guaranteeing or having the
economic effect of guaranteeing any Indebtedness of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, and including
any obligation of such Person, (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness, (ii) to purchase
property, securities or services for the purpose of assuring the holder of such
Indebtedness of the payment of such Indebtedness of (iii) to maintain working
capital, equity capital or the financial condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness.

        "Work Plan" shall have the meaning ascribed to such term in the Supply
Agreement.

                                   ARTICLE II

                                 TERMS OF OPTION

               SECTION 2.1 GRANT OF OPTION. (a) CGI hereby grants Affymetrix an
option to purchase the Option Shares at the purchase price set forth below and
subject to the other terms and conditions set forth herein (the "Option").

               (b) The purchase price for the Option Shares ("Option Purchase
Price") shall consist of securities and cash as follows:

                      (i) (A) If Affymetrix has not transferred any CGI Shares
        in exercise of its co-sale rights under Section 2.1 of the CGI
        Stockholders Agreement, all CGI Shares; or

                                      -4-
<PAGE>

                          (B) If Affymetrix has transferred any of the CGI
        Shares in exercise of its co-sale rights under Section 2.1 of the CGI
        Stockholders Agreement, (1) the Co-Sale Consideration and (2) any CGI
        Shares not transferred by Affymetrix in exercise of such co-sale rights;
        and

                     (ii) (A) If the Option is exercised during the First
        Period, an amount of cash equal to (1) $32 million minus (2) the Excess
        Indebtedness;

                          (B) If the Option is exercised during the Second
        Period, an amount of cash equal to (1) the lesser of (x) the product of
        $32 million multiplied by a fraction, the numerator of which is the
        Cumulative N-Mer Array Program Investment and the denominator of which
        is $20 million or (y) $48 million minus (2) the Excess Indebtedness; or

                          (C) If the Option is exercised during the Third
        Period, an amount of cash equal to (1) the lesser of (x) the product of
        $36.8 million multiplied by a fraction, the numerator of which is the
        Cumulative N-Mer Array Program Investment and the denominator of which
        is $20 million or (y) $48 million minus (2) the Excess Indebtedness.

               SECTION 2.2 EXERCISE OF OPTION. (a) The Option shall be
exercisable, for all but not less than all of the Option Shares, at any time
during the Term. Affymetrix may exercise the Option by delivering a written
notice to CGI in substantially the form attached hereto as Annex A (the
"Exercise Notice"). Delivery of the Exercise Notice shall constitute an
irrevocable and binding commitment by Affymetrix to purchase from CGI, and a
binding obligation of CGI to sell to Affymetrix, the Option Shares.

               (b) CGI shall use commercially reasonable efforts to deliver the
Income Statement to Affymetrix within ten (10) Business Days after receipt by
CGI of the Exercise Notice. If Affymetrix elects to dispute any part of the
Income Statement prior to the Closing, Affymetrix shall, not later than 5 p.m.
California time on the fifth (5th) Business Day following delivery by CGI of the
Income Statement to Affymetrix, deliver written notice to CGI of its intention
to dispute the Income Statement ("Notice of Disagreement"). Promptly following
receipt by CGI of a Notice of Disagreement, the Chief Financial Officers of CGI
and Affymetrix shall meet together and attempt to resolve in good faith any
dispute set forth therein. CGI and Affymetrix agree that the Income Statement
shall be considered purely for the purposes of calculating the Option Purchase
Price and for no other purpose.

               SECTION 2.3 CLOSING. Subject to obtaining any required regulatory
approvals and the expiration or termination of any waiting period applicable to
the sale of the Option Shares under the HSR Act, the closing (the "Closing") of
the purchase and sale of the Option Shares shall take place as soon as
practicable after the earlier of (i) if a Notice of Disagreement is delivered,
resolution of any dispute in respect of the Income Statement and (ii) if a
Notice of Disagreement is not delivered, the lapse of the five (5) Business Day
period provided for the delivery of a Notice of Disagreement, or such other date
as Affymetrix and CGI shall mutually agree. The Closing shall be held at 10:00
a.m., local time, at the principal office of N-Mer. At such Closing, (i) CGI
shall deliver to Affymetrix certificates or other documents evidencing the

                                      -5-
<PAGE>

Option Shares being sold, free and clear of any Liens (and CGI hereby represents
and warrants to Affymetrix that such Option Shares shall, immediately prior to
such sale, be so free and clear of Liens and that it shall have good and
marketable title to such Option Shares), (ii) Affymetrix shall deliver to CGI
the cash consideration to be paid for the Option Shares in accordance with
Section 2.1 in cash by wire transfer in immediately available funds to an
account specified by CGI to Affymetrix not less than five (5) days prior to such
Closing and all Co-Sale Consideration deliverable pursuant to Section
2.1(b)(i)(B), (iii) Affymetrix shall deliver to CGI certificates or other
documents evidencing the CGI Shares to be delivered by Affymetrix pursuant to
Section 2.1(b) free and clear of any Liens (and Affymetrix hereby represents and
warrants to CGI that such CGI Shares shall, immediately prior to such delivery,
be so free and clear of Liens), (iv) N-Mer shall duly record the transfer on its
books and records, (v) N-Mer, CGI and Affymetrix shall enter into a
Stockholders' Agreement in substantially the form attached hereto as Annex B and
a Registration Rights Agreement in substantially the form attached hereto as
Annex C and (vi) N-Mer, CGI and Affymetrix shall execute such other documents
and take such other action as shall be reasonably necessary to consummate the
purchase and sale of the Option Shares on the terms contemplated by this Article
II.

        SECTION 2.4 AMENDMENT OF LICENSE AGREEMENT. If the Option is exercised
during the Second Period or the Third Period and a Qualified Financing has not
occurred prior to the Closing, then the License Agreement, dated as of the date
hereof, between CGI and N-Mer shall be deemed amended as of the Closing such
that Section 3.5 of such agreement is deleted in its entirety.

                                   ARTICLE III

                           COVENANTS OF CGI AND N-MER

        SECTION 3.1 RESTRICTIONS ON TRANSFER AND ISSUANCE OF COMMON STOCK.

        CGI shall not, directly or indirectly, sell, assign, transfer or
otherwise dispose of, or pledge, hypothecate or otherwise encumber, any of the
shares of Common Stock. N-Mer shall not issue equity securities (including,
without limitation, Common Stock) or securities convertible into equity
securities to any Person; provided, however, that N-Mer may issue Common Stock
to CGI.

        SECTION 3.2 BASIC FINANCIAL INFORMATION AND REPORTING.

                    (a) N-Mer will maintain true books and records of account in
        which full and correct entries will be made of all its business
        transactions pursuant to a system of accounting established and
        administered in accordance with generally accepted accounting principles
        consistently applied.

                    (b) As soon as practicable after the end of each fiscal year
        of N-Mer, and in any event within ninety (90) days thereafter, N-Mer
        will furnish Affymetrix a consolidated balance sheet of N-Mer, as at the
        end of such fiscal year, and a consolidated statement of income and a
        consolidated statement of cash flows of N-Mer, for such year, all
        prepared in accordance with generally accepted accounting principles
        consistently

                                      -6-
<PAGE>
        applied and setting forth in each case in comparative form the figures
        for the previous fiscal year, all in reasonable detail. As soon as
        practicable after the end of each fiscal year of N-Mer, and in any event
        within ninety (90) days thereafter, N-Mer will furnish Affymetrix a
        detailed schedule of the all amounts paid to each of Hyseq, CGI and
        Affymetrix during such year. Such financial statements and schedule
        shall be accompanied by a report and opinion thereon by independent
        public accountants selected by N-Mer's Board of Directors.

                      (c) N-Mer will furnish Affymetrix, as soon as practicable
        after the end of the first, second and third quarterly accounting
        periods in each fiscal year of N-Mer, and in any event within forty-five
        (45) days thereafter, a consolidated balance sheet of N-Mer as of the
        end of each such quarterly period, and a consolidated statement of
        income and a consolidated statement of cash flows of N-Mer for such
        period and for the current fiscal year to date, certified by an
        executive officer of N-Mer and prepared in accordance with generally
        accepted accounting principles, with the exception that no notes need be
        attached to such statements and normal, recurring year-end audit
        adjustments may not have been made. N-Mer will also furnish Affymetrix,
        as soon as practicable after the end of the first, second and third
        quarterly accounting periods in each fiscal year of N-Mer, and in any
        event within forty-five (45) days thereafter, a detailed schedule of the
        all amounts paid to each of Hyseq, CGI and Affymetrix during such
        quarterly period, certified by an executive officer of N-Mer.

                      (d) N-Mer will furnish Affymetrix, as soon as practicable
        after the end of each of the first two months in each fiscal quarter,
        and in any event within fifteen (15) days thereafter, a consolidated
        balance sheet of N-Mer as of the end of each such monthly period, and a
        consolidated statement of income and a consolidated statement of cash
        flows of N-Mer for such period and for the current fiscal year to date,
        certified by an executive officer of N-Mer and prepared in accordance
        with generally accepted accounting principles, with the exception that
        no notes need be attached to such statements and normal, recurring
        year-end audit adjustments may not have been made. N-Mer will also
        furnish Affymetrix, as soon as practicable after the end of each month,
        and in any event together with the financial statements furnished under
        Sections 3.2(b), (c) and (d), a detailed schedule of all amounts paid by
        N-Mer to each of Hyseq, CGI and Affymetrix and their respective
        Affiliates during such monthly period together with a detailed
        description of the basis for such payments (including the methodology
        used for allocating costs to N-Mer), certified by an executive officer
        of N-Mer.

               SECTION 3.3 INSPECTION RIGHTS. Affymetrix (including its
officers, employees, counsel, accountants and other representatives) shall have
the right to visit and inspect any of the properties of N-Mer or any of its
subsidiaries, and to discuss the affairs, finances and accounts of N-Mer or any
of its subsidiaries with its officers and employees, and to review such books,
contracts, records and other information as is reasonably requested all at such
reasonable times and as often as may be reasonably requested.

               SECTION 3.4 AFFILIATE TRANSACTIONS. Neither N-Mer nor any of its
subsidiaries shall enter into any contract or transaction with or for the direct
or indirect benefit of, or pay or provide any money or other form of
consideration, directly or indirectly, to or for the benefit of,

                                      -7-
<PAGE>

or assume, guarantee or otherwise become liable for any indebtedness or other
obligation of, or sell, lease (as lessor or lessee), transfer, give or otherwise
assign or acquire any properties or assets, tangible or intangible, or services
to or from, CGI or Hyseq or any of their respective Affiliates which is not in
the ordinary course of business on terms at least as favorable to N-Mer or such
subsidiary as an arm's-length arrangement or which is not in accordance with the
Work Plan.

               SECTION 3.5 LIMITATIONS ON LINE OF BUSINESS. N-Mer shall be
primarily engaged in the N-Mer Field and shall pursue its business solely in
accordance with the Work Plan, and shall not engage in any activities that are
not directly related to the N-Mer Field and not in accordance with the Work
Plan.

               SECTION 3.6 LIMITATIONS ON CERTAIN ACTIVITIES. Neither N-Mer nor
any of its subsidiaries shall take any action in respect of, and CGI shall not
cause N-Mer to take any action in respect of, (i) the adoption, amendment,
alteration or repeal of any provision or term of any certificate of
incorporation or bylaws (or similar constituent documents) for N-Mer or any of
its subsidiaries; (ii) any merger or consolidation involving N-Mer (other than
any merger or consolidation of a wholly-owned subsidiary of N-Mer with or into
N-Mer or another wholly-owned subsidiary of N-Mer); (iii) any reorganization,
dissolution, liquidation or other winding-up or termination of N-Mer or any of
its subsidiaries; (iv) the redemption, purchase, repurchase or other acquisition
for value any equity securities of N-Mer or any of its subsidiaries (except for
acquisitions of common stock by N-Mer pursuant to restricted stock, employment
or consulting agreements which permit N-Mer to repurchase such shares upon
termination of services to N-Mer or in exercise of N-Mer's right of first
refusal upon a proposed transfer); (v) the payment or declaration of any
dividend or distribution on any of equity securities of N-Mer (other than a
dividend payable solely in common stock of N-Mer); and (vi) entering into,
assuming or becoming bound by any contract to do any of the foregoing or
otherwise attempting to do any of the foregoing, either directly or indirectly.

               SECTION 3.7 TERMINATION OF COVENANTS. The covenants of CGI and
N-Mer set forth in this Article III shall terminate upon the earlier of (i) the
expiration of the Term and (ii) the Closing.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

               SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF CGI AND N-MER.

               CGI and N-Mer, jointly and severally, hereby represent and
warrant to Affymetrix as follows:

                    (a) ORGANIZATION AND GOOD STANDING. Each of CGI and N-Mer is
        a corporation duly organized, validly existing and in good standing
        under the laws of the State of Delaware. Each of CGI and N-Mer has all
        requisite corporate power and authority to execute and deliver this
        Agreement and to carry out the provisions of this Agreement.

                                      -8-
<PAGE>

                    (b) CAPITALIZATION; VOTING RIGHTS. The authorized capital
        stock of N-Mer, as of the date of this Agreement, consist of 1,000
        shares of Common Stock, of which 100 shares (the "Outstanding Shares")
        are issued and outstanding. All of the Outstanding Shares are owned by
        CGI. Except as may be granted pursuant to this Agreement, there are no
        outstanding options, warrants, puts, calls, rights (including conversion
        or preemptive rights and rights of first refusal), proxy or stockholder
        agreements, or agreements of any kind for the purchase or acquisition
        from N-Mer or CGI of any securities of N-Mer. The Outstanding Shares
        have been duly authorized, validly issued (including, without
        limitation, issued in compliance with applicable state and federal
        securities laws), fully paid and nonassessable and are, and shall be
        immediately prior to Closing, free of any Liens.

                    (c) AUTHORIZATION; BINDING OBLIGATIONS. All corporate action
        on the part of each of CGI and N-Mer, its officers, directors and
        stockholders necessary for the authorization, execution and delivery of
        this Agreement, the performance of all obligations of each of CGI and
        N-Mer hereunder and the sale and delivery of the Option Shares pursuant
        hereto has been taken. This Agreement is the valid and legally binding
        obligation of each of CGI and N-Mer enforceable against each of CGI and
        N-Mer in accordance with its terms, except (i) as limited by applicable
        bankruptcy, insolvency, reorganization, moratorium or other laws of
        general application affecting enforcement of creditors' rights; and (ii)
        as limited by general principles of equity that restrict the
        availability of specific performance, injunctive relief or other
        equitable remedies. The sale of the Option Shares will not be subject to
        any preemptive rights or rights of first refusal that have not been
        properly waived or complied with.

                    (d) COMPLIANCE WITH OTHER INSTRUMENTS. Neither CGI nor N-Mer
        is in violation or default and the execution and delivery of this
        Agreement and the performance of their respective obligations hereunder
        will not violate or cause a default under, or otherwise conflict with,
        any term of the Certificate of Incorporation or Bylaws of CGI or N-Mer,
        or of any provision of any mortgage, indenture, agreement, instrument or
        contract to which CGI or N-Mer is a party or by which CGI or N-Mer is
        bound. The execution, delivery and performance of and compliance with
        this Agreement, and the sale of the Option Shares pursuant hereto, will
        not, with or without the passage of time or giving of notice, result in
        any such violation, or be in conflict with or constitute a default under
        any such term or provision, or result in the creation of any Lien upon
        any of the properties or assets of CGI or N-Mer.

                    (e) COMPLIANCE WITH LAWS; PERMITS. Neither CGI nor N-Mer is
        in violation of, and the execution and delivery of this Agreement and
        the performance by each of CGI and N-Mer of its obligations hereunder
        will not violate, any statute, rule, regulation, order or restriction of
        any domestic or foreign government or any instrumentality or agency
        thereof in respect of the conduct of its business or the ownership of
        its properties which violation would materially and adversely affect the
        business, financial condition, results of operations or prospects of
        either CGI or N-Mer. No governmental orders, permissions, consents,
        approvals or authorizations are required to be obtained and no
        registrations or declarations are required to be filed in connection
        with the execution and delivery of this Agreement and the offer, sale
        and delivery of the

                                      -9-
<PAGE>

        Option Shares, or the other transactions to be consummated at the
        Closing, as contemplated in this Agreement, except for such orders,
        permissions, consents, approvals or authorizations as may be required
        under applicable federal or state securities laws.

               SECTION 4.2 REPRESENTATIONS AND WARRANTIES OF AFFYMETRIX.

               Affymetrix hereby represents and warrants to CGI and N-Mer as
        follows:

                      (a) AUTHORIZATION; BINDING OBLIGATIONS. Affymetrix has all
        necessary power and authority to execute and deliver this Agreement and
        to carry out its obligations hereunder. All actions on the part of
        Affymetrix required for the due authorization, execution and delivery of
        this Agreement have been taken. This Agreement is the valid and legally
        binding obligation of Affymetrix, enforceable in accordance with its
        terms, except (i) as limited by applicable bankruptcy, insolvency,
        reorganization, moratorium or other laws of general application
        affecting enforcement of creditors' rights; and (ii) as limited by
        general principles of equity that restrict the availability of specific
        performance, injunctive relief or other equitable remedies.

                      (b) PURCHASE ENTIRELY FOR OWN ACCOUNT. Affymetrix is
        acquiring the Option, and will acquire the Option Shares (together with
        the Option, the "Securities"), for its own account, not as a nominee or
        agent, for investment and not with a view to the resale or distribution
        of any part thereof.

                      (c) INVESTMENT EXPERIENCE. Affymetrix is an "accredited
        investor" within the meaning of Rule 501(a) under the Securities Act of
        1933, as amended (the "Securities Act"). Affymetrix has such knowledge
        and experience in financial and business matters that Affymetrix is
        capable of evaluating the merits and risks of the investment
        contemplated hereby and otherwise to protect its own interests in
        connection with the purchase of the Securities.

                      (d) RESTRICTED SECURITIES. Affymetrix understands that the
        Securities are being offered in transactions not involving any public
        offering in the United States within the meaning of the Securities Act,
        that the Securities have not been registered under the Securities Act
        and that Affymetrix may not resell, pledge or otherwise transfer any
        Securities except (A) pursuant to an effective registration statement
        under the Securities Act, (B) in an offshore transaction complying with
        Rule 904 of Regulation S under the Securities Act, or (C) pursuant to
        another applicable exemption from registration.

                      (e) NO PUBLIC MARKET. Affymetrix understands that no
        public market now exists for any of the securities issued by N-Mer and
        that neither N-Mer nor CGI has made any assurances that a public market
        will ever exist for such securities.

                      (f) LEGENDS. Affymetrix understands that the Option
        Shares, and any securities issue in respect thereof or in exchange
        therefor, may bear the following legend until such time, if any, as (A)
        the Option Shares or such securities (i) are sold in compliance with
        Rule 144 under the Securities Act (or a comparable successor provision)
        or pursuant to an effective registration statement under the Securities
        Act or (ii) are

                                      -10-
<PAGE>

        eligible for sale pursuant to Rule 144(k) under the Securities Act (or a
        comparable successor provision), or (B) the Company receives an opinion
        of counsel reasonably acceptable to it to the effect that such legend
        may be removed:

               "THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
               THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
               "SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
               OTHERWISE TRANSFERRED EXCEPT (A) (1) IF REGISTERED UNDER THE
               SECURITIES ACT OR (2) IN A TRANSACTION EXEMPT FROM, OR NOT
               SUBJECT TO, SUCH REGISTRATION (IT BEING UNDERSTOOD THAT NO
               REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF AN
               EXEMPTION) AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
               LAWS OF THE STATES OF THE UNITED STATES."

               The Shares will also bear any legend required by the laws of the
        State of California, including any legend required by the California
        Department of Corporations and Sections 417 and 418 of the California
        Corporations Code.

                      (g) LIENS. The CGI Shares held by Affymetrix on the
        Closing Date are held by it free and clear of any Liens.

                                    ARTICLE V

                                  MISCELLANEOUS

               SECTION 5.1 GOVERNING LAW. This Agreement shall be governed in
all respects by the laws of the State of California without regard to the
conflicts of laws principles thereof.

               SECTION 5.2 SURVIVAL; INDEMNIFICATION. The representations,
warranties, covenants and agreements contained in this Agreement shall survive
the execution and delivery of this Agreement and the Closing. Each party agrees
to indemnify each other party against any and all claims, demands, losses,
damages, liabilities, lawsuits, and other proceedings, judgments and awards, and
costs and expenses (including reasonable attorneys' fees and expenses) incurred
by such other party or any Affiliate of such other party arising from any breach
by such party of any of its representations, warranties, covenants or agreements
in this Agreement.

               SECTION 5.3 SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of, and be binding upon, the parties and their successors and
permitted assigns. Except as otherwise expressly provided herein, the rights and
obligations hereunder may not be assigned or delegated by any party hereto
without the prior written consent of each other party; provided, however, that
Affymetrix may assign this Agreement to any of its Affiliates or to any Person
(or any of such Person's Affiliates) that consolidates or merges with or into,
or otherwise acquires, Affymetrix or the business of Affymetrix to which this
Agreement relates or purchases, leases or otherwise acquires all or
substantially all of the assets of Affymetrix or the assets of that part of the
business of Affymetrix to which this Agreement relates. Any assignment or
delegation contrary to the provisions hereof shall be null and void.

                                      -11-
<PAGE>

               SECTION 5.4 ENTIRE AGREEMENT. This Agreement, together with the
Letter Agreement, dated as of the date hereof, among CGI, Affymetrix, N-Mer and
Hyseq, constitutes the full and entire understanding and agreement between the
parties with regard to the subject matter hereof.

               SECTION 5.5 SEVERABILITY. In case any provision of the Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

               SECTION 5.6 AMENDMENT AND WAIVER. This Agreement may be amended
or modified, and any term or provision of this Agreement may be waived, only
upon the written consent of the parties hereto.

               SECTION 5.7 DELAYS OR OMISSIONS. It is agreed that no delay or
omission to exercise any right, power or remedy accruing to a party, upon any
breach, default or noncompliance by the party under this Agreement, shall impair
any such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance thereafter occurring. It is further agreed
that any waiver, permit, consent or approval of any kind or character on either
party's part of any breach, default or noncompliance under this Agreement or any
waiver on such party's part of any provisions or conditions of this Agreement
must be in writing and shall be effective only to the extent specifically set
forth in such writing. All remedies, either under this Agreement, by law, or
otherwise afforded to any party, shall be cumulative and not alternative.

               SECTION 5.8 NOTICES. All notices, consents or other
communications shall be in writing, and shall be deemed to have been duly given
and delivered when delivered by hand, or when mailed by registered or certified
mail, return receipt requested, postage prepaid, or when received via telecopy,
telex or other electronic transmission, in all cases addressed to the party for
whom intended at its address set forth below:

              If to CGI:

                         Callida Genomics, Inc.
                         670 Almanor Avenue
                         Sunnyvale, California 94085

                         Telephone:   (408) 524-8100
                         Facsimile:   (408) 524-8141
                         Attention:   Dr. Radoje Drmanac

              If to N-Mer:

                         N-Mer, Inc.
                         670 Almanor Avenue
                         Sunnyvale, California 94085

                         Telephone:   (408) 524-8100

                                      -12-
<PAGE>

                         Facsimile:   (408) 524-8141
                         Attention:   Dr. Radoje Drmanac

              with a copy to (which shall not constitute notice):

                         Latham & Watkins
                         135 Commonwealth Drive
                         Menlo Park, California  94025

                         Telephone:   (650) 328-4600
                         Facsimile:   (650) 463-2600
                         Attention:   Alan C. Mendelson, Esq.

              If to Affymetrix:

                         Affymetrix, Inc.
                         3380 Central Expressway
                         Santa Clara, California  95051

                         Telephone:   (408) 731-5000
                         Facsimile:   (408) 731-5394
                         Attention:   General Counsel

              with a copy to (which shall not constitute notice):

                         Sullivan & Cromwell
                         1870 Embarcadero Road
                         Palo Alto, California  94303

                         Telephone:   (650) 461-5600
                         Facsimile:   (650) 461-5700
                         Attention:   John L. Savva, Esq.

or such other address as a party shall have designated by notice in writing to
the other party given in the manner provided by this Section.

               SECTION 5.9 TITLES AND SUBTITLES. The titles of the sections and
subsections of the Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.

               SECTION 5.10 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.

               SECTION 5.11 BROKER'S FEES. Each party hereto represents and
warrants that no agent, broker, investment banker, person or firm acting on
behalf of or under the authority of

                                      -13-
<PAGE>

such party hereto is or will be entitled to any broker's or finder's fee or any
other commission directly or indirectly in connection with the transactions
contemplated herein.

               SECTION 5.12 EXPENSES. Each party shall pay all costs and
expenses that it incurs with respect to the negotiation, execution, delivery and
performance of this Agreement and all of the transactions contemplated herein.

               SECTION 5.13 ATTORNEY'S FEES. If any action at law or in equity
is necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.

               SECTION 5.14 FURTHER ASSURANCES. Each party shall use its
respective reasonable efforts at any time and from time to time to execute and
deliver to the applicable party such further documents and instruments and to
take all such further actions as such other party to this Agreement reasonably
may request to consummate the transactions contemplated by this Agreement.

               SECTION 5.15 REQUIRED APPROVALS As promptly as practicable after
the delivery of the Exercise Notice, CGI shall, and shall cause N-Mer to, make
all filings required to be made by them in order to consummate the sale of the
Option Shares to Affymetrix (including all filings under the HSR Act). Between
the date of the delivery of the Exercise Notice and the Closing Date, CGI shall,
and shall cause N-Mer to, cooperate with Affymetrix with respect to all filings
that Affymetrix reasonably elects to make or is required to make in connection
with the sale of the Option Shares to Affymetrix (including taking all actions
reasonably requested by Affymetrix to cause early termination of any applicable
waiting period under the HSR Act).

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                      -14-
<PAGE>

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.

                                            CALLIDA GENOMICS, INC.

                                            By: /s/ George B. Rathmann
                                                --------------------------------
                                                Name:  George B. Rathmann
                                                Title: Chairman and Interim
                                                       Chief Executive Officer

                                            N-MER, INC.

                                            By: /s/ George B. Rathmann
                                                --------------------------------
                                                Name:  George B. Rathmann
                                                Title: Chairman and Interim
                                                       Chief Executive Officer

                                            AFFYMETRIX, INC.

                                            By: /s/ Barbara A. Caulfield
                                                --------------------------------
                                                Name:  Barbara A. Caulfield
                                                Title: Executive Vice President
                                                       and General Counsel

                             (Signature page to Option Agreement)

<PAGE>

                               NOTICE OF EXERCISE

        The undersigned ______________________, a__ , pursuant to the provisions
of that certain Option Agreement, entered into as of October __, 2001 (the
"Agreement"), among Callida Genomics, Inc., a Delaware corporation ("CGI"),
N-Mer, Inc., a Delaware corporation ("N-Mer"), and Affymetrix, Inc., a Delaware
corporation ("Affymetrix"), hereby agrees to purchase [81] shares of Common
Stock, par value $0.001 per share, of N-Mer.

        The undersigned further acknowledges that it has reviewed the
representations and warranties contained in Section 4.2 of the Agreement and by
its signature below hereby makes such representations and warranties to CGI and
agrees to be bound by all the terms and conditions contained in the Agreement.

Dated: __________________                   [AFFYMETRIX, INC.]

                                            __________________________________
                                            Name:
                                            Title:

<PAGE>

                        AMENDMENT TO THE OPTION AGREEMENT

        This Amendment to the Option Agreement (this "Amendment") is entered
into as of November 13, 2001, among Callida Genomics, Inc., a Delaware
corporation ("CGI"), N-Mer, Inc., a Delaware corporation ("N-Mer"), and
Affymetrix, Inc., a Delaware corporation ("Affymetrix").

        WHEREAS, CGI, N-Mer and Affymetrix entered into the Option Agreement
(the "Agreement") on October 24, 2001; and

        WHEREAS, the parties hereto desire to correct a mistake in Section
4.1(b) of the Agreement relating to the capitalization of N-Mer.

        NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto hereby agree as
follows:

        1. AMENDMENT TO SECTION 4.1(b) OF THE AGREEMENT. Section 4.1(b) of the
Agreement is hereby amended to replace the number "1,000" appearing in the first
sentence of such section with the number "100".

        2. NO OTHER AMENDMENTS; EFFECT OF AMENDMENT. Except as expressly amended
by Section 1 of this Amendment, the Agreement shall remain in full force and
effect in the form in which it existed immediately prior to the execution and
delivery of this Amendment. This Amendment shall be deemed effective, and
Section 4.1(b) shall be deemed amended, for all purposes, as of the time of
first signing of the Agreement.

        3. GOVERNING LAW. This Amendment shall be governed in all respects by
the laws of the State of California without regard to the conflicts of laws
principles thereof.

        4. ENTIRE AGREEMENT. This Amendment, together with the Agreement and the
Letter Agreement, dated as of October 24, 2001, among CGI, Affymetrix, N-Mer and
Hyseq, constitutes the full and entire understanding and agreement between the
parties with regard to the subject matter hereof.

        5. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

        6. EXPENSES. Each party shall pay all costs and expenses that it incurs
with respect to the negotiation, execution, delivery and performance of this
Amendment and all of the transactions contemplated herein.

        7. DEFINITIONS. Capitalized terms used but not defined herein shall have
the meaning ascribed to them in the Agreement.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

        IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
the Option Agreement as of the date set forth in the first paragraph hereof.

                                            CALLIDA GENOMICS, INC.

                                            By:________________________________
                                               Name:
                                               Title:

                                            N-MER, INC.

                                            By:________________________________
                                               Name:
                                               Title:

                                            AFFYMETRIX, INC.

                                            By:________________________________
                                               Name:
                                               Title:

              (Signature page to Amendment to the Option Agreement)

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