EXHIBIT 10.2
EXECUTION COPY
SUBSCRIPTION AGREEMENT
Acacia Research Corporation
500 Newport Center Drive
7th Floor
Newport Beach, CA 92660
Ladies and Gentlemen:
The undersigned (the "INVESTOR") hereby confirms its agreement with you
as follows:
1. This Subscription Agreement (this "AGREEMENT") is made as of the
date set forth below between Acacia Research Corporation, a Delaware corporation
(the "COMPANY"), and the Investor.
2. The Company has authorized the sale and issuance to certain
investors of up to 6,385,907 shares (the "SHARES") of its common stock, par
value $0.001 per share, designated as Acacia Research - CombiMatrix Common Stock
(the "COMMON STOCK"), and warrants (substantially in the form attached as
Exhibit B to the Placement Agency Agreement (as defined below)) to purchase up
to 1,596,478] shares of its Common Stock (the "WARRANTS" and together with the
ShareS, the "SECURITIES"). Each Share purchased by the Investor will include a
Warrant to purchase up to 0.25 Shares (the Shares and corresponding Warrants, a
"Unit"). The purchase price of a Unit shall be $1.65 (the "PURCHASE PRICE").
3. The offering and sale of the Securities (the "OFFERING") are being
made pursuant to an effective Registration Statement on Form S-3 (including the
Prospectus contained therein (the "BASE PROSPECTUS"), the "REGISTRATION
STATEMENT")) filed by the Company with the Securities and Exchange Commission
(the "Commission") and a Prospectus Supplement (the "PROSPECTUS SUPPLEMENT" and,
together with the Base Prospectus, the "PROSPECTUS") containing certain
supplemental information regarding the Securities and terms of the Offering that
will be filed with the Commission and delivered to the Investor along with the
Company's counterpart to this Agreement.
4. The Company and the Investor agree that the Investor will purchase
from the Company and the Company will issue and sell to the Investor the number
of Shares and Warrants set forth below for the aggregate purchase price set
forth below. The Securities shall be purchased pursuant to the Terms and
Conditions for Purchase of Securities attached hereto as ANNEX I and
incorporated herein by this reference as if fully set forth herein. The Investor
acknowledges that the offering is not being underwritten by the placement agent
(the "PLACEMENT AGENT") named in the Prospectus Supplement and that there is no
minimum offering amount.
5. (i) The manner of settlement of the SHARES purchased by the Investor
shall be determined by such Investor as follows (CHECK ONE):
[____] A. Delivery by electronic book-entry at The Depository Trust
Company ("DTC"), registered in the Investor's name and address
as set forth below, and released by U.S. Stock Transfer, the
Company's transfer agent (the "TRANSFER AGENT"), to the
Investor at the Closing. NO LATER THAN ONE (1) BUSINESS DAY
AFTER THE EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE
COMPANY, THE INVESTOR SHALL:
(I) DIRECT THE BROKER-DEALER AT WHICH THE ACCOUNT OR
ACCOUNTS TO BE CREDITED WITH THE SHARES ARE
MAINTAINED TO SET UP A DEPOSIT/WITHDRAWAL AT
CUSTODIAN ("DWAC") INSTRUCTING THE TRANSFER AGENT TO
CREDIT SUCH ACCOUNT OR ACCOUNTS WITH THE SHARES, AND
(II) REMIT BY WIRE TRANSFER THE AMOUNT OF FUNDS EQUAL TO
THE AGGREGATE PURCHASE PRICE FOR THE SECURITIES BEING
PURCHASED BY THE INVESTOR TO THE FOLLOWING ACCOUNT:
PNC Bank of New Jersey
ABA No.: 031-207-607
Acct. No.: 8100612350
Acct. Name: Lowenstein Sandler PC Attorney
Trust Account
- OR -
[____] B. Delivery versus payment ("DVP") through DTC (i.e., the
Company shall deliver Shares registered in the Investor's name
and address as set forth below and released by the Transfer
Agent to the Investor at the Closing directly to the
account(s) at Piper Jaffray & Co. identified by the Investor
and simultaneously therewith payment shall be made from such
account(s) to the Company through DTC). NO LATER THAN ONE (1)
BUSINESS DAY AFTER THE EXECUTION OF THIS AGREEMENT BY THE
INVESTOR AND THE COMPANY, THE INVESTOR SHALL:
(I) NOTIFY PIPER JAFFRAY & CO. OF THE ACCOUNT OR ACCOUNTS
AT PIPER JAFFRAY & CO. TO BE CREDITED WITH THE SHARES
BEING PURCHASED BY SUCH INVESTOR, AND
(II) CONFIRM THAT THE ACCOUNT OR ACCOUNTS AT PIPER JAFFRAY
& CO., TO BE CREDITED WITH THE SHARES BEING PURCHASED
BY THE INVESTOR HAVE A MINIMUM BALANCE EQUAL TO THE
AGGREGATE PURCHASE PRICE FOR THE SECURITIES BEING
PURCHASED BY THE INVESTOR.
It is the investor's responsibility to (A) make the necessary wire transfer or
confirm the proper account balance in a timely manner and (B) arrange for
settlement by way of DWAC or DVP in a timely manner. If the Investor does not
deliver the aggregate purchase price for the SECURITIES or does not make proper
arrangements for settlement in a timely manner, the SECURITIES may not be
delivered at Closing to the Investor or the Investor may be excluded from the
closing altogether.
(ii) Notwithstanding the manner of settlement of the Shares
chosen by the Investor pursuant to 5(i)(A) or (B) above, the Company shall
deliver or caused to be delivered the Warrants purchased by the Investor,
registered in the Investor's name and address as set forth below, within one (1)
Business Day of the Closing.
6. The Investor represents that, except as set forth below, (a) it has
had no position, office or other material relationship within the past three
years with the Company or persons known to it to be affiliates of the Company,
(b) it is not a NASD member or an Associated Person (as such term is defined
under the NASD Membership and Registration Rules Section 1011) as of the
Closing, and (c) neither the Investor nor any group of investors (as identified
in a public filing made with the Commission) of which the Investor is a part, in
connection with the offering of the Securities, acquired or obtained the right
to acquire, 20% or more of the Common Stock (or securities convertible or
exercisable for Common Stock) or the voting power of the Company on a
post-transaction basis. Exceptions:
- --------------------------------------------------------------------------------
(If no exceptions, write "none." If left blank, response will be
deemed to be "none.")
7. The Investor represents that it has received the Base Prospectus,
dated March 17, 2004, which is a part of the Company's Registration Statement,
prior to or in connection with the receipt of this Agreement.
Number of Shares: _____________________________________
Number of Warrants: ___________________________________
(such number to be equal to 25% of the number of Shares being purchased by the
Investor)
Purchase Price Per Unit $ _____________________________
Aggregate Purchase Price for the Securities: $ ________
Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose.
Dated as of: September 15, 2005
INVESTOR
By:
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Print Name:
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Title:
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Address:
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Agreed and Accepted this 15th day of September, 2005:
ACACIA RESEARCH CORPORATION
By:
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Title:
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ANNEX I
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TERMS AND CONDITIONS FOR PURCHASE OF SECURITIES
1. AUTHORIZATION AND SALE OF THE SECURITIES. Subject to the terms and
conditions of this Agreement, the Company has authorized the sale of the
Securities.
2. AGREEMENT TO SELL AND PURCHASE THE SECURITIES; PLACEMENT AGENT.
2.1 At the Closing (as defined in SECTION 3.1), the Company
will sell to the Investor, and the Investor will purchase from the Company, upon
the terms and conditions set forth herein, the number of Shares and Warrants set
forth on the last page of the Agreement to which these Terms and Conditions for
Purchase of Securities are attached as ANNEX I (the "SIGNATURE PAGE") for the
aggregate purchase price therefor set forth on the Signature Page.
2.2 The Company proposes to enter into substantially this same
form of Subscription Agreement with certain other investors (the "OTHER
INVESTORS") and expects to complete sales of Securities to them. This Agreement
and the Subscription Agreements executed by the Other Investors are hereinafter
sometimes collectively referred to as the "AGREEMENTS."
2.3 Investor acknowledges that the Company intends to pay
Piper Jaffray & Co. (the "PLACEMENT AGENT") a fee (the "PLACEMENT FEE") in
respect of the sale of Securities to the Investor.
2.4 The Company has entered into a Placement Agency Agreement,
dated September 15, 2005 (the "PLACEMENT AGREEMENT"), with the Placement Agent
that contains certain representations, warranties, covenants and agreements of
the Company that may be relied upon by the Investor, which shall be a third
party beneficiary thereof. A copy of the Placement Agreement is available upon
request.
3. CLOSINGS AND DELIVERY OF THE SECURITIES AND FUNDS.
3.1 CLOSING. The completion of the purchase and sale of the
Securities (the "CLOSING") shall occur at a place and time (the "CLOSING DATE")
to be specified by the Company and the Placement Agent, and of which the
Investor will be notified in advance by the Placement Agent in accordance with
Rule 15c6-1 promulgated under the Securities Exchange Act of 1934, as amended.
At the Closing, (a) the Company shall (i) cause the Transfer Agent to deliver to
the Investor the number of Shares and (ii) deliver or cause to be delivered to
the Investor, within one (1) Business Day of the Closing, the number of Warrants
set forth on the Signature Page registered in the name of the Investor or, if so
indicated on the Investor Questionnaire attached hereto as EXHIBIT A, in the
name of a nominee designated by the Investor and (b) the aggregate purchase
price for the Securities being purchased by the Investor will be delivered by or
on behalf of the Investor to the Company.
3.2 (a) CONDITIONS TO THE COMPANY'S OBLIGATIONS. The Company's
obligation to issue and sell the Securities to the Investor shall be subject to:
(a) the receipt by the Company of the purchase price for the Securities being
purchased hereunder as set forth on the Signature Page and (b) the accuracy of
the representations and warranties made by the Investor and the fulfillment of
those undertakings of the Investor to be fulfilled prior to the Closing Date.
(b) CONDITIONS TO THE INVESTOR'S OBLIGATIONS. The
Investor's obligation to purchase the Securities will be subject to the
condition that the Placement Agent shall not have: (a) terminated the Placement
Agreement pursuant to the terms thereof or (b) determined that the conditions to
closing in the Placement Agreement have not been satisfied. The Investor's
obligations are expressly not conditioned on the purchase by any or all of the
Other Investors of the Securities that they have agreed to purchase from the
Company.
3.3 DELIVERY OF FUNDS.
(a) DELIVERY BY ELECTRONIC BOOK-ENTRY AT THE
DEPOSITORY TRUST COMPANY. If the Investor elects to settle the Shares purchased
by such Investor through delivery by electronic book-entry at DTC, NO LATER THAN
ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND
THE COMPANY, the Investor shall remit by wire transfer the amount of funds equal
to the aggregate purchase price for the Securities being purchased by the
Investor to the following account designated by the Company and the Placement
Agent pursuant to the terms of that certain Escrow Agreement (the "ESCROW
AGREEMENT") dated as of September 15, 2005, by and among the Company, the
Placement Agent and Lowenstein Sandler PC (the "ESCROW AGENT"):
PNC Bank of New Jersey
ABA No.: 031-207-607
Acct. No.: 8100612350
Acct. Name: Lowenstein Sandler PC Attorney Trust Account
Such funds shall be held in escrow until the Closing
and delivered by the Escrow Agent on behalf of the Investor to the Company upon
the satisfaction, in the sole judgment of the Placement Agent, of the conditions
set forth in Section 3.2(b) hereof. The Placement Agent shall have no rights in
or to any of the escrowed funds, unless the Placement Agent and the Escrow Agent
are notified in writing by the Company in connection with the Closing that a
portion of the escrowed funds shall be applied to the Placement Fee. The Company
and the Investor hereby agree to indemnify and hold the Escrow Agent harmless
from and against any and all liabilities, obligations, damages, losses, claims,
encumbrances, costs or expenses (including, without limitation, court costs,
reasonable attorneys fees and expenses) ("LOSSES") arising under this SECTION
3.3 or otherwise with respect to the funds held in escrow pursuant hereto or
arising under the Escrow Agreement, unless it is finally determined that such
Losses resulted directly from the willful misconduct or gross negligence of the
Escrow Agent. Anything in this Agreement to the contrary notwithstanding, in no
event shall the Escrow Agent be liable for any special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Escrow Agent has been advised of the likelihood of
such loss or damage and regardless of the form of action.
Investor acknowledges that the Escrow Agent acts as
counsel to the Placement Agent and shall have the right to continue to represent
the Placement Agent in any action, proceeding, claim, litigation, dispute,
arbitration or negotiation in connection with the Offering, and Investor hereby
consents thereto and waives any objection to the continued representation of the
Placement Agent by the Escrow Agent in connection therewith based upon the
services of the Escrow Agent under the Escrow Agreement, without waiving any
duty or obligation the Escrow Agent may have to any other person.
(b) DELIVERY VERSUS PAYMENT THROUGH THE DEPOSITORY
TRUST COMPANY. If the Investor elects to settle the Shares purchased by such
Investor by delivery versus payment through DTC, NO LATER THAN ONE (1) BUSINESS
DAY AFTER THE EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE COMPANY, the
Investor shall confirm that the account or accounts at Piper Jaffray & Co. to be
credited with the Shares being purchased by the Investor have a minimum account
balance equal to the aggregate purchase price for the Securities being purchased
by the Investor.
3.4 DELIVERY OF SECURITIES.
(a) DELIVERY OF SHARES BY ELECTRONIC BOOK-ENTRY AT
THE DEPOSITORY TRUST COMPANY. If the Investor elects to settle the Shares
purchased by such Investor through delivery by electronic book-entry at DTC, NO
LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THIS AGREEMENT BY THE
INVESTOR AND THE COMPANY, the Investor shall direct the broker-dealer at which
the account or accounts to be credited with the Shares being purchased by such
Investor are maintained, which broker/dealer shall be a DTC participant, to set
up a Deposit/Withdrawal at Custodian ("DWAC") instructing U.S. Stock Transfer,
the Company's transfer agent, to credit such account or accounts with the Shares
by means of an electronic book-entry delivery. Such DWAC shall indicate the
settlement date for the deposit of the Shares, which date shall be provided to
the Investor by the Placement Agent. Simultaneously with the delivery to the
Company by the Escrow Agent of the funds held in escrow pursuant to SECTION 3.3
above, the Company shall direct its transfer agent to credit the Investor's
account or accounts with the Shares pursuant to the information contained in the
DWAC.
(b) DELIVERY OF SHARES VERSUS PAYMENT THROUGH THE
DEPOSITORY TRUST COMPANY. If the Investor elects to settle the Shares purchased
by such Investor by delivery versus payment through DTC, NO LATER THAN ONE (1)
BUSINESS DAY AFTER THE EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE
COMPANY, the Investor shall notify Piper Jaffray & Co. of the account or
accounts at Piper Jaffray & Co. to be credited with the Shares being purchased
by such Investor. On the Closing Date, the Company shall deliver the Shares to
the Investor directly to the account(s) at Piper Jaffray & Co. identified by
Investor and simultaneously therewith payment shall be made from such account(s)
to the Company through DTC.
(c) DELIVERY OF WARRANTS. The Company shall deliver
or cause to be delivered, within one (1) Business Day of the Closing, the
Warrants purchased by the Investor at the Closing.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR.
4.1 The Investor represents and warrants to, and covenants
with, the Company that (a) the Investor has answered all questions on the
Signature Page and Exhibit A attached hereto for use in preparation of the
Prospectus Supplement and the answers thereto are true and correct as of the
date hereof and will be true and correct as of the Closing Date and (b) the
Investor, in connection with its decision to purchase the number of Shares and
Warrants set forth on the Signature Page, relied only upon the Prospectus, the
Company's regular reports on Forms 10-K, 10-Q and 8-K as filed by the Company
with the Commission, and the representations and warranties of the Company
contained herein.
4.2 The Investor acknowledges, represents and agrees that no
action has been or will be taken in any jurisdiction outside the United States
by the Company or the Placement Agent that would permit an offering of the
Securities or possession or distribution of offering materials in connection
with the issue of the Securities in any jurisdiction outside the United States
where action for that purpose is required. Each Investor outside the United
States will comply with all applicable laws and regulations in each foreign
jurisdiction in which it purchases, offers, sells or delivers Securities or has
in its possession or distributes any offering material, in all cases at its own
expense.
4.3 The Investor further represents and warrants to, and
covenants with, the Company that (a) the Investor has full right, power,
authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement, and (b) this
Agreement constitutes a valid and binding obligation of the Investor enforceable
against the Investor in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Investor
herein may be legally unenforceable.
4.4 The Investor understands that nothing in this Agreement,
the Prospectus or any other materials presented to the Investor in connection
with the purchase and sale of the Securities constitutes legal, tax or
investment advice. The Investor has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of Securities.
4.5 The Investor represents, warrants and agrees that, since
the earlier to occur of (i) the date on which any of the Company or the
Placement Agent first contacted the Investor about the potential sale of the
Securities and (ii) the date that is the tenth (10th) trading day prior to the
date of this Agreement, it has not engaged in any transactions in the securities
of the Company (including, without limitation, any Short Sales involving the
Company's securities). Such Investor covenants that it will not engage in any
transactions in the securities of the Company (including Short Sales) prior to
the time that the transactions contemplated by this Agreement are publicly
disclosed. Each Investor agrees that it will not use any of the Securities
acquired pursuant to this Agreement to cover any short position if doing so
would be in violation of applicable securities laws. For purposes hereof, "Short
Sales" include, without limitation, all "short sales" as defined in Rule 3b-3 of
the Exchange Act and Rule 200 promulgated under Regulation SHO under the
Exchange Act, whether or not against the box, and all types of direct and
indirect stock pledges, forward sale contracts, options, puts, calls, short
sales, swaps, "put equivalent positions" (as defined in Rule 16a-1(h) under the
Exchange Act) and similar arrangements (including on a total return basis), and
sales and other transactions through non-US broker dealers or foreign regulated
brokers.
5. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement or by the
Placement Agent, all covenants, agreements, representations and warranties made
by the Company and the Investor herein will survive the execution of this
Agreement, the delivery to the Investor of the Securities being purchased and
the payment therefor.
6. NOTICES. All notices, requests, consents and other communications
hereunder will be in writing, will be mailed (a) if within the domestic United
States by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile or (b) if delivered
from outside the United States, by International Federal Express or facsimile,
and will be deemed given (i) if delivered by first-class registered or certified
mail domestic, three business days after so mailed, (ii) if delivered by
nationally recognized overnight carrier, one business day after so mailed, (iii)
if delivered by International Federal Express, two business days after so mailed
and (iv) if delivered by facsimile, upon electric confirmation of receipt and
will be delivered and addressed as follows:
(A) if to the Company, to:
Acacia Research Corporation
500 Newport Center Drive
7th Floor
Newport Beach, CA 92660
Attention: Chief Financial Officer
Phone: (949) 480-8300
Telecopy: (949) 480-8301
with copies to:
Greenberg Traurig, LLP
650 Town Center Drive
Suite 1700
Costa Mesa, CA 92626
Attention: Raymond A. Lee, Esq.
Phone: (714) 708-6510
Telecopy: (714) 708-6501
(B) if to the Investor, at its address on the
Signature Page hereto, or at such other address or addresses as may have been
furnished to the Company in writing.
7. CHANGES. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Investor.
8. HEADINGS. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and will not be deemed to
be part of this Agreement.
9. SEVERABILITY. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein will
not in any way be affected or impaired thereby.
10. GOVERNING LAW. This Agreement will be governed by, and construed in
accordance with, the internal laws of the State of New York, without giving
effect to the principles of conflicts of law that would require the application
of the laws of any other jurisdiction.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will constitute an original, but all of which, when
taken together, will constitute but one instrument, and will become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties. The Company and the Investor acknowledge and
agree that the Company shall deliver its counterpart to the Investor along with
the Prospectus Supplement.
12. CONFIRMATION OF SALE. The Investor acknowledges and agrees that
such Investor's receipt of the Company's counterpart to this Agreement, together
with the Prospectus Supplement, shall constitute written confirmation of the
Company's sale of Securities to such Investor.
13. PRESS RELEASE. The Company and the Investor agree that the Company
shall issue a press release announcing the transaction prior to the opening of
the financial markets in New York City on the business day immediately after the
date hereof.
14. TERMINATION. In the event that the Placement Agreement is
terminated by the Placement Agent pursuant to the terms thereof, this Agreement
shall terminate without any further action on the part of the parties hereto.
EXHIBIT A
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ACACIA RESEARCH CORPORATION
INVESTOR QUESTIONNAIRE
Pursuant to SECTION 3 of ANNEX I to the Agreement, please provide us
with the following information:
1. The exact name that your
Securities are to be registered
in. You may use a nominee name
if appropriate: ___________________________________
2. The relationship between the
Investor and the registered
holder listed in response to
item 1 above: ___________________________________
3. The mailing address of the
registered holder listed in
response to item 1 above: ___________________________________
4. The Social Security Number or
Tax Identification Number of
the registered holder listed in
the response to item 1 above: ___________________________________
5. Name of DTC Participant
(broker-dealer at which the
account or accounts to be
credited with the Shares are
maintained) ___________________________________
6. DTC Participant Number ___________________________________
7. Name of Account at DTC
Participant being credited with
the Shares ___________________________________
8. Account Number at DTC
Participant being credited with
the Shares ___________________________________