As filed with the Securities and Exchange Commission on
February 21, 1997.
Registration No. ________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________________
ACACIA RESEARCH CORPORATION
(Exact name of registrant as specified in its charter)
___________________
California 95-440574
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12 South Raymond Avenue, Pasadena, California 91105
(Address of principal executive offices)
ACACIA RESEARCH CORPORATION 1996 STOCK OPTION PLAN
(Full title of the plan)
Ms. Kathryn King-Van Wie
Secretary and Chief Operating Officer
12 South Raymond Avenue, Pasadena, California 91105
(Name and address of agent for service)
___________________
Telephone number, including area code, of agent for service:
(818) 449-6431
___________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Proposed Proposed
maximum maximum
Title Of Amount offering aggregate Amount of
securities to be price offering registration
to be registered registered per unit price fee
Common Stock, 250,000<1> $6.875<2> $1,718,750.00<2> $521.00<2>
no par value shares
__________
<FN>
<F1> This Registration Statement covers, in addition to the
number of shares of Common Stock stated above, options to
purchase the shares of Common Stock covered by the
Prospectus and, pursuant to Rule 416, an additional
indeterminate number of shares which by reason of certain
events specified in the Plan may become subject to the
Plan.
<F2> Pursuant to Rule 457(h), the maximum offering price, per
share and in the aggregate, and the registration fee were
calculated based upon the average of the high and low
prices of the Common Stock on February 14, 1997, as
reported on the NASDAQ National Market System and
published in The Western Edition of The Wall Street
Journal.
</FN>
</TABLE>
<PAGE>
PART I
INFORMATION REQUIRED IN THE
SECTION 10(a) PROSPECTUS
The documents containing the information specified in
Part I of Form S-8 (plan information and registrant
information) will be sent or given to optionees as specified
by Rule 428(b)(1) of the Securities Act of 1933, as amended
(the "Act"). Such documents need not be filed with the
Securities and Exchange Commission either as part of this
Registration Statement or as prospectuses or prospectus
supplements pursuant to Rule 424 of the Act. These documents,
which include the statement of availability required by Item
2 of Form S-8, and the documents incorporated by reference in
this Registration Statement pursuant to Item 3 of Form S-8
(Part II hereof), taken together, constitute a prospectus that
meets the requirements of Section 10(a) of the Act.
<PAGE>
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of Acacia Research
Corporation (the "Company") filed with the Securities and
Exchange Commission are incorporated herein by reference:
(a) Annual Report on Form 10-KSB for the Company's fiscal
year ended December 31, 1995;
(b) Quarterly Reports on Form 10-Q for the Company's
quarterly periods ended March 31, 1996, June 30, 1996,
and September 30, 1996; and
(c) The description of the Company's Common Stock
contained in its Registration Statement on Form 8-A
filed with the Securities and Exchange Commission on
May 11, 1995, and Amendment No. 1 to Form 8-A on Form
8-A/A filed with the Securities and Exchange
Commission on June 5, 1995, and any amendment or
report filed for the purpose of updating such
description.
All documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities and Exchange Act of 1934, as amended (the "Exchange
Act"), prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall
be deemed to be incorporated by reference into the prospectus
and to be a part hereof from the date of filing of such
documents. Any statement contained herein or in a document,
all or a portion of which is incorporated or deemed to be
incorporated by reference herein, shall be deemed to be
modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or
in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or
amended, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
The Company's Common Stock, no par value (the "Common
Stock"), is registered pursuant to Section 12 of the Exchange
Act, and, therefore, the description of securities is omitted.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation contain a
provision which eliminates the liability of directors for
monetary damages to the fullest extent permissible under
California law. The General Corporation Law of California
(the "Law") (i) authorizes the elimination of liability of
directors for monetary damages in an action brought by a
shareholder in the right of the Company (referred to herein as
a "derivative action") or by the Company for breach of a
director's duties to the Company and its shareholders and
(ii) authorizes the Company to indemnify directors and
officers for monetary damages for all acts or omissions
committed by them in their respective capacities; provided,
however, that liability is not limited nor may indemnification
be provided for (a) acts or omissions that involve intentional
misconduct or knowing and culpable violation of law, (b) for
acts or omissions that a director or officer believes to be
contrary to the best interests of the Company or its
shareholders or that involve the absence of good faith on the
part of a director or officer seeking indemnification, (c) for
any transaction from which a director or officer derives an
improper personal benefit, (d) for acts or omissions that show
a reckless disregard for the director's or officer's duty to
the Company or its shareholders in circumstances in which such
person was aware, or should have been aware, in the ordinary
course of performing his duties, of a risk of serious injury
to the Company or its shareholders, (e) for acts or omissions
that constitute an unexcused pattern of inattention that
amounts to an abdication of the director's or officer's duty
to the Company or its shareholders, and (f) for liabilities
arising under Section 310 (contracts in which a director has
a material financial interest) and 316 (certain unlawful
dividends, distributions, loans and guarantees) of the Law.
In addition, the Company may not indemnify directors and
officers in circumstances in which indemnification is
expressly prohibited by Section 317 of the Law.
The bylaws of the Company provide that the Company has
the power to indemnify directors and officers to the fullest
extent permitted under California law and the Company's
Articles of Incorporation. The Company has entered into
indemnification agreements with its directors and officers
which require that the Company indemnify such directors and
officers in all cases to the fullest extent permitted by
applicable provisions of the Law. The Company also maintains
a directors' and officers' liability insurance policy insuring
directors and officers of the Company for covered losses as
defined in the policy.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
See the attached Exhibit Index.
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus
required by Section 10(a)(3) of the Securities
Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus
any facts or events arising after the effective
date of the Registration Statement (or the most
recent post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth
in the Registration Statement; and
(iii) To include any material
information with respect to the plan of
distribution not previously disclosed in the
Registration Statement or any material change to
such information in the Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") that
are incorporated by reference in the Registration
Statement;
(2) That, for the purpose of determining any
liability under the Act, each such post-effective amendment
shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Act, each
filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(h) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the provisions described in Item 6 above, or otherwise, the
registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-8 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Pasadena, State of California, on
February 18, 1997.
By: /s/ Paul R. Ryan
Paul R. Ryan
Its: President and Chief
Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes
and appoints R. Bruce Stewart, his true and lawful attorney-
in-fact and agent, with full powers of substitution and
resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, each acting alone, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed below by the
following persons in the capacities and on the dates
indicated.
SIGNATURE TITLE DATE
/s/ Paul R. Ryan President and Chief February 18, 1997
Paul R. Ryan Executive Officer
(Principal Executive Officer)
/s/ R. Bruce Stewart Chief Financial Officer and February 18, 1997
R. Bruce Stewart Chairman of the Board (Principal
Financial and Accounting Officer)
/s/ Brooke P. Anderson Vice President, Research and February 18, 1997
Brooke P. Anderson Development and Director
/s/ Fred A. de Boom Director<1> February 18, 1997
Fred A. de Boom
/s/ Edward W. Frykman Director<1> February 18, 1997
Edward W. Frykman
___________________________________________
<1>Member of Compensation Committee
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
4.1 Acacia Research Corporation 1996 Stock Option Plan.
4.2 Form of Employee Incentive Stock Option Agreement.
4.3 Form of Employee Nonstatutory Stock Option Agreement.
5. Opinion of O'Melveny & Myers LLP (opinion re
legality).
23.1 Consent of Finocchiaro & Co.
23.2 Consent of O'Melveny & Myers LLP (included in
Exhibit 5).
24. Power of Attorney (included in this
Registration Statement under "Signatures").
<PAGE>
ACACIA RESEARCH CORPORATION
1996 STOCK OPTION PLAN
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. THE PLAN. . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Purpose. . . . . . . . . . . . . . . . . . 1
Section 1.2 Administration and Authorization; Power
and Procedure. . . . . . . . . . . . . . . 1
Section 1.3 Participation. . . . . . . . . . . . . . . 3
Section 1.4 Shares Available for Awards. . . . . . . . 3
Section 1.5 Grant of Awards. . . . . . . . . . . . . . 4
Section 1.6 Award Period . . . . . . . . . . . . . . . 4
Section 1.7 Exercise and Vesting of Awards . . . . . . 4
Section 1.8 No Transferability . . . . . . . . . . . . 4
ARTICLE II. KEY EMPLOYEE OPTIONS. . . . . . . . . . . . . . 5
Section 2.1 Grants . . . . . . . . . . . . . . . . . . 5
Section 2.2 Option Price . . . . . . . . . . . . . . . 5
Section 2.3 Limitations on Grant and Terms of
Incentive Stock Options. . . . . . . . . . 7
Section 2.4 Limits on 10% Holders. . . . . . . . . . . 7
Section 2.5 Option Repricing/Cancellation and
Regrant. . . . . . . . . . . . . . . . . . 7
Section 2.6 Limit on Grants to any Individual. . . . . 8
ARTICLE III. NON-EMPLOYEE DIRECTOR OPTIONS. . . . . . . . . . 8
Section 3.1 Participation. . . . . . . . . . . . . . . 8
Section 3.2 Annual Option Grants . . . . . . . . . . . 8
Section 3.3 Option Price . . . . . . . . . . . . . . . 8
Section 3.4 Option Period. . . . . . . . . . . . . . . 9
Section 3.5 Exercise of Options. . . . . . . . . . . . 9
Section 3.6 Termination of Directorship. . . . . . . . 9
Section 3.7 Adjustments. . . . . . . . . . . . . . . . 9
Section 3.8 Acceleration Upon a Change in Control
Event. . . . . . . . . . . . . . . . . . . 10
Section 3.9 Limitation on Amendments . . . . . . . . . 10
ARTICLE IV. OTHER PROVISIONS. . . . . . . . . . . . . . . . 10
Section 4.1 Rights of Eligible Employees,
Participants and Beneficiaries . . . . . . 10
Section 4.2 Adjustments; Acceleration. . . . . . . . . 11
Section 4.3 Effect of Termination of Employment. . . . 12
Section 4.4 Compliance with Laws . . . . . . . . . . . 12
Section 4.5 Tax Withholding. . . . . . . . . . . . . . 12
Section 4.6 Plan Amendment, Termination and
Suspension; Changes in Awards. . . . . . . 13
Section 4.7 Privileges of Stock Ownership. . . . . . . 14
Section 4.8 Effective Date of Plan . . . . . . . . . . 14
Section 4.9 Term of the Plan . . . . . . . . . . . . . 14
Section 4.10 Governing Law/Construction/Severability. . 14
Section 4.11 Captions . . . . . . . . . . . . . . . . . 15
Section 4.12 Effect of Change of Subsidiary Status. . . 15
Section 4.13 Non-Exclusivity of Plan. . . . . . . . . . 15
ARTICLE V. DEFINITIONS . . . . . . . . . . . . . . . . . . 15
Section 5.1 Definitions. . . . . . . . . . . . . . . . 15
<PAGE>
ACACIA RESEARCH CORPORATION
1996 STOCK OPTION PLAN
ARTICLE I. THE PLAN
SECTION 1.1 PURPOSE.
The purpose of this Plan is to promote the success of the
Company by providing an additional means through the grant of
Awards (a) to attract, motivate and retain key employees,
including officers (whether or not directors), of the Company
with rewards and incentives for high levels of individual
performance and improved financial performance of the Company
under the "Key Employee Program" in Article II, and (b) to
attract, motivate and retain experienced and knowledgeable
independent directors through the benefits provided under the
"Non-Employee Director Program" in Article III. "Corporation"
means Acacia Research Corporation and "Company" means the
Corporation and its Subsidiaries, collectively. These terms and
other capitalized terms if not defined elsewhere in the text of
this Plan, are defined in Article V.
SECTION 1.2 ADMINISTRATION AND AUTHORIZATION; POWER AND
PROCEDURE.
(a) Committee. This Plan shall be administered by and
all Awards to Eligible Employees shall be authorized by the
Committee. Any action of the Committee with respect to the
administration of this Plan shall be taken pursuant to a
majority vote or by written consent of its members.
(b) Plan Awards; Interpretation; Powers of Committee.
Subject to the express provisions of this Plan, the
Committee shall have the authority:
(i) to determine from among those eligible
persons the particular Eligible Employees who will
receive any Awards;
(ii) to grant Awards to Eligible Employees,
determine the price at which securities will be offered
or awarded and the amount of securities to be offered
or awarded to any of such persons, and determine the
other specific terms and conditions of such Awards
consistent with the express limits of this Plan, and
establish the installments (if any) in which such
Awards shall become exercisable, or determine that no
delayed exercisability is required, and establish the
events of termination of such Awards;
(iii)to approve the forms of Award Agreements
(which need not be identical either as to type of award
or among Participants);
(iv) to construe and interpret this Plan and any
agreements defining the rights and obligations of the
Company and Eligible Employee Participants under this
Plan, further define the terms used in this Plan, and
prescribe, amend and rescind rules and regulations
relating to the administration of this Plan;
(v) to cancel, modify or waive the Corporation's
rights with respect to, or modify, discontinue,
suspend, or terminate any or all outstanding Awards
held by Eligible Employees, subject to any required
consent under Section 4.6;
(vi) to accelerate or extend the exercisability or
extend the term of any or all such outstanding Awards
within the maximum ten-year term of Awards under
Section 1.6; and
(vii)to make all other determinations and take
such other action as contemplated by this Plan or as
may be necessary or advisable for the administration of
this Plan and the effectuation of its purposes.
Notwithstanding the foregoing, the provisions of Article III
relating to Non-Employee Director Awards shall be non-
discretionary, automatic and, to the maximum extent possible,
self-effectuating, and the discretion of the Committee shall not
extend to such Awards in any manner that would be impermissible
under Rule 16b-3(c)(2).
(c) Binding Determinations. Any action taken by, or
inaction of, the Corporation, any Subsidiary, the Board or
the Committee relating or pursuant to this Plan shall be
within the absolute discretion of that entity or body and
shall be conclusive and binding upon all persons. No member
of the Board or Committee, or officer of the Corporation or
any Subsidiary, shall be liable for any such action or
inaction of the entity or body, of another person or, except
in circumstances involving bad faith, of himself or herself.
Subject only to compliance with the express provisions
hereof, the Board and Committee may act in their absolute
discretion in matters within their authority related to this
Plan.
(d) Reliance on Experts. In making any determination
or in taking or not taking any action under or with respect
to this Plan, the Committee or the Board, as the case may
be, may obtain and may rely upon the advice of experts,
including professional advisors to the Corporation. No
director, officer or agent of the Company shall be liable
for any such action or determination taken or made or
omitted in good faith.
(e) Delegation. The Committee may delegate
ministerial, non-discretionary functions to individuals who
are officers or employees of the Company.
SECTION 1.3 PARTICIPATION.
Awards may be granted by the Committee only to those persons
that the Committee determines to be Eligible Employees. An
Eligible Employee who has been granted an Award may, if otherwise
eligible, be granted additional Awards if the Committee shall so
determine. Non-Employee Directors shall not be eligible to
receive any Awards except for Nonqualified Stock Options granted
automatically without further action of the Committee under the
provisions of Article III.
SECTION 1.4 SHARES AVAILABLE FOR AWARDS.
Subject to the provisions of Section 4.2, the capital stock
that may be delivered under this Plan shall be shares of the
Corporation's authorized but unissued Common Stock. The shares
may be delivered for any lawful consideration.
(a) Number of Shares. The maximum aggregate number of
shares of Common Stock that may be delivered pursuant to all
Awards granted under this Plan (including under Articles II
and III) shall not exceed 500,000 shares and the maximum
number of shares of Common Stock that may be delivered under
the provisions of Article III shall not exceed 60,000
shares. The maximum number of shares of Common Stock that
may be delivered pursuant to Options qualified as Incentive
Stock Options granted under this Plan is 300,000. Each of
the three foregoing numerical limits shall be subject to
adjustments as contemplated by Section 4.2.
(b) Calculation of Available Shares and Replenishment.
Shares subject to outstanding Awards shall be reserved for
issuance. If any Award shall expire or be cancelled or
terminated without having been exercised in full, the
unpurchased shares subject thereto shall again be available
for the purposes of the Plan, subject to any applicable
limitations under Rule 16b-3. In addition, any Common Stock
which is used by an Eligible Employee Participant as full or
partial payment to the Company for the purchase of Common
Stock acquired upon exercise of an Option and any shares
delivered by an Eligible Employee Participant or withheld by
the Company in satisfaction of the tax withholding
obligations of such Participant, shall be available for
further awards to Eligible Employees under this Plan;
provided, however, that, to the extent required to maintain
the Plan's status as a qualifying plan under Rule 16b-3,
such shares shall be available for subsequent awards only to
Eligible Employees who are not Section 16 Persons; provided
further that (except as otherwise permitted by the Code) no
such shares shall be available for future grants of
incentive stock options under this Plan.
SECTION 1.5 GRANT OF AWARDS.
Subject to the express provisions of this Plan, the
Committee shall grant and determine the terms and conditions of
all Awards to Eligible Employees, the number of shares of Common
Stock subject to each Award and the price to be paid for the
shares subject to each Award. Each Award shall be evidenced by
an Award Agreement signed by the Corporation and, if required by
the Committee, by the Participant.
SECTION 1.6 AWARD PERIOD.
All Awards to Eligible Employees and all executory rights or
obligations under the related Award Agreements shall expire on
such date (if any) as shall be determined by the Committee, but
not later than 10 years after the Award Date, and shall be
subject to earlier termination as provided herein or in the Award
Agreements. The Committee from time to time may authorize by
amendment to or waiver of the Award Agreements or otherwise, as
to any number of Awards or all Awards to Eligible Employees, any
extension or acceleration of benefits thereunder.
SECTION 1.7 EXERCISE AND VESTING OF AWARDS.
(a) Provisions for Exercise. Unless the Committee
otherwise provides, no Eligible Employee's Award shall be
exercisable until at least 6 months after the initial Award
Date and, once exercisable, an Award shall remain
exercisable until the expiration or earlier cancellation or
termination of the Award.
(b) Procedure. Any exercisable Award shall be deemed
to be exercised when the Secretary of the Corporation
receives written notice of such exercise from the
Participant, together with any required payment made in
accordance with Section 2.2(a) or 3.3, as the case may be,
and Section 4.5.
(c) Fractional Shares/Minimum Issue. Fractional share
interests shall be disregarded, but may be accumulated. The
Committee may, however, in the case of Eligible Employees
determine in the Award Agreement or thereafter that cash,
other securities, or other property will be paid or
transferred in lieu of any factional share interests. No
fewer than 100 shares may be required on exercise of an
Award at one time unless the number purchased is the total
number at the time available for purchase under the Award.
SECTION 1.8 NO TRANSFERABILITY.
Awards may be exercised only by, and amounts payable or
shares issuable pursuant to an Award shall be paid only to (or
registered only in the name of), the Participant or, if the
Participant has died, the Participant's Beneficiary. Other than
by will or the laws of descent and distribution or, with respect
to Nonqualified Stock Options, pursuant to a QDRO, no right or
benefit under this Plan or any Award shall be transferrable by
the Participant or shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge and any such attempted action shall be
void. The Corporation shall disregard any attempt at transfer,
assignment or other alienation prohibited by the preceding
sentences and shall pay or deliver such cash or shares of Common
Stock in accordance with the provisions of this Plan. The
designation of a Beneficiary hereunder shall not constitute a
transfer for these purposes.
ARTICLE II. KEY EMPLOYEE OPTIONS
SECTION 2.1 GRANTS.
One or more Options may be granted under this Article to any
Eligible Employee. Each Option granted may be either an Option
intended to be an Incentive Stock Option, or not so intended, as
determined by the Committee, and such intent shall be indicated
in the applicable Award Agreement. Notwithstanding the preceding
sentence, Options granted to Other Eligible Persons shall only be
Nonqualified Stock Options.
SECTION 2.2 OPTION PRICE.
(a) Pricing Limits. The purchase price per share of
the Common Stock covered by each Option granted under this
Article shall be determined by the Committee at the time of
the Award, but in the case of Incentive Stock Options shall
not be less than 100% (110% in the case of an Eligible
Employee Participant described in Section 2.4) of the Fair
Market Value of the Common Stock on the date of grant.
(b) Payment Provisions. No shares shall be delivered
pursuant to the exercise of an Option granted under this
Article until payment of the full purchase price of such
shares is received by the Corporation at its principal
office located at 12 S. Raymond Avenue, Suite B, Pasadena,
California 91105, or at such other place as the Committee
may specify from time to time. Payment methods may include
any of the following, pursuant to such conditions and rules
or procedures as may be established by the Committee from
time to time or as may be set forth in the Award Agreement:
(i) In cash;
(ii) In shares of Common Stock already owned by
the Participant;
(iii)Partly in cash and partly in shares of Common
Stock already owned by the Participant; or
(iv) By delivery of a notice instructing the
Corporation to deliver the shares being purchased to a
broker, subject to the broker's delivery of cash to the
Corporation equal to the purchase price; or
(v) To the extent an applicable Award Agreement
so provides, payment may be made in whole or in part by
a promissory note executed by the recipient of an Award
in favor of the Corporation, upon terms and conditions
determined by the Committee, and secured by the Common
Stock issuable upon exercise of the Options granted by
such Award in compliance with applicable law
(including, without limitation, state corporate law and
federal margin requirements).
Any shares used for payment pursuant to clause (ii) or (iii)
above shall have been held by the Eligible Employee Participant
for at least six months prior to such exercise date. Common
Stock accepted as a payment shall be valued at the Fair Market
Value of the Common Stock on the date of exercise.
(c) Reload Options. The Committee may provide in an
Award Agreement that, effective as of the date of exercise
by a Participant of all or part of an Option (the "Base
Option") by delivering shares of Common Stock already owned
by the Participant to the extent permitted by subsection
(b)(ii) or (iii) above, the Eligible Employee Participant
shall be granted an additional Option (a "Reload Option") to
purchase at the Fair Market Value on the date of such
exercise and new grant, a number of shares of Common Stock
equal to the number of whole shares (subject to reduction in
the case of an outstanding Incentive Stock Option to the
extent necessary to comply with the $100,000 limit set forth
in Section 2.3(a)) used by the Participant to pay or toward
the payment of the exercise price of the Base Option,
provided the Participant at the time of such exercise is an
Eligible Employee. The Reload Option may be exercised
between the date six months after its grant and the original
date of expiration of the Base Option or such later time as
the Committee may permit. The Reload Option shall be
evidenced in the Award Agreement for the Base Option or by
any other writing containing such terms and conditions as
the Committee shall approve, which conditions may provide
that upon the exercise of any Reload Option, an additional
Reload Option may be granted with respect to the number of
whole shares used to exercise the prior outstanding Reload
Option. In no event, however, shall the aggregate number of
additional shares authorized by Reload Option(s) exceed 50%
of the maximum number of shares initially deliverable
(subject to adjustments pursuant to Section 4.2(a)) on
exercise of the Base Option.
SECTION 2.3 LIMITATIONS ON GRANT AND TERMS OF INCENTIVE
STOCK OPTIONS.
(a) $100,000 Limit. To the extent that the aggregate
"fair market value" (as defined below) of stock with respect
to which incentive stock options first become exercisable by
a Participant in any calendar year exceeds $100,000, taking
into account both Common Stock subject to Incentive Stock
Options under this Plan and stock subject to incentive stock
options under all other plans of the Company, such options
shall be treated as Nonqualified Stock Options. For this
purpose, the "fair market value" of the stock subject to
options shall be determined as of the date the options were
awarded. In reducing the number of options treated as
incentive stock options to meet the $100,000 limit, the most
recently granted options shall be reduced first. To the
extent a reduction of simultaneously granted options is
necessary to meet the $100,000 limit, the Committee may, in
the manner and to the extent permitted by law, designate
which shares of Common Stock are to be treated as shares
acquired pursuant to the exercise of an Incentive Stock
Option.
(b) Option Period. Each Option and all rights
thereunder shall expire no later than 10 years after the
Award Date.
(b) Other Code Limits. There shall be imposed in any
Award Agreement relating to Incentive Stock Options such
terms and conditions as from time to time are required in
order that the Option be an "incentive stock option" as that
term is defined in Section 422 of the Code.
SECTION 2.4 LIMITS ON 10% HOLDERS.
No Incentive Stock Option may be granted to any person who,
at the time the Option is granted, owns (or is deemed to own
under Section 424(d) of the Code) shares of outstanding Common
Stock representing more than 10% of the total combined voting
power of all classes of stock of the Corporation, unless the
exercise price of such Option is at least 110% of the Fair Market
Value of the stock subject to the Option on the date of grant and
such Option by its terms is not exercisable after the expiration
of five years from the date such Option is granted.
SECTION 2.5 OPTION REPRICING/CANCELLATION AND REGRANT.
Subject to Section 1.4 and Section 4.6 and the general
limitations on Awards contained elsewhere in this Plan, the
Committee from time to time may authorize, generally or in
specific cases only, any adjustment in the exercise or purchase
price, the number of shares subject to, or the term of, an Award
granted under this Article by cancellation of an outstanding
Award and a subsequent regranting of an Award, by amendment, by
substitution of an outstanding Award, by waiver or by other
legally valid means. Such amendment or other action may result
among other changes in an exercise or purchase price which is
higher or lower than the exercise or purchase price of the
original or prior Award, provide for a greater or lesser number
of shares subject to the Award, or provide for a longer or
shorter vesting or exercise period.
SECTION 2.6 LIMIT ON GRANTS TO ANY INDIVIDUAL.
The maximum number of shares of Common Stock that are
issuable under Options that during any calendar year are granted
to any Eligible Employee Participant shall not exceed 100,000,
subject to adjustments contemplated by Section 4.2.
ARTICLE III. NON-EMPLOYEE DIRECTOR OPTIONS
SECTION 3.1 PARTICIPATION.
Awards under this Article III shall be made only to Non-
Employee Directors.
SECTION 3.2 ANNUAL OPTION GRANTS.
(a) Time of Initial Award. Subject to approval by the
shareholders of the Corporation, persons who are Non-
Employee Directors at the time of the Plan's adoption on
April 16, 1996, and persons who are elected or appointed to
the Board after April 16, 1996, on the date of such
election, shall each be granted without further action a
NonQualified Stock Option to purchase 10,000 shares of
Common Stock.
(b) Subsequent Annual Awards. On the first business
day in each calendar year following the approval of this
Plan by the shareholders of the Corporation and during the
term of this Plan, there shall be granted automatically
(without any action by the Committee or the Board) a
Nonqualified Stock Option (the Award Date of which shall be
such date) to each Non-Employee Director then in office to
purchase 1,000 shares of Common Stock on each such date.
SECTION 3.3 OPTION PRICE.
The purchase price per share of the Common Stock covered by
each Option granted pursuant to Section 3.2 hereof shall be 100
percent of the Fair Market Value of the Common Stock on the Award
Date. The Award Date of Options granted under Section 3.2(a)
shall, for purposes of determining the Option price, be April 16,
1996 with respect to Options granted to Non-Employee Directors as
of that date, or the date such Option is granted upon election or
appointment of the applicable director to the Board with respect
to all other Options granted under Section 3.2(a). The purchase
price of any shares purchased shall be paid in full at the time
of each purchase either (i) in cash or by check of or on behalf
of the Non-Employee Director, including (to the extent permitted
by applicable law and consistent with Rule 16b-3(c)(2)) the
process set forth in Section 2.2(b)(iv), (ii) in shares of Common
Stock valued at their Fair Market Value on the date of exercise
of the Option or (iii) partly in such shares and partly in cash;
provided that if payments are made pursuant to clauses (ii) and
(iii) above any shares used for such payment shall have been held
by the Non-Employee Director Participant for at least six months
prior to such exercise date.
SECTION 3.4 OPTION PERIOD.
Each option granted under this Article III and all rights or
obligations thereunder shall expire on the fifth anniversary of
the Award Date and shall be subject to earlier termination as
provided below.
SECTION 3.5 EXERCISE OF OPTIONS.
Each Option granted under this Article III shall become
exercisable in full 12 months after the Award Date, except (i)
such Options granted pursuant to Section 3.2(a), which such
Options shall vest at the rate of 2,500 shares of Common Stock
per year on each of the first four anniversaries of the date of
such grant, and (ii) as provided in Section 3.8.
SECTION 3.6 TERMINATION OF DIRECTORSHIP.
An Option granted pursuant to this Article shall, if
exercisable on the date of a Non-Employee Director Participant's
termination of service as a director, remain exercisable only for
six months after the date of such termination or until the
expiration of the stated term of such Option, whichever first
occurs. Any Option granted pursuant to Section 3.2 hereof held
by such Non-Employee Director Participant which is not
exercisable on the date of termination of service shall
terminate.
SECTION 3.7 ADJUSTMENTS.
Options granted under this Article III shall be subject to
adjustment as provided in Section 4.2, but only to the extent
that (a) such adjustment and the Committee's actions in respect
thereof satisfy applicable criteria under Rule 16b-3 and (b) such
adjustment is consistent with adjustments to Options held by
persons other than executive officers or directors of the
Corporation.
SECTION 3.8 ACCELERATION UPON A CHANGE IN CONTROL EVENT.
Upon the occurrence of a Change in Control Event, each
Option granted under Section 3.2 hereof shall become immediately
exercisable in full. To the extent that any Option granted under
this Article III (a) is not exercised prior to (i) a dissolution
of the Corporation or (ii) a merger or other corporate event in
which the Corporation does not survive and (b) no provision is
(or consistent with the provisions of Section 3.7 can be) made
for the assumption, conversion, substitution or exchange of the
Option, the Option shall terminate upon the occurrence of such
event.
SECTION 3.9 LIMITATION ON AMENDMENTS.
The provisions of this Article III shall not be amended more
than once every six months (other than as may be necessary to
conform to any applicable changes in the Code or ERISA or, in
each case, the rules thereunder), unless such amendment would be
consistent with the provisions of Rule 16b-3(c)(2)(ii) (or any
successor provision).
ARTICLE IV. OTHER PROVISIONS
SECTION 4.1 RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS
AND BENEFICIARIES.
(a) Employment Status. Status as an Eligible Employee
shall not be construed as a commitment that any Award will
be made under this Plan to an Eligible Employee or to
Eligible Employees generally.
(b) No Employment Contract. Nothing contained in this
Plan (or in any other documents related to this Plan or to
any Award) shall confer upon any Eligible Employee or other
Participant any right to continue in the employ or other
service of the Company or constitute any contract or
agreement of employment or other service, nor shall it
interfere in any way with the right of the Company to change
such person's compensation or other benefits or to terminate
the employment of such person, with or without cause, but
nothing contained in this Plan or any document related
hereto shall adversely affect any other contractual right of
such person without his or her consent thereto.
(c) Plan Not Funded. This Plan is not subject to
Title 1 of ERISA and is not funded. No Participant,
Beneficiary or other person shall have any right, title or
interest in any fund or in any specific asset (including
shares of Common Stock, except as expressly otherwise
provided) of the Company by reason of any Award hereunder.
Neither the provisions of this Plan (or of any related
documents), nor the creation or adoption of this Plan, nor
any action taken pursuant to the provisions of this Plan
shall create, or be construed to create, a trust of any kind
or a fiduciary relationship between the Company and any
Participant, Beneficiary or other person.
SECTION 4.2 ADJUSTMENTS; ACCELERATION.
(a) Adjustments. If there shall occur any
extraordinary dividend or other extraordinary distribution
in respect of the Common Stock (whether in the form of cash,
Common Stock, other securities, or other property), or any
recapitalization, stock split (including a stock split in
the form of a stock dividend), reverse stock split,
reorganization, merger, combination, consolidation, split-
up, spin-off, combination, repurchase, or exchange of Common
Stock or other securities of the Corporation, or there shall
occur any other like corporate transaction or event in
respect of the Common Stock, then the Committee shall, in
such manner and to such extent (if any) as it deems
appropriate and equitable (1) proportionately adjust any or
all of (a) the number and type of shares of Common Stock (or
other securities) which thereafter may be made the subject
of Awards (including the specific maximum numbers of shares
set forth elsewhere in this Plan), (b) the number, amount
and type of shares of Common Stock (or other securities or
property) subject to any or all outstanding Awards, and
(c) the exercise price of any or all outstanding Awards, or
(2) in the case of an extraordinary dividend or
distribution, merger, reorganization, consolidation,
combination, split up, exchange or spin off make provision
for a cash payment or a substitution or exchange of the
securities or property deliverable upon exercise to the
holder of any or all outstanding Awards based upon the
distribution or consideration payable to holders of Common
Stock upon or in respect of such event; provided, however,
in each case, that with respect to Awards of Incentive Stock
Options, no such adjustment shall be made which would cause
the Plan to violate Section 424(a) of the Code or any
successor provision thereto.
(b) Acceleration of Awards Upon Change in Control. As
to any Eligible Employee Participant, unless prior to a
Change in Control Event the Committee determines that, upon
its occurrence, there shall be no acceleration of benefits
under Awards or determines that only certain or limited
benefits under Awards shall be accelerated and the extent to
which they shall be accelerated, and/or establishes a
different time in respect of such Change in Control Event
for such acceleration, then upon the occurrence of a Change
in Control Event each Option shall become immediately
exercisable. The Committee may override the limitations on
acceleration in this Section 4.2(b) by express provision in
the Award Agreement and may accord any Eligible Employee
Participant a right to refuse such acceleration in such
circumstances as the Committee may approve. Any
acceleration of Awards shall comply with applicable
regulatory requirements, including without limitation
Section 422 of the Code. The authority and provisions of
this Section 4.2 are not intended to limit the Committee's
authority to provide for acceleration of exercisability of
Awards in other circumstances. Further, the Committee may
provide for the termination of any or all of an Eligible
Employee Participant's Awards to the extent they are not
exercised as of the date of any event or transaction in or
pursuant to which the Corporation does not survive.
SECTION 4.3 EFFECT OF TERMINATION OF EMPLOYMENT.
The Committee shall establish in respect of each Award
granted to an Eligible Employee the effect of a termination of
employment on the rights and benefits thereunder and in so doing
may make distinctions based upon the cause of termination.
SECTION 4.4 COMPLIANCE WITH LAWS.
This Plan, the granting and vesting of Awards under this
Plan and the issuance and delivery of shares of Common Stock
and/or the payment of money or the use or application of shares
under this Plan or under Awards granted hereunder are subject to
compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal
securities laws and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as
may, in the opinion of counsel for the Corporation, be necessary
or advisable in connection therewith. Any securities delivered
under this Plan shall be subject to such restrictions and the
person acquiring such securities shall, if requested by the
Corporation, provide such assurances and representations to the
Corporation as the Corporation may deem necessary or desirable to
assure compliance with all applicable legal requirements.
SECTION 4.5 TAX WITHHOLDING.
Upon any exercise, vesting, or payment of any Award or, if
they require upon the disposition of shares of Common Stock
acquired pursuant to the exercise of an Incentive Stock Option
prior to satisfaction of the holding period requirements of
Section 422 of the Code, the Company shall have the right at its
option to (i) require the Participant (or Beneficiary) to pay or
provide for payment of the amount of any taxes which the Company
may be required to withhold with respect to such transaction or
(ii) deduct from any amount payable in cash the amount of any
taxes which the Company may be required to withhold with respect
to such cash amount. In any case where a tax is required to be
withheld in connection with the delivery of shares of Common
Stock under this Plan, any Eligible Employee Participant may
elect, to the extent allowed by and pursuant to such rules and
subject to such conditions as the Committee may establish, to
have the Corporation reduce the number of shares to be delivered
by (or otherwise reacquire) that number of shares valued at their
then Fair Market Value to satisfy such withholding obligation.
SECTION 4.6 PLAN AMENDMENT, TERMINATION AND SUSPENSION;
CHANGES IN AWARDS.
(a) Board Authorization. Except as provided in
Section 3.9, the Board may, at any time, terminate or, from
time to time, amend, modify or suspend this Plan, in whole
or in part. No Awards may be granted during any suspension
of this Plan or after termination of this Plan, but the
Committee shall retain jurisdiction as to Awards then
outstanding in accordance with the terms of this Plan.
(b) Shareholder Approval. If any amendment would
(i) materially increase the benefits accruing to
Participants under this Plan, (ii) materially increase the
aggregate number of securities that may be issued under this
Plan, or (iii) materially modify the requirements as to
eligibility for participation in this Plan, then to the
extent then required by Rule 16b-3 to secure benefits
thereunder or to avoid liability under Section 16 of the
Exchange Act (and Rules thereunder) or required under
Section 424 of the Code or any other applicable law, or
deemed necessary or advisable by the Board, such amendment
shall be subject to shareholder approval.
(c) Amendments to Awards. Without limiting any other
express authority of the Committee under, but subject to the
express limits of, this Plan, the Committee by agreement or
resolution may waive conditions of or limitations on Awards
to Eligible Employees that the Committee in the prior
exercise of its discretion has imposed, without the consent
of a Participant, and may make other changes to the terms
and conditions of Awards that do not affect in any manner
materially adverse to the Eligible Employee Participant, his
or her rights and benefits under an Award.
(d) Limitations on Amendments to Plan and Awards. No
amendment, suspension or termination of the Plan or change
of or affecting any outstanding Award shall, without written
consent of the Participant, affect in any manner materially
adverse to the Participant any rights or benefits of the
Participant or obligations of the Corporation under any then
outstanding Award granted under this Plan. Changes
contemplated by Section 4.2 shall not be deemed to
constitute changes or amendments for purposes of this
Section 4.6.
SECTION 4.7 PRIVILEGES OF STOCK OWNERSHIP.
A Participant shall not be entitled to any privilege of
stock ownership as to any shares of Common Stock not actually
delivered to and held of record by him or her, other than
benefits incident to the disposition of shares upon due exercise
of an Option consistent with the terms of this Plan. No
adjustment will be made for dividends or other rights as a
shareholder for which a record date is prior to the date of
delivery of shares on exercise of an Award.
SECTION 4.8 EFFECTIVE DATE OF PLAN.
This Plan is effective as of April 16, 1996, the date of
initial Board approval, subject to shareholder approval by
December 31, 1996.
SECTION 4.9 TERM OF THE PLAN.
No Award shall be granted more than ten years after the
initial effective date of the Plan (the "termination date").
Unless otherwise expressly provided in this Plan or in an
applicable Award Agreement, any Award theretofore granted may
extend beyond such termination date, and all authority of the
Committee with respect to Awards hereunder shall continue during
any suspension of this Plan and in respect of outstanding Awards
on such termination date.
SECTION 4.10 GOVERNING LAW/CONSTRUCTION/SEVERABILITY.
(a) Choice of Law. This Plan, the Awards, all
documents evidencing Awards and all other related documents
shall be governed by, and construed in accordance with the
laws of the state of incorporation of the Corporation.
(b) Severability. If any provision shall be held by a
court of competent jurisdiction to be invalid and
unenforceable, the remaining provisions of this Plan shall
continue in effect.
(c) Plan Construction. It is the intent of the
Corporation that this Plan and Awards hereunder satisfy and
be interpreted in a manner that in the case of Participants
who are or may be subject to Section 16(b) of the Exchange
Act satisfies the applicable requirements of Rule 16b-3
thereunder so that such persons will be entitled to the
benefits of Rule 16b-3 or other exemptive rules under
Section 16 of the Exchange Act and will not be subjected to
avoidable liability thereunder and so that persons receiving
Awards under Article III remain "disinterested" under these
Rules. If any provision of this Plan or of any Award would
otherwise frustrate or conflict with the intent expressed
above, that provision to the extent possible shall be
interpreted and deemed amended so as to avoid such conflict,
but to the extent of any remaining irreconcilable conflict
with such intent as to such persons in the circumstances,
such provision shall be disregarded. It is the further
intent of the Company that Options with an exercise price
not less than Fair Market Value on the date of grant shall
qualify as performance-based compensation under Section
162(M) of the Code, and this Plan shall be interpreted
consistent with such intent.
(d) Limitations Prior to September 1, 1996.
Notwithstanding any other provision of this plan, during the
period prior to September 1, 1996 (or such other date as the
transition period under Rule 16b-3 may expire as to the
Company) (i) any Award granted to a Section 16 Person shall
have an exercise price equal to or greater than 50% of the
Fair Market Value of the shares of Common Stock on the date
of the Award and (ii) any Award the grant of which is
intended to be exempt from Rule 16b-3 shall not be
transferrable other than as permitted by former Rule 16b-
3(d)(ii).
SECTION 4.11 CAPTIONS.
Captions and headings are given to the sections and
subsections of this Plan solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material
or relevant to the construction or interpretation of the Plan or
any provision thereof.
SECTION 4.12 EFFECT OF CHANGE OF SUBSIDIARY STATUS.
If an entity ceases to be a Subsidiary, for purposes of this
Plan and any Award hereunder, a termination of employment of each
employee of such Subsidiary who does not continue as an employee
of another entity within the Company shall be deemed to have
occurred.
SECTION 4.13 NON-EXCLUSIVITY OF PLAN.
Nothing in this Plan shall limit or be deemed to limit the
authority of the Board or the Committee to grant awards or
authorize any other compensation, with or without reference to
the Common Stock, under any other plan or authority.
ARTICLE V. DEFINITIONS.
SECTION 5.1 DEFINITIONS.
(a) "Award" shall mean an award of any Option
authorized by and granted under this Plan.
(b) "Award Agreement" shall mean any writing setting
forth the terms of an Award that has been authorized by the
Committee.
(c) "Award Date" shall mean the date upon which the
Committee took the action granting an Award or such later
date as the Committee designates as the Award Date at the
time of the Award, or in the case of Non-Employee Director
Awards under Article III, the date of automatic grant under
Article III.
(d) "Award Period" shall mean the period beginning on
an Award Date and ending on the expiration date of such
Award.
(e) "Beneficiary" shall mean the person, persons,
trust or trusts entitled by will or the laws of descent and
distribution to receive the benefits specified in the Award
Agreement and under this Plan in the event of a
Participant's death, and shall mean the Participant's
executor or administrator if no other Beneficiary is
identified and able to act under the circumstances.
(f) "Board" shall mean the Board of Directors of the
Corporation.
(g) A "Change in Control Event" shall mean and shall
be deemed to have occurred if and when: (i) within the
meaning of Section 13(d) of the Exchange Act, any person or
group becomes a beneficial owner, directly or indirectly, of
securities of the Corporation representing 20% or more of
the combined voting power in the election of directors of
the Corporation's then outstanding securities;
(ii) individuals who were members of the Board of the
Corporation immediately prior to a meeting of the
shareholders of the Corporation involving a contest for the
election of directors shall not constitute a majority of the
Board following such election; (iii) the shareholders of the
Corporation approve the dissolution or liquidation of the
Corporation; (iv) the shareholders of the Corporation
approve an agreement to merge or consolidate, or otherwise
reorganize, with or into one or more entities which are not
subsidiaries, as a result of which less than 50% of the
outstanding voting securities of the surviving or resulting
entity are, or are to be, owned by shareholders of the
Corporation immediately prior to such reorganization
(assuming for purposes of such determination that there is
no change in the record ownership of the Corporation's
securities from the record date for such approval until such
reorganization and that such record owners hold no
securities of the other parties to such reorganization,
excluding from consideration as a former shareholder any
shareholder who is, or as a result of the transaction in
question becomes, an "affiliate", as that term is used the
Exchange Act and the rules promulgated thereunder, of any
party to such merger, consolidation or reorganization); or
(v) the shareholders of the Corporation approve the sale of
substantially all of the Corporation's business and/or
assets to a person or entity which is not a Subsidiary.
(h) "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time.
(i) "Committee" shall mean a committee appointed by
the Board to administer this Plan, which committee shall be
comprised only of two or more directors or such greater
number of directors as may be required under applicable law,
none of whom is an Eligible Employee and each of whom,
during such time as one or more Participants may be subject
to Section 16 of the Exchange Act, shall be Disinterested
and "outside" within the meaning of Section 162(m) of the
Code.
(j) "Common Stock" shall mean the Common Stock, no par
value, of the Corporation and such other securities or
property as may become the subject of Awards, or become
subject to Awards, pursuant to an adjustment made under
Section 4.2 of this Plan.
(k) "Company" shall mean, collectively, the
Corporation and its Subsidiaries.
(l) "Corporation" shall mean Acacia Research
Corporation, a California corporation, and its successors.
(m) "Disinterested" shall mean disinterested within
the meaning of any applicable regulatory requirements,
including Rule 16b-3.
(n) "Eligible Employee" shall mean an officer, a key
executive, or an administrative, managerial, production,
marketing or sales employee of the Company, whether or not
such person is a director, or an Other Eligible Person.
(o) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(p) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended from time to time.
(q) "Fair Market Value" shall mean (i) if the Common
Stock is listed and registered on a national securities
exchange such as the New York Stock Exchange or the American
Stock Exchange, the simple average of the highest and lowest
quoted selling prices of the Common Stock on such exchange
on the applicable date of determination, or, if no such
sales were made on such date on such exchange, then by such
method as of the last date prior thereto on which sales were
made, or (ii) if the Common Stock is not listed and
registered on any national securities exchange, the simple
average of the bid and ask prices per share of Common Stock
in the over-the-counter market at the end of the applicable
date of determination, or, if for any reason no such
quotations are available, then by such other method as the
Committee, in its sole discretion, shall determine to be
appropriate on such date of determination.
(r) "Incentive Stock Option" shall mean an Option
which is designated as an incentive stock option within the
meaning of Section 422 of the Code, the award of which
contains such provision as are necessary to comply with that
section.
(s) "Nonqualified Stock Option" shall mean an Option
that is designated as a Nonqualified Stock Option and shall
include any Option intended as an Incentive Stock Option
that fails to meet the applicable legal requirements
thereof. Any Option granted hereunder that is not
designated as an incentive stock option shall be deemed to
be designated a nonqualified stock option under this Plan
and not an incentive stock option under the Code. Options
granted under Article III shall be Nonqualified Stock
Options.
(t) "Non-Employee Director" shall mean a person who
is, as of the applicable date of determination for an award
under Article III, (i) a member of the Board of Directors of
the Corporation and not an officer or employee of the
Company or any affiliate, and (ii) eligible to serve on the
Committee.
(u) "Option" shall mean an option to purchase Common
Stock under this Plan.
(v) "Other Eligible Person" shall mean any other
individual (including significant agents and consultants)
who performs substantial services for the Company of a
nature similar to those performed by key employees, selected
to participate in this Plan by the Committee from time to
time; provided that in no event shall a Non-Employee
Director be selected as an Other Eligible Person.
(w) "Participant" shall mean a person who has been
granted or has received an Award under this Plan.
(x) "Plan" shall mean this 1996 Stock Option Plan.
(y) "QDRO" shall mean a qualified domestic relations
order as defined in Section 414(p) of the Code or Title I,
Section 206(d)(3) of ERISA (to the same extent as if this
Plan were subject thereto), or the applicable rules
thereunder or other decree accorded relief from transfer
restrictions under Rule 16b-3.
(z) "Rule 16b-3" shall mean Rule 16b-3 as promulgated
by the Securities and Exchange Commission pursuant to the
Exchange Act.
(aa) "Section 16 Person" shall mean a person subject to
Section 16(a) of the Exchange Act.
(bb) "Subsidiary" shall mean any corporation or other
entity a majority of whose outstanding voting stock or
voting power is beneficially owned directly or indirectly by
the Corporation.
<PAGE>
ACACIA RESEARCH CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is dated as of the (date) day of (month), 199_
by and between Acacia Research Corporation, a California corporation
(the "Corporation") and (name) (the "Optionee").
W I T N E S S E T H
WHEREAS, the Committee believes that the grant of an Option to the
Optionee will promote the interests of the Corporation by inducing the
Optionee to render faithful and efficient services to the Corporation; and
WHEREAS, pursuant to the Acacia Research Corporation 1996 Stock Option
Plan (the "Plan"), the Corporation has granted to the Optionee, effective as
of the (date) day of (month), 199_ (the "Award Date"), an Incentive Stock
Option (as defined in the Plan, "ISO") to purchase all or any part of (number)
authorized but unissued Shares, par value, upon the terms and conditions set
forth herein and in the Plan (the "Option"). [Only individuals who are
employed as employees by the Corporation or a Subsidiary Corporation (as
defined in the Plan) are eligible for Incentive Stock Options.]
NOW, THEREFORE, in consideration of the [past and] prospective services
[rendered and] to be rendered by the Optionee, and the mutual promises and
covenants made herein and the mutual benefits to be derived herefrom, the
parties agree as follows:
1. Defined Terms. Capitalized terms used herein and not otherwise
defined herein shall have the meaning assigned to such terms in the Plan.
2. Grant of Option. This Incentive Stock Option agreement evidences
the Corporation's grant to the Optionee of the right and option to purchase,
on the terms and conditions set forth herein and in the Plan, all or any part
of an aggregate of (number) authorized but unissued Shares at the price of $
(price) per Share (the "Exercise Price"). [To qualify as an ISO: (i) for
Optionees who are not ten percent stockholders, the Exercise Price must equal
at least 100 percent of the Fair Market Value of a share on the Award Date;
and (ii) for Optionees who are ten percent stockholders, the Exercise Price
must equal at least 110 percent of the Fair Market Value of a Share on the
Award Date.] The Corporation has granted the Option as a matter of separate
inducement in connection with the Optionee's employment, and not in lieu of
any salary or other compensation for the Optionee's services.
3. Term. The Option shall expire on (date) (the "Expiration Date").
[For Optionees who are not ten percent stockholders, the term may not exceed
10 years from the Award Date. For Optionees who are ten percent stockholders,
the term may not exceed 5 years from the Award Date.]
4. Character of Option. The Option is an ISO. However to the extent
that the aggregate Fair Market Value on the Award Date of Stock with respect
to which this Option and any other ISOs are exercisable for the first time by
the Optionee during any calendar year (under any stock option plans of the
Corporation, Parent Corporation or a Subsidiary Corporation exceeds $100,000,
such options shall be treated as Nonstatutory Options.
5. Vesting of Option.
[Alternative 1: The option shall vest on (date).]
[Alternative 2: The Option shall vest in installments for a number of shares
(subject to adjustment as provided in Section 13) as follows:
Date of Vesting Number of Shares (subject
of Option to adjustment) as to
Installment which Option vests
date number
date number
date number
date number]
6. Exercisability of Option. No Options shall become exercisable
prior to six months after the Award Date. After such date, the Option (as to
vested shares only) may be exercised in whole or in part, at the discretion of
the Optionee, from time to time until its expiration or earlier termination.
To the extent that the Optionee does not in any period purchase all or any
part of the Shares to which the Optionee is entitled, the Optionee has the
right cumulatively thereafter to purchase any Shares not so purchased and such
right shall continue until the Option terminates or expires. Fractional Share
interests shall be disregarded, but may be cumulated for purposes of
determining how many Shares have been purchased at any time under the Option.
No fewer then 1,000 Shares may be purchased at any time, unless the number
purchased is the total number then available for purchase under the Option.
7. Method of Exercise of Option.
(a) Written Notice. Each exercise of the Option shall be
by written notice of exercise duly delivered to the
Corporation, specifying the number of Shares with respect to
which the Option is being exercised.
(b) Payment. Such written notice must be accompanied by
payment in full for the Shares to be purchased, and payment
may take [one or a combination of] the following form [s]:
[(i)] lawful money of the United States of America or
a certified or bank cashier's check;
[Optional: (ii) Shares, surrendered to the Corporation in good form
for transfer, which have already been owned by the Optionee or a
representative of the Optionee for more than six months. Such Shares shall be
valued at their Fair Market Value as of the date when the new Shares are
purchased under the Option;]
[Optional: (iii) delivery (on a form prescribed by the Corporation)
of an irrevocable direction to a securities broker approved by the Corporation
to sell Shares and to deliver all or part of the sales proceeds to the
Corporation in payment of all or part of the Exercise Price and any
withholding taxes;]
[Optional: (iv) a promissory note executed by the Optionee in favor
the Corporation upon the following terms, and conditions: [insert key terms].
Such promissory note shall be secured by the Stock issuable upon exercise of
the Option in compliance with applicable law (including, without limitation,
state corporate law and federal margin requirements):]
[Optional: (iv) any other method of payment which the Committee, in
its sole discretion, deems acceptable.]
(c) Securities Laws. The written notice of exercise shall specify
that the Shares are being acquired by the Optionee for investment only and not
with a view to resale or distribution.
8. Withholding Taxes. Upon the exercise of the Option, [Alternative 1:
[insert requirement for the satisfaction of any federal, state, local, or
foreign withholding tax obligations arising in connection with the exercise of
the Option, for example, specify that the Optionee shall provide cash payment
of tax, allow for the deduction of tax, allow for a reduction in number of
Shares or obtain a loan of the tax from the Corporation]/ Alternative 2: the
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax
obligations arising in connection with the exercise of the Option.] The
Optionee agrees that on disposition of Shares acquired by exercising the
Option, the Optionee shall comply with all requirements of the Committee for
satisfaction of any federal, state, local or foreign withholding tax
obligations arising in connection with the disposition of the Shares.
9. Effect of Termination of Employment. Should the Optionee cease to be
an employee, [insert effect of termination of employment on the rights and
benefits of the Option]
[Optional: (i) Options shall cease to vest on the date of
termination of Optionee's employment with the Corporation;]
[Optional: (ii) except as provided in clause (iii) below, the
Option may be exercised at any time within [one] year[s] after
Employee's termination of employment (to the extent it was
exercisable on such date):]
[Optional: (iii) if Optionee's employment with the Corporation
was terminated for cause (as determined by the Committee in
its sole discretion), the Option and all rights hereunder, to
the extent no previously exercised, shall terminate and become
null and void at such time as Optionee ceases to be employed
by the Corporation;]
[Optional: (iv) if an Optionee dies while employed by the
Corporation or during the period referred to in clause (ii)
above, the Option shall expire [one] year[s] after the date of
death. During the [one] year[s] period after the death of the
Optionee, the Option may be exercised (to the extent it was
exercisable as of the date of death or earlier termination of
such Optionee's employment) by the person or persons to whom
the Optionee's rights under the option shall pass by will or
by the applicable laws of descent and distribution;]
[Optional: (v) if an Optionee's employment by the Corporation
was terminated as a result of a "permanent and total
disability" within the meaning of Section 22(e) (3) of the
Code, the Optionee or the Optionee's personal representative
as an agent for the Optionee, shall have [one] year[s] from
the date of termination of employment to exercise the Option
(to the extent it was exercisable on such date).]
Nothing in this Section 9 shall be deemed to extend the term of the Option
beyond the Expiration Date nor to limit the Corporation's ability to terminate
the Option at an earlier date pursuant to the other provision of this
Agreement and the Plan.
10. Non-Transferability of Option. This Option and any other rights of
the Optionee under this Agreement or the Plan are non-transferrable as
provided in Section 6 of the Plan.
11. No Rights as Shareholder. The Optionee, or a transferee of the
Optionee, has no rights as a shareholder with respect to any Shares covered by
an Option until the date of the issuance of a stock certificate for such
Shares.
12. Modification, Extension and Assignation of Option. The Option may
be modified, extended or assumed from time to time by the Committee within the
limitations of and by the means specified in Section 10 of the Plan.
13. Adjustment of Option.
(a) Generally. As provided in Section 9 of the Plan, the
Committee may make adjustments to the number of Shares covered
by the Option, the Exercise Price of the Option or any other
Provision in this Agreement that the Committee deems
necessary or advisable to adjust.
(b) Reorganizations. In the event that the Corporation
is a party to a merger or other reorganization, or in
contemplation of such a merger or other reorganization, and to
the extent that the Committee, in its sole discretion, so
directs, the Corporation may:
(i) terminate the Option paying the Optionee the
difference between the Exercise Price and the
consideration to be received by stockholders of the
Corporation for "in-the-money" options and terminate all
other options without payment;
(ii) provide for assumption of the Option by the
surviving corporation;
(iii) if the Corporation is a surviving corporation,
continue the Option; or
(iv) take any action with respect to the Option that
the Committee, in its sole discretion, deems necessary or advisable.
14. Notices. Any notice to be given under the terms of this Agreement
shall be in writing addressed to the Corporation at its principal office
located at 12 South Raymond Avenue, Pasadena, CA 91105, to the attention of
Kathryn King-Van Wie, and to the Optionee at the address given beneath the
Optionee's signature hereto, or at such other address as either party may
hereafter designate in writing to the other.
15. Plan. The Option is subject to, and the Optionee agrees to be bound
by, all of the terms and conditions of the Plan. The Optionee acknowledges
receipt of a copy of the Plan, which is made a part hereof by this reference.
16. Successors. Subject to the Plan, where the context permits,
"Optionee" as used in this Incentive Stock Option Agreement shall include the
Optionee's executor, administrator or persons to whom Optionee's rights pass
by will or the applicable laws of descent and distribution.
17. Governing Law. The interpretation, performance, and enforcement of
this Agreement shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed on its behalf by a duly authorized officer and the Optionee has
hereunto set his or her hand.
ACACIA RESEARCH CORPORATION
By_________________________
Title______________________
OPTIONEE
___________________________
(Signature)
___________________________
(Print Name)
___________________________
(Address)
___________________________
(City, State, Zip Code)
<PAGE>
ACACIA RESEARCH CORPORATION
NONSTATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT is dated as of the (date) day of (month), 1996 by and between
Acacia Research Corporation, a California corporation (the "Corporation") and
(name) (the "Optionee").
W I T N E S S E T H
WHEREAS, the Committee believes that the grant of an Option to the Optionee
will promote the interests of the Corporation by inducing the Optionee to
render faithful and efficient services to the Corporation; and
WHEREAS, pursuant to the Acacia Research Corporation 1996 Stock Option Plan
(the "Plan"), the Corporation has granted to the Optionee, effective as of the
(date) day of (month), 199__ (the "Award Date"), a Nonstatutory Option to
purchase all or any part of (number) authorized but unissued Shares, par
value, upon the terms and conditions set forth herein and in the Plan (the
"Option").
NOW, THEREFORE, in consideration of the [past and] prospective services
[rendered and] to be rendered by the Optionee, and the mutual promises and
covenants made herein and the mutual benefits to be derived herefrom, the
parties agree as follows:
1. Defined Terms. Capitalized terms used herein and not otherwise
defined herein shall have the meaning assigned to such terms in the Plan.
2. Grant of Option. This Nonstatutory Stock Option agreement evidences
the Corporation's grant to the Optionee of the right and option to purchase,
on the terms and conditions set forth herein and in the Plan, all or any part
of an aggregate of (number) authorized but unissued Shares at the price of $
(price) per Share (the "Exercise Price"). The Corporation has granted the
Option as a matter of separate inducement in connection with the Optionee's
employment, and not in lieu of any salary or other compensation for the
Optionee's services.
3. Term. The Option shall expire on (date) (the "Expiration Date").
[The term may not exceed 10 years after the Award Date.]
4. Vesting of Option.
[Alternative 1: The option shall vest on (date).]
[Alternative 2: The Option shall vest in installments for a number of shares
(subject to adjustment as provided in Section 12) as follows:
Date of Vesting Number of Shares (subject
of Option to adjustment) as to
Installment which Option vests
date number
date number
date number
date number]
5. Exercisability of Option. No Options shall become exercisable prior
to six months after the Award Date. After such date, the Option (as to vested
shares only) may be exercised in whole or in part, at the discretion of the
Optionee, from time to time until its expiration or earlier termination. To
the extent that the Optionee does not in any period purchase all or any part
of the Shares to which the Optionee is entitled, the Optionee has the right
cumulatively thereafter to purchase any Shares not so purchased and such right
shall continue until the Option terminates or expires. Fractional Share
interests shall be disregarded, but may be cumulated for purposes of
determining how many Shares have been purchased at any time under the Option.
No fewer then 1,000 Shares may be purchased at any time, unless the number
purchased is the total number then available for purchase under the Option.
6. Method of Exercise of Option.
(a) Written Notice. Each exercise of the Option shall be
by written notice of exercise duly delivered to the Corporation,
specifying the number of Shares with respect to which the Option
is being exercised.
(b) Payment. Such written notice must be accompanied by
payment in full for the Shares to be purchased, and payment
may take [one or a combination of] the following form [s]:
[(i)] lawful money of the United States of America
or a certified or bank cashier's check;
[Optional: (ii) Shares, surrendered to the Corporation in
good form for transfer, which have already been owned by
the Optionee or a representative of the Optionee for more
than six months. Such Shares shall be valued at their
Fair Market Value as of the date when the new Shares are
purchased under the Option;]
[Optional: (iii) delivery (on a form prescribed by the
Corporation) of an irrevocable direction to a securities
broker approved by the Corporation to sell Shares and to
deliver all or part of the sales proceeds to the
Corporation in payment of all or part of the Exercise
Price and any withholding taxes;]
[Optional: (iv) a promissory note executed by the
Optionee in favor the Corporation upon the following
terms and conditions: [insert key terms]. Such
promissory note shall be secured by the Stock issuable
upon exercise of the Option in compliance with applicable
law (including, without limitation, state corporate law
and federal margin requirements):]
[Optional: (v) any other method of payment which the
Committee, in its sole discretion, deems acceptable.]
(c) Securities Laws. The written notice of exercise
shall specify that the Shares are being acquired by the
Optionee for investment only and not with a view to resale or
distribution.
7. Withholding Taxes. Upon the exercise of the Option, [Alternative 1:
[insert requirement for the satisfaction of any federal, state, local, or
foreign withholding tax obligations arising in connection with the exercise of
the Option, for example, specify that the Optionee shall provide cash payment
of tax, allow for the deduction of tax, allow for a reduction in number of
Shares or obtain a loan of the tax from the Corporation]/ Alternative 2: the
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax
obligations arising in connection with the exercise of the Option.] The
Optionee agrees that on disposition of Shares acquired by exercising the
Option, the Optionee shall comply with all requirements of the Committee for
satisfaction of any federal, state, local or foreign withholding tax
obligations arising in connection with the disposition of the Shares.
8. Effect of Termination of Employment. Should the Optionee cease to be
an employee, [insert effect of termination of employment on the rights and
benefits of the Option]
[Optional: (i) Options shall cease to vest on the date of
termination of Optionee's employment with the Corporation;]
[Optional: (ii) except as provided in clause (iii) below, the
Option may be exercised at any time within [one] year[s]
after Employee's termination of employment (to the extent it
was exercisable on such date):]
[Optional: (iii) if Optionee's employment with the
Corporation was terminated for cause (as determined by the
Committee in its sole discretion), the Option and all rights
hereunder, to the extent not previously exercised, shall
terminate and become null and void at such time as Optionee
ceases to be employed by the Corporation;]
[Optional: (iv) if an Optionee dies while employed by the
Corporation or during the period referred to in clause (ii)
above, the Option shall expire [one] year[s] after the date of
death. During the [one] year[s] period after the death of the
Optionee, the Option may be exercised (to the extent it was
exercisable as of the date of death or earlier termination of
such Optionee's employment) by the person or persons to whom
the Optionee's rights under the option shall pass by will or
by the applicable laws of descent and distribution;]
[Optional: (v) if an Optionee's employment by the Corporation
was terminated as a result of a "permanent and total
disability" within the meaning of Section 22(e) (3) of the
Code, the Optionee or the Optionee's personal representative
as an agent for the Optionee, shall have [one] year[s] from
the date of termination of employment to exercise the Option
(to the extent it was exercisable on such date).]
Nothing in this Section 8 shall be deemed to extend the term of the Option
beyond the Expiration Date nor to limit the Corporation's ability to terminate
the Option at an earlier date pursuant to the other provision of this
Agreement and the Plan.
9. Non-Transferability of Option. This Option and any other rights of
the Optionee under this Agreement or the Plan are non-transferrable as
provided in Section 6 of the Plan.
10. No Rights as Shareholder. The Optionee, or a transferee of the
Optionee, has no rights as a shareholder with respect to any Shares covered by
an Option until the date of the issuance of a stock certificate for such
Shares.
11. Modification, Extension and Assumption of Option. The Option may
be modified, extended or assumed from time to time by the Committee within the
limitations of and by the means specified in Section 10 of the Plan.
12. Adjustment of Option
(a) Generally. As provided in Section 9 of the Plan,
the Committee may make adjustments to the number of Shares
covered by the Option, the Exercise Price of the Option or any
other Provision in this Agreement that the Committee deems
necessary or advisable to adjust.
(b) Reorganizations. In the event that the Corporation is
a party to a merger or other reorganization, or in
contemplation of such a merger or other reorganization, and to
the extent that the Committee, in its sole discretion, so
directs, the Corporation may:
(i) terminate the Option by paying the Optionee the
difference between the Exercise Price and the
consideration to be received by stockholders of the
Corporation for "in-the-money" options and terminate all
other options without payment;
(ii) provide for assumption of the Option by the
surviving corporation;
(iii) if the Corporation is a surviving corporation,
continue the Option; or
(iv) take any action with respect to the Option that
the Committee, in its sole discretion, deems necessary or
advisable.
13. Notices. Any notice to be given under the terms of this Agreement
shall be in writing addressed to the Corporation at its principal office
located at 12 South Raymond Avenue, Pasadena, CA 91105, to the attention of
Kathryn King-Van Wie, and to the Optionee at the address given beneath the
Optionee's signature hereto, or at such other address as either party may
hereafter designate in writing to the other.
14. Plan. The Option is subject to, and the Optionee agrees to be bound
by, all of the terms and conditions of the Plan. The Optionee acknowledges
receipt of a copy of the Plan, which is made a part hereof by this reference.
15. Successors. Subject to the Plan, where the context permits,
"Optionee" as used in this Nonstatutory Stock Option Agreement shall include
the Optionee's executor, administrator or persons to whom Optionee's rights
pass by will or the applicable laws of descent and distribution.
16. Governing Law. The interpretation, performance, and enforcement of
this Agreement shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed on its behalf by a duly authorized officer and the Optionee has
hereunto set his or her hand.
ACACIA RESEARCH CORPORATION
By_________________________
Title______________________
OPTIONEE
___________________________
(Signature)
___________________________
(Print Name)
___________________________
(Address)
___________________________
(City, State, Zip Code)
<PAGE>
February
18th
1 9 9 7
003,863-001
NB1-299234.V1
Acacia Research Corporation
12 South Raymond Avenue
Pasadena, California 91105
Re: Registration on Form S-8 of Acacia
Research Corporation (the "Company")
Ladies and Gentlemen:
At your request, we have examined the Registration
Statement on Form S-8 to be filed with the Securities and
Exchange Commission in connection with the registration under the
Securities Act of 1933, as amended, of 250,000 shares of Common
Stock, without par value, of the Company (the "Common Stock"), to
be issued pursuant to the Acacia Research Corporation 1996 Stock
Option Plan (the "Plan"). We have examined the proceedings
heretofore taken and to be taken in connection with the
authorization of the Plan and the Common Stock to be issued
pursuant to and in accordance with the Plan.
Based upon such examination and upon such matters of
fact and law as we have deemed relevant, we are of the opinion
that the Common Stock has been duly authorized by all necessary
corporate action on the part of the Company and, when issued in
accordance with such authorization, the provisions of the Plan
and relevant agreements duly authorized by and in accordance with
the terms of the Plan, will be validly issued, fully paid and
nonassessable.
We consent to the use of this opinion as an exhibit to
the Registration Statement.
Respectfully submitted,
/s/ O'Melveny & Myers LLP
O'MELVENY & MYERS LLP
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
As independent public accountants, we hereby consent to the
incorporation by reference in the Form S-8 Registration Statement
and related Prospectus pertaining to the Acacia Research
Corporation 1996 Stock Option Plan of our report, dated
March 14, 1996, with respect to the consolidated financial
statements and schedules of Acacia Research Corporation, included
in its Annual Report on Form 10-KSB for the year ended December
31, 1995 filed with the Securities and Exchange Commission.
/s/ Finocchiaro & Co.
FINOCCHIARO & CO.
Pasadena, California
February 19, 1997
