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EXHIBIT 1.1
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Execution Copy
ACACIA RESEARCH CORPORATION
3,000,000 Shares
Common Stock
($0.001 Par Value Per Share)
Designated as Acacia Research-CombiMatrix Common Stock
PLACEMENT AGENCY AGREEMENT
April 13, 2004
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PLACEMENT AGENCY AGREEMENT
April 13, 2004
Thomas Weisel Partners LLC
One Montgomery Partners, Suite 3700
San Francisco, California 94104
Brean Murray & Co., Inc.
570 Lexington Ave.
New York, New York 10022
Ladies and Gentlemen:
Acacia Research Corporation, a Delaware corporation (the
"Company"),
proposes to issue and sell to certain
investors (collectively, the "Investors")
up to an aggregate of three million
(3,000,000) shares (the "Shares") of Common
Stock, $0.001 par value per share,
designated as Acacia Research-CombiMatrix
Common Stock (the "Common Stock"), of the
Company. The Company desires to engage
Thomas Weisel Partners LLC ("TWP") as its
exclusive lead placement agent and
Brean Murray & Co., Inc. ("BMC") as its
exclusive co-placement agent (TWC and
BMC, each a "Placement Agent" and,
together, the "Placement Agents") in
connection with such issuance and sale. The
Shares are described in the
Prospectus that is referred to below.
The Company has prepared and filed, in accordance with the
provisions
of the Securities Act of 1933, as amended,
and the rules and regulations
thereunder (collectively, the "Act"), with
the Securities and Exchange
Commission (the "Commission") a
registration statement under the Act on Form S-3
(File No. 333-112885) originally filed on
February 17, 2004 (as amended, the
"registration statement"). The registration
statement has been declared by the
Commission to be effective under the Act.
The Company will next file with the
Commission pursuant to Rule 424(b) under
the Act a final prospectus supplement
to the Basic Prospectus (as defined below),
describing the Shares and the
offering thereof, in such form as has been
provided to or discussed with, and
approved, by the Placement Agents.
The term "Registration Statement" as used in this Agreement means
the
registration statement, at the time it
became effective and as supplemented or
amended prior to the execution of this
Agreement, including (i) all financial
schedules and exhibits thereto and (ii) all
documents incorporated by reference
or deemed to be incorporated by reference
therein. The term "Basic Prospectus"
as used in this Agreement means the basic
prospectus dated as of March 17, 2004
that is part of the registration statement
for use in connection with the offer
and/or sale of the Shares pursuant to this
Agreement. The term "Prospectus
Supplement" as used in this Agreement means
any final prospectus supplement
specifically relating to the Shares, in the
form filed with, or transmitted for
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filing to, the Commission pursuant to Rule
424 under the Act. The term
"Prospectus" as used in this Agreement
means the Basic Prospectus together with
the Prospectus Supplement except that if
such Basic Prospectus is amended or
supplemented on or prior to the date on
which the Prospectus Supplement was
first filed pursuant to Rule 424, the term
"Prospectus" shall refer to the Basic
Prospectus as so amended or supplemented
and as supplemented by the Prospectus
Supplement. Any reference herein to the
registration statement, the Registration
Statement, the Basic Prospectus, any
Prospectus Supplement or the Prospectus
shall be deemed to refer to and include (i)
the documents incorporated by
reference therein pursuant to Form S-3 (the
"Incorporated Documents") and (ii)
the copy of the Registration Statement, the
Basic Prospectus, the Prospectus
Supplement, the Prospectus or the
Incorporated Documents filed with the
Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval
system ("EDGAR"). 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 the filing
of any document under the Securities
Exchange Act of 1934, as amended, and the
rules and regulations thereunder
(collectively, the "Exchange Act") after the
effective date of the Registration
Statement, or the date of the Prospectus, as
the case may be, deemed to be incorporated
therein by reference. As used herein,
"business day" shall mean a day on which
the New York Stock Exchange (the
"NYSE") is open for trading.
The Company hereby confirms its agreement with each Placement Agent
as
follows:
1. AGREEMENT TO ACT AS PLACEMENT AGENTS. Upon the basis of the
representations and warranties of the
Company and subject to the terms and
conditions set forth in this Agreement the
Company engages the Placement Agents
to act as its exclusive placement agents,
on a best efforts basis, in connection
with the offer and sale by the Company of
Shares to the Investors (the
"Offering"). As compensation to the
Placement Agents for services rendered, at
the time of purchase (as defined below) the
Company shall pay to TWP, by Federal
Funds wire transfer to an account or
accounts designated by TWP, an amount equal
to (i) 8% of the first $5,000,000 in gross
proceeds received by the Company in
the Offering, (ii) 7% of the next
$5,000,000 in gross proceeds received by the
Company in the Offering, and (iii) 6% of
all additional gross proceeds received
by the Company in the Offering; provided,
however, no compensation shall be
payable to the Placement Agents for sales
of Shares to strategic investors
purchasing stock in connection with
entering into license, joint venture,
partnership or other related agreements
with the Company ("Strategic Sales").
The Shares are being sold at a price of
$5.00 per share. TWP may retain other
brokers or dealers to act as subagents on
its behalf in connection with the
offering and sale of the Shares. Up to 15%
of the aggregate compensation payable
to TWP hereunder may be allocated by TWP to
BMC.
This Agreement shall not give rise to any commitment by the
Placement
Agents or any of their affiliates to
underwrite or purchase any of the Shares or
otherwise provide any financing, and the
Placement Agents shall have no
authority to bind the Company in respect of
the sale of any Shares. The sale of
the Shares shall be made pursuant to
purchase agreements in the form included as
Exhibit A hereto (the "Purchase
Agreements").
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2. PAYMENT AND DELIVERY. Subject to the terms and conditions
hereof,
payment of the purchase price for, and
delivery of certificates for, the Shares
shall be made at the office of Allen
Matkins Leck Gamble & Mallory LLP, 1901
Avenue of the Stars, Suite 1800, Los
Angeles, California 90067 (or at such other
place as shall be agreed upon by the
Placement Agents and the Company), at 11:00
A.M., New York City time, on April 14, 2004
(unless another time shall be agreed
to by the Placement Agents and the
Company). Subject to the terms and conditions
hereof, payment of the purchase price for
the Shares shall be made to the
Company by Federal Funds wire transfer,
against delivery of certificates for the
Shares, through the facilities of The
Depository Trust Company ("DTC"), to such
persons, and shall be registered in such
name or names and shall be in such
denominations, as the Placement Agents may
request at least one business day
before the time of purchase (as defined
below). Payment of the purchase price
for the Shares shall be made at the time of
purchase by the purchasers thereof
directly to the Company. The time at which
such payment and delivery are to be
made is hereinafter sometimes called "the
time of purchase." Electronic transfer
of the Shares shall be made at the time of
purchase in such names and in such
denominations as the Placement Agents shall
specify.
Deliveries of the documents described in Section 6 hereof with
respect
to the purchase of the Shares shall be made
at the offices of Allen Matkins Leck
Gamble & Mallory LLP, 1901 Avenue of
the Stars, Suite 1800, Los Angeles,
California 90067, at 11:00 A.M., New York
City time, on the date of the closing
of the purchase of the Shares.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to and agrees with
each Placement Agent that, except as
may otherwise be set forth in the
Registration Statement and the Prospectus:
(a) the Registration Statement has been declared effective
under the Act; no stop order of the
Commission preventing or suspending the use
of the Basic Prospectus, the Prospectus
Supplement or the Prospectus or the
effectiveness of the Registration Statement
has been issued and no proceedings
for such purpose have been instituted or,
to the Company's knowledge, are
contemplated by the Commission; the Company
is eligible to use Form S-3; such
registration statement at the date of this
Agreement meets, and the offering of
the Shares complies with, the requirements
of Rule 415 under the Act. The
Registration Statement conformed when it
became effective, conforms and will
conform, at the time of purchase, and the
Basic Prospectus, the Prospectus
Supplement and the Prospectus conformed as
of its date, conform and will conform
at the time of purchase in all material
respects with the requirements of the
Act (including said Rule 415); any
statutes, regulations, contracts or other
documents that are required to be described
in the Registration Statement or the
Prospectus or to be filed as exhibits to
the Registration Statement have been
and will be so described or filed; and the
Registration Statement did not at the
time of effectiveness, does not and will
not at the time of purchase contain an
untrue statement of a material fact or omit
to state a material fact required to
be stated therein or necessary to make the
statements therein not misleading,
and the Basic Prospectus, the Prospectus
Supplement and the Prospectus did not
as of its date, does not and will not at
the time of purchase contain an untrue
statement of a material fact or omit to
state a material fact required to be
stated therein or necessary to make the
statements therein, in light of the
circumstances under which they were made,
not misleading; provided, however,
that the Company makes no warranty or
representation with respect to any
statement contained in the Registration
Statement or the Prospectus in reliance
upon and in conformity with information
concerning a Placement Agent and
furnished in writing by or on behalf of
such Placement Agent to the Company
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expressly for use in the Registration
Statement or the Prospectus; the documents
incorporated by reference in the Basic
Prospectus, the Prospectus Supplement,
the Registration Statement and the
Prospectus, 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 an untrue statement of a
material fact or omit to state a material
fact required to be stated therein or
necessary to make the statements therein,
in light of the circumstances under
which they were made, not misleading; and
the Company has not distributed and
will not distribute any offering material
in connection with the offering or
sale of the Shares other than the
Registration Statement, the then most recent
Prospectus Supplement and the
Prospectus;
(b) as of the date of this Agreement, the Company has an
authorized and outstanding capitalization
as set forth in the Registration
Statement and the Prospectus and, as of the
time of purchase, the Company shall
have an authorized and outstanding
capitalization as 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); all of the
issued and outstanding shares of
capital stock, including the Common Stock,
of the Company have been duly
authorized and validly issued and are fully
paid and non-assessable, have been
issued in material compliance with all
federal and state securities laws and
were not issued in violation of any
preemptive right, resale right, right of
first refusal or similar right;
(c) the Company has been duly incorporated and is validly
existing as a corporation in good standing
under the laws of the State of
Delaware, with full corporate power and
authority to own, lease and operate its
properties and conduct its business as
described in the Registration Statement
and the Prospectus, to execute and deliver
this Agreement and to issue, sell and
deliver the Shares as contemplated
herein;
(d) the Company is duly qualified to do business as a foreign
corporation and is in good standing in each
jurisdiction where the ownership or
leasing of its properties or the conduct of
its business requires such
qualification, except where the failure to
be so qualified and in good standing
would not, individually or in the
aggregate, have a material adverse effect on
the business, properties, financial
condition or results of operation of the
Company and the Subsidiaries (as
hereinafter defined) taken as a whole (a
"Material Adverse Effect");
(e) the Company has no "significant subsidiaries" (as defined
in Rule 1-02 of Regulation S-X of the Act)
other than as listed in Schedule A
annexed hereto (collectively, the
"Subsidiaries"); the Company owns all of the
issued and outstanding capital stock of
each of the Subsidiaries other than as
listed in Schedule A annexed hereto; other
than the capital stock of the
Subsidiaries, the Company does not own,
directly or indirectly, any shares of
stock or any other equity or long-term debt
securities of any corporation or
have any equity interest in any firm,
partnership, joint venture, association or
other entity; complete and correct copies
of the certificate of incorporation
and the bylaws of the Company and all
amendments thereto have been delivered or
made available to the Placement Agents, and
no changes therein will be made
subsequent to the date hereof and prior to
the time of purchase; each Subsidiary
has been duly incorporated and is validly
existing as a corporation in good
standing under the laws of the jurisdiction
of its incorporation, with full
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corporate power and authority to own, lease
and operate its properties and to
conduct its business as described in the
Registration Statement and the
Prospectus; each Subsidiary is duly
qualified to do business as a foreign
corporation and is in good standing in each
jurisdiction where the ownership or
leasing of its properties or the conduct of
its business requires such
qualification, except where the failure to
be so qualified and in good standing
would not, individually or in the
aggregate, have a Material Adverse Effect; all
of the outstanding shares of capital stock
of each of the Subsidiaries have been
duly authorized and validly issued, are
fully paid and non-assessable and are
owned by the Company subject to no security
interest, other encumbrance or
adverse claims other than as listed in
Schedule A annexed hereto; and no
options, warrants or other rights to
purchase, agreements or other obligations
to issue or other rights to convert any
obligation into shares of capital stock
or ownership interests in the Subsidiaries
are outstanding other than as listed
in Schedule A annexed hereto;
(f) the Shares have been duly and validly authorized and, when
issued and delivered against payment
therefor as provided herein and in the
Prospectus Supplement, will be duly and
validly issued, fully paid and
non-assessable and free of statutory and
contractual preemptive rights, resale
rights, rights of first refusal and similar
rights;
(g) the capital stock of the Company, including the Shares,
conforms in all material respects to the
description thereof contained in the
Registration Statement and the Prospectus
and the certificates for the Shares
are in due and proper form;
(h) this Agreement has been duly authorized, executed and
delivered by the Company;
(i) the Company is not in breach or violation of or in default
under (nor has any event occurred which
with notice, lapse of time or both would
result in any breach or violation of,
constitute a default under or give the
holder of any indebtedness (or a person
acting on such holder's behalf) the
right to require the repurchase, redemption
or repayment of all or a part of
such indebtedness under) its certificate of
incorporation or bylaws, or any
agreement filed as an exhibit or
incorporated by reference in the Company's most
recent report on Form 10-K, and the
execution, delivery and performance of this
Agreement, the issuance and sale of the
Shares and the consummation of the
transactions contemplated hereby will not
conflict with, result in any breach or
violation of or constitute a default under
(nor constitute any event which with
notice, lapse of time or both would result
in any breach or violation of or
constitute a default under or give the
holder of any indebtedness (or a person
acting on such holder's behalf) the right
to require the repurchase, redemption
or repayment of all or a part of such
indebtedness under) the certificate of
incorporation or bylaws of the Company, or
any agreement filed as an exhibit or
incorporated by reference in the Company's
most recent report on Form 10-K, or
any federal, state, local or foreign law,
regulation or rule or any decree,
judgment or order applicable to the
Company;
(j) no approval, authorization, consent or order of or filing
with any federal, state, local or foreign
governmental or regulatory commission,
board, body, authority or agency or of or
with the Nasdaq National Market, or
approval of the shareholders of the
Company, is required in connection with the
issuance and sale of the Shares or the
consummation by the Company of the
transactions contemplated hereby other than
registration under the Act of the
offer and sale of the Shares, which has
been effected, and any necessary
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qualification under the securities or blue
sky laws of the various jurisdictions
in which the Shares are being offered under
the terms of this Agreement or under
the rules and regulations of the National
Association of Securities Dealers,
Inc. ("NASD"); the Company is eligible to
use Form S-3 pursuant to the standards
for Form S-3 prior to October 21, 1992;
(k) (i) no person has the right, contractual or otherwise, to
cause the Company to issue or sell to it
any shares of Common Stock or shares of
any other capital stock or other equity
interests of the Company, (ii) no person
has any preemptive rights, resale rights,
rights of first refusal or other
rights to purchase any shares of Common
Stock or shares of any other capital
stock or other securities of the Company,
and (iii) except as provided herein
and in the letter agreement dated March 25,
2004 between the Company and TWP
(the "Engagement Letter"), no person has
the right to act as an underwriter,
placement agent or financial advisor to the
Company in connection with the offer
and sale of the Shares, in the case of each
of the foregoing clauses (i), (ii)
and (iii), either as a result of the filing
or effectiveness of the Registration
Statement or the sale of the Shares as
contemplated thereby; no person has the
right, contractual or otherwise, to cause
the Company to register under the Act
any shares of Common Stock or shares of any
other capital stock or other
securities of the Company, or to include
any such shares or interests in the
Registration Statement or the offering
contemplated thereby, whether as a result
of the filing or effectiveness of the
Registration Statement or the sale of the
Shares as contemplated thereby or
otherwise;
(l) each of the Company and the Subsidiaries has all necessary
licenses, authorizations, consents and
approvals and has made all necessary
filings required under any federal, state,
local or foreign law, regulation or
rule, and has obtained all necessary
authorizations, consents and approvals from
other persons, in order to conduct its
respective business, except where the
failure to do so would not, individually or
in the aggregate, have a Material
Adverse Effect; neither the Company nor any
of the Subsidiaries is in violation
of, or in default under, or has received
notice of any proceedings relating to
revocation or modification of, any such
license, authorization, consent or
approval or any federal, state, local or
foreign law, regulation or rule or any
decree, order or judgment applicable to the
Company or any of the Subsidiaries,
except where such violation, default,
revocation or modification would not,
individually or in the aggregate, have a
Material Adverse Effect;
(m) all legal or governmental proceedings, affiliate
transactions, off-balance sheet
transactions, contracts, licenses, agreements,
leases or documents of a character required
to be described in the Registration
Statement or the Prospectus or to be filed
as an exhibit to the Registration
Statement have been so described or filed
as required;
(n) there are no actions, suits, claims or investigations or
proceedings pending or, to the knowledge of
the Company, threatened against the
Company or any of the Subsidiaries , before
or by any federal, state, local or
foreign governmental or regulatory
commission, board, body, authority or agency,
except any such action, suit, claim,
investigation or proceeding which would not
reasonably be expected to result in a
judgment, decree or order having,
individually or in the aggregate, a
Material Adverse Effect or prevent
consummation of the transactions
contemplated hereby;
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(o) PricewaterhouseCoopers LLP, whose report on the
consolidated financial statements of the
Company and the Subsidiaries is filed
with the Commission as part of the
Registration Statement and the Prospectus,
are independent public accountants as
required by the Act;
(p) the audited financial statements included in the
Registration Statement and the Prospectus,
together with the related notes and
schedules, present fairly in all material
respects the consolidated financial
position of the Company and the
Subsidiaries as of the dates indicated and the
consolidated results of operations and cash
flows of the Company and the
Subsidiaries for the periods specified and
have been prepared in compliance with
the requirements of the Act and in
conformity with generally accepted accounting
principles applied on a consistent basis
during the periods involved; any pro
forma financial statements or data included
in the Registration Statement and
the Prospectus comply in all material
respects with the requirements of
Regulation S-X of the Act, the assumptions
used in the preparation of such pro
forma financial statements and data are
reasonable, the pro forma adjustments
used therein are appropriate to give effect
to the transactions or circumstances
described therein, subject to normal
adjustments and reclassifications, and the
pro forma adjustments have been properly
applied to the historical amounts in
the compilation of those statements and
data; the other financial and
statistical data set forth in the
Registration Statement and the Prospectus are
accurately presented in all material
respects and prepared on a basis consistent
with the financial statements and books and
records of the Company; there are no
financial statements (historical or pro
forma) that are required to be included
in the Registration Statement and the
Prospectus that are not included as
required; and the Company and the
Subsidiaries do not have any material
liabilities or obligations, direct or
contingent (including any off-balance
sheet obligations), not disclosed in the
Registration Statement and the
Prospectus;
(q) 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 the Subsidiaries
taken as a whole, (ii) any transaction
which is material to the Company and the
Subsidiaries taken as a whole, (iii) any
obligation, direct or contingent
(including any off-balance sheet
obligations), incurred by the Company or the
Subsidiaries, which is material to the
Company and the Subsidiaries taken as a
whole, (iv) any change in the capital stock
or outstanding indebtedness of the
Company or the Subsidiaries (subject to the
issuance of shares of Common Stock
upon issuance of stock options and warrants
disclosed as outstanding in the
Registration Statement and Prospectus and
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;
(r) neither the Company nor any of the Subsidiaries is nor,
after giving effect to the offering and
sale of the Shares, will any of them be
an "investment company" or an entity
"controlled" by an "investment company," as
such terms are defined in the Investment
Company Act of 1940, as amended (the
"Investment Company Act") or a "passive
foreign investment company" or a
"controlled foreign corporation" as such
terms are defined in the Internal
Revenue Code;
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(s) the Company and each of the Subsidiaries has good and
valid title to all property (real and
personal) described the Registration
Statement and in the Prospectus as being
owned by each of them, free and clear
of all liens, claims, security interests or
other encumbrances, except as do not
materially and adversely affect the value
of such property and do not materially
interfere with the use made of such
property by the Company; all 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 and subsisting
leases;
(t) the Company and the Subsidiaries own, or have obtained
valid and enforceable licenses for, or
other rights to use, the inventions,
patent applications, patents, trademarks
(both registered and unregistered),
tradenames, copyrights, trade secrets and
other proprietary information
described in the Registration Statement and
the Prospectus as being owned or
licensed by them or which are necessary for
the conduct of their respective
businesses, except where the failure to
own, license or have such rights would
not, individually or in the aggregate, have
a Material Adverse Effect
(collectively, "Intellectual Property").
There are no third parties who have
asserted any written claims to existing
rights to any Intellectual Property
except for the ownership rights of the
owners of the Intellectual Property which
is licensed to the Company. To the
Company's knowledge, there is no infringement
by third parties of any Intellectual
Property. To the Company's knowledge, there
is no pending or threatened action, suit,
proceeding or claim by others
challenging the Company's rights in or to
any Intellectual Property. To the
Company's knowledge, there is no pending or
threatened action, suit, proceeding
or claim by others challenging the validity
or scope of any Intellectual
Property. To the Company's knowledge, there
is no pending or threatened action,
suit, proceeding or claim by others that
the Company infringes or otherwise
violates any patent, trademark, copyright,
trade secret or other proprietary
rights of others;
(u) to the Company's knowledge, neither the Company nor any of
the Subsidiaries is engaged in any unfair
labor practice; except for matters
which would not, individually or in the
aggregate, have a Material Adverse
Effect, (i) there is (A) to the Company's
knowledge, no unfair labor practice
complaint pending or threatened against the
Company or any of the Subsidiaries
before the National Labor Relations Board,
and no grievance or arbitration
proceeding arising out of or under
collective bargaining agreements is pending
or threatened, (B) to the Company's
knowledge, no strike, labor dispute,
slowdown or stoppage pending or threatened
against the Company or any of the
Subsidiaries and (C) no union
representation dispute currently existing
concerning the employees of the Company or
any of the Subsidiaries, and (ii) to
the Company's knowledge, (A) no union
organizing activities are currently taking
place concerning the employees of the
Company or any of the Subsidiaries and (B)
there has been no violation of any federal,
state, local or foreign law relating
to discrimination in the hiring, promotion
or pay of employees, any applicable
wage or hour laws or any provision of the
Employee Retirement Income Security
Act of 1974 ("ERISA") or the rules and
regulations promulgated thereunder
concerning the employees of the Company or
any of the Subsidiaries;
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(v) to the Company's knowledge, the Company and the
Subsidiaries and their properties, assets
and operations are in compliance with,
and hold all permits, authorizations and
approvals required under, Environmental
Laws (as defined below), except to the
extent that failure to so comply or to
hold such permits, authorizations or
approvals would not, individually or in the
aggregate, have a Material Adverse Effect;
there are no past, present or, to the
Company's knowledge, reasonably anticipated
future events, conditions,
circumstances, activities, practices,
actions, omissions or plans that could
reasonably be expected to give rise to any
material costs or liabilities to the
Company or the Subsidiaries under, or to
interfere with or prevent compliance by
the Company or the Subsidiaries with,
Environmental Laws; except as would not,
individually or in the aggregate, have a
Material Adverse Effect, neither the
Company nor any of the Subsidiaries (i) to
the Company's knowledge, is the
subject of any investigation, (ii) has
received any notice or claim, (iii) is a
party to or affected by any pending or, to
the Company's knowledge, threatened
action, suit or proceeding, (iv) is bound
by any judgment, decree or order or
(v) has entered into any agreement, in each
case relating to any alleged
violation of any Environmental Law or any
actual or alleged release or
threatened release or cleanup at any
location of any Hazardous Materials (as
defined below) (as used herein,
"Environmental Law" means any federal, state,
local or foreign law, statute, ordinance,
rule, regulation, order, decree,
judgment, injunction, permit, license,
authorization or other binding
requirement, or common law, relating to
health, safety or the protection,
cleanup or restoration of the environment
or natural resources, including those
relating to the distribution, processing,
generation, treatment, storage,
disposal, transportation, other handling or
release or threatened release of
Hazardous Materials, and "Hazardous
Materials" means any material (including,
without limitation, pollutants,
contaminants, hazardous or toxic substances or
wastes) that is regulated by or may give
rise to liability under any
Environmental Law);
(w) all tax returns required to be filed by the Company and
each of the Subsidiaries have been filed,
and all taxes and other assessments of
a similar nature (whether imposed directly
or through withholding) including any
interest, additions to tax or penalties
applicable thereto due or claimed to be
due from such entities have been paid,
other than those being contested in good
faith and for which adequate reserves have
been provided;
(x) the Company and each of the Subsidiaries maintains
insurance covering its properties,
operations, personnel and businesses as the
Company deems adequate; such insurance
insures against such losses and risks to
an extent which is adequate in accordance
with customary industry practice to
protect the Company and the Subsidiaries
and their businesses; all such
insurance is fully in force on the date
hereof and will be fully in force at the
time of purchase;
(y) neither the Company nor any of the Subsidiaries has
sustained since the date of the last
audited financial statements included in
the Registration Statement and the
Prospectus 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;
(z) except for the normal expiration of contracts or
agreements in accordance with the terms of
any such contract or agreement,
including upon the completion of all
obligations thereunder by a party thereto,
the Company has not sent or received any
written communication regarding
termination of, or intent not to renew, any
of the contracts or agreements
referred to or described in, or filed as an
exhibit to, the Registration
Statement, and no such termination or
non-renewal has been threatened by the
Company or, to the Company's knowledge, any
other party to any such contract or
agreement, except for such terminations or
non-renewals which individually or in
the aggregate would not have a Material
Adverse Effect;
-9-
<PAGE>
(aa) the Company and each of the Subsidiaries maintains a
system of internal accounting controls
sufficient to provide reasonable
assurance 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;
(bb) the Company has established and maintains disclosure
controls and procedures (as such term is
defined in Rule 13a-15(e) and 15d-15(e)
under the Exchange Act); such disclosure
controls and procedures are designed to
ensure that material information relating
to the Company, including its
consolidated Subsidiaries, is made known to
the Company's Chief Executive
Officer and its Chief Financial Officer by
others within those entities, and
such disclosure controls and procedures are
effective at a reasonable level 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 deficiencies in the design or
operation of internal controls which
would reasonably be expected to adversely
affect the Company's ability to
record, process, summarize, and report
financial data; and (ii) any fraud that
involves management or other employees who
have a role in the Company's internal
controls; any material weaknesses in
internal controls have been identified for
the Company's auditors; the principal
executive officers (or their equivalents)
and principal financial officers (or their
equivalents) of the Company have made
all certifications required by the
Sarbanes-Oxley Act of 2002 (the
"Sarbanes-Oxley Act") and any related rules
and regulations promulgated by the
Commission, and the statements contained in
any such certification are complete
and correct in all material respects; and
the Company is otherwise in compliance
in all material respects with all
applicable provisions of the Sarbanes-Oxley
Act that are effective;
(cc) the Company has provided the Placement Agents true,
correct, and complete copies of all
documentation pertaining to any extension of
credit in the form of a personal loan made,
directly or indirectly, by the
Company to any director or executive
officer of the Company, or to any family
member or affiliate of any director or
executive officer of the Company; and
since July 30, 2002, the Company has not,
directly or indirectly, including
through any subsidiary: (i) extended
credit, arranged to extend credit, or
renewed any extension of credit, in the
form of a personal loan, to or for any
director or executive officer of the
Company, or to or for any family member or
affiliate of any director or executive
officer of the Company; or (ii) made any
material modification, including any
renewal thereof, to any term of any
personal loan to any director or executive
officer of the Company, or any family
member or affiliate of any director or
executive officer, which loan was
outstanding on July 30, 2002;
(dd) any statistical and market-related data included in the
Registration Statement and the Prospectus
are based on or derived from sources
that the Company believes to be reliable
and accurate, and the Company has
obtained the consent to the use of such
data from such sources to the extent
required;
-10-
<PAGE>
(ee) neither the Company nor any of the Subsidiaries nor, to
the Company's knowledge, any employee of
the Company or the Subsidiaries has
made any payment of funds of the Company or
the Subsidiaries or received or
retained any funds in violation of any law,
rule or regulation, which payment,
receipt or retention of funds is of a
character required to be disclosed in the
Registration Statement or the
Prospectus;
(ff) neither the Company nor any of the Subsidiaries, nor to
the Company's knowledge, any of their
respective directors, officers, affiliates
or controlling persons has taken, directly
or indirectly, any action designed,
or which has constituted or might
reasonably be expected to cause or result in,
under the Exchange Act or otherwise, the
stabilization or manipulation of the
price of any security of the Company to
facilitate the sale or resale of the
Shares;
(gg) to the Company's knowledge, there are no affiliations or
associations between any member of the NASD
and any of the Company's officers,
directors or 5% o
