EXHIBIT 4.1
ACACIA RESEARCH CORPORATION
SUBSCRIPTION AGREEMENT
AND INSTRUCTIONS
PLEASE READ THE SUBSCRIPTION AGREEMENT CAREFULLY. IN ORDER TO SUBSCRIBE YOU
MUST:
1. Check the appropriate boxes in the Subscription Agreement on pages 9
through 10.
2. Sign and complete the APPROPRIATE signature page.
3. Sign and complete the Internal Revenue Service Form W-9.
4. If you are married, your spouse must sign the attached Consent of Spouse.
5. Sign and complete the enclosed Confidential Purchaser Questionnaire.
6. Return the above materials along with payment to:
Acacia Research Corporation
00 X. Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Certified or official bank checks for the amount subscribed (as indicated
on the signature page of the Subscription Agreement) should be made payable
to "ACACIA RESEARCH CORPORATION - SPECIAL ACCOUNT"
Or payment can be made by wire transfer to:
Imperial Bank 0000 Xxxxxxx Xxxxxx Xxxxx 000 Xxx
Xxxxxxx, XX 00000 ABA # 000000000
Credit to Acacia Research Corporation
Account # 00-000-000
Acacia Research Corporation (the "Company") will notify investors as to the
date and time of the closing of the transaction.
7. Each prospective purchaser may be required to provide such additional
information as the Company shall reasonably request. In this connection,
please note:
(a) A partnership may be required to provide a copy, among other items, of
its partnership agreement, as amended, as well as all other documents
that authorize the partnership to invest in the Company.
(b) A corporation may be required to provide a copy, among other items, of
its Articles of Incorporation and Bylaws, as amended, in effect, as
well as all other documents that authorize the corporation to invest
in the Company.
(c) A limited liability company may be required to provide a copy, among
other items, of its Certificate of Formation and Operating Agreement,
as amended, in effect, as well as all other documents that authorize
the limited liability company to invest in the Company.
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(d) A trust may be required to provide a copy, among other items, of its
Declaration of Trust or other governing instrument, as amended, as
well as other documents that authorize the trust to invest in the
Company.
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ACACIA RESEARCH CORPORATION
SUBSCRIPTION AGREEMENT
Ladies and Gentlemen:
1. SUBSCRIPTION; PAYMENT. The undersigned, intending to be legally bound,
hereby irrevocably agrees to purchase from Acacia Research Corporation, a
Delaware corporation (the "Company"), this subscription (the "Subscription") in
the amount of $__________ (the "Capital Commitment") for __________ Units (each
Unit consisting of one share of the Company's Common Stock, par value $0.001 per
share, and one Common Stock Purchase Warrant) pursuant to the Company's
Confidential Private Placement Memorandum dated January 17, 2001 (the
"Memorandum"). This Subscription is submitted to you in accordance with and
subject to the terms and conditions described in this Subscription Agreement.
For a description of the Common Stock Purchase Warrant, please refer to
Attachment 1 hereto "Form of Common Stock Purchase Warrant."
The undersigned shall either: (i) enclose herewith a certified or official
bank check payable to the Company, or (ii) transmit by wire transfer the amount
of the Capital Commitment.
2. ACCEPTANCE OF SUBSCRIPTION. The undersigned understands and agrees that
the Company in its sole discretion reserves the right to accept or reject this
or any other subscription in whole or in part, notwithstanding prior receipt by
the undersigned of notice of acceptance. If this Subscription is rejected by the
Company in whole or in part, the Company shall promptly return all funds
received from the undersigned, without interest, and this Subscription Agreement
shall thereafter be of no further force or effect.
3. REPRESENTATIONS AND WARRANTIES. The undersigned hereby acknowledges,
represents and warrants to, and agrees with, the Company as follows:
(a) The undersigned understands that the offering and sale of the
Units are intended to be exempt from registration under the Securities Act
of 1933, as amended, (the "Securities Act"), by virtue of Section 4(2) and
Rule 506 of Regulation D promulgated under the Securities Act, and in
accordance therewith and in furtherance thereof, the undersigned represents
and warrants and agrees as follows:
(i) The undersigned and the undersigned's advisers have been
afforded an opportunity to review and receive the Memorandum and
reports filed by the Company under the Securities Exchange Act of 1934
(the "Exchange Act") and other publicly available information relating
to the Company, the Company's business and finances (collectively, the
"Information"), and any and all other information deemed relevant by
the undersigned in order to make an informed investment decision
regarding the Units, and have reviewed and received such Information
and understand the Information and this Subscription Agreement;
(ii) No written representations have been made other than as
stated, or in addition to those stated, in the Information;
(iii) The undersigned is not subscribing for the Units as a
result of or subsequent to any advertisement, article, notice, other
communication published in any newspaper, magazine, or similar media
or broadcast over television or radio, or presented at any seminar or
meeting, or any solicitation of a subscription by a person other than
a representative of the Company;
(iv) If the undersigned is a natural person, the undersigned has
reached the age of majority in the state in which the undersigned
resides;
(v) The address set forth below is the undersigned's true and
correct domicile;
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(vi) The undersigned has adequate means of providing for the
undersigned's current financial needs and contingencies, is able to
bear the substantial economic risks of an investment in the Units for
an indefinite period of time, has no need for liquidity in such
investment, and, at the present time, could afford a complete loss of
such investment;
(vii) The undersigned has such knowledge and experience in
financial, tax, and business matters so as to enable the undersigned
to utilize the Information made available to the undersigned in
connection with the offering of the Units to evaluate the merits and
risks of an investment in the Company and to make an informed
investment decision with respect thereto;
(viii) The undersigned is not relying on the Company with respect
to the legal, tax, and other economic considerations of an investment
and has obtained, or had the opportunity to obtain the advice of the
undersigned's own legal, tax, and other advisors;
(ix) The undersigned will not sell or otherwise transfer the
Units or the underlying shares of the Company's Common Stock thereof
("Shares") without registration under the Securities Act or applicable
state securities laws or an exemption therefrom. The Units and the
Shares have not been registered under the Securities Act or under the
securities laws of any state. The undersigned represents that the
undersigned is purchasing the Units for the undersigned's own account,
for investment and not with a view to resale or distribution except in
compliance with the Securities Act. The undersigned has not offered or
sold any portion of the Units being acquired. The undersigned does not
have any present intention of selling, distributing or otherwise
disposing of any portion of the Units, which may be a violation of the
Securities Act unless (i) a registration statement has been filed and
declared effective by the Securities and Exchange Commission (the
"SEC") covering such Shares to be resold or otherwise distributed; or
(ii) the passage of a fixed or determinable period of time that makes
such resale or distribution exempt from registration and is pursuant
to Rule 144 promulgated under the Securities Act or upon the
occurrence or nonoccurrence of any predetermined event or circumstance
in violation of the Securities Act. The undersigned is aware that
there is currently no public market for the Units, although a public
market exists for the Company's Common Stock;
(x) THE UNDERSIGNED UNDERSTANDS AND ACKNOWLEDGES THAT HIS OR HER
INVESTMENT IN THE COMPANY INVOLVES A HIGH DEGREE OF RISK AND IS
SUITABLE ONLY FOR INVESTORS OF SUBSTANTIAL MEANS WHO HAVE NO IMMEDIATE
NEED FOR LIQUIDITY OF THE AMOUNT INVESTED, AND THAT SUCH INVESTMENT
INVOLVES A RISK OF LOSS OF ALL OR A SUBSTANTIAL PART OF SUCH
INVESTMENT; and
(xi) The undersigned is an "accredited investor" within the
meaning of Rule 501 of Regulation D promulgated under the Securities
Act.
(b) The undersigned's overall commitment to investments which are not
readily marketable is reasonable in relation to the undersigned's net
worth.
(c) The undersigned xxxxxx agrees to provide such information and to
execute and deliver such documents as may reasonably be necessary to comply
with any and all laws and ordinances to which the Company is subject,
including, without limitation, such additional information as the Company
may reasonably deem appropriate with regard to the undersigned's
suitability.
(d) The undersigned acknowledges:
(i) In making an investment decision the undersigned has relied
on the undersigned's own examination of the Company and the terms of
the offering of the Units, including the merits and risks involved.
THE UNITS OFFERED IN THIS SUBSCRIPTION AGREEMENT HAVE NOT BEEN
RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES
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COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE
ADEQUACY OF THE INFORMATION OR THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE;
(ii) The undersigned, if executing this Subscription Agreement in
a representative or fiduciary capacity, has full power and authority
to execute and deliver this Subscription Agreement in such capacity
and on behalf of the subscribing individual, xxxx, partnership, trust,
estate, corporation, or other entity for whom the undersigned is
executing this Subscription Agreement, and such individual, xxxx,
partnership, trust, estate, corporation, or other entity has full
right and power to perform pursuant to this Subscription Agreement and
make an investment in the Company; and
(iii) The representations, warranties, and agreements of the
undersigned contained herein and in any other writing delivered in
connection with the transactions contemplated hereby shall be true and
correct in all respects on and as of the date of the sale of the Units
as if made on and as of such date and shall survive the execution and
delivery of this Subscription Agreement and the purchase of the Units.
4. REGISTRATION RIGHTS.
(a) REGISTRATION RIGHTS
(i) The undersigned understands that the Company will file a
Registration Statement with the SEC for the resale of the Company's
Common Stock included in the Units sold pursuant to the Memorandum
("Unit Shares") and the Company's Common Stock to be issued upon
exercise of the Common Stock Purchase Warrants included in the
Units sold pursuant to the Memorandum ("Warrant Shares") as soon as
shall be reasonably practicable following the consummation of the
sale of the Units pursuant to the terms of this Subscription
Agreement, but in no event more than sixty (60) days after the
final closing of the Offering (as defined in the Memorandum).
Holders of the Units, the Unit Shares, and the Warrant Shares are
collectively referred to as "Holders." Subject to the provisions of
this Subscription Agreement, the Company shall use commercially
reasonable efforts to have such Registration Statement declared
effective by the SEC as promptly as shall be practicable, but in no
event more than 120 days after the final closing of the Offering
(as defined in the Memorandum). The Company shall keep such
Registration Statement effective for a period of up to 120 days or
until the distribution contemplated in such Registration Statement
has been completed; PROVIDED, HOWEVER, that such 120-day period
shall be extended for a period of time equal to the period the
Holder refrains from selling any securities included in such
Registration Statement at the request of the Company or an
underwriter of the Company's Common Stock (or other securities).
For the purposes of this Subscription Agreement: (A) "Registrable
Shares" means the Unit Shares and the Warrant Shares (and including
any shares issued in connection with any split or dividend in
respect of any such shares); provided, however, that any such share
of Common Stock will cease to be a Registrable Share when (1) a
Registration Statement covering a Registrable Share has been
declared effective by the SEC and such share has been disposed of
by the Holders pursuant to such effective Registration Statement,
(2) the Registrable Share is transferred to another person, (3)
such share (after initial issuance) is held by the Company or one
of its subsidiaries or otherwise ceases to be outstanding, or (4)
such share may be traded without restriction pursuant to paragraph
(k) of Rule 144, if applicable; and (B) "Registration Statement"
means any registration statement or comparable document under the
Securities Act through which a public sale or disposition of the
Registrable Shares may be registered, including the prospectus,
amendments and supplements to such registration statement, all
exhibits, and all material incorporated by reference or deemed to
be incorporated by reference in such registration statement.
(ii) Upon the written request of a Holder to include all or any
portion of such Holder's Registrable Shares in an underwritten
offering, the Company shall have the right, in its sole
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discretion, to determine whether any of such Registrable Shares are
to be included in such underwritten offering, and if the Company so
determines, the Company alone shall have the right to select the
managing underwriter or underwriters to administer the offering.
(iii) If the managing underwriter of an underwritten offering
under this Section 4(a) advises the Company in writing that in its
opinion the number of shares requested to be included in such
registration exceeds the number which can be sold in such offering,
the Company will include in such registration only the number of
shares which in the opinion of such underwriter can be sold and may
delay registering the balance of the shares in a non-underwritten
offering for up to 120 days. This provision shall not relieve or
modify the Company's obligations to file and have declared
effective any Registration Statement under Section 4(a)(i). If the
number of shares that can be sold is less than the number of shares
proposed to be registered, the amount to be so registered shall be
allocated pro rata among the Holders of Registrable Shares desiring
to participate in such registration.
(iv) If the Company fails to file a Registration Statement, or
have such Registration Statement declared effective, within the
time periods specified in this Section 4(a) (each an "Obligation"),
the Company shall return to the undersigned an amount in cash equal
to 1.5% of the Capital Commitment, net of any finder's fees, on any
such date and on the monthly anniversary of each such date until
the Company satisfies the applicable Obligation.
(b) SUSPENSION OF EFFECTIVENESS. The Company's obligations under
Section 4(a) above shall not restrict its ability to suspend the
effectiveness of, or direct the Holders not to offer or sell securities
under, any Registration Statement, at any time, for such reasonable period
of time which the Company believes is necessary to prevent the premature
disclosure of any events or information having a material effect on the
Company. In addition, the Company shall not be required to keep any
Registration Statement effective, or may, without suspending such
effectiveness, instruct the Holders not to sell such securities, during any
period during which the Company is instructed, directed, ordered or
otherwise requested by any governmental agency or self-regulatory
organization to stop or suspend such trading or sales.
(c) HOLDBACK AGREEMENT. In the event of any filing of a prospectus
supplement or the commencement of an underwritten public distribution of
the Company's Common Stock under a Registration Statement, whether or not
Registrable Shares are included, the Holders agree not to effect any public
sale or distribution of Registrable Shares (except as part of such
underwritten public distribution), including a sale pursuant to Rule 144 or
Rule 144A under the Securities Act, during a period designated by the
Company in a written notice duly given to the Holders, which period shall
commence up to 14 days prior to the effective date of any such filing of
such prospectus supplement or the commencement of such underwritten public
distribution of such Common Stock under a Registration Statement and shall
continue for up to 44 consecutive days in the case of a sale pursuant to
Rule 144 and for up to 74 consecutive days otherwise.
(d) REGISTRATION PROCEDURES. Except as otherwise expressly provided
herein, in connection with any registration of Registrable Shares pursuant
to this Agreement, the Company shall, as expeditiously as possible:
(i) prepare and file with the SEC a Registration Statement with
respect to such Registrable Shares and use its reasonable best efforts
to cause such Registration Statement to become effective as soon as
practicable thereafter; and before filing a Registration Statement or
prospectus or any amendments or supplements thereto, furnish to the
Holders copies of such Registration Statement and such other documents
as proposed to be filed (including copies of any document to be
incorporated by reference therein), and thereafter furnish to the
Holders such number of copies as may be reasonably requested in
writing by the Holders of such Registration Statement, each amendment
and supplement thereto (including copies of any document to be
incorporated by reference therein), including all exhibits thereto,
the prospectus included in such Registration Statement (including each
preliminary prospectus), and, promptly after the effectiveness of a
Registration Statement, the definitive final prospectus filed with the
SEC;
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(ii) notify the Holders, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the
occurrence of any event as a result of which the prospectus included
in such Registration Statement (including any document to be
incorporated by reference therein) contains an untrue statement of a
material fact or omits any fact necessary to make the statements
therein not misleading and, the Company shall prepare a supplement or
amendment to such prospectus, as soon as practicable, so that, as
thereafter delivered to the purchasers of such Registrable Shares,
such prospectus will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and
promptly make available to the Holders any such supplement or
amendment;
(iii) notify the Holders and the managing underwriters, if any,
promptly, and (if requested by any such Person) confirm such advice in
writing, (i) when the Registration Statement, the prospectus or any
prospectus supplement or post-effective amendment has been filed, and,
with respect to the Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of the issuance by
the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the
use of any preliminary prospectus or the initiation of any proceedings
for that purpose and the Company shall promptly use its reasonable
best efforts to prevent the issuance of any stop order or to obtain
its withdrawal if such stop order should be issued, and (iii) of the
receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Registrable Shares for offer or
sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose.
The Company may require the Holders to furnish to the Company such
information regarding themselves and the distribution of such Registrable
Shares as the Company may from time to time reasonably request in writing
and such other information as may be legally required in connection with
such registration. The Holders agree, by their acquisition of Registrable
Shares and their acceptance of the benefits provided to it hereunder, to
furnish promptly to the Company all information required to be disclosed in
order to make any previously furnished information not materially
misleading. All Holders proposing to distribute their Registrable Shares
through an underwritten offering shall (together with the Company) enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected by the Company for such underwriting and shall
provide to such underwriter or underwriters any opinions and certificates,
and any indemnification with respect to such Holder as reasonably required
by such underwriter or underwriters.
The Holders agree that upon receipt of any notice from the Company of
the happening of any event of the kind described herein requiring the
cessation of the distribution of a prospectus or the distribution of a
supplemented or amended prospectus, the Holders will forthwith discontinue
disposition of Registrable Shares pursuant to the Registration Statement
covering such Registrable Shares until the Holders' receipt of the copies
of the supplemented or amended prospectus contemplated by this Subscription
Agreement, or until it is advised in writing by the Company that the use of
the prospectus may be resumed, and, if so directed by the Company, the
Holders will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in the Holders' possession, of the
prospectus covering such Registrable Shares current at the time of receipt
of such notice.
(e) REGISTRATION EXPENSES. All expenses incident to the Company's
performance of or compliance with the registration of shares pursuant to
this Subscription Agreement, including, without limitation, all
registration and filing fees, fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel of the Company and counsel for the underwriters in connection with
"blue sky" qualifications of the Registrable Shares), fees and expenses
associated with filings required to be made with the National Association
of Securities Dealers, Inc., and with listing on any national securities
exchange or exchanges in which listing may be sought, printing expenses,
messenger and delivery expenses, fees and expenses of counsel for the
Company and its independent certified public accountants, securities acts
liability insurance (if the Company elects to obtain such insurance), the
fees and expenses of
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any special experts retained by the Company in connection with such
registration, and fees and expenses of other persons retained by the
Company (all such expenses being herein called "Registration Expenses")
will be borne by the Company; provided that in no event shall Registration
Expenses payable by the Company include any (i) underwriting discounts,
commissions, or fees attributable to the sale of Registrable Shares, (ii)
fees and expenses of any counsel, accountants, or other persons retained or
employed by the Holders or underwriters, or (iii) transfer taxes, if any.
(f) INDEMNIFICATION.
(i) To the extent permitted by law, the Company shall
indemnify each Holder, each underwriter of the Registrable
Shares and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to
which any registration, qualification or compliance has been
sought pursuant to this Subscription Agreement, against all
claims, losses, damages and liabilities (or action in respect
thereof), including any of the foregoing incurred in settlement
of any litigation, commenced or threatened (subject to Section
4(f)(iii) below), arising out of or based on (i) any untrue
statement (or alleged untrue statement) of a material fact
contained in any Registration Statement incident to any such
registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances
in which they were made, or (ii) any violation or alleged
violation by the Company of the Securities Act, the Exchange
Act, or any rule or regulation promulgated under the Securities
Act, or the Exchange Act, and shall reimburse each Holder, each
underwriter of the Registrable Shares and each person
controlling such Holder, for legal and other expenses
reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action as
incurred; provided that the Company shall not be liable in any
such case to the extent that any untrue statement or omission
or allegation thereof is made in reliance upon and in
conformity with written information furnished to the Company by
or on behalf of such Holder and stated to be specifically for
use in preparation of such Registration Statement; provided
that the Company shall not be liable in any such case where the
claim, loss, damage or liability arises out of or is related to
the failure of the Holder to comply with the covenants and
agreements contained in this Subscription Agreement respecting
sales of Registrable Shares, and except that the foregoing
indemnity agreement is subject to the condition that, insofar
as it relates to any such untrue statement or alleged untrue
statement or omission or alleged omission made in the
preliminary prospectus but eliminated or remedied in the
amended prospectus on file with the SEC at the time the
Registration Statement becomes effective or in the amended
prospectus filed with the SEC pursuant to Rule 424(b) of the
Securities Act or in the prospectus subject to completion and
term sheet under Rule 434 of the Act, which together meet the
requirements of Section 10(a) of the Act (the "Final
Prospectus"), such indemnity agreement shall not inure to the
benefit of any such Holder, any such underwriter or any such
controlling person, if a copy of the Final Prospectus furnished
by the Company to the Holder for delivery was not furnished to
the person or entity asserting the loss, liability, claim or
damage at or prior to the time such furnishing is required by
the Securities Act and the Final Prospectus would have cured
the defect giving rise to such loss, liability, claim or damage.
(ii) Each Holder will severally, if Registrable Shares held
by such Holder are included in the securities as to which such
registration, qualification or compliance is being effected,
indemnify the Company, each of its directors and officers, each
underwriter of the Registrable Shares and each person who
controls the Company within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and
liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation,
commenced or threatened (subject to Section 4(f)(iii) below),
arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any
Registration Statement incident to any such registration,
qualification or compliance or based on any omission (or
alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading in light of the circumstances in which they were
made, and will reimburse the Company, such directors and
officers, each underwriter of the Registrable Shares and each
person controlling the Company for reasonable legal and any
other
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expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability or action
as incurred, in each case to the extent, but only to the
extent, that such untrue statement or omission or allegation
thereof is made in reliance upon, and in conformity with,
written information furnished to the Company by or on behalf of
the Holder and stated to be specifically for use in preparation
of such Registration Statement; provided that the indemnity
shall not apply to the extent that such claim, loss, damage or
liability results from the fact that a current copy of the
prospectus or offering circular was not made available to the
Holder and such current copy the prospectus or offering
circular would have cured the defect giving rise to such loss,
claim, damage or liability. Notwithstanding the foregoing, in
no event shall a Holder be liable for any such claims, losses,
damages or liabilities in excess of the proceeds received by
such Holder in the offering, except in the event of fraud by
such Xxxxxx.
(iii) Each party entitled to indemnification under this
Section 4(f) (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall conduct the
defense of such claim or litigation, shall be approved by the
Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such
defense with its own counsel at such Indemnified Party's
expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this
Agreement, unless such failure is materially prejudicial to the
Indemnifying Party in defending such claim or litigation. An
Indemnifying Party shall not be liable for any settlement of an
action or claim effected without its written consent (which
consent shall not be unreasonably withheld).
(iv) If the indemnification provided for in this Section
4(f) is held by a court of competent jurisdiction to be
unavailable to an Indemnified Party with respect to any loss,
liability, claim, damage or expense referred to therein, then
the Indemnifying Party, in lieu of indemnifying such
Indemnified Party thereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such
loss, liability, claim, damage or expense in such proportion as
is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party
on the other in connection with the statements or omissions
which resulted in such loss, liability, claim, damage or
expense as well as any other relevant equitable considerations.
The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of
a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by
the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(g) AGREEMENT TO SUSPEND EXERCISE OF WARRANT CALL RIGHTS. If for any
reason, the Company suspends or otherwise prohibits the Holders from
distributing any Registrable Shares pursuant to any provision of this
Section 4, the Company shall not exercise its right to redeem any of the
Common Stock Purchase Warrants included in the Units sold pursuant to the
Memorandum until such suspension or prohibition is lifted.
5. LEGEND OF CERTIFICATES. Each stock certificate of the Company issued to
represent a Share shall bear the following (or substantially equivalent) legend
on the face or reverse side thereof:
"THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE
SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND SUCH LAWS. THESE SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR
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ASSIGNED UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
EXEMPTION THEREFROM."
Any stock certificate issued at any time in exchange or substitution for
any certificate bearing such legend (except a new certificate issued upon the
completion of a public distribution of shares represented thereby) shall also
bear such legend, unless in the opinion of counsel satisfactory to the Company
the securities represented thereby need no longer be subject to the restrictions
contained herein. The provisions of this Subscription Agreement shall be binding
upon, and shall inure to the benefit of, the undersigned and all subsequent
holders of the Units who acquired such Units directly or indirectly from the
undersigned in a transaction or series of transactions not involving any public
offering.
6. NO UNTRUE STATEMENTS; INDEMNIFICATION.
(a) The Company hereby warrants and represents that the Memorandum and
other data provided by the Company to the undersigned in connection with
this transaction, whether orally or in writing, is accurate, complete and
correct, and does not contain an untrue statement of a material fact or
omit a material fact necessary in order to make the Memorandum and other
data not misleading.
(b) Each party agrees to indemnify and hold harmless the other party,
its officers, members, directors, employees, agents, and affiliates against
any and all loss, liability, claim, damage, and expense whatsoever
(including, without limitation, any and all expenses reasonably incurred in
investigating, preparing, or defending against any litigation commenced or
threatened or any claim whatsoever) arising out of or based upon any
materially false representation or warranty or material breach or failure
by the undersigned to comply with any covenant or agreement made by the
undersigned herein or in any other document furnished by the undersigned to
any of the foregoing in connection with this transaction.
7. IRREVOCABILITY; BINDING EFFECT; ENTIRE AGREEMENT. The undersigned hereby
acknowledges and agrees that the Subscription hereunder is irrevocable by the
undersigned, that, except as required by law, the undersigned is not entitled to
cancel, terminate, or revoke this Subscription Agreement or any agreements of
the undersigned hereunder, and that this Subscription Agreement and such other
agreements shall survive the death or disability of the undersigned and shall be
binding upon and inure to the benefit of the parties and their heirs, executors,
administrators, successors, legal representatives, and permitted assigns. If the
undersigned is more than one person, the obligations of the undersigned
hereunder shall be joint and several and the agreements, representations,
warranties, and acknowledgements herein contained shall be deemed to be made by
and be binding upon each such person and his/her heirs, executors,
administrators, successors, legal representatives, and permitted assigns. This
Agreement sets forth the entire agreement and understanding among the parties
hereto with respect to the transactions contemplated hereby and supersedes any
and all prior agreements and understandings relating to the subject matter
hereof.
8. MODIFICATION. Neither this Subscription Agreement nor any provisions
hereof shall be waived, modified, discharged, or terminated except by an
instrument in writing signed by the party against whom any such waiver,
modification, discharge, or termination is sought.
9. NOTICES. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or delivered against receipt to the party to whom it
is to be given (a) if to the Company, at the address set forth above, or (b) if
to the undersigned, at the address set forth on the signature page hereof (or,
in either case, to such other address as the party shall have furnished in
writing in accordance with the provisions of this Section 9). Any notice or
other communication given by certified mail shall be deemed given at the time of
certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof.
10. ASSIGNABILITY. This Subscription Agreement and the rights and
obligations hereunder are not transferable or assignable by the undersigned.
8
11. APPLICABLE LAW. This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of California as applied to
residents of that state executing contracts wholly to be performed in that
State.
12. NATURE OF SUBSCRIBER. The undersigned is (check one):
[ ] (a) One or more individuals
[ ] (b) A corporation
[ ] (c) A partnership
[ ] (d) A trust
[ ] (e) Another entity or organization, namely
_____________________(please specify)
13. INVESTMENT PURPOSE FOR NON-INDIVIDUALS.
(a) If the undersigned is not an individual, indicate the approximate
date the undersigned's entity was formed: ___________________.
(b) If the undersigned is not an individual, initial the appropriate
blank below which correctly describes the application of the following
statement to your situation: the undersigned (i) was not organized or
reorganized for the specific purpose of acquiring the Units, (ii) has made
investments prior to the date hereof, and each beneficial owner thereof has
and will share in the same proportion in each investment and (iii) the
undersigned's investment in the Company will not constitute more than forty
percent (40%) of the undersigned's total capital.
[ ] True
[ ] False
If the "False" box is checked, the undersigned will as of the closing
of the transaction (the "Closing") have ________ individual shareholders,
partners or other record owners and ______ non-individual shareholders,
partners or other record owners. Those non-individual shareholders,
partners or other record owners to whom application of the above statement
would be "False" have an aggregate of _________ ultimate beneficial owners
who are either individuals or to whom application of the above statement
and the statement in Section 14 would be "True." IF THE "FALSE" BOX IS
CHECKED, EACH PARTICIPATING PERSON MAY BE REQUIRED TO FILL OUT A
SUBSCRIPTION AGREEMENT, INCLUDING MAKING THE REPRESENTATIONS AS TO INVESTOR
STATUS SET FORTH IN SECTIONS 3(c), 12, 13 AND 14.
14. LIMITATIONS ON INVESTMENT IN INVESTMENT COMPANIES.
If the undersigned is not a individual, initial the box below which
correctly describes the application of the following statement to your
situation: the undersigned would not, upon acquiring the Units, have more than
ten percent (10%) of its assets invested in one or more investment companies
that rely solely on the exclusion from the definition of "investment company"
provided in Section 3(c)(1)(A) of the Investment Company Act of 1940:
[ ] True
[ ] False
If the "False" box is checked, the undersigned will as of the Closing have
________ individual shareholders, partners or other record owners and ______
non-individual shareholders, partners or other record owners. Those
non-individual shareholders, partners or other record owners to whom application
of the above statement would be "False" have an aggregate of _________ ultimate
beneficial owners who are either individuals or to whom application of the above
statement and the statement in Section 13 would be "True."
9
15. MATTERS RELATING TO THE UNDERSIGNED'S OWNERSHIP OF THE UNITS.
(a) All correspondence relating to the undersigned's investment should
be sent (check one):
[ ] (i) to the address of the undersigned set forth on the
signature page hereof
[ ] (ii) to the following address:
----------------------------------------
----------------------------------------
----------------------------------------
(b) The undersigned may be contacted by telephone at the following
telephone numbers:
(i) Home telephone: ( )_____________________
(ii) Business telephone: ( )___________________
(iii) Facsimile telephone: ( )___________________
(iv) E-mail address: _____________________________
10
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
FOR INDIVIDUALS AND LIVING OR REVOCABLE TRUSTS
IN WITNESS WHEREOF, the undersigned executed this Agreement this _________
day of January __, 2001.
No. of Units Purchased: _______________________________________
Print Name
______________________
_______________________________________
Signature of Investor
_______________________________________
Social Security Number
_______________________________________
_______________________________________
Residence Address
If the purchaser has indicated that the Units will be held as JOINT
TENANTS, as TENANTS IN COMMON, or as COMMUNITY PROPERTY, please complete the
following:
_______________________________________
Print Name of Spouse or Other Purchaser
_______________________________________
Signature of Spouse or Other Purchaser
_______________________________________
Social Security Number
ACCEPTED AND AGREED:
ACACIA RESEARCH CORPORATION
By: ______________________________
Name:
Title:
Dated: January __, 2001
S-1
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
FOR PARTNERSHIPS, CORPORATIONS, TRUSTS, OR OTHER ENTITIES
IN WITNESS WHEREOF, the undersigned has executed this Agreement this ______
day of January, 2001.
No. of Units Purchased: _______________________________________
Print Name of Partnership, Corporation,
______________________ Trust or other Entity
By: ___________________________________
(Signature of Authorized Signatory)
Name: _________________________________
Title:_________________________________
Address:_______________________________
_______________________________
Jurisdiction where organized:
________________________________________
Taxpayer Identification Number:
________________________________________
Date of Formation:______________________
Address of Chief Executive Officer of
Subscriber:
________________________________________
________________________________________
ACCEPTED AND AGREED:
ACACIA RESEARCH CORPORATION
By:______________________________
Name:
Title:
Dated: January __, 2001
S-2
ATTACHMENT 1
NO.
FORM OF COMMON STOCK PURCHASE WARRANT
THIS SECURITY AND ANY SHARES ISSUED UPON EXERCISE OF THIS SECURITY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS THE APPLICABLE SECURITY HAS BEEN REGISTERED UNDER THE ACT AND
SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED AND (2) AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO THE COMPANY TO THE EFFECT
THAT REGISTRATION UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
ACACIA RESEARCH CORPORATION
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, ________________________________
("the Holder") is entitled to subscribe for and purchase up to [________] shares
(subject to adjustment from time to time pursuant to the provisions of Section 5
hereof) of fully paid and nonassessable Common Stock of Acacia Research
Corporation, a Delaware corporation (the "Company"), at the price specified in
Section 2 hereof, as such price may be adjusted from time to time pursuant to
Section 5 hereof (the "Warrant Price"), subject to the provisions and upon the
terms and conditions hereinafter set forth and callable by the Company upon the
terms and conditions set forth in Section 1 hereof.
As used herein, the term "Common Stock" shall mean the Company's presently
authorized Common Stock, par value $0.001 per share, and any stock into or for
which such Common Stock may hereafter be converted or exchanged.
This Warrant is issued pursuant to that certain Subscription Agreement
between the Holder and the Company dated January __, 2001 (the "Subscription
Agreement").
l. TERM OF WARRANT; CALLABILITY BY COMPANY.
The purchase right represented by this Warrant is exercisable, in whole or
in part, at any time during a period beginning on the date hereof and ending
January __, 2004. However, during the three-year period, the Company will have
the right to redeem all of the Warrants on 30 days prior written notice at a
redemption price of $0.10 per Warrant if (a) the closing bid price of the
Company's Common Stock averages $26.25 or above for 20 consecutive trading days
after the Common Stock reaches a closing bid price of at least $26.25 on the
Nasdaq National Market System and (b) the registration statement covering the
resale of the shares of the Company's Common Stock underlying this Warrant has
been declared effective by the Securities and Exchange Commission and remains in
effect. If the Company elects to exercise its redemption right, the Holder of
this Warrant may either exercise the Warrant, in whole or in part, or tender the
Warrant to the Company for redemption, in whole or in part. Within five business
days after the end of the 30-day period, the Company will mail a check for the
redemption price to the Holder of this Warrant should this Warrant remain
outstanding in whole or in part as of the end of the 30-day period, whether or
not the Holder has surrendered this Warrant for redemption. This Warrant may not
be exercised after the end of such 30-day period. Notwithstanding the provisions
of this Section 1, if for any reason, the Company suspends or otherwise
prohibits the Holder from distributing any shares of the Company's Common Stock
issuable pursuant to this Warrant pursuant to any provision of Section 4 of the
Subscription Agreement, the Company shall not exercise its right to redeem this
Warrant until such suspension or prohibition is lifted.
2. WARRANT PRICE.
A-1
The Warrant Price is $ 21.00 per share, subject to adjustment from time to
time pursuant to the provisions of Section 5 hereof.
3. METHOD OF EXERCISE: PAYMENT; ISSUANCE OF NEW WARRANT.
Subject to Section 1 hereof, the purchase right represented by this Warrant
may be exercised by the Holder, in whole or in part, by the surrender of this
Warrant (with the notice of exercise form attached hereto as Exhibit 1 duly
executed) at the principal office of the Company and by the payment to the
Company, by xxxxxxx's check or wire transfer, of an amount equal to the then
applicable Warrant Price per share multiplied by the number of shares then being
purchased. The Company agrees that the shares so purchased shall be deemed to be
issued to the Holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment made for such shares as aforesaid. In the event of any exercise of the
rights represented by this Warrant, certificates for the shares of stock so
purchased shall be delivered to the Holder within 15 days thereafter and, unless
this Warrant has been fully exercised or expired, a new Warrant representing the
portion of the shares, if any, with respect to which this Warrant shall not then
have been exercised, shall also be issued to the Holder within such 15 day
period.
4. STOCK FULLY PAID; RESERVATION OF SHARES.
All Common Stock which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof. During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized, and
reserved for the purpose of the issuance upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its Common Stock to
provide for the exercise of the rights represented by this Warrant.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES.
The kind of securities purchasable upon the exercise of this Warrant, the
Warrant Price and the number of shares purchasable upon exercise of this Warrant
shall be subject to adjustment from time to time upon the occurrence of the
following events:
(a) RECLASSIFICATION, CONSOLIDATION, OR MERGER. In case of any
reclassification or change of outstanding securities of the class issuable
upon exercise of this Warrant (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), or in case of any consolidation or
merger of the Company with or into another corporation, other than a merger
with another corporation in which the Company is a continuing corporation
and which does not result in any reclassification or change of outstanding
securities issuable upon exercise of this Warrant, the Company, or such
successor, as the case may be, shall execute a new Warrant, providing that
the Holder of this Warrant shall have the right to exercise such new
Warrant and procure upon such exercise, in lieu of each share of Common
Stock theretofore issuable upon exercise of this Warrant, the kind and
amount of shares of stock, other securities, money and property receivable
upon such reclassification, change, consolidation, or merger by a Holder of
one share of Common Stock. Such new Warrant shall provide for adjustments,
which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 5. The provisions of this
subparagraph (a) shall similarly apply to successive reclassification,
changes, consolidations, and mergers.
(b) SUBDIVISION OR COMBINATION OF SHARES. If the Company at any time
while this Warrant remains outstanding and unexpired shall subdivide or
combine its common stock, or distribute dividends on its common stock
payable in Common Stock, the Warrant Price shall be proportionately
decreased in the case of a subdivision or increased in the case of a
combination or dividend.
(c) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in the
Warrant Price pursuant to any of subparagraphs (a) through (c) of this
Section 5, the number of shares of Common Stock purchasable
A-2
hereunder shall be adjusted, to the nearest whole share, to the product
obtained by multiplying the number of shares purchasable immediately prior
to such adjustment in the Warrant Price by a fraction, the numerator of
which shall be the Warrant Price immediately prior to such adjustment and
the denominator of which shall be the Warrant Price immediately thereafter.
6. NOTICE OF ADJUSTMENTS.
Whenever any Warrant Price shall be adjusted pursuant to Section 5 hereof,
the Company shall prepare a certificate signed by its chief financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
the Warrant Price after giving effect to such adjustment and the number of
shares then purchasable upon exercise of this Warrant, and shall cause copies of
such certificate to be mailed (by first class mail, postage prepaid) to the
Holder of this Warrant at the address specified in Section 10(c) hereof, or at
such other address as may be provided to the Company in writing by the Holder of
this Warrant.
7. FRACTIONAL SHARES.
No fractional shares of Common Stock will be issued in conjunction with any
exercise hereunder, but in lieu of such fractional shares the Company shall make
a cash payment therefor on the basis of the Warrant Price then in effect.
8. COMPLIANCE WITH SECURITIES ACT.
The Holder of this Warrant, by acceptance hereof, agrees that this Warrant
and the shares of Common Stock to be issued on exercise hereof are being
acquired for investment and that it will not offer, sell or otherwise dispose of
this Warrant or any shares of Common Stock to be issued upon exercise hereof
except under circumstances which will not result in a violation of the
Securities Act of 1933, as amended (the "Act"). This Warrant and all shares of
Common Stock issued upon exercise of this Warrant (unless registered under the
Act) shall be stamped and imprinted with a legend substantially in the following
form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER
THE ACT AND SUCH LAWS OR (1) REGISTRATION UNDER SUCH LAWS IS NOT REQUIRED
AND (2) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO
THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT AND THE
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED."
9. TRANSFER AND EXCHANGE OF WARRANT.
This Warrant is not transferable or exchangeable without the consent of the
Company.
10. MISCELLANEOUS.
(a) NO RIGHTS AS SHAREHOLDER. The Holder of this Warrant shall not be
entitled to vote or receive dividends or be deemed the Holder of Common
Stock or any other securities of the Company that may at any time be
issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the Holder of this Warrant, as
such, any of the rights of a shareholder of the Company or any right to
vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value or change of stock to no par
value, consolidation, merger, conveyance or otherwise) or to receive notice
of meetings, or to receive dividends or subscription rights or otherwise
until the Warrant shall have been exercised and the shares purchasable upon
the exercise hereof shall have become deliverable, as provided herein.
A-3
(b) REPLACEMENT. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant and,
in the case of mutilation, on surrender and cancellation of this Warrant,
the Company, at its expense, will execute and deliver, in lieu of this
Warrant, a new Warrant of like tenor.
(c) NOTICE. Any notice given to either party under this Warrant shall
be in writing, and any notice hereunder shall be deemed to have been given
upon the earlier of delivery thereof by hand delivery, by courier, or by
standard form of telecommunication or three (3) business days after the
mailing thereof in the U.S. mail if sent registered mail with postage
prepaid, addressed to the Company at its principal executive offices and to
the Holder at its address set forth in the Company's books and records or
at such other address as the Holder may have provided to the Company in
writing.
(d) GOVERNING LAW. This Warrant shall be governed and construed under
the laws of the State of California.
This Warrant is executed as of this _______ day of January, 2001.
ACACIA RESEARCH CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
A-4
EXHIBIT 1
NOTICE OF EXERCISE
TO: ACACIA RESEARCH CORPORATION
1. The undersigned hereby elects to purchase _________ shares of Common
Stock of Acacia Research Corporation pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full.
2. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the Holder at the address specified below:
-------------------------------------
(Name)
-------------------------------------
(Address)
-------------------------------------
(Address)
3. The undersigned represents that any of the aforesaid shares of Common
Stock not subject to an effective Registration Statement under the Securities
Act of 1933 are being acquired for the account of the undersigned for investment
and not with a view to, or for resale in connection with, the distribution
thereof and that the undersigned has no present intention of distributing or
reselling such shares.
4. The undersigned represents that each of the representations and
warranties and each of the responses in the confidential purchaser questionnaire
given with the Subscription Agreement are true, correct and complete as of the
date hereof.
-------------------------------------
(Signature of Holder)
-------------------------------------
(Print Name of Holder)
A-5
CONFIDENTIAL PURCHASER QUESTIONNAIRE
ACACIA RESEARCH CORPORATION
(ALL INFORMATION FURNISHED IN COMPLETING THIS
QUESTIONNAIRE WILL BE TREATED CONFIDENTIALLY)
ACACIA RESEARCH CORPORATION (the "Company") will use the responses to this
questionnaire to qualify prospective investors for purposes of federal and state
securities laws.
If the answer to any question below is "none" or "not applicable," please
indicate.
Your answers will be kept confidential at all times. However, by signing
this questionnaire, you agree that the Company may present this questionnaire to
such parties as it deems appropriate to establish the availability of exemptions
from registration under state and federal securities laws.
I. INDIVIDUAL INVESTORS
INVESTORS THAT ARE NOT INDIVIDUALS (CORPORATIONS, PARTNERSHIPS, TRUSTS,
ETC.) SHOULD TURN TO PAGE 6
1. PERSONAL
Name_________________________________________________
(Exact name as it should appear on stock certificate)
Residence Address_______________________________________
Home Telephone________________________________________
Date of Birth__________________________
Social Security Number_________________
2. BUSINESS
Occupation_____________________________________________
Number of Years________
Present Employer__________________________________________
Position/Title_____________________________________________
Business Address__________________________________________
Business Telephone_________________________________
1
Business Facsimile_________________________________
3. RESIDENCE INFORMATION
(a) Set forth in the space provided below the state(s)/countries in which
you have maintained your principal residence during the past three
years and the dates during which you resided in each state/country.
--------------------------------------------------
--------------------------------------------------
(b) Are you registered to vote in, or do you have a driver's license
issued by, or do you maintain a residence in any other state/country?
If yes, in which state(s)/ country(ies)?
--------------------------------------------------
4. INCOME
(a) Do you reasonably expect EITHER your own income from all sources
during the current year to exceed $200,000 OR the joint income of you
and your spouse (if married) from all sources during the current year
to exceed $300,000?
Yes ___ No ___ If not, please specify amount ______________
(b) What percentage of your income as shown above is anticipated to be
derived from sources other than salary?
--------------------------------------------------
(c) Was EITHER your yearly income from all sources during each of the last
two years in excess of $200,000 OR was the joint income of you and
your spouse (if married) from all sources during each of such years in
excess of $300,000?
Yes__ No__
If no, please specify amount for: Last Year:__________________
Year Before Last:___________
5. NET WORTH
Will your net worth as of the date you purchase the securities offered,
together with the net worth of your spouse, be in excess of $1,000,000?
Yes ___ No ___ If not, please specify amount ______________
2
6. EDUCATION
Please describe your educational background and degrees obtained, if any.
-----------------------------------------------------------
-----------------------------------------------------------
7. AFFILIATION
If you have any pre-existing personal or business relationship with the
Company or any of its officers, directors or controlling persons, please
describe the nature and duration of such relationship.
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
8. BUSINESS AND FINANCIAL EXPERIENCE
(a) Please describe in reasonable detail the nature and extent of your
business, financial and investment experience which you believe gives
you the capacity to evaluate the merits and risks of the proposed
investment and the capacity to protect your interests.
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
(b) Are you purchasing the securities offered for your own account and for
investment purposes only?
Yes__ No__
If no, please state for whom you are investing and/or the reason for
investing.
-----------------------------------------------------------
-----------------------------------------------------------
9. FINANCIAL ADVISORS
In evaluating this investment, will you use the services of any of the
following advisors? (If so, please identity, providing address and
telephone number.)
3
Accountant: ________________________________
________________________________
________________________________
Attorney: ________________________________
________________________________
________________________________
Other: ________________________________
________________________________
________________________________
PLEASE CONTINUE ON PAGE 5
4
II. NON-INDIVIDUAL INVESTORS
(please answer this Part II only if the proposed purchase is to be made by a
corporation, partnership, trust or other entity.)
IF INVESTMENT WILL BE MADE BY MORE THAN ONE AFFILIATED ENTITY, PLEASE COMPLETE A
COPY OF THIS QUESTIONNAIRE FOR EACH ENTITY.
1. IDENTIFICATION
Name_______________________________________________________
(Exact name as it will appear on stock certificate)
Address of Principal
Place of Business _______________________________________
Jurisdiction of Formation
or Incorporation ________________________________________
Contact Person ____________________________________________
Telephone Number ____________________
Facsimile Number____________________________
Type of Entity
(corporation, partnership,
trust, etc.)__________________________
Was entity formed for the purpose of this investment?
Yes ____ No ____
If the answer is yes, all shareholders, partners or other equity owners
must answer Part I of this Questionnaire. If the above answer is no, please
continue completing this form.
2. PROPOSED INVESTMENT
Please indicate the amount of your proposed investment: $________________
Please state the investing entity's net worth at the time the securities
will be purchased: $______________
3. BUSINESS
Please check the appropriate box to indicate which of the following
accurately describes the nature of the business conducted by the investing
entity:
[ ] private business development company as defined in Section 202(a)(22)
of the Investment Advisers Act of 1940 [a U.S. venture capital fund
which invests primarily through private placements in non-publicly
traded securities and makes available (either directly or through
co-investors) to the portfolio companies significant guidance
concerning management, operations or business objectives];
5
17
[ ] a Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958;
[ ] an investment company registered under the Investment Company Act of
1940 or a business development company as defined in Section 2(a)(48)
of that Act;
[ ] a bank as defined in Section 3(a)(2) or a savings and loan association
or other institution defined in Section 3(a)(5)(A) of the Securities
Act of 1933 acting in either an individual or fiduciary capacity;
[ ] an insurance company as defined in Section 2(13) of the Securities Act
of 1933;
[ ] an employee benefit plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974 whose investment decision is
made by a fiduciary which is either a bank, savings and loan
association, insurance company, or registered investment advisor, OR
whose total assets exceed US$5,000,000, or, if a self-directed plan, a
plan whose investment decisions are made solely by persons who
accredited investors;
[ ] an organization described in Section 501(c)(3) of the Internal Revenue
Code, a corporation, a Massachusetts or similar business trust or a
partnership, in each case, not formed for the purpose of this
investment, with total assets in excess of US$5,000,000;
[ ] an entity not located in the U.S. and whose equity owners are neither
U.S. citizens nor U.S. residents;
[ ] a trust with total assets in excess of US$5,000,000 whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii)
of the Securities Act of 1933.
[ ] Other. Please describe: _____________________________________________
______________________________________________________________________
______________________________________________________________________
4. INVESTMENT EXPERIENCE
Please provide information detailing the business, financial and investment
experience of the entity and investment manager of such entity.
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
PLEASE CONTINUE ON THE NEXT PAGE
6
III. BENEFICIAL OWNERSHIP (For purposes of filing Registration Statement)
As of the date below, undersigned is the beneficial owner of the following
number of shares of Acacia Research Corporation common stock:
Shares purchased pursuant to the
Private Placement Memorandum
dated January 17, 2001: __________________
Other shares of common stock
beneficially owned by
undersigned: ___________________
Total: ___________________
As of the date below, undersigned agrees to keep Acacia Research
Corporation informed of any changes to the total number of shares
beneficially owned by undersigned until such time as undersigned is
notified that a Registration Statement is declared effective or the Company
informs undersigned that the information is no longer needed.
Signed: ____________________________
Print Name:
Date: ______________________________
7
IV. SIGNATURE
The above information is true and correct in all material respects and the
undersigned recognizes that the Company and its counsel are relying on the truth
and accuracy of such information in reliance on the exemption contained in
Subsection 4(2) of the Securities Act of 1933, as amended, and Regulation D
promulgated thereunder. The undersigned agrees to notify the Company promptly of
any changes in the foregoing information which may occur prior to the
investment.
Executed at _________________, on January ___, 2001.
IF INVESTOR IS AN INDIVIDUAL:
---------------------------------
(Signature)
---------------------------------
(Print or type name)
IF INVESTOR IS AN ENTITY:
---------------------------------
(Print or type name of entity)
By:______________________________
Title:___________________________
8
[ATTACH IRS FORM W-9]
1
ACKNOWLEDGEMENT AND AGREEMENT OF SPOUSE
The undersigned spouse of ___________________________ acknowledges that
he or she has read the attached Subscription Agreement of even date herewith and
agrees to be bound thereby.
Dated:
------------------------------------
Print Name:_________________________
2
