Document:

<PAGE>   1
                                                                   Exhibit 10.11
<TABLE>
<S><C>
------------------------------------------------------------------------------------------------------------------------------------
   AWARD/CONTRACT                       1. THIS CONTRACT IS A RATED ORDER                           RATING              PAGE OF PAGE
                                           UNDER DPAS (15 CRF 350)                                  DO-C9E               1       17
------------------------------------------------------------------------------------------------------------------------------------
2. CONTRACT [illegible]       NO.       3. EFFECTIVE DATE                          4. REQUISITION/PURCHASE REQUEST/PROJECT NO.
DAAD13-00-C-0033                                  10 Jul 2000                      W80B3W20000339
------------------------------------------------------------------------------------------------------------------------------------
5. ISSUED BY                      CODE     DAAD13              6. ADMINISTERED BY [illegible]                       CODE S4801A
AMC ACQUISITION CENTER-EDGEWOOD                                DCMC SEATTLE                                              -----------
AM6SB-ACC/BLDG.E-4466                                          CORPORATE CAMPUS EAST III
5183 BLACKHAWK ROAD                                            3009 112TH AVE. NE
                                                               SUITE 200
ABERDEEN PROVING GROUND, MD 21010-5424                         BELLEVUE, WA 98004-8019
------------------------------------------------------------------------------------------------------------------------------------
7. NAME AND ADDRESS OF CONTRACTOR (No., street, city, [illegible]                  8. DELIVERY
COMBIMATRIX CORPORATION                       state and zip code)                     [ ] FOB ORIGIN  [X] OTHER (See below)
34935 SE DOUGLAS ST.                                                               -------------------------------------------------
SUITE 110                                                                          9. DISCOUNT FOR PROMPT PAYMENT
SNOQUALMIE, WA 98065
                                                                                   -------------------------------------------------
                                                                                   10. SUBMIT INVOICES                   ITEM
                                                                                   (4 copies unless otherwise specified)
---------------------------------------------------------------------------------  TO THE ADDRESS
CODE 1L178                              FACILITY CODE                              SHOWN IN:
------------------------------------------------------------------------------------------------------------------------------------
11. SHIP TO/MARK FOR              CODE                         12. PAYMENT WILL BE MADE BY                          CODE HQ0339
                                      -----------------------  DFAS-COLUMBUS CENTER                                      -----------
                                                               DFAS-CO/WEST ENTITLEMENT OPERATIONS
                                                               P.O. BOX 182231

                  SEE SCHEDULE                                 COLUMBUS, OH 43218-2381

------------------------------------------------------------------------------------------------------------------------------------
13. AUTHORITY FOR USING OTHER THAN FULL AND OPEN               14. ACCOUNTING AND APPROPRIATION DATA
    COMPETITION:
    [  ] 10 U.S.C.2304(c)(   )  [ ] 41 U.S.C.253(c)(   )       See Schedule
------------------------------------------------------------------------------------------------------------------------------------
15A. ITEM NO.           15B. SUPPLIES/SERVICES                 15C. QUANTITY     15D. UNIT      15E. UNIT PRICE       15F. AMOUNT
------------------------------------------------------------------------------------------------------------------------------------

                             SEE SCHEDULE

------------------------------------------------------------------------------------------------------------------------------------
                                                               15G. TOTAL AMOUNT OF CONTRACT                             $730,000.00
------------------------------------------------------------------------------------------------------------------------------------
                                                    16. TABLE OF CONTENTS
------------------------------------------------------------------------------------------------------------------------------------
(X)   SEC.             DESCRIPTION                     PAGE(S)    (X)   SEC.              DESCRIPTION                      PAGE(S)
------------------------------------------------------------------------------------------------------------------------------------
                  PART I - THE SCHEDULE                                             PART II - CONTRACT CLAUSES
------------------------------------------------------------------------------------------------------------------------------------
 X     A      SOLICITATION/CONTRACT FORM               1-1         X     I      CONTRACT CLAUSES                           12
------------------------------------------------------------------------------------------------------------------------------------
 X     B      SUPPLIES OR SERVICES AND PRICES/COSTS    2              PART III-LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS
------------------------------------------------------------------------------------------------------------------------------------
 X     C      DESCRIPTION/SPECS./WORK STATEMENT        4           X     J      LIST OF ATTACHMENTS                        17
------------------------------------------------------------------------------------------------------------------------------------
 X     D      PACKAGING AND MARKING                    6                    PART IV-REPRESENTATIONS AND INSTRUCTIONS
------------------------------------------------------------------------------------------------------------------------------------
 X     E      INSPECTION AND ACCEPTANCE                7                        REPRESENTATIONS, CERTIFICATIONS
---------------------------------------------------------------          K      AND OTHER STATEMENTS
 X     F      DELIVERIES OR PERFORMANCE                8                        OR OFFERORS
------------------------------------------------------------------------------------------------------------------------------------
 X     G      CONTRACT ADMINISTRATION DATA             9                 L      INSTRS., CONDS., AND NOTICES TO OFFERORS
------------------------------------------------------------------------------------------------------------------------------------
 X     H      SPECIAL CONTRACT REQUIREMENTS            10                M      EVALUATION FACTORS FOR AWARD
------------------------------------------------------------------------------------------------------------------------------------
                                  CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE
------------------------------------------------------------------------------------------------------------------------------------
17. (X) CONTRACTOR'S NEGOTIATED AGREEMENT    [ILLEGIBLE]       18. ( ) AWARD                      [ILLEGIBLE]

                 [COPY ILLEGIBLE]                                                        [COPY ILLEGIBLE]

------------------------------------------------------------------------------------------------------------------------------------
19A. NAME AND TITLE OF SIGNER         (Type or print)          20A. NAME AND TITLE OF CONTRACTING OFFICER

/s/ STEVE BURKE, CFO
------------------------------------------------------------------------------------------------------------------------------------
19B. NAME OF CONTRACTOR              19C. DATE SIGNED          20B. UNITED STATES OF AMERICA                      20C. DATE SIGNED

BY  /s/ BURKE                           7-11-00                BY
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>   2
                                                                DAAD13-00-C-0033

                                                                    Page 2 of 17

SECTION B Supplies or Services and Prices

ITEM NO   SUPPLIES/SERVICES    QUANTITY     UNIT     UNIT PRICE       AMOUNT
0001                             1.00      Lot       $730,000.00    $730,000.00
          Research and Development Services
          In accordance with Statement of Work title "Nanode Array Sensor
          Microchips-Phase II", in Section C of this contract. This is a
          Firm Fixed Price Contract as described in FAR 16.202

                                                                  --------------
                                                      NET AMT

          ACRN AA Funded Amount                                    $365,000.00

ITEM NO   SUPPLIES/SERVICES    QUANTITY     UNIT     UNIT PRICE       AMOUNT
0002                                                     $             $NSP
          CONTRACT DATA REQUIREMENT LIST
          FFP-EXHIBIT A, SEQUENCE A001-A004. In accordance with
          DD Form 1423

                                                                  --------------
                                                      NET AMT

                                                                    $

See Exhibit A

Payments, in accordance with the following schedule and in the amounts
specified, will be made to the contractor subsequent to the receipt and
acceptance of quarterly reports by the Government and submission of an invoice:

         QUARTERLY REPORT/INVOICE                         PAYMENT

1st Quarterly Report/Invoice #1/7-October-2000           $91,250.00
2nd Quarterly Report/Invoice #2/7-January-2001           $91,250.00
3rd Quarterly Report/Invoice #3/7-April-2001             $91,250.00
4th Quarterly Report/Invoice #4/7-July-2001              $91,250.00
5th Quarterly Report/Invoice #5/7-October-2001           $91,250.00

<PAGE>   3
                                                                DAAD13-00-C-0033

                                                                    Page 3 of 17

6th Quarterly Report/Invoice #6/7-January-2002           $91,250.00
7th Quarterly Report/Invoice #7/7-April-2002             $91,250.00

Final Comprehensive Report/Final Invoice/7-June-2002     $91,250.00

<PAGE>   4
                                                                DAAD13-00-C-0033

                                                                    Page 4 of 17

SECTION C: Descriptions and Specifications

                            STATEMENT OF WORK (SOW)

Section C: Description/Specifications/Work Statements

Title: Nanode Array Sensor Microchips

C.1.0 Scope.

C.1.1 Introduction. Development of biosensors typically relies on the use of
bio-specific molecules, such as antibodies, to recognize and bind a specific
target analyte, such as a protein toxin or bacterial cell, to the sensor's
surface. Once the target analyte is bound to the sensor surface, other chemical
reagents are then often employed to convert the binding event into a visual or
electrochemical signal, which is then detected by the sensor's transductive
element. Arrays of nanometer-scale ultramicro electrodes (nanodes) have been
shown to offer improved detection limits while accommodating spatial location
of multiple assays on a single integrated sensor device. The controlled,
spatial deposition of biomolecules on a substrate has generated a whole new
field of "biochip" technology that is fueling the development of sensor
instrumentation capable of detecting thousands of molecular interactions
simultaneously.

C.1.2 Background: The Phase I effort established the proof-of-concept for
developing integrated circuits possessing a high density of individually
addressable electrodes, each of which has individual voltage control and current
sourcing. With 1 micron, manufacturing technology, the biochip exhibits an array
density of over 10,000 individual electrodes per cubic CM2. The Phase I effort
also established the methods for coating the chips with biological molecules at
discrete electrode locations and cross validated the chips surface labeling
using both fluorescence and electrochemical methods of detection.

C.1.3 Objective: The objective of the Phase II contract is to further develop
and validate the nanode array chip for constructing a biosensor platform for
detecting biological toxins and organisms. The specific objectives are: 1)
optimize the fabrication and manufacturing of nanode array chips, 2) evaluate
different methods for multiplex loading of immunoassays on the chip, 3)
demonstrate detection of viral and vegetative cells, and 4) demonstrate a
prototype module of chip arrays that can detect toxins, viral and bacterial
cells simultaneously.

C.2.0 Applicable Documents.

C.2.1 32 Code of Federal Regulation (CFR) Part 626 Biological Defense Safety
Program

C.2.2 Document Summary List

C.3.0 Requirements: The contractor, as an independent contractor and not as an
agent of the government, shall furnish the necessary services, personnel,
labor, facilities, materials, supplies, and equipment (except those
specifically designated as Government furnished) to perform the work as
detailed specifically in pages 11-14 of the proposal entitled "Nanode Array
Sensor Microchips" as submitted by CombiMatrix Corporation and dated 12 Oct
1999.

<PAGE>   5
                                                                DAAD13-00-C-0033

                                                                    Page 5 of 17

C.3.1 Safety Requirements

C.3.1.1 The contractor shall comply with 32 Code of Federal Regulations
(CFR)626. The contractor shall ensure all subcontractors comply with 32 CRF 626.

C.3.1.2 The contractor shall notify all local emergency support agencies (such
as law enforcement, fire department, health departments and government) of BDP
activities and ensure the appropriate emergency support is available to
provide effective emergency response. The contractor shall formalize all
required support documents with the local agencies.

C.3.1.3 The contractor shall notify the government of any biological defense
mishaps related to this contract within 24 hours.

C.3.1.4 The contractor shall make facilities used to support this contract
accessible to government representative for required preaward and periodic
safety compliance inspections. The contractor shall correct all major
deficiencies noted during safety compliance inspections prior to beginning or
continuing operation IAW the governments contracting officer's instructions.

C.3.1.5 The contractor shall prepare and deliver a facility safety program in
accordance with Exhibit Line Item Number (ELIN) A003 and 32 CFR626, subpart C,
for approval by the government prior to start any biolevel 2 work.

C.3.1.6 The contractor shall prepare and deliver standard operating procedures
(SOPs) for all biolevel 2 work based on the criteria outlined in 32 CFR626,
subpart C, in accordance with ELIN A004.

C.3.2 Reports.

C.3.2.1 The contractor shall prepare and deliver quarterly progress reports IAW
ELIN A001.

C.3.2.2 The contractor shall prepare and deliver a final comprehensive report
IAW ELIN A002.

<PAGE>   6
                                                                DAAD13-00-C-0033

                                                                    Page 6 of 17

SECTION D Packaging and Marketing

52.0000-4126

      ALL DATA TO BE DELIVERED BY THE CONTRACTOR UNDER THIS CONTRACT SHALL BE
TRANSMITTED BY ELECTRONIC MEDIA AND MARKED FOR THE ADDRESSES IDENTIFIED ON THE
CONTRACT DATA REQUIREMENT LIST, DD FORM 1423-2

52.0000-4125
ALL ITEMS TO BE DELIVERED UNDER THIS CONTRACT SHALL BE PACKED AND PACKAGED IN
ACCORDANCE WITH GOOD COMMERCIAL PRACTICES AND IN SUCH A MANNER THAT WILL AFFORD
PROTECTION AGAINST CORROSION, DETERIORATION, AND PHYSICAL DAMAGE FOR SAFE
DELIVERY TO DESTINATION.

<PAGE>   7
                                                                DAAD13-00-C-0033

                                                                    Page 7 of 17

SECTION E Inspection and Acceptance

INSPECTION AND ACCEPTANCE TERMS

Supplies/services will be inspected/accepted at:

CLIN       INSPECT AT         INSPECT BY        ACCEPT AT         ACCEPT BY
0001       Destination        Government        Destination       Government
0002       Destination        Government        Destination       Government

CLAUSES INCORPORATED BY REFERENCE:

52.246-9    Inspection Of Research And Development (Short Form)    APR 1984

<PAGE>   8
                                                                   EXHIBIT 10.12
                                                                DAAD13-00-C-0033

                                                                    Page 8 of 17

SECTION F Deliveries or Performance

DELIVERY INFORMATION

<TABLE>
<CAPTION>
CLINS   DELIVERY DATE      UNIT OF ISSUE   QUANTITY   FOB     SHIP TO ADDRESS
-----   -------------      -------------   --------   ---     ---------------
<S>     <C>                <C>             <C>        <C>     <C>
0001    720 CDAC           Lot             1.00       Dest.   TRANSPORTATION OFFICE BUILDING
        DELIVERY OF THE                                       E5185
        THREE PROTOTYPES                                      EDGEWOOD AREA
        SHALL BE 720 CDAC                                     ABERDEEN PROVING GROUND, MD
        AND SHALL BE                                          21010-5424
        MARKED FOR                                            M/F CONTRACT NO. DAAD13-00-C-0033
                                                              ATTN: ROY THOMPSON
                                                              AMSSB-RRT-BM
                                                              BLDG. E3831
                                                              (410)436-5699

0002    DATA SHALL BE
        PROVIDED AS
        SPECIFIED ON THE
        CONTRACT DATA
        REQUIREMENT LIST,
        DD FORM 1423-2
</TABLE>

CLAUSES INCORPORATED BY REFERENCE:

<TABLE>
<S>             <C>                     <C>
52.242-15       Stop-Work Order         AUG 1989
52.247-34       F.O.B. Destination      NOV 1991
</TABLE>
<PAGE>   9
<TABLE>
<S><C>
                                                                          DAAD13-00-C-0033

                                                                              Page 9 of 17

SECTION G Contract Administration Data

ACCOUNTING AND APPROPRIATION DATA

AA:       9790400260196N6N66P6112000000255YRK0100MIPROEDERNF1499E6RWDS11071   000000000000
AMOUNT:   $365,000.00

52.0000-4133

CONTRACT SPECIALIST:    Celeste Fuertes

OFFICE SYMBOL:          AMSSB-ACC-EP

TELEPHONE:              (410)436-4436

DSN:                    584-4436

EMAIL:                  celeste.fuertes@sbccom.apgea.army.mil

</TABLE>
<PAGE>   10
                                                                DAAD13-00-C-0033

                                                                   Page 10 of 17

SECTION H Special Contract Requirements

52.0000-4048

      a.  The Government and the contractor understand and agree that the
          support services to be delivered under this contract by the
          contractor are non-personal services and the parties recognize and
          agree that no employer-employee relationships exist or will exist
          under the contract between the Government and the Contractor and/or
          between the Government and the contractor's employees. It is,
          therefore, in the best interest of the Government to afford the
          parties a full and complete understanding of their respective
          obligations.
      b.  Contractor personnel under this contract shall not:

              (1)   Be placed in a position where they are appointed or employed
                    by a Federal Officer, or are under the supervision,
                    direction, or evaluation of a Federal Officer, military or
                    civilian.
              (2)   Be placed in a staff or policy making position.
              (3)   Be placed in a position of command, supervision, direction,
                    or evaluation over DA military or civilian personnel, or
                    personnel of other contractors or become a part of a
                    Government organization.

      c.  Employee Relationships:

              (1)   The services to be performed under this contract do not
                    require the contractor or its employees to exercise personal
                    judgement and discretion on behalf of the Government, but
                    rather the contractor's employees will act and exercise
                    personal judgement on behalf of the contractor.
              (2)   Rules, regulations, directions, and requirements which are
                    issued by command authorities under their responsibility
                    for good order, administration, and security are applicable
                    to all personnel who enter a Government installation. This
                    is not to be construed or interpreted to establish any
                    degree of Government control which is inconsistent with a
                    nonpersonal services contract.
              (3)   The contractor will not be paid for performance of personal
                    services. Therefore in the event the contractor (or its
                    employee) are directed by any Government employee to
                    perform task that the contractor believes are personal
                    services, the contractor should take no action until it has
                    contacted the Procuring Contracting Officer to determine
                    the appropriate course of action.

52.0000-4142

      The contractor shall not employed Foreign Nationals in performance of the
effort required hereunder without the specific written approval of the
Procuring Contracting Officer. When requesting such approval, the contractor
shall provide the name of the individual involved, date and place of birth,
country or current citizenship, registration number, port of entry and the
proposed position in which the employee will be utilized. Requests for approval
shall be submitted to the Procuring Contracting Officer.

52.0000-4147

Section K of the Solicitation will not be distributed with the contract.
However, Section K is incorporated in and forms a part of the resultant
contract as though furnished in full text therewith.

a.    If access to unclassified sensitive information (For Official Use Only --
FOUO) is

<PAGE>   11
                                                                DAAD13-00-C-0033

                                                                   Page 11 of 17

authorized, contractor may access only the information related to the subject
matter of this contract.

<PAGE>   12
<TABLE>
<CAPTION>
                                                                            DAAD13-00-C-0033

                                                                               Page 12 of 17

SECTION I Contract Clauses

CLAUSES INCORPORATED BY REFERENCE:
<S>              <C>                                                                <C>
52.252-2         Clauses Incorporated By Reference                                  FEB 1998
52.202-1         Definitions                                                        OCT 1995
52.203-3         Gratuities                                                         APR 1984
52.203-5         Covenant Against Contingent Fees                                   APR 1984
52.203-6         Restrictions On Subcontractor Sales To The Government              JUL 1995
52.203-7         Anti-Kickback Procedures                                           JUL 1995
52.203-8         Cancellation, Recission, and Recovery of Funds for Illegal or      JAN 1997
                 Improper Activity
52.203-10        Price Or Fee Adjustment For Illegal Or Improper Activity           JAN 1997
52.203-12        Limitation On Payments To Influence Certain Federal Transactions   JUN 1997
52.204-4         Printing/Copying Double-Sided on Recycled Paper                    JUN 1996
52.209-6         Protecting the Government's Interest When Subcontracting With      JUL 1995
                 Contractors Debarred, Suspended, or Proposed for Debarment
52.211-15        Defense Priority And Allocation Requirements                       SEP 1990
52.215-2         Audit and Records--Negotiation                                     JUN 1999
52.215-8         Order of Precedence--Uniform Contract Format                       OCT 1997
52.215-17        Waiver of Facilities Capital Cost of Money                         OCT 1997
52.219.8         Utilization of Small Business Concerns                             OCT 1999
52.222-3         Convict Labor                                                      AUG 1996
52.222-21        Prohibition Of Segregated Facilities                               FEB 1999
52.222-26        Equal Opportunity                                                  FEB 1999
52.222-35        Affirmative Action For Disabled Veterans And Veterans of the       APR 1998
                 Vietnam Era
52.222-36        Affirmative Action For Workers With Disabilities                   JUN 1998
52.222-37        Employment Reports on Disabled Veterans And Veterans Of The        JAN 1999
                 Vietnam Era
52.223-5         Pollution Prevention and Right-to-Know Information                 APR 1998
52.223-6         Drug Free Workplace                                                JAN 1997
52.223-14        Toxic Chemical Release Reporting                                   OCT 1996
52.225-13        Restrictions on Certain Foreign Purchases                          FEB 2000
52.227-1 Alt I   Authorization And Consent (Jul 1995) - Alternate I                 APR 1984
52.227-2         Notice And Assistance Regarding Patent And Copyright               AUG 1996
                 Infringement
52.227-11        Patent Rights--Retention By The Contractor (Short Form)            JUN 1997
52.232-2         Payments Under Fixed-Price Research And Development Contracts      APR 1984
52.229-3         Federal, State And Local Taxes                                     JAN 1991
52.232-8         Discounts For Prompt Payment                                       MAY 1997
52.232-17        Interest                                                           JUN 1996
52.232-23        Assignment Of Claims                                               JAN 1986
52.232-25        Prompt Payment                                                     JUN 1997
52.232-33        Payment by Electronic Funds Transfer--Central Contractor           MAY 1999
                 Registration
52.233-1         Disputes                                                           DEC 1998
52.233-3         Protest After Award                                                AUG 1996
52.242-13        Bankruptcy                                                         JUL 1995
52.243-1 Alt V   Changes--Fixed-Price (Aug 1987) - Alternate V                      APR 1984
52.243-7         Notification Of Changes                                            APR 1984
52.244-6         Subcontracts for Commercial Items and Commercial Components        OCT 1998

</TABLE>
<PAGE>   13
<TABLE>
<CAPTION>
                                                                            DAAD13-00-C-0033

                                                                               Page 13 of 17

<S>              <C>                                                                <C>
52.246-25        Limitation Of Liability--Services                                  FEB 1997
52.249-2         Termination For Convenience Of The Government (Fixed-Price)        SEP 1996
52.249-9         Default (Fixed-Price Research And Development)                     APR 1984
52.253-1         Computer Generated Forms                                           JAN 1991
252.201-7000     Contracting Officer's Representative                               DEC 1991
252.203-7001     Prohibition On Persons Convicted of Fraud or Other Defense-        MAR 1999
                 Contract-Related Felonies
252.204-7003     Control Of Government Personnel Work Product                       APR 1992
252.209-7000     Acquisition From Subcontractors Subject To On-Site Inspection      NOV 1995
                 Under The Intermediate Range Nuclear Forces (INF) Treaty
252.204-7000     Disclosure Of Information                                          DEC 1991
252.204-7004     Required Central Contractor Registration                           MAR 2000
252.205-7000     Provisions Of Information To Cooperative Agreement Holders         DEC 1991
252.209-7004     Subcontracting With Firms That Are Owned or Controlled By The      MAR 1998
                 Government of a Terrorist Country
252.225-7031     Secondary Arab Boycott Of Israel                                   JUN 1992
252.227-7016     Rights in Bid or Proposal Information                              JUN 1995
252.227-7018     Rights in Noncommercial Technical Data and Computer Software--     JUN 1995
                 Small Business Innovation Research (SBIR) Program
252.227-7019     Validation of Asserted Restrictions--Computer Software             JUN 1995
252.227-7030     Technical Data--Withholding Of Payment                             MAR 2000
252.227-7034     Patents--Subcontracts                                              APR 1984
252.227-7036     Declaration of Technical Data Conformity                           JAN 1997
252.227-7037     Validation of Restrictive Markings on Technical Data               SEP 1999
252.227-7039     Patents--Reporting Of Subject Inventions                           APR 1990
252.231-7000     Supplemental Cost Principles                                       DEC 1991
252.235-7010     Acknowledgement of Support and Disclaimer                          MAY 1995
252.235-7011     Final Scientific or Technical Report                               SEP 1999
252.242-7000     Postaward Conference                                               DEC 1991
252.243-7001     Pricing Of Contract Modifications                                  DEC 1991
252.243-7002     Requests for Equitable Adjustment                                  MAR 1998
252.246-7001     Warranty Of Data (Dec 1991) - Alternate II                         DEC 1991
Alt II
</TABLE>

CLAUSES INCORPORATED BY FULL TEXT

52.0000-4160     Guidance on Documentation of Data Requirements

The following information is furnished to provide guidance with respect to the
abbreviations and codes utilized in various blocks of DD Form 1423, Contract
Data Requirements List.

Block 7, DD Form 250 Requirement. This block designates the location (source or
destination) for performance of Government inspection and acceptance. The
applicable codes for inspection and acceptance are cited below. The Government
activity to perform the destination acceptance task is entered in Block 14 as
the first addressee.

Code Inspection Acceptance

SS +Source (DD Form 250)                  +Source (DD Form 250)
DD Destination (DD Form 250)              Destination (DD Form 250)
SD +Source (DD Form 250)                  Destination (DD Form 250)

<PAGE>   14
                                                                DAAD13-00-C-0033

                                                                   Page 14 of 17

DS Destination (DD Form 250)                    +Source (DD Form 250)
++LT Letter of Transmittal Only
NO No inspection or acceptance required
XX Inspection/acceptance requirements specified elsewhere in the contract

+Source indicates Contractor's facility.
++Use of these symbols is not authorized for engineering data such as drawings
or specifications.

Block 8, Approval Code. Items of critical data requiring specific advanced
written approval, such as test plans, are identified by an "A" in this field.
Most of these data require submission of a preliminary draft prior to
publication of a final document. When advanced approval is not required, this
field is a blank.

Block 10, Frequency. The codes used in this block are cited below:

DAILY  = Daily
BI-MO  = Each two months
OTIME  = One time
WEEKLY = Weekly
QRTLY  = Quarterly
ONE/R  = One time and revision
BI-WE  = Each two weeks
ANNLY  = Annually
R/ASR  = Revision as required
MTHLY  = Monthly
SEMIA  = Each six months
DFDEL  = Deferred Delivery
ASREQ  = As required
2TIME  = Two separate
ONE/P  = One time preliminary (See Notes A/B Submittals draft)
CHG P AS REQ = Change pages as required

NOTE A:  Block 13 is used for further explanation.
NOTE B:  When data is of a recurring type, it will be submitted at end of
reporting period established in field unless otherwise indicated in Data
Preparation Instructions or in Blocks 12 or 13 of DD Form 1423.

Block 11, As of Date (AOD). When data is submitted only once, this block
indicates the number of days the data is to be submitted prior to the end of
the reporting period; e.g., "15" would place the AOD for this report at 15
calendar days before the end of each month, quarter, or year, depending on the
frequency established in Block 10; "0" places the AOD at the end of each month,
quarter, or year. Further guidance is shown in Block 13 or 16 as required.

Block 12, Date of First Submission. This block indicates the initial data
submission date (Year/Month/Day). When data has already been submitted and will
be resubmitted, the date of the next submission is entered. When the contract
starts: the date has not been established, this block indicates the number of
calendar days after the contract start date that the data is due; e.g., 30 DAC.
Further information, if required, is contained in Block 13. Classified dates
are not cited in this form. "DFDEL" indicates deferred delivery.

<PAGE>   15
                                                                DAAD13-00-C-0033

                                                                   Page 15 of 17

Block 13, Date of Subsequent Submission/Event Identification. When data is
submitted more than once, the date(s) of subsequent submission(s) is indicated
in this block. When submission of data is based on the initiation of a specific
event or milestone, this information is cited in this block (when such
information classifies the form, this block is left blank). Example: "NLT 15
calendar days before start of production;" "45 calendar days before first
article," etc.

Block 14, Distribution and Addresses. Addresses and number of copies
(regular/reproducible) to be forwarded to each addressee is cited in this
block; e.g. SCERD-ODR-E 0/1/0. Addressees are indicated by office symbols
(i.e., STEAA-AP-EP), contractor initials, DoD Handbook H-4 codes, and Command
initials. A list explaining these symbols is attached to the form. When
reproducible copies are required (second number), the type of copies required
will be cited in this block or Block 16.

NOTE: Unless otherwise cited in Block 10, entries in Blocks 3 through 9 on DD
Forms 1664, Data Item Descriptions, are for informational purposes only and are
not contractually binding.

252.232-7007 LIMITATION OF GOVERNMENT'S OBLIGATION (AUG 1993)

(a) Contract line item(s) 0001 is incrementally funded. For these item(s), the
sum of $365,000 of the total price is presently available for payment and
allotted to this contract. An allotment schedule is set forth in paragraph (i)
of this clause.

(b) For item(s) identified in paragraph (a) of this clause, the Contractor
agrees to perform up to the point at which the total amount payable by the
Government, including reimbursement in the event of termination of those
item(s) for the Government's convenience, approximates the total amount
currently allotted to the contract. The Contractor will not be obligated to
continue work on those item(s) beyond that point. The Government will not be
obligated in any event to reimburse the Contractor in excess of the amount
allotted to the contract for those item(s) regardless of anything to the
contrary in the clause entitled "TERMINATION FOR THE CONVENIENCE OF THE
GOVERNMENT." As used in this clause, the total amount payable by the Government
in the event of termination of applicable contract line item(s) for convenience
includes costs, profit and estimated termination settlement costs for those
item(s).

(c) Notwithstanding the dates specified in the allotment schedule in paragraph
(i) of this clause, the Contractor will notify the Contracting Officer in
writing at least sixty days prior to the date when, in the Contractor's best
judgment, the work will reach the point at which the total amount payable by
the Government, including any cost for termination for convenience, will
approximate 85 percent of the total amount then allotted to the contract for
performance of the applicable item(s). The notification will state (1) the
estimated date when that point will be reached and (2) an estimate of
additional funding, if any, needed to continue performance of applicable line
items up to the next scheduled date for allotment of funds identified in
paragraph (i) of this clause, or to a mutually agreed upon substitute date. The
notification will also advise the Contracting Officer of the estimated amount
of additional funds that will be required for the timely performance of the
item(s) funded pursuant to this clause, for subsequent period as may be
specified in the allotment schedule in paragraph (i) of this clause, or
otherwise agreed to by the parties. If after such notification additional funds
are not allotted by the date identified in the Contractor's notification, or by
an agreed substitute date, the Contracting Officer will terminate any item(s)
for which additional funds have not been allotted, pursuant to the clause of
this contract entitled "TERMINATION FOR THE CONVENIENCE OF THE GOVERNMENT".

(d) When additional funds are allotted for continued performance of the
contract line item(s) identified in paragraph (a) of this clause, the parties
will agree as to the period of contract performance which will be covered by
the funds.
<PAGE>   16
                                                                DAAD13-00-C-0033

                                                                   Page 16 of 17

The provisions of paragraph (b) through (d) of this clause will apply in like
manner to the additional allotted funds and agreed substitute date, and the
contract will be modified accordingly.

(e) If, solely by reason of failure of the Government to allot additional
funds, by the dates indicated below, in amounts sufficient for timely
performance of the contract line item(s) identified in paragraph (a) of this
clause, the Contractor incurs additional costs or is delayed in the performance
of the work under this contract and if additional funds are allotted, an
equitable adjustment will be made in the price or prices (including appropriate
target, billing, and ceiling prices where applicable) of the item(s), or in the
time of delivery, or both. Failure to agree to any such equitable adjustment
hereunder will be a dispute concerning a question of fact within the meaning of
the clause entitled "disputes."

(f) The Government may at any time prior to termination allot additional funds
for the performance of the contract line item(s) identified in paragraph (a) of
this clause.

(g) The termination provisions of this clause do not limit the rights of the
Government under the clause entitled "DEFAULT." The provisions of this clause
are limited to work and allotment of funds for the contract line item(s) set
forth in paragraph (a) of this clause. This clause no longer applies once the
contract if fully funded except with regard to the rights or obligations of the
parties concerning equitable adjustments negotiated under paragraph (d) or (e)
of this clause.

(h) Nothing in this clause affects the right of the Government to this contract
pursuant to the clause of this contract entitled "TERMINATION FOR CONVENIENCE
OF THE GOVERNMENT."

(i) The parties contemplate that the Government will allot funds to this
contract in accordance with the following schedule:

On execution of contract ............. $365,000
June 26, 2001 ........................ $365,000

(End of clause)
<PAGE>   17
                                                                 DAAD13-00-C0033

                                                                   Page 17 of 17

SECTION J List of Documents, Exhibits and Other Attachments

Section J Table Of Contents

<TABLE>
<S>                     <C>                     <C>               <C>
DOCUMENT TYPE           DESCRIPTION             PAGES             DATE
Exhibit A               CLIN 0002               6                 17-MAR-2000
CONTRACT DATA
REQUIREMENT LIST
DD FORM 1423-2
EXHIBIT LINE ITEMS
A001-A004 INCLUDES
DATA ITEM
DESCRIPTIONS
</TABLE><PAGE>   1
                                                                   EXHIBIT 10.12

  [Note: Asterisks denote material omitted that has been separately filed with
           the SEC pursuant to a request for confidential treatment.]

                          LICENSE AND SUPPLY AGREEMENT

        THIS AGREEMENT (the "Agreement"), effective as of November _____, 2000
(the "Effective Date"), is made and entered into by and between ACACIA RESEARCH
CORPORATION, a Delaware corporation having a place of business at 55 South Lake
Avenue, Suite B, Pasadena, California 91101 ("Acacia"), and COMBIMATRIX
CORPORATION, a Delaware corporation having a place of business at 34395 SE
Douglas, Suite 110, Snoqualmie, Washington 98065 (hereafter "CBMX"). Acacia and
CBMX may be referred to herein individually as a "Party" and collectively as the
"Parties."

                                    RECITALS

        WHEREAS, CBMX is engaged in the research, development, and
commercialization of certain proprietary biochip technology, namely biological
array processor technology for rapid synthesis of DNA, peptides, and other
chemical compounds on software programmable semiconductor chips;

        WHEREAS, Acacia develops new technology-related companies by providing
seed capital, management, technical advice, and ongoing operational support, and
intends to acquire companies in the life sciences field that will utilize CBMX's
biochip technology;

        WHEREAS, Acacia intends to acquire a company that owns and/or has
know-how or other intellectual property rights regarding certain proprietary
nucleic acid sequences and their application in the field of toxicology
("Toxco") in order to use certain of CBMX's biochip technology in that field;

        WHEREAS, upon Acacia's acquisition of Toxco, the Parties intend to
execute a novation agreement whereby Toxco will be substituted for Acacia as a
party to this Agreement, thereby extinguishing all of Acacia's rights and
obligations hereunder;

        WHEREAS, upon commencement of commercialization of products resulting
from this Agreement, Toxco will issue certain shares of Toxco common stock to
CBMX;

        WHEREAS, the Parties intend for CBMX to use its biochip technology to
develop products incorporating Toxco's proprietary nucleic acid sequences for
Toxco's use, contract services and resale for toxicological applications;

        WHEREAS, Acacia desires to obtain, and CBMX wishes to grant, a
royalty-free license to use, sell or resell, but excluding the rights to make or
have made, CBMX's biochip technology in order to use and commercialize certain
bioarray processors produced by CBMX with DNA oligonucleotide sequences
developed or obtained by Toxco for use in the field of toxicology as provided in
this Agreement; and

        WHEREAS, the Parties contemplate that CBMX will manufacture and supply
commercial quantities of such products to Toxco for Toxco's use and resale for
toxicological applications as provided in this Agreement;

<PAGE>   2

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

1.      DEFINITIONS.

As used herein, the following terms shall have the following meanings:

        1.1 "AFFILIATE" means, with respect to a Party, any person, company, or
entity that controls, is controlled by, or is under common control with such
Party. As used in this definition, "controls" means that the person or entity
owns, directly or indirectly, fifty percent (50%) or more of the voting stock or
participating profit interest of the controlled entity or otherwise has the
ability to direct the management of such entity.

        1.2 "BETA PERIOD" means the period described in Section 3.2 of this
Agreement.

        1.3 "CBMX KNOW-HOW" means all information, trade secrets, know-how, and
any other intellectual property rights in or to any and all inventions,
discoveries, processes, methods, or formulae that are (a) owned by or licensed
to CBMX or its successors or affiliates (with the right to sublicense) during
the term of this Agreement, and (b) necessary or useful to the manufacture, use,
or sale of Toxco Chips or System Products.

        1.4 "CBMX PATENTS" means any and all patents or patent applications
(including without limitation all divisionals, continuations,
continuations-in-part, reissues, reexaminations, extensions and corresponding
foreign patents and patent applications) in existence or hereafter filed, at
least one claim of which would be infringed by the making, using or selling of a
Toxco Chip or a System Product by an unauthorized party.

        1.5 "CBMX TECHNOLOGY" means the any and all CBMX Patents, the CBMX
Technology, CBMX trademarks, and CBMX Know-How.

        1.6 "CHIP" means CBMX's biochips, namely CBMX's proprietary biological
array processors, and including all Improvements thereto, (but excluding, for
clarity, any oligonucleotide sequence provided by Toxco to CBMX).

        1.7 "CHIP-RELATED SOFTWARE" means CBMX proprietary software that (i)
controls the synthesis activities on Chips or otherwise directs the operation of
the Hardware, (ii) collects data from the Hardware, (iii) analyzes and reports
such data, or (iv) designs and creates appropriate oligonucleotide capture
probes based on sequence inputs.

        1.8 "COMMERCIAL PERIOD" means the period described in Section 10.2 of
this Agreement during which Toxco shall purchase Toxco Chips and System Products
from CBMX for (a) Toxco's own use including for providing services in the Field,
and/or (b) Toxco's resale to Third Parties.

        1.9 "CONFIDENTIAL INFORMATION" means information that is disclosed by a
Party pursuant to this Agreement and identified as "Confidential" in writing at
the time of disclosure, that is deemed by a Party to be its confidential or
proprietary information, including, without

                                       2
<PAGE>   3

limitation, information related to inventions, technology, know-how, trade
secrets, plans, data, research, development, design, processes, manufacture,
marketing, financial matters, and personnel matters, whether in oral, written,
graphic, or electronic form.

        1.10 "FIELD" means Toxicology studies, development and commercial
activities, and includes without limitation Toxicology research and the
creation, maintenance and/or commercialization of Toxicology databases.

        1.11 "HARDWARE" means any hardware developed by or on behalf of CBMX
including, but not limited to, Chip readers and hybridizers, that is necessary
to use and read the Chips to conduct an assay, test or other experiment using
Chips.

        1.12 "IMPROVEMENT" means any improvement or modification of know-how,
technology, or an invention claimed in a patent, which, absent a license, would
infringe one or more Valid Claims of the patent or misappropriate such
technology or know-how.

        1.13 "IN-HOUSE CHIPS" means Toxco Chips purchased by Toxco during the
Commercial Period for Toxco's own use, including, without limitation, use as
part of services provided by Toxco to Third Parties or for building Toxicology
databases for internal or commercial use.

        1.14 "MANUFACTURING COST" means, with respect to a particular Toxco Chip
or System Product, the actual cost of goods produced to manufacture such Toxco
Chip or System Products, as applicable, including direct costs that would not be
incurred but for CBMX's performance under this Agreement, namely direct
material, direct labor, direct overhead, and direct product testing costs of
CBMX, as determined in accordance with Generally Accepted Accounting Principles
consistently applied.

        1.15 "REAGENT" means a chemical or biochemical substance or set of
substances required or recommended to be used with a Chip for performing a
particular assay or other experiment using the Chip. A particular assay or
experiment may require one or more Reagents.

        1.16 "RESPONSIBLE EXECUTIVE" means the Chief Executive Officer or duly
appointed representative thereof.

        1.17 "SPECIFICATIONS" means the specifications for a particular Toxco
Chip or System Product, which designate appropriate dimensions, structure, and
performance and other criteria, as agreed to in advance by the Parties in
writing. These Specifications may be modified by the Parties from time to time
by prior written agreement.

        1.18 "SYSTEM PRODUCT" means any CBMX product related to use of Chips to
perform assays or other experiments, including without limitation Hardware,
Reagents, Chip-Related Software, and related protocols. A System Product may
comprise cassettes, each containing a plurality of Chips ("Cassettes"), and/or
kits containing reagents and protocols for sample preparation ("Reagent Kits").

                                       3
<PAGE>   4

        1.19 "THIRD PARTY" means any person or entity other than Acacia, CBMX,
Toxco, or an Affiliate of any of them.

        1.20 "TOXCO" means the currently unidentified company or other business
entity to be acquired by Acacia that owns or has rights to know-how or other
intellectual property rights regarding certain proprietary nucleic acid
sequences and their application in the Field.

        1.21 "TOXCO CHIP" means a Chip that (a) incorporates Toxco Technology as
requested by Toxco under this Agreement, and (b) is covered by, or is made by a
process covered by, or that otherwise utilizes, CBMX Technology.

        1.22 "TOXCO TECHNOLOGY" means Toxco's nucleic acid sequences, including
any inventions and other derivative intellectual property rights, that are
provided to CBMX by Toxco under this Agreement solely for CBMX to manufacture,
according to the Specifications, and deliver to Toxco the Toxco Chips ordered
under Article 4.

        1.23 "TOXICOLOGY" means the identification, detection, or
characterization of the adverse effects (including, without limitation, cell
death or damage, carcinogenicity, mutagenicity, teratogenicity, apoptosis, and
necrosis) on living systems resulting from the exposure of these systems to
natural or synthetic substances including, but not limited to, the
identification of such potential toxic substances and their putative mechanisms
of action, and the detection of correlations between toxic responses to these
substances and changes in the genetic profiles of the living systems exposed to
such substances.

        1.24 "VALID CLAIM" means (a) an issued claim of an issued patent within
the CBMX Patents that has not (i) expired or been canceled, (ii) been declared
invalid by an unreversed and unappealable decision of a court or other
appropriate body of competent jurisdiction, (iii) been admitted to be invalid or
unenforceable through reissue, disclaimer or otherwise, and/or (iv) been
abandoned in accordance with or as permitted by the terms of this Agreement or
by mutual written agreement; or (b) a claim included in a pending patent
application within the CBMX Patents that is being actively prosecuted in
accordance with this Agreement and which has not been (i) canceled, (ii)
withdrawn from consideration, (iii) finally determined to be unallowable by the
applicable governmental authority (and from which no appeal is or can be taken),
and/or (iv) abandoned in accordance with or as permitted by the terms of this
Agreement or by mutual written consent.

        1.25 "VAR CHIPS" means Toxco Chips purchased by Toxco during the
Commercial Period to be used for resale to any Third Party, either directly or
indirectly.

2.      LICENSE RELATIONSHIP AND GRANTS

        2.1 OVERVIEW. Pursuant to this Agreement, the Parties intend initially
to conduct a beta evaluation of the Toxco Chips and System Products for use in
the Field, as provided in Article 3. Upon completion of such beta evaluation,
and provided that the Toxco Chips and System Products supplied by CBMX under
Exhibit A are satisfactory to Toxco under such evaluation, CBMX will manufacture
and supply to Toxco the Toxco Chips and System Products for commercialization by
Toxco in the Field during the Commercial Period, all as provided in,

                                       4
<PAGE>   5

and subject to, the terms of this Agreement. It is understood and agreed that,
during the Commercial Period, Toxco will provide CBMX with new DNA
oligonucleotide sequences, consistent with the Specifications, for use in
manufacturing new Toxco Chips intended for use in the Field, and that CBMX will
manufacture and supply such Toxco Chips as provided in Article 4.

        2.2 GRANT BY CBMX TO ACACIA. Subject to the terms of this Agreement,
CBMX hereby grants to Acacia a worldwide license under the applicable CBMX
Technology, to use, for Acacia's benefit or the benefit of Acacia's customers,
and to resell Toxco Chips and System Products in the Field. The foregoing
license shall be exclusive during the exclusivity term of Section 10.3 and
non-exclusive thereafter during the term of the Agreement.

        2.3 TRADEMARK LICENSE. Subject to the terms of this Agreement, CBMX
hereby grants to Acacia a worldwide, license (which license shall be exclusive
during the exclusivity term of Section 10.3 and non-exclusive thereafter) under
the applicable CBMX Technology to use any CBMX trademarks in conjunction with
the sale of Toxco Chips and System Products to Third Parties or Acacia's use of
Toxco Chips or System Products to perform services in the Field. Any such use of
any applicable CBMX trademark by Acacia must be in accordance with this
Agreement, and will inure to the benefit of CBMX. CBMX has the right in advance,
to review and approve in writing all materials that contain a CBMX trademark and
do not originate with CBMX. Without prior written consent of CBMX, Acacia may
not: (i) remove any CBMX trademarks from Toxco Chips or System Products, or (ii)
alter any other proprietary rights notices or other legally required notices or
labels of CBMX, including copyright and patent notices. Acacia shall have the
right to use any additional trademarks (other than any CBMX trademarks) that
Acacia selects in its discretion with respect to its sales of Toxco Chips or
services based thereon.

        2.4 GRANT BY TOXCO TO CBMX. Subject to the terms of this Agreement,
Toxco shall grant to CBMX a non-exclusive, royalty-free license, with a right to
grant sublicenses with the prior written approval of Toxco, which approval shall
not be unreasonably withheld, under Toxco Technology for the Term of this
Agreement solely to the extent useful or necessary for CBMX to manufacture and
supply Toxco Chips to Toxco as provided in Article 4.

        2.5 SUBLICENSING. Any sublicensee to whom a Party has sublicensed rights
under this Agreement, to the extent sublicensing is permitted under Sections 2.1
and 2.2, shall agree to be bound by all of the applicable terms and conditions
of this Agreement.

        2.6 EXPANDED LICENSE. CBMX understands that Toxco may be involved in or
expand into areas beyond the scope of the Licenses contemplated herein,
including without limitation, the fields concerning the evaluation of potency
and efficacy of drug candidates. The Parties agree to negotiate in good faith
expanded licenses under the CBMX Technology to cover additional fields beyond
Toxicology as requested by Toxco. CBMX shall be under no obligation, however, to
execute any such expanded license.

        2.7 TOXCO'S RIGHT TO DEVELOP PRODUCTS. Nothing in this Agreement will
prevent Toxco from developing any products in the Field during or after the term
of this Agreement, including chip based products, that do not derive from CBMX
Technology.

                                       5
<PAGE>   6

        2.8 CBMX RIGHT OF NEGOTIATION. If Toxco chooses to resell Toxco Chips
through a Third Party distributor, dealer, or reseller, it shall give written
notice to CBMX of such decisions and shall permit CBMX (if it so chooses in its
sole discretion) the right to negotiate with Toxco for up to sixty (60) days
after CBMX's receipt of such notice, a distribution agreement for such Toxco
Chips. Toxco will be under no obligation to execute any such distribution
agreement with CBMX. If the Parties do not execute such agreement at the
expiration of the sixty (60) day negotiation period, Toxco will be free to
execute such agreement with any Third Party.

        2.9 ACQUISITION OR FORMATION OF TOXCO; NOVATION. Acacia shall acquire
Toxco by the six month anniversary of the Effective Date and the Parties and
Toxco shall execute a novation agreement within thirty (30) days thereafter,
whereby Toxco will (i) be substituted for Acacia as a party to this Agreement,
thereby extinguishing all of Acacia's rights and obligations hereunder, and (ii)
assume all of Acacia's obligations hereunder including any obligations directed
at "Toxco". Upon Toxco's request, Toxco and CBMX will execute an Amended and
Restated License Agreement containing terms substantially equivalent with those
contained in this Agreement to reflect the substitution of Toxco for Acacia
under the Agreement. If Acacia fails to acquire Toxco by the six month
anniversary of the Effective Date, this Agreement shall terminate as provided in
Section 10.5.

        2.10 TRANSFER OF TOXCO TECHNOLOGY. Within thirty (30) days from the date
on which the Parties and Toxco enter into a novation agreement as provided in
Section 2.9, Toxco shall transfer to CBMX the applicable Toxco Technology as
needed for CBMX to use in fulfilling its obligations under this Agreement.

3.      BETA EVALUATION

        3.1 PURPOSE AND SCOPE. To provide for an initial evaluation by Toxco of
Toxco Chips and System Products, and to enable CBMX to complete any work needed
to manufacture the intended Toxco Chips and System Products, the Parties intend
for CBMX and Toxco to conduct a "beta" evaluation of the Toxco Chips and System
Products during the Beta Period. As described in more detail in Exhibit A
attached to this Agreement and incorporated herein, under this beta evaluation
Toxco will supply to CBMX certain DNA oligonucleotide sequences or DNA
oligonucleotide sequence information, and CBMX shall prepare Toxco Chips (for
example, Toxco Chips containing oligonucleotides complimentary to such sequences
that can bind and detect such sequences in applicable assays). CBMX will then
supply such Toxco Chips, and related System Products, to Toxco for evaluation by
Toxco, all as provided in Exhibit A attached hereto. The Parties estimate that
the Beta Period shall last approximately three months. All costs and expenses of
CBMX activities under the Beta Period shall be borne by CBMX. During the Beta
Period, CBMX will supply Toxco between 10 and 25 Toxco Chips per month at no
additional cost to Toxco.

        3.2 BETA PERIOD. The Beta Period shall commence on the date CBMX
receives Toxco Technology from Toxco as provided in Section 2.10 of this
Agreement (i.e. the first set of DNA oligonucleotide sequences or DNA
oligonucleotide sequence information), and shall expire at such time as Toxco
determines in its reasonable discretion that at least one (1) Toxco Chip has
been successfully developed and is ready for commercial use or resale, provided
that if the Beta Period has lasted a total of three months, and at that time
CBMX demonstrates to Toxco that it

                                       6
<PAGE>   7

has begun commercial supply of Chips to another of its beta customers, then CBMX
may at that time elect to terminate the Beta Period and commence the Commercial
Period at the end of a one month period thereafter, or such longer period if
Toxco makes a reasonable showing that additional evaluation is needed to develop
at least one Toxco Chip product that is ready for commercial use or resale,
without regard to products, other than System Products, that Toxco may use or
resell.

        3.3 ACCESS TO FACILITIES. Toxco shall have the right to have its
representatives visit CBMX's facilities from time to time and observe CBMX's
activities and obtain information in connection with the Product Development
Program. Toxco shall give CBMX at least five (5) business days advance notice of
any such visit. CBMX shall have the right to take such steps as CBMX reasonably
deems necessary, in its discretion, to protect the trade secrets and other
proprietary information of CBMX or any Third Party from disclosure during any
visit by Toxco personnel.

        3.4 CONDUCT OF BETA EVALUATION. Each Party's rights and obligations with
respect to the beta evaluation to be conducted during the Beta Period as are set
forth in Exhibit A attached hereto. Each Party shall use its good faith
reasonable efforts and business and scientific judgment, as applied to
commercial development projects, to allocate sufficient time, effort, equipment,
personnel, and facilities to carry out its respective obligations under the beta
evaluation during the Beta Period.

4.      COMMERCIAL SUPPLY

        4.1 COMMERCIAL PERIOD. The Parties agree that, unless otherwise agreed
to in writing, CBMX shall manufacture (or have manufactured on its behalf) and
supply to Toxco, pursuant to the terms of this Agreement, all of Toxco's
quantity requirements for Toxco Chips and System Products during the Commercial
Period (set forth in Section 10.2 of this Agreement) at the prices set forth in
Section 5.5 for (a) Toxco's own use including for providing services in the
Field, and/or (b) Toxco's resale to Third Parties for use in the Field. During
the Agreement, Toxco may provide CBMX with new or different DNA oligonucleotide
sequences consistent with the Specifications for incorporation into new Toxco
Chip products, and CBMX agrees to make such new Toxco Chip products and supply
same to Toxco as provided in this Article 4. Toxco understands that in the event
of a capacity shortage by CBMX, CBMX will first notify Toxco of such shortage
and will use reasonable efforts to allocate its capacity among its customers,
but in no case will CBMX be required to allocate greater than [*************]
of its capacity to manufacture and supply Toxco Chips and System Products for
Toxco during such shortage or ever without prior written agreement of the
Parties.

        4.2 EXCLUSIVITY. During the Exclusivity Period set forth in Section 10.3
of this Agreement, CBMX agrees that it (i) shall not provide services in the
Field, (ii) shall not sell any Chip or any System Product to [*************
***********************************************] and (iii) shall take the steps
indicated below to avoid selling any Chip or any System Product for use in the
Field to [********************************************************************].
During such Exclusivity Period, prior to delivering Chips or System Products to
such Third Parties, CBMX shall cause [************************] to represent and
warrant in writing that [******************************************************
***********************************************], and

                                       7
<PAGE>   8

CBMX shall obtain appropriate audit rights to verify such non-use. [**********
******************************************************************************
******************************************************************************
******************************************************************************
******************************************************************************
******************************************************************************
******************************************************************************
******************************************************************************].
Notwithstanding the previous sentence, CBMX shall not be prohibited from selling
Chips or any other biochip related products in the Field to pharmaceutical
companies, academic institutions, and not-for-profit institutions. In addition,
CBMX agrees not to promote, market, sell or otherwise transfer any Toxco Chip,
or any Chip or other biochip related product containing DNA oligonucleotide
sequences substantially similar to those contained in any Toxco Chip, to any
Third Party for any reason, without prior written permission of Toxco, except as
otherwise provided below. Nothing in this Section 4.2 shall prevent CBMX from
selling to a Third Party customer any Chip or other biochip product that
contains DNA sequences that are the same as or similar to the DNA sequences in
any Toxco Chip so long as (i) such sequences were provided to CBMX by such Third
Party customer, (ii) were not previously disclosed to such Third Party customer
by CBMX, and (iii) if such Third Party customer [******************************
********], CBMX shall follow the provisions set forth in the first two sentences
of this section 4.2.

        4.3 ORDERS. Any purchase orders for Toxco Chips and/or System Products
submitted by Toxco shall be governed exclusively by the terms set forth in this
Agreement, unless otherwise agreed in writing between the Parties. Any term or
condition in any order, confirmation, or other document furnished by Toxco or
CBMX that is in any way inconsistent with these terms and conditions is hereby
expressly rejected. Within thirty (30) days of Toxco's written notice to CBMX
indicating successful developments of at least one Toxco Chip by CBMX under
Section 3.5 of this Agreement, but no later than six (6) months after the
commencement of the Beta Period, Toxco shall submit to CBMX its first binding
purchase order for its requirements of Toxco Chips and System Products. CBMX
shall deliver to Toxco the Toxco Chips and/or System Products ordered in
accordance with the purchase order within ten (10) days of CBMX's receipt of
such purchase order. Thereafter, Toxco shall submit binding purchase orders for
its requirements of Toxco Chips and System Products to CBMX on a monthly basis.
CBMX shall deliver to Toxco the Toxco Chips and/or System Products ordered in
accordance with these monthly purchase orders within ten (10) days of CBMX's
receipt of such purchase orders. Toxco shall specify in all purchase orders
submitted to CBMX under this Section the number of Toxco Chips ordered therein
that are to be used as VAR Chips or as In-House Chips. No Toxco order for Toxco
Chips or System Products can exceed ten percent (10%) of CBMX annual
manufacturing capacity without prior written approval from CBMX.

        4.4 DELIVERY. Unless otherwise agreed by the Parties in writing,
delivery of Toxco Chips and System Products shall be FOB CBMX's facility, where
risk of loss shall pass to Toxco upon CBMX tender of such products to a common
carrier at CBMX's facility, and Toxco shall pay any applicable freight and
insurance costs. CBMX will package and ship Toxco Chips and System Products in
accordance with CBMX's customary practices for such products, unless otherwise
specified and paid for by Toxco. Toxco will be responsible for any sales, use,
excise,

                                       8
<PAGE>   9

or similar taxes customarily paid by the buyer resulting from the sale of the
Toxco Chips and System Products from CBMX to Toxco.

        4.5 MINIMUM PURCHASE REQUIREMENTS FOR TOXCO CHIPS. During the first year
of the Commercial Period, Toxco shall purchase from CBMX, and CBMX shall supply
to Toxco, not less than [******************************] VAR Chips and [*******
******************] In-House Chips. Upon the expiration of the first year of the
Commercial Period, Toxco and CBMX agree to negotiate in good faith to amend this
Agreement to provide for the minimum commercial quantities of VAR Chips and
In-House Chips that Toxco shall purchase during the second and third years of
the Commercial Period. Toxco currently estimates that it shall order from CBMX
not less than [*********] VAR Chips and [*************************************
*******] In-House Chips during the second year of the Commercial Period, and not
less than [*************] VAR Chips and [*****************************] In-House
Chips during the third year of the Commercial Period. CBMX and Toxco understand
that Toxco's minimum commercial requirements during the second and third years
of the Commercial Period are only estimates and CBMX and Toxco agree that such
requirements are not binding under this Agreement and that any failure by CBMX
or Toxco to meet these requirements will not constitute a breach of this
Agreement.

        4.6 INSPECTION, ACCEPTANCE, AND REJECTION. Within seven (7) days of
receipt of each shipment of Toxco Chips or System Products, Toxco shall perform
a visual inspection, including examination of the external appearance and
integrity of the packaging as appropriate. If Toxco finds, based upon its visual
inspection, that the Toxco Chips or System Products are defective, Toxco shall,
within seven (7) days after the discovery of any defects of Toxco Chips or
System Products, give CBMX written notice of any claim setting forth the details
of such defects, or otherwise shall be deemed to have accepted the Toxco Chips.
CBMX shall repair or replace any defective Toxco Chips or System Products at
CBMX's expense and at no cost to Toxco. At CBMX's election, any defective Toxco
Chips or System Products shall either be destroyed or returned to CBMX at CBMX's
expense.

        4.7 CONFORMANCE WITH SPECIFICATIONS. Toxco Chips supplied hereunder will
conform to the Specifications as agreed to in writing by the Parties.

        4.8 LIMITED COMMERCIAL WARRANTY. CBMX warrants (i) that it has good and
marketable title to the Toxco Chips and System Products sold hereunder and (ii)
that for a period of ninety (90) days from the date of delivery, Toxco Chips
conform to the Specifications and are free from defects in material and
workmanship. If the Toxco Chips or System Products fail to meet said warranties,
CBMX shall replace the non-conforming Toxco Chips or System Products at no cost
to Toxco. The foregoing is Toxco's sole and exclusive remedy for CBMX's failure
to deliver or supply Toxco Chips or System Products that meet the foregoing
warranties. The Toxco Chips and System Products are not approved medical
devices, may not be used for diagnostic applications and do not have United
States Food and Drug Administration ("FDA") approval. No patent license is
conveyed to Toxco to use, and Toxco agrees not to use, the Toxco chips or System
Products or any of their components in any setting requiring FDA or similar
regulatory approval. CBMX HEREBY DISCLAIMS THAT USE OF ANY OF THE DNA
OLIGONUCLEOTIDES PROVIDED ON THE TOXCO CHIPS WILL BE FRE FROM INFRINGEMENT OF
THIRD PARTY RIGHTS. CBMX MAKES NO OTHER WARRANTY OF ANY KIND, EITHER EXPRESS OR
IMPLIED, INCLUDING ANY WARRANTY OF

                                       9
<PAGE>   10

MERCHANTABILITY OR FITNESS OF THE PRODUCT FOR ANY PARTICULAR PURPOSE (EVEN IF
THAT PURPOSE IS KNOWN TO CBMX).

5.      FINANCIAL TERMS

        5.1 LICENSE FEE. Upon expiration of the Beta Period under Section 3.5 of
this Agreement, unless earlier terminated under Section 10.6, and in
consideration for the license and exclusivity rights granted to Acacia in this
Agreement, Acacia shall pay CBMX a non-refundable license fee of one million
dollars ($1,000,000). Such fee will be payable in four (4) equal quarterly
installments with the first installment due at the time Toxco places its first
purchase order of the Commercial Period. CBMX understands that such license fee
shall not be due unless the first purchase order is executed between the Parties
during the Commercial Period.

        5.2    EQUITY INTEREST.

               (a) Upon commencement of the Commercial Period, Toxco shall issue
to CBMX, as further consideration for its receipt of the intangible property
rights granted under this Agreement, the number of shares of common stock of
Toxco equal to ten percent (10%) of the total equity interest in Toxco on the
Acquisition Date. Such issuance shall be pursuant to the Investors Rights and
Co-Sale Agreements attached in Exhibits C and D respectively hereto. Such rights
may be terminated by Acacia if it reasonably determines that the presence of
such rights is materially and adversely impeding Toxco's ability, after the use
by Acacia of commercially reasonable efforts to obtain financing without
amending or modifying CBMX's investor rights, to conduct further financing on
reasonable terms.

               (b) In addition, any stock purchase agreement ("SPA") executed
pursuant to this Section 5.2 shall provide that Toxco will grant additional
shares of common stock to CBMX, at no extra cost to CBMX, through Toxco's first
round of financing of at least $5,000,000 following the acquisition date, to the
extent necessary for CBMX to maintain a ten percent (10%) equity interest in
Toxco.

        5.3 COMMERCIAL RATES FOR TOXCO CHIPS AND SYSTEM PRODUCTS. Toxco shall
pay to CBMX the rates set forth in this section for Toxco Chips and System
Products ordered and delivered during the Commercial Period. CBMX shall invoice
Toxco as such products are shipped for Toxco Chips and System Products ordered
by Toxco.

               (a) REAGENT KITS. Toxco shall pay CBMX's actual Manufacturing
Cost, plus forty percent (40%) of such cost for Reagent kits.

               (b) HARDWARE. Toxco shall pay CBMX's actual Manufacturing Cost,
plus ten percent (10%) of such cost for Hardware.

               (c) TOXCO CHIPS. Depending upon the use for which Toxco is
purchasing Toxco Chips, Toxco shall pay the lesser of either (i) fifty percent
(50%) of the average net sales price per Chip paid by all Third Party's to CBMX
during the six (6) month period preceding the date of Toxco's order, or (ii) the
price as indicated in the table below.

                                       10
<PAGE>   11

<TABLE>
<CAPTION>

                                     [***]

<S>                             <C>           <C>          <C>

                                     [***]

</TABLE>

        5.4 RECORDS AND AUDITS. During the term of this Agreement and for a
period of three (3) years thereafter, Toxco shall keep complete and accurate
records pertaining to the sale or other disposition of Toxco Chips
commercialized by it, to the extent necessary to permit CBMX to confirm the
accuracy of the payments made hereunder with respect to purchases of Toxco
Chips, solely by verifying Toxco's allocation of Toxco Chip purchases as to
In-House Chips and VAR Chips. During the Commercial Period and for a period of
three (3) years thereafter, CBMX shall keep complete and accurate records
pertaining to the manufacture of Chips and their sale to Third Parties in
sufficient detail to permit Toxco to confirm the accuracy of all payments made
hereunder and Manufacturing Costs. Either Party, through a certified public
accountant, shall have the right to access the other Party's records for the
sole purpose of verifying the reports regarding amounts due. Such access shall
be conducted after reasonable prior notice by the Party requesting such audit
during the other Party's ordinary business hours and shall not be more frequent
than once during each calendar year. Said accountant shall not disclose a
Party's confidential information, except to the extent that such disclosure is
necessary to verify the accuracy of payment obligations hereunder. The Party
requesting the audit shall bear the full cost of the audit unless such audit
discloses a variance of the amount actually owed during a year of more than five
percent (5%) from the amount previously paid for such year. In such case, the
Party in error shall bear the full cost of such audit. The term of this Section
shall survive any termination or expiration of this Agreement for a period of
three (3) years.

6.      OWNERSHIP OF INTELLECTUAL PROPERTY

        6.1 OWNERSHIP. Toxco shall own all right, title, and interest in and to
Toxco Technology including, without limitation, all patent, copyright, trade
secret, and any other intellectual property rights therein. CBMX shall own all
right , title, and interest in and to CBMX Technology including, without
limitation, all patent, copyright, trade secret, and any other intellectual
property rights therein.

        6.2    IMPROVEMENTS.

               (a) CBMX shall own all right, title, and interest in and to any
ideas, innovations, discoveries, improvements, or inventions (whether or not
patentable) acquired, discovered, conceived, and/or reduced to practice by CBMX
during the term of this Agreement. CBMX may obtain patent, copyright, and/or
other proprietary protection relating to such ideas, innovations, discoveries,
improvements, and inventions.

               (b) Toxco shall own all right, title, and interest in and to any
ideas, innovations, discoveries, improvements, or inventions (whether or not
patentable) acquired, discovered, conceived, and/or reduced to practice by Toxco
during the term of this Agreement.

                                       11
<PAGE>   12

Toxco may obtain patent, copyright, and/or other proprietary protection relating
to such ideas, innovations, discoveries, improvements, and inventions.

               (c) "Chip Improvement Invention" shall mean any invention to the
extent, and only to the extent, that such invention (i) is conceived and/or
first reduced to practice by Toxco using the Toxco Chip or a System Product, or
(ii) constitutes a probe array manufacturing technique, probe array layout
techniques, or a probe array packaging technique applicable generally to the
design and manufacture of probe arrays. Notwithstanding Section 6.2(b) above,
CBMX shall own all right, title, and interest in and to all Chip Improvement
Inventions, subject only to the license rights granted below. Toxco agrees to
use reasonable efforts to report any Chip Improvement Invention to CBMX and to
assign to CBMX any rights to Chip Improvement Inventions as is necessary for
CBMX to achieve such sole ownership.

               (d) Except to the extent prohibited by applicable law, CBMX
hereby grants to Toxco a fully paid-up, royalty-free, worldwide, non-exclusive
license to all Chip Improvement Inventions in the Field.

        6.3    INFRINGEMENT OF CBMX TECHNOLOGY BY THIRD PARTIES.

               (a) NOTICE. Each Party shall promptly notify the other in writing
of any alleged or threatened infringement of the CBMX Technology that may
adversely impact the rights of the Parties hereunder, of which it becomes aware.

               (b) ENFORCEMENT ACTION. In the event that the Parties become
aware of any alleged or threatened infringement of the CBMX Technology, CBMX
shall have the right, but not the obligation, to take appropriate action against
any person or entity directly or contributorily infringing such CBMX Technology.

        6.4 PATENT MARKING. CBMX shall mark all Toxco Chips and System Products
used or sold under the terms of this Agreement, or their containers, in
accordance with the applicable patent marking laws to the extent such marking is
required by applicable patent law to preserve CBMX Patents. Toxco agrees not to
remove or modify any CBMX trademark or marking of CBMX.

7.      CONFIDENTIALITY

        7.1 CONFIDENTIALITY. Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing by the Parties, each Party agrees that,
for the term of this Agreement and for five (5) years thereafter or until
issuance of United States Letters Patent or publication of a foreign patent
application with respect the particular subject matter thereof, whichever is
earlier; provided however that information which is disclosed in writing, or, if
disclosed orally, is confirmed within thirty (30) days in writing, and which is
identified in writing as being a trade secret of the providing Party, shall be
maintained in secret until such time as it no longer qualifies as a trade secret
or until such time as the providing Party advises the recipient in writing that
such information is no longer a trade secret, it shall keep confidential and
shall not publish or otherwise disclose and shall not use for any purpose other
than as provided for in this Agreement any Confidential Information furnished to
it by the other Party pursuant to this

                                       12
<PAGE>   13

Agreement, except that the foregoing shall not apply to any information that the
receiving Party can demonstrate by competent proof:

               (a) was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the other Party;

               (b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving Party;

               (c) became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of such Agreements; or

               (d) was disclosed to the receiving Party, other than under an
obligation of confidentiality to a Third Party, by a Third Party who had no
obligation to the disclosing Party not to disclose such information to others.

        7.2 AUTHORIZED DISCLOSURE. Each Party may disclose Confidential
Information belonging to the other Party to the extent such disclosure is
reasonably necessary for the following reasons:

               (a) filing or prosecuting patents relating to Licensed Product;

               (b) regulatory filings;

               (c) prosecuting or defending litigation;

               (d) complying with applicable governmental regulations; and

               (e) disclosure to Affiliates or sublicensees who agree to be
bound by similar terms of confidentiality.

        Notwithstanding the foregoing, in the event a Party is required to make
a disclosure of the other Party's Confidential Information pursuant to this
Section 7.2 it will, except where impracticable, give reasonable advance notice
to the other Party of such disclosure and use best efforts to secure
confidential treatment of such information. In any event, the Parties agree to
take all reasonable action to avoid disclosure of confidential information
hereunder.

        7.3 EMPLOYEES; AGENTS. CBMX and Acacia shall ensure that each employee,
consultant, or other agent of CBMX, Acacia, or any of its Affiliates and
sublicensees who has access to Confidential Information is bound to obligations
of confidentiality and non-use at least equivalent in scope to those set forth
in Sections 7.1 and 7.2.

        7.4 TERMS OF THIS AGREEMENT AND PRESS RELEASE. The Parties agree that
the material terms of this Agreement shall be considered Confidential
Information. The Parties will consult with one another and agree on the
provisions of this Agreement to be redacted in any filings made by the Parties
with the Securities and Exchange Commission or as otherwise required by

                                       13
<PAGE>   14

law. Notwithstanding any terms of this Agreement, each Party may issue a press
release announcing the existence and general nature of this Agreement.

8.      REPRESENTATIONS AND WARRANTIES

        8.1    REPRESENTATIONS AND WARRANTIES OF ACACIA.

               (a) CORPORATE POWER. Acacia is duly organized and validly
existing under the laws of the state of Delaware and has full corporate power
and authority to enter into this Agreement and to carry out the provisions
hereof.

               (b) DUE AUTHORIZATION. Acacia is duly authorized to execute and
deliver this Agreement and to perform its obligations hereunder. The person
executing this Agreement on Acacia's behalf has been duly authorized to do so by
all requisite corporate action.

               (c) BINDING AGREEMENT. This Agreement is a legal and valid
obligation binding upon Acacia and enforceable in accordance with its terms. The
execution, delivery and performance of this Agreement by Acacia does not
conflict with any agreement, instrument, or understanding, oral or written, to
which it is a party or by which it may be bound, nor violate any material law or
regulation of any court, governmental body, or administrative or other agency
having jurisdiction over it.

               (d) VALIDITY. Acacia is aware of no action, suit, inquiry, or
investigation instituted by any governmental agency which questions or threatens
the validity of this Agreement.

        8.2    REPRESENTATIONS AND WARRANTIES OF CBMX.

               (a) CORPORATE POWER. CBMX is duly organized and validly existing
under the laws of Delaware and has full corporate power and authority to enter
into this Agreement and to carry out the provisions hereof.

               (b) DUE AUTHORIZATION. CBMX is duly authorized to execute and
deliver this Agreement and to perform its obligations hereunder. The person
executing this Agreement on CBMX's behalf has been duly authorized to do so by
all requisite corporate action.

               (c) BINDING AGREEMENT. This Agreement is a legal and valid
obligation binding upon CBMX and enforceable in accordance with its terms. The
execution, delivery and performance of this Agreement by CBMX does not conflict
with any agreement, instrument or understanding, oral or written, to which it is
a party or by which it may be bound, nor violate any material law or regulation
of any court, governmental body or administrative or other agency having
jurisdiction over it.

               (d) VALIDITY. CBMX is aware of no action, suit, inquiry, or
investigation instituted by any governmental agency which questions or threatens
the validity of this Agreement.

                                       14
<PAGE>   15

               (e) LICENSE GRANT. CBMX represents that CBMX has sufficient legal
title under CBMX Technology to grant a license to Acacia as set forth in Section
2.1 and warrants to the best of its knowledge that no additional license fees
will be due to any Third Party under such license.

               (f) NON-INFRINGEMENT. CBMX represents that the to its knowledge
CBMX Technology does not infringe any patent, trademark, or copyright with
respect to the incorporation of CBMX Technology into Toxco Chips. CBMX is not
aware of the existence of any lawsuits or claims, either asserted or implied, of
CBMX Technology's infringement of a patent or other proprietary right anywhere
in the world.

9.      INDEMNIFICATION

        9.1 INDEMNIFICATION BY CBMX. CBMX hereby agrees to indemnify, defend,
and hold Toxco and its customers and their respective directors, officers,
agents, and employees harmless from and against any and all suits, claims,
actions, demands, liabilities, expenses, or loss, including reasonable legal
expenses and reasonable attorneys' fees (collectively, "Claims"), to the extent
that such Claim or Claims arise from (i) any manufacturing defects of the Toxco
Chip or the System Product, (ii) the Toxco Chip's or System Product's
infringement of a Third Party's intellectual property, (iii) the negligence or
willful misconduct of CBMX, or (iv) CBMX's breach or alleged breach of the
representations and warranties set forth in Sections 4.8 and 8.2, provided Toxco
notifies CBMX promptly in writing of the Claims and gives CBMX sole control of
the defense. In no case may CBMX settle any Claim in which Toxco is a named
defendant or which may affect Toxco's rights without prior written consent of
Toxco, which consent shall not be unreasonably withheld. The foregoing
indemnities shall not apply to the extent such Claims are covered by Toxco's
indemnity set forth in Section 9.2 below.

        9.2 INDEMNIFICATION BY TOXCO. Toxco hereby agrees to indemnify, defend,
and hold CBMX and its directors, officers, agents, and employees harmless from
and against any and all suits, claims, actions, demands, liabilities, expenses,
or loss, including reasonable legal expenses and attorneys' fees (collectively,
"Claims"), to the extent that such Claim or Claims arise from (i) the Toxco
Technology's infringement of a Third Party's intellectual property rights, (ii)
the negligence or willful misconduct of Toxco, or (iii) Toxco's breaches of the
representations and warranties set forth in Section 8.1, provided CBMX notifies
Toxco promptly in writing of the action and gives Toxco sole control of the
Defense. In no case may Toxco settle any Claim in which CBMX is a named
defendant or which may affect CBMX's rights without prior written consent of
CBMX, which consent shall not be unreasonably withheld. The foregoing
indemnities shall not apply to the extent such Claims are covered by CBMX's
indemnity set forth in Section 9.1 above.

        9.3 CONTROL OF DEFENSE. If a Party is entitled to indemnification under
Section 9.1 or 9.2 (the "Indemnified Party"), it shall give written notice to
the Party providing indemnification (the "Indemnifying Party") of any Claims
that may be subject to indemnification promptly after learning of such Claim,
and the Indemnifying Party shall assume the defense of such Claims with counsel
reasonably satisfactory to the Indemnified Party. If such defense is assumed by
the Indemnifying Party with counsel so selected, the Indemnifying Party will not
be subject to any liability for any settlement of such Claims made by the
Indemnified Party without the

                                       15
<PAGE>   16

Indemnifying Party's consent (but such consent will not be unreasonably withheld
or delayed), and will not be obligated to pay the fees and expenses of any
separate counsel retained by the Indemnified Party with respect to such Claims.

10.     TERM; TERMINATION

        10.1 TERM. The term of this Agreement shall commence upon the Effective
Date and shall expire on the expiration of the Commercial Period, unless earlier
terminated as provided below in this Article 10.

        10.2 TERM OF COMMERCIAL PERIOD. The Commercial Period shall commence
upon the date expiration of the Beta Period, unless the Agreement is terminated
under Section 10.6, and shall continue until the fifth (5th) anniversary of such
date, unless extended as provided below. The Commercial Period will
automatically be extended for additional one (1) year terms after such fifth
(5th) anniversary unless either party provides written notice to the other, at
least sixty (60) days prior to such fifth (5th) anniversary or the then current
Commercial Period expiration date, that it wishes to terminate the Commercial
Period.

        10.3 TERM OF EXCLUSIVITY PERIOD. The Exclusivity Period shall commence
on the date of CBMX's first delivery of Toxco Chips to Toxco for commercial
resale, and shall terminate on the one (1) year anniversary of the commencement
of the Commercial Period. Toxco may request an extension of the Exclusivity
Period upon thirty (30) days written notice to CBMX for an additional one (1)
year term, which may be granted by CBMX at CBMX's discretion.

        10.4 TERMINATION FOR MATERIAL BREACH. If either Party is in material
breach of this Agreement, the other Party may terminate the Agreement upon sixty
(60) days prior written notice if such breach has not been cured within such
sixty (60) day period.

        10.5 TERMINATION FOR ACACIA'S FAILURE TO ACQUIRE TOXCO. In the event
that Acacia fails to acquire Toxco within six (6) months from the Effective Date
of this Agreement, this Agreement shall terminate.

        10.6 TERMINATION BY ACACIA. Acacia shall have the right to terminate the
Agreement on thirty (30) days prior written notice, if the results of the beta
evaluation under Exhibit A are not acceptable to Acacia.

        10.7 ACCRUED RIGHTS; SURVIVING OBLIGATIONS. Termination of this
Agreement shall not affect any accrued rights of either Party. The terms of
Sections 1 (Definitions), 4.8 (Limited Commercial Warranty), 5.4 (Records and
Audits), 6 (Ownership of Intellectual Property), 7 (Confidentiality), 9
(Indemnification), 11 (Governing Law; Dispute Resolution), 12.8 (Headings), 12.9
(Limitation of Liability), and 12.10 (Counterparts) of this Agreement shall
survive termination of this Agreement.

                                       16
<PAGE>   17

11.     GOVERNING LAW; DISPUTE RESOLUTION

        11.1 GOVERNING LAW. This Agreement shall be governed by Delaware law,
excluding its choice of law rules.

        11.2 ARBITRATION. Any controversy or claim arising out of or related to
the Parties' obligations under this Agreement, or the breach thereof, shall be
settled by arbitration conducted in the State of Delaware and, except as
otherwise provided in this Section 11.2, shall be conducted in accordance with
the Commercial Arbitration Rules of the American Arbitration Association.
Discovery shall be permitted as set forth in the Federal Rules of Civil
Procedure with respect to the performance by the Parties of their obligations
under this Agreement and such other matters as the arbitrators may determine (it
being the intent of the Parties that full discovery occur with respect to
salient facts). Judgment upon an award rendered by the Arbitrator shall be
binding and may be entered in any court in Delaware, and the Parties consent to
jurisdiction therein for the purpose of such enforcement.

12.     GENERAL PROVISIONS

        12.1 NOTICES. All notices required or permitted to be given under this
Agreement shall be in writing and shall be mailed by registered or certified
mailed addressed to the signatory to whom such notice is required or permitted
to be given and transmitted by facsimile to the number indicated below. All
notices shall be deemed to have been given when faxed or mailed as evidenced by
the postmark at the point of mailing.

All notices to Acacia shall be addressed as follows:

        Acacia Research Corporation
        55 South Lake Avenue
        Suite B
        Pasadena, California  91101
        Attn:

    with a copy to:

        Cooley Godward LLP
        Five Palo Alto Square
        3000 El Camino Real
        Palo Alto, California  94306
        Attn:  Barclay Kamb, Esq.

        All notices to CBMX shall be addressed as follows:

        CombiMatrix Corporation
        3439 S SE Douglas
        Suite 110
        Snoqualmie, Washington  98065

                                       17
<PAGE>   18

Any Party may, by written notice to the other, designate a new address or fax
number to which notice to that Party shall thereafter be mailed or faxed.

        12.2 FORCE MAJEURE. Neither Party shall lose any rights hereunder or be
liable to the other Party for damages or losses on account of the failure or
delay of performance by the defaulting Party if the failure is occasioned by
government action, war, fire, earthquake, explosion, flood, strike, lockout,
embargo, act of God, or any other similar or dissimilar cause beyond the
defaulting Party's reasonable control and that by the exercise of due diligence
it is unable to prevent, provided that the Party claiming force majeure has
exerted and continues to exert all reasonable efforts to overcome the same.

        12.3 ENTIRETY OF AGREEMENT. This Agreement sets forth the entire
agreement and understanding of the Parties relating to the subject matter
contained herein and merges all prior discussions and agreements between them,
and no Party shall be bound by any representation other than as expressly stated
in this Agreement, or by a written amendment to this Agreement signed by
authorized representatives of each of the Parties.

        12.4 NON-WAIVER. The failure of a Party in one or more instances to
insist upon strict performance of any of the terms and conditions of this
Agreement shall not be construed as a waiver or relinquishment, to any extent,
of the right to assert or rely upon any such terms or conditions on any future
occasion.

        12.5 DISCLAIMER OF AGENCY. This Agreement shall not constitute any Party
the legal representative or agent of the other, nor shall any Party have the
right or authority to assume, create, or incur any third-party liability or
obligation of any kind, either express or implied, against, in the name of, or
on behalf of the other except as expressly set forth in this Agreement.

        12.6 SEVERANCE. If any Section or part thereof of this Agreement is
declared invalid by any court of competent jurisdiction, or if any government or
other agency having jurisdiction over either CBMX or Acacia deems any Section or
part thereof to be contrary to any antitrust or competition laws, then such
declaration shall not affect the remainder of the Section or other Sections. To
the extent possible, the Parties shall revise such invalidated Section or part
thereof in a manner that will render such provision valid without impairing the
Parties' original intent.

        12.7 AFFILIATES, ASSIGNMENT. A Party may discharge any obligations and
exercise any rights hereunder through an Affiliate of that Party. References to
a Party shall include any Affiliate of that Party to whom such an assignment or
delegation has been made or ratified. Except as provided in this Section,
neither Party shall delegate duties of performance or assign, in whole or in
part, rights or obligations under this Agreement without the prior written
consent of the other Party, and any attempted delegation or assignment without
such written consent shall be of no force or effect. Subject to the restrictions
contained in the preceding sentence, this Agreement shall be binding upon the
successors and assigns of the Parties.

        12.8 HEADINGS. The headings contained in this Agreement have been added
for convenience only and shall not be construed as limiting.

                                       18
<PAGE>   19

        12.9 LIMITATION OF LIABILITY. No Party shall be liable to another for
indirect, incidental, consequential, or special damages, including, but not
limited to, lost profits, arising from or relating to any breach of this
Agreement, regardless of any notice of the possibility of such damages. Nothing
in this Section is intended to limit or restrict the indemnification rights or
obligations of any Party.

        12.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.

        IN WITNESS WHEREOF, the Parties hereto have duly executed this
Agreement.

ACACIA RESEARCH CORPORATION                  COMBIMATRIX CORPORATION

-----------------------------------          -----------------------------------
By:                                          By:
Title:                                       Title:

                                       19

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