EXHIBIT 4.1
ACACIA RESEARCH CORPORATION
SUBSCRIPTION AGREEMENT
Ladies and Gentlemen:
1. SUBSCRIPTION; PAYMENT. The undersigned, intending to be legally
bound, hereby irrevocably agrees to purchase from Acacia Research Corporation, a
Delaware corporation (the "Company"), this subscription (the "Subscription") in
the amount of $_______________ (the "Capital Commitment") for Units (each Unit
consisting of one share of the Company's Acacia Research - CombiMatrix common
stock ("AR-CombiMatrix stock"), par value $0.001 per share, and one-half (0.5)
of one warrant to purchase one share of AR-CombiMatrix stock ("Warrant"))
pursuant to the Company's Confidential Private Placement Memorandum dated May 7,
2003 (the "Memorandum"). This Subscription is submitted to you in accordance
with and subject to the terms and conditions described in this Subscription
Agreement. For a description of the Warrant, please refer to Attachment 1 hereto
"Form of Warrant."
The undersigned shall either: (i) enclose herewith a certified or
official bank check payable to the Company, or (ii) transmit by wire transfer
the amount of the Capital Commitment.
2. ACCEPTANCE OF SUBSCRIPTION. The undersigned understands and agrees
that the Company in its sole discretion reserves the right to accept or reject
this or any other subscription in whole or in part, notwithstanding prior
receipt by the undersigned of notice of acceptance. If this Subscription is
rejected by the Company in whole, the Company shall promptly return all funds
received from the undersigned, without interest, and this Subscription Agreement
shall thereafter be of no further force or effect. If this Subscription is
rejected by the Company in part, the Company shall promptly return the rejected
portion of the funds received from the undersigned, without interest, and this
Subscription Agreement shall thereafter remain in effect with respect to the
portion of the subscription not so rejected.
3. REPRESENTATIONS AND WARRANTIES. The undersigned hereby acknowledges,
represents and warrants to, and agrees with, the Company as follows:
(a) The undersigned understands that the offering and sale of
the Units are intended to be exempt from registration under the
Securities Act of 1933, as amended, (the "Securities Act"), by virtue
of Section 4(2) and Rule 506 of Regulation D promulgated under the
Securities Act, and in accordance therewith and in furtherance thereof,
the undersigned represents and warrants and agrees as follows:
(i) The undersigned and the undersigned's advisers
have been afforded an opportunity to review and receive the
Memorandum and reports filed by the Company under the
Securities Exchange Act of 1934 (the "Exchange Act") and other
publicly available information relating to the Company, the
Company's business and finances (collectively, the
"Information"), and any and all other information deemed
relevant by the undersigned in order to make an informed
investment decision regarding the Units, and have reviewed and
received such Information and understand the Information and
this Subscription Agreement;
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(ii) No written representations have been made other
than as stated, or in addition to those stated, in the
Information;
(iii) The undersigned is not subscribing for the
Units as a result of or subsequent to any advertisement,
article, notice, other communication published in any
newspaper, magazine, or similar media or broadcast over
television or radio, or presented at any seminar or meeting,
or any solicitation of a subscription by a person other than a
representative of the Company;
(iv) If the undersigned is a natural person, the
undersigned has reached the age of majority in the state in
which the undersigned resides;
(v) The address set forth below is the undersigned's
true and correct domicile;
(vi) The undersigned has adequate means of providing
for the undersigned's current financial needs and
contingencies, is able to bear the substantial economic risks
of an investment in the Units for an indefinite period of
time, has no need for liquidity in such investment, and, at
the present time, could afford a complete loss of such
investment;
(vii) The undersigned has such knowledge and
experience in financial, tax, and business matters so as to
enable the undersigned to utilize the Information made
available to the undersigned in connection with the offering
of the Units to evaluate the merits and risks of an investment
in the Company and to make an informed investment decision
with respect thereto;
(viii) The undersigned is not relying on the Company
with respect to the legal, tax, and other economic
considerations of an investment and has obtained, or had the
opportunity to obtain the advice of the undersigned's own
legal, tax, and other advisors;
(ix) The undersigned will not sell or otherwise
transfer the Units or the underlying shares of the Company's
AR-CombiMatrix stock ("Shares") without registration under the
Securities Act or applicable state securities laws or an
exemption therefrom. The Units and the Shares have not been
registered under the Securities Act or under the securities
laws of any state. The undersigned represents that the
undersigned is purchasing the Units for the undersigned's own
account, for investment and not with a view to resale or
distribution except in compliance with the Securities Act. The
undersigned has not offered or sold any portion of the Units
being acquired. The undersigned does not have any present
intention of selling, distributing or otherwise disposing of
any portion of the Units, which may be a violation of the
Securities Act unless (i) a registration statement has been
filed and declared effective by the Securities and Exchange
Commission (the "SEC") covering such Shares to be resold or
otherwise distributed; or (ii) the passage of a fixed or
determinable period of time that makes such resale or
distribution exempt from registration and is pursuant to Rule
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144 promulgated under the Securities Act or upon the
occurrence or nonoccurrence of any predetermined event or
circumstance in violation of the Securities Act. The
undersigned is aware that there is currently no public market
for the Units, although a public market exists for the
Company's AR-CombiMatrix stock;
(x) THE UNDERSIGNED UNDERSTANDS AND ACKNOWLEDGES THAT
HIS OR HER INVESTMENT IN THE COMPANY INVOLVES A HIGH DEGREE OF
RISK AND IS SUITABLE ONLY FOR INVESTORS OF SUBSTANTIAL MEANS
WHO HAVE NO IMMEDIATE NEED FOR LIQUIDITY OF THE AMOUNT
INVESTED, AND THAT SUCH INVESTMENT INVOLVES A RISK OF LOSS OF
ALL OR A SUBSTANTIAL PART OF SUCH INVESTMENT; and
(xi) The undersigned is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated
under the Securities Act.
(b) The undersigned's overall commitment to investments which
are not readily marketable is reasonable in relation to the
undersigned's net worth.
(c) The undersigned hereby agrees to provide such information
and to execute and deliver such documents as may reasonably be
necessary to comply with any and all laws and ordinances to which the
Company is subject, including, without limitation, such additional
information as the Company may reasonably deem appropriate with regard
to the undersigned's suitability.
(d) The undersigned acknowledges:
(i) In making an investment decision the undersigned
has relied on the undersigned's own examination of the Company
and the terms of the offering of the Units, including the
merits and risks involved. THE UNITS OFFERED IN THIS
SUBSCRIPTION AGREEMENT HAVE NOT BEEN RECOMMENDED BY ANY
FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT
CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THE
INFORMATION OR THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE;
(ii) The undersigned, if executing this Subscription
Agreement in a representative or fiduciary capacity, has full
power and authority to execute and deliver this Subscription
Agreement in such capacity and on behalf of the subscribing
individual, ward, partnership, trust, estate, corporation, or
other entity for whom the undersigned is executing this
Subscription Agreement, and such individual, ward,
partnership, trust, estate, corporation, or other entity has
full right and power to perform pursuant to this Subscription
Agreement and make an investment in the Company; and
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(iii) The representations, warranties, and agreements
of the undersigned contained herein and in any other writing
delivered in connection with the transactions contemplated
hereby shall be true and correct in all respects on and as of
the date of the sale of the Units as if made on and as of such
date and shall survive the execution and delivery of this
Subscription Agreement and the purchase of the Units.
4. REGISTRATION RIGHTS.
(a) REGISTRATION RIGHTS
(i) The undersigned understands that the Company will
use commercially reasonable efforts to file a Registration
Statement with the SEC for the resale of the Company's
AR-CombiMatrix stock included in the Units sold pursuant to
the Memorandum ("Unit Shares") and the Company's
AR-CombiMatrix stock to be issued upon exercise of the
Warrants included in the Units sold pursuant to the Memorandum
("Warrant Shares") as soon as shall be reasonably practicable
following the consummation of the sale of the Units pursuant
to the terms of this Subscription Agreement, but in no event
more than sixty (60) days after the final closing of the
Offering (as defined in the Memorandum). Holders of the Units,
the Unit Shares and the Warrant Shares are collectively
referred to as "Holders." Subject to the provisions of this
Subscription Agreement, the Company shall use commercially
reasonable efforts to have such Registration Statement
declared effective by the SEC as promptly as shall be
practicable, but in no event more than 120 days after the
final closing of the Offering (as defined in the Memorandum).
If and when the Registration Statement becomes effective, the
Company shall keep such Registration Statement effective for a
period of up to 120 days or until the distribution
contemplated in such Registration Statement has been
completed; provided, however, that such 120-day period shall
be extended for a period of time equal to the period the
Holder refrains from selling any securities included in such
Registration Statement at the request of the Company or an
underwriter of any of the Company's common stock (or other
securities). For the purposes of this Subscription Agreement:
(a) "Registrable Shares" means the Unit Shares and the Warrant
Shares (and including any shares issued in connection with any
split or dividend in respect of any such shares); provided,
however, that any such share of AR-CombiMatrix stock will
cease to be a Registrable Share when (1) a Registration
Statement covering a Registrable Share has been declared
effective by the SEC and such share has been disposed of by
the Holders pursuant to such effective Registration Statement,
(2) the Registrable Share is transferred to another person,
(3) such share (after initial issuance) is held by the Company
or one of its subsidiaries or otherwise ceases to be
outstanding, or (4) such share may be traded without
restriction pursuant to paragraph (k) of Rule 144, if
applicable; and (b) "Registration Statement" means any
registration statement or comparable document under the
Securities Act through which a public sale or disposition of
the Registrable Shares may be registered, including the
prospectus, amendments and supplements to such registration
statement, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such
registration statement.
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(ii) Upon the written request of a Holder to include
all or any portion of such Holder's Registrable Shares in an
underwritten offering, the Company shall have the right, in
its sole discretion, to determine whether any of such
Registrable Shares are to be included in such underwritten
offering, and if the Company so determines, the Company alone
shall have the right to select the managing underwriter or
underwriters to administer the offering.
(iii) If the managing underwriter of an underwritten
offering under this Section 4(a) advises the Company in
writing that in its opinion the number of shares requested to
be included in such registration exceeds the number which can
be sold in such offering, the Company will include in such
registration only the number of shares which in the opinion of
such underwriter can be sold and may delay registering the
balance of the shares in a non-underwritten offering for up to
120 days. This provision shall not relieve or modify the
Company's obligations to use commercially reasonable efforts
to file and have declared effective any Registration Statement
under Section 4(a)(i). If the number of shares that can be
sold is less than the number of shares proposed to be
registered, the amount to be so registered shall be allocated
pro rata among the Holders of Registrable Shares desiring to
participate in such registration.
(iv) If the Company fails to have such Registration
Statement declared effective on or before the date which is
120 days following the final closing of the Offering (the
"Outside Date"), the Company shall return to the undersigned
an amount in cash equal to 1.0% of the Capital Commitment, net
of any finder's fees, on the Outside Date and on the monthly
anniversary of the Outside Date until the earlier of (A) the
date on which such Registration Statement is declared
effective and (B) the one year anniversary of the final
closing of the Offering, with any such payment to be made by
the Company within 10 business days of the date on which such
payment becomes payable.
(b) SUSPENSION OF EFFECTIVENESS. The Company's obligations
under Section 4(a) above shall not restrict its ability to suspend the
effectiveness of, or direct the Holders not to offer or sell securities
under, any Registration Statement, at any time, for such reasonable
period of time which the Company believes is necessary to prevent the
premature disclosure of any events or information having a material
effect on the Company. In addition, the Company shall not be required
to keep any Registration Statement effective, or may, without
suspending such effectiveness, instruct the Holders not to sell such
securities, during any period during which the Company is instructed,
directed, ordered or otherwise requested by any governmental agency or
self-regulatory organization to stop or suspend such trading or sales.
(c) HOLDBACK AGREEMENT. In the event of any filing of a
prospectus supplement or the commencement of an underwritten public
distribution of the Company's AR-CombiMatrix stock under a Registration
Statement, whether or not Registrable Shares are included, the Holders
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agree not to effect any public sale or distribution of Registrable
Shares (except as part of such underwritten public distribution),
including a sale pursuant to Rule 144 or Rule 144A under the Securities
Act, during a period designated by the Company in a written notice duly
given to the Holders, which period shall commence up to 14 days prior
to the effective date of any such filing of such prospectus supplement
or the commencement of such underwritten public distribution of such
AR-CombiMatrix stock under a Registration Statement and shall continue
for up to 44 consecutive days in the case of a sale pursuant to Rule
144 and for up to 74 consecutive days otherwise.
(d) REGISTRATION PROCEDURES. Except as otherwise expressly
provided herein, in connection with any registration of Registrable
Shares pursuant to this Agreement, the Company shall, as expeditiously
as possible:
(i) use commercially reasonable efforts to prepare
and file with the SEC a Registration Statement with respect to
such Registrable Shares and use commercially reasonable
efforts to cause such Registration Statement to become
effective as soon as practicable thereafter; and before filing
a Registration Statement or prospectus or any amendments or
supplements thereto, furnish to the Holders copies of such
Registration Statement and such other documents as proposed to
be filed (including copies of any document to be incorporated
by reference therein), and thereafter furnish to the Holders
such number of copies as may be reasonably requested in
writing by the Holders of such Registration Statement, each
amendment and supplement thereto (including copies of any
document to be incorporated by reference therein), including
all exhibits thereto, the prospectus included in such
Registration Statement (including each preliminary
prospectus), and, promptly after the effectiveness of a
Registration Statement, the definitive final prospectus filed
with the SEC;
(ii) notify the Holders, at any time when a
prospectus relating thereto is required to be delivered under
the Securities Act, of the occurrence of any event as a result
of which the prospectus included in such Registration
Statement (including any document to be incorporated by
reference therein) contains an untrue statement of a material
fact or omits any fact necessary to make the statements
therein not misleading and, the Company shall prepare a
supplement or amendment to such prospectus, as soon as
practicable, so that, as thereafter delivered to the
purchasers of such Registrable Shares, such prospectus will
not contain an 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
promptly make available to the Holders any such supplement or
amendment;
(iii) notify the Holders and the managing
underwriters, if any, promptly, and (if requested by any such
Person) confirm such advice in writing, (i) when the
Registration Statement, the prospectus or any prospectus
supplement or post-effective amendment has been filed, and,
with respect to the Registration Statement or any
post-effective amendment, when the same has become effective,
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(ii) of the issuance by the SEC of any stop order suspending
the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus
or the initiation of any proceedings for that purpose and the
Company shall promptly use commercially reasonable efforts to
prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued, and (iii) of
the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the
Registrable Shares for offer or sale in any jurisdiction, or
the initiation or threatening of any proceeding for such
purpose.
The Company may require the Holders to furnish to the Company
such information regarding themselves and the distribution of such
Registrable Shares as the Company may from time to time reasonably
request in writing and such other information as may be legally
required in connection with such registration. The Holders agree, by
their acquisition of Registrable Shares and their acceptance of the
benefits provided to it hereunder, to furnish promptly to the Company
all information required to be disclosed in order to make any
previously furnished information not materially misleading. All Holders
proposing to distribute their Registrable Shares through an
underwritten offering shall (together with the Company) enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected by the Company for such underwriting and shall
provide to such underwriter or underwriters any opinions and
certificates, and any indemnification with respect to such Holder as
reasonably required by such underwriter or underwriters.
The Holders agree that upon receipt of any notice from the
Company of the happening of any event of the kind described herein
requiring the cessation of the distribution of a prospectus or the
distribution of a supplemented or amended prospectus, the Holders will
forthwith discontinue disposition of Registrable Shares pursuant to the
Registration Statement covering such Registrable Shares until the
Holders' receipt of the copies of the supplemented or amended
prospectus contemplated by this Subscription Agreement, or until it is
advised in writing by the Company that the use of the prospectus may be
resumed, and, if so directed by the Company, the Holders will deliver
to the Company (at the Company's expense) all copies, other than
permanent file copies then in the Holders' possession, of the
prospectus covering such Registrable Shares current at the time of
receipt of such notice.
(e) REGISTRATION EXPENSES. All expenses incident to the
Company's performance of or compliance with the registration of shares
pursuant to this Subscription Agreement, including, without limitation,
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and
disbursements of counsel of the Company and counsel for the
underwriters in connection with "blue sky" qualifications of the
Registrable Shares), fees and expenses associated with filings required
to be made with the National Association of Securities Dealers, Inc.,
and with listing on any national securities exchange or exchanges in
which listing may be sought, printing expenses, messenger and delivery
expenses, fees and expenses of counsel for the Company and its
independent certified public accountants, securities acts liability
insurance (if the Company elects to obtain such insurance), the fees
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and expenses of any special experts retained by the Company in
connection with such registration, and fees and expenses of other
persons retained by the Company (all such expenses being herein called
"Registration Expenses") will be borne by the Company; provided that in
no event shall Registration Expenses payable by the Company include any
(i) underwriting discounts, commissions, or fees attributable to the
sale of Registrable Shares, (ii) fees and expenses of any counsel,
accountants, or other persons retained or employed by the Holders or
underwriters, or (iii) transfer taxes, if any.
(f) INDEMNIFICATION.
(i) To the extent permitted by law, the Company shall
indemnify each Holder, each underwriter of the Registrable
Shares and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to
which any registration, qualification or compliance has been
sought pursuant to this Subscription Agreement, against all
claims, losses, damages and liabilities (or action in respect
thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened (subject
to Section 4(f)(iii) below), arising out of or based on (i)
any untrue statement (or alleged untrue statement) of a
material fact contained in any Registration Statement incident
to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances in which they were made, or (ii) any violation
or alleged violation by the Company of the Securities Act, the
Exchange Act, or any rule or regulation promulgated under the
Securities Act, or the Exchange Act, and shall reimburse each
Holder, each underwriter of the Registrable Shares and each
person controlling such Holder, for legal and other expenses
reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action as
incurred; provided that the Company shall not be liable in any
such case to the extent that any untrue statement or omission
or allegation thereof is made in reliance upon and in
conformity with written information furnished to the Company
by or on behalf of such Holder and stated to be specifically
for use in preparation of such Registration Statement;
provided that the Company shall not be liable in any such case
where the claim, loss, damage or liability arises out of or is
related to the failure of the Holder to comply with the
covenants and agreements contained in this Subscription
Agreement respecting sales of Registrable Shares, and except
that the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any such untrue
statement or alleged untrue statement or omission or alleged
omission made in the preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the SEC at the
time the Registration Statement becomes effective or in the
amended prospectus filed with the SEC pursuant to Rule 424(b)
of the Securities Act or in the prospectus subject to
completion and term sheet under Rule 434 of the Act, which
together meet the requirements of Section 10(a) of the Act
(the "Final Prospectus"), such indemnity agreement shall not
inure to the benefit of any such Holder, any such underwriter
or any such controlling person, if a copy of the Final
Prospectus furnished by the Company to the Holder for delivery
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was not furnished to the person or entity asserting the loss,
liability, claim or damage at or prior to the time such
furnishing is required by the Securities Act and the Final
Prospectus would have cured the defect giving rise to such
loss, liability, claim or damage.
(ii) Each Holder will severally, if Registrable
Shares held by such Holder are included in the securities as
to which such registration, qualification or compliance is
being effected, indemnify the Company, each of its directors
and officers, each underwriter of the Registrable Shares and
each person who controls the Company within the meaning of
Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any
litigation, commenced or threatened (subject to Section
4(f)(iii) below), arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact
contained in any Registration Statement incident to any such
registration, qualification or compliance or based on any
omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances in which they were made, and will reimburse the
Company, such directors and officers, each underwriter of the
Registrable Shares and each person controlling the Company for
reasonable legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim,
loss, damage, liability or action as incurred, in each case to
the extent, but only to the extent, that such untrue statement
or omission or allegation thereof is made in reliance upon,
and in conformity with, written information furnished to the
Company by or on behalf of the Holder and stated to be
specifically for use in preparation of such Registration
Statement; provided that the indemnity shall not apply to the
extent that such claim, loss, damage or liability results from
the fact that a current copy of the prospectus or offering
circular was not made available to the Holder and such current
copy the prospectus or offering circular would have cured the
defect giving rise to such loss, claim, damage or liability.
Notwithstanding the foregoing, in no event shall a Holder be
liable for any such claims, losses, damages or liabilities in
excess of the proceeds received by such Holder in the
offering, except in the event of fraud by such Holder.
(iii) Each party entitled to indemnification under
this Section 4(f) (the "Indemnified Party") shall give notice
to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party,
who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval
shall not unreasonably be withheld), and the Indemnified Party
may participate in such defense with its own counsel at such
Indemnified Party's expense, and provided further that the
failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its
obligations under this Agreement, unless such failure is
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materially prejudicial to the Indemnifying Party in defending
such claim or litigation. An Indemnifying Party shall not be
liable for any settlement of an action or claim effected
without its written consent (which consent shall not be
unreasonably withheld).
(iv) If the indemnification provided for in this
Section 4(f) is held by a court of competent jurisdiction to
be unavailable to an Indemnified Party with respect to any
loss, liability, claim, damage or expense referred to therein,
then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party thereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such
loss, liability, claim, damage or expense in such proportion
as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified
Party on the other in connection with the statements or
omissions which resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party
and of the Indemnified Party shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a
material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
5. LEGEND OF CERTIFICATES. Each stock certificate of the Company issued
to represent a Share shall bear the following (or substantially equivalent)
legend on the face or reverse side thereof:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THE APPLICABLE
SECURITY HAS BEEN REGISTERED UNDER THE ACT AND SUCH LAWS OR
(1) REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED AND (2) AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO
THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT AND
THE APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED."
Any stock certificate issued at any time in exchange or substitution
for any certificate bearing such legend (except a new certificate issued upon
the completion of a public distribution of shares represented thereby) shall
also bear such legend, unless in the opinion of counsel satisfactory to the
Company the securities represented thereby need no longer be subject to the
restrictions contained herein. The provisions of this Subscription Agreement
shall be binding upon, and shall inure to the benefit of, the undersigned and
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all subsequent holders of the Units who acquired such Units directly or
indirectly from the undersigned in a transaction or series of transactions not
involving any public offering.
6. NO UNTRUE STATEMENTS; INDEMNIFICATION.
(a) The Company hereby warrants and represents that the
Memorandum provided by the Company to the undersigned in connection
with this transaction and the documents incorporated therein by
reference, is accurate, complete and correct, and does not contain an
untrue statement of a material fact or omit a material fact necessary
in order to make the Memorandum and other data not misleading.
(b) Each party agrees to indemnify and hold harmless the other
party, its officers, members, directors, employees, agents, and
affiliates against any and all loss, liability, claim, damage, and
expense whatsoever (including, without limitation, any and all expenses
reasonably incurred in investigating, preparing, or defending against
any litigation commenced or threatened or any claim whatsoever) arising
out of or based upon any materially false representation or warranty or
material breach or failure by the undersigned to comply with any
covenant or agreement made by the undersigned herein or in any other
document furnished by the undersigned to any of the foregoing in
connection with this transaction.
7. IRREVOCABILITY; BINDING EFFECT; ENTIRE AGREEMENT. The undersigned
hereby acknowledges and agrees that the Subscription hereunder is irrevocable by
the undersigned, that, except as required by law, the undersigned is not
entitled to cancel, terminate, or revoke this Subscription Agreement or any
agreements of the undersigned hereunder, and that this Subscription Agreement
and such other agreements shall survive the death or disability of the
undersigned and shall be binding upon and inure to the benefit of the parties
and their heirs, executors, administrators, successors, legal representatives,
and permitted assigns. If the undersigned is more than one person, the
obligations of the undersigned hereunder shall be joint and several and the
agreements, representations, warranties, and acknowledgments herein contained
shall be deemed to be made by and be binding upon each such person and his/her
heirs, executors, administrators, successors, legal representatives, and
permitted assigns. This Agreement sets forth the entire agreement and
understanding among the parties hereto with respect to the transactions
contemplated hereby and supersedes any and all prior agreements and
understandings relating to the subject matter hereof.
8. MODIFICATION. Neither this Subscription Agreement nor any provisions
hereof shall be waived, modified, discharged, or terminated except by an
instrument in writing signed by the party against whom any such waiver,
modification, discharge, or termination is sought.
9. NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or delivered against receipt to the party to whom it
is to be given (a) if to the Company, at the address set forth above, or (b) if
to the undersigned, at the address set forth on the signature page hereof (or,
in either case, to such other address as the party shall have furnished in
writing in accordance with the provisions of this Section 9). Any notice or
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other communication given by certified mail shall be deemed given at the time of
certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof.
10. ASSIGNABILITY. This Subscription Agreement and the rights and
obligations hereunder are not transferable or assignable by the undersigned.
11. APPLICABLE LAW. This Subscription Agreement shall be governed by
and construed in accordance with the laws of the State of California as applied
to residents of that state executing contracts wholly to be performed in that
State, regardless of any laws on choice of law or conflicts of law of any
jurisdiction.
12. NATURE OF SUBSCRIBER. The undersigned is (check one):
[ ] (a) One or more individuals
[ ] (b) A corporation
[ ] (c) A partnership
[ ] (d) A trust
[ ] (e) Another entity or organization, namely
____________________(please specify)
13. INVESTMENT PURPOSE FOR NON-INDIVIDUALS.
(a) If the undersigned is not an individual, indicate the
approximate date the undersigned's entity was formed:
_______________________
(b) If the undersigned is not an individual, initial the
appropriate blank below which correctly describes the application of
the following statement to your situation: the undersigned (i) was not
organized or reorganized for the specific purpose of acquiring the
Units, (ii) has made investments prior to the date hereof, and each
beneficial owner thereof has and will share in the same proportion in
each investment and (iii) the undersigned's investment in the Company
will not constitute more than forty percent (40%) of the undersigned's
total capital.
[ ] True
[ ] False
If the "False" box is checked, the undersigned will as of the
closing of the transaction (the "Closing") have __________ individual
stockholders, partners or other record owners and __________
non-individual stockholders, partners or other record owners. Those
non-individual stockholders, partners or other record owners to whom
application of the above statement would be "False" have an aggregate
of __________ ultimate beneficial owners who are either individuals or
to whom application of the above statement and the statement in Section
14 would be "True." IF THE "FALSE" BOX IS CHECKED, EACH PARTICIPATING
PERSON MAY BE REQUIRED TO FILL OUT A SUBSCRIPTION AGREEMENT, INCLUDING
MAKING THE REPRESENTATIONS AS TO INVESTOR STATUS SET FORTH IN SECTIONS
3(c), 12, 13 AND 14.
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14. LIMITATIONS ON INVESTMENT IN INVESTMENT COMPANIES.
If the undersigned is not a individual, initial the box below which
correctly describes the application of the following statement to your
situation: the undersigned would not, upon acquiring the Units, have more than
ten percent (10%) of its assets invested in one or more investment companies
that rely solely on the exclusion from the definition of "investment company"
provided in Section 3(c)(1)(a) of the Investment Company Act of 1940:
[ ] True
[ ] False
If the "False" box is checked, the undersigned will as of the Closing
have individual stockholders, partners or other record owners and __________
non-individual stockholders, partners or other record owners. Those
non-individual stockholders, partners or other record owners to whom application
of the above statement would be "False" have an aggregate of __________ ultimate
beneficial owners who are either individuals or to whom application of the above
statement and the statement in Section 13 would be "True."
15. MATTERS RELATING TO THE UNDERSIGNED'S OWNERSHIP OF THE UNITS.
(a) All correspondence relating to the undersigned's
investment should be sent (check one):
[ ] (i) to the address of the undersigned set forth
on the signature page hereof
[ ] (ii) to the following address:
_______________________________
_______________________________
_______________________________
(b) The undersigned may be contacted by telephone at the
following telephone numbers:
(i) Home telephone: _____________________________
(ii) Business telephone: _____________________________
(iii) Facsimile telephone: _____________________________
(iv) E-mail address: _____________________________
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SUBSCRIPTION AGREEMENT SIGNATURE PAGE
FOR INDIVIDUALS AND LIVING OR REVOCABLE TRUSTS
IN WITNESS WHEREOF, the undersigned executed this Agreement as of
___________, 2003.
No. of Units Purchased: _______________________________________
Print Name
_______________________
_______________________________________
Signature of Investor
_______________________________________
Social Security Number
_______________________________________
_______________________________________
Residence Address
If the purchaser has indicated that the Units will be held as JOINT
TENANTS, as TENANTS IN COMMON, or as COMMUNITY PROPERTY, please complete the
following:
_______________________________________
Print Name of Spouse or Other Purchaser
_______________________________________
Signature of Spouse or Other Purchaser
_______________________________________
Social Security Number
ACCEPTED AND AGREED:
ACACIA RESEARCH CORPORATION
By: _______________________________________
Name:_______________________________________
Title:______________________________________
Dated: ___________, 2003
S-1
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
FOR PARTNERSHIPS, CORPORATIONS, TRUSTS, OR OTHER ENTITIES
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
______________, 2003.
No. of Units Purchased:
________________________________________
_______________________ Print Name of Partnership, Corporation,
Trust or other Entity
By: ___________________________________
(Signature of Authorized Signatory)
Name:___________________________________
Title:__________________________________
Address:________________________________
________________________________
Jurisdiction where organized:
________________________________________
Taxpayer Identification
Number:_________________________________
Date of Formation:______________________
Address of Chief Executive Officer of
Subscriber:
________________________________________
________________________________________
ACCEPTED AND AGREED:
ACACIA RESEARCH CORPORATION
By: _________________________________
Name:_________________________________
Title:________________________________
Dated: ___________, 2003
S-2
ATTACHMENT 1
NO.
FORM OF WARRANT
THIS SECURITY AND ANY SHARES ISSUED UPON EXERCISE OF THIS SECURITY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THE APPLICABLE SECURITY HAS BEEN REGISTERED UNDER THE ACT AND
SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED AND (2) AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO THE COMPANY TO THE EFFECT
THAT REGISTRATION UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
ACACIA RESEARCH CORPORATION
WARRANT TO PURCHASE AR-COMBIMATRIX STOCK
This certifies that, for value received, _____________________________
("the Holder") is entitled to subscribe for and purchase up to [________] shares
(subject to adjustment from time to time pursuant to the provisions of Section 5
hereof) of fully paid and nonassessable Acacia Research-CombiMatrix common stock
of Acacia Research Corporation, a Delaware corporation (the "Company"), at the
price specified in Section 2 hereof, as such price may be adjusted from time to
time pursuant to Section 5 hereof (the "Warrant Price"), subject to the
provisions and upon the terms and conditions hereinafter set forth and callable
by the Company upon the terms and conditions set forth in Section 1 hereof.
As used herein, the term "AR-CombiMatrix stock" shall mean the
Company's presently authorized Acacia Research-CombiMatrix common stock, par
value $0.001 per share, and any stock into or for which such stock may hereafter
be converted or exchanged.
This Warrant is issued pursuant to that certain Subscription Agreement
between the Holder and the Company dated May __, 2003 (the "Subscription
Agreement").
1. TERM OF WARRANT; CALLABILITY BY COMPANY.
The purchase right represented by this Warrant is exercisable, in whole
or in part, at any time during the period beginning on the date hereof and
ending on May __, 2008 (the "Term") However, at any time during the Term after
the first anniversary of the date hereof, if the daily average of the high and
low prices of the Company's AR-CombiMatrix stock on the Nasdaq SmallCap Market
is equal to or above $4.50 (the "Call Price") for 20 consecutive trading days,
the Company will have the right, but not the obligation, to redeem all of the
Warrants on 30 days prior written notice at a redemption price of $0.10 per New
Warrant. If the Company elects to exercise its redemption right, the Holder of
this Warrant may either exercise the Warrant, in whole or in part, or tender the
Warrant to the Company for redemption, in whole or in part. Within five business
A-1
days after the end of the 30-day period, the Company will deliver the redemption
price to the Holder of this Warrant should this Warrant remain outstanding in
whole or in part as of the end of the 30-day period, whether or not the Holder
has surrendered this Warrant for redemption. This Warrant may not be exercised
after the end of such 30-day period. Notwithstanding the provisions of this
Section 1, if for any reason, the Company suspends or otherwise prohibits the
Holder from distributing any shares of the Company's AR-CombiMatrix stock
issuable pursuant to this Warrant pursuant to any provision of Section 4 of the
Subscription Agreement, the Company shall not exercise its right to redeem this
Warrant until such suspension or prohibition is lifted.
2. WARRANT PRICE.
The Warrant Price is $2.75 per share, subject to adjustment from time
to time pursuant to the provisions of Section 5 hereof.
3. METHOD OF EXERCISE: PAYMENT; ISSUANCE OF NEW WARRANT.
(a) Subject to Section 1 hereof, the purchase right represented by this
Warrant may be exercised by the Holder, in whole or in part, by the surrender of
this Warrant (with the notice of exercise form attached hereto as Exhibit 1 duly
executed) at the principal office of the Company and by the payment to the
Company, by cashier's check or wire transfer, of an amount equal to the then
applicable Warrant Price per share multiplied by the number of shares then being
purchased. The Company agrees that the shares so purchased shall be deemed to be
issued to the Holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment made for such shares as aforesaid. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of stock so
purchased shall be delivered to the Holder within 15 days thereafter and, unless
this Warrant has been fully exercised or expired, a new Warrant representing the
portion of the shares, if any, with respect to which this Warrant shall not then
have been exercised, shall also be issued to the Holder within such 15 day
period.
(b) If, within one year following the date hereof, the Company has not
filed a Registration Statement, which has been declared effective by the SEC,
for the resale of the shares of AR-CombiMatrix stock to be issued upon exercise
of this Warrant, the Holders of this Warrant shall be entitled to exercise this
Warrant, in whole but not in part, by the surrender of this Warrant (with the
notice of exercise form attached hereto as Exhibit 1 duly executed) at the
principal office of the Company, and upon such surrender, the Holder shall be
entitled to receive a number of shares of AR-CombiMatrix stock equal to the
quotient obtained by dividing [(A-B)(X)] by (A), where:
(A) = the closing bid price of the AR-CombiMatrix stock on the trading
day immediately preceding the date of such exercise;
(B) = the then applicable Warrant Price; and
(X) = the number of shares of AR-CombiMatrix stock issuable upon
exercise of this Warrant in accordance with its terms.
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In the event of any exercise of the rights represented by this Warrant
pursuant to this paragraph 3 (b), certificates for the shares of stock so
purchased shall be delivered to the Holder within 15 days thereafter
4. STOCK FULLY PAID; RESERVATION OF SHARES.
All AR-CombiMatrix stock which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof. During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of the issuance upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its AR-CombiMatrix
stock to provide for the exercise of the rights represented by this Warrant.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES.
The kind of securities purchasable upon the exercise of this Warrant,
the Warrant Price and the number of shares purchasable upon exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
the following events:
(a) RECLASSIFICATION, CONSOLIDATION, OR MERGER. In case of any
reclassification or change of outstanding securities of the class
issuable upon exercise of this Warrant (other than a change in par
value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or in case of
any consolidation or merger of the Company with or into another
corporation, other than a merger with another corporation in which the
Company is a continuing corporation and which does not result in any
reclassification or change of outstanding securities issuable upon
exercise of this Warrant, the Company, or such successor, as the case
may be, shall execute a new Warrant, providing that the Holder of this
Warrant shall have the right to exercise such new Warrant and procure
upon such exercise, in lieu of each share of AR-CombiMatrix stock
theretofore issuable upon exercise of this Warrant, the kind and amount
of shares of stock, other securities, money and property receivable
upon such reclassification, change, consolidation, or merger by a
Holder of one share of AR-CombiMatrix stock. Such new Warrant shall
provide for adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 5. The
provisions of this subparagraph (a) shall similarly apply to successive
reclassification, changes, consolidations, and mergers.
(b) SUBDIVISION OR COMBINATION OF SHARES. If the Company at
any time while this Warrant remains outstanding and unexpired shall
subdivide or combine its AR-CombiMatrix stock, or distribute dividends
on its AR-CombiMatrix stock payable in AR-CombiMatrix stock, the
Warrant Price shall be proportionately decreased in the case of a
subdivision or increased in the case of a combination or dividend.
(c) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in
the Warrant Price pursuant to subparagraphs (a) or (b) of this Section
5, the number of shares of AR-CombiMatrix stock purchasable hereunder
shall be adjusted, to the nearest whole share, to the product obtained
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by multiplying the number of shares purchasable immediately prior to
such adjustment in the Warrant Price by a fraction, the numerator of
which shall be the Warrant Price immediately prior to such adjustment
and the denominator of which shall be the Warrant Price immediately
thereafter. No adjustment in the number of shares shall be made upon
any adjustment in the Warrant Price pursuant to subparagraph (d) below.
6. NOTICE OF ADJUSTMENTS.
Whenever any Warrant Price shall be adjusted pursuant to Section 5
hereof, the Company shall prepare a certificate signed by its chief financial
officer setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, the method by which such adjustment was
calculated, the Warrant Price after giving effect to such adjustment and the
number of shares then purchasable upon exercise of this Warrant, and shall cause
copies of such certificate to be mailed (by first class mail, postage prepaid)
to the Holder of this Warrant at the address specified in Section 10(c) hereof,
or at such other address as may be provided to the Company in writing by the
Holder of this Warrant.
7. FRACTIONAL SHARES.
No fractional shares of AR-CombiMatrix stock will be issued in
conjunction with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor on the basis of the Warrant Price
then in effect.
8. COMPLIANCE WITH SECURITIES ACT.
The Holder of this Warrant, by acceptance hereof, agrees that this
Warrant and the shares of AR-CombiMatrix stock to be issued on exercise hereof
are being acquired for investment and that it will not offer, sell or otherwise
dispose of this Warrant or any shares of AR-CombiMatrix stock to be issued upon
exercise hereof except under circumstances which will not result in a violation
of the Securities Act of 1933, as amended (the "Act"). This Warrant and all
shares of AR-CombiMatrix stock issued upon exercise of this Warrant (unless
registered under the Act) shall be stamped and imprinted with a legend
substantially in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE ACT"), OR APPLICABLE STATE SECURITIES LAWS AND
MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN
REGISTERED UNDER THE ACT AND SUCH LAWS OR (1) REGISTRATION UNDER SUCH
LAWS IS NOT REQUIRED AND (2) AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY IS FURNISHED TO THE COMPANY TO THE EFFECT THAT REGISTRATION
UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED."
9. TRANSFER AND EXCHANGE OF WARRANT.
This Warrant is not transferable or exchangeable without the consent of
the Company.
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10. MISCELLANEOUS.
(a) NO RIGHTS AS STOCKHOLDER. The Holder of this Warrant shall
not be entitled to vote or receive dividends or be deemed the Holder of
AR-CombiMatrix stock or any other securities of the Company that may at
any time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the Holder of
this Warrant, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change
of par value or change of stock to no par value, consolidation, merger,
conveyance or otherwise) or to receive notice of meetings, or to
receive dividends or subscription rights or otherwise until the Warrant
shall have been exercised and the shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein.
(b) REPLACEMENT. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Warrant and, in the case of mutilation, on surrender
and cancellation of this Warrant, the Company, at its expense, will
execute and deliver, in lieu of this Warrant, a new Warrant of like
tenor.
(c) NOTICE. Any notice given to either party under this
Warrant shall be in writing, and any notice hereunder shall be deemed
to have been given upon the earlier of delivery thereof by hand
delivery, by courier, or by standard form of telecommunication or three
(3) business days after the mailing thereof in the U.S. mail if sent
registered mail with postage prepaid, addressed to the Company at its
principal executive offices and to the Holder at its address set forth
in the Company's books and records or at such other address as the
Holder may have provided to the Company in writing.
(d) GOVERNING LAW. This Warrant shall be governed and
construed under the laws of the State of California, regardless of any
laws on choice of law or conflicts of law of any jurisdiction.
This Warrant is executed as of May __, 2003.
ACACIA RESEARCH CORPORATION
By: ________________________________
Name: ________________________________
Title:________________________________
A-5
EXHIBIT 1
---------
NOTICE OF EXERCISE
TO: ACACIA RESEARCH CORPORATION
1. The undersigned hereby elects to purchase _______________ shares of
AR-CombiMatrix stock of Acacia Research Corporation pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.
2. Please issue a certificate or certificates representing said shares
of AR-CombiMatrix stock in the name of the Holder at the address specified
below:
____________________________________________________
(Name)
____________________________________________________
(Address)
____________________________________________________
(Address)
3. The undersigned represents that any of the aforesaid shares of
AR-CombiMatrix stock not subject to an effective Registration Statement under
the Securities Act of 1933 are being acquired for the account of the undersigned
for investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares.
4. The undersigned represents that each of the representations and
warranties and each of the responses in the confidential purchaser questionnaire
given with the Subscription Agreement are true, correct and complete as of the
date hereof.
____________________________________
(Signature of Holder)
____________________________________
(Print Name of Holder)
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