Exhibit 10.1
 
9,768,313 Shares
 
Warrants to Purchase 11,721,975 Shares
 
ACACIA RESEARCH CORPORATION
 
Acacia Research - CombiMatrix Common Stock ($0.001 par value)
 
PLACEMENT AGENCY AGREEMENT
 
December 7, 2006
 

Oppenheimer & Co. Inc.
125 Broad Street
New York, New York 10004
Ladies and Gentlemen:
 
Acacia Research Corporation, a Delaware corporation (the “Company”) proposes,
subject to the terms and conditions contained herein and in the Subscription
Agreements in the form of Exhibit A attached hereto (the “Subscription
Agreements”) entered into with the Investors identified therein (each an
“Investor” and, collectively, the “Investors”), to issue and sell up to an
aggregate of 9,768,313 units (the “Units”), each consisting of (i) one share
(the “Share” and collectively the “Shares”) of common stock, $0.001 par value
per share, designated as Acacia Research - CombiMatrix Common Stock (the “AR -
CombiMatrix Common Stock”), of the Company and (ii) one warrant (the “Warrant”
and collectively the “Warrants”) to purchase 1.2 shares of AR-CombiMatrix Common
Stock substantially in the form of Exhibit B attached hereto. The shares
issuable upon the exercise of the Warrants and the Placement Agent’s Warrants
(as defined in Section 1(a) below) are referred to herein as the “Warrant
Shares” and, together with the Units, the Shares and the Warrants are referred
to herein as the “Securities.” The Company hereby confirms its agreement with
Oppenheimer & Co. Inc. (“Oppenheimer”) acting as the placement agent (the
“Placement Agent”). The Securities are more fully described in the Registration
Statement (as hereinafter defined).
 
1.    Agreement to Act as Placement Agent; Delivery and Payment. On the basis of
the representations, warranties and agreements of the Company herein contained,
and subject to all the terms and conditions of this Agreement:
 
(a)    The Placement Agent agrees to act as the Company’s exclusive placement
agent to solicit offers for the purchase of all or part of the Units from the
Company in connection with the proposed issuance and sale, on a commercially
reasonable efforts basis, by the Company of the Units to the Investors (the
“Offering”). Upon the occurrence of the Closing (as hereinafter defined), the
Company shall pay to the Placement Agent by wire transfer of immediately
available funds to an account or accounts designated by the Placement Agent an
amount equal to seven percent (7.0%) of the gross proceeds received by the
Company from the sale of the Units on such Closing Date (as hereinafter
defined). In addition, the Company shall issue and sell to the Placement Agent
and/or its designees, in addition to the amount set forth above, warrants (the
“Placement Agent’s Warrants”) to purchase 488,416 shares of Common Stock for a
purchase price of $0.01 per warrant. The Placement Agent’s Warrants will entitle
the holder thereof for a five-year period commencing on the first day after the
six-month anniversary of the Closing Date to purchase 488,416 shares of AR -
CombiMatrix Common Stock at an exercise price equal to $1.0875 per share. The
Placement Agent’s Warrants shall be in the form attached hereto as Exhibit C.
The Company acknowledges and agrees that the Placement Agent’s engagement
hereunder is not an agreement by the Placement Agent or any of its affiliates to
underwrite or purchase any securities or otherwise provide any financing. Under
no circumstances will the Placement Agent be obligated to purchase any Units for
its own account and, in soliciting purchases of Units, the Placement Agent shall
act solely as the Company’s agent and not as principal. Notwithstanding the
foregoing, it is understood and agreed that the Placement Agent (or its
affiliates) may, solely at its discretion and without any obligation to do so,
purchase Units as principal. The Placement Agent shall have no authority to bind
the Company.
 

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(b)    Payment of the purchase price for, and delivery of, the Units shall be
made at a closing (the “Closing”) at the offices of Greenberg Traurig, LLP,
counsel for the Company, located at 650 Town Center Drive, Suite 1700, Costa
Mesa, California at 7:00 a.m., local time, on the third or fourth business day
(as permitted under Rule 15c6-1 under the Exchange Act) after the determination
of the public offering price of the Units (such time and date of payment and
delivery being herein called the “Closing Date”). All such actions taken at the
Closing shall be deemed to have occurred simultaneously.
 
(c)    Prior to the Closing, the Placement Agent shall cause each Investor to
wire directly to an escrow account designated by the Placement Agent an amount
equal to the aggregate purchase price for the number of Units such Investor has
agreed to purchase.
 
(d)    On the Closing Date, the Placement Agent shall cause the aggregate
purchase price for the Units to be wired from the Investors or the escrow
account referred to in Section 1(c) above to an account designated by the
Company and the Company shall deliver, or cause the transfer agent for the Units
to deliver, to each Investor the number of Units set forth on the signature page
to such Investor’s Subscription Agreement, which delivery shall be made, with
respect to an Investor, in accordance with the procedures set forth in such
Investor’s executed Subscription Agreement.
 
(e)    The purchases of the Units by each of the Investors shall be evidenced by
the execution of a Subscription Agreement substantially in the form attached
hereto as Exhibit A
 
(f)    Prior to the earlier of (i) the date on which this Agreement is
terminated and (ii) the Closing Date, the Company shall not, without the prior
written consent of the Placement Agent, solicit or accept offers to purchase
shares of its AR-CombiMatrix Common Stock or other equity or equity-linked
securities of the Company (other than pursuant to the exercise of options or
warrants to purchase shares of AR-CombiMatrix Common Stock that are outstanding
at the date hereof) otherwise than through the Placement Agent.
 
2.    Representations and Warranties of the Company. The Company represents and
warrants to the Placement Agent and the Investors as of the date hereof and as
of the Closing Date, as follows:
 
(a)    RegistrationStatement. The Company has prepared and filed in conformity
with the requirements of the Securities Act of 1933, as amended (the “Securities
Act”), and published rules and regulations thereunder (the “Rules and
Regulations”) adopted by the Securities and Exchange Commission (the
“Commission”) a “shelf” Registration Statement (as hereinafter defined) on Form
S-3 (No. 333-133529), which was declared by the Commission to be effective under
the Securities Act as of May 26, 2006 (the “Effective Date”) including a Base
Prospectus, dated as of the Effective Date, relating to the Securities (the
“Base Prospectus”), and such amendments and supplements thereto as may have been
required to the date of this Agreement. The Company will next file with the
Commission pursuant to Rule 424(b) under the Securities Act a final prospectus
supplement to the Base Prospectus (a “Prospectus Supplement”) describing the
Units and the offering thereof, in such form as has been provided to or
discussed with, and approved, by the Placement Agent.
 
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The term “Registration Statement” as used in this Agreement means the
registration statement (including all exhibits, financial schedules and all
documents and information deemed to be a part of the Registration Statement
pursuant to Rule 430A or 434(d) under the Securities Act), as of the Effective
Date and as amended and/or supplemented to the date of this Agreement. The
Registration Statement has been declared effective under the Securities Act and
no stop order preventing or suspending the effectiveness of the Registration
Statement or suspending or preventing the use of the Prospectus (as defined
below) has been issued by the Commission and no proceedings for that purpose
have been instituted or, to the Company’s knowledge, are contemplated by the
Commission.
 
The term “Prospectus” as used in this Agreement means the Base Prospectus
together with the Prospectus Supplement, except that if such Base Prospectus is
amended or supplemented prior to the date on which the Prospectus Supplement was
first filed pursuant to Rule 424, the term “Prospectus” shall refer to the Base
Prospectus as so amended or supplemented and as supplemented by the Prospectus
Supplement. Any reference herein to the Registration Statement, the Base
Prospectus, any Prospectus Supplement or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to Item
12 of Form S-3 (the “Incorporated Documents”), which were filed under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) and any
reference herein to the terms “amend,” “amendment,” or “supplement” with respect
to the Registration Statement, the Prospectus Supplement or the Prospectus shall
be deemed to refer to and include (i) the filing of any document under the
Exchange Act after the Effective Date, or the date of the Prospectus, as the
case may be, which is incorporated by reference and (ii) any such document so
filed. If the Company has filed an abbreviated registration statement to
register additional Securities pursuant to Rule 462(b) under the Rules (the
“462(b) Registration Statement”), then any reference herein to the Registration
Statement shall also be deemed to include such 462(b) Registration Statement.
 
(b)    Registration Statement and Prospectus. On the Effective Date, upon the
filing or first delivery to the Investors of the Prospectus, as of the date
hereof, and at the Closing Date, the Registration Statement (and any
post-effective amendment thereto) and the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
or supplement to the Registration Statement or the Prospectus) complied and will
comply, in all material respects, with the requirements of the Securities Act
and the Rules and Regulations and the Exchange Act and the rules and regulations
of the Commission thereunder and did not at the Effective Date, does not as of
the date hereof and will not as of the Closing Date, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein (in light of
the circumstances under which they were made, in the case of the Prospectus) not
misleading. Notwithstanding the foregoing, none of the representations and
warranties in this paragraph 2(b) shall apply to statements in, or omissions
from, the Registration Statement or the Prospectus, or any amendment or
supplement thereto made in reliance upon, and in conformity with, information
herein or otherwise furnished in writing by or on behalf of the Placement Agent
to the Company expressly for use in the Registration Statement or the Prospectus
or any amendment or supplement thereto. The Incorporated Documents, at the time
they became effective or were filed with the Commission, complied in all
material respects with the requirements of the Exchange Act and did not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Company has not distributed and will not distribute, prior to
the completion of the distribution of the Securities, any offering material in
connection with the offering and sale of the Securities, other than the
Registration Statement and the Prospectus.
 
(c)    Subsidiaries. The Company has no significant subsidiaries (as such term
is defined in Rule 1-02 of Regulation S-X promulgated by the Commission) other
than as listed in Schedule I attached hereto (collectively, the “Subsidiaries”).
All of the issued and outstanding shares of capital stock of each of the
Subsidiaries have been duly and validly authorized and issued and are fully
paid, nonassessable and free of preemptive and similar rights to subscribe for
or purchase securities, and, except as listed on Schedule I attached hereto or
otherwise described in the Registration Statement and Prospectus, the Company
owns directly or indirectly, free and clear of any security interests, claims,
liens, proxies, equities or other encumbrances, all of the issued and
outstanding shares of such stock.
 
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(d)    Financial _Statements. The consolidated financial statements of the
Company, together with the related schedules and notes thereto, set forth or
incorporated by reference in the Registration Statement and the Prospectus
comply in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as applicable, and fairly present, in all
material respects, (i) the consolidated financial condition of the Company and
its Subsidiaries as of the dates indicated and (ii) the consolidated results of
operations, stockholders’ equity and changes in cash flows of the Company and
the Subsidiaries for the periods therein specified; and such financial
statements and related schedules and notes thereto, comply, in all material
respects, as to form with the applicable accounting requirements under the
Securities Act and have been prepared in conformity with United States generally
accepted accounting principles, consistently applied throughout the periods
involved (except as otherwise stated therein and subject, in the case of
unaudited financial statements, to the absence of footnotes and normal year-end
adjustments). No other financial statements or schedules are required by the
Securities Act and the Rules and Regulations to be included in the Registration
Statement or Prospectus.
 
(e)    Independent Accountants. PricewaterhouseCoopers, LLP (the “Auditors”),
whose report with respect to the audited consolidated financial statements and
schedules of the Company and its Subsidiaries included in the Prospectus, or the
Registration Statement, or incorporated by reference therein is, and during the
periods covered by its reports, was an independent public accounting firm within
the meaning of the Securities Act and the Rules and Regulations.
 
(f)    Organization. Each of the Company and its Subsidiaries has been duly
incorporated or otherwise organized and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation or
organization (as applicable). Each of the Company and its Subsidiaries has full
corporate power and authority to own, lease and operate its properties and
assets and to conduct its business as described in the Registration Statement
and Prospectus, and is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which it owns or leases real
property or in which the conduct of its business makes such qualification
necessary, except where the failure to be so qualified or be in good standing,
as the case may be, would not, individually or in the aggregate, have or
reasonably be expected to result in, a material adverse effect upon the
business, prospects, properties, operations, condition (financial or otherwise)
or results of operations of the Company and its Subsidiaries, taken as a whole
(a “Material Adverse Effect”).
 
(g)    No Material Adverse Effect. Except as set forth in the Registration
Statement or the Prospectus, subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, there has
not been (i) any material adverse change in the business, properties,
management, financial condition or results of operations of the Company and its
subsidiaries taken as a whole, including any material loss or interference with
its respective business from fire, explosion, flood or other calamity, whether
or not covered by insurance, or from any labor dispute or court or governmental
action, order or decree, (ii) any transaction that is material to the Company
and its Subsidiaries taken as a whole, (iii) any obligation, direct or
contingent (including any off balance sheet obligations), incurred by the
Company or its Subsidiaries, which is material to the Company and its
Subsidiaries taken as a whole, (iv) any change in the capital stock or
outstanding indebtedness of the Company or its Subsidiaries (subject to the
issuance of shares of Common Stock upon exercise of stock options or warrants
disclosed as outstanding in the Registration Statement and Prospectus and the
grant of options under existing stock option plans described in the Registration
Statement and Prospectus) or (v) any dividend or distribution of any kind
declared, paid or made on the capital stock of the Company.
 
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(h)    Legal Proceedings. Except as set forth in the Registration Statement and
the Prospectus, there is not pending or, to the knowledge of the Company,
threatened or contemplated, any action, suit or proceeding to which the Company
or any of its Subsidiaries is a party or of which any property or assets of the
Company or any of its Subsidiaries is the subject before or by any court or
governmental agency, authority or body, or any arbitrator, which, individually
or in the aggregate, would reasonably be expected to result in any Material
Adverse Effect or materially and adversely affect the ability of the Company to
perform its obligations under this Agreement and the Subscription Agreements.
 
(i)    Sufficiency of Disclosure. There are (i) no current or pending legal,
governmental or regulatory actions, suits or proceedings that are required under
the Securities Act to be described in the Registration Statement and Prospectus
that have not been so described and (ii) there are no affiliate transactions,
off-balance sheet transactions, contracts, licenses, agreements, leases or other
documents of a character required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement that
are not so described or filed as required.
 
(j)    Due Authorization and Enforceability. The Company has full legal power
and authority to enter into this Agreement and the Subscription Agreements and
to consummate the transactions contemplated hereby and thereby. This Agreement
and each of the Subscription Agreements have been duly authorized, executed and
delivered by the Company, and constitute valid, legal and binding obligations of
the Company, enforceable in accordance with their terms, except as rights to
indemnity hereunder may be limited by applicable laws and except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights and remedies of creditors
generally or subject to general principles of equity.
 
(k)    The Shares. The Shares have been duly and validly authorized by the
Company and, when issued, delivered and paid for in accordance with the terms of
this Agreement, will have been duly and validly issued and will be fully paid
and nonassessable; and the capital stock of the Company, including the
AR-CombiMatrix Common Stock, conforms to the description thereof in the
Registration Statement and Prospectus. Except as otherwise stated in the
Registration Statement and Prospectus, there are no preemptive rights or other
rights to subscribe for or to purchase, or any restriction upon the voting or
transfer of, any shares of AR -CombiMatrix Common Stock pursuant to the
Company’s charter, bylaws or any agreement or other instrument to which the
Company is a party or by which the Company is bound that have not been waived or
complied with.
 
(l)    The Warrants and the Placement Agent’s Warrants. The Company has the full
right, power and authority to enter into the Warrants and the Placement Agent’s
Warrants and to perform and discharge its obligations thereunder. The Warrants
and the Placement Agent’s Warrants have been duly and validly authorized by the
Company and upon delivery to the Investors at the Closing Date will be duly
issued and will constitute legal, valid and binding obligations of the Company,
enforceable in accordance with their terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights and remedies of creditors generally or subject to general
principles of equity. The Warrant Shares have been duly authorized and reserved
for issuance upon the exercise of the Warrants and the Placement Agent’s
Warrants and when issued upon payment of the exercise price therefor will be
validly issued, fully paid and nonassessable.
 
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(m)    No Conflicts. The execution, delivery and performance by the Company of
this Agreement, the Warrants and the Placement Agent’s Warrants, and each of the
Subscription Agreements and the consummation of the transactions herein and
therein contemplated, including the issuance and sale of the Securities, will
not (i) conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default (or an event which with notice or lapse
of time or both would constitute a default) under, or require any consent or
waiver under, or result in the execution of any lien, charge or encumbrance upon
any properties or assets of the Company or its Subsidiaries pursuant to the
terms of, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound or to which
any of the property or assets of the Company or any of its Subsidiaries is
subject, (ii) result in any violation of the provisions of the charter or
by-laws of the Company or any of its Subsidiaries or (iii) result in any
violation of any franchise, license, permit, statute, law, rule or regulation
applicable to the Company or any judgment, order or decree of any court or
governmental agency or body having jurisdiction over the Company or any of its
Subsidiaries or any of their properties or assets, except, in the case of each
of clauses (i) and (iii) above, for any such conflict, breach, violation,
default, lien, charge or encumbrance that would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
 
(n)    No Consents Required. No consent, approval, authorization, filing with or
order of or registration with, any court or governmental agency or body, or
approval of the shareholders of the Company, is required for the execution,
delivery and performance of this Agreement, the Warrants and the Placement
Agent’s Warrants, and each of the Subscription Agreements or for the
consummation of the transactions contemplated hereby and thereby, including the
issuance or sale of the Securities by the Company, except such as have been
obtained or made, and such as may be required under the securities, or blue sky,
laws of any jurisdiction in connection with the offer and sale of the Units by
the Company in the manner contemplated herein and in the Registration Statement
and the Prospectus.
 
(o)    Capitalization. All of the issued and outstanding shares of capital stock
of the Company, including the outstanding shares of AR-CombiMatrix Common Stock,
are duly authorized and validly issued, fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, were not issued
in violation of or subject to any preemptive rights or other rights to subscribe
for or purchase securities that have not been waived in writing. As of the date
hereof and as of the Closing Date, the Company has or will have, as the case may
be, an authorized, issued and outstanding capitalization as is set forth in the
Registration Statement and the Prospectus (subject, in each case, to the
issuance of shares of Common Stock upon exercise of stock options and warrants
disclosed as outstanding in the Registration Statement and the Prospectus and
grant of options under existing stock option plans described in the Registration
Statement and the Prospectus, and such authorized capital stock conforms to the
description thereof set forth in the Registration Statement and the Prospectus.
Except as described in the Registration Statement and the Prospectus, as of the
date referred to therein, the Company did not have outstanding any options,
warrants, agreements, contracts or other rights in existence to purchase or
acquire from the Company or any Subsidiary of the Company any shares of the
capital stock of the Company or any Subsidiary of the Company.
 
(p)    Title to Real and Personal Property. The Company and each of its
Subsidiaries has good and valid title to all property (whether real or personal)
described in the Registration Statement and Prospectus as being owned by each of
them, in each case free and clear of all liens, claims, security interests,
other encumbrances or defects except such as are described in the Registration
Statement and the Prospectus and those that do not materially and adversely
affect the value of such property and do not materially interfere with the use
made of such property by the Company. All of the property described in the
Registration Statement and the Prospectus as being held under lease by the
Company or a Subsidiary are held thereby under valid, subsisting and enforceable
leases.
 
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(q)    Title to Intellectual Property. The Company and its Subsidiaries own,
possess, license or have other rights to use all foreign and domestic patents,
patent applications, trade and service marks, trade and service mark
registrations, trade names, copyrights, licenses, inventions, trade secrets,
technology, Internet domain names, know-how and other intellectual property,
necessary for the conduct of CombiMatrix Group’s (as defined in the Prospectus)
businesses as now conducted or as proposed in the Prospectus to be conducted
(collectively, the “Intellectual Property”). Except as set forth in the
Prospectus, (a) the Company has not received written notice, and has no
knowledge of, any rights of third parties to any such Intellectual Property; (b)
to the Company’s knowledge, there is no infringement by third parties of any
such Intellectual Property; (c) there is no pending or, to the Company’s
knowledge, threatened action, suit, proceeding or claim by others challenging
the Company’s and its Subsidiaries’ rights in or to any such Intellectual
Property; (d) there is no pending or, to the Company’s knowledge, threatened
action, suit, proceeding or claim by others challenging the validity or scope of
any such Intellectual Property; (e) there is no pending or, to the Company’s
knowledge, threatened action, suit, proceeding or claim by others that
CombiMatrix Group infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of others; (f) to the
Company’s knowledge, there is no third-party U.S. patent or published U.S.
patent application which contains claims for which an Interference Proceeding
(as defined in 35 U.S.C. § 135) has been commenced against any patent or patent
application which constitutes the Intellectual Property described in the
Prospectus; and (g) the CombiMatrix Group has taken all steps necessary to
perfect its ownership of the Intellectual Property, in each of clauses (a)-(g)
except for such infringement, conflict or action which would not, singularly or
in the aggregate, reasonably be expected to result in a Material Adverse Effect.
 
(r)    No Violation or Default. Neither the Company nor any of its Subsidiaries
is (i) in violation of any provision of its charter or bylaws or similar
organizational documents, (ii) is in default in any respect, and no event has
occurred which, with notice or lapse of time or both, would constitute such a
default, in the due performance or observance of any term, covenant, or
condition of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party or by which it is bound or to which any of its
property or assets is subject, or (iii) is in violation in any respect of any
statute, law, rule, regulation, ordinance, judgment, order or decree of any
court, regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company, its Subsidiaries or any of
its properties of which it has knowledge, as applicable, except, with respect to
clauses (ii) and (iii), any violations or defaults which, singularly or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.
 
(s)    Permits. The Company and each of its Subsidiaries has made all filings,
applications and submissions required by, and possesses all approvals, licenses,
certificates, certifications, clearances, consents, exemptions, marks,
notifications, orders, permits and other authorizations issued by, the
appropriate federal, state or foreign regulatory authorities necessary to
conduct its businesses as described in the Registration Statement and the
Prospectus (collectively, “Permits”), except for such Permits the failure of
which to obtain would not reasonably be expected to result in a Material Adverse
Effect, and is in compliance with the terms and conditions of all such Permits;
all of such Permits held by the Company and each of its Subsidiaries are valid
and in full force and effect; there is no pending or, to its knowledge,
threatened action, suit, claim or proceeding which may cause any such Permit to
be limited, revoked, cancelled, suspended, modified or not renewed, except for
such limitations, revocations, cancellations, suspensions, modifications or
non-renewals that would not reasonably be expected to result in a Material
Adverse Effect; and the Company and each of its Subsidiaries has not received
any notice of proceedings relating to the limitation, revocation, cancellation,
suspension, modification or non-renewal of any such Permit which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would reasonably be expected to result in a Material Adverse Effect, whether or
not arising from transactions in the ordinary course of business and has no
reason to believe that any such license, certificate, permit or authorization
will not be renewed in the ordinary course.
 
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(t)    Taxes. The Company and its Subsidiaries have timely filed all federal,
state, local and foreign income and franchise tax returns (or timely filed
applicable extensions therefore) required to be filed and are not in default in
the payment of any taxes which were payable pursuant to said returns or any
assessments with respect thereto, other than any which the Company or any of its
Subsidiaries is contesting in good faith and for which adequate reserves have
been provided.
 
(u)    Listing. The AR-CombiMatrix Common Stock (including the Shares and the
Warrant Shares) is registered pursuant to Section 12(g) of the Exchange Act and
the Company, in the two years preceding the date hereof, has not received any
notification (written or oral) from the Nasdaq Global Market, any stock
exchange, market or trading facility on which the AR-CombiMatrix Common Stock is
or has been listed (or on which it has been quoted) to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such exchange, market or trading facility. The Company shall comply with all
requirements of the Nasdaq Global Market with respect to the issuance of the
Securities and shall use its best efforts to have the Shares and the Warrant
Shares listed on the Nasdaq Global Market on or before the Closing Date.
 
(v)    Internal Controls. The Company and each of its Subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management’s
general or specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
 
(w)    Disclosure Controls. The Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15e and 15d-15e
under the Exchange Act), which (i) are designed to ensure that material
information relating to the Company is made known to the Company’s principal
executive officer and its principal financial officer by others within those
entities, particularly during the periods in which the periodic reports required
under the Exchange Act are being prepared; (ii) provide for the periodic
evaluation of the effectiveness of such disclosure controls and procedures as of
the end of each of the Company’s quarterly and annual fiscal periods; and (iii),
as of the end of the periods covered by each periodic report filed under the
Exchange Act and incorporated by reference into the Prospectus, were effective
in all material respects to perform the functions for which they were
established. The Company’s auditors and the Audit Committee of the Board of
Directors have been advised of (i) any significant deficiency in the design or
operation of internal controls which could adversely affect the Company’s
ability to record, process, summarize and report financial data or any material
weaknesses in internal controls; or (ii) any fraud, whether or not material,
that involves management or other employees who have a significant role in the
Company’s internal controls. Since the date of the most recent evaluation of
such disclosure controls and procedures, there have been no changes that have
materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting, including any corrective
actions with regard to significant deficiencies and material weaknesses.
 
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(x)    No Undisclosed Relationships. No relationship, direct or indirect, exists
between or among the Company on the one hand and the directors, officers,
stockholders, customers or suppliers of the Company on the other hand which is
required to be described in the Prospectus and which is not so described.
 
(y)    No Registration Rights. Except as described in the Prospectus, no person
or entity has the right, contractual or otherwise, to require registration of
shares of AR-CombiMatrix Common Stock or other securities of the Company because
of the filing or effectiveness of the Registration Statement or otherwise,
except for persons and entities who have expressly waived such right or who have
been given proper notice and have failed to exercise such right within the time
or times required under the terms and conditions of such right, and the Company
is not required to file any registration statement for the registration of any
securities of any person or register any such securities pursuant to any other
registration statement filed by the Company under the Securities Act for a
period of at least 180 days after the Effective Date.
 
(z)    Sarbanes-Oxley Act. The principal executive officer and principal
financial officer of the Company have made all certifications required by
Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith (the “Sarbanes:Oxley Act”) with
respect to all reports, schedules, forms, statements and other documents
required to be filed by it with the Commission, and the statements contained in
any such certification are complete and correct. The Company, and to its
knowledge after due inquiry, all of the Company’s directors or officers, in
their capacities as such, is in compliance in all material respects with all
applicable effective provisions of the Sarbanes-Oxley Act (and intends to comply
with all applicable provisions that are not yet effective upon effectiveness).
 
(aa)         Compliance with Environmental Laws. (i) The Company and each of its
Subsidiaries is in compliance in all material respects with all rules, laws and
regulation relating to the use, treatment, storage and disposal of toxic
substances and protection of human health and safety or the environment
(“Environmental Laws”) which are applicable to its business, except where the
failure to comply would not reasonably be expected to result in a Material
Adverse Effect; (ii) neither the Company nor its Subsidiaries has received any
written notice from any governmental authority or third party of an asserted
claim under Environmental Laws; (iii) the Company and each of its Subsidiaries
has received all material permits, licenses or other approvals required of it
under applicable Environmental Laws to conduct its business and is in compliance
with all material terms and conditions of any such permit, license or approval,
except where the failure to receive or comply would not reasonably be expected
to result in a Material Adverse Effect; (iv) to the Company’s knowledge after
reasonable due inquiry, no facts currently exist that will require the Company
or any of its Subsidiaries to make future material capital expenditures to
comply with Environmental Laws; and (v) no property which is or has been owned,
leased or occupied by the Company or its Subsidiaries has been designated as a
Superfund site pursuant to the Comprehensive Environmental Response,
Compensation of Liability Act of 1980, as amended (42 U.S.C. Section 9601, et.
seq,) (“CERCLA”) or otherwise designated as a contaminated site under applicable
state or local law. Neither the Company nor any of its Subsidiaries has been
named as a “potentially responsible party” under CERCLA.
 
(bb)  Compliance with ERISA. Each of the Company and its Subsidiaries has
fulfilled its obligations, if any, under the minimum funding standards of
Section 302 of the United States Employee Retirement Income Security Act of 1974
(“ERISA”) and the regulations and published interpretations thereunder with
respect to each “plan” (as defined in Section 3(3) of ERISA and such regulations
and published interpretations) in which employees of the Company and its
Subsidiaries are eligible to participate and each such plan is in compliance in
all material respects with the presently applicable provisions of ERISA and such
regulations and published interpretations. No “prohibited transaction” (as
defined in Section 406 of ERISA, or Section 4975 of the Internal Revenue Code of
1986, as amended from time to time (the “Code”)) has occurred with respect to
any employee benefit plan which could reasonably be expected to result in a
Material Adverse Effect. The Company and each of its Subsidiaries has not
incurred any unpaid liability to the Pension Benefit Guaranty Corporation (other
than for the payment of premiums in the ordinary course) or to any such plan
under Title IV of ERISA,
 
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(cc)  No Labor Disputes. No labor problem or dispute with the employees of the
Company or any of its Subsidiaries exists or, to the Company’s knowledge, is
threatened or imminent, which would reasonably be expected to result in a
Material Adverse Effect. The Company is not aware that any key employee or
significant group of employees of the Company or any of its Subsidiaries plans
to terminate employment with the Company or any such Subsidiary.
 
(dd)  Insurance. The Company and each of its Subsidiaries is insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are engaged
or propose to engage after giving effect to the transactions described in the
Prospectus; all policies of insurance and fidelity or surety bonds insuring the
Company and each of its Subsidiaries and their businesses, assets, employees,
officers and directors are in full force and effect; the Company and each of its
Subsidiaries is in compliance with the terms of such policies and instruments in
all material respects; and the Company and each of its Subsidiaries has no
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that is
not materially greater than the current cost, except where the failure to obtain
would not reasonably be expected to result in a Material Adverse Effect.
 
(ee)  No Stabilization. Neither the Company nor any of its Subsidiaries nor, to
its knowledge after reasonable due inquiry, any of their officers, directors,
affiliates or controlling persons has taken or will take, directly or
indirectly, any action designed or intended to stabilize or manipulate the price
of any security of the Company.
 
(ff)  Investment Company Act. Neither the Company nor any of its Subsidiaries is
or, after giving effect to the offering and sale of the Securities and the
application of the proceeds thereof as described in the Prospectus, will be
required to register as an “investment company” as defined in the Investment
Company Act of 1940, as amended.
 
(gg)  No Broker’s Fees. Neither the Company nor any of its Subsidiaries is a
party to any contract, agreement or understanding with any person (other than
this Agreement) that would give rise to a valid claim against the Company or its
Subsidiaries or the Placement Agent for a brokerage commission, finder’s fee or
like payment in connection with the offering and sale of the Securities.
 
(hh)  Contracts. Each description of a contract, document or other agreement in
the Registration Statement and the Prospectus accurately reflects in all
material respects the terms of the underlying contract, document or other
agreement. Each contract, document or other agreement described in the
Registration Statement and Prospectus or listed in the exhibits to the
Registration Statement or incorporated therein by reference is in full force and
effect, unless validly terminated in accordance with the provisions thereof, and
is valid and enforceable by and against the Company or its Subsidiary, as the
case may be, in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights and remedies of creditors generally and subject to general
principles of equity, Neither the Company nor any of its Subsidiaries, if a
Subsidiary is a party, nor to the Company’s knowledge, any other party, is in
default in the observance or performance of any term or obligation to be
performed by it under any such agreement, and no event has occurred which with
notice or lapse of time or both would constitute such a default, in any such
case which default or event, individually or in the aggregate, would reasonably
be expected to result in a Material Adverse Effect.
 
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(ii)  Forward-Looking Statements. No forward-looking statement (within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act) contained in the Registration Statement and the Prospectus has been made or
reaffirmed without a reasonable basis or has been disclosed other than in good
faith.
 
(jj)  Corporate Records. All existing minute books of the Company and each of
its Subsidiaries, including all existing records of all meetings and actions of
the board of directors (including, Audit, Compensation and Nomination/Corporate
Governance Committees) and stockholders of the Company through the date of the
latest meeting and action (collectively, the “Corporate Records”) have been made
available to the Placement Agent and counsel for the Placement Agent. All such
Corporate Records are complete in all material respects and accurately and
fairly reflect, in reasonable detail, all transactions referred to in such
Corporate Records.
 
(kk)  Foreign Corrupt Practices. Neither the Company nor any of its
Subsidiaries, nor, to the knowledge of the Company after reasonable due inquiry,
any director, officer, agent or employee of the Company or its Subsidiaries,
has, directly or indirectly, while acting on behalf of the Company or its
Subsidiaries (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity; (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds; (iii) violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended; (iv) made any other unlawful bribe, rebate, payoff,
influence, kickback or payment to any foreign or domestic government official or
employee.
 
(ll)  Off-Balance Sheet Arrangements. There are no material off balance sheet
arrangements (as defined in Item 303 of Regulation S-K) that have or would
reasonably be likely to have a material current or future effect on the
Company’s financial condition, revenues or expenses, changes in financial
condition, results of operations, liquidity, capital expenditures or capital
resources, including those off-balance sheet transactions described in the
Commission’s Statement about Management’s Discussion and Analysis of Financial
Conditions and Results of Operations (Release Nos 33-8056; 34-45321; FR-61),
required to be described in the Prospectus which have not been so described.
 
(mm)  Regulatory Filings. Each of the Company and its Subsidiaries has filed
with the applicable regulatory authorities all filings, declarations, listings,
registrations, reports and submissions required to be filed; all such filings,
declarations, listings, registrations, reports or submissions were in compliance
with applicable laws when filed and no deficiencies have been asserted by any
applicable regulatory authority with respect to any such filings, declarations,
listings, registrations, repots or submissions. To the Company’s knowledge after
reasonable due inquiry, there are no affiliations or associations between any
member of the National Association of Securities Dealers, Inc. (the “NASD”) and
any of the Company’s officers, directors or any five percent (5%) or greater
shareholders of the Company, except as set forth in the Registration Statement
and the Prospectus or otherwise disclosed in writing to the Placement Agent.
 
Any certificate signed by any officer of the Company and delivered to the
Placement Agent or to counsel for the Placement Agent shall be deemed a
representation and warranty by the Company to the Placement Agent and the
Investors as to the matters covered thereby.
 
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3.    Delivery and Payment. On the Closing Date, in accordance with the terms
and conditions of each Investor’s respective Subscription Agreement, the Company
shall sell to, and the Investor(s) shall purchase, the number of Units reflected
on such Investor’s Subscription Agreement against payment by such Investor of
such Investor’s aggregate purchase price therefor reflected in the Investor’s
Subscription Agreement.
 
4.    Covenants. The Company covenants and agrees with the Placement Agent as
follows:
 
(a)    Effectiveness. The Registration Statement has become effective, and if
Rule 430A is used or the filing of the Prospectus Supplement is otherwise
required pursuant to Rule 424(b), the Company shall prepare the Prospectus
Supplement in a form approved by the Placement Agent and file such Prospectus
pursuant to Rule 424(b) not later than the Commission’s close of business on the
business day following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by the Rules and Regulations.
 
(b)    Amendments or Supplements; Free Writing Prospectuses. The Company will
not, during such period as the Prospectus would be required by law to be
delivered in connection with sales of the Units by the Placement Agent or a
dealer in connection with the offering contemplated by this Agreement, file any
amendment or supplement to the Registration Statement or the Prospectus, except
as required by law, unless a copy thereof shall first have been submitted to the
Placement Agent within a reasonable period of time prior to the filing thereof
and the Placement Agent shall not have reasonably objected thereto in good
faith. The Company represents and agrees that it has not made and will not, make
any offer relating to the Units that would constitute a “free writing
prospectus” as defined in Rule 405 under the Securities Act (“Issuer Free
Writing Prospectus”).
 
(c)    Notice to Placement Agent. The Company agrees (i) for so long as the
delivery of a prospectus is required in connection with the offering or sale of
the Securities, to advise the Placement Agent promptly after it receives notice
thereof, of the time when any post effective amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish the Placement
Agent with copies thereof, (ii) to file promptly all reports and any definitive
proxy or information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 15 or 15(d) of the Exchange Act subsequent
to the date of the Prospectus Supplement and for so long as the delivery of a
prospectus is required in connection with the offering or sale of the Units;
(iii) to advise the Placement Agent, promptly after it receives notices thereof,
(x) of any request by the Commission to amend the Registration Statement or to
amend or supplement the Prospectus or for additional information with respect
thereto, (y) of the issuance by the Commission, of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or any order directed at any document incorporated by reference therein
or any amendment or supplement thereto or any order preventing or suspending the
use of the Prospectus or any amendment or supplement thereto, or (z) of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the institution or threatening of any proceeding for any
such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for additional
information; and, (iv) in the event of the issuance of any stop order or of any
order preventing or suspending the use of the Prospectus or suspending any such
qualification, promptly to use its reasonable best efforts to obtain the
withdrawal of such order.
 
(d)    Ongoing Compliance of the Prospectus. If, at any time when a Prospectus
relating to the Securities is required to be delivered under the Act, the
Company becomes aware of the occurrence of any event as a result of which the
Prospectus, as then amended or supplemented, would, in the reasonable judgment
of counsel to the Company or counsel to the Placement Agent, include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or the Registration Statement, as then amended
or supplemented, would, in the reasonable judgment of counsel to the Company or
counsel to the Placement Agent, include any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein not
misleading, or if for any other reason it is necessary, in the reasonable
judgment of counsel to the Company or counsel to the Placement Agent, at any
time to amend or supplement the Prospectus or the Registration Statement to
comply with the Act or the Rules and Regulations, the Company will promptly
notify the Placement Agent and, subject to Section 4(b) hereof, will promptly
prepare and file with the Commission, at the Company’s expense, an amendment to
the Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance and will deliver
to the Placement Agent, without charge, such number of copies thereof as the
Placement Agent may reasonably request. The Company consents to the use of the
Prospectus or any amendment or supplement thereto by the Placement Agent, and
the Placement Agent agrees to provide to each Investor, prior to the Closing, a
copy of the Prospectus and any amendments or supplements thereto.
 
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(e)    Delivery of Copies. To deliver promptly to the Placement Agent and its
counsel such number of the following documents as the Placement Agent shall
reasonably request: (i) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment thereto (in each case
excluding exhibits), (ii) so long as a prospectus relating to the Securities is
required to be delivered under the Securities Act, as many copies of the
Prospectus or any amendment or supplement thereto; (iii) any document
incorporated by reference in the Prospectus and (iv) all correspondence to and
from, and all documents issued to and by, the Commission in connection with the
registration of the Securities under the Securities Act. The Company will pay
the expenses of printing or other production of all documents relating to the
Offering.
 
(f)    Use of Proceeds. The Company will apply the net proceeds from the sale of
the Securities in the manner set forth in the Prospectus under the heading “Use
of Proceeds”.
 
(g)    Reports. During a period of three years commencing with the date hereof,
the Company will furnish to the Placement Agent, copies of all periodic and
special reports furnished to the stockholders of the Company and all
information, documents and reports filed with the Commission, the NASD, Nasdaq
or any securities exchange (other than any such information, documents and
reports that are filed with the Commission electronically via EDGAR or any
successor system).
 
(h)    Blue Sky Compliance. The Company will promptly take from time to time
such actions as the Placement Agent may reasonably request to qualify the
Securities for offering and sale under the securities, or blue sky, laws of such
jurisdictions as the Placement Agent may designate and to continue such
qualifications in effect for so long as required for the distribution of the
Securities and will pay the fee, if any, of the NASD in connection with its
review of the Offering. The Company shall not be obligated to qualify as a
foreign corporation in any jurisdiction in which it is not so qualified or to
file a general consent to service of process in any jurisdiction or subject
itself to taxation as doing business in any jurisdiction.
 
(i)    Lock-Up Agreements. The Company will cause each of its executive officers
and directors whose names are set forth on Exhibit D hereto to furnish to the
Placement Agent, prior to the Closing Date, a letter, substantially in the form
of Exhibit E hereto (the “Lock-Up Agreement”). The Company will enforce the
terms of each Lock-Up Agreement and issue stop transfer instructions to the
transfer agent for the AR-CombiMatrix Common Stock with respect to any
transaction or contemplated transaction that would constitute a breach or
default under the applicable Lock-Up Agreement.
 
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(j)    Press Releases. Prior to the Closing Date, the Company will not issue any
press release or other communication directly or indirectly or hold any press
conference with respect to the Company, its Subsidiaries, its condition,
financial or otherwise, or earnings, business affairs or business prospects
(except for routine oral marketing communications in the ordinary course of
business and consistent with the past practices of the Company and of which the
Placement Agent is notified), without the prior written consent of the Placement
Agent, unless in the reasonable judgment of the Company and its counsel, and
after notification to the Placement Agent, such press release or communication
is required by law.
 
(k)    Compliance with Laws. The Company will comply in all material respects
with all applicable securities and other applicable laws, rules and regulations,
including, without limitation, the Sarbanes-Oxley Act, and use its best efforts
to cause the Company’s directors and officers, in their capacities as such, to
comply with such laws, rules and regulations, including, without limitation, the
provisions of the Sarbanes-Oxley Act.
 
(l)    Maintenance of Internal Procedures. The Company and its Subsidiaries will
maintain such controls and other procedures, including without limitation those
required by Sections 302 and 906 of the Sarbanes-Oxley Act and the applicable
regulations thereunder, that are designed to ensure that information required to
be disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Commission’s rules and forms, including without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Company’s management,
including its principal executive officer and its principal financial officer,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure, to ensure that material information
relating to Company, including its Subsidiaries, is made known to them by others
within those entities.
 
(m)    Transfer Agent. The Company shall engage and maintain, at its expense, a
registrar and transfer agent for the Securities.
 
(n)    Reservation of Stock. The Company shall reserve and keep available at all
times a sufficient number of shares of AR-CombiMatrix Common Stock for the
purpose of enabling the Company to issue the Warrant Shares.
 
(o)    Listing. The Company shall use its best efforts to cause the
qualification of the Shares and Warrant Shares for quotation on the Nasdaq
Global Market.
 
(p)    SEDA Termination. At or prior to Closing, the Company shall terminate its
equity line with Cornell Capital Partners, LP pursuant to a standby equity
distribution agreement dated as of June 14, 2006.
 
(q)    Issuance of Securities. For purposes of this subsection (q), the
following definitions shall apply:
 
(i)    “Approved Stock Plan” means any employee benefit plan which has been
approved by the Board of Directors of the Company, pursuant to which the
Company’s securities may be issued to any employee, officer or director for
services provided to the Company.
 
(ii)   “Common Stock Equivalents” means, collectively, Options and Convertible
Securities.
 
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(iii)          “Convertible Securities” means any stock or securities (other
than Options) convertible into or exercisable or exchangeable for AR -
CombiMatrix Common Stock.
 
(iv)   “Excluded Securities” means AR - CombiMatrix Common Stock issued or
issuable: (i) as a stock dividend to holders of AR - CombiMatrix Common Stock or
upon any subdivision or combination of shares of AR - CombiMatrix Common Stock;
(ii) in connection with any Approved Stock Plan; (iii) any securities issued to
the seller as consideration for the acquisition of another entity by the Company
by merger or share exchange (whereby the Company owns no less than 51% of the
voting power of the surviving entity) or purchase of substantially all of such
entity’s stock or assets; (iv) any securities issued in connection with a
license, strategic partnership, joint venture or other similar agreement,
provided that the purpose of such arrangement is not primarily the raising of
capital; (v) upon exercise of warrants issued as a part of the issuance of
straight debt securities (with no equity or equity-linked feature) issued to a
financial institution or lender in connection with a bank loan, credit, lease,
or other debt transaction with such financial institution or lender (where
warrant coverage is not greater than 5%); or (vi) upon conversion of any Options
or Convertible Securities which are outstanding on the day immediately preceding
the Closing Date, provided that the terms of such Options or Convertible
Securities are not amended, modified, or changed on or after the Closing Date.
 
(v)    “Options” means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.
 
From the date hereof until the date that is 90 days after the Closing Date, the
Company will not, directly or indirectly, offer, sell, grant any option to
purchase, or otherwise dispose of (or announce any offer, sale, grant or any
option to purchase or other disposition of) any of its or its subsidiaries’
equity or equity equivalent securities, including without limitation any debt,
preferred stock or other instrument or security that is, at any time during its
life and under any circumstances, convertible into or exchangeable or
exercisable for shares of AR - CombiMatrix Common Stock or Common Stock
Equivalents. The restrictions contained in this section shall not apply in
connection with the issuance of any Excluded Securities.
 
5.    Payment Of Expenses. The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement is terminated, will pay
or cause to be paid all costs and expenses incident to the performance of the
obligations of the Company under this Agreement, including but not limited to
costs and expenses of or relating to (i) the preparation, printing, filing,
delivery, and shipping (including costs of mailing) of the Registration
Statement (including the financial statements therein and all amendments,
schedules, and exhibits thereto), the Base Prospectus, each Prospectus
Supplement, the Prospectus, and any amendment thereof or supplement thereto,
(ii) the registration, issue, sale and delivery of the Securities including any
stock or transfer taxes and stamp or similar duties payable upon the sale,
issuance or delivery of the Securities and the printing, delivery, and shipping
of the certificates representing the Securities, (iii) all filing fees and fees
and disbursements of the Placement Agent’s counsel incurred in connection with
the registration or qualification of the Securities for offering and sale by the
Company under the securities or blue sky laws of such jurisdictions designated
pursuant to Section 4(i), including the preparation and printing of preliminary,
supplemental and final Blue Sky Memoranda, (iv) the fees and expenses of any
transfer agent or registrar for the Securities, (v) fees, disbursements and
other charges of counsel to the Company, (vi) if applicable, the filing fees of
the NASD in connection with its review of the terms of the public offering and
reasonable fees and disbursements of counsel for the Placement Agent in
connection with such review (including all COBRADesk fees), (vii) listing fees,
if any, for the quotation of the AR-CombiMatrix Common Stock on the Nasdaq
Global Market, (viii) fees and disbursements of the Auditors incurred in
delivering the letters) described in Section 6(g) of this Agreement, (ix) at the
Closing, the fees and expenses of counsel for the Placement Agent in connection
with the Offering, and (x) the reasonable costs and expenses of the Company and
the Placement Agent incurred in connection with the marketing of the offering
and the sale of the Securities to prospective investors including, but not
limited to, those related to any presentations or meetings undertaken in
connection therewith including, without limitation, (A) expenses associated with
the production of road show slides and graphics, (B) fees and expenses of any
consultants engaged with the consent of the Company in connection with the road
show presentations, and (C) travel, lodging and other expenses incurred by the
officers of the Company and any such consultants. Notwithstanding anything
contained in the foregoing or elsewhere in this Agreement, the Company’s
obligations to reimburse the Placement Agent for its actual out-of-pocket
expenses, including reasonable legal fees and disbursements, shall not in the
aggregate exceed $50,000.
 
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6.    Conditions of Placement Agent’s Obligations. The respective obligations of
the Placement Agent and the Investors and the closing of the sale of the Units
are subject to the following conditions:
 
(a)    No stop order suspending the effectiveness of the Registration Statement
or the qualification or registration of the Securities under the securities or
Blue Sky laws of any jurisdiction shall be in effect and no proceedings for that
purpose shall have been initiated or threatened by any securities or other
governmental authority (including, without limitation, the Commission), and any
request for additional information on the part of the staff of any securities or
other governmental authority (including, without limitation, the Commission)
shall have been complied with to the satisfaction of the staff of the Commission
or such other authorities and after the date hereof no amendment or supplement
to the Registration Statement or the Prospectus shall have been filed unless a
copy thereof was first submitted to the Placement Agent and the Placement Agent
did not reasonably object thereto in good faith.
 
(b)    Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall not have been (i) any
change in the capital stock or long-term debt of the Company or any of its
Subsidiaries or any change, or any development involving a prospective change,
whether or not arising from transactions in the ordinary course of business, in
or affecting the business, general affairs, management, financial position,
stockholders’ equity, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole, or (ii) any loss or interference with its
business from fire, explosion, storm, flood, act of war, terrorist act or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth in or
contemplated by the Registration Statement or the Prospectus, the effect of
which, in any such case described in clauses (i) and (ii) above, is, in the
judgment of the Placement Agent, so material and adverse as to make it
impracticable or inadvisable to proceed with the sale or delivery of the
Securities on the terms and in the manner contemplated by the Prospectus.
 
(c)    The Placement Agent shall not have discovered and disclosed to the
Company on or prior to the Closing Date that (i) the Registration Statement, or
any amendment or supplement thereto contains an untrue statement of a fact
which, in the opinion of the counsel to the Placement Agent, is material, or
omits to state any fact which, in the opinion of the counsel to the Placement
Agent, is material and is required to be stated therein or is necessary to make
the statements therein not misleading, or (ii) the Prospectus, or any amendment
or supplement thereto contains an untrue statement of a fact which, in the
opinion of the counsel to the Placement Agent, is material, or omits to state
any fact which, in the opinion of the counsel to the Placement Agent, is
material and is required to be stated therein or is necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
 
(d)    Each of the representations and warranties of the Company contained
herein shall be true and correct at the Closing Date, as if made on such date,
and all covenants and agreements herein contained to be performed on the part of
the Company and all conditions herein contained to be fulfilled or complied with
by the Company at or prior to the Closing Date shall have been duly performed,
fulfilled or complied with.
 
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(e)    The Placement Agent shall have received (i) from Greenberg Traurig, LLP,
corporate counsel to the Company, such counsel’s written opinion, addressed to
the Placement Agent and dated the Closing Date, in form and substance as is set
forth on Exhibit F-1 attached hereto, and (ii) from Michael D. Vrbanac, in-house
counsel for the Company, such counsel’s written opinion addressed to the
Placement Agent and dated the Closing Date, in form and substance as is set
forth on Exhibit F-2 attached hereto.
 
(f)    The Placement Agent shall have received from Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., such opinion or opinions, dated the Closing Date and
addressed to the Placement Agent, covering such matters as are customarily
covered in transactions of this type, and the Company shall have furnished to
such counsel such documents as it requests for the purpose of enabling it to
pass upon such matters.
 
(g)    Concurrently with the execution and delivery of this Agreement, or, if
the Company elects to rely on Rule 430A, on the date of the Prospectus
Supplement, the Auditors shall have furnished to the Placement Agent a letter,
dated the date of its delivery (the “Original Letter”), addressed to the
Placement Agent and in form and substance reasonably satisfactory to the
Placement Agent, containing statements and information of the type customarily
included in accountants’ “comfort letters” to underwriters. At the Closing Date,
the Auditors shall have furnished to the Placement Agent a letter, dated the
date of its delivery, which shall confirm, on the basis of a review in
accordance with the procedures set forth in the Original Letter, that nothing
has come to their attention during the period from the date of the Original
Letter referred to in the prior sentence to a date (specified in the letter) not
more than three days prior to the Closing Date which would require any change in
the Original Letter if it were required to be dated and delivered at the Closing
Date .
 
(h)    The Placement Agent shall have received on the Closing Date a
certificate, addressed to the Placement Agent and dated the Closing Date, of the
chief executive or chief operating officer and the chief financial officer or
chief accounting officer of the Company to the effect that:
 
(i)    the representations, warranties and agreements of the Company in this
Agreement were true and correct when made and are time and correct as of the
Closing Date; and the Company has complied with all agreements and satisfied all
the conditions on its part required under this Agreement to be performed or
satisfied at or prior to the Closing Date;
 
(ii)   the Registration Statement is effective and, to their knowledge, as of
the Closing Date, no stop order or other order suspending the effectiveness of
the Registration Statement or any amendment thereof or the qualification of the
Securities for offering or sale has been issued, and no proceeding for that
purpose has been instituted or are pending before or are contemplated by the
Commission or any state or regulatory body;
 
(iii)          the signers of said certificate have carefully examined the
Registration Statement and the Prospectus, and any amendments thereof or
supplements thereto (and any documents filed under the Exchange Act and deemed
to be incorporated by reference into the Prospectus), and (A) the Registration
Statement, or any amendment thereof, does not contain any 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 the Prospectus,
as amended or supplemented, does not include any untrue statement of material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
(B) no event has occurred as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein not untrue or
misleading in any material respect; and
 
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(iv)          subsequent to the date of the most recent financial statements
included or incorporated by reference in the Prospectus, there has been no
change in the financial position or results of operation of the Company and its
Subsidiaries that would reasonably be expected to result in a Material Adverse
Effect, or any change, or any development including a prospective change, in or
affecting the condition (financial or otherwise), results of operations,
business or prospects of the Company and its Subsidiaries taken as a whole,
except as set forth in the Prospectus.
 
(i)    The Shares and the Warrant Shares shall be registered under the Exchange
Act and shall have been approved for quotation on the Nasdaq Global Market and
listed and admitted and authorized for trading on the Nasdaq Global Market,
subject only to official notice of issuance. Satisfactory evidence of such
actions shall have been provided to the Placement Agent.
 
(j)    No action shall have been taken and no statute, rule, regulation or order
shall have been enacted, adopted or issued by any governmental agency or body
which would, as of the Closing Date, prevent the issuance or sale of the
Securities; and no injunction, restraining order or order of any other nature by
any federal or state court of competent jurisdiction shall have been issued as
of the Closing Date which would prevent the issuance or sale of the Securities.
 
(k)    The Prospectus Supplement shall have been filed with the Commission
pursuant to Rule 424(b) under the Securities Act before 5:30 P.M. New York City
time on the business day after the date of this Agreement.
 
(l)    The Company shall have prepared and filed with the Commission a Current
Report on Form 8-K with respect to the transactions contemplated hereby,
including as an exhibit thereto this Agreement and any other documents relating
thereto.
 
(m)    The Company shall have entered into Subscription Agreements with each of
the Investors.
 
(n)    Subsequent to the execution and delivery of this Agreement, there shall
not have occurred any of the following: (i) trading in securities generally on
the New York Stock Exchange, the Nasdaq Global Market or the American Stock
Exchange or in the over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market, shall have been
suspended or minimum or maximum prices or maximum ranges for prices shall have
been established on any such exchange or such market by the Commission, by such
exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by federal or
state authorities or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States, (iii) the
United States shall have become engaged in hostilities, or the subject of an act
of terrorism, there shall have been an escalation in hostilities involving the
United States or there shall have been a declaration of a national emergency or
war by the United States or (iv) there shall have occurred any other calamity or
crisis or any change in general economic, political or financial conditions in
the United States or elsewhere, if the effect of any such event in clause (iii)
or (iv) makes it, in the sole judgment of the Placement Agent, impracticable or
inadvisable to proceed with the sale or delivery of the Units on the terms and
in the manner contemplated by the Registration Statement and the Prospectus.
 
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(o)    The NASD shall have raised no objection to the fairness and
reasonableness of the placement agency terms and arrangements.
 
(p)    The Placement Agent shall have received copies of the executed Lock-Up
Agreements executed by each person listed on Exhibit E hereto, and such Lock-Up
Agreements shall be in full force and effect on the Closing Date.
 
(q)    Prior to the Closing Date, the Company shall have furnished to the
Placement Agent such further information, certificates or documents as the
Placement Agent shall have reasonably requested.
 
All opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Placement Agent. The Company will furnish you with such conformed copies of
such opinions, certificates, letters and other documents as you shall reasonably
request.
 
7.    Indemnification and Contribution.
 
(a)    Indemnification of the Placement Agent. The Company shall indemnify and
hold harmless the Placement Agent, its directors, officers, managers, members,
employees, and agents and each person, if any, who controls the Placement Agent
within the meaning of the Securities Act (collectively the “Placement Agent
Indemnified Parties” and each a “Placement Agent Indemnified Party”) against any
loss, claim, damage, expense or liability, joint or several, or any action,
investigation or proceeding in respect thereof, to which the Placement Agent
Indemnified Party may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, expense, liability, action, investigation
or proceeding arises out of or is based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Base Prospectus, the
Registration Statement, any Preliminary Prospectus, any Issuer Free Writing
Prospectus, any “issuer information” filed or required to be filed pursuant to
Rule 433(d) of the Rules and Regulations or the Prospectus, or in any amendment
or supplement thereto or document incorporated by reference therein, (ii) the
omission or alleged omission to state in the Base Prospectus, the Registration
Statement, any Preliminary Prospectus, any Issuer Free Writing Prospectus, any
“issuer information” filed or required to be filed pursuant to Rule 433(d) of
the Rules and Regulations or the Prospectus, or in any amendment or supplement
thereto or document incorporated by reference therein, a material fact required
to be stated therein or necessary to make the statements therein not misleading,
(iii) any breach of the representations and warranties of the Company contained
herein, or (iv) any act or failure to act, or any alleged act or failure to act,
by the Placement Agent in connection with, or relating in any manner to, the
Units or the Offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, expense, liability, action,
investigation or proceeding arising out of or based upon matters covered by
clause (i), (ii) or (iii) above; (provided that the Company shall not be liable
in the case of any matter covered by this clause (iv) to the extent that it is
determined in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, expense, liability or action resulted directly from any
such act or failure to act undertaken or omitted to be taken by the Placement
Agent through its gross negligence or willful misconduct) and shall reimburse
each Placement Agent Indemnified Party promptly upon demand for any legal or
other expenses reasonably incurred by that Placement Agent Indemnified Party in
connection with investigating or preparing to defend or defending against or
appearing as a third party witness in respect of, or otherwise incurred in
connection with any such loss, claim, damage, expense, liability, action,
investigation or proceeding as such fees and expenses are incurred; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, expense, liability, action, investigation or
proceeding arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from the Base Prospectus, the
Registration Statement, any Preliminary Prospectus, any Issuer Free Writing
Prospectus, any “issuer information” filed or required to be filed pursuant to
Rule 433(d) of the Rules and Regulations or the Prospectus, or in any amendment
or supplement thereto made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Placement Agent
through the Placement Agent specifically for use therein, which information the
parties hereto agree is limited to the Placement Agent’s Information (as defined
in Section 16 ). This indemnity agreement is not exclusive and will be in
addition to any liability, which the Company might otherwise have and shall not
limit any rights or remedies which may otherwise be available at law or in
equity to each Placement Agent Indemnified Party.
 
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(b)    Indemnification of the Company. The Placement Agent shall indemnify and
hold harmless the Company its officers, employees, and agents, each of its
directors and each person, if any, who controls the Company within the meaning
of the Securities Act (collectively the “Company Indemnified Parties” and each a
“Company Indemnified Party”) against any loss, claim, damage, expense or
liability, joint or several, or any action, investigation or proceeding in
respect thereof, to which the Company Indemnified Parties may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of or is based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the Base Prospectus,
the Registration Statement, any Preliminary Prospectus, any Issuer Free Writing
Prospectus, any “issuer information” filed or required to be filed pursuant to
Rule 433(d) of the Rules and Regulations or the Prospectus, or in any amendment
or supplement thereto, or (ii) the omission or alleged omission to state in the
Base Prospectus, the Registration Statement, any Preliminary Prospectus, any
Issuer Free Writing Prospectus, any “issuer information” filed or required to be
filed pursuant to Rule 433(d) of the Rules and Regulations or the Prospectus, or
in any amendment or supplement thereto, a material fact required to be stated
therein or necessary to make the statements therein not misleading, but in each
case only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Placement
Agent through the Placement Agent specifically for use therein, and shall
reimburse the Company Indemnified Parties for any legal or other expenses
reasonably incurred by such parties in connection with investigating or
preparing to defend or defending against or appearing as third party witness in
connection with any such loss, claim, damage, expense, liability or action,
investigation or proceeding as such fees and expenses are incurred; provided
that the parties hereto hereby agree that such written information provided by
the Placement Agent consist solely of the Placement Agent’s Information. This
indemnity agreement is not exclusive and will be in addition to any liability,
which the Placement Agent and Investors might otherwise have and shall not limit
any rights or remedies which may otherwise be available at law or in equity to
the Company Indemnified Parties. Notwithstanding the provisions of this Section
7(b) , in no event shall any indemnity by the Placement Agent under this Section
7(b) exceed the total compensation received by the Placement Agent in accordance
with Section 1(a).
 
(c)    Notice and Procedures. Promptly after receipt by an indemnified party
under this Section 7 of notice of any claim or the commencement of any action,
the indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under this Section 7, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 7 except to the extent it has
been materially prejudiced by such failure; and, provided, further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 7.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
employment thereof has been specifically authorized by the indemnifying party in
writing, (ii) such indemnified party shall have been advised by such counsel
that there may be one or more legal defenses available to it which are different
from or additional to those available to the indemnifying party and in the
reasonable judgment of such counsel it is advisable for such indemnified party
to employ separate counsel or (iii) the indemnifying party has failed to assume
the defense of such action in accordance with the terms hereof and employ
counsel reasonably satisfactory to the indemnified party, in which case, if such
indemnified party notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such action
on behalf of such indemnified party, it being understood, however, that the
indemnifying party shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for all such indemnified parties, which firm shall be designated in writing
by the Placement Agent, if the indemnified parties under this Section 7 consist
of any Placement Agent Indemnified Party, or by the Company if the indemnified
parties under this Section 7 consist of any Company Indemnified Parties. Each
indemnified party, as a condition of the indemnity agreements contained in
Sections 7(a) and 7(b) shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. Subject to the
provisions of Section 7(d) below, no indemnifying party shall be liable for any
settlement, compromise or consent to the entry of judgment in connection with
any such action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action (other than a judgment
entered with the consent of such indemnified party), the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
 
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(d)    Reimbursement for Fees and Expenses of Counsel. If at any time an
indemnified party shall have requested that an indemnifying party reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
this Section 7 effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
request for reimbursement, (ii) such indemnifying party shall have received
notice of the terms of such settlement at least 30 days prior to such settlement
being entered into and (iii) such indemnifying party shall not have reimbursed
such indemnified party in accordance with such request prior to the date of such
settlement.
 
(e)    Contribution; Limitation on Liability. If the indemnification provided
for in this Section 7 is unavailable or insufficient to hold harmless an
indemnified party under Section 7(a) or 7(b), then each indemnifying party
shall, in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof, (i) in such proportion as
shall be appropriate to reflect the relative benefits received by the Company on
the one hand and the Placement Agent on the other from the offering of the Units
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and the Placement Agent on the other with respect to
the statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Placement Agent on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Units purchased under this Agreement (before deducting expenses) received
by the Company bears to the total compensation received by the Placement Agent
with respect to the Units purchased under this Agreement. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company on the
one hand or the Placement Agent on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission; provided that the parties hereto
agree that the written information furnished to the Company by the Placement
Agent for use in the Prospectus, or in any amendment or supplement thereto,
consists solely of the Placement Agent’s Information. The Company and the
Placement Agent agree that it would not be just and equitable if contributions
pursuant to this Section 7(e) were to be determined by pro rata allocation or by
any other method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 7(e) shall be deemed to include, for
purposes of this Section 7(e), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7(e), the
Placement Agent shall not be required to contribute any amount in excess of the
total compensation received by the Placement Agent in accordance with Section
1(e) less the amount of any damages which the Placement Agent has otherwise paid
or become liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
 
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8.    Representations and Agreements to Survive Delivery.  All representations,
warranties, and agreements of the Company herein or in certificates delivered
pursuant hereto, and the agreements of the Placement Agent and the Company
contained in Section 7 hereof, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Placement
Agent or any controlling person thereof, or the Company or any of its officers,
directors, or controlling persons and shall survive delivery of, and payment
for, the Units.
 
9.    Termination.
 
(a)    The obligations of the Placement Agent and the Investors hereunder and
under the Subscription Agreements may be terminated by the Placement Agent, in
its absolute discretion by notice given to the Company prior to delivery
(including electronic delivery) of and payment for the Units if, prior to that
time, any of the events described in Sections 6(b) and 6(n) have occurred or if
the Investors shall decline to purchase the Units for any reason permitted under
this Agreement or the Subscription Agreements.
 
(b)    If the sale of the Units provided for herein is not consummated because
any condition to the obligations of the Placement Agent set forth in Section 6
hereof is not satisfied, because of any termination pursuant to Section 9(a)
hereof or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof
other than by reason of a default by the Placement Agent, the Company will
reimburse the Placement Agent upon demand for all out-of-pocket expenses
(including fees and disbursements of counsel and any expenses advanced by the
Placement Agent on the Company’s behalf) that shall have been incurred by the
Placement Agent in connection with this Agreement and the proposed purchase and
sale of the Units and, upon demand, the Company shall pay the full amount
thereof to the Placement Agent.
 
10.           Notices. All statements, requests, notices and agreements
hereunder shall be in writing, and:
 
(a)    if to the Placement Agent, shall be delivered or sent by mail, telex or
facsimile transmission to Oppenheimer & Co. Inc., 125 Broad Street, New York,
New York 10004, Attention: Kee Colen (Fax: 212-425-2028), with a copy to Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 666 Third Avenue, New York, New
York, 10017, Attention: Ivan Blumenthal (Fax: 212-983-3115);
 
(b)    if to the Company shall be delivered or sent by mail, telex or facsimile
transmission to Acacia Research Corporation, 500 Newport Center Drive, 7th
Floor, Newport Beach, California 92660 Attention: Chief Financial Officer (Fax:
949-480-8393), with a copy to: Greenberg Traurig, LLP, 650 Town Center Drive,
Suite 1700, Costa Mesa, California 92626, Attention: Raymond A. Lee, Esq. (Fax:
714-708-6501).
 
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11.    Persons Entitled to Benefit of Agreement. This Agreement shall inure to
the benefit of and shall be binding upon the Placement Agent, the Investors, the
Company, and their respective successors and assigns and the controlling
persons, officers and directors referred to in Section 7. Nothing in this
Agreement is intended or shall be construed to give to any other person, firm or
corporation, other than the persons, firms or corporations mentioned in the
preceding sentence, any legal or equitable remedy or claim under or in respect
of this Agreement, or any provision herein contained. The term “successors and
assigns” as herein used shall not include any purchaser by reason merely of such
purchase.
 
12.    Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
conflicts of laws provisions thereof
 
13.    Counterparts. This Agreement may be executed in one or more counterparts
and, if executed in more than one counterpart, the executed counterparts shall
each be deemed to be an original and all such counterparts shall together
constitute one and the same instrument.
 
14.    General Provisions. This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. In this Agreement, the masculine, feminine and neuter
genders and the singular and the plural include one another. The section
headings in this Agreement are for the convenience of the parties only and will
not affect the construction or interpretation of this Agreement. This Agreement
may be amended or modified, and the observance of any term of this Agreement may
be waived, only by a writing signed by the Company and the Placement Agent.
 
15.    [Intentionally Omitted]
 
16.    Placement Agent’s Information. The parties hereto acknowledge and agree
that, for all purposes of this Agreement, the Placement Agent’s Information
consists solely of the statements concerning the Placement Agent contained in
the section under the heading “Plan of Distribution” in the Prospectus
Supplement.
 
17.    Absence of Fiduciary Relationship. The Company acknowledges and agrees
that in connection with the Offering:
 
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(a)    The Placement Agent’s responsibility to the Company is solely contractual
in nature, the Placement Agent has been retained solely to act as placement
agent in connection with the sale of the Units and no fiduciary, advisory or
agency relationship between the Company and the Placement Agent has been created
in respect of any of the transactions contemplated by this Agreement,
irrespective of whether the Placements Agent has advised or is advising the
Company on other matters;
 
(b)    The price of the Units set forth in this Agreement was established by the
Company following discussions and arms-length negotiations with the Investors
and the Placement Agent, and the Company is capable of evaluating and
understanding, and understands and accepts, the terms, risks and conditions of
the transactions contemplated by this Agreement;
 
(c)    The Company has been advised that the Placement Agent and its affiliates
are engaged in a broad range of transactions which may involve interests that
differ from those of the Company; and
 
(d)    The Company waives, to the fullest extent permitted by law, any claims
that the Company may have against the Placement Agent with respect to any breach
of fiduciary duty in connection with the sale of the Units.
 
18.    Partial Unenforceability. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
 
 
[Signature Page Follows]
 
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If the foregoing is in accordance with your understanding of the agreement
between the Company and the Placement Agent, kindly indicate your acceptance in
the space provided for that purpose below.
 

       
Very truly yours,
 
ACACIA RESEARCH CORPORATION
 
   
      By:  
/s/ Paul R.
Ryan                                                                    
  Name: Paul R. Ryan   Title:  CEO

 
Accepted as of
the date first above written:
 
OPPENHEIMER & CO. INC.
 
By:       /s/ Kee
Colen                                                            
Name:  Kee Colen
Title:    Managing Director
 
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Schedules and Exhibits
 
Schedule I:         Subsidiaries of the Company
 
Exhibit A:    Form of Subscription Agreement
 
Exhibit B:    Form of Investor Warrant
 
Exhibit C:    Form of Placement Agent’s Warrant
 
Exhibit D:    Form of Lock-Up Agreement
 
Exhibit E:    List of Directors and Executive Officers Executing Lock-Up
Agreements
 
Exhibit F:    Matters to be Covered in the Opinion of Counsel to the Company
 

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Schedule I
 
Subsidiaries of the Company
 

The following is a listing of the significant subsidiaries of Acacia Research
Corporation: 

 
Jurisdiction of Incorporation
CombiMatrix Corporation
Delaware
Acacia Global Acquisition Corporation
Delaware
IP Innovation LLC
Texas (as of 12/31/05, not as 9/30//06)
Computer Docking Station Corporation
Delaware (not as of 12/31/05, as of 9/30/06)

 

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Exhibit A
 
Form of Subscription Agreement
 
 
 
Filed as Exhibit 10.2 to this Current Report on Form 8-K.

--------------------------------------------------------------------------------

Exhibit B
 
Form of Investor Warrant
 
 
Filed as Exhibit 10.3 to this Current Report on Form 8-K.

--------------------------------------------------------------------------------

Exhibit C
 
Form of Placement Agent’s Warrant
 
 
ACACIA RESEARCH CORPORATION
 
WARRANT TO PURCHASE COMMON STOCK
 
December 13, 2006
 
Void After December 13, 2011
 
THIS CERTIFIES THAT, for value received, OPPENHEIMER & CO. INC., or permitted
registered assigns (the “Holder”), is entitled to subscribe for and purchase at
the Exercise Price (defined below) from Acacia Research Corporation, a Delaware
corporation (the “Company”), up to 488,416 shares of the Company’s Acacia
Research-CombiMatrix common stock, par value $0.001 per share (the “Common
Stock”).
 
1. DEFINITIONS. As used herein, the following terms shall have the following
respective meanings:
 
(a) “Exercise Period” shall mean the period commencing on the date that is 181
days from the date hereof and ending five (5) years from the date hereof, unless
sooner terminated as provided below.
 
(b) “Exercise Price” shall mean $1.0875 per share, subject to adjustment
pursuant to Section 5 below.
 
(c) “Exercise Shares” shall mean the shares of Common Stock issuable upon
exercise of this Warrant.
 
(d) “Trading Day” shall mean (a) any day on which the Common Stock is listed or
quoted and traded on its primary Trading Market, (b) if the Common Stock is not
then listed or quoted and traded on any Eligible Market, then a day on which
trading occurs on the OTC Bulletin Board (or any successor thereto), or (c) if
trading does not occur on the OTC Bulletin Board (or any successor thereto), any
Business Day.

2. EXERCISE OF WARRANT.  The rights represented by this Warrant may be exercised
in whole or in part at any time during the Exercise Period, by delivery of the
following to the Company at its address set forth on the signature page hereto
(or at such other address as it may designate by notice in writing to the
Holder):
 
(a) An executed Notice of Exercise in the form attached hereto;

(b) Payment of the Exercise Price either (i) in cash or by check, (ii) by
cancellation of indebtedness, or (iii) pursuant to Section 2.1 below; and

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(c) This Warrant.
 
The Holder shall not be required to deliver the original Warrant in order to
effect the exercise hereunder. Execution and delivery of the Notice of Exercise
shall have the same effect as cancellation of the original Warrant and issuance
of a new Warrant evidencing the right to purchase the remaining number of
Exercise Shares.

Certificates for shares purchased hereunder shall be transmitted by the transfer
agent of the Company to the Holder by crediting the account of the Holder’s
prime broker with the  Depository Trust Company through its Deposit Withdrawal
Agent Commission system if the Company is a participant in such system, and
otherwise by physical delivery to the address specified by the Holder in the
Notice of Exercise within three business days from the delivery to the Company
of the Notice of Exercise, surrender of this Warrant and payment of the
aggregate Exercise Price as set forth above.  This Warrant shall be deemed to
have been exercised on the date the Exercise Price is received by the Company. 
The Exercise Shares shall be deemed to have been issued, and Holder or any other
person so designated to be named therein shall be deemed to have become a holder
of record of such shares for all purposes, as of the date the Warrant has been
exercised by payment to the Company of the Exercise Price.
 
In addition to any other rights available to the Holder, if the Company fails to
deliver to the Holder a certificate representing Exercise Shares by the third
Trading Day after the date on which delivery of such certificate is required by
this Warrant, and if after such third Trading Day the Holder purchases (in an
open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Shares that the Holder
anticipated receiving from the Company (a “Buy-In”), then in the Holder’s sole
discretion, the Company shall within three Trading Days after the Holder’s
request, either (i) pay cash to the Holder in an amount equal to the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased less the Exercise Price (the “Buy-In Price”), at which
point the Company’s obligation to deliver such certificate (and to issue such
Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver
to the Holder a certificate or certificates representing such Common Stock and
pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In
Price over the product of (A) such number of shares of Common Stock, times (B)
the Closing Price on the date of the event giving rise to the Company’s
obligation to deliver such certificate.
 
The person in whose name any certificate or certificates for Exercise Shares are
to be issued upon exercise of this Warrant shall be deemed to have become the
holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the date
of delivery of such certificate or certificates, except that, if the date of
such surrender and payment is a date when the stock transfer books of the
Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.

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To the extent permitted by law, the Company’s obligations to issue and deliver
Exercise Shares in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any person or entity or any action to enforce
the same, or any setoff, counterclaim, recoupment, limitation or termination, or
any breach or alleged breach by the Holder or any other person or entity of any
obligation to the Company or any violation or alleged violation of law by the
Holder or any other person or entity, and irrespective of any other circumstance
which might otherwise limit such obligation of the Company to the Holder in
connection with the issuance of Exercise Shares. Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.

This Warrant shall be non-callable.

If immediately prior to the end of the Exercise Period, this Warrant has not
been previously exercised, this Warrant shall automatically be exercised
pursuant to Section 2.1 below.

2.1. Net Exercise.  If during the Exercise Period, the fair market value of one
share of the Common Stock is greater than the Exercise Price (at the date of
calculation as set forth below), in lieu of exercising this Warrant by payment
of cash or by check, or by cancellation of indebtedness, the Holder may elect to
receive shares equal to the value (as determined below) of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal
office of the Company together with the properly endorsed Notice of Exercise in
which event the Company shall issue to the Holder a number of shares of Common
Stock computed using the following formula:
 
X =    Y (A-B)    
A
 
Where X = the number of shares of Common Stock to be issued to the Holder

Y =
the number of shares of Common Stock purchasable under the Warrant or, if only a
portion of the Warrant is being exercised, the portion of the Warrant being
canceled (at the date of such calculation)
  
 
A =
the fair market value of one share of the Company’s Common Stock (at the date of
such calculation)
 
 
 B =
Exercise Price (as adjusted to the date of such calculation)

 
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For purposes of the above calculation, the “fair market value” of one share of
Common Stock shall mean (i) the average of the closing sales prices for the
shares of Common Stock on the Nasdaq Global Market or other trading market where
such security is listed or traded as reported by Bloomberg Financial Markets (or
a comparable reporting service of national reputation selected by the Company
and reasonably acceptable to the Holder if Bloomberg Financial Markets is not
then reporting sales prices of such security) (collectively, “Bloomberg”) for
the trading day immediately preceding such date, or (ii) if the Nasdaq Global
Market is not the principal trading market for the shares of Common Stock, the
average of the reported sales prices reported by Bloomberg on the principal
trading market for the Common Stock during the same period, or, if there is no
sales price for such period, the last sales price reported by Bloomberg for such
period, or (iii) if neither of the foregoing applies, the last sales price of
such security in the over-the-counter market on the pink sheets or bulletin
board for such security as reported by Bloomberg, or if no sales price is so
reported for such security, the last bid price of such security as reported by
Bloomberg or (iv) if fair market value cannot be calculated as of such date on
any of the foregoing bases, the fair market value shall be as determined by the
Board of Directors of the Company in the exercise of its good faith judgment. 
 
2.2. Issuance of New Warrants.  Upon any partial exercise of this Warrant, the
Company, at its expense, will forthwith and, in any event within five business
days, issue and deliver to the Holder a new warrant or warrants of like tenor,
registered in the name of the Holder, exercisable, in the aggregate, for the
balance of the number of shares of Common Stock remaining available for purchase
under the Warrant.
 
2.3. Payment of Taxes and Expenses.  The Company shall pay any recording,
filing, stamp or similar tax which may be payable in respect of any transfer
involved in the issuance of, and the preparation and delivery of certificates
(if applicable) representing, (i) any Exercise Shares purchased upon exercise of
this Warrant and/or (ii) new or replacement warrants in the Holder’s name or the
name of any transferee of all or any portion of this Warrant.

3. COVENANTS OF THE COMPANY.
 
3.1. Covenants as to Exercise Shares.  The Company covenants and agrees that all
Exercise Shares that may be issued upon the exercise of the rights represented
by this Warrant will, upon issuance in accordance with the terms hereof, be
validly issued and outstanding, fully paid and nonassessable, and free from all
taxes, liens and charges with respect to the issuance thereof.  The Company
further covenants and agrees that the Company will at all times during the
Exercise Period, have authorized and reserved, free from preemptive rights, a
sufficient number of shares of Common Stock to provide for the exercise of the
rights represented by this Warrant.  If at any time during the Exercise Period
the number of authorized but unissued shares of Common Stock shall not be
sufficient to permit exercise of this Warrant, the Company will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purposes.

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3.2. No Impairment.  Except and to the extent as waived or consented to by the
Holder, the Company will not, by amendment of its Certificate of Incorporation
or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may be necessary or appropriate in order to protect
the exercise rights of the Holder against impairment.
 
3.3. Notices of Record Date and Certain Other Events.  In the event of any
taking by the Company of a record of the holders of any class of securities for
the purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the Company shall mail to the Holder,
at least 20 days prior to the date on which any such record is to be taken for
the purpose of such dividend or distribution, a notice specifying such date.  In
the event of any voluntary dissolution, liquidation or winding up of the
Company, the Company shall mail to the Holder, at least 20 days prior to the
date of the occurrence of any such event, a notice specifying such date. In the
event the Company authorizes or approves, enters into any agreement
contemplating, or solicits stockholder approval for any Fundamental Transaction,
as defined in Section 7 herein, the Company shall mail to the Holder, at least
twenty days prior to the date of the occurrence of such event, a notice
specifying such date.
 
4. [INTENTIONALLY OMITTED]
 
5. ADJUSTMENT OF EXERCISE PRICE AND SHARES.
 
(a) In the event of changes in the outstanding Common Stock of the Company by
reason of stock dividends, split-ups, recapitalizations, reclassifications,
combinations or exchanges of shares, separations, reorganizations, liquidations,
consolidation, acquisition of the Company (whether through merger or acquisition
of substantially all the assets or stock of the Company), or the like, the
number, class and type of shares available under the Warrant in the aggregate
and the Exercise Price shall be correspondingly adjusted to give the Holder of
the Warrant, on exercise for the same aggregate Exercise Price, the total
number, class, and type of shares or other property as the Holder would have
owned had the Warrant been exercised prior to the event and had the Holder
continued to hold such shares until the event requiring adjustment.  The form of
this Warrant need not be changed because of any adjustment in the number of
Exercise Shares subject to this Warrant.
 
(b) If at any time or from time to time the holders of Common Stock of the
Company (or any shares of stock or other securities at the time receivable upon
the exercise of this Warrant) shall have received or become entitled to receive,
without payment therefor,  

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(i) Common Stock or any shares of stock or other securities which are at any
time directly or indirectly convertible into or exchangeable for Common Stock,
or any rights or options to subscribe for, purchase or otherwise acquire any of
the foregoing by way of dividend or other distribution (other than a dividend or
distribution covered in Section 5(a) above),
 
(ii) any cash paid or payable otherwise than as a cash dividend or
 
(iii) Common Stock or additional stock or other securities or property
(including cash) by way of spinoff, split-up, reclassification, combination of
shares or similar corporate rearrangement (other than shares of Common Stock
pursuant to Section 5(a) above), then and in each such case, the Holder hereof
will, upon the exercise of this Warrant, be entitled to receive, in addition to
the number of shares of Common Stock receivable thereupon, and without payment
of any additional consideration therefor, the amount of stock and other
securities and property (including cash in the cases referred to in clauses (ii)
and (iii) above) which such Holder would hold on the date of such exercise had
such Holder been the holder of record of such Common Stock as of the date on
which holders of Common Stock received or became entitled to receive such shares
or all other additional stock and other securities and property.

(c) Upon the occurrence of each adjustment pursuant to this Section 5, the
Company at its expense will, at the written request of the Holder, promptly
compute such adjustment in accordance with the terms of this Warrant and prepare
a certificate setting forth such adjustment, including a statement of the
adjusted Exercise Price and adjusted number or type of Exercise Shares or other
securities issuable upon exercise of this Warrant (as applicable), describing
the transactions giving rise to such adjustments and showing in detail the facts
upon which such adjustment is based. Upon written request, the Company will
promptly deliver a copy of each such certificate to the Holder and to the
Company’s transfer agent.

6. FRACTIONAL SHARES.  No fractional shares shall be issued upon the exercise of
this Warrant as a consequence of any adjustment pursuant hereto.  All Exercise
Shares (including fractions) issuable upon exercise of this Warrant may be
aggregated for purposes of determining whether the exercise would result in the
issuance of any fractional share.  If, after aggregation, the exercise would
result in the issuance of a fractional share, the Company shall, in lieu of
issuance of any fractional share, pay the Holder otherwise entitled to such
fraction a sum in cash equal to the product resulting from multiplying the then
current fair market value of an Exercise Share by such fraction.

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7. FUNDAMENTAL TRANSACTIONS.  If, at any time while this Warrant is outstanding,
(i) the Company effects any merger of the Company with or into another entity,
(ii) the Company effects any sale of all or substantially all of its assets in
one or a series of related transactions, (iii) any tender offer or exchange
offer (whether by the Company or another individual or entity) is completed
pursuant to which holders of Common Stock are permitted to tender or exchange
their shares for other securities, cash or property or (iv) the Company effects
any reclassification of the Common Stock or any compulsory share exchange
pursuant to which the Common Stock is effectively converted into or exchanged
for other securities, cash or property (other than as a result of a subdivision
or combination of shares of Common Stock covered by Section 5 above) (in any
such case, a “Fundamental Transaction”), then, upon any subsequent exercise of
this Warrant, the Holder shall have the right to receive, for each Warrant Share
that would have been issuable upon such exercise immediately prior to the
occurrence of such Fundamental Transaction, at the option of the Holder, (a)
upon exercise of this Warrant, the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration (the “Alternate Consideration”)
receivable upon or as a result of such reorganization, reclassification, merger,
consolidation or disposition of assets by a Holder of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
event.   For purposes of any such exercise, the determination of the Exercise
Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share
of Common Stock in such Fundamental Transaction, and the Company shall apportion
the Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration.  If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such Fundamental
Transaction.  To the extent necessary to effectuate the foregoing provisions,
any successor to the Company or surviving entity in such Fundamental Transaction
shall issue to the Holder a new warrant consistent with the foregoing provisions
and evidencing the Holder’s right to exercise such warrant into Alternate
Consideration. The terms of any agreement pursuant to which a Fundamental
Transaction is effected shall include terms requiring any such successor or
surviving entity to comply with the provisions of this Section 7 and insuring
that this Warrant (or any such replacement security) will be similarly adjusted
upon any subsequent transaction analogous to a Fundamental Transaction.
 
8. NO STOCKHOLDER RIGHTS.  This Warrant in and of itself shall not entitle the
Holder to any voting rights or other rights as a stockholder of the Company.
 
9. TRANSFER OF WARRANT.  Subject to applicable laws, this Warrant and all rights
hereunder are transferable, by the Holder in person or by duly authorized
attorney, upon delivery of this Warrant and the form of assignment attached
hereto to any transferee designated by Holder.

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10. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT.  If this Warrant is lost,
stolen, mutilated or destroyed, the Company may, on such terms as to indemnity
or otherwise as it may reasonably impose (which shall, in the case of a
mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or destroyed. 
Any such new Warrant shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant shall be at any time enforceable by anyone.
 
11. NOTICES, ETC.  All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day, (c) five days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt.  All communications shall be sent to the
Company at the address listed on the signature page hereto and to Holder at the
applicable address set forth on the applicable signature page to the
Subscription Agreement or at such other address as the Company or Holder may
designate by 10 days advance written notice to the other parties hereto.
  
12. ACCEPTANCE.  Receipt of this Warrant by the Holder shall constitute
acceptance of and agreement to all of the terms and conditions contained herein.
 
13. GOVERNING LAW.  This Warrant and all rights, obligations and liabilities
hereunder shall be governed by the laws of the State of New York.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
duly authorized officer as of December 13, 2006.

       
ACACIA RESEARCH CORPORATION
 
   
      By:  
                                                                                              
  Name:   Title: 

 

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NOTICE OF EXERCISE
 
TO:  ACACIA RESEARCH CORPORATION
 
(1)   o  The undersigned hereby elects to purchase _________ shares of the
Acacia Research-CombiMatrix Common Stock (the “Common Stock”) of ACACIA RESEARCH
CORPORATION  (the “Company”) pursuant to the terms of the attached Warrant, and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.
 
  o     The undersigned hereby elects to purchase _________ shares of Common
Stock of the Company pursuant to the terms of the net exercise provisions set
forth in Section 2.1 of the attached Warrant, and shall tender payment of all
applicable transfer taxes, if any.
 
(2)  Please issue a certificate or certificates representing said shares of
Common Stock of the Company in the name of the undersigned or in such other name
as is specified below:
 
 
(Name)
 
 
 
(Address)
 

                                   _____________________________
 (Date)                               (Signature)

                                    _____________________________
                                    (Print name)
 
 

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ASSIGNMENT FORM
 
(To assign the foregoing Warrant, execute this form and supply required
information.  Do not use this form to purchase shares.)
 
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are
hereby assigned to
 

Name:
_______________________________________________  
(Please Print)
 
 
Address:
_______________________________________________   
(Please Print)

 
Dated: , 20___
 
 
  
Holder’s Signature:
 
Holder’s Address:
 
 

 

 
 
NOTE:  The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever.  Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
 
C-11

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Exhibit D
 
Form of Lock-Up Agreement
 

December ___, 2006

Oppenheimer & Co., Inc.
125 Broad Street
New York, NY 10004

Re: Acacia Research Corporation (the “Company”)

Ladies and Gentlemen:

The undersigned is an owner of record or beneficially of certain shares of
Acacia Research - CombiMatrix common stock, par value $0.001 per share (the
“Common Stock”), of the Company or securities convertible into or exchangeable
or exercisable for Common Stock.

The undersigned is aware that the Company proposes to carry out a registered
direct offering of Common Stock and warrants (the “Warrants”) to purchase Common
Stock (the “Offering”) for which you will act as placement agent. The
undersigned recognizes that the Offering will be of benefit to the undersigned
and will benefit the Company by, among other things, raising additional capital
for its operations. The undersigned acknowledges that you are relying on the
representations and agreements of the undersigned contained in this letter in
carrying out the Offering.

  In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not (and will cause any spouse or minor child or immediate
family member of the spouse or the undersigned living in the undersigned’s
household not to), without your prior written consent (which consent may be
withheld in their sole discretion), directly or indirectly, sell, offer,
contract or grant any option to sell (including without limitation any short
sale), pledge, transfer, or otherwise dispose of any shares of Common Stock,
options or warrants to acquire shares of Common Stock, or securities
exchangeable or exercisable for or convertible into shares of Common Stock
currently or hereafter owned either of record or beneficially (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) by the
undersigned (or such spouse or minor child or family member), or publicly
announce an intention to do any of the foregoing, for a period commencing on the
date hereof and continuing through the ninety (90) days following the closing of
the Offering (the “Lock-Up Period”).

If (i) the Company issues an earnings release or material news, or a material
event relating to the Company occurs, during the last 17 days of the Lock-Up
Period, or (ii) prior to the expiration of the Lock-Up Period, the Company
announces that it will release earnings results during the 16-day period
beginning on the last day of the Lock-Up Period, the restrictions imposed by
this agreement shall continue to apply until the expiration of the 18-day period
beginning on the issuance of the earnings release or the occurrence of the
material news or material event.
 
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The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company’s transfer agent and registrar against the
transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the undersigned except in
compliance with the foregoing restrictions.

This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.

  
____________________________________________________
Printed Name of Holder
 
By: 
 
_______________________________________  
 
 
 
 
    
____________________________________________________
Printed Name of Person Signing
 
 
 
 
(indicate capacity of person signing if signing as
custodian, trustee, or on behalf of an entity)
 
 

 
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Exhibit E
 
List of Directors and Executive Officers Executing Lock-Up Agreements
 
 

Rigdon Currie
Fred deBoon
Thomas B. Akin
Edward Frykman
Paul R. Ryan
Robert L. Harris, II
G. Louis Graziadio
Amit Kumar, Ph.D.
Brooke Anderson
Scott Burell
Hisashi Fuji
Andrew McShea
Michael Tognotti
 
E-1

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Exhibit F
 
Matters to be Covered in the Opinion of Counsel to the Company
 

1. The Company and each of its Subsidiaries is a company, validly existing and
in good standing under the laws of the state of its respective incorporation or
formation. The Company has the corporate power and authority necessary to own or
hold its properties, to conduct its business as described in the Registration
Statement and the Prospectus and to enter into and perform its obligations under
the Placement Agency Agreement, the Warrants, the Placement Agent’s Warrants,
and the Subscription Agreements.
 
2. The Company has an authorized capitalization as set forth in the Registration
Statement and the Prospectus and all of the outstanding shares of AR-CombiMatrix
Common Stock of the Company as of immediately prior to the Closing are duly
authorized, validly issued and fully paid and nonassessable; and to our
knowledge, none of the outstanding shares of capital stock of the Company was
issued in violation of any statutory, contractual preemptive or other similar
rights of any securityholder of the Company.
 
3. The Shares have been duly and validly authorized and, when issued and
delivered to the Investors and paid for in accordance with the terms of the
Placement Agency Agreement and the Subscription Agreements, will be validly
issued, fully paid and nonassessable. The Warrant Shares to be issued from time
to time upon the exercise of the Warrants and the Placement Agent’s Warrants, as
applicable, have been duly and validly authorized and, upon payment of the
exercise price in accordance with the terms of the Warrants and the Placement
Agent’s Warrants, as the case may be, will be validly issued, fully paid and
nonassessable.
 
4. The issuance of the Shares and the Warrant Shares is not subject to any
statutory preemptive right or, to our knowledge, other similar rights of any
securityholder of the Company.
 
5. Each of the Placement Agency Agreement, the Warrants, the Placement Agent’s
Warrants, and the Subscription Agreements has been duly and validly authorized,
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms.
 
6. The execution of the Placement Agency Agreement, the Warrants, the Placement
Agent’s Warrants, and the Subscription Agreements by the Company, and the
consummation by the Company of the transactions contemplated thereunder to be
consummated on the Closing Date, will not (a) result in any violation of or
conflict with any provision of the Company's Certificate of Incorporation or
Bylaws, (b) violate or conflict with the General Corporations Law of the State
of Delaware or any statute of the United States or the State of California or
any order, rule or regulation of any governmental agency or body of the United
States or the State of California that in our experience is normally applicable
to the transactions of the type contemplated by the Placement Agency Agreement
or the Subscription Agreements.
 
7. The Company is not in violation of any provision of its Certificate of
Incorporation or its Bylaws and, to our knowledge, the Company is not in
material default in the performance of any obligation, agreement, covenant or
condition contained in any document filed as exhibit to the Registration
Statement or incorporated by reference therein.
 

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8. No consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company of
its obligations under the Placement Agency Agreement, the Warrants, the
Placement Agent’s Warrants, or the Subscription Agreements, except: (i) such as
have been obtained under the Securities Act and (ii) such as may be required by
the securities or Blue Sky laws of the various states in connection with the
offer and sale of the Securities by the Company, as to which we express no
opinion.
 
9. To our knowledge, there is not pending or threatened any action, suit,
proceeding, inquiry or investigation, to which the Company or any of its
subsidiaries are parties, or to which the property of the Company or its
subsidiaries are subject, before or brought by any court or governmental
authority, arbitration board or tribunal, domestic or foreign, that is required
to be described in the Prospectus and is not so described therein.
 
10. The Registration Statement is effective under the Securities Act, and, to
our knowledge, no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereof has been issued and no
proceedings therefore have been initiated or threatened by the Commission and
all filings required by Rule 424(b) and Rule 430(A) promulgated under the
Securities Act have been made.
 
11. To our knowledge, no person or entity has the right to require the
registration of shares of AR-CombiMatrix Common Stock or other equity securities
of the Company (including securities that are convertible into or exchangeable
for the Company's equity securities) because of the filing or effectiveness of
the Registration Statement or the completion of the Offering.
 
12. To our knowledge, the Company is not a party to any contract or agreement of
a character required to be filed as an exhibit to the Registration Statement
that has not been so filed.
 
13. The Registration Statement (including the Base Prospectus), as of its
effective date, and the Prospectus, as of its date, complied as to form in all
material respects with the requirements of the Securities Act, and the documents
incorporated by reference in the Registration Statement, the Base Prospectus or
the Prospectus, including any Current Report on Form 8-K filed with the
Commission prior to the Closing Date, when they became effective or were filed
with the Commission, as applicable, complied as to form in all material respects
with the requirements of the Securities Act.
 
14. The Company is not, and will not be after giving effect to the offering of
the Shares and Warrants and the application of the proceeds thereof as described
in the Base Prospectus and the Prospectus, an “investment company” as defined in
the Investment Company Act of 1940, as amended.
 
 
F-2