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DELAWARE
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95-4405754
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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ACACIA RESEARCH CORPORATION
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Table Of Contents
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Part I.
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Financial Information
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Part II.
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Other Information
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Item 1A.
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Risk Factors
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Item 6.
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Signatures
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Exhibit Index
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June 30,
2016 |
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December 31,
2015 |
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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139,772
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$
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135,223
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Restricted cash
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14,036
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10,725
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Short-term investments
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32,243
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—
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Accounts receivable
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4,325
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33,500
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Deferred income taxes
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210
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210
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Prepaid expenses and other current assets
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4,310
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4,219
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Total current assets
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194,896
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183,877
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Property and equipment, net
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189
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272
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Patents, net
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100,958
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162,642
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Other assets
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365
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1,110
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$
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296,408
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$
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347,901
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Accounts payable and accrued expenses
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$
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11,424
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$
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17,347
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Accrued patent investment costs
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—
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1,000
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Royalties and contingent legal fees payable
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17,854
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14,878
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Total current liabilities
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29,278
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33,225
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Deferred income taxes
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210
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210
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Other liabilities
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354
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311
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Total liabilities
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29,842
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33,746
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Commitments and contingencies (Note 5)
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Stockholders’ equity:
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Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; no shares issued or outstanding
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—
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—
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Common stock, par value $0.001 per share; 100,000,000 shares authorized; 50,392,241 and 50,651,239 shares issued and outstanding as of June 30, 2016 and December 31, 2015, respectively
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50
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51
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Treasury stock, at cost, 1,729,408 shares as of June 30, 2016 and December 31, 2015
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(34,640
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)
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(34,640
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)
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Additional paid-in capital
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636,332
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633,146
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Accumulated comprehensive loss
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(171
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)
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(215
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)
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Accumulated deficit
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(338,669
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)
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(288,131
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)
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Total Acacia Research Corporation stockholders’ equity
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262,902
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310,211
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Noncontrolling interests in operating subsidiaries
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3,664
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3,944
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Total stockholders’ equity
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266,566
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314,155
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$
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296,408
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$
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347,901
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
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2016
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2015
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2016
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2015
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Revenues
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$
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41,351
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$
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40,336
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$
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66,072
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$
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74,546
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Operating costs and expenses:
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Cost of revenues:
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Inventor royalties
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—
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1,265
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1,573
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10,590
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Contingent legal fees
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10,418
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5,512
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14,527
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10,296
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Litigation and licensing expenses - patents
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7,324
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9,012
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15,047
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17,687
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Amortization of patents
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10,759
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13,228
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21,519
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26,266
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General and administrative expenses (including non-cash stock compensation expense of $1,475 and $3,210 for the three and six months ended June 30, 2016, respectively, and $3,177 and $6,424 for the three and six months ended June 30, 2015, respectively)
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7,535
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9,587
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15,529
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20,162
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Research, consulting and other expenses - business development
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1,334
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732
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1,856
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1,729
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Write-off of patent-related intangible assets
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40,165
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—
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40,165
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—
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Other (income) expense
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(1,242
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)
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—
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500
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426
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Total operating costs and expenses
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76,293
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39,336
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110,716
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87,156
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Operating income (loss)
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(34,942
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)
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1,000
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(44,644
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)
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(12,610
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)
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Total other income (expense)
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(52
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)
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(104
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)
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(55
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)
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124
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Income (loss) before provision for income taxes
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(34,994
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)
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896
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(44,699
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)
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(12,486
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)
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Provision for income taxes
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(5,927
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)
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(119
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)
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(6,119
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)
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(289
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)
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Income (loss) including noncontrolling interests in operating subsidiaries
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(40,921
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)
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777
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(50,818
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)
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(12,775
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)
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Net (income) loss attributable to noncontrolling interests in operating subsidiaries
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348
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(4,463
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)
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280
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(4,041
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)
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Net loss attributable to Acacia Research Corporation
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$
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(40,573
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)
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$
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(3,686
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)
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$
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(50,538
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)
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$
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(16,816
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)
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Net loss attributable to common stockholders - basic and diluted
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$
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(40,573
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)
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$
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(3,896
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)
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$
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(50,538
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)
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$
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(17,241
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)
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Basic and diluted loss per common share
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$
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(0.81
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)
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$
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(0.08
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)
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$
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(1.01
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)
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$
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(0.35
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)
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Weighted average number of shares outstanding - basic and diluted
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50,015,869
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49,423,472
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49,970,709
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49,318,423
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Cash dividends declared per common share
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$
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—
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$
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0.125
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$
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—
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$
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0.25
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
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2016
|
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2015
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2016
|
|
2015
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||||||||
|
|
|
|
|
|
|
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||||||||
Net income (loss) including noncontrolling interests in operating subsidiaries
|
$
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(40,921
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)
|
|
$
|
777
|
|
|
$
|
(50,818
|
)
|
|
$
|
(12,775
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)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
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Unrealized gain (loss) on short-term investments, net of tax of $0
|
26
|
|
|
(119
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)
|
|
26
|
|
|
(262
|
)
|
||||
Unrealized loss on foreign currency translation, net of tax of $0
|
(48
|
)
|
|
(113
|
)
|
|
(4
|
)
|
|
(141
|
)
|
||||
Reclassification adjustment for income (losses) included in net loss
|
(1
|
)
|
|
259
|
|
|
22
|
|
|
343
|
|
||||
Total other comprehensive income (loss)
|
(40,944
|
)
|
|
804
|
|
|
(50,774
|
)
|
|
(12,835
|
)
|
||||
Comprehensive (income) loss attributable to noncontrolling interests
|
348
|
|
|
(4,463
|
)
|
|
280
|
|
|
(4,041
|
)
|
||||
Comprehensive loss attributable to Acacia Research Corporation
|
$
|
(40,596
|
)
|
|
$
|
(3,659
|
)
|
|
$
|
(50,494
|
)
|
|
$
|
(16,876
|
)
|
|
Six Months Ended
June 30, |
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss including noncontrolling interests in operating subsidiaries
|
$
|
(50,818
|
)
|
|
$
|
(12,775
|
)
|
Adjustments to reconcile net loss including noncontrolling interests in operating subsidiaries to net cash provided by (used in) operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
21,604
|
|
|
26,386
|
|
||
Non-cash stock compensation
|
3,210
|
|
|
6,424
|
|
||
Impairment of patent-related intangible assets
|
40,165
|
|
|
—
|
|
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Other
|
18
|
|
|
(127
|
)
|
||
|
|
|
|
||||
Changes in assets and liabilities:
|
|
|
|
|
|||
Restricted cash
|
(3,311
|
)
|
|
(10,718
|
)
|
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Accounts receivable
|
29,175
|
|
|
(17,382
|
)
|
||
Prepaid expenses and other assets
|
654
|
|
|
(791
|
)
|
||
Accounts payable and accrued expenses
|
(5,880
|
)
|
|
(3,292
|
)
|
||
Royalties and contingent legal fees payable
|
2,976
|
|
|
5,830
|
|
||
|
|
|
|
||||
Net cash provided by (used in) operating activities
|
37,793
|
|
|
(6,445
|
)
|
||
|
|
|
|
|
|
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Cash flows from investing activities:
|
|
|
|
|
|
||
Investments in patents/ patent rights
|
(1,000
|
)
|
|
(18,667
|
)
|
||
Purchases of property and equipment
|
(4
|
)
|
|
(8
|
)
|
||
Purchases of available-for-sale investments
|
(49,677
|
)
|
|
(23,296
|
)
|
||
Maturities and sales of available-for-sale investments
|
17,462
|
|
|
44,845
|
|
||
|
|
|
|
||||
Net cash provided by (used in) investing activities
|
(33,219
|
)
|
|
2,874
|
|
||
|
|
|
|
|
|
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Cash flows from financing activities:
|
|
|
|
|
|
||
Dividends paid to stockholders
|
—
|
|
|
(12,749
|
)
|
||
Repurchased restricted common stock
|
(25
|
)
|
|
—
|
|
||
Proceeds from exercises of stock options
|
—
|
|
|
938
|
|
||
|
|
|
|
||||
Net cash used in financing activities
|
(25
|
)
|
|
(11,811
|
)
|
||
|
|
|
|
|
|
||
Increase (decrease) in cash and cash equivalents
|
4,549
|
|
|
(15,382
|
)
|
||
|
|
|
|
|
|
||
Cash and cash equivalents, beginning
|
135,223
|
|
|
134,466
|
|
||
|
|
|
|
|
|
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Cash and cash equivalents, ending
|
$
|
139,772
|
|
|
$
|
119,084
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●
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Level 1 - Observable Inputs: Quoted prices in active markets for identical investments;
|
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●
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Level 2 - Pricing Models with Significant Observable Inputs: Other significant observable inputs, including quoted prices for similar investments, interest rates, credit risk, etc.; and
|
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●
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Level 3 - Unobservable Inputs: Significant unobservable inputs, including the entity’s own assumptions in determining the fair value of investments.
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Numerator (in thousands):
|
|
|
|
|
|
|
|
|
||||||||
Basic and Diluted
|
|
|
|
|
|
|
|
|
||||||||
Net loss
|
|
$
|
(40,573
|
)
|
|
$
|
(3,686
|
)
|
|
$
|
(50,538
|
)
|
|
$
|
(16,816
|
)
|
Total dividends declared / paid
|
|
—
|
|
|
(6,374
|
)
|
|
—
|
|
|
(12,749
|
)
|
||||
Dividends attributable to common stockholders
|
|
—
|
|
|
6,164
|
|
|
—
|
|
|
12,324
|
|
||||
Net loss attributable to common stockholders – basic and diluted
|
|
$
|
(40,573
|
)
|
|
$
|
(3,896
|
)
|
|
$
|
(50,538
|
)
|
|
$
|
(17,241
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares used in computing net loss per share attributable to common stockholders – basic and diluted
|
|
50,015,869
|
|
|
49,423,472
|
|
|
49,970,709
|
|
|
49,318,423
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted net loss per common share
|
|
$
|
(0.81
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(1.01
|
)
|
|
$
|
(0.35
|
)
|
Anti-dilutive equity-based incentive awards excluded from the computation of diluted loss per share
|
|
880,974
|
|
|
71,468
|
|
|
2,214,674
|
|
|
71,468
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Revenues (in thousands)
|
$
|
41,351
|
|
|
$
|
40,336
|
|
|
$
|
66,072
|
|
|
$
|
74,546
|
|
New agreements executed
|
7
|
|
|
20
|
|
|
19
|
|
|
43
|
|
||||
Licensing and enforcement programs generating revenues
|
13
|
|
|
18
|
|
|
21
|
|
|
25
|
|
As of Date:
|
|
Trailing Twelve -Month Revenues
|
|
% Change
|
|||
|
|
|
|
|
|||
June 30, 2016
|
|
$
|
116,563
|
|
|
1
|
%
|
March 31, 2016
|
|
$
|
115,548
|
|
|
(8
|
)%
|
December 31, 2015
|
|
$
|
125,037
|
|
|
5
|
%
|
September 30, 2015
|
|
$
|
118,570
|
|
|
(17
|
)%
|
June 30, 2015
|
|
$
|
142,768
|
|
|
—
|
%
|
•
|
the dollar amount of agreements executed each period, which can be driven by the nature and characteristics of the technology or technologies being licensed and the magnitude of infringement associated with a specific licensee;
|
•
|
the specific terms and conditions of agreements executed each period including the nature and characteristics of rights granted, and the periods of infringement or term of use contemplated by the respective payments;
|
•
|
fluctuations in the total number of agreements executed each period;
|
•
|
the number of, timing, results and uncertainties associated with patent licensing negotiations, mediations, patent infringement actions, trial dates and other enforcement proceedings relating to our patent licensing and enforcement programs;
|
•
|
the relative maturity of licensing programs during the applicable periods;
|
•
|
other external factors, including the periodic status or results of ongoing negotiations, the status or results of ongoing litigations and appeals, actual or perceived shifts in the regulatory environment, impact of unrelated patent related judicial proceedings and other macroeconomic factors; and
|
•
|
historically, based on the merits and strength of our operating subsidiary’s patent infringement claims and other factors, many prospective licensees have elected to settle significant patent infringement cases and pay reasonable license fees for the use of our patented technology, as those patent infringement cases approached a court determined trial date.
|
•
|
4G Wireless technology
|
|
•
|
Knee Replacement technology
|
•
|
Audio Communications Fraud Detection technology
|
|
•
|
Lighting Ballast technology
|
•
|
Bone Wedge technology
|
|
•
|
Online Auction Guarantee technology
|
•
|
Broadband Communications technology
|
|
•
|
Reflective and Radiant Barrier Insulation technology
|
•
|
Cardiology and Vascular Device technology
|
|
•
|
Shared Memory for Multimedia Processing technology
|
•
|
Diamond and Gemstone Grading technology
(1)
|
|
•
|
Speech codes used in wireless and wireline systems technology
|
•
|
DisplayPort and MIPI DSI technology
|
|
•
|
Super Resolutions Microscopy technology
|
•
|
Electronic spreadsheet, data analysis and software development technology
|
|
•
|
Telematics technology
|
•
|
Gas Modulation Control Systems technology
|
|
•
|
Variable Data Printing technology
(2)
|
•
|
High Speed Circuit Interconnect and Display Control technology
|
|
•
|
Wireless Infrastructure and User Equipment technology
|
•
|
Interstitial and Pop-Up Internet Advertising technology
|
|
|
|
(1)
|
Initial revenues recognized during the three months ended June 30, 2016
|
(2)
|
Initial revenues recognized during the six months ended June 30, 2016
|
•
|
360 Degree View technology
(1)(2)
|
|
•
|
Location Based Services technology
|
•
|
3G & 4G Cellular Air Interface and Infrastructure technology
|
|
•
|
Messaging technology
|
•
|
4G Wireless technology
|
|
•
|
Oil and Gas Production technology
|
•
|
Audio Communications Fraud Detection technology
|
|
•
|
Online Auction Guarantee technology
|
•
|
Automotive Safety, Navigation and Diagnostics technology
|
|
•
|
Optimized Microprocessor Operation technology
|
•
|
Broadband Communications technology
|
|
•
|
Reflective and Radiant Barrier Insulation technology
|
•
|
Cardiology and Vascular Device technology
|
|
•
|
Semiconductor Testing technology
(2)
|
•
|
DisplayPort and MIPI DSI technology
(2)
|
|
•
|
Speech codes used in wireless and wireline systems
|
•
|
Electronic Access Control technology
|
|
•
|
Super Resolutions Microscopy technology
|
•
|
Gas Modulation Control Systems technology
|
|
•
|
Surgical Access technology
|
•
|
Innovative Display technology
|
|
•
|
Suture Anchors technology
|
•
|
Intercarrier SMS technology
|
|
•
|
Telematics technology
|
•
|
Interstitial and Pop-Up Internet Advertising technology
|
|
|
|
(1)
|
Initial revenues recognized during the three months ended June 30, 2015
|
(2)
|
Initial revenues recognized during the six months ended June 30, 2015
|
|
Three Months Ended
June 30, |
|
%
|
|
Six Months Ended
June 30, |
|
%
|
||||||||||||||
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
41,351
|
|
|
$
|
40,336
|
|
|
3
|
%
|
|
$
|
66,072
|
|
|
$
|
74,546
|
|
|
(11
|
)%
|
Operating costs and expenses
|
76,293
|
|
|
39,336
|
|
|
94
|
%
|
|
110,716
|
|
|
87,156
|
|
|
27
|
%
|
||||
Operating income (loss)
|
(34,942
|
)
|
|
1,000
|
|
|
*
|
|
|
(44,644
|
)
|
|
(12,610
|
)
|
|
254
|
%
|
||||
Income (loss) before provision for income taxes
|
(34,994
|
)
|
|
896
|
|
|
*
|
|
|
(44,699
|
)
|
|
(12,486
|
)
|
|
258
|
%
|
||||
Provision for income taxes
|
(5,927
|
)
|
|
(119
|
)
|
|
*
|
|
|
(6,119
|
)
|
|
(289
|
)
|
|
*
|
|
||||
Net (income) loss attributable to noncontrolling interests in operating subsidiaries
|
348
|
|
|
(4,463
|
)
|
|
(108
|
)%
|
|
280
|
|
|
(4,041
|
)
|
|
(107
|
)%
|
||||
Net loss attributable to Acacia Research Corporation
|
(40,573
|
)
|
|
(3,686
|
)
|
|
*
|
|
|
(50,538
|
)
|
|
(16,816
|
)
|
|
201
|
%
|
•
|
Revenues remained relatively flat, increasing
$1.0 million
, or
3%
, to
$41.4 million
for the three months ended
June 30, 2016
, as compared to
$40.3 million
in the comparable prior year quarter.
|
•
|
Loss before income taxes was
$35.0 million
for the three months ended
June 30, 2016
, as compared to income before income taxes of
$896,000
for the three months ended
June 30, 2015
. The change was due primarily to a
$40.2 million
patent impairment charge, partially offset by a net decrease in operating expenses, including the following:
|
•
|
Cost of Revenues and Other Operating Expenses:
|
•
|
Inventor royalties and contingent legal fees, on a combined basis, increased
$3.6 million
, or
54%
, compared to the
3%
increase in related revenues for the same periods, due primarily due to higher average contingent legal fee rates for the portfolios generating revenues in the second quarter of 2016, as compared to the portfolios generating revenues in the second quarter of 2015.
|
•
|
Litigation and licensing expenses-patents decreased
$1.7 million
, or
19%
, to
$7.3 million
, d
ue primarily to a net decrease in litigation support costs associated with upcoming trials and a decrease in patent prosecution and litigation expenses associated with ongoing licensing and enforcement programs.
|
•
|
Amortization expense decreased
$2.5 million
, or
19%
, to
$10.8 million
, due to a decrease in scheduled amortization on existing patent portfolios resulting from various patent portfolio impairment charges previously recorded in the fourth quarter of 2015.
|
•
|
General and administrative expenses decreased
$2.1 million
, or
21%
, to
$7.5 million
,
due primarily to a net decrease in non-cash stock compensation and personnel costs in connection with head count reduction activities in 2015 and 2016.
|
•
|
Impairment of patent-related intangible asset charges totaled
$40.2 million
, reflecting the impact of reductions in expected estimated future net cash flows for certain patent portfolios and certain patent portfolios that management determined it would no longer allocate resources to in future periods.
|
•
|
Other operating income was
$1.2 million
as compared to
$0
in the comparable prior year quarter. Other operating income includes a reversal of an estimated accrual for attorney's fees due to settlement of the matter, resulting in no payment due by either party.
|
•
|
Revenues decreased
$8.5 million
, or
11%
to
$66.1 million
, as compared to
$74.5 million
in the comparable prior year period,
due primarily to a decrease in the total number of agreements executed, partially offset by an increase in average revenue per agreement
.
|
•
|
Loss before income taxes increased
258%
, to
$44.7 million
, as compared to
$12.5 million
in the comparable prior year period, due to the
11%
decrease in revenues and
$40.2 million
of patent impairment charges described above, partially offset by a net decrease in operating expenses, as follows:
|
•
|
Cost of Revenues and Other Operating Expenses:
|
•
|
Inventor royalties and contingent legal fees, on a combined basis, decreased
$4.8 million
, or
23%
, as compared to the
11%
decrease in related revenues for the same periods, due primarily to higher average levels of cost recovery related preferred returns on revenues, resulting in a decrease in inventor royalty expense during the six months ended June 30, 2016, partially offset by an increase in contingent legal fee rates for the portfolios generating revenues during the six months ended June 30, 2016.
|
•
|
Litigation and licensing expenses-patents decreased
$2.6 million
, or
15%
, to
$15.0 million
, d
ue primarily to a net decrease in litigation support costs associated with upcoming trials and a decrease in patent prosecution and litigation expenses associated with ongoing licensing and enforcement programs.
|
•
|
Amortization of patents decreased
$4.7 million
, or
18%
, to
$21.5 million
, due primarily to a decrease in scheduled amortization on existing patent portfolios resulting from various patent portfolio impairment charges previously recorded in the fourth quarter of 2015.
|
•
|
Marketing, general and administrative expenses decreased
$4.6 million
, or
23%
, to
$15.5 million
,
due primarily to a net decrease in non-cash stock compensation charges and a decrease in variable performance-based compensation costs.
|
•
|
The effective tax rates for the
six months
ended
June 30, 2016
and
2015
were
14%
and
2%
, respectively. Tax expense for the periods presented primarily reflects the impact of foreign withholding taxes related to revenue agreements executed with third party licensees domiciled in foreign jurisdictions, and valuation allowances recorded for foreign withholding tax credits and net operating loss related tax assets generated during the periods.
|
•
|
Increases in patent-related legal expenses associated with patent infringement litigation, including, but not limited to, increases in costs billed by outside legal counsel for discovery, depositions, economic analyses, damages assessments, expert witnesses and other consultants, re-exam and i
nter partes review costs,
case-related audio/video presentations and other litigation support and administrative costs could increase our operating costs and decrease our profit generating opportunities;
|
•
|
Our patented technologies and enforcement actions are complex and, as a result, we may be required to appeal adverse decisions by trial courts in order to successfully enforce our patents. Moreover, such appeals may not be successful;
|
•
|
New legislation, regulations or rules related to enforcement actions, including any fee or cost shifting provisions, could significantly increase our operating costs and decrease our profit generating opportunities.
Increased focus on the growing number of patent-related lawsuits may result in legislative changes which increase our costs and related risks of asserting patent enforcement actions. For instance, the United States House of Representatives passed a bill that would require non-practicing entities that bring patent infringement lawsuits to pay legal costs of the defendants, if the lawsuits are unsuccessful and certain standards are not met;
|
•
|
Courts may rule that our subsidiaries have violated certain statutory, regulatory, federal, local or governing rules or standards by pursuing such enforcement actions, which may expose us and our operating subsidiaries to material liabilities, which could harm our operating results and our financial position; and
|
•
|
The complexity of negotiations and potential magnitude of exposure for potential infringers associated with higher quality patent portfolios may lead to increased intervals of time between the filing of litigation and
|
|
|
Three Months Ended
June 30, |
|
Change
|
|
Six Months Ended
June 30, |
|
Change
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
2016
|
|
2015
|
|
$
|
|
%
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Revenues (in thousands, except percentage change values)
|
|
$
|
41,351
|
|
|
$
|
40,336
|
|
|
$
|
1,015
|
|
|
3
|
%
|
|
$
|
66,072
|
|
|
$
|
74,546
|
|
|
$
|
(8,474
|
)
|
|
(11
|
)%
|
New agreements executed
|
|
7
|
|
|
20
|
|
|
|
|
|
|
19
|
|
|
43
|
|
|
|
|
|
||||||||||
Average revenue per agreement (in thousands)
|
|
$
|
5,907
|
|
|
$
|
2,017
|
|
|
|
|
|
|
$
|
3,477
|
|
|
$
|
1,734
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||
|
|
2016 vs. 2015
|
|
2016 vs. 2015
|
||||
|
|
|
||||||
Change in number of agreements executed
|
|
$
|
(26,218
|
)
|
|
$
|
(41,607
|
)
|
Change in average revenue per agreement executed
|
|
27,233
|
|
|
33,133
|
|
||
Total change in revenues
|
|
$
|
1,015
|
|
|
$
|
(8,474
|
)
|
|
|
Three Months Ended
June 30, |
|
Change
|
|
Six Months Ended
June 30, |
|
Change
|
|||||||||||||||||||||
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|||||||||||||
|
|
(in thousands, except percentage change values)
|
|||||||||||||||||||||||||||
Income (loss) before provision for income taxes
|
|
$
|
(34,994
|
)
|
|
$
|
896
|
|
|
$
|
(35,890
|
)
|
|
*
|
|
$
|
(44,699
|
)
|
|
$
|
(12,486
|
)
|
|
$
|
(32,213
|
)
|
|
258
|
%
|
|
Three Months Ended
June 30, |
|
|
|
Six Months Ended
June 30, |
|
|
||||||
|
2016 vs. 2015
|
|
%
|
|
2016 vs. 2015
|
|
%
|
||||||
|
(in thousands, except percentage values)
|
||||||||||||
Increase (decrease) in revenues
|
$
|
1,015
|
|
|
(3
|
)%
|
|
$
|
(8,474
|
)
|
|
26
|
%
|
(Increase) decrease in inventor royalties and contingent legal fees
|
(3,641
|
)
|
|
10
|
%
|
|
4,786
|
|
|
(15
|
)%
|
||
Decrease in general and administrative expenses
|
2,052
|
|
|
(6
|
)%
|
|
4,633
|
|
|
(14
|
)%
|
||
Decrease in litigation and licensing expenses
|
1,688
|
|
|
(5
|
)%
|
|
2,640
|
|
|
(8
|
)%
|
||
Decrease in patent amortization expenses
|
2,469
|
|
|
(7
|
)%
|
|
4,747
|
|
|
(15
|
)%
|
||
Increase in impairment of patent-related intangible assets
|
(40,165
|
)
|
|
113
|
%
|
|
(40,165
|
)
|
|
125
|
%
|
||
Other
|
692
|
|
|
(2
|
)%
|
|
(380
|
)
|
|
1
|
%
|
||
Total change in loss before provision for income taxes
|
$
|
(35,890
|
)
|
|
100
|
%
|
|
$
|
(32,213
|
)
|
|
100
|
%
|
|
|
Three Months Ended
June 30, |
|
Change
|
|
Six Months Ended
June 30, |
|
Change
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
2016
|
|
2015
|
|
$
|
|
%
|
||||||||||||||
|
|
(in thousands, except percentage change values)
|
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Inventor royalties
|
|
$
|
—
|
|
|
$
|
1,265
|
|
|
$
|
(1,265
|
)
|
|
(100
|
)%
|
|
$
|
1,573
|
|
|
$
|
10,590
|
|
|
$
|
(9,017
|
)
|
|
(85
|
)%
|
Contingent legal fees
|
|
$
|
10,418
|
|
|
$
|
5,512
|
|
|
$
|
4,906
|
|
|
89
|
%
|
|
$
|
14,527
|
|
|
$
|
10,296
|
|
|
$
|
4,231
|
|
|
41
|
%
|
|
|
Three Months Ended
June 30, |
|
%
|
|
Six Months Ended
June 30, |
|
%
|
||||||
|
|
2016 vs. 2015
|
|
|
2016 vs. 2015
|
|
||||||||
Inventor Royalties:
|
|
|
||||||||||||
Increase (decrease) in total revenues
|
|
$
|
35
|
|
|
(3
|
)%
|
|
$
|
(1,277
|
)
|
|
14
|
%
|
Increase in inventor royalty rates
|
|
—
|
|
|
—
|
%
|
|
528
|
|
|
(6
|
)%
|
||
Increase in revenues without inventor royalty obligations primarily due to upfront advance related preferred returns
|
|
(1,300
|
)
|
|
103
|
%
|
|
(8,268
|
)
|
|
92
|
%
|
||
Total change in inventor royalties expense
|
|
$
|
(1,265
|
)
|
|
100
|
%
|
|
$
|
(9,017
|
)
|
|
100
|
%
|
Contingent Legal Fees:
|
|
|
|
|
|
|
|
|
||||||
Increase (decrease) in total revenues
|
|
$
|
139
|
|
|
3
|
%
|
|
$
|
(1,196
|
)
|
|
(28
|
)%
|
Increase in contingent legal fee rates
|
|
4,895
|
|
|
100
|
%
|
|
5,549
|
|
|
131
|
%
|
||
Increase in revenues without contingent legal fee obligations
|
|
(128
|
)
|
|
(3
|
)%
|
|
(122
|
)
|
|
(3
|
)%
|
||
Total change in contingent legal fees expense
|
|
$
|
4,906
|
|
|
100
|
%
|
|
$
|
4,231
|
|
|
100
|
%
|
|
|
Three Months Ended
June 30, |
|
Change
|
|
Six Months Ended
June 30, |
|
Change
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
2016
|
|
2015
|
|
$
|
|
%
|
||||||||||||||
|
|
(in thousands, except percentage change values)
|
||||||||||||||||||||||||||||
Litigation and licensing expenses - patents
|
|
$
|
7,324
|
|
|
$
|
9,012
|
|
|
$
|
(1,688
|
)
|
|
(19
|
)%
|
|
$
|
15,047
|
|
|
$
|
17,687
|
|
|
$
|
(2,640
|
)
|
|
(15
|
)%
|
Amortization of patents
|
|
$
|
10,759
|
|
|
$
|
13,228
|
|
|
$
|
(2,469
|
)
|
|
(19
|
)%
|
|
$
|
21,519
|
|
|
$
|
26,266
|
|
|
$
|
(4,747
|
)
|
|
(18
|
)%
|
|
|
Three Months Ended
June 30, |
|
Change
|
|
Six Months Ended
June 30, |
|
Change
|
||||||||||||||||||||||
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
2016
|
|
2015
|
|
$
|
|
%
|
||||||||||||||
|
|
(in thousands, except percentage change values)
|
||||||||||||||||||||||||||||
Impairment of patent-related intangible assets
|
|
$
|
40,165
|
|
|
$
|
—
|
|
|
$
|
40,165
|
|
|
100
|
%
|
|
$
|
40,165
|
|
|
$
|
—
|
|
|
$
|
40,165
|
|
|
100
|
%
|
|
Three Months Ended
June 30, |
|
Change
|
|
Six Months Ended
June 30, |
|
Change
|
||||||||||||||||||||||
|
2016
|
|
2015
|
|
$
|
|
%
|
|
2016
|
|
2015
|
|
$
|
|
%
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
General and administrative expenses
|
$
|
6,060
|
|
|
$
|
6,410
|
|
|
$
|
(350
|
)
|
|
(5
|
)%
|
|
$
|
12,319
|
|
|
$
|
13,738
|
|
|
$
|
(1,419
|
)
|
|
(10
|
)%
|
Non-cash stock compensation expense
|
1,475
|
|
|
3,177
|
|
|
(1,702
|
)
|
|
(54
|
)%
|
|
3,210
|
|
|
6,424
|
|
|
(3,214
|
)
|
|
(50
|
)%
|
||||||
Total general and administrative expenses
|
$
|
7,535
|
|
|
$
|
9,587
|
|
|
$
|
(2,052
|
)
|
|
(21
|
)%
|
|
$
|
15,529
|
|
|
$
|
20,162
|
|
|
$
|
(4,633
|
)
|
|
(23
|
)%
|
|
Three Months Ended
June 30, |
|
|
|
Six Months Ended
June 30, |
|
|
||||||
|
2016 vs. 2015
|
|
%
|
|
2016 vs. 2015
|
|
%
|
||||||
|
|
|
|
||||||||||
Personnel cost reductions due to headcount reductions
|
$
|
(1,650
|
)
|
|
80
|
%
|
|
$
|
(3,236
|
)
|
|
70
|
%
|
Variable performance-based compensation costs
|
338
|
|
|
(16
|
)%
|
|
(196
|
)
|
|
4
|
%
|
||
Corporate, general and administrative costs
|
776
|
|
|
(38
|
)%
|
|
1,334
|
|
|
(29
|
)%
|
||
Non-cash stock compensation expense
|
(1,702
|
)
|
|
83
|
%
|
|
(3,214
|
)
|
|
69
|
%
|
||
Non-recurring employee severance costs
|
186
|
|
|
(9
|
)%
|
|
679
|
|
|
(14
|
)%
|
||
Total change in general and administrative expenses
|
$
|
(2,052
|
)
|
|
100
|
%
|
|
$
|
(4,633
|
)
|
|
100
|
%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Provision for income taxes (in thousands)
|
$
|
(5,927
|
)
|
|
$
|
(119
|
)
|
|
$
|
(6,119
|
)
|
|
$
|
(289
|
)
|
Effective tax rate
|
17
|
%
|
|
(13
|
)%
|
|
14
|
%
|
|
2
|
%
|
|
Six Months Ended
June 30, |
||||||
|
2016
|
|
2015
|
||||
|
|
|
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
37,793
|
|
|
$
|
(6,445
|
)
|
Investing activities
|
(33,219
|
)
|
|
2,874
|
|
||
Financing activities
|
(25
|
)
|
|
(11,811
|
)
|
|
Six Months Ended
June 30, |
||||||
|
2016
|
|
2015
|
||||
|
|
|
|
||||
Available-for-sale investments, net
|
$
|
(32,215
|
)
|
|
$
|
21,549
|
|
Investments in patents/ patent rights
|
(1,000
|
)
|
|
(18,667
|
)
|
||
Purchases of property and equipment
|
(4
|
)
|
|
(8
|
)
|
||
Net cash provided by investing activities
|
$
|
(33,219
|
)
|
|
$
|
2,874
|
|
|
Six Months Ended
June 30, |
||||||
|
2016
|
|
2015
|
||||
|
|
|
|
|
|
||
Dividends paid to stockholders
|
$
|
—
|
|
|
$
|
(12,749
|
)
|
Repurchased restricted common stock
|
(25
|
)
|
|
—
|
|
||
Proceeds from exercises of stock options
|
—
|
|
|
938
|
|
||
Net cash used in financing activities
|
$
|
(25
|
)
|
|
$
|
(11,811
|
)
|
|
Payments Due by Period (In thousands)
|
||||||||||||||||||
Contractual Obligations
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating leases, net of guaranteed sublease income
|
$
|
4,566
|
|
|
$
|
548
|
|
|
$
|
2,569
|
|
|
$
|
1,449
|
|
|
$
|
—
|
|
EXHIBIT
NUMBER
|
EXHIBIT
|
|
|
10.1
|
2016 Acacia Research Corporation Stock Incentive Plan
|
31.1
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934
|
31.2
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934
|
32.1
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350
|
32.2
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350
|
101
|
Interactive Data Files Pursuant to Rule 405 of Regulation S-T
|
|
ACACIA RESEARCH CORPORATION
|
|
|
|
/
s/ Marvin Key
|
|
By: Marvin Key
|
|
Interim Chief Executive Officer
|
|
(Principal Executive Officer and Duly Authorized Signatory)
|
|
|
|
/s/ Clayton J. Haynes
|
|
By: Clayton J. Haynes
|
|
Chief Financial Officer and Treasurer
|
|
(Principal Financial and Accounting Officer)
|
EXHIBIT
NUMBER
|
EXHIBIT
|
10.1
|
2016 Acacia Research Corporation Stock Incentive Plan
|
31.1
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934
|
31.2
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934
|
32.1
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350
|
32.2
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350
|
101
|
Interactive Data Files Pursuant to Rule 405 of Regulation S-T.
|
A.
|
The Plan shall be divided into three separate equity incentive programs:
|
•
|
the Discretionary Option Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase shares of Common Stock,
|
•
|
the Stock Issuance Program under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of Common Stock directly, either through the immediate purchase of such shares or as a bonus for services rendered to the Corporation (or any Subsidiary), and
|
•
|
the Discretionary Restricted Stock Unit Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted Restricted Stock Units convertible into shares of Common Stock.
|
B.
|
The provisions of Articles One and Five shall apply to all equity incentive programs under the Plan and shall govern the interests of all persons under the Plan.
|
A.
|
The Committee shall have sole and exclusive authority to administer the Discretionary Option Grant, Stock Issuance and Discretionary Restricted Stock Unit Grant Programs with respect to Section 16 Insiders. Administration of the Discretionary Option Grant, Stock Issuance and Discretionary Restricted Stock Unit Grant Programs with respect to all other persons eligible to participate in those programs may, at the Board’s discretion, be vested in the Committee, or the Board may retain the power to administer those programs with respect to all such persons. However, any discretionary option grants or stock issuances to members of the Committee must be authorized and approved by a disinterested majority of the Board.
|
B.
|
Members of the Committee shall serve for such period of time as the Board may determine and may be removed by the Board at any time.
|
C.
|
The Plan Administrator shall, within the scope of its administrative functions under the Plan, have full power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper administration of the Discretionary Option Grant, Stock Issuance and Discretionary Restricted Stock Unit Grant Programs and to make such determinations under, and issue such interpretations of, the provisions of those programs and any outstanding options or stock issuances thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator within the scope of its administrative functions under the Plan shall be final and binding on all parties who have an interest in the Discretionary Option Grant, Stock Issuance and Discretionary Restricted Stock Unit Grant Programs under its jurisdiction or any stock option or stock issuance thereunder.
|
D.
|
Service on the Committee shall constitute Service as a Board member, and members of the Committee shall accordingly be entitled to full indemnification and reimbursement as Board members for their service on the Committee. No member of the Committee shall be liable for any act or omission made in good faith with respect to the Plan or any option grants or stock issuances under the Plan.
|
A.
|
The persons eligible to participate in the Discretionary Option Grant, Stock Issuance and Discretionary Restricted Stock Unit Grant Programs are as follows:
|
B.
|
The Plan Administrator shall, within the scope of its administrative jurisdiction under the Plan, have full authority to determine, (i) with respect to option grants under the Discretionary Option Grant Program, which eligible persons are to receive such grants, the time or times when those grants are to be made, the number of shares to be covered by each such grant, the status of the granted option as either an Incentive Option or a Non-Statutory Option, the vesting schedule (if any) applicable to the option shares and the maximum term for which the option is to remain outstanding, (ii) with respect to stock issuances under the Stock Issuance Program, which eligible persons are to receive such issuances, the time or times when the issuances are to be made, the number of shares to be issued to each Participant, the vesting schedule (if any) applicable to the issued shares and the consideration for such shares and (iii) with respect to Restricted Stock Unit grants under the Discretionary Restricted Stock Unit Grant Program, which eligible persons are to receive such grants, the time or times when those grants are to be made, the number of shares to be covered by each such grant and the vesting schedule (if any) applicable to the shares covered by each such grant.
|
C.
|
The Plan Administrator shall have the absolute discretion either to grant options in accordance with the Discretionary Option Grant Program, to effect stock issuances in accordance with the Stock Issuance Program or to grant Restricted Stock Units in accordance with the Discretionary Restricted Stock Unit Grant Program.
|
A.
|
Shares Available Under the Plan.
The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Corporation on the open market. The number of shares of Common Stock initially reserved for issuance under the Plan shall be 4,500,000 shares plus the number of shares of Common Stock remaining available for issuance and not subject to awards granted under the Acacia Research Corporation 2013 Stock Incentive Plan (the “Existing
|
B.
|
Share Counting. The number of shares of Common Stock available for grant under the Plan shall be reduced by one share of Common Stock for each share of Common Stock issued pursuant to the exercise to an option granted under the Plan. The number of shares of Common Stock available for grant under the Plan shall be reduced by 1.85 shares of Common Stock for each share of Common Stock issued
|
C.
|
Forfeiture. In the event that (i) all or any portion of any option granted under the Plan can no longer under any circumstances be exercised, (ii) any shares of Common Stock issued under the Plan are reacquired by the Corporation or (iii) all or any portion of any Restricted Stock Units granted under the Plan are forfeited or can no longer under any circumstances vest, the shares of Common Stock allocable to the unexercised portion of such options, or the forfeited or unvested portion of such Restricted Stock Unit or the shares so reacquired shall again be available for grant or issuance under the Plan.
|
D.
|
No Liberal Share Recycling. Notwithstanding Section V.C. above, the following shares of Common Stock may not again be made available for issuance as awards under the Plan: (i) shares of Common Stock used to pay the exercise price related to outstanding options, or (ii) shares of Common Stock used to pay withholding taxes related to outstanding options or Restricted Stock Units or any other full value awards. Awards or
(iii) shares of Common Stock that have been repurchased by the Corporation using the proceeds from any exercise of options.
|
E.
|
Individual Award Limits. No one person participating in the Plan may receive Awards under the Plan for more than 750,000 shares of Common Stock in the aggregate per calendar year.
|
F.
|
Adjustments. If any change is made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate adjustments shall be made by the Plan Administrator to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the maximum number and/or class of securities for which any one person may be granted stock options and direct stock issuances or share right awards under the Plan per calendar year, (iii) the number and/or class of securities for which grants are subsequently to be made under the Discretionary Restricted Stock Unit Grant Program, and (iv) the number and/or class of securities and the exercise price per share in effect under each outstanding option under the Plan. Such adjustments to the outstanding options are to be effected in a manner which shall preclude the enlargement or dilution of rights and benefits under such options. The adjustments determined by the Plan Administrator shall be final, binding and conclusive.
|
I.
|
OPTION TERMS
|
A.
|
EXERCISE PRICE.
|
B.
|
EXERCISE AND TERM OF OPTIONS.
|
C.
|
EFFECT OF TERMINATION OF SERVICE
|
D.
|
STOCKHOLDER RIGHTS. The holder of an option shall have no stockholder rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become a holder of record of the purchased shares.
|
E.
|
REPURCHASE RIGHTS. The Plan Administrator shall have the discretion to grant options which are exercisable for unvested shares of Common Stock. Should the Optionee cease Service while holding such unvested shares, the Corporation shall have the right to repurchase, at the exercise price paid per share, any or all of those unvested shares. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan Administrator and set forth in the document evidencing such repurchase right.
|
F.
|
DIVIDEND EQUIVALENT RIGHTS. No option granted under the Plan shall provide for dividend equivalent rights.
|
G.
|
LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee, Incentive Options shall be exercisable only by the Optionee and shall not be assignable or transferable other than by will or the laws of descent and distribution following the Optionee’s death. Non-Statutory Options shall be subject to the same limitation, except that a Non-Statutory Option may be assigned in whole or in part during the Optionee’s lifetime to one or more of the Optionee’s Immediate Family or to a trust established exclusively for the Optionee or one or more members of the Optionee’s Immediate Family members or to Optionee’s former spouse, to the extent such assignment is in connection with the Optionee’s estate plan or pursuant to a domestic relations order. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned
|
A.
|
ELIGIBILITY. Incentive Options may only be granted to Employees of the Corporation or any Subsidiary.
|
B.
|
EXERCISE PRICE. Except as set forth in Section II.E. of this Article Two, the exercise price per share shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date.
|
C.
|
DOLLAR LIMITATION. The aggregate Fair Market Value of the shares of Common Stock (determined as of the respective date or dates of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Subsidiary) may for the first time become exercisable as Incentive Options during any one calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more such options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted.
|
D.
|
FAILURE TO QUALIFY AS INCENTIVE OPTION. To the extent that any option governed by this Plan does not qualify as an Incentive Option, by reason of the dollar limitation described in Section II.C of this Article Two or for any other reason, such option shall be exercisable as a Non-Statutory Option under the Federal tax laws.
|
E.
|
10% STOCKHOLDER. If any Employee to whom an Incentive Option is granted is a 10% Stockholder, then the exercise price per share shall not be less than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the option grant date, and the option term shall not exceed five (5) years measured from the option grant date.
|
A.
|
Unless otherwise determined by the Plan Administrator in the event of a Change in Control/Hostile Take-Over, any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue any or all options outstanding under the Plan or may substitute similar stock awards for options outstanding under the Plan (including but not limited to, awards to acquire the same consideration paid to the stockholders of the Corporation pursuant to the Change in Control/Hostile Take-Over), and any reacquisition or repurchase rights held by the Corporation in respect of Common Stock issued pursuant to options may be assigned by the Corporation to the successor of the Corporation (or the successor’s parent company, if any), in connection with such Change in Control/Hostile Take-Over. A surviving corporation or acquiring corporation (or its parent) may choose to assume or continue only a
|
B.
|
In the event of a Change in Control/Hostile Take-Over in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue such outstanding option or substitute similar stock awards for such outstanding options, then with respect to options that have not been assumed, continued or substituted, the vesting of such options will be accelerated in full to a date prior to the effective time of such Change in Control/Hostile Take-Over (contingent upon the effectiveness of the Change in Control/Hostile Take-Over) as the Board will determine (or, if the Board does not determine such a date, to the date that is five days prior to the effective time of the Change in Control/Hostile Take-Over), and such options will terminate if not exercised (if applicable) at or prior to the effective time of the Change in Control/Hostile Take-Over, and any reacquisition or repurchase rights held by the Corporation with respect to such options will lapse (contingent upon the effectiveness of the Change in Control/Hostile Take-Over).
|
C.
|
Notwithstanding the foregoing, in the event an option will terminate if not exercised prior to the effective time of a Change in Control/Hostile Take-Over, the Board may provide, in its sole discretion, that the holder of such option may not exercise such option but instead will receive a payment, in such form as may be determined by the Board, equal in value to the excess, if any, of (i) the value of the property the Optionee would have received upon the exercise of the option immediately prior to the effective time of the Change in Control/Hostile Take-Over (including, at the discretion of the Board, any unvested portion of such option), over (ii) any exercise price payable by such holder in connection with such exercise. For clarity, this payment may be zero if the value of the property is equal to or less than the exercise price. Payments under this provision may be delayed to the same extent that payment of consideration to the holders of the Common Stock in connection with the Change in Control/Hostile Take-Over is delayed as a result of escrows, earn outs, holdbacks or any other contingencies.
|
D.
|
The portion of any Incentive Option accelerated in connection with a Change in Control or Hostile Take-Over shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand Dollar ($100,000) limitation is not exceeded. To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option under the Federal tax laws.
|
E.
|
The grant of options under the Discretionary Option Grant Program shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
|
A.
|
PURCHASE PRICE.
|
B.
|
VESTING PROVISIONS.
|
C.
|
LIMITED TRANSFERABILITY OF STOCK AWARDS. Each stock Award and share Right Award may be assigned in whole or in part during the Participant’s lifetime to one or more members of the Participant’s Immediate Family or to a trust established exclusively for the Participant’s or one or more members of the holder’s Immediate Family or to Participant’s former spouse, to the extent such assignment is in connection with the Participant’s estate plan or pursuant to domestic relations order. The terms applicable to the assigned portion shall be the same as those in effect for the stock Award(s) or share right Award(s) immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate. A Participant may also designate one or more persons as the beneficiary or beneficiaries of his or her outstanding stock Awards or share right Awards, and those stock Awards or share right Awards shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon such Participant’s death while holding those Restricted Stock Units. Such beneficiary or beneficiaries shall take the transferred Restricted Stock Units subject to all the terms and conditions of the applicable agreement evidencing each such transferred Restricted Stock Unit.
|
A.
|
Unless otherwise determined by the Plan Administrator, in the event of a Change in Control/Hostile Take-Over, any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue any or all stock Awards or share right Awards granted under the Plan or may substitute similar stock awards for stock Awards or share right Awards outstanding under the Plan (including but not limited to, awards to acquire the same consideration paid to the stockholders of the Corporation pursuant to the Change in Control/Hostile Take-Over), and any reacquisition or repurchase rights held by the Corporation in respect of Common Stock issued pursuant to stock Awards or share right Awards may be assigned by the Corporation to the successor of the Corporation (or the successor’s parent company, if any), in connection with such Change in Control/Hostile Take-Over. A surviving corporation or acquiring corporation (or its parent) may choose to assume or continue only a portion of a stock Award or share right Award or substitute a similar stock award for only a portion of a stock Award or share right Award, or may choose to assume or continue the stock Award or share right Award held by some, but not all Participants. The terms of any assumption, continuation or substitution will be set by the Board. If either (x) Participant’s employment with the Corporation is terminated by the Corporation without Cause (which termination shall be effective as of the date specified by the Corporation in a written notice to Participant), other than due to death or disability, or in the event Participant terminates his or her employment with Good Reason, in either case within twelve months following a Change in Control/Hostile Take-Over, or (y) Participant voluntarily terminates his or her employment on his or her own initiative after the twelfth month but no later than the thirteenth month following a Change in Control/Hostile Take-Over, in either case of (x) or (y), then the vesting of such stock Awards or share right Awards will be accelerated in full and any reacquisition or repurchase rights held by the Corporation with respect to such stock Awards or share right Awards will lapse. Such vesting acceleration will occur on the date of termination of such Participant’s Service.
|
B.
|
In the event of a Change in Control/Hostile Take-Over in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue such outstanding stock Awards or share right Awards or substitute similar stock awards for such outstanding stock Awards or share right Awards, then with respect to stock Awards or share right Awards that have not been assumed, continued or substituted, the vesting of such stock Awards or share right Awards will be accelerated in full to a date prior to the effective time of such Change in Control/Hostile Take-Over (contingent upon the effectiveness of the Change in Control/Hostile Take-Over) as the Board will determine (or, if the Board does not determine such a date, to the date that is five days prior to the effective time of the Change in Control/Hostile Take-Over), and any reacquisition or repurchase rights held by the Corporation with respect to such stock Awards or share right Awards will lapse (contingent upon the effectiveness of the Change in Control/Hostile Take-Over).
|
C.
|
The grant of stock Awards or share right Awards under the Share Issuance Program shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
|
A.
|
GENERAL. The Plan Administrator shall have the right to grant, pursuant to the Plan, Restricted Stock Units, subject to such terms, restrictions and conditions as the Plan Administrator may determine at the time of grant. Such conditions may include, but are not limited to, continued employment or the achievement of specified performance goals or objectives established by the Plan Administrator.
|
B.
|
RESTRICTED STOCK UNIT AGREEMENTS. A Participant shall have no rights with respect to the Restricted Stock Units covered by a Restricted Stock Award Agreement until the Participant has executed and delivered to the Corporation the applicable Restricted Stock Award Agreement. Each Restricted Stock Award Agreement shall be in such form, and shall set forth the Purchase Price, if any, and such other terms, conditions and restrictions of the Restricted Stock Award Agreement, not inconsistent with the provisions of the Plan, as the Plan Administrator shall, from time to time, deem desirable. Each such Restricted Stock Award Agreement may be different from each other Restricted Stock Award Agreement.
|
C.
|
PURCHASE PRICE.
|
D.
|
VESTING. The Restricted Stock Unit Award agreement shall specify the date or dates, the performance goals, if any, established by the Plan Administrator with respect to one or more “Qualifying Performance Criteria” that must be achieved, and any other conditions on which the Restricted Stock Units may vest. No shares of Common Stock shall be issued to a Participant prior to the date on which a Restricted Stock Unit vests. As soon as practical after any Restricted Stock Units vest, the Corporation shall promptly cause
|
E.
|
LIMITED TRANSFERABILITY OF RESTRICTED STOCK UNITS. Each Restricted Stock Unit under this Article Four may be assigned in whole or in part during the Participant’s lifetime to one or more members of the Participant’s Immediate Family or to a trust established exclusively for the Participant’s or one or more members of the holder’s Immediate Family or to Participant’s former spouse, to the extent such assignment is in connection with the Participant’s estate plan or pursuant to domestic relations order. The terms applicable to the assigned portion shall be the same as those in effect for the Restricted Stock Unit(s) immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate. A Participant may also designate one or more persons as the beneficiary or beneficiaries of his or her outstanding Restricted Stock Units under this Article Four, and those Restricted Stock Units shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon such Participant’s death while holding those Restricted Stock Units. Such beneficiary or beneficiaries shall take the transferred Restricted Stock Units subject to all the terms and conditions of the applicable agreement evidencing each such transferred Restricted Stock Unit.
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F.
|
NO RIGHTS AS A STOCKHOLDER. A holder of Restricted Stock Units shall possess no incidents of ownership with respect to the shares of Common Stock represented by such Restricted Stock Units, unless and until the shares of Common Stock are transferred to such holder pursuant to the terms of this Plan.
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A.
|
Unless otherwise determined by the Plan Administrator , in the event of a Change in Control/Hostile Take-Over, in the event of a Change in Control/Hostile Take-Over, any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue any or all Restricted Stock Unit Awards outstanding under the Plan or may substitute similar stock awards for Restricted Stock Unit Awards outstanding under the Plan (including but not limited to, awards to acquire the same consideration paid to the stockholders of the Corporation pursuant to the Change in Control/Hostile Take-Over), and any reacquisition or repurchase rights held by the Corporation in respect of Common Stock issued pursuant to Restricted Stock Unit Awards may be assigned by the Corporation to the successor of the Corporation (or the successor’s parent company, if any), in connection with such Change in Control/Hostile Take-Over. A surviving corporation or acquiring corporation (or its parent) may choose to assume or continue only a portion of a Restricted Stock Unit Award or substitute a similar stock award for only a portion of a Restricted Stock Unit Award, or may choose to assume or continue the Restricted Stock Unit Awards held by some, but not all Participants. The terms of any assumption, continuation or substitution will be set by the Board. If either (x) Participant’s employment with the Corporation is terminated by the Corporation without Cause (which termination shall be effective as of the date specified by the Corporation in a written notice to Participant), other than due to death or disability, or in the event Participant terminates his or her employment with Good Reason, in either case within twelve months following a Change in Control/Hostile Take-Over, or (y) Participant voluntarily terminates his or her employment on his or her own initiative after the twelfth month but no later than the thirteenth month following a Change in Control/Hostile Take-Over, in either case of (x) or (y), then the vesting of such Restricted Stock Units and the time when such Restricted Stock Units may be exercised will be accelerated in full. Such vesting acceleration will occur on the date of termination of such Participant’s Service.
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B.
|
In the event of a Change in Control/Hostile Take-Over in which the surviving corporation or acquiring corporation (or its parent company) does not assume or continue such outstanding Restricted Stock Unit Awards or substitute similar stock awards for such outstanding Restricted Stock Unit Awards, then with respect to Restricted Stock Unit Awards that have not been assumed, continued or substituted, the vesting of such Restricted Stock Unit Awards will be accelerated in full to a date prior to the effective time of such Change in Control/Hostile Take-Over (contingent upon the effectiveness of the Change in Control/
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C.
|
Notwithstanding the foregoing, in the event a Restricted Stock Unit Award will terminate if not exercised prior to the effective time of a Change in Control/Hostile Take-Over, the Board may provide, in its sole discretion, that the holder of such Restricted Stock Unit Award may not exercise such Restricted Stock Unit Award but instead will receive a payment, in such form as may be determined by the Board, equal in value to the excess, if any, of (A) the value of the property the Participant would have received upon the exercise of the Restricted Stock Unit Award immediately prior to the effective time of the Change in Control/Hostile Take-Over (including, at the discretion of the Board, any unvested portion of such Restricted Stock Unit Award), over (B) any exercise price payable by such holder in connection with such exercise. For clarity, this payment may be zero if the value of the property is equal to or less than the exercise price. Payments under this provision may be delayed to the same extent that payment of consideration to the holders of the Common Stock in connection with the Change in Control/Hostile Take-Over is delayed as a result of escrows, earn outs, holdbacks or any other contingencies.
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D.
|
The grant of Restricted Stock Units under the Discretionary Restricted Stock Unit Grant Program shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
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A.
|
Whenever shares of Common Stock are to be issued upon the exercise of an option, the settlement of Restricted Stock Units or the grant or vesting of shares pursuant to an Award, the Corporation shall have the right to require the Participant or Optionee, as applicable, to remit to the Corporation in cash an amount sufficient to satisfy Withholding Taxes attributable to such exercise, settlement, grant or vesting prior to the delivery of any certificate or certificates for such shares or the effectiveness of the lapse of such restrictions. In addition, upon the exercise or settlement of any Award in cash, the Corporation shall have the right to withhold from any cash payment required to be made pursuant thereto an amount sufficient to satisfy the Withholding Taxes, if any, attributable to such exercise or settlement.
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B.
|
The Plan Administrator may, in its discretion, permit (i) the Corporation to withhold shares of Common Stock from the award in satisfaction of all or part of the Withholding Taxes which may become payable in connection with the an award granted under the Plan (pursuant to the terms of Article Five Section II.B.1.) and (ii) any or all Optionees or Participants under the Plan with the right to use shares of Common Stock in satisfaction of all or part of the Withholding Taxes to which such Participants or Optionees may become subject in connection with the grant or exercise of their options, the vesting or settlement of their Restricted Stock Units or the issuance or vesting of their shares. The withholding of shares in order to
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A.
|
The Plan shall become effective immediately upon the Plan Effective Date. No options granted under the Plan may be exercised, no Restricted Stock Units granted under the Plan may be settled and no shares shall be issued under the Plan, until the Plan is approved by the Corporation’s stockholders. If such stockholder approval is not obtained within twelve (12) months after the Plan Effective Date, then all options and Restricted Stock Units previously granted under this Plan shall terminate and cease to be outstanding, and no further options or Restricted Stock Units shall be granted and no shares shall be issued under the Plan.
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B.
|
The Plan shall terminate upon the earliest of (i) the tenth anniversary of the Plan Effective Date, (ii) the date on which all shares available for issuance under the Plan shall have been issued as fully-vested shares or (iii) the termination of all outstanding options and Restricted Stock Units in connection with a Change in Control. Upon such Plan termination, all option grants, Restricted Stock Unit grants and unvested stock issuances outstanding at that time shall thereafter continue to have force and effect in accordance with the provisions of the documents evidencing such grants or issuances.
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A.
|
The Plan Administrator shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects; provided, however, that to the extent any applicable law, regulation or rule of a stock exchange requires stockholder approval in order for any such amendment or modification to be effective, such amendment or modification shall not be effective without such approval; provided further, no such amendment or modification shall adversely affect the rights and obligations with respect to stock options, Restricted Stock Units or unvested stock issuances at the time outstanding under the Plan unless the Optionee or the Participant consents to such amendment or modification.
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B.
|
Options to purchase shares of Common Stock may be granted under the Discretionary Option Grant Program, Restricted Stock Units may be granted under the Discretionary Restricted Stock Unit Grant Program and shares of Common Stock may be issued under the Stock Issuance Program that are in each instance in excess of the number of shares then available for issuance under the Plan, provided any excess shares actually issued under those programs shall be held in escrow until there is obtained stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the Plan. If such stockholder approval is not obtained within twelve (12) months after the date the first such excess issuances are made, then (i) any unexercised options granted on the basis of such excess shares shall terminate and cease to be outstanding and (ii) the Corporation shall promptly refund
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A.
|
The implementation of the Plan, the granting of any stock option under the Plan, the granting of any Restricted Stock Unit under the Plan and the issuance of any shares of Common Stock (i) upon the exercise of any granted option or the settlement of any Restricted Stock Unit or (ii) under the Stock Issuance Program shall be subject to the Corporation’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the stock options and Restricted Stock Units granted under the Plan and the shares of Common Stock issued pursuant to the Plan.
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B.
|
No shares of Common Stock or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable requirements of Federal and state securities laws, including the filing and effectiveness of the Form S-8 registration statement for the shares of Common Stock issuable under the Plan, and all applicable listing requirements of any stock exchange (or the Nasdaq National Market, if applicable) on which Common Stock is then listed for trading.
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A.
|
To the extent that the Plan Administrator determines that any Award granted under the Plan is subject to Section 409A of the Code, the Plan and document evidencing such Award shall incorporate the terms and conditions required by Section 409A of the Code. To the extent applicable, the Plan and any agreement evidencing an Award shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Plan Effective Date. Notwithstanding any provision of the Plan to the contrary, in the event that following the Plan Effective Date the Plan Administrator determines that any Award may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the Plan Effective Date), the Plan Administrator may adopt such amendments to the Plan and the applicable Award agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Plan Administrator determines are necessary or appropriate to (a) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance and thereby avoid the application of any penalty taxes under such Section. The Corporation shall not be responsible for any additional tax imposed pursuant to Section 409A of the Code, nor will the Corporation indemnify or otherwise reimburse an Optionee for any liability incurred as a result of Section 409A of the Code
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B.
|
A termination of Service shall not be deemed to have occurred for purposes of any provision of this Plan providing for the payment of any amounts or benefits that the Plan Administrator determines may be considered nonqualified deferred compensation under Section 409A of the Code upon or following a termination of Service unless such termination is also a “separation from service” within the meaning of Section 409A of the Code, and, for purposes of any such provision of this Plan, references to a “termination,” “termination of Service” or like terms shall mean such a separation from service. The determination of whether and when a separation from service has occurred for purposes of this Plan shall be made in accordance with the presumptions set forth in Section 1.409A-1(h) of the Treasury Regulations.
|
C.
|
A Change in Control or Hostile Take-Over shall not be deemed to have occurred for purposes of any provision of this Plan providing for the payment of any amounts or benefits that the Plan Administrator determines may be considered nonqualified deferred compensation under Section 409A of the Code upon or following a Change in Control or Hostile Take-Over unless such Change in Control or Hostile Take-Over also results in the occurrence of a “change in control event” within the meaning of Section 409A of the Code, and Section 1.409A-3(i)(5) of the Treasury Regulations, and, for purposes of any such provision of this Plan, references to a “Change in Control” or “Hostile Take-Over” or like terms shall mean such occurrence of a change in control event. The determination of whether and when a change in control event has occurred for purposes of this Plan shall be made in accordance with Section 409A of the Code and the applicable Treasury Regulations thereunder.
|
D.
|
Any provision of this Plan to the contrary notwithstanding, if at the time of a Participant’s separation from service, the Plan Administrator determines that such Participant is a “specified employee,” within the meaning of Section 409A of the Code, based on an identification date of December 31, then to the extent any payment or benefit that such Participant becomes entitled to under this Plan on account of such separation from service would be considered nonqualified deferred compensation under Section 409A of
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A.
|
AWARD shall mean any (i) options issued under the Discretionary Option Grant Program, or (ii) any shares issued under the Stock Issuance Program, or (iii) any Restricted Stock Units issued under the Discretionary Restricted Stock Unit Grant Program.
|
B.
|
BOARD shall mean the Corporation’s Board of Directors.
|
C.
|
CAUSE shall have the meaning ascribed to such term in any written agreement between the Optionee or Participant and the Corporation defining such term and, in the absence of such agreement, such term will mean, with respect to an Optionee or Participant, the occurrence of any of the following events: (i) such Optionee’s or Participant’s conviction of, or plea of no contest with respect to, any crime involving fraud, dishonesty or moral turpitude; (ii) such Optionee’s or Participant’s attempted commission of or participation in a fraud or act of dishonesty against the Corporation that results in (or might have reasonably resulted in) material harm to the business of the Corporation; (iii) such Optionee’s or Participant’s intentional, material violation of any contract or agreement between the Optionee or Participant and the Corporation or any statutory duty the Participant owes to the Corporation; or (iv) such Optionee’s or Participant’s conduct that constitutes gross misconduct, insubordination, incompetence or habitual neglect of duties and that results in (or might have reasonably resulted in) material harm to the business of the Corporation. The determination that a termination of the Optionee’s or Participant’s Service is for Cause will not be made unless and until there will have been delivered to such Optionee or Participant a copy of a resolution duly adopted by the affirmative vote of at least a majority of the Board at a meeting of the Board called and held for such purpose (after reasonable notice to such Optionee or Participant and an opportunity for such Optionee or Participant, together with such Optionee’s or Participant’s counsel, to be heard before the Board), finding that in the good faith opinion of the Board, such Optionee or Participant was guilty of the conduct constituting “Cause” and specifying the particulars. Any determination by the Corporation that the Continuous Service of an Optionee or Participant was terminated with or without Cause for the purposes of outstanding Awards held by such Optionee or Participant will have no effect upon any determination of the rights or obligations of the Corporation or such Optionee or Participant for any other purpose.
|
D.
|
CERTIFICATE OF INCORPORATION shall mean the Restated Certificate of Incorporation of Acacia Research Corporation filed with the Delaware Secretary of State on the Plan Effective Date and all subsequent amendments, supplements, modifications and replacements thereof.
|
E.
|
CHANGE IN CONTROL shall mean a change in ownership or control of the Corporation effected through any of the following transactions:
|
F.
|
CODE shall mean the Internal Revenue Code of 1986, as amended.
|
G.
|
COMMITTEE shall mean a committee of two (2) or more non-employee Board members appointed by the Board.
|
H.
|
COMMON STOCK shall mean the Corporation’s Common Stock, par value $0.001.
|
I.
|
CORPORATION shall mean Acacia Research Corporation, a Delaware corporation, and any corporate successor to all or substantially all of the assets or voting stock of Acacia Research Corporation, which shall by appropriate action adopt the Plan.
|
J.
|
DISCRETIONARY OPTION GRANT PROGRAM shall mean the discretionary option grant program in effect under Article Two of the Plan.
|
K.
|
DISCRETIONARY RESTRICTED STOCK UNIT GRANT PROGRAM shall mean the discretionary restricted stock unit grant program in effect under Article Four of the Plan.
|
L.
|
EMPLOYEE shall mean an individual who is in the employ of the Corporation (or any Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.
|
M.
|
EXERCISE DATE shall mean the date on which the Corporation shall have received written notice of the option exercise.
|
N.
|
FAIR MARKET VALUE per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:
|
O.
|
GOOD REASON shall mean that one or more of the following are undertaken by the Corporation without the Optionee’s or Participant’s express written consent:
|
P.
|
HOSTILE TAKE-OVER shall mean either of the following events effecting a change in control or ownership of the Corporation:
|
Q.
|
IMMEDIATE FAMILY shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law and shall include adoptive relationships.
|
R.
|
INCENTIVE OPTION shall mean an option which satisfies the requirements of Code Section 422.
|
S.
|
MISCONDUCT shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Subsidiary), or any other intentional misconduct by such person adversely affecting the business or affairs of the Corporation (or any Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any Subsidiary) may consider as grounds for the dismissal or discharge of any Optionee, Participant or other person in the Service of the Corporation (or any Subsidiary).
|
T.
|
1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
|
U.
|
NON-STATUTORY OPTION shall mean an option not intended to satisfy the requirements of Code Section 422.
|
V.
|
OPTIONEE shall mean any person to whom an option is granted under the Discretionary Option Grant Program.
|
W.
|
PARTICIPANT shall mean any person who is (i) issued shares of Common Stock under the Stock Issuance Program, or (ii) granted Restricted Stock Units under the Discretionary Restricted Stock Unit Grant Program.
|
X.
|
PERFORMANCE AWARD means an Award the grant, issuance, retention, vesting and/or settlement of which is subject to satisfaction of one or more of the Qualifying Performance Criteria specified in Section VIII.
|
Y.
|
PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the inability of the Optionee or the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of continuous duration of twelve (12) months or more.
|
Z.
|
PLAN shall mean the Corporation’s 2016 Acacia Research Corporation Stock Incentive Plan, as set forth in this document.
|
AA.
|
PLAN ADMINISTRATOR shall mean the particular body, whether the Committee or the Board, which is authorized to administer the Discretionary Option Grant Program, the Discretionary Restricted Stock Unit Grant Program and Stock Issuance Programs with respect to one or more classes of eligible persons, to the extent such entity is carrying out its administrative functions under those programs with respect to the persons under its jurisdiction.
|
AB.
|
PLAN EFFECTIVE DATE shall mean
April 26, 2016
, which is the date of its adoption by the Board, subject to approval of the Plan by the stockholders of the Corporation.
|
AC.
|
RESTRICTED STOCK UNIT shall mean a right to receive a share of Common Stock during specified time periods granted pursuant to Article Four.
|
AD.
|
SECTION 16 INSIDER shall mean an officer or director of the Corporation subject to the short-swing profit liabilities of Section 16 of the 1934 Act.
|
AE.
|
SERVICE shall mean the performance of services for the Corporation (or any Subsidiary) by a person in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor, except to the extent otherwise specifically provided in the documents evidencing the option grant or stock issuance.
|
AF.
|
SHORT TERM FEDERAL RATE shall mean the federal short-term rate in effect under Section 1274(d) of the Code for the period the shares were held in escrow.
|
AG.
|
STOCK EXCHANGE shall mean the Nasdaq Stock Market, the American Stock Exchange or the New York Stock Exchange.
|
AH.
|
STOCK ISSUANCE AGREEMENT shall mean the agreement entered into by the Corporation and the Participant at the time of issuance of shares of Common Stock under the Stock Issuance Program.
|
AI.
|
STOCK ISSUANCE PROGRAM shall mean the stock issuance program in effect under Article Three of the Plan.
|
AJ.
|
SUBSIDIARY shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
|
AK.
|
10% STOCKHOLDER shall mean the owner of stock (as determined under Code Section 424(d)) possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation (or any Subsidiary).
|
AL.
|
WITHHOLDING TAXES shall mean the Federal, state and local income and employment withholding taxes to which the holder of options, stock issuances or share right awards may become subject in connection with such options, stock issuances or share right awards.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Acacia Research Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
August 9, 2016
|
/s/ Marvin Key
|
|
|
Marvin Key
Interim Chief Executive Officer
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Acacia Research Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
August 9, 2016
|
/s/ Clayton J. Haynes
|
|
|
Clayton J. Haynes
Chief Financial Officer and Treasurer
|
|
|
By:
/s/ Marvin Key
Marvin Key
Interim Chief Executive Officer
|
|
August 9, 2016
|
|
By:
/s/ Clayton J. Haynes
Clayton J. Haynes
Chief Financial Officer and Treasurer
|
|
August 9, 2016
|