9,768,313 Shares Warrants to Purchase 11,721,975 Shares ACACIA RESEARCH CORPORATION Acacia Research - CombiMatrix Common Stock ($0.001 par value) PLACEMENT AGENCY AGREEMENT
Exhibit
10.1
9,768,313
Shares
Warrants
to Purchase 11,721,975 Shares
ACACIA
RESEARCH CORPORATION
Acacia
Research - CombiMatrix Common Stock ($0.001 par value)
December
7, 2006
▇▇▇▇▇▇▇▇▇▇▇
& Co. Inc.
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
Ladies
and Gentlemen:
Acacia
Research Corporation, a Delaware corporation (the “Company”)
proposes, subject to the terms and conditions contained herein and in the
Subscription Agreements in the form of Exhibit
A
attached
hereto (the “Subscription
Agreements”)
entered into with the Investors identified therein (each an “Investor”
and,
collectively, the “Investors”),
to
issue and sell up to an aggregate of 9,768,313 units (the “Units”),
each
consisting of (i) one share (the “Share”
and
collectively the “Shares”)
of
common stock, $0.001 par value per share, designated as Acacia Research -
CombiMatrix Common Stock (the “AR
- CombiMatrix Common Stock”),
of
the Company and (ii) one warrant (the “Warrant”
and
collectively the “Warrants”)
to
purchase 1.2 shares of AR-CombiMatrix Common Stock substantially in the form
of
Exhibit
B
attached
hereto. The shares issuable upon the exercise of the Warrants and the Placement
Agent’s Warrants (as defined in Section 1(a) below) are referred to herein as
the “Warrant
Shares”
and,
together with the Units, the Shares and the Warrants are referred to herein
as
the “Securities.”
The
Company hereby confirms its agreement with ▇▇▇▇▇▇▇▇▇▇▇ & Co. Inc.
(“▇▇▇▇▇▇▇▇▇▇▇”)
acting
as the placement agent (the “Placement
Agent”).
The
Securities are more fully described in the Registration Statement (as
hereinafter defined).
1. Agreement
to Act as Placement Agent; Delivery and Payment.
On
the
basis of the representations, warranties and agreements of the Company herein
contained, and subject to all the terms and conditions of this
Agreement:
(a) The
Placement Agent agrees to act as the Company’s exclusive placement agent to
solicit offers for the purchase of all or part of the Units from the Company
in
connection with the proposed issuance and sale, on a commercially reasonable
efforts basis, by the Company of the Units to the Investors (the “Offering”).
Upon
the occurrence of the Closing (as hereinafter defined), the Company shall pay
to
the Placement Agent by wire transfer of immediately available funds to an
account or accounts designated by the Placement Agent an amount equal to seven
percent (7.0%) of the gross proceeds received by the Company from the sale
of
the Units on such Closing Date (as hereinafter defined). In addition, the
Company shall issue and sell to the Placement Agent and/or its designees, in
addition to the amount set forth above, warrants (the “Placement
Agent’s Warrants”)
to
purchase 488,416 shares of Common Stock for a purchase price of $0.01 per
warrant. The Placement Agent’s Warrants will entitle the holder thereof for a
five-year period commencing on the first day after the six-month anniversary
of
the Closing Date to purchase 488,416 shares of AR - CombiMatrix Common Stock
at
an exercise price equal to $1.0875 per share. The Placement Agent’s Warrants
shall be in the form attached hereto as Exhibit
C.
The
Company acknowledges and agrees that the Placement Agent’s engagement hereunder
is not an agreement by the Placement Agent or any of its affiliates to
underwrite or purchase any securities or otherwise provide any financing. Under
no circumstances will the Placement Agent be obligated to purchase any Units
for
its own account and, in soliciting purchases of Units, the Placement Agent
shall
act solely as the Company’s agent and not as principal. Notwithstanding the
foregoing, it is understood and agreed that the Placement Agent (or its
affiliates) may, solely at its discretion and without any obligation to do
so,
purchase Units as principal. The Placement Agent shall have no authority to
bind
the Company.
(b) Payment
of the purchase price for, and delivery of, the Units shall be made at a closing
(the “Closing”)
at
the
offices of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP, counsel for the Company, located at ▇▇▇
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ at 7:00 a.m., local time,
on
the third or fourth business day (as permitted under Rule 15c6-1 under the
Exchange Act) after the determination of the public offering price of the Units
(such time and date of payment and delivery being herein called the
“Closing
Date”).
All
such actions taken at the Closing shall be deemed to have occurred
simultaneously.
(c) Prior
to
the Closing, the Placement Agent shall cause each Investor to wire directly
to
an escrow account designated by the Placement Agent an amount equal to the
aggregate purchase price for the number of Units such Investor has agreed to
purchase.
(d) On
the
Closing Date, the Placement Agent shall cause the aggregate purchase price
for
the Units to be wired from the Investors or the escrow account referred to
in
Section 1(c) above to an account designated by the Company and the Company
shall
deliver, or cause the transfer agent for the Units to deliver, to each Investor
the number of Units set forth on the signature page to such Investor’s
Subscription Agreement, which delivery shall be made, with respect to an
Investor, in accordance with the procedures set forth in such Investor’s
executed Subscription Agreement.
(e) The
purchases of the Units by each of the Investors shall be evidenced by the
execution of a Subscription Agreement substantially in the form attached hereto
as Exhibit
A
(f) Prior
to
the earlier of (i) the date on which this Agreement is terminated and (ii)
the
Closing Date, the Company shall not, without the prior written consent of the
Placement Agent, solicit or accept offers to purchase shares of its
AR-CombiMatrix Common Stock or other equity or equity-linked securities of
the
Company (other than pursuant to the exercise of options or warrants to purchase
shares of AR-CombiMatrix Common Stock that are outstanding at the date hereof)
otherwise than through the Placement Agent.
2. Representations
and Warranties of the Company.
The
Company represents and warrants to the Placement Agent and the Investors as
of
the date hereof and as of the Closing Date, as follows:
(a) RegistrationStatement.
The
Company has prepared and filed in conformity with the requirements of the
Securities Act of 1933, as amended (the “Securities
Act”),
and
published rules and regulations thereunder (the “Rules
and Regulations”)
adopted by the Securities and Exchange Commission (the “Commission”)
a
“shelf”
Registration Statement (as hereinafter defined) on Form S-3 (No. 333-133529),
which was declared by the Commission to be effective under the Securities Act
as
of May 26, 2006 (the “Effective
Date”)
including a Base Prospectus, dated as of the Effective Date, relating to the
Securities (the “Base
Prospectus”),
and
such amendments and supplements thereto as may have been required to the date
of
this Agreement. The Company will next file with the Commission pursuant to
Rule
424(b) under the Securities Act a final prospectus supplement to the Base
Prospectus (a “Prospectus
Supplement”)
describing the Units and the offering thereof, in such form as has been provided
to or discussed with, and approved, by the Placement Agent.
2
The
term
“Registration
Statement”
as used
in this Agreement means the registration statement (including all exhibits,
financial schedules and all documents and information deemed to be a part of
the
Registration Statement pursuant to Rule 430A or 434(d) under the Securities
Act), as of the Effective Date and as amended and/or supplemented to the date
of
this Agreement. The Registration Statement has been declared effective under
the
Securities Act and no stop order preventing or suspending the effectiveness
of
the Registration Statement or suspending or preventing the use of the Prospectus
(as defined below) has been issued by the Commission and no proceedings for
that
purpose have been instituted or, to the Company’s knowledge, are contemplated by
the Commission.
The
term
“Prospectus”
as used
in this Agreement means the Base Prospectus together with the Prospectus
Supplement, except that if such Base Prospectus is amended or supplemented
prior
to the date on which the Prospectus Supplement was first filed pursuant to
Rule
424, the term “Prospectus”
shall
refer to the Base Prospectus as so amended or supplemented and as supplemented
by the Prospectus Supplement. Any reference herein to the Registration
Statement, the Base Prospectus, any Prospectus Supplement or the Prospectus
shall be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 (the “Incorporated
Documents”),
which
were filed under the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”)
and
any reference herein to the terms “amend,” “amendment,” or “supplement” with
respect to the Registration Statement, the Prospectus Supplement or the
Prospectus shall be deemed to refer to and include (i) the filing of any
document under the Exchange Act after the Effective Date, or the date of the
Prospectus, as the case may be, which is incorporated by reference and (ii)
any
such document so filed. If the Company has filed an abbreviated registration
statement to register additional Securities pursuant to Rule 462(b) under the
Rules (the “462(b)
Registration Statement”),
then any
reference herein to the Registration Statement shall also be deemed to include
such 462(b) Registration Statement.
(b) Registration
Statement and Prospectus.
On the
Effective Date, upon the filing or first delivery to the Investors of the
Prospectus, as of the date hereof, and at the Closing Date, the Registration
Statement (and any post-effective amendment thereto) and the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment or supplement to the Registration Statement or the Prospectus)
complied and will comply, in all material respects, with the requirements of
the
Securities Act and the Rules and Regulations and the Exchange Act and the rules
and regulations of the Commission thereunder and did not at the Effective Date,
does not as of the date hereof and will not as of the Closing Date, contain
any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein (in
light of the circumstances under which they were made, in the case of the
Prospectus) not misleading. Notwithstanding the foregoing, none of the
representations and warranties in this paragraph 2(b) shall apply to statements
in, or omissions from, the Registration Statement or the Prospectus, or any
amendment or supplement thereto made in reliance upon, and in conformity with,
information herein or otherwise furnished in writing by or on behalf of the
Placement Agent to the Company expressly for use in the Registration Statement
or the Prospectus or any amendment or supplement thereto. The Incorporated
Documents, at the time they became effective or were filed with the Commission,
complied in all material respects with the requirements of the Exchange Act
and
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Company has not distributed and will not distribute, prior
to the completion of the distribution of the Securities, any offering material
in connection with the offering and sale of the Securities, other than the
Registration Statement and the Prospectus.
(c) Subsidiaries.
The
Company has no significant subsidiaries (as such term is defined in Rule 1-02
of
Regulation S-X promulgated by the Commission) other than as listed in
Schedule
I
attached
hereto (collectively, the “Subsidiaries”).
All
of the issued and outstanding shares of capital stock of each of the
Subsidiaries have been duly and validly authorized and issued and are fully
paid, nonassessable and free of preemptive and similar rights to subscribe
for
or purchase securities, and, except as listed on Schedule
I
attached
hereto or otherwise described in the Registration Statement and Prospectus,
the
Company owns directly or indirectly, free and clear of any security interests,
claims, liens, proxies, equities or other encumbrances, all of the issued and
outstanding shares of such stock.
3
(d) Financial
_Statements.
The
consolidated financial statements of the Company, together with the related
schedules and notes thereto, set forth or incorporated by reference in the
Registration Statement and the Prospectus comply in all material respects with
the applicable requirements of the Securities Act and the Exchange Act, as
applicable, and fairly present, in all material respects, (i) the consolidated
financial condition of the Company and its Subsidiaries as of the dates
indicated and (ii) the consolidated results of operations, stockholders’ equity
and changes in cash flows of the Company and the Subsidiaries for the periods
therein specified; and such financial statements and related schedules and
notes
thereto, comply, in all material respects, as to form with the applicable
accounting requirements under the Securities Act and have been prepared in
conformity with United States generally accepted accounting principles,
consistently applied throughout the periods involved (except as otherwise stated
therein and subject, in the case of unaudited financial statements, to the
absence of footnotes and normal year-end adjustments). No other financial
statements or schedules are required by the Securities Act and the Rules and
Regulations to be included in the Registration Statement or
Prospectus.
(e) Independent
Accountants.
PricewaterhouseCoopers, LLP (the “Auditors”),
whose
report with respect to the audited consolidated financial statements and
schedules of the Company and its Subsidiaries included in the Prospectus, or
the
Registration Statement, or incorporated by reference therein is, and during
the
periods covered by its reports, was an independent public accounting firm within
the meaning of the Securities Act and the Rules and Regulations.
(f) Organization.
Each of
the Company and its Subsidiaries has been duly incorporated or otherwise
organized and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation or organization (as applicable).
Each
of the Company and its Subsidiaries has full corporate power and authority
to
own, lease and operate its properties and assets and to conduct its business
as
described in the Registration Statement and Prospectus, and is duly qualified
to
do business as a foreign corporation and is in good standing in each
jurisdiction in which it owns or leases real property or in which the conduct
of
its business makes such qualification necessary, except where the failure to
be
so qualified or be in good standing, as the case may be, would not, individually
or in the aggregate, have or reasonably be expected to result in, a material
adverse effect upon the business, prospects, properties, operations, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole (a “Material
Adverse Effect”).
(g) No
Material Adverse Effect.
Except
as set forth in the Registration Statement or the Prospectus, subsequent to
the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there has not been (i) any material adverse change in the
business, properties, management, financial condition or results of operations
of the Company and its subsidiaries taken as a whole, including any material
loss or interference with its respective business from fire, explosion, flood
or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, (ii) any transaction that
is
material to the Company and its Subsidiaries taken as a whole, (iii) any
obligation, direct or contingent (including any off balance sheet obligations),
incurred by the Company or its Subsidiaries, which is material to the Company
and its Subsidiaries taken as a whole, (iv) any change in the capital stock
or
outstanding indebtedness of the Company or its Subsidiaries (subject to the
issuance of shares of Common Stock upon exercise of stock options or warrants
disclosed as outstanding in the Registration Statement and Prospectus and the
grant of options under existing stock option plans described in the Registration
Statement and Prospectus) or (v) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company.
4
(h) Legal
Proceedings.
Except
as set forth in the Registration Statement and the Prospectus, there is not
pending or, to the knowledge of the Company, threatened or contemplated, any
action, suit or proceeding to which the Company or any of its Subsidiaries
is a
party or of which any property or assets of the Company or any of its
Subsidiaries is the subject before or by any court or governmental agency,
authority or body, or any arbitrator, which, individually or in the aggregate,
would reasonably be expected to result in any Material Adverse Effect or
materially and adversely affect the ability of the Company to perform its
obligations under this Agreement and the Subscription Agreements.
(i) Sufficiency
of Disclosure.
There
are (i) no current or pending legal, governmental or regulatory actions, suits
or proceedings that are required under the Securities Act to be described in
the
Registration Statement and Prospectus that have not been so described and (ii)
there are no affiliate transactions, off-balance sheet transactions, contracts,
licenses, agreements, leases or other documents of a character required to
be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not so described or filed as
required.
(j) Due
Authorization and Enforceability.
The
Company has full legal power and authority to enter into this Agreement and
the
Subscription Agreements and to consummate the transactions contemplated hereby
and thereby. This Agreement and each of the Subscription Agreements have been
duly authorized, executed and delivered by the Company, and constitute valid,
legal and binding obligations of the Company, enforceable in accordance with
their terms, except as rights to indemnity hereunder may be limited by
applicable laws and except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the rights
and
remedies of creditors generally or subject to general principles of
equity.
(k) The
Shares.
The
Shares have been duly and validly authorized by the Company and, when issued,
delivered and paid for in accordance with the terms of this Agreement, will
have
been duly and validly issued and will be fully paid and nonassessable; and
the
capital stock of the Company, including the AR-CombiMatrix Common Stock,
conforms to the description thereof in the Registration Statement and
Prospectus. Except as otherwise stated in the Registration Statement and
Prospectus, there are no preemptive rights or other rights to subscribe for
or
to purchase, or any restriction upon the voting or transfer of, any shares
of AR
-CombiMatrix Common Stock pursuant to the Company’s charter, bylaws or any
agreement or other instrument to which the Company is a party or by which the
Company is bound that have not been waived or complied with.
(l) The
Warrants and the Placement Agent’s Warrants.
The
Company has the full right, power and authority to enter into the Warrants
and
the Placement Agent’s Warrants and to perform and discharge its obligations
thereunder. The Warrants and the Placement Agent’s Warrants have been duly and
validly authorized by the Company and upon delivery to the Investors at the
Closing Date will be duly issued and will constitute legal, valid and binding
obligations of the Company, enforceable in accordance with their terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights and remedies of creditors
generally or subject to general principles of equity. The Warrant Shares have
been duly authorized and reserved for issuance upon the exercise of the Warrants
and the Placement Agent’s Warrants and when issued upon payment of the exercise
price therefor will be validly issued, fully paid and
nonassessable.
5
(m) No
Conflicts.
The
execution, delivery and performance by the Company of this Agreement, the
Warrants and the Placement Agent’s Warrants, and each of the Subscription
Agreements and the consummation of the transactions herein and therein
contemplated, including the issuance and sale of the Securities, will not (i)
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default (or an event which with notice or lapse
of time or both would constitute a default) under, or require any consent or
waiver under, or result in the execution of any lien, charge or encumbrance
upon
any properties or assets of the Company or its Subsidiaries pursuant to the
terms of, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its Subsidiaries is
a
party or by which the Company or any of its Subsidiaries is bound or to which
any of the property or assets of the Company or any of its Subsidiaries is
subject, (ii) result in any violation of the provisions of the charter or
by-laws of the Company or any of its Subsidiaries or (iii) result in any
violation of any franchise, license, permit, statute, law, rule or regulation
applicable to the Company or any judgment, order or decree of any court or
governmental agency or body having jurisdiction over the Company or any of
its
Subsidiaries or any of their properties or assets, except, in the case of each
of clauses (i) and (iii) above, for any such conflict, breach, violation,
default, lien, charge or encumbrance that would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse
Effect.
(n) No
Consents Required.
No
consent, approval, authorization, filing with or order of or registration with,
any court or governmental agency or body, or approval of the shareholders of
the
Company, is required for the execution, delivery and performance of this
Agreement, the Warrants and the Placement Agent’s Warrants, and each of the
Subscription Agreements or for the consummation of the transactions contemplated
hereby and thereby, including the issuance or sale of the Securities by the
Company, except such as have been obtained or made, and such as may be required
under the securities, or blue sky, laws of any jurisdiction in connection with
the offer and sale of the Units by the Company in the manner contemplated herein
and in the Registration Statement and the Prospectus.
(o) Capitalization.
All of
the issued and outstanding shares of capital stock of the Company, including
the
outstanding shares of AR-CombiMatrix Common Stock, are duly authorized and
validly issued, fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, were not issued in violation of
or
subject to any preemptive rights or other rights to subscribe for or purchase
securities that have not been waived in writing. As of the date hereof and
as of
the Closing Date, the Company has or will have, as the case may be, an
authorized, issued and outstanding capitalization as is set forth in the
Registration Statement and the Prospectus (subject, in each case, to the
issuance of shares of Common Stock upon exercise of stock options and warrants
disclosed as outstanding in the Registration Statement and the Prospectus and
grant of options under existing stock option plans described in the Registration
Statement and the Prospectus, and such authorized capital stock conforms to
the
description thereof set forth in the Registration Statement and the Prospectus.
Except as described in the Registration Statement and the Prospectus, as of
the
date referred to therein, the Company did not have outstanding any options,
warrants, agreements, contracts or other rights in existence to purchase or
acquire from the Company or any Subsidiary of the Company any shares of the
capital stock of the Company or any Subsidiary of the Company.
(p) Title
to Real and Personal Property.
The
Company and each of its Subsidiaries has good and valid title to all property
(whether real or personal) described in the Registration Statement and
Prospectus as being owned by each of them, in each case free and clear of all
liens, claims, security interests, other encumbrances or defects except such
as
are described in the Registration Statement and the Prospectus and those that
do
not materially and adversely affect the value of such property and do not
materially interfere with the use made of such property by the Company. All
of
the property described in the Registration Statement and the Prospectus as
being
held under lease by the Company or a Subsidiary are held thereby under valid,
subsisting and enforceable leases.
6
(q) Title
to Intellectual Property.
The
Company and its Subsidiaries own, possess, license or have other rights to
use
all foreign and domestic patents, patent applications, trade and service marks,
trade and service mark registrations, trade names, copyrights, licenses,
inventions, trade secrets, technology, Internet domain names, know-how and
other
intellectual property, necessary for the conduct of CombiMatrix Group’s (as
defined in the Prospectus) businesses as now conducted or as proposed in the
Prospectus to be conducted (collectively, the “Intellectual
Property”).
Except as set forth in the Prospectus, (a) the Company has not received written
notice, and has no knowledge of, any rights of third parties to any such
Intellectual Property; (b) to the Company’s knowledge, there is no infringement
by third parties of any such Intellectual Property; (c) there is no pending
or,
to the Company’s knowledge,
threatened action, suit, proceeding or claim by others challenging the Company’s
and its Subsidiaries’ rights in or to any such Intellectual Property; (d) there
is no pending or, to the Company’s knowledge, threatened action, suit,
proceeding or claim by others challenging the validity or scope of any such
Intellectual Property; (e) there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others that CombiMatrix Group
infringes or otherwise violates any patent, trademark, copyright, trade secret
or other proprietary rights of others; (f) to the Company’s knowledge, there is
no third-party U.S. patent or published U.S. patent application which contains
claims for which an Interference Proceeding (as defined in 35 U.S.C. § 135) has
been commenced against any patent or patent application which constitutes the
Intellectual Property described in the Prospectus; and (g) the CombiMatrix
Group
has taken all steps necessary to perfect its ownership of the Intellectual
Property, in each of clauses (a)-(g) except for such infringement, conflict
or
action which would not, singularly or in the aggregate, reasonably be expected
to result in a Material Adverse Effect.
(r) No
Violation or Default.
Neither
the Company nor any of its Subsidiaries is (i) in violation of any provision
of
its charter or bylaws or similar organizational documents, (ii) is in default
in
any respect, and no event has occurred which, with notice or lapse of time
or
both, would constitute such a default, in the due performance or observance
of
any term, covenant, or condition of any indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement or other agreement, obligation,
condition, covenant or instrument to which it is a party or by which it is
bound
or to which any of its property or assets is subject, or (iii) is in violation
in any respect of any statute, law, rule, regulation, ordinance, judgment,
order
or decree of any court, regulatory body, administrative agency, governmental
body, arbitrator or other authority having jurisdiction over the Company, its
Subsidiaries or any of its properties of which it has knowledge, as applicable,
except, with respect to clauses (ii) and (iii), any violations or defaults
which, singularly or in the aggregate, would not reasonably be expected to
result in a Material Adverse Effect.
(s) Permits.
The
Company and each of its Subsidiaries has made all filings, applications and
submissions required by, and possesses all approvals, licenses, certificates,
certifications, clearances, consents, exemptions, marks, notifications, orders,
permits and other authorizations issued by, the appropriate federal, state
or
foreign regulatory authorities necessary to conduct its businesses as described
in the Registration Statement and the Prospectus (collectively, “Permits”),
except
for such Permits the failure of which to obtain would not reasonably be expected
to result in a Material Adverse Effect, and is in compliance with the terms
and
conditions of all such Permits; all of such Permits held by the Company and
each
of its Subsidiaries are valid and in full force and effect; there is no pending
or, to its knowledge, threatened action, suit, claim or proceeding which may
cause any such Permit to be limited, revoked, cancelled, suspended, modified
or
not renewed, except for such limitations, revocations, cancellations,
suspensions, modifications or non-renewals that would not reasonably be expected
to result in a Material Adverse Effect; and the Company and each of its
Subsidiaries has not received any notice of proceedings relating to the
limitation, revocation, cancellation, suspension, modification or non-renewal
of
any such Permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would reasonably be expected to result
in a Material Adverse Effect, whether or not arising from transactions in the
ordinary course of business and has no reason to believe that any such license,
certificate, permit or authorization will not be renewed in the ordinary
course.
7
(t) Taxes.
The
Company and its Subsidiaries have timely filed all federal, state, local and
foreign income and franchise tax returns (or timely filed applicable extensions
therefore) required to be filed and are not in default in the payment of any
taxes which were payable pursuant to said returns or any assessments with
respect thereto, other than any which the Company or any of its Subsidiaries
is
contesting in good faith and for which adequate reserves have been
provided.
(u) Listing.
The
AR-CombiMatrix Common Stock (including the Shares and the Warrant Shares) is
registered pursuant to Section 12(g) of the Exchange Act and the Company, in
the
two years preceding the date hereof, has not received any notification (written
or oral) from the Nasdaq Global Market, any stock exchange, market or trading
facility on which the AR-CombiMatrix Common Stock is or has been listed (or
on
which it has been quoted) to the effect that the Company is not in compliance
with the listing or maintenance requirements of such exchange, market or trading
facility. The Company shall comply with all requirements of the Nasdaq Global
Market with respect to the issuance of the Securities and shall use its best
efforts to have the Shares and the Warrant Shares listed on the Nasdaq Global
Market on or before the Closing Date.
(v) Internal
Controls.
The
Company and each of its Subsidiaries maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions
are executed in accordance with management’s general or specific authorization;
(ii)
transactions
are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(w) Disclosure
Controls.
The
Company has established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15e and 15d-15e under the Exchange Act), which
(i) are designed to ensure that material information relating to the Company
is
made known to the Company’s principal executive officer and its principal
financial officer by others within those entities, particularly during the
periods in which the periodic reports required under the Exchange Act are being
prepared; (ii) provide for the periodic evaluation of the effectiveness of
such
disclosure controls and procedures as of the end of each of the Company’s
quarterly and annual fiscal periods; and (iii), as of the end of the periods
covered by each periodic report filed under the Exchange Act and incorporated
by
reference into the Prospectus, were effective in all material respects to
perform the functions for which they were established. The Company’s auditors
and the Audit Committee of the Board of Directors have been advised of (i)
any
significant deficiency in the design or operation of internal controls which
could adversely affect the Company’s ability to record, process, summarize and
report financial data or any material weaknesses in internal controls; or (ii)
any fraud, whether or not material, that involves management or other employees
who have a significant role in the Company’s internal controls. Since the date
of the most recent evaluation of such disclosure controls and procedures, there
have been no changes that have materially affected, or are reasonably likely
to
materially affect, the Company’s internal control over financial reporting,
including any corrective actions with regard to significant deficiencies and
material weaknesses.
8
(x) No
Undisclosed Relationships.
No
relationship, direct or indirect, exists between or among the Company on the
one
hand and the directors, officers, stockholders, customers or suppliers of the
Company on the other hand which is required to be described in the Prospectus
and which is not so described.
(y) No
Registration Rights.
Except
as described in the Prospectus, no person or entity has the right, contractual
or otherwise, to require registration of shares of AR-CombiMatrix Common Stock
or other securities of the Company because of the filing or effectiveness of
the
Registration Statement or otherwise, except for persons and entities who have
expressly waived such right or who have been given proper notice and have failed
to exercise such right within the time or times required under the terms and
conditions of such right, and the Company is not required to file any
registration statement for the registration of any securities of any person
or
register any such securities pursuant to any other registration statement filed
by the Company under the Securities Act for a period of at least 180 days after
the Effective Date.
(z) ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act.
The
principal executive officer and principal financial officer of the Company
have
made all certifications required by Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act of 2002 and the rules and regulations promulgated in connection therewith
(the “Sarbanes:Oxley
Act”)
with
respect to all reports, schedules, forms, statements and other documents
required to be filed by it with the Commission, and the statements contained
in
any such certification are complete and correct.
The
Company, and to its knowledge after due inquiry, all of the Company’s directors
or officers, in their capacities as such, is in compliance in all material
respects with all applicable effective provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
(and
intends to comply with all applicable provisions that are not yet effective
upon
effectiveness).
(aa) Compliance
with Environmental Laws.
(i) The
Company and each of its Subsidiaries is in compliance in all material respects
with all rules, laws and regulation relating to the use, treatment, storage
and
disposal of toxic substances and protection of human health and safety or the
environment (“Environmental
Laws”)
which
are applicable to its business, except where the failure to comply would not
reasonably be expected to result in a Material Adverse Effect; (ii) neither
the
Company nor its Subsidiaries has received any written notice from any
governmental authority or third party of an asserted claim under Environmental
Laws; (iii) the Company and each of its Subsidiaries has received all material
permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and is in compliance with all
material terms and conditions of any such permit, license or approval, except
where the failure to receive or comply would not reasonably be expected to
result in a Material Adverse Effect; (iv) to the Company’s knowledge after
reasonable due inquiry, no facts currently exist that will require the Company
or any of its Subsidiaries to make future material capital expenditures to
comply with Environmental Laws; and (v) no property which is or has been owned,
leased or occupied by the Company or its Subsidiaries has been designated as
a
Superfund site pursuant to the Comprehensive Environmental Response,
Compensation of Liability Act of 1980, as amended (42 U.S.C. Section 9601,
et.
seq,) (“CERCLA”)
or
otherwise designated as a contaminated site under applicable state or local
law.
Neither the Company nor any of its Subsidiaries has been named as a “potentially
responsible party” under CERCLA.
(bb) Compliance
with ERISA.
Each of
the Company and its Subsidiaries has fulfilled its obligations, if any, under
the minimum funding standards of Section 302 of the United States Employee
Retirement Income Security Act of 1974 (“ERISA”)
and
the regulations and published interpretations thereunder with respect to each
“plan”
(as
defined in Section 3(3) of ERISA and such regulations and published
interpretations) in which employees of the Company and its Subsidiaries are
eligible to participate and each such plan is in compliance in all material
respects with the presently applicable provisions of ERISA and such regulations
and published interpretations. No “prohibited
transaction”
(as
defined in Section 406 of ERISA, or Section 4975 of the Internal Revenue Code
of
1986, as amended from time to time (the “Code”))
has
occurred with respect to any employee benefit plan which could reasonably be
expected to result in a Material Adverse Effect. The Company and each of its
Subsidiaries has not incurred any unpaid liability to the Pension Benefit
Guaranty Corporation (other than for the payment of premiums in the ordinary
course) or to any such plan under Title IV of ERISA,
9
(cc) No
Labor Disputes.
No
labor problem or dispute with the employees of the Company or any of its
Subsidiaries exists or, to the Company’s knowledge, is threatened or imminent,
which would reasonably be expected to result in a Material Adverse Effect.
The
Company is not aware that any key employee or significant group of employees
of
the Company or any of its Subsidiaries plans to terminate employment with the
Company or any such Subsidiary.
(dd) Insurance.
The
Company and each of its Subsidiaries is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts
as
are prudent and customary in the businesses in which they are engaged or propose
to engage after giving effect to the transactions described in the Prospectus;
all policies of insurance and fidelity or surety bonds insuring the Company
and
each of its Subsidiaries and their businesses, assets, employees, officers
and
directors are in full force and effect; the Company and each of its Subsidiaries
is in compliance with the terms of such policies and instruments in all material
respects; and the Company and each of its Subsidiaries has no reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as
may
be necessary to continue its business at a cost that is not materially greater
than the current cost, except where the failure to obtain would not reasonably
be expected to result in a Material Adverse Effect.
(ee) No
Stabilization.
Neither
the Company nor any of its Subsidiaries nor, to its knowledge after reasonable
due inquiry, any of their officers, directors, affiliates or controlling persons
has taken or will take, directly or indirectly, any action designed or intended
to stabilize or manipulate the price of any security of the
Company.
(ff) Investment
Company Act.
Neither
the Company nor any of its Subsidiaries is or, after giving effect to the
offering and sale of the Securities and the application of the proceeds thereof
as described in the Prospectus, will be required to register as an “investment
company” as defined in the Investment Company Act of 1940, as
amended.
(gg) No
Broker’s Fees.
Neither
the Company nor any of its Subsidiaries is a party to any contract, agreement
or
understanding with any person (other than this Agreement) that would give rise
to a valid claim against the Company or its Subsidiaries or the Placement Agent
for a brokerage commission, finder’s fee or like payment in connection with the
offering and sale of the Securities.
(hh) Contracts.
Each
description of a contract, document or other agreement in the Registration
Statement and the Prospectus accurately reflects in all material respects the
terms of the underlying contract, document or other agreement. Each contract,
document or other agreement described in the Registration Statement and
Prospectus or listed in the exhibits to the Registration Statement or
incorporated therein by reference is in full force and effect, unless validly
terminated in accordance with the provisions thereof, and is valid and
enforceable by and against the Company or its Subsidiary, as the case may be,
in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the
rights and remedies of creditors generally and subject to general principles
of
equity, Neither the Company nor any of its Subsidiaries, if a Subsidiary is
a
party, nor to the Company’s knowledge, any other party, is in default in the
observance or performance of any term or obligation to be performed by it under
any such agreement, and no event has occurred which with notice or lapse of
time
or both would constitute such a default, in any such case which default or
event, individually or in the aggregate, would reasonably be expected to result
in a Material Adverse Effect.
10
(ii) Forward-Looking
Statements.
No
forward-looking statement (within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act) contained in the Registration Statement
and the Prospectus has been made or reaffirmed without a reasonable basis or
has
been disclosed other than in good faith.
(jj) Corporate
Records.
All
existing minute books of the Company and each of its Subsidiaries, including
all
existing records of all meetings and actions of the board of directors
(including, Audit, Compensation and Nomination/Corporate Governance Committees)
and stockholders of the Company through the date of the latest meeting and
action (collectively, the “Corporate
Records”)
have
been made available to the Placement Agent and counsel for the Placement Agent.
All such Corporate Records are complete in all material respects and accurately
and fairly reflect, in reasonable detail, all transactions referred to in such
Corporate Records.
(kk) Foreign
Corrupt Practices.
Neither
the Company nor any of its Subsidiaries, nor, to the knowledge of the Company
after reasonable due inquiry, any director, officer, agent or employee of the
Company or its Subsidiaries, has, directly or indirectly, while acting on behalf
of the Company or its Subsidiaries (i) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties
or
campaigns from corporate funds; (iii) violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; (iv) made any other unlawful bribe,
rebate, payoff, influence, kickback or payment to any foreign or domestic
government official or employee.
(ll) Off-Balance
Sheet Arrangements.
There
are no material off balance sheet arrangements (as defined in Item 303 of
Regulation S-K) that have or would reasonably be likely to have a material
current or future effect on the Company’s financial condition, revenues or
expenses, changes in financial condition, results of operations, liquidity,
capital expenditures or capital resources, including those off-balance sheet
transactions described in the Commission’s Statement about Management’s
Discussion and Analysis of Financial Conditions and Results of Operations
(Release Nos 33-8056; 34-45321; FR-61), required to be described in the
Prospectus which have not been so described.
(mm) Regulatory
Filings.
Each of
the Company and its Subsidiaries has filed with the applicable regulatory
authorities all filings, declarations, listings, registrations, reports and
submissions required to be filed; all
such
filings, declarations, listings, registrations, reports or submissions were
in
compliance with applicable laws when filed and no deficiencies have been
asserted by any applicable regulatory authority with respect to any such
filings, declarations, listings, registrations, repots or submissions. To the
Company’s knowledge after reasonable due inquiry, there are no affiliations or
associations between any member of the National Association of Securities
Dealers, Inc. (the “NASD”)
and
any of the Company’s officers, directors or any five percent (5%) or greater
shareholders of the Company, except as set forth in the Registration Statement
and the Prospectus or otherwise disclosed in writing to the Placement
Agent.
Any
certificate signed by any officer of the Company and delivered to the Placement
Agent or to counsel for the Placement Agent shall be deemed a representation
and
warranty by the Company to the Placement Agent and the Investors as to the
matters covered thereby.
11
3. Delivery
and Payment. On
the
Closing Date, in accordance with the terms and conditions of each Investor’s
respective Subscription Agreement, the Company shall sell to, and the
Investor(s) shall purchase, the number of Units reflected on such Investor’s
Subscription Agreement against payment by such Investor of such Investor’s
aggregate purchase price therefor reflected in the Investor’s Subscription
Agreement.
4. Covenants.
The
Company covenants and agrees with the Placement Agent as follows:
(a) Effectiveness.
The
Registration Statement has become effective, and if Rule 430A is used or the
filing of the Prospectus Supplement is otherwise required pursuant to Rule
424(b), the Company shall prepare the Prospectus Supplement in a form approved
by the Placement Agent and file such Prospectus pursuant to Rule 424(b) not
later than the Commission’s close of business on the business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by the Rules and Regulations.
(b) Amendments
or Supplements; Free Writing Prospectuses.
The
Company will not, during such period as the Prospectus would be required by
law
to be delivered in connection with sales of the Units by the Placement Agent
or
a dealer in connection with the offering contemplated by this Agreement, file
any amendment or supplement to the Registration Statement or the Prospectus,
except as required by law, unless a copy thereof shall first have been submitted
to the Placement Agent within a reasonable period of time prior to the filing
thereof and the Placement Agent shall not have reasonably objected thereto
in
good faith. The Company represents and agrees that it has not made and will
not,
make any offer relating to the Units that would constitute a “free writing
prospectus” as defined in Rule 405 under the Securities Act (“Issuer
Free Writing Prospectus”).
(c) Notice
to Placement Agent.
The
Company agrees (i) for so long as the delivery of a prospectus is required
in
connection with the offering or sale of the Securities, to advise the Placement
Agent promptly after it receives notice thereof, of the time when any post
effective amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has
been
filed and to furnish the Placement Agent with copies thereof, (ii) to file
promptly all reports and any definitive proxy or information statements required
to be filed by the Company with the Commission pursuant to Section 13(a), 15
or
15(d) of the Exchange Act subsequent to the date of the Prospectus Supplement
and for so long as the delivery of a prospectus is required in connection with
the offering or sale of the Units; (iii) to advise the Placement Agent, promptly
after it receives notices thereof, (x) of any request by the Commission to
amend
the Registration Statement or to amend or supplement the Prospectus or for
additional information with respect thereto, (y) of the issuance by the
Commission, of any stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto or any order directed at
any
document incorporated by reference therein or any amendment or supplement
thereto or any order preventing or suspending the use of the Prospectus or
any
amendment or supplement thereto, or (z) of the suspension of the qualification
of the Securities for offering or sale in any jurisdiction, or of the
institution or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the Registration
Statement or the Prospectus or for additional information; and, (iv) in the
event of the issuance of any stop order or of any order preventing or suspending
the use of the Prospectus or suspending any such qualification, promptly to
use
its reasonable best efforts to obtain the withdrawal of such order.
(d) Ongoing
Compliance of the Prospectus.
If, at
any time when a Prospectus relating to the Securities is required to be
delivered under the Act, the Company becomes aware of the occurrence of any
event as a result of which the Prospectus, as then amended or supplemented,
would, in the reasonable judgment of counsel to the Company or counsel to the
Placement Agent, include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
the
light of the circumstances under which they were made, not misleading, or the
Registration Statement, as then amended or supplemented, would, in the
reasonable judgment of counsel to the Company or counsel to the Placement Agent,
include any untrue statement of a material fact or omit to state a material
fact
necessary to make the statements therein not misleading, or if for any other
reason it is necessary, in the reasonable judgment of counsel to the Company
or
counsel to the Placement Agent, at any time to amend or supplement the
Prospectus or the Registration Statement to comply with the Act or the Rules
and
Regulations, the Company will promptly notify the Placement Agent and, subject
to Section 4(b) hereof, will promptly prepare and file with the Commission,
at
the Company’s expense, an amendment to the Registration Statement or an
amendment or supplement to the Prospectus that corrects such statement or
omission or effects such compliance and will deliver to the Placement Agent,
without charge, such number of copies thereof as the Placement Agent may
reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the Placement Agent, and the Placement Agent
agrees to provide to each Investor, prior to the Closing, a copy of the
Prospectus and any amendments or supplements thereto.
12
(e) Delivery
of Copies.
To
deliver promptly to the Placement Agent and its counsel such number of the
following documents as the Placement Agent shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding exhibits), (ii)
so
long as a prospectus relating to the Securities is required to be delivered
under the Securities Act, as many copies of the Prospectus or any amendment
or
supplement thereto; (iii) any document incorporated by reference in the
Prospectus and (iv) all correspondence to and from, and all documents issued
to
and by, the Commission in connection with the registration of the Securities
under the Securities Act. The Company will pay the expenses of printing or
other
production of all documents relating to the Offering.
(f) Use
of
Proceeds.
The
Company will apply the net proceeds from the sale of the Securities in the
manner set forth in the Prospectus under the heading “Use of
Proceeds”.
(g) Reports.
During
a period of three years commencing with the date hereof, the Company will
furnish to the Placement Agent, copies of all periodic and special reports
furnished to the stockholders of the Company and all information, documents
and
reports filed with the Commission, the NASD, Nasdaq or any securities exchange
(other than any such information, documents and reports that are filed with
the
Commission electronically via ▇▇▇▇▇ or any successor system).
(h) Blue
Sky Compliance.
The
Company will promptly take from time to time such actions as the Placement
Agent
may reasonably request to qualify the Securities for offering and sale under
the
securities, or blue sky, laws of such jurisdictions as the Placement Agent
may
designate and to continue such qualifications in effect for so long as required
for the distribution of the Securities and will pay the fee, if any, of the
NASD
in connection with its review of the Offering. The Company shall not be
obligated to qualify as a foreign corporation in any jurisdiction in which
it is
not so qualified or to file a general consent to service of process in any
jurisdiction or subject itself to taxation as doing business in any
jurisdiction.
(i) Lock-Up
Agreements.
The
Company will cause each of its executive officers and directors whose names
are
set forth on Exhibit
D
hereto
to furnish to the Placement Agent, prior to the Closing Date, a letter,
substantially in the form of Exhibit
E
hereto
(the “Lock-Up
Agreement”).
The
Company will enforce the terms of each Lock-Up Agreement and issue stop transfer
instructions to the transfer agent for the AR-CombiMatrix Common Stock with
respect to any transaction or contemplated transaction that would constitute
a
breach or default under the applicable Lock-Up Agreement.
13
(j) Press
Releases.
Prior
to the Closing Date, the Company will not issue any press release or other
communication directly or indirectly or hold any press conference with respect
to the Company, its Subsidiaries, its condition, financial or otherwise, or
earnings, business affairs or business prospects (except for routine oral
marketing communications in the ordinary course of business and consistent
with
the past practices of the Company and of which the Placement Agent is notified),
without the prior written consent of the Placement Agent, unless in the
reasonable judgment of the Company and its counsel, and after notification
to
the Placement Agent, such press release or communication is required by
law.
(k) Compliance
with Laws.
The
Company will comply in all material respects with all applicable securities
and
other applicable laws, rules and regulations, including, without limitation,
the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act, and use its best efforts to cause the Company’s directors
and officers, in their capacities as such, to comply with such laws, rules
and
regulations, including, without limitation, the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act.
(l) Maintenance
of Internal Procedures.
The
Company and its Subsidiaries will maintain such controls and other procedures,
including without limitation those required by Sections 302 and 906 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the applicable regulations thereunder, that are designed
to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Commission’s
rules and forms, including without limitation, controls and procedures designed
to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is accumulated and
communicated to the Company’s management, including its principal executive
officer and its principal financial officer, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure, to ensure that material information relating to Company, including
its Subsidiaries, is made known to them by others within those
entities.
(m) Transfer
Agent.
The
Company shall engage and maintain, at its expense, a registrar and transfer
agent for the Securities.
(n) Reservation
of Stock.
The
Company shall reserve and keep available at all times a sufficient number of
shares of AR-CombiMatrix Common Stock for the purpose of enabling the Company
to
issue the Warrant Shares.
(o) Listing.
The
Company shall use its best efforts to cause the qualification of the Shares
and
Warrant Shares for quotation on the Nasdaq Global Market.
(p) SEDA
Termination.
At or
prior to Closing, the Company shall terminate its equity line with Cornell
Capital Partners, LP pursuant to a standby equity distribution agreement dated
as of June 14, 2006.
(q) Issuance
of Securities.
For
purposes of this subsection (q), the following definitions shall
apply:
(i) “Approved
Stock Plan”
means
any employee benefit plan which has been approved by the Board of Directors
of
the Company, pursuant to which the Company’s securities may be issued to any
employee, officer or director for services provided to the Company.
(ii) “Common
Stock Equivalents”
means,
collectively, Options and Convertible Securities.
14
(iii)
“Convertible
Securities”
means
any stock or securities (other than Options) convertible into or exercisable
or
exchangeable for AR - CombiMatrix Common Stock.
(iv) “Excluded
Securities”
means
AR - CombiMatrix Common Stock issued or issuable: (i) as a stock dividend to
holders of AR - CombiMatrix Common Stock or upon any subdivision or combination
of shares of AR - CombiMatrix Common Stock; (ii) in connection with any Approved
Stock Plan; (iii) any securities issued to the seller as consideration for
the
acquisition of another entity by the Company by merger or share exchange
(whereby the Company owns no less than 51% of the voting power of the surviving
entity) or purchase of substantially all of such entity’s stock or assets; (iv)
any securities issued in connection with a license, strategic partnership,
joint
venture or other similar agreement, provided that the purpose of such
arrangement is not primarily the raising of capital; (v) upon exercise of
warrants issued as a part of the issuance of straight debt securities (with
no
equity or equity-linked feature) issued to a financial institution or lender
in
connection with a bank loan, credit, lease, or other debt transaction with
such
financial institution or lender (where warrant coverage is not greater than
5%);
or (vi) upon conversion of any Options or Convertible Securities which are
outstanding on the day immediately preceding the Closing Date, provided that
the
terms of such Options or Convertible Securities are not amended, modified,
or
changed on or after the Closing Date.
(v) “Options”
means
any rights, warrants or options to subscribe for or purchase Common Stock or
Convertible Securities.
From
the
date hereof until the date that is 90 days after the Closing Date, the Company
will not, directly or indirectly, offer, sell, grant any option to purchase,
or
otherwise dispose of (or announce any offer, sale, grant or any option to
purchase or other disposition of) any of its or its subsidiaries’ equity or
equity equivalent securities, including without limitation any debt, preferred
stock or other instrument or security that is, at any time during its life
and
under any circumstances, convertible into or exchangeable or exercisable for
shares of AR - CombiMatrix Common Stock or Common Stock Equivalents. The
restrictions contained in this section shall not apply in connection with the
issuance of any Excluded Securities.
5. Payment
Of Expenses.
The
Company, whether or not the transactions contemplated hereunder are consummated
or this Agreement is terminated, will pay or cause to be paid all costs and
expenses incident to the performance of the obligations of the Company under
this Agreement, including but not limited to costs and expenses of or relating
to (i) the preparation, printing, filing, delivery, and shipping (including
costs of mailing) of the Registration Statement (including the financial
statements therein and all amendments, schedules, and exhibits thereto), the
Base Prospectus, each Prospectus Supplement, the Prospectus, and any amendment
thereof or supplement thereto, (ii) the registration, issue, sale and delivery
of the Securities including any stock or transfer taxes and stamp or similar
duties payable upon the sale, issuance or delivery of the Securities and the
printing, delivery, and shipping of the certificates representing the
Securities, (iii) all filing fees and fees and disbursements of the Placement
Agent’s counsel incurred in connection with the registration or qualification of
the Securities for offering and sale by the Company under the securities or
blue
sky laws of such jurisdictions designated pursuant to Section 4(i), including
the preparation and printing of preliminary, supplemental and final Blue Sky
Memoranda, (iv) the fees and expenses of any transfer agent or registrar for
the
Securities, (v) fees, disbursements and other charges of counsel to the Company,
(vi) if applicable, the filing fees of the NASD in connection with its review
of
the terms of the public offering and reasonable fees and disbursements of
counsel for the Placement Agent in connection with such review (including all
COBRADesk fees), (vii) listing fees, if any, for the quotation of the
AR-CombiMatrix Common Stock on the Nasdaq Global Market, (viii) fees and
disbursements of the Auditors incurred in delivering the letters) described
in
Section 6(g) of this Agreement, (ix) at the Closing, the fees and expenses
of
counsel for the Placement Agent in connection with the Offering, and (x) the
reasonable costs and expenses of the Company and the Placement Agent incurred
in
connection with the marketing of the offering and the sale of the Securities
to
prospective investors including, but not limited to, those related to any
presentations or meetings undertaken in connection therewith including, without
limitation, (A) expenses associated with the production of road show slides
and
graphics, (B) fees and expenses of any consultants engaged with the consent
of
the Company in connection with the road show presentations, and (C) travel,
lodging and other expenses incurred by the officers of the Company and any
such
consultants. Notwithstanding anything contained in the foregoing or elsewhere
in
this Agreement, the Company’s obligations to reimburse the Placement Agent for
its actual out-of-pocket expenses, including reasonable legal fees and
disbursements, shall not in the aggregate exceed $50,000.
15
6. Conditions
of Placement Agent’s Obligations.
The
respective obligations of the Placement Agent and the Investors and the closing
of the sale of the Units are subject to the following conditions:
(a) No
stop
order suspending the effectiveness of the Registration Statement or the
qualification or registration of the Securities under the securities or Blue
Sky
laws of any jurisdiction shall be in effect and no proceedings for that purpose
shall have been initiated or threatened by any securities or other governmental
authority (including, without limitation, the Commission), and any request
for
additional information on the part of the staff of any securities or other
governmental authority (including, without limitation, the Commission) shall
have been complied with to the satisfaction of the staff of the Commission
or
such other authorities and after the date hereof no amendment or supplement
to
the Registration Statement or the Prospectus shall have been filed unless a
copy
thereof was first submitted to the Placement Agent and the Placement Agent
did
not reasonably object thereto in good faith.
(b) Since
the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there shall not have been (i) any change in the capital
stock or long-term debt of the Company or any of its Subsidiaries or any change,
or any development involving a prospective change, whether or not arising from
transactions in the ordinary course of business, in or affecting the business,
general affairs, management, financial position, stockholders’ equity, results
of operations or prospects of the Company and its Subsidiaries, taken as a
whole, or (ii) any loss or interference with its business from fire, explosion,
storm, flood, act of war, terrorist act or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth in or contemplated by the
Registration Statement or the Prospectus, the effect of which, in any such
case
described in clauses (i) and (ii) above, is, in the judgment of the Placement
Agent, so material and adverse as to make it impracticable or inadvisable to
proceed with the sale or delivery of the Securities on the terms and in the
manner contemplated by the Prospectus.
(c) The
Placement Agent shall not have discovered and disclosed to the Company on or
prior to the Closing Date that (i) the Registration Statement, or
any
amendment or supplement thereto contains an untrue statement of a fact which,
in
the opinion of the counsel to the Placement Agent, is material, or omits to
state any fact which, in the opinion of the counsel to the Placement Agent,
is
material and is required to be stated therein or is necessary to make the
statements therein not misleading, or (ii) the Prospectus, or any amendment
or
supplement thereto contains an untrue statement of a fact which, in the opinion
of the counsel to the Placement Agent, is material, or omits to state any fact
which, in the opinion of the counsel to the Placement Agent, is material and
is
required to be stated therein or is necessary to make the statements therein,
in
light of the circumstances under which they were made, not
misleading.
(d) Each
of
the representations and warranties of the Company contained herein shall be
true
and correct at the Closing Date, as if made on such date, and all covenants
and
agreements herein contained to be performed on the part of the Company and
all
conditions herein contained to be fulfilled or complied with by the Company
at
or prior to the Closing Date shall have been duly performed, fulfilled or
complied with.
16
(e) The
Placement Agent shall have received (i) from ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP, corporate
counsel to the Company, such counsel’s written opinion, addressed to the
Placement Agent and dated the Closing Date, in form and substance as is set
forth on Exhibit
F-1
attached
hereto, and (ii) from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, in-house counsel for the Company,
such
counsel’s written opinion addressed to the Placement Agent and dated the Closing
Date, in form and substance as is set forth on Exhibit
F-2
attached
hereto.
(f) The
Placement Agent shall have received from ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
and
▇▇▇▇▇, P.C., such opinion or opinions, dated the Closing Date and addressed
to
the Placement Agent, covering such matters as are customarily covered in
transactions of this type, and the Company shall have furnished to such counsel
such documents as it requests for the purpose of enabling it to pass upon such
matters.
(g) Concurrently
with the execution and delivery of this Agreement, or, if the Company elects
to
rely on Rule 430A, on the date of the Prospectus Supplement, the Auditors shall
have furnished to the Placement Agent a letter, dated the date of its delivery
(the “Original Letter”),
addressed to the Placement Agent and in form and substance reasonably
satisfactory to the Placement Agent, containing statements and information
of
the type customarily included in accountants’ “comfort letters” to underwriters.
At the Closing Date, the Auditors shall have furnished to the Placement Agent
a
letter, dated the date of its delivery, which shall confirm, on the basis of
a
review in accordance with the procedures set forth in the Original Letter,
that
nothing has come to their attention during the period from the date of the
Original Letter referred to in the prior sentence to a date (specified in the
letter) not more than three days prior to the Closing Date which would require
any change in the Original Letter if it were required to be dated and delivered
at the Closing Date .
(h) The
Placement Agent shall have received on the Closing Date a certificate, addressed
to the Placement Agent and dated the Closing Date, of the chief executive or
chief operating officer and the chief financial officer or chief accounting
officer of the Company to the effect that:
(i) the
representations, warranties and agreements of the Company in this Agreement
were
true and correct when made and are time and correct as of the Closing Date;
and
the Company has complied with all agreements and satisfied all the conditions
on
its part required under this Agreement to be performed or satisfied at or prior
to the Closing Date;
(ii) the
Registration Statement is effective and, to their knowledge, as of the Closing
Date, no stop order or other order suspending the effectiveness of the
Registration Statement or any amendment thereof or the qualification of the
Securities for offering or sale has been issued, and no proceeding for that
purpose has been instituted or are pending before or are contemplated by the
Commission or any state or regulatory body;
(iii)
the
signers of said certificate have carefully examined the Registration Statement
and the Prospectus, and any amendments thereof or supplements thereto (and
any
documents filed under the Exchange Act and deemed to be incorporated by
reference into the Prospectus), and (A) the Registration Statement, or any
amendment thereof, does not contain any untrue statement of a material fact
or
omit to state any material fact required to be stated therein or necessary
to
make the statements therein not misleading, and the Prospectus, as amended
or
supplemented, does not include any untrue statement of material fact or omit
to
state a material fact necessary to make the statements therein, in light of
the
circumstances under which they were made, not misleading, and (B) no event
has
occurred as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein not untrue or misleading
in
any material respect; and
17
(iv)
subsequent
to the date of the most recent financial statements included or incorporated
by
reference in the Prospectus, there has been no change in the financial position
or results of operation of the Company and its Subsidiaries that would
reasonably be expected to result in a Material Adverse Effect, or any change,
or
any development including a prospective change, in or affecting the condition
(financial or otherwise), results of operations, business or prospects of the
Company and its Subsidiaries taken as a whole, except as set forth in the
Prospectus.
(i) The
Shares and the Warrant Shares shall be registered under the Exchange Act and
shall have been approved for quotation on the Nasdaq Global Market and listed
and admitted and authorized for trading on the Nasdaq Global Market, subject
only to official notice of issuance. Satisfactory evidence of such actions
shall
have been provided to the Placement Agent.
(j) No
action
shall have been taken and no statute, rule, regulation or order shall have
been
enacted, adopted or issued by any governmental agency or body which would,
as of
the Closing Date, prevent the issuance or sale of the Securities; and no
injunction, restraining order or order of any other nature by any federal or
state court of competent jurisdiction shall have been issued as of the Closing
Date which would prevent the issuance or sale of the Securities.
(k) The
Prospectus Supplement shall have been filed with the Commission pursuant to
Rule
424(b) under the Securities Act before 5:30 P.M. New York City time on the
business day after the date of this Agreement.
(l) The
Company shall have prepared and filed with the Commission a Current Report
on
Form 8-K with respect to the transactions contemplated hereby, including as
an
exhibit thereto this Agreement and any other documents relating
thereto.
(m) The
Company shall have entered into Subscription Agreements with each of the
Investors.
(n) Subsequent
to the execution and delivery of this Agreement, there shall not have occurred
any of the following: (i) trading in securities generally on the New York Stock
Exchange, the Nasdaq Global Market or the American Stock Exchange or in the
over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
or maximum prices or maximum ranges for prices shall have been established
on
any such exchange or such market by the Commission, by such exchange or by
any
other regulatory body or governmental authority having jurisdiction, (ii) a
banking moratorium shall have been declared by federal or state authorities
or a
material disruption has occurred in commercial banking or securities settlement
or clearance services in the United States, (iii) the United States shall have
become engaged in hostilities, or the subject of an act of terrorism, there
shall have been an escalation in hostilities involving the United States or
there shall have been a declaration of a national emergency or war by the United
States or (iv) there shall have occurred any other calamity or crisis or any
change in general economic, political or financial conditions in the United
States or elsewhere, if the effect of any such event in clause (iii) or (iv)
makes it, in the sole judgment of the Placement Agent, impracticable or
inadvisable to proceed with the sale or delivery of the Units on the terms
and
in the manner contemplated by the Registration Statement and the
Prospectus.
18
(o) The
NASD
shall have raised no objection to the fairness and reasonableness of the
placement agency terms and arrangements.
(p) The
Placement Agent shall have received copies of the executed Lock-Up Agreements
executed by each person listed on Exhibit
E
hereto,
and such Lock-Up Agreements shall be in full force and effect on the Closing
Date.
(q) Prior
to
the Closing Date, the Company shall have furnished to the Placement Agent such
further information, certificates or documents as the Placement Agent shall
have
reasonably requested.
All
opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Placement Agent. The Company will furnish you with such conformed copies
of
such opinions, certificates, letters and other documents as you shall reasonably
request.
7. Indemnification
and Contribution.
(a) Indemnification
of the Placement Agent.
The
Company shall indemnify and hold harmless the Placement Agent, its directors,
officers, managers, members, employees, and agents and each person, if any,
who
controls the Placement Agent within the meaning of the Securities Act
(collectively the “Placement
Agent Indemnified Parties”
and
each a “Placement
Agent Indemnified Party”)
against any loss, claim, damage, expense or liability, joint or several, or
any
action, investigation or proceeding in respect thereof, to which the Placement
Agent Indemnified Party may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, expense, liability, action,
investigation or proceeding arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the Base
Prospectus, the Registration Statement, any Preliminary Prospectus, any Issuer
Free Writing Prospectus, any “issuer information” filed or required to be filed
pursuant to Rule 433(d) of the Rules and Regulations or the Prospectus, or
in
any amendment or supplement thereto or document incorporated by reference
therein, (ii) the omission or alleged omission to state in the Base Prospectus,
the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing
Prospectus, any “issuer information” filed or required to be filed pursuant to
Rule 433(d) of the Rules and Regulations or the Prospectus, or in any amendment
or supplement thereto or document incorporated by reference therein, a material
fact required to be stated therein or necessary to make the statements therein
not misleading, (iii) any breach of the representations and warranties of the
Company contained herein, or (iv) any act or failure to act, or any alleged
act
or failure to act, by the Placement Agent in connection with, or relating in
any
manner to, the Units or the Offering contemplated hereby, and which is included
as part of or referred to in any loss, claim, damage, expense, liability,
action, investigation or proceeding arising out of or based upon matters covered
by clause (i), (ii) or (iii) above; (provided that the Company shall not be
liable in the case of any matter covered by this clause (iv) to the extent
that
it is determined in a final judgment by a court of competent jurisdiction that
such loss, claim, damage, expense, liability or action resulted directly from
any such act or failure to act undertaken or omitted to be taken by the
Placement Agent through its gross negligence or willful misconduct) and shall
reimburse each Placement Agent Indemnified Party promptly upon demand for any
legal or other expenses reasonably incurred by that Placement Agent Indemnified
Party in connection with investigating or preparing to defend or defending
against or appearing as a third party witness in respect of, or otherwise
incurred in connection with any such loss, claim, damage, expense, liability,
action, investigation or proceeding as such fees and expenses are incurred;
provided, however, that the Company shall not be liable in any such case to
the
extent that any such loss, claim, damage, expense, liability, action,
investigation or proceeding arises out of or is based upon an untrue statement
or alleged untrue statement in or omission or alleged omission from the Base
Prospectus, the Registration Statement, any Preliminary Prospectus, any Issuer
Free Writing Prospectus, any “issuer information” filed or required to be filed
pursuant to Rule 433(d) of the Rules and Regulations or the Prospectus, or
in
any amendment or supplement thereto made in reliance upon and in conformity
with
written information furnished to the Company by or on behalf of the Placement
Agent through the Placement Agent specifically for use therein, which
information the parties hereto agree is limited to the Placement Agent’s
Information (as defined in Section 16 ). This indemnity agreement is not
exclusive and will be in addition to any liability, which the Company might
otherwise have and shall not limit any rights or remedies which may otherwise
be
available at law or in equity to each Placement Agent Indemnified
Party.
19
(b) Indemnification
of the Company.
The
Placement Agent shall indemnify and hold harmless the Company its officers,
employees, and agents, each of its directors and each person, if any, who
controls the Company within the meaning of the Securities Act (collectively
the
“Company
Indemnified Parties”
and
each a “Company
Indemnified Party”)
against any loss, claim, damage, expense or liability, joint or several, or
any
action, investigation or proceeding in respect thereof, to which the Company
Indemnified Parties may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of or is
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Base Prospectus, the Registration Statement, any
Preliminary Prospectus, any Issuer Free Writing Prospectus, any “issuer
information” filed or required to be filed pursuant to Rule 433(d) of the Rules
and Regulations or the Prospectus, or in any amendment or supplement thereto,
or
(ii) the omission or alleged omission to state in the Base Prospectus, the
Registration Statement, any Preliminary Prospectus, any Issuer Free Writing
Prospectus, any “issuer information” filed or required to be filed pursuant to
Rule 433(d) of the Rules and Regulations or the Prospectus, or in any amendment
or supplement thereto, a material fact required to be stated therein or
necessary to make the statements therein not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Placement Agent
through the Placement Agent specifically for use therein, and shall reimburse
the Company Indemnified Parties for any legal or other expenses reasonably
incurred by such parties in connection with investigating or preparing to defend
or defending against or appearing as third party witness in connection with
any
such loss, claim, damage, expense, liability or action, investigation or
proceeding as such fees and expenses are incurred; provided that the parties
hereto hereby agree that such written information provided by the Placement
Agent consist solely of the Placement Agent’s Information. This indemnity
agreement is not exclusive and will be in addition to any liability, which
the
Placement Agent and Investors might otherwise have and shall not limit any
rights or remedies which may otherwise be available at law or in equity to
the
Company Indemnified Parties. Notwithstanding the provisions of this Section
7(b)
, in no event shall any indemnity by the Placement Agent under this Section
7(b)
exceed the total compensation received by the Placement Agent in accordance
with
Section 1(a).
(c) Notice
and Procedures.
Promptly after receipt by an indemnified party under this Section 7 of notice
of
any claim or the commencement of any action, the indemnified party shall, if
a
claim in respect thereof is to be made against the indemnifying party under
this
Section 7, notify the indemnifying party in writing of the claim or the
commencement of that action; provided, however, that the failure to notify
the
indemnifying party shall not relieve it from any liability which it may have
under this Section 7 except to the extent it has been materially prejudiced
by
such failure; and, provided, further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may have
to
an indemnified party otherwise than under this Section 7. If any such claim
or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from
the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable
to
the indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i)
the
employment thereof has been specifically authorized by the indemnifying party
in
writing, (ii) such indemnified party shall have been advised by such counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party and in the
reasonable judgment of such counsel it is advisable for such indemnified party
to employ separate counsel or (iii) the indemnifying party has failed to assume
the defense of such action in accordance with the terms hereof and employ
counsel reasonably satisfactory to the indemnified party, in which case, if
such
indemnified party notifies the indemnifying party in writing that it elects
to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, that the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at
any
time for all such indemnified parties, which firm shall be designated in writing
by the Placement Agent, if the indemnified parties under this Section 7 consist
of any Placement Agent Indemnified Party, or by the Company if the indemnified
parties under this Section 7 consist of any Company Indemnified Parties. Each
indemnified party, as a condition of the indemnity agreements contained in
Sections 7(a) and 7(b) shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. Subject to the
provisions of Section 7(d) below, no indemnifying party shall be liable for
any
settlement, compromise or consent to the entry of judgment in connection with
any such action effected without its written consent (which consent shall not
be
unreasonably withheld), but if settled with its written consent or if there
be a
final judgment for the plaintiff in any such action (other than a judgment
entered with the consent of such indemnified party), the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against
any
loss or liability by reason of such settlement or judgment.
20
(d) Reimbursement
for Fees and Expenses of Counsel.
If at
any time an indemnified party shall have requested that an indemnifying party
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by this Section 7 effected without its written consent
if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the request for reimbursement, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30
days prior to such settlement being entered into and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
(e) Contribution;
Limitation on Liability.
If the
indemnification provided for in this Section 7 is unavailable or insufficient
to
hold harmless an indemnified party under Section 7(a) or 7(b), then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i)
in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Placement Agent on the other
from the offering of the Units or (ii) if the allocation provided by clause
(i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Placement Agent
on the other with respect to the statements or omissions which resulted in
such
loss, claim, damage or liability, or action in respect thereof, as well as
any
other relevant equitable considerations. The relative benefits received by
the
Company on the one hand and the Placement Agent on the other with respect to
such offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Units purchased under this Agreement (before
deducting expenses) received by the Company bears to the total compensation
received by the Placement Agent with respect to the Units purchased under this
Agreement. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Placement Agent on the other,
the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission; provided
that the parties hereto agree that the written information furnished to the
Company by the Placement Agent for use in the Prospectus, or in any amendment
or
supplement thereto, consists solely of the Placement Agent’s Information. The
Company and the Placement Agent agree that it would not be just and equitable
if
contributions pursuant to this Section 7(e) were to be determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable
by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 7(e) shall be
deemed to include, for purposes of this Section 7(e), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7(e), the Placement Agent shall not be required
to
contribute any amount in excess of the total compensation received by the
Placement Agent in accordance with Section 1(e) less the amount of any damages
which the Placement Agent has otherwise paid or become liable to pay by reason
of any untrue or alleged untrue statement or omission or alleged omission.
No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
21
8. Representations
and Agreements to Survive Delivery.
All
representations, warranties, and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the Placement
Agent and the Company contained in Section 7 hereof, shall remain operative
and
in full force and effect regardless of any investigation made by or on behalf
of
the Placement Agent or any controlling person thereof, or the Company or any
of
its officers, directors, or controlling persons and shall survive delivery
of,
and payment for, the Units.
9. Termination.
(a) The
obligations of the Placement Agent and the Investors hereunder and under the
Subscription Agreements may be terminated by the Placement Agent, in its
absolute discretion by notice given to the Company prior to delivery (including
electronic delivery) of and payment for the Units if, prior to that time, any
of
the events described in Sections 6(b) and 6(n) have occurred or if the Investors
shall decline to purchase the Units for any reason permitted under this
Agreement or the Subscription Agreements.
(b) If
the
sale of the Units provided for herein is not consummated because any condition
to the obligations of the Placement Agent set forth in Section 6 hereof is
not
satisfied, because of any termination pursuant to Section 9(a) hereof or because
of any refusal, inability or failure on the part of the Company to perform
any
agreement herein or comply with any provision hereof other than by reason of
a
default by the Placement Agent, the Company will reimburse the Placement Agent
upon demand for all out-of-pocket expenses (including fees and disbursements
of
counsel and any expenses advanced by the Placement Agent on the Company’s
behalf) that shall have been incurred by the Placement Agent in connection
with
this Agreement and the proposed purchase and sale of the Units and, upon demand,
the Company shall pay the full amount thereof to the Placement
Agent.
10.
Notices.
All
statements, requests, notices and agreements hereunder shall be in writing,
and:
(a) if
to the
Placement Agent, shall be delivered or sent by mail, telex or facsimile
transmission to ▇▇▇▇▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇ ▇▇▇▇▇ (Fax: ▇▇▇-▇▇▇-▇▇▇▇), with a copy to ▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (Fax: ▇▇▇-▇▇▇-▇▇▇▇);
(b) if
to the
Company shall be delivered or sent by mail, telex or facsimile transmission
to
Acacia Research Corporation, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: Chief Financial Officer (Fax: ▇▇▇-▇▇▇-▇▇▇▇), with
a
copy to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇, Esq. (Fax:
▇▇▇-▇▇▇-▇▇▇▇).
22
11. Persons
Entitled to Benefit of Agreement.
This
Agreement shall inure to the benefit of and shall be binding upon the Placement
Agent, the Investors, the Company, and their respective successors and assigns
and the controlling persons, officers and directors referred to in Section
7.
Nothing in this Agreement is intended or shall be construed to give to any
other
person, firm or corporation, other than the persons, firms or corporations
mentioned in the preceding sentence, any legal or equitable remedy or claim
under or in respect of this Agreement, or any provision herein contained. The
term “successors and assigns” as herein used shall not include any purchaser by
reason merely of such purchase.
12. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York, without giving effect to the conflicts of laws provisions
thereof
13. Counterparts.
This
Agreement may be executed in one or
more counterparts
and, if executed in more than one counterpart, the executed counterparts shall
each be deemed to be an original and all such counterparts shall together
constitute one and the same instrument.
14. General
Provisions.
This
Agreement constitutes the entire agreement of the parties to this Agreement
and
supersedes all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter hereof.
In
this Agreement, the masculine, feminine and neuter genders and the singular
and
the plural include one another. The section headings in this Agreement are
for
the convenience of the parties only and will not affect the construction or
interpretation of this Agreement. This Agreement may be amended or modified,
and
the observance of any term of this Agreement may be waived, only by a writing
signed by the Company and the Placement Agent.
15. [Intentionally
Omitted]
16. Placement
Agent’s Information.
The
parties hereto acknowledge and agree that, for all purposes of this Agreement,
the Placement Agent’s Information consists solely of the statements concerning
the Placement Agent contained in the section under the heading “Plan of
Distribution” in the Prospectus Supplement.
17. Absence
of Fiduciary Relationship.
The
Company acknowledges and agrees that in connection with the
Offering:
23
(a) The
Placement Agent’s responsibility to the Company is solely contractual in nature,
the Placement Agent has been retained solely to act as placement agent in
connection with the sale of the Units and no fiduciary, advisory or agency
relationship between the Company and the Placement Agent has been created in
respect of any of the transactions contemplated by this Agreement, irrespective
of whether the Placements Agent has advised or is advising the Company on other
matters;
(b) The
price
of the Units set forth in this Agreement was established by the Company
following discussions and arms-length negotiations with the Investors and the
Placement Agent, and the Company is capable of evaluating and understanding,
and
understands and accepts, the terms, risks and conditions of the transactions
contemplated by this Agreement;
(c) The
Company has been advised that the Placement Agent and its affiliates are engaged
in a broad range of transactions which may involve interests that differ from
those of the Company; and
(d) The
Company waives, to the fullest extent permitted by law, any claims that the
Company may have against the Placement Agent with respect to any breach of
fiduciary duty in connection with the sale of the Units.
18. Partial
Unenforceability.
The
invalidity or unenforceability of any Section, paragraph or provision of this
Agreement shall not affect the validity or enforceability of any other Section,
paragraph or provision hereof. If any Section, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there
shall be deemed to be made such minor changes (and only such minor changes)
as
are necessary to make it valid and enforceable.
[Signature
Page Follows]
24
If
the
foregoing is in accordance with your understanding of the agreement between
the
Company and the Placement Agent, kindly indicate your acceptance in the space
provided for that purpose below.
|
Very
truly yours,
ACACIA
RESEARCH CORPORATION
|
||
| |
|
|
| By: |
/s/
▇▇▇▇ ▇.
▇▇▇▇
|
|
| Name: ▇▇▇▇ ▇. ▇▇▇▇ | ||
| Title: CEO | ||
Accepted
as of
the
date
first above written:
▇▇▇▇▇▇▇▇▇▇▇
& CO. INC.
By: /s/
▇▇▇
▇▇▇▇▇
Name:
▇▇▇ ▇▇▇▇▇
Title:
Managing Director
25
Schedules
and Exhibits
Schedule
I: Subsidiaries
of the Company
Exhibit
A: Form
of
Subscription Agreement
Exhibit
B: Form
of
Investor Warrant
Exhibit
C: Form
of
Placement Agent’s Warrant
Exhibit
D: Form
of
Lock-Up Agreement
Exhibit
E: List
of
Directors and Executive Officers Executing Lock-Up Agreements
Exhibit
F: Matters
to be Covered in the Opinion of Counsel to the Company
Schedule
I
Subsidiaries
of the Company
The
following is a listing of the significant subsidiaries of Acacia Research
Corporation:
|
Jurisdiction
of Incorporation
|
|
|
CombiMatrix
Corporation
|
Delaware
|
|
Acacia
Global Acquisition Corporation
|
Delaware
|
|
IP
Innovation LLC
|
Texas
(as of 12/31/05, not as 9/30//06)
|
|
Computer
Docking Station Corporation
|
Delaware
(not as of 12/31/05, as of 9/30/06)
|
Exhibit
A
Form
of
Subscription Agreement
Filed
as Exhibit 10.2 to this Current Report on Form
8-K.
Exhibit
B
Form
of
Investor Warrant
Filed
as Exhibit 10.3 to this Current Report on Form 8-K.
Exhibit
C
Form
of
Placement Agent’s Warrant
ACACIA
RESEARCH CORPORATION
WARRANT
TO PURCHASE COMMON STOCK
December
13, 2006
Void
After December 13, 2011
THIS
CERTIFIES THAT,
for
value received, ▇▇▇▇▇▇▇▇▇▇▇
& CO. INC.,
or
permitted registered assigns (the “Holder”),
is
entitled to subscribe for and purchase at the Exercise Price (defined below)
from Acacia
Research Corporation,
a
Delaware corporation (the
“Company”),
up to
488,416 shares
of
the Company’s Acacia Research-CombiMatrix common stock, par value $0.001 per
share (the “Common
Stock”).
1. DEFINITIONS.
As
used
herein, the following terms shall have the following respective
meanings:
(a) “Exercise
Period” shall mean the period commencing on the date that is 181 days from the
date hereof and ending five (5) years from the date hereof, unless sooner
terminated as provided below.
(b) “Exercise
Price” shall mean $1.0875
per
share, subject to adjustment pursuant to Section 5 below.
(c) “Exercise
Shares” shall mean the shares of Common Stock issuable upon exercise of this
Warrant.
(d) “Trading
Day” shall mean
(a)
any day on which the Common Stock is listed or quoted and traded on its primary
Trading Market, (b) if the Common Stock is not then listed or quoted and
traded
on any Eligible Market, then a day on which trading occurs on the OTC
Bulletin Board
(or any
successor thereto), or (c) if trading does not occur on the OTC Bulletin
Board
(or any successor thereto), any Business Day.
2. EXERCISE
OF WARRANT. The
rights represented by this Warrant may be exercised in whole or in part at
any
time during the Exercise Period, by delivery of the following to the Company
at
its address set forth on the signature page hereto (or at such other address
as
it may designate by notice in writing to the Holder):
(a) An
executed Notice of Exercise in the form attached hereto;
(b) Payment
of the Exercise Price either (i) in cash or by check, (ii) by cancellation
of
indebtedness, or (iii) pursuant to Section 2.1 below; and
C-1
(c) This
Warrant.
The
Holder shall not be required to deliver the original Warrant in order to
effect
the exercise hereunder. Execution and delivery of the Notice of Exercise
shall
have the same effect as cancellation of the original Warrant and issuance
of a
new Warrant evidencing the right to purchase the remaining number of Exercise
Shares.
Certificates
for shares purchased hereunder shall be transmitted by the transfer agent
of the
Company to the Holder by crediting the account of the Holder’s prime broker with
the Depository Trust Company through its Deposit Withdrawal Agent
Commission system if the Company is a participant in such system, and otherwise
by physical delivery to the address specified by the Holder in the Notice
of
Exercise within three business days from the delivery to the Company of the
Notice of Exercise, surrender of this Warrant and payment of the aggregate
Exercise Price as set forth above. This Warrant shall be deemed to have
been exercised on the date the Exercise Price is received by the Company.
The Exercise Shares shall be deemed to have been issued, and Holder or any
other
person so designated to be named therein shall be deemed to have become a
holder
of record of such shares for all purposes, as of the date the Warrant has
been
exercised by payment to the Company of the Exercise Price.
In
addition to any other rights available to the Holder, if the Company fails
to
deliver to the Holder a certificate representing Exercise Shares by the third
Trading Day after the date on which delivery of such certificate is required
by
this Warrant, and if after such third Trading Day the Holder purchases (in
an
open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Shares that the Holder
anticipated receiving from the Company (a “Buy-In”),
then
in the Holder’s sole discretion, the Company shall within three Trading Days
after the Holder’s request, either (i) pay cash to the Holder in an amount equal
to the Holder’s total purchase price (including brokerage commissions, if any)
for the shares of Common Stock so purchased less the Exercise Price (the
“Buy-In
Price”),
at
which point the Company’s obligation to deliver such certificate (and to issue
such Common Stock) shall terminate, or (ii) promptly honor its obligation
to
deliver to the Holder a certificate or certificates representing such Common
Stock and pay cash to the Holder in an amount equal to the excess (if any)
of
the Buy-In Price over the product of (A) such number of shares of Common
Stock,
times (B) the Closing Price on the date of the event giving rise to the
Company’s obligation to deliver such certificate.
The
person in whose name any certificate or certificates for Exercise Shares
are to
be issued upon exercise of this Warrant shall be deemed to have become the
holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the
date
of delivery of such certificate or certificates, except that, if the date
of
such surrender and payment is a date when the stock transfer books of the
Company are closed, such person shall be deemed to have become the holder
of
such shares at the close of business on the next succeeding date on which
the
stock transfer books are open.
C-2
To
the
extent permitted by law, the Company’s obligations to issue and deliver Exercise
Shares in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same,
any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any person or entity or any action to enforce the same,
or any
setoff, counterclaim, recoupment, limitation or termination, or any breach
or
alleged breach by the Holder or any other person or entity of any obligation
to
the Company or any violation or alleged violation of law by the Holder or
any
other person or entity, and irrespective of any other circumstance which
might
otherwise limit such obligation of the Company to the Holder in connection
with
the issuance of Exercise Shares. Nothing herein shall limit a Holder’s right to
pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant
as
required pursuant to the terms hereof.
This
Warrant shall be non-callable.
If
immediately prior to the end of the Exercise Period, this Warrant has not
been
previously exercised, this Warrant shall automatically be exercised pursuant
to
Section 2.1 below.
2.1. Net
Exercise.
If
during the Exercise Period, the fair market value of one share of the Common
Stock is greater than the Exercise Price (at the date of calculation as set
forth below), in lieu of exercising this Warrant by payment of cash or by
check,
or by cancellation of indebtedness, the Holder may elect to receive shares
equal
to the value (as determined below) of this Warrant (or the portion thereof
being
canceled) by surrender of this Warrant at the principal office of the Company
together with the properly endorsed Notice of Exercise in which event the
Company shall issue to the Holder a number of shares of Common Stock computed
using the following formula:
X
= Y
(A-B)
A
Where
X =
the number of shares of Common Stock to be issued to the Holder
|
Y
=
|
the
number of shares of Common Stock purchasable under the Warrant
or, if only
a portion of the Warrant is being exercised, the portion of the
Warrant
being canceled (at the date of such calculation)
|
|
|
|
|
A
=
|
the
fair market value of one share of the Company’s Common Stock (at the date
of such calculation)
|
|
|
|
|
B
=
|
Exercise
Price (as adjusted to the date of such
calculation)
|
C-3
For
purposes of the above calculation, the “fair market value” of one share of
Common Stock shall mean (i) the average of the closing sales prices for the
shares of Common Stock on the Nasdaq Global Market or other trading market
where
such security is listed or traded as reported by Bloomberg Financial Markets
(or
a comparable reporting service of national reputation selected by the Company
and reasonably acceptable to the Holder if Bloomberg Financial Markets is
not
then reporting sales prices of such security) (collectively, “Bloomberg”) for
the trading day immediately preceding such date, or (ii) if the Nasdaq Global
Market is not the principal trading market for the shares of Common Stock,
the
average of the reported sales prices reported by Bloomberg on the principal
trading market for the Common Stock during the same period, or, if there
is no
sales price for such period, the last sales price reported by Bloomberg for
such
period, or (iii) if neither of the foregoing applies, the last sales price
of
such security in the over-the-counter market on the pink sheets or bulletin
board for such security as reported by Bloomberg, or if no sales price is
so
reported for such security, the last bid price of such security as reported
by
Bloomberg or (iv) if fair market value cannot be calculated as of such date
on
any of the foregoing bases, the fair market value shall be as determined
by the
Board of Directors of the Company in the exercise of its good faith
judgment.
2.2. Issuance
of New Warrants.
Upon any partial exercise of this Warrant, the Company, at its expense, will
forthwith and, in any event within five business days, issue and deliver
to the
Holder a new warrant or warrants of like tenor, registered in the name of
the
Holder, exercisable, in the aggregate, for the balance of the number of shares
of Common Stock remaining available for purchase under the Warrant.
2.3. Payment
of Taxes and Expenses.
The Company shall pay any recording, filing, stamp or similar tax which may
be
payable in respect of any transfer involved in the issuance of, and the
preparation and delivery of certificates (if applicable) representing, (i)
any
Exercise Shares purchased upon exercise of this Warrant and/or (ii) new or
replacement warrants in the Holder’s name or the name of any transferee of all
or any portion of this Warrant.
3. COVENANTS
OF THE COMPANY.
3.1. Covenants
as to Exercise Shares.
The Company covenants and agrees that all Exercise Shares that may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance
in accordance with the terms hereof, be validly issued and outstanding, fully
paid and nonassessable, and free from all taxes, liens and charges with respect
to the issuance thereof. The Company further covenants and agrees that the
Company will at all times during the Exercise Period, have authorized and
reserved, free from preemptive rights, a sufficient number of shares of Common
Stock to provide for the exercise of the rights represented by this
Warrant. If at any time during the Exercise Period the number of
authorized but unissued shares of Common Stock shall not be sufficient to
permit
exercise of this Warrant, the Company will take such corporate action as
may, in
the opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for
such
purposes.
C-4
3.2. No
Impairment.
Except and to the extent as waived or consented to by the Holder, the Company
will not, by amendment of its Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or
sale of securities or any other voluntary action, avoid or seek to avoid
the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in the taking of all
such
action as may be necessary or appropriate in order to protect the exercise
rights of the Holder against impairment.
3.3. Notices
of Record Date and Certain Other Events.
In
the event of any taking by the Company of a record of the holders of any
class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend which is the
same
as cash dividends paid in previous quarters) or other distribution, the Company
shall mail to the Holder, at least 20 days prior to the date on which any
such
record is to be taken for the purpose of such dividend or distribution, a
notice
specifying such date. In the event of any voluntary dissolution,
liquidation or winding up of the Company, the Company shall mail to the Holder,
at least 20 days prior to the date of the occurrence of any such event, a
notice
specifying such date. In the event the Company authorizes or approves, enters
into any agreement contemplating, or solicits stockholder approval for any
Fundamental Transaction, as defined in Section 7 herein, the Company shall
mail
to the Holder, at least twenty days prior to the date of the occurrence of
such
event, a notice specifying such date.
4. [INTENTIONALLY
OMITTED]
5. ADJUSTMENT
OF EXERCISE PRICE AND SHARES.
(a) In
the
event of changes in the outstanding Common Stock of the Company by reason
of
stock dividends, split-ups, recapitalizations, reclassifications, combinations
or exchanges of shares, separations, reorganizations, liquidations,
consolidation, acquisition of the Company (whether through merger or acquisition
of substantially all the assets or stock of the Company), or the like, the
number, class and type of shares available under the Warrant in the aggregate
and the Exercise Price shall be correspondingly adjusted to give the Holder
of
the Warrant, on exercise for the same aggregate Exercise Price, the total
number, class, and type of shares or other property as the Holder would have
owned had the Warrant been exercised prior to the event and had the Holder
continued to hold such shares until the event requiring adjustment. The
form of this Warrant need not be changed because of any adjustment in the
number
of Exercise Shares subject to this Warrant.
(b) If
at any
time or from time to time the holders of Common Stock of the Company (or
any
shares of stock or other securities at the time receivable upon the exercise
of
this Warrant) shall have received or become entitled to receive, without
payment
therefor,
C-5
(i) Common
Stock or any shares of stock or other securities which are at any time directly
or indirectly convertible into or exchangeable for Common Stock, or any rights
or options to subscribe for, purchase or otherwise acquire any of the foregoing
by way of dividend or other distribution (other than a dividend or distribution
covered in Section 5(a) above),
(ii) any
cash
paid or payable otherwise than as a cash dividend or
(iii) Common
Stock or additional stock or other securities or property (including cash)
by
way of spinoff, split-up, reclassification, combination of shares or similar
corporate rearrangement (other than shares of Common Stock pursuant to
Section 5(a) above), then and in each such case, the Holder hereof will,
upon the exercise of this Warrant, be entitled to receive, in addition to
the
number of shares of Common Stock receivable thereupon, and without payment
of
any additional consideration therefor, the amount of stock and other securities
and property (including cash in the cases referred to in clauses (ii) and
(iii)
above) which such Holder would hold on the date of such exercise had such
Holder
been the holder of record of such Common Stock as of the date on which holders
of Common Stock received or became entitled to receive such shares or all
other
additional stock and other securities and property.
(c) Upon
the
occurrence of each adjustment pursuant to this Section 5, the Company at
its
expense will, at the written request of the Holder, promptly compute such
adjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment, including a statement of the adjusted
Exercise Price and adjusted number or type of Exercise Shares or other
securities issuable upon exercise of this Warrant (as applicable), describing
the transactions giving rise to such adjustments and showing in detail the
facts
upon which such adjustment is based. Upon written request, the Company will
promptly deliver a copy of each such certificate to the Holder and to the
Company’s transfer agent.
6. FRACTIONAL
SHARES. No
fractional shares shall be issued upon the exercise of this Warrant as a
consequence of any adjustment pursuant hereto. All Exercise Shares
(including fractions) issuable upon exercise of this Warrant may be aggregated
for purposes of determining whether the exercise would result in the issuance
of
any fractional share. If, after aggregation, the exercise would result in
the issuance of a fractional share, the Company shall, in lieu of issuance
of
any fractional share, pay the Holder otherwise entitled to such fraction
a sum
in cash equal to the product resulting from multiplying the then current
fair
market value of an Exercise Share by such fraction.
C-6
7. FUNDAMENTAL
TRANSACTIONS.
If, at any time while this Warrant is outstanding, (i) the Company effects
any
merger of the Company with or into another entity, (ii) the Company effects
any
sale of all or substantially all of its assets in one or a series of related
transactions, (iii) any tender offer or exchange offer (whether by the Company
or another individual or entity) is completed pursuant to which holders of
Common Stock are permitted to tender or exchange their shares for other
securities, cash or property or (iv) the Company effects any reclassification
of
the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash
or
property (other than as a result of a subdivision or combination of shares
of
Common Stock covered by Section 5 above) (in any such case, a “Fundamental
Transaction”),
then,
upon any subsequent exercise of this Warrant, the Holder shall have the right
to
receive, for each Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental Transaction, at the
option of the Holder, (a) upon exercise of this Warrant, the number of shares
of
Common Stock of the successor or acquiring corporation or of the Company,
if it
is the surviving corporation, and any additional consideration (the
“Alternate
Consideration”)
receivable upon or as a result of such reorganization, reclassification,
merger,
consolidation or disposition of assets by a Holder of the number of shares
of
Common Stock for which this Warrant is exercisable immediately prior to such
event.
For
purposes of any such exercise, the determination of the Exercise Price shall
be
appropriately adjusted to apply to such Alternate Consideration based on
the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction,
then
the Holder shall be given the same choice as to the Alternate Consideration
it
receives upon any exercise of this Warrant following such Fundamental
Transaction. To the extent necessary to effectuate the foregoing
provisions, any successor to the Company or surviving entity in such Fundamental
Transaction shall issue to the Holder a new warrant consistent with the
foregoing provisions and evidencing the Holder’s right to exercise such warrant
into Alternate Consideration. The terms of any agreement pursuant to which
a
Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this Section
7
and insuring that this Warrant (or any such replacement security) will be
similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.
8. NO
STOCKHOLDER RIGHTS. This
Warrant in and of itself shall not entitle the Holder to any voting rights
or
other rights as a stockholder of the Company.
9. TRANSFER
OF WARRANT. Subject
to applicable laws, this Warrant and all rights hereunder are transferable,
by
the Holder in person or by duly authorized attorney, upon delivery of this
Warrant and the form of assignment attached hereto to any transferee designated
by ▇▇▇▇▇▇.
C-7
10. LOST,
STOLEN, MUTILATED OR DESTROYED WARRANT. If
this
Warrant is lost, stolen, mutilated or destroyed, the Company may, on such
terms
as to indemnity or otherwise as it may reasonably impose (which shall, in
the
case of a mutilated Warrant, include the surrender thereof), issue a new
Warrant
of like denomination and tenor as the Warrant so lost, stolen, mutilated
or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated
or destroyed Warrant shall be at any time enforceable by anyone.
11. NOTICES,
ETC. All
notices required or permitted hereunder shall be in writing and shall be
deemed
effectively given: (a) upon personal delivery to the party to be notified,
(b) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient, if not, then on the next business day,
(c) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to
the Company at the address listed on the signature page hereto and to Holder
at
the applicable address set forth on the applicable signature page to the
Subscription Agreement or at such other address as the Company or Holder
may
designate by 10 days advance written notice to the other parties
hereto.
12. ACCEPTANCE.
Receipt
of this Warrant by the Holder shall constitute acceptance of and agreement
to
all of the terms and conditions contained herein.
13. GOVERNING
LAW. This
Warrant and all rights, obligations and liabilities hereunder shall be governed
by the laws of the State of New York.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
C-8
IN
WITNESS WHEREOF,
the
Company has caused this Warrant to be executed by its duly authorized officer
as
of December 13, 2006.
|
ACACIA
RESEARCH CORPORATION
|
||
| |
|
|
| By: |
|
|
| Name: | ||
| Title: | ||
C-9
NOTICE
OF EXERCISE
TO:
ACACIA
RESEARCH CORPORATION
(1)
o The
undersigned hereby elects to purchase _________ shares of the Acacia
Research-CombiMatrix Common Stock (the “Common
Stock”)
of
ACACIA
RESEARCH CORPORATION (the
“Company”)
pursuant to the terms of the attached Warrant, and tenders herewith payment
of
the exercise price in full, together with all applicable transfer taxes,
if
any.
o The
undersigned hereby elects to purchase _________ shares of Common Stock of
the
Company pursuant to the terms of the net exercise provisions set forth in
Section 2.1 of the attached Warrant, and shall tender payment of all
applicable transfer taxes, if any.
(2)
Please
issue a certificate or certificates representing said shares of Common Stock
of
the Company in the name of the undersigned or in such other name as is specified
below:
(Name)
(Address)
_____________________________
(Date) (Signature)
_____________________________
(Print
name)
ASSIGNMENT
FORM
(To
assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR
VALUE RECEIVED,
the
foregoing Warrant and all rights evidenced thereby are hereby assigned
to
|
Name:
|
_______________________________________________ |
|
(Please
Print)
|
|
|
|
|
|
Address:
|
_______________________________________________ |
|
(Please
Print)
|
Dated:
,
20___
Holder’s
Signature:
Holder’s
Address:
NOTE:
The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or
any
change whatever. Officers of corporations and those acting in a fiduciary
or other representative capacity should file proper evidence of authority
to
assign the foregoing Warrant.
C-11
Exhibit
D
Form
of
Lock-Up Agreement
December
___, 2006
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& Co., Inc.
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New
York,
NY 10004
Re:
Acacia Research Corporation (the “Company”)
Ladies
and Gentlemen:
The
undersigned is an owner of record or beneficially of certain shares of Acacia
Research - CombiMatrix common stock, par value $0.001 per share (the
“Common
Stock”),
of
the Company or securities convertible into or exchangeable or exercisable
for
Common Stock.
The
undersigned is aware that the Company proposes to carry out a registered
direct
offering of Common Stock and warrants (the “Warrants”)
to
purchase Common Stock (the “Offering”)
for
which you will act as placement agent. The undersigned recognizes that the
Offering will be of benefit to the undersigned and will benefit the Company
by,
among other things, raising additional capital for its operations. The
undersigned acknowledges that you are relying on the representations and
agreements of the undersigned contained in this letter in carrying out the
Offering.
In
consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not (and will cause any spouse or minor child or immediate
family member of the spouse or the undersigned living in the undersigned’s
household not to), without your prior written consent (which consent may
be
withheld in their sole discretion), directly or indirectly, sell, offer,
contract or grant any option to sell (including without limitation any short
sale), pledge, transfer, or otherwise dispose of any shares of Common Stock,
options or warrants to acquire shares of Common Stock, or securities
exchangeable or exercisable for or convertible into shares of Common Stock
currently or hereafter owned either of record or beneficially (as defined
in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) by the
undersigned (or such spouse or minor child or family member), or publicly
announce an intention to do any of the foregoing, for a period commencing
on the
date hereof and continuing through the ninety (90) days following the closing
of
the Offering (the “Lock-Up
Period”).
If
(i)
the Company issues an earnings release or material news, or a material event
relating to the Company occurs, during the last 17 days of the Lock-Up
Period,
or (ii)
prior to the expiration of the Lock-Up
Period,
the
Company announces that it will release earnings results during the 16-day
period
beginning on the last day of the Lock-Up
Period,
the
restrictions imposed by this agreement shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event.
D-1
The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company’s transfer agent and registrar against the transfer of shares
of Common Stock or securities convertible into or exchangeable or exercisable
for Common Stock held by the undersigned except in compliance with the foregoing
restrictions.
This
agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
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____________________________________________________
Printed
Name of Holder
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By:
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_______________________________________
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____________________________________________________
Printed
Name of Person Signing
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(indicate
capacity of person signing if signing as
custodian,
trustee, or on behalf of an entity)
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D-2
Exhibit
E
List
of
Directors and Executive Officers Executing Lock-Up Agreements
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▇▇▇▇▇, Ph.D.
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E-1
Exhibit
F
Matters
to be Covered in the Opinion of Counsel to the Company
1. The
Company and each of its Subsidiaries is a company, validly existing and in
good
standing under the laws of the state of its respective incorporation or
formation. The Company has the corporate power and authority necessary to
own or
hold its properties, to conduct its business as described in the Registration
Statement and the Prospectus and to enter into and perform its obligations
under
the Placement Agency Agreement, the Warrants, the Placement Agent’s Warrants,
and the Subscription Agreements.
2. The
Company has an authorized capitalization as set forth in the Registration
Statement and the Prospectus and all of the outstanding shares of AR-CombiMatrix
Common Stock of the Company as of immediately prior to the Closing are duly
authorized, validly issued and fully paid and nonassessable; and to our
knowledge, none of the outstanding shares of capital stock of the Company
was
issued in violation of any statutory, contractual preemptive or other similar
rights of any securityholder of the Company.
3. The
Shares have been duly and validly authorized and, when issued and delivered
to
the Investors and paid for in accordance with the terms of the Placement
Agency
Agreement and the Subscription Agreements, will be validly issued, fully
paid
and nonassessable. The Warrant Shares to be issued from time to time upon
the
exercise of the Warrants and the Placement Agent’s Warrants, as applicable, have
been duly and validly authorized and, upon payment of the exercise price
in
accordance with the terms of the Warrants and the Placement Agent’s Warrants, as
the case may be, will be validly issued, fully paid and
nonassessable.
4. The
issuance of the Shares and the Warrant Shares is not subject to any statutory
preemptive right or, to our knowledge, other similar rights of any
securityholder of the Company.
5. Each
of
the Placement Agency Agreement, the Warrants, the Placement Agent’s Warrants,
and the Subscription Agreements has been duly and validly authorized, executed
and delivered by the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance
with
its terms.
6. The
execution of the Placement Agency Agreement, the Warrants, the Placement
Agent’s
Warrants, and the Subscription Agreements by the Company, and the consummation
by the Company of the transactions contemplated thereunder to be consummated
on
the Closing Date, will not (a) result in any violation of or conflict with
any
provision of the Company's Certificate of Incorporation or Bylaws, (b) violate
or conflict with the General Corporations Law of the State of Delaware or
any
statute of the United States or the State of California or any order, rule
or
regulation of any governmental agency or body of the United States or the
State
of California that in our experience is normally applicable to the transactions
of the type contemplated by the Placement Agency Agreement or the Subscription
Agreements.
7. The
Company is not in violation of any provision of its Certificate of Incorporation
or its Bylaws and, to our knowledge, the Company is not in material default
in
the performance of any obligation, agreement, covenant or condition contained
in
any document filed as exhibit to the Registration Statement or incorporated
by
reference therein.
F-1
8. No
consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company
of
its obligations under the Placement Agency Agreement, the Warrants, the
Placement Agent’s Warrants, or the Subscription Agreements, except: (i) such as
have been obtained under the Securities Act and (ii) such as may be required
by
the securities or Blue Sky laws of the various states in connection with
the
offer and sale of the Securities by the Company, as to which we express no
opinion.
9. To
our
knowledge, there is not pending or threatened any action, suit, proceeding,
inquiry or investigation, to which the Company or any of its subsidiaries
are
parties, or to which the property of the Company or its subsidiaries are
subject, before or brought by any court or governmental authority, arbitration
board or tribunal, domestic or foreign, that is required to be described
in the
Prospectus and is not so described therein.
10. The
Registration Statement is effective under the Securities Act, and, to our
knowledge, no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereof has been issued and no
proceedings therefore have been initiated or threatened by the Commission
and
all filings required by Rule 424(b) and Rule 430(A) promulgated under the
Securities Act have been made.
11. To
our
knowledge, no person or entity has the right to require the registration
of
shares of AR-CombiMatrix Common Stock or other equity securities of the Company
(including securities that are convertible into or exchangeable for the
Company's equity securities) because of the filing or effectiveness of the
Registration Statement or the completion of the Offering.
12. To
our
knowledge, the Company is not a party to any contract or agreement of a
character required to be filed as an exhibit to the Registration Statement
that
has not been so filed.
13. The
Registration Statement (including the Base Prospectus), as of its effective
date, and the Prospectus, as of its date, complied as to form in all material
respects with the requirements of the Securities Act, and the documents
incorporated by reference in the Registration Statement, the Base Prospectus
or
the Prospectus, including any Current Report on Form 8-K filed with the
Commission prior to the Closing Date, when they became effective or were
filed
with the Commission, as applicable, complied as to form in all material respects
with the requirements of the Securities Act.
14. The
Company is not, and will not be after giving effect to the offering of the
Shares and Warrants and the application of the proceeds thereof as described
in
the Base Prospectus and the Prospectus, an “investment company” as defined in
the Investment Company Act of 1940, as amended.
F-2