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EXHIBIT 10.1
EXECUTION COPY
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6,385,907 SHARES
WARRANTS TO PURCHASE 1,596,478 SHARES
ACACIA RESEARCH CORPORATION
ACACIA RESEARCH - COMBIMATRIX COMMON STOCK
PLACEMENT AGENCY AGREEMENT
September 15, 2005
PIPER JAFFRAY & CO.
U.S. Bancorp Center
800 Nicollet Mall
Minneapolis, Minnesota 55402
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 an
aggregate of (i) 6,385,907 shares (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) 1,596,478 warrants to
purchase AR-CombiMatrix Common Stock
substantially in the form of EXHIBIT B
attached hereto (the "INVESTOR WARRANTS",
such number of warrants being equal to
twenty-five percent (25%) of the number of
Shares so proposed to be sold by the
Company to the Investors) directly to the
Investors. The aggregate of 6,385,907
Shares and 1,596,478 Investor Warrants are
hereinafter referred to as the
"SECURITIES." The shares of AR-CombiMatrix
Common Stock issuable upon exercise
of the Investor Warrants are hereinafter
referred to as the "INVESTOR WARRANT
SHARES." The Company desires to engage you
as its placement agent (the
"PLACEMENT AGENT") in connection with such
issuance and sale. 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 in connection
with the issuance and sale, on a
commercially reasonable efforts basis, by
the Company of the Securities to the
Investors. Upon the occurrence of the
Closing (as hereinafter defined), the
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Company shall pay to the Placement Agent
seven percent (7.0%) of the gross
proceeds received by the Company from the
sale of the Securities. 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 Securities
for its own account and, in soliciting
purchases of Securities, 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 Securities as
principal. The Placement Agent shall
have no authority to bind the Company.
(b) Payment of the purchase price for, and delivery of, the
Securities shall be made at a closing (the
"CLOSING") at the offices of
Greenberg Traurig, LLP, counsel for the
Company, located at 650 Town Center
Drive, Suite 1700, Costa Mesa, California
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 Securities (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 Securities
such Investor has agreed to purchase.
(d) On the Closing Date, the Placement Agent shall cause the
aggregate purchase price for the Securities
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
Securities to deliver, to each Investor the
number of Securities 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 Securities 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 Piper
Jaffray & Co., 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.
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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) REGISTRATION STATEMENT. 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. 333-112885), which was declared by
the Commission to be effective under
the Securities Act as of March 17, 2004
(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
Securities and the offering thereof, in
such form as has been provided to or
discussed with, and approved, by the
Placement Agent.
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.
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(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.
(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
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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.
(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.
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(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) INVESTOR WARRANTS. The Company has the full right, power
and authority to enter into the Investor
Warrants and to perform and discharge
its obligations thereunder. The Investor
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 Investor Warrant
Shares have been duly authorized and
reserved for issuance upon the exercise of
the Investor Warrants and when issued upon
payment of the exercise price
therefor will be validly issued, fully paid
and nonassessable.
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(m) NO CONFLICTS. The execution, delivery and performance by
the Company of this Agreement, the Investor
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 Investor 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, or
contemplated by this paragraph 2(n) to be
obtained or made.
(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
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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 is held thereby
under valid, subsisting and enforceable
leases.
(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 the
Company and its Subsidiaries infringe or
otherwise violate 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. ss. 135) has been
commenced against any patent or
patent application which constitutes the
Intellectual Property described in the
Prospectus; and (g) the Company and its
Subsidiaries have 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
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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.
(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 Investor 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 National
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 National Market with
respect to the issuance of the Securities
and shall use its best efforts to have
the Shares and the Investor Warrant Shares
listed on the Nasdaq National 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.
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(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.
(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) SARBANES-OXLEY ACT. The principal executive officer and
principal financial officer of the Company
have made all certifications required
by Sections 302 and 906 of the
Sarbanes-Oxley 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
Sarbanes-Oxley Act (and intends to comply
with all applicable provisions that are not
yet effective upon effectiveness).
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<PAGE>
(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, 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.
(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
11
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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, 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 th
