-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MH6BTkoXamsZi7ohEJU4VgfzXQplHzHsj6P3MK6j9h5ujv2oESqwNtPHiDpTaXCJ 26V/liRuca3/fN+P7tajfg== 0001019687-05-000221.txt : 20050201 0001019687-05-000221.hdr.sgml : 20050201 20050201142514 ACCESSION NUMBER: 0001019687-05-000221 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20050128 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050201 DATE AS OF CHANGE: 20050201 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACACIA RESEARCH CORP CENTRAL INDEX KEY: 0000934549 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS & ACCESSORIES [3670] IRS NUMBER: 954405754 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-26068 FILM NUMBER: 05565287 BUSINESS ADDRESS: STREET 1: 500 NEWPORT CENTER DRIVE STREET 2: 7TH FLOOR CITY: NEWPORT BEACH STATE: CA ZIP: 92660 BUSINESS PHONE: 9494808300 MAIL ADDRESS: STREET 1: 500 NEWPORT CENTER DRIVE STREET 2: # CITY: NEWPORT BEACH STATE: CA ZIP: 92660 8-K 1 acacia_8k-012805.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) January 28, 2005 ----------------------- Acacia Research Corporation - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 000-26068 95-4405754 - ---------------------------- ------------------ ------------------------------ (State or other jurisdiction (Commission (IRS Employer of incorporation File Number) Identification No.) 500 Newport Center Drive, Newport Beach, CA 92660 - -------------------------------------------- ---------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (949) 480-8300 --------------------------- - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) SECTION 1 REGISTRANT'S BUSINESS AND OPERATIONS ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. On December 15, 2004, we entered into a binding letter of intent with Global Patent Holdings LLC, a Delaware limited liability company ("Global Patent Holdings"), to acquire its wholly owned, single-member limited liability companies holding various patents as described in our Form 8-K filed with the Commission on December 21, 2005. The closing was subject to certain conditions, including the completion of our due diligence regarding the assets and the negotiation and execution of definitive agreements regarding the transaction. On January 28, 2005, we executed such definitive documents, including the following material definitive agreements made outside the ordinary course of business: 1. Membership Interest Purchase Agreement, by and between Acacia Research Corporation, Acacia Global Acquisition Corporation (our wholly-owned subsidiary formed for the purpose of this acquisition), and Global Patent Holdings. 2. Registration Rights Agreement, by and between Acacia Research Corporation, Acacia Global Acquisition Corporation, and Global Patent Holdings, 3. Consulting Agreement, by and between Acacia Global Acquisition Corporation and Cascades Ventures, Inc., an Illinois corporation, and 4. Goodwill Purchase Agreement, by and between Acacia Global Acquisition Corporation and Anthony O. Brown. A brief description of the material terms and conditions of each of the foregoing agreements is provided below. 1. MEMBERSHIP INTEREST PURCHASE AGREEMENT ASSETS ------ We acquired 11 patent licensing companies, holding an aggregate of 27 patent portfolios, which include 120 U.S. patents and certain foreign counterparts. A more detailed description of the patents is included in Item 2.01 below, incorporated herein by reference. PURCHASE PRICE -------------- At closing, we paid to Global Patent Holdings $5,000,000 cash and 3,938,832 shares of Acacia Research-Acacia Technologies common stock (the "ACTG Stock"), representing $17,000,000 divided by $4.316, the average closing price of ACTG Stock for the ten trading days preceding October 30, 2004. As a condition to closing, we will pay an additional $2,000,000 over two years pursuant to the consulting agreement more fully described below. 2. REGISTRATION RIGHTS AGREEMENT We are required to register the resale of all 3,938,832 shares of ACTG Stock by February 2, 2005, at our expense. If the registration statement is not effective within (a)100 days after the closing date if it is reviewed by the Commission, or (b) 30 days if it is not reviewed by the Commission, then we are required to pay Global Patent Holdings $3,000 per day thereafter until the registration statement is declared effective, subject to Global Patent Holdings' timely delivery of information required in the registration statement. We plan to file a registration statement for such resale on Form S-3 by February 2, 2005. 2 As long as Mr. Anthony O. Brown and his affiliates beneficially own at least 495,465 shares of our ACTG Stock included for resale in the registration statement, then upon Mr. Brown's request, we have agreed to appoint Mr. Brown or his designee to fill any existing vacancy on our board of directors, and thereafter to nominate him for re-election by the stockholders. Such service by Mr. Brown or his designee is subject to proper qualification and the rules and regulations adopted by the Commission and Nasdaq. At this time, Mr. Brown has not elected to exercise such rights, as more fully described in Item 5.02 of this report incorporated herein by reference. 3. CONSULTING AGREEMENT As a condition to the Purchase Agreement, and pursuant to the Consulting Agreement, we have engaged Cascades Ventures, Inc., an Illinois corporation, to provide the consulting services of Anthony O. Brown to our company related to our ownership and enforcement of the patents. Mr. Brown was a principal officer of Global Patent Holdings and has knowledge about and experience with the patents that we believe will assist our company with fully realizing the benefits of the patents. The term of the agreement is two years, expiring on January 27, 2006. We will pay the consultant two million dollars ($2,000,000) over the term of the agreement, in equal installments of $38,461.54 every two weeks. In addition, we will pay all of the consultant's expenses, including the costs and expenses of an office, secretary, and employee benefits for Mr. Brown and the secretary in the amount of approximately $83,600 per year, travel expenses, and other miscellaneous overhead expenses. 4. GOODWILL PURCHASE AGREEMENT Anthony O. Brown was the principal officer and an owner of Global Patent Holdings. As a condition to the Purchase Agreement, and pursuant to the Goodwill Purchase Agreement, we paid Mr. Brown two million dollars ($2,000,000) for the right to use his contacts and other goodwill related to the patents acquired. SECTION 2 FINANCIAL INFORMATION ITEM 2.01 COMPLETION OF ACQUISITION OF ASSETS We closed the acquisition of 11 limited liability companies from Global Patent Holdings, LLC on January 28, 2005, pursuant to the agreements identified in Item 1.01 above, hereby incorporated by reference. We acquired the companies through our wholly-owned subsidiary, Acacia Global Acquisition Corporation, a Delaware corporation, formed for the purpose of acquiring and holding these assets. The companies we acquired hold an aggregate of 27 patent portfolios, which include 120 U.S. patents and certain foreign counterparts. The new patents relate to certain aspects of various technologies or products, including: o Broadcast Equipment o Broadcasting and Data Transmission o Cache Coherency o Credit Card Receipt Processing o Data File Synchronization o Datamatrix Bar Codes o Dynamic Manufacturing Models o Encryption and Product Activation o Hand Held Endoscopes o Image Resolution or Enhancement o Interactive Simulation Systems o Interstitial Internet Advertising o Peer to Peer Network Communications o Programs for Resource Scheduling/Displaying Interrelated Tables o Spreadsheet Programs o Video Noise Reduction and Audio/Video Synchronization 3 We paid consideration for the assets as described in Item 1.01 above, incorporated herein by reference. SECTION 3 SECURITIES AND TRADING MARKETS ITEM 3.02. UNREGISTERED SALES OF EQUITY SECURITIES. We issued to Global Patent Holdings 3,938,832 shares of Acacia Research-Acacia Technologies common stock in partial consideration for the Assets, as described below. The offer and sale of common stock was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2). Global Patent Holdings is an accredited investor, and we are relying upon Rule 506 of Regulation D to determine an exemption from registration. The offer did not involve a public offering or general solicitation. No commissions were paid on the issuance and sale of the common stock. The offer closed upon execution of the agreement. Global Patent Holdings made a pro rata distribution of the shares of Acacia Research-Acacia Technologies common stock to its 16 members at closing, and as an accommodation to Global Patent Holdings, and pursuant to the Purchase Agreement, we delivered certificates to such members at closing. Such shares continue to be restricted stock and contain appropriate restrictive legends pursuant to Rule 144 of the Securities and Exchange Act of 1933. We received as consideration for the common stock the assets more fully described in Item 2.01, incorporated by reference herein. This was based upon a fair market value of $17,000,000 divided by $4.316, the average closing price of ACTG Stock for the ten trading days preceding October 30, 2004, the date the price was determined. SECTION 5 CORPORATE GOVERNANCE AND MANAGEMENT ITEM 5.02. ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS. (a) Election of Directors For so long as Anthony O. Brown or his affiliates beneficially own at least 495,465 shares of our ACTG Stock included for resale in the registration statement described in Item 1.01 above, incorporated herein by reference, then upon Mr. Brown's request, we will appoint either Mr. Brown or a reasonably acceptable, qualified designee of Mr. Brown, to fill any vacancy on our board of directors. We have three classes of directors, each class serving a different term of three years. We do not know at this time to which class Mr. Brown or his designee may be appointed. Following such appointment, we will continue to nominate him or his designee to be elected at the end of his term, for so long as he or his affiliates continue to own a beneficial interest in 495,465 shares of our ACTG stock included for resale in the registration statement. At this time, Mr. Brown has not elected to exercise such right. Mr. Brown or his designee will not be an independent director and as such, will not serve on the audit committee. We do not know at this time what other committees Mr. Brown, or his designee, may serve, and we will amend this report as necessary when such information becomes available. (c) Appointment of Principal Officers Effective January 31, 2005, we appointed Mr. Robert A. Berman as Chief Operating Officer of Acacia Research Corporation to serve until he resigns or his successor is appointed. 4 Mr. Berman joined our company in 2000 and was named Senior Vice President and General Counsel in February 2001. As of January 31, 2005, Mr. Berman was promoted from Executive Vice President, Business Development to Chief Operating Officer. Information regarding Mr. Berman's background, compensation and related transactions is set forth on pages 12 through 17 of our Definitive Proxy Statement on Schedule 14A, filed with the Commission on April 1, 2004, incorporated herein by reference. SECTION 7 REGULATION FD DISCLOSURE Effective January 31, 2005, we appointed Mr. Dooyong Lee as Executive Vice President, Business Development of the Acacia Technologies Group. We issued a press release on January 31, 2005, announcing this appointment, attached hereto as Exhibit 99.2 and incorporated herein by reference. We issued another press release on January 31, 2005, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference. SECTION 9 FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Business Acquired. We will amend this Form 8-K within 45 days to include the audited financial statements of Global Patent Holdings for the periods required Rule 3-05(b) of Regulation S-X. (b) Pro Forma Financial Information We will amend this Form 8-K within 45 days to include the pro forma financial information required by Article 11 of Regulation S-X. (c) Exhibits. The following exhibits are included with this Form 8-K: 2.1 Membership Interest Purchase Agreement 10.1 Registration Rights Agreement 10.2 Consulting Agreement 10.3 Goodwill Purchase Agreement 10.4 Membership Interest Purchase Agreement (included as Exhibit 2.1 of this report) 99.1 Press Release issued January 31, 2005 99.2 Press Release issued January 31, 2005 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. ACACIA RESEARCH CORPORATION, a Delaware corporation Date: January 31, 2004 By: /S/ Paul R. Ryan ------------------------------------- Paul R. Ryan, Chairman and Chief Executive Officer 5 EX-2.1 2 acacia_8kex2-1.txt EXHIBIT 2.1 MEMBERSHIP INTEREST PURCHASE AGREEMENT Among: GLOBAL PATENT HOLDINGS, LLC, a Delaware limited liability company, ACACIA RESEARCH CORPORATION, a Delaware corporation and ACACIA GLOBAL ACQUISITION CORPORATION, a Delaware corporation ---------------- Dated as of January 28, 2005 ---------------- TABLE OF CONTENTS PAGE ---- 1. Sale and Purchase of LLC Interests; Related Transactions..................1 1.1. Sale and Purchase of LLC Interests.................................1 1.2. Purchase Price.....................................................1 1.3. Closing............................................................1 2. Representations and Warranties of Seller..................................2 2.1. Due Organization; No Subsidiaries..................................2 2.2. Organizational Documents; Records..................................3 2.3. Capitalization.....................................................3 2.4. Financial Statements...............................................4 2.5. Absence of Changes.................................................4 2.6. Title to Assets....................................................5 2.7. Intellectual Property Rights.......................................5 2.8. Contracts; Consents................................................6 2.9. No Undisclosed Liabilities.........................................7 2.10. Compliance with Legal Requirements.................................8 2.11. Governmental Authorizations........................................8 2.12. Tax Matters........................................................8 2.13. Labor Matters; Benefit Plans.......................................9 2.14. Intellectual Property Disclosures..................................9 2.15. Related Party Transactions.........................................9 2.16. Proceeds; Orders..................................................10 2.17. Authority; Binding Nature of Agreements...........................10 2.18. Non-Contravention; Consents.......................................11 2.19. Brokers...........................................................11 2.20. Investment Company Act............................................11 2.21. Investment Representations........................................12 2.22. Solvency..........................................................13 2.23. Exclusive Representations and Warranties..........................13 3. Representations and Warranties of Purchaser and Acacia...................13 i 3.1. Due Organization; Good Standing...................................14 3.2. Authority; Binding Nature Of Agreements...........................14 3.3. No Default, Violation or Consent..................................14 3.4. No Proceedings....................................................15 3.5. SEC Filings; Purchaser Financial Statements.......................15 3.6. No Material Adverse Effect........................................15 3.7. Brokers...........................................................16 3.8. Purchase Shares...................................................16 3.9. No Representations................................................16 4. Closing Deliverables.....................................................16 4.1. Agreements and Documents of Seller................................16 4.2. Agreements and Documents of the Purchaser and Acacia..............17 5. Post-Closing Covenants Of The Parties....................................18 5.1. Filings And Consents..............................................18 5.2. Tax Allocation....................................................19 6. Indemnification..........................................................19 6.1. Survival of Seller Representations................................19 6.2. Indemnification By Seller.........................................19 6.3. Threshold; Ceiling; Limits........................................20 6.4. Exercise Of Remedies By Seller Indemnitees Other Than Purchaser...21 6.5. Survival of Purchaser and Acacia Representations..................21 6.6. Indemnification By Acacia.........................................21 6.7. Notice and Defense of Third Party Claims..........................22 6.8. Losses Net of Insurance, Recoveries, Etc..........................23 6.9. Sole and Exclusive Remedies.......................................24 7. Miscellaneous............................................................24 7.1. Further Assurances................................................24 7.2. Fees And Expenses.................................................24 7.3. Notices...........................................................25 7.4. Time Of The Essence...............................................27 7.5. Headings..........................................................27 ii 7.6. Counterparts......................................................27 7.7. Governing Law.....................................................27 7.8. Successors and Assigns............................................27 7.9. Waiver............................................................27 7.10. Amendments........................................................28 7.11. Severability......................................................28 7.12. Parties In Interest...............................................28 7.13. Limitation of Individual Liability................................28 7.14. Entire Agreement..................................................28 7.15. Construction......................................................29 iii MEMBERSHIP INTEREST PURCHASE AGREEMENT This Membership Interest Purchase Agreement is entered into as of January 28, 2005, by and among Global Patent Holdings, LLC, a Delaware limited liability company ("Seller"), Acacia Research Corporation, a Delaware corporation ("Acacia"), and Acacia Global Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of Acacia ("Purchaser"). Certain capitalized terms used in this Agreement are defined in Exhibit A. RECITALS A. Seller owns all of the issued and outstanding membership interests of the Acquired Companies (collectively, the "LLC Interests"), which constitute all of the outstanding equity and other interests of the Acquired Companies. B. Seller wishes to sell all of the LLC Interests to the Purchaser, and the Purchaser desires to purchase all of the LLC Interests from Seller, on the terms and subject to the conditions set forth in this Agreement. AGREEMENT The Purchaser, Acacia and Seller, intending to be legally bound, agree as follows: 1. SALE AND PURCHASE OF LLC INTERESTS; RELATED TRANSACTIONS 1.1. SALE AND PURCHASE OF LLC INTERESTS. At the Closing, Seller shall sell, assign, transfer and deliver the LLC Interests, free and clear of all Encumbrances as of the date hereof, to the Purchaser, and the Purchaser shall, and Acacia shall cause the Purchaser to, purchase, assume and accept the LLC Interests from Seller, on the terms and subject to the conditions set forth in this Agreement. 1.2. PURCHASE PRICE. (a) The aggregate purchase price payable by the Purchaser for the LLC Interests (the "Purchase Price") shall be payable in cash and ACTG Stock as follows: (i) cash in the amount of Three Million Dollars ($3,000,000) (the "Cash Consideration"); and (ii) 3,938,832 shares of ACTG Stock, which shall be issued to Seller or its members at the Closing (the "Purchase Shares"). 1.3. CLOSING. (a) The closing of the purchase and sale of the LLC Interests hereunder (the "Closing") shall take place on the date this Agreement is signed at such place and time as the Purchaser and Seller may jointly designate). "Closing Date" shall mean the date as of which the Closing actually takes place, and "Effective Time" shall mean the time as of which the Closing actually takes place. 1 (b) At the Closing: (i) the Purchaser shall pay to Seller by wire transfer the Cash Consideration and shall issue and deliver to Seller (or to the members of Seller, pro rata, as directed by Seller) certificates representing the Purchase Shares; and (ii) the parties shall deliver each of the closing deliverables set forth in Section 4. 2. REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to the Purchaser, as of the Closing Date, as follows: 2.1. DUE ORGANIZATION; NO SUBSIDIARIES. (a) Seller and each of the Acquired Companies are limited liability companies duly organized, validly existing and in good standing under the laws of the state of their respective organization, and each of these limited liability companies has all necessary power and authority: (i) to conduct its business in the manner in which its business is currently being conducted; (ii) to own and use its assets in the manner in which its assets are currently owned and used; and (iii) to perform its obligations under all its Contracts. (b) Seller and each of the Acquired Companies are in good standing as a foreign limited liability company in each of the jurisdictions identified in Part 2.1(b) of the Disclosure Schedule. (c) Part 2.1(c) of the Disclosure Schedule accurately sets forth (i) the names of the managers and members of each of Seller and the Acquired Companies and (ii) the names of the officers of each of Seller and the Acquired Companies. (d) None of Seller, the Acquired Companies nor any of their respective managers or members, has ever approved, or commenced any proceeding or made any election contemplating, the dissolution, liquidation, sale or other disposition of Seller, any of the Acquired Companies or the winding up or cessation of Seller's or any of the Acquired Companies' respective business or affairs. 2 (e) Except as set forth in Part 2.1(e) of the Disclosure Schedule, each of the Acquired Companies has no subsidiaries, and has never owned, beneficially or otherwise, any shares or other securities of, or any direct or indirect ownership interest of any nature in, any Entity. Seller currently has no Subsidiaries other than the Acquired Companies. 2.2. ORGANIZATIONAL DOCUMENTS; RECORDS. (a) Seller has delivered to the Purchaser accurate and complete copies of: (i) Organizational Documents for each of Seller and the Acquired Companies, including all amendments thereto; (ii) the membership interest register or other membership interest records of each of Seller and the Acquired Companies; and (iii) the minutes and other records of the meetings and other proceedings (including any actions taken by written consent or otherwise without a meeting) of the managers of each of the Acquired Companies and of the members of each of Seller and the Acquired Companies. (b) The Acquired Companies have never engaged in any business other than the purchasing and licensing of the Intellectual Property Rights and enforcement of rights related to the Intellectual Property Rights and related activities. 2.3. CAPITALIZATION. (a) The authorized equity of each of the Acquired Companies consists of membership interests represented by the LLC Interests specified in Part 2.3(a) of the Disclosure Schedule, all of which are outstanding and owned, beneficially and of record, by Seller. (b) Seller has, and the Purchaser will acquire at the Closing, good, valid and marketable title to all of the LLC Interests free and clear of any Encumbrances. (c) All of the LLC Interests (i) have been duly authorized and validly issued, (ii) are fully paid and non-assessable, and (iii) have been issued in full compliance with all applicable securities laws and other applicable Legal Requirements. (d) There is no: (i) outstanding subscription, option, call, warrant or right (whether or not currently exercisable) to acquire any equity interest in, or other security of, any of the Acquired Companies; (ii) outstanding security, instrument or obligation that is or may become convertible into or exchangeable for any equity interest in, or other security of, any of the Acquired Companies; 3 (iii) Contract under which any of the Acquired Companies is or may become obligated to sell or otherwise issue any equity interest or other security; or (iv) any condition or circumstance that may directly or indirectly give rise to or provide a basis for the assertion of a claim by any Person to the effect that such Person is entitled to acquire or receive any equity interest in, or other security of, any of the Acquired Companies. 2.4. FINANCIAL STATEMENTS (a) Seller has delivered to Buyer the unaudited consolidated balance sheets of Seller and each Acquired Company, as applicable, as at December 31 of each of the fiscal years 1999 through 2004 ("Balance Sheets"), and the related unaudited consolidated statements of income for each of the fiscal years then ended (the "Financial Statements"). The Financial Statements fairly present in all material respects the financial condition and the results of operations of each of Seller and the Acquired Companies on a consolidated basis, as applicable, as at the respective dates of and for the periods referred to in such Financial Statements. The Financial Statements reflect in all material respects the consistent application of accounting principles throughout the periods involved. The Financial Statements have been and will be prepared from and are in accordance with, in all material respects, accounting Records of Seller and each of the Acquired Companies. (b) Each of the Seller's and the Acquired Companies' books of account and other financial Records, all of which have been made available to the Purchaser, are complete and correct in all material respects and represent in all material respects actual, bona fide transactions and have been maintained in all material respects in accordance with sound business practices, including the maintenance of an adequate system of internal controls. At the Closing, all of books and Records of the Acquired Companies will be in the possession of the Acquired Companies. 2.5. ABSENCE OF CHANGES. Except as provided in the Transactional Agreements, since December 31, 2004: (a) None of the Acquired Companies has made any promises to any Persons with regard to future employment or engagement; (b) Except as specified in Part 2.5(b) of the Disclosure Schedule, none of the Acquired Companies has entered into, nor have any of the assets owned or used by the Acquired Companies become bound by, any material Contract; (c) Except as specified in Part 2.5(c) of the Disclosure Schedule, no material Contract by which the Acquired Companies or any of the assets owned or used by the Acquired Companies is or was bound, or under which the Acquired Companies has or had any rights or interest, has been amended or terminated; 4 (d) None of the Acquired Companies has changed any of its methods of accounting or accounting practices in any respect; (e) None of the Acquired Companies has entered into any transaction or taken any other action outside the Ordinary Course of Business except for the Transactions; (f) None of the Acquired Companies has agreed, committed or offered (in writing or otherwise), and has not attempted, to take any of the actions referred to in clauses "(a)" through "(e)" above; and (g) Except as specified in Part 2.5, including Part 2.5(g), of the Disclosure Schedule, each of the Acquired Companies has (i) operated its business in the Ordinary Course of Business and consistent with past practice and (ii) preserved intact its relationships with its customers, licensees, licensors, suppliers, providers, payors and other Persons with which it has significant business relationships. 2.6. TITLE TO ASSETS. (a) Except as provided in Part 2.6(b) of the Disclosure Schedule, each of the Acquired Companies owns, and has good, valid and marketable title to, all assets purported to be owned by it, free and clear of Encumbrances, including without limitation: (i) all Intellectual Property Rights identified or required to be identified in Parts 2.7(a)(i) of the Disclosure Schedule and (ii) all other assets reflected in the books and records of the Acquired Companies as being owned by such Acquired Companies. Additionally, to Seller's Knowledge, except as provided in Part 2.8(b) of the Disclosure Schedule, each of the Acquired Companies has a valid right to license and enforce all Intellectual Property Rights identified in Part 2.7(a)(ii) and in the IP Contracts listed in Part 2.7(a)(iv) of the Disclosure Schedule free and clear of all Encumbrances. (b) Except as set forth in Part 2.6(b) of the Disclosure Schedule, all of such assets are owned by the Acquired Companies free and clear of any Encumbrances as of the date hereof. 2.7. INTELLECTUAL PROPERTY RIGHTS. (a) (i) Part 2.7(a)(i) of the Disclosure Schedule sets forth a complete list of each Patent in which any of the Acquired Companies has an ownership interest. (ii) Part 2.7(a)(ii) of the Disclosure Schedule sets forth a complete list of each Patent in which a third party has an ownership interest and which any of the Acquired Companies has license and/or enforcement rights. (iii) Part 2.7(a)(iii) of the Disclosure Schedule identifies, and Seller has delivered to Purchaser, accurate and complete copies of, each of the IP Contracts under which any of the Acquired Companies has any ongoing royalty or payment obligations, and to Seller's Knowledge, there are no outstanding or threatened disputes, disagreements, claims or Proceedings with respect to any such IP Contracts, except as described in Part 2.8(b) or any other part of the Disclosure Schedule. 5 (iv) To the Seller's Knowledge, any IP Contract, pursuant to which any Acquired Company, as owner or licensee of any Patent, has granted to any third party any right (whether or not currently exercisable) to use, license or otherwise exploit any material Intellectual Property Rights, has been identified in Part 2.7(a)(iv) of the Disclosure Schedule. Additionally, to the Seller's Knowledge, Seller has provided Purchaser with access to all written information in its possession which identifies any Person who has a right (whether or not currently exercisable) to use, license or otherwise exploit any Intellectual Property Rights. (v) Except as set forth in Part 2.7(a)(v) of the Disclosure Schedule, regarding the Patents identified in Parts 2.7(a)(i) or (ii), to the Seller's Knowledge, (i) no such Patents have expired due to failure to make a required maintenance fee, and (ii) such Patents are not now involved in any interference, reissue, reexamination or opposition proceeding. (vi) To Seller's Knowledge, as of the Effective Time, there are no divisions, continuations or continuations-in-part to any of the Patents listed in Parts 2.7(a)(i) or (ii). (b) None of the Acquired Companies have (i) licensed any of the Intellectual Property Rights listed in Parts 2.7(a)(i) or 2.7(a)(ii) to any other Person on an exclusive basis, or (ii) except as may otherwise be provided in any of the Contracts included in the Disclosure Schedule, (x) entered into any Contract under which any other Person has the right to distribute, license or sublicense any of the Intellectual Property Rights listed in Parts 2.7(a)(i) or 2.7(a)(ii), or (y) entered into any covenant not to compete or other Contract limiting the ability of any of the Acquired Companies to fully exploit any of the Intellectual Property Rights listed in Parts 2.7(a)(i) or 2.7(a)(ii) or to transact business in any market or geographical area or with any other Person. (c) To Seller's Knowledge, no current or former employee, officer, manager, member, consultant or independent contractor of Seller or any of the Acquired Companies has any right, claim or interest in or with respect to any Intellectual Property. 2.8. CONTRACTS; CONSENTS. (a) Except as may otherwise be provided and identified in any of the Contracts listed in Part 2.8(a) of the Disclosure Schedule, no Contract contains a "most favored nations" provision. To the Knowledge of Seller, Seller has delivered to the Purchaser accurate and complete copies of each Contract identified in Part 2.8(a) of the Disclosure Schedule. Subject to Part 2.8(b) of the Disclosure Schedule, each such Contract, assuming the due authorization, execution and delivery thereof by each of the other parties thereto, is valid and in full force and effect, and is enforceable by the Acquired Companies in accordance with its terms subject to (i) laws of general application relating to bankruptcy, insolvency, reorganization, moratorium and the relief of debtors, and (ii) rules of law governing specific performance, injunctive relief or other equitable remedies. 6 (b) Except as set forth in Part 2.8(b) of the Disclosure Schedule, to the Knowledge of Seller: (i) no Acquired Company has materially violated, Breached, declared or committed any material default under any IP Contract or material Company Contract, and, to the Knowledge of Seller, no other Person has materially violated, Breached, declared or committed any material default under any IP Contract or Company Contract; (ii) no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) can reasonably be expected to, (A) result in a material violation or material Breach of any of the provisions of any IP Contract or Company Contract, (B) give any Person the right to declare a material default or exercise any remedy under any IP Contract or Company Contract, (C) give any Person the right to accelerate the maturity or performance of any IP Contract or Company Contract, or (D) give any Person the right to cancel, terminate or materially modify any IP Contract or Company Contract; and (iii) none of the Acquired Companies has waived any of its material rights under any IP Contract or Company Contract, except as disclosed in the Disclosure Schedule. (c) Part 2.8(c) of the Disclosure Schedule identifies each Consent required to be obtained by the Seller and each notice required to be made by the Seller or the Acquired Companies to any Person for (i) the transfer of the LLC Interests to the Purchaser at the Closing, (ii) the avoidance, upon transfer of the LLC Interests to the Purchaser at the Closing, of any of the circumstances set forth in Section 2.8(b)(ii)(A)-(D) above, and (iii) the execution and delivery of any of the Transactional Agreements or the consummation or performance of any of the Transactions. 2.9. NO UNDISCLOSED LIABILITIES. Each of the Acquired Companies has no Liabilities required to be reflected on a balance sheet prepared in accordance with GAAP except (i) for Liabilities identified as such in the "liabilities" column of the consolidated Financial Statements dated as of December 31, 2004, (ii) for trade payables incurred in the Ordinary Course of Business, (iii) for any of the Acquired Companies' obligations under the IP Contracts or Company Contracts listed in Part 2.8(a) of the Disclosure Schedule and (iv) as set forth on Part 2.9 of the Disclosure Schedule. The Acquired Companies have no operating leases, except as listed, if any, in the Disclosure Schedule. 7 2.10. COMPLIANCE WITH LEGAL REQUIREMENTS. To the Knowledge of Seller, except for qualification, authorization, registration or licensing to do business as a foreign limited liability company and except in such instances where it would not be reasonably likely to have a Material Adverse Effect, each of the Acquired Companies has conducted its business in compliance with all, and is not in violation of, any applicable Legal Requirements. None of Seller or any of the Acquired Companies has received any written notification of any asserted present or past failure by any of the Acquired Companies to comply with any applicable Legal Requirements or Order. 2.11. GOVERNMENTAL AUTHORIZATIONS. To Knowledge of Seller, no Governmental Authorizations are necessary or required by applicable law in connection with the execution, delivery and performance of the Transaction Agreements or the Transactions by Seller and Seller's members or in connection with the operation of the Acquired Companies' respective businesses. 2.12. TAX MATTERS. (a) Seller and the Acquired Companies have filed or caused to be filed on a timely basis all Tax Returns required to be filed by them pursuant to applicable Legal Requirements and that relate to the business of the Acquired Companies. All Tax Returns filed by Seller and each of the Acquired Companies that relate to the business of the Acquired Companies are true, correct and complete in all material respects. Each of Seller and the Acquired Companies has paid, or made provision for the payment of, all Taxes that relate to the business of the Acquired Companies prior to the Closing Date and that are due for all periods covered by such Tax Returns or otherwise due prior to the Closing Date, or pursuant to any assessment received by Seller or the Acquired Companies prior to the Closing Date. Neither Seller nor any of the Acquired Companies is the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made by any taxing authority in a writing received by Seller or any of the Acquired Companies in a jurisdiction where Seller or any of the Acquired Companies does not file Tax Returns that Seller or any of the Acquired Companies is or may be subject to taxation by that jurisdiction on income attributable to the business of the Acquired Companies. As of the date hereof, there are no Encumbrances on any of the Acquired Companies' assets or properties that arose in connection with any failure (or alleged failure) to pay any Tax. (b) Seller and each of the Acquired Companies has delivered or made available to the Purchaser copies of all Tax Returns of Seller and the Acquired Companies filed since their respective dates of formation. There is no dispute or claim concerning any Taxes of Seller or any of the Acquired Companies relating to the business of the Acquired Companies raised by any taxing authority in a writing received by Seller or any of the Acquired Companies. There has not been received by Seller or any of the Acquired Companies in writing a proposed Tax assessment or deficiency against Seller or any of the Acquired Companies relating to the business of the Acquired Companies. (c) All Taxes relating to the business of the Acquired Companies that Seller and each of the Acquired Companies is or was required by Legal Requirements to withhold, deduct or collect have been duly withheld, deducted and collected and, to the extent required, have been paid to the proper Governmental Body or other Person. 8 (d) Except as set forth in Part 2.12 of the Disclosure Schedule, there is not currently in effect with respect to any of the Acquired Companies any tax sharing agreement, tax allocation agreement, tax indemnity obligation or similar agreement, arrangement or understanding or practice with respect to Taxes that will require any payment by any of the Acquired Companies after the Closing Date. (e) Since the date of each of the Acquired Companies' formation, each of the Acquired Companies has qualified for and has taken properly all necessary steps to be treated as a disregarded entity for federal and all applicable state income tax purposes, as provided for by Treasury Regulations Sections 301.7701-1, et seq., and none of Seller or the Acquired Companies has taken a position inconsistent with such treatment. 2.13. LABOR MATTERS; BENEFIT PLANS. (a) Except as set forth in Part 2.13(a) of the Disclosure Schedule, none of the Acquired Companies has ever had any employees or independent contractors. (b) Since the effective date of ERISA, there have not been, nor are there now existing, any events or conditions which would permit any Plan to be terminated by the PBGC under circumstances which would cause Seller or any of the Acquired Companies to incur a Liability under Title IV of ERISA. Since the effective date of ERISA, no Reportable Event has occurred with respect to any Plan and no Plan has been terminated in whole or in part. No withdrawals from any Plans have occurred which could subject the Seller or any of the Acquired Companies to any liability. 2.14. INTELLECTUAL PROPERTY DISCLOSURES. Seller has made available to Purchaser in all material respects all information and assistance that the Purchaser has requested regarding the Intellectual Property Rights. 2.15. RELATED PARTY TRANSACTIONS. Except as set forth in Part 2.16 of the Disclosure Schedule and other than its ownership of the LLC Interests or membership interests of the Seller or as contemplated by the Transactional Agreements, (a) to Seller's Knowledge no Related Party has any direct or indirect interest of any nature in or to the Acquired Companies or any of the assets of the Acquired Companies, including the Intellectual Property Rights, (b) none of the Acquired Companies are indebted to any Related Party, (c) no Related Party has entered into, or has any direct or indirect financial interest in, any IP Contract or Company Contract, or any transaction or business dealing of any nature involving the Acquired Companies or the Intellectual Property Rights; (d) no Related Party is competing, directly or indirectly, with the Acquired Companies; and (e) no Related Party has any claim or right against any of the Acquired Companies (including rights to receive compensation for services performed as an employee or Independent Contractor of Seller). 9 2.16. PROCEEDS; ORDERS. Except as set forth in Part 2.16 of the Disclosure Schedule, to Seller's Knowledge there is no pending Proceeding, and the Seller has not received notice of any threat made by any Person to commence any Proceeding (a) that involves the Seller, the Intellectual Property Rights or any of the Acquired Companies or that otherwise relates to or might have a Material Adverse Effect on the Intellectual Property Rights or any of the Acquired Companies (whether or not any of the Acquired Companies are named as a party thereto) or (b) that may have the effect of preventing, materially delaying, making illegal or otherwise materially interfering with, any of the Transactions. To the Seller's Knowledge, there is no Order to which any of the Acquired Companies or any of the material assets owned or used by any of the Acquired Companies (including the Intellectual Property Rights and the IP Contracts), is subject. To the Seller's Knowledge, no employee or independent contractor of Seller is subject to any Order that prohibits such Person from engaging in or continuing any conduct, activity or practice relating to any of the Acquired Companies or their Intellectual Property Rights. 2.17. AUTHORITY; BINDING NATURE OF AGREEMENTS. Seller has the absolute and unrestricted right, power and authority to enter into and to perform its obligations under the Transactional Agreements. The execution, delivery and performance by Seller of the Transactional Agreements and the Transactions have been duly authorized by all necessary action on the part of Seller and its members, managers and officers. The Transactions have been duly authorized by all necessary action on the part of Seller and its members, managers and officers. This Agreement, assuming the due authorization, execution and delivery thereof by each of the other parties thereto, constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, and upon the execution of each of the other Transactional Agreements at the Closing, each of such other Transactional Agreements to which Seller is a party will, assuming the due authorization, execution and delivery thereof by each of the other parties thereto, constitute the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms subject to (i) laws of general application relating to bankruptcy, insolvency, reorganization, moratorium and the relief of debtors, and (ii) rules of law governing specific performance, injunctive relief or other equitable remedies. 10 2.18. NON-CONTRAVENTION; CONSENTS. Except as would not be reasonably likely to have a Material Adverse Effect or as disclosed in Part 2.8 of the Disclosure Schedule, neither the execution and delivery of any of the Transactional Agreements, nor the consummation or performance of any of the Transactions, will directly or indirectly (with or without notice or lapse of time): (a) contravene, conflict with or result in a violation of (i) any of the provisions of Seller's or any of Acquired Companies' Organizational Documents, or (ii) any resolution adopted by Seller's managers or members; (b) contravene, conflict with or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Transactions or to exercise any remedy or obtain any relief under, any Legal Requirement or any Order to which Seller, or any of Acquired Companies or any of their respective members, or any of the assets owned or used by any of the Acquired Companies, is subject; (c) contravene, conflict with or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by any of the Acquired Companies or that otherwise relates to any of the Acquired Companies' business or to any of the assets owned or used by any of the Acquired Companies; (d) contravene, conflict with or result in a violation or Breach of, or result in a default under, any provision of any IP Contract or Company Contract; (e) give any Person a right to (i) declare a default or exercise any remedy under any IP Contract or Company Contract, (ii) accelerate the maturity or performance of any IP Contract or Company Contract, or (iii) cancel, terminate or modify any IP Contract or Company Contract; or (f) result in the imposition or creation of any Encumbrance upon or with respect to any asset owned or used by any of the Acquired Companies. 2.19. BROKERS. None of Seller, any of the Acquired Companies or any of their respective members has agreed or become obligated to pay, or has taken any action that might result in any Person claiming to be entitled to receive, any brokerage commission, finder's fee or similar commission or fee in connection with any of the Transactions. 2.20. INVESTMENT COMPANY ACT. Seller is not an "investment company" or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended 11 2.21. INVESTMENT REPRESENTATIONS. (a) Seller (and to Seller's Knowledge, its members) understands that the Purchase Shares are being offered and sold pursuant to a private placement exemption from registration contained in the Securities Act of 1933, as amended (the "Securities Act") based in part upon Seller's representations contained in this Agreement and upon the representations of Seller's members contained in the Investment Representation Letter. (b) Seller (and to Seller's Knowledge, its members) have substantial experience in evaluating and investing in private placement transactions of securities in companies similar to Acacia so that they are capable of evaluating the merits and risks of their investment in Acacia and have the capacity to protect their own interests. Seller (and to Seller's Knowledge, its members) must bear the economic risk of this investment indefinitely unless the Purchase Shares are registered pursuant to the Securities Act, or an exemption from registration is available. Seller (and to Seller's Knowledge, its members) also understand that there is no assurance that any exemption from registration under the Securities Act will be available and that, even if available, such exemption may not allow Seller or its members to transfer all or any portion of the Purchase Shares under the circumstances, in the amounts or at the times Seller and its members might propose. (c) Seller is acquiring the Purchase Shares for its own account for investment only, and not with a view towards their distribution. (d) Seller represents that by reason of its, or of its management's, business or financial experience, Seller has the capacity to protect their own interests in connection with the transactions contemplated in the Agreement. Further, Seller is aware of no publication of any advertisement in connection with the transactions contemplated in the Agreement. (e) Seller is an accredited investor within the meaning of Rule 501(a) of Regulation D under the Securities Act. (f) Seller has had an opportunity to discuss Acacia's business, management and financial affairs with directors, officers and management of Acacia and have had the opportunity to review Acacia's operations and facilities. Seller has also had the opportunity to ask questions of and receive answers from Acacia and its management regarding the terms and conditions of this investment. (g) Seller acknowledges and agrees that the Purchase Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Seller and its members have been advised or are aware of the provisions of Rule 144 promulgated under the Securities Act as in effect on the date hereof, which permits limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things: the availability of certain current public information about Acacia, the resale occurring following the required holding period under Rule 144 and the number of shares being sold during any three-month period not exceeding specified limitations. (h) The office of Seller in which its investment decision was made is located at the address or addresses of Seller set forth in Part 2.23(h) of the Disclosure Schedule. Seller or to Seller's knowledge its members are United States persons (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended). (i) Seller acknowledges and agrees that the Purchase Shares are subject to restrictions on transfer as set forth in the applicable securities laws. 12 (j) All certificates representing the Purchase Shares shall have endorsed thereon legends in substantially the following forms (in addition to any other legend which may be required by other agreements between the parties hereto): (i) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED." (ii) Any legend required by appropriate blue sky officials. 2.22. SOLVENCY. Immediately after the consummation of the Transactions, (a) the fair value of the assets of Seller will exceed its debts and Liabilities, subordinated, contingent or otherwise, (b) the present fair saleable value of the property of Seller will be greater than the amount that will be required to pay the probable obligations of its debts and other Liabilities, subordinated, contingent or otherwise, as such debts and other Liabilities become absolute and matured and (c) Seller will be able to pay its debts and Liabilities, subordinated, contingent or otherwise, as such debts and Liabilities become absolute and matured. 2.23. EXCLUSIVE REPRESENTATIONS AND WARRANTIES. Other than the representations and warranties set forth in this Article 2, Seller is not making any other representation or warranty, express or implied. Seller has provided the Purchaser and the Purchaser's Representatives with full and complete access to all records and other documents and data relating to the Acquired Companies. 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND ACACIA The Purchaser and Acacia represents and warrants, to and for the benefit of Seller, as of the Closing Date, as follows: 13 3.1. DUE ORGANIZATION; GOOD STANDING. Each of the Purchaser and Acacia is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. 3.2. AUTHORITY; BINDING NATURE OF AGREEMENTS. Each of the Purchaser and Acacia has the requisite corporate power and authority to enter into and perform its obligations under the Transactional Agreements to which it is a party. Each of the Purchaser and Acacia and their respective board of directors have taken all necessary corporate action to duly authorize the execution, delivery and performance of the Transactional Agreements to which the Acacia or Purchaser is a party. This Agreement, and upon the execution and delivery of the additional Transactional Agreements at the Closing, the Transactional Agreements, constitute legal, valid and binding obligations of the Purchaser and Acacia, as applicable, (with respect to the Transactional Agreements to which the Purchaser or Acacia is a party), enforceable against the Purchaser and Acacia, as applicable, in accordance with their terms, subject to (i) laws of general application relating to bankruptcy, insolvency, reorganization, moratorium and the relief of debtors, and (ii) rules of law governing specific performance, injunctive relief or other equitable remedies. 3.3. NO DEFAULT, VIOLATION OR CONSENT. The execution, delivery and performance by the Purchaser and Acacia, as applicable, of the Transactional Agreements to which it is a party do not and will not: (a) violate the Purchaser's or Acacia's charter or by-laws; (b) breach or result in a default (or an event which, with the giving of notice or the passage of time, or both, would constitute a default) under, require any Consent under, result in the creation of any Encumbrance on any assets of the Purchaser or Acacia under or give to others any rights of termination, acceleration, suspension, revocation, cancellation or amendment of any material agreement to which the Purchaser or Acacia is a party or by which the Purchaser or Acacia or any of their assets is bound; (c) breach or otherwise violate any Order or Legal Requirement of any court or other Governmental Body; (d) require any Consent, authorization (including any Governmental Authorization), approval from Shareholders or otherwise, except the Consent of the Securities and Exchange Commission with respect to the prospectus and registration statement to be used under the Registration Rights Agreement; and 14 (e) except in the case of clauses (b) through (d) above, for such matters as would not, individually or in the aggregate, be likely to have a material adverse effect on Purchaser's or Acacia's ability to perform its obligations under the Transactional Agreements. 3.4. NO PROCEEDINGS. Other than as set forth in the SEC Reports, there is no action, suit or proceedings of any nature pending or the Acacia's Knowledge threatened against the Purchaser or Acacia, it properties or business which have had or would reasonably likely to have a Material Adverse Effect on the Purchaser or Acacia or which in any manner would challenge or seek to prevent, enjoin, hinder or delay any of the transactions contemplated hereby. 3.5. SEC FILINGS; PURCHASER FINANCIAL STATEMENTS. (a) Acacia has filed all forms, reports, registration statements and documents required to be filed by Acacia with the SEC since January 1, 2004 and has made available to the Seller such forms, reports, and documents in the form filed with the SEC since such date. All such required forms, reports and documents (including those that the Purchaser may file subsequent to the date hereof until the Closing) are referred to herein as the "SEC Reports;" provided, that any SEC Report shall be deemed to include all amendments to such report through the date hereof. As of their respective filing dates (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing), the SEC Reports (i) complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such SEC Reports and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except to the extent corrected by subsequently filed documents with the SEC. (b) Each of the consolidated financial statements of Acacia (including, in each case, the notes thereto), included in the SEC Reports (the "Purchaser Financial Statements"), including each SEC Report filed after the date hereof until the Closing, (i) complied as to form in all material respects with the applicable rules and regulations of the SEC with respect thereto; (ii) was prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated (other than the provision of notes to the financial statements or in the case of unaudited interim financial statements as permitted by the SEC on Form 10-Q of the Exchange Act); and (iii) fairly presented the consolidated financial position of the Acacia and its subsidiaries at the respective dates thereof and the consolidated results of Acacia's operations and cash flows for the periods indicated (subject, in the case of unaudited financial statements, to audit adjustments). There has been no change in Acacia's accounting policies during the periods covered by the Purchaser Financial Statements except as described in the notes thereto. 3.6. NO MATERIAL ADVERSE EFFECT. Since December 31, 2004, there has not been any Material Adverse Effect with respect to the Purchaser or Acacia. 15 3.7. BROKERS. Neither the Purchaser nor Acacia has agreed or become obligated to pay, and has not taken any action that might result in any Person claiming to be entitled to receive, any brokerage commission, finder's fee or similar commission or fee in connection with any of the Transactions. 3.8. PURCHASE SHARES. (a) The Purchase Shares to be issued at the Closing will, when issued and delivered in accordance with this Agreement, be: (i) duly authorized, validly issued, fully paid and non-assessable, (ii) in compliance with applicable securities laws, (iii) entitled to all of the benefits and rights stated in Acacia's articles of incorporation and other charter documents, (iii) free and clear of any Encumbrance or any other limitation or restriction, including any irrevocable proxies, (iv) issued and delivered without any violation of any right of any Person under any applicable Legal Requirements, any obligation of the Purchaser or Acacia or of the Purchaser's or Acacia's certificate of incorporation or by-laws or other organizational documents or the terms of any agreement to which the Purchaser or Acacia is a party or by which the Purchaser or Acacia is bound; provided, however, that the Purchase Shares to be issued hereunder will be subject to restrictions on transfer under applicable federal and state securities laws. (b) With respect to the Purchase Shares, (i) there are no outstanding subscriptions, options, warrants, rights, or other agreements granting to any Person, firm or corporation, any interest in or right to acquire from the Acacia, at any time, or upon the happening of any stated event, an interest in such Purchase Shares and (ii) such Purchase Shares are restricted securities and may only be sold, under current law, either by (A) the registration of the Purchase Shares under the Securities Act and applicable state securities acts, (B) compliance with Rule 144 of the Securities Act or (C) the availability of an exemption from the registration requirements of the Securities Act and applicable state securities acts. The Purchaser will use its best efforts to maintain current information by complying with its reporting requirements under the Exchange Act, as amended. 3.9. NO REPRESENTATIONS. Purchaser and Acacia acknowledge that Seller is not making any representations or warranties concerning (i) infringement by any third party of any claims of the Intellectual Property Rights, (ii) the validity or enforceability of any of the Intellectual Property Rights or (iii) the revenues that may be realized by Purchaser from licensing or enforcing the Intellectual Property Rights. 4. CLOSING DELIVERABLES 4.1. AGREEMENTS AND DOCUMENTS OF SELLER. At or prior to the Closing, the Purchaser shall have received the following agreements and documents, each of which shall be in full force and effect: (a) all certificates of membership interest, if any, representing the LLC Interests, together with a membership interest assignment agreement substantially in the form attached hereto as Exhibit B (the "Membership Assignment"); 16 (b) noncompetition agreements in the form of Exhibit C (the "Noncompetition Agreement"), executed by Seller and Brown; (c) a consulting agreement in the form of Exhibit D (the "Consultant Agreement"), executed by Cascade Ventures, Inc.; (d) a registration rights agreement in the form of Exhibit E (the "Registration Rights Agreement"), executed by Seller, Brown and the Seller's other members; (e) an assignment and assumption agreement in the form of Exhibit F (the "Assumption Agreement"), executed by Seller; (f) an Investment Representation Letter in the form of Exhibit G, executed by each of the Seller's members; (g) written resignations of all managers and officers of each of the Acquired Companies, effective as of the Effective Time; (h) a certificate executed by the managers of Seller, certifying as to the true, correct, complete and current (i) Organizational Documents of Seller, (ii) resolutions of the managers of Seller approving the Transactional Agreements and performance of the Transactions, (iii) resolutions of the members of Seller approving the Transactional Agreements and performance of the Transactions (or a certification that such approval is not required) and (iv) incumbency of the managers or officers of Seller executing any of the Transactional Agreements or any related certificates; (i) a certificate executed by an authorized representative of each of the Acquired Companies, certifying as to the true, correct, complete and current (i) Organizational Documents of each of the Acquired Companies, (ii) resolutions of the members of each of the Acquired Companies approving the Transactional Agreements and performance of the Transactions and (iii) incumbency of the managers or officers of the Acquired Companies executing any of the Transactional Agreements or any related certificates; and (j) each Consent, and a copy of each notice, set forth on Part 2.8(c) of the Disclosure Schedule. 4.2. AGREEMENTS AND DOCUMENTS OF THE PURCHASER AND ACACIA. At or prior to the Closing, Seller shall have received the following payments and agreements and documents, each of which shall be in full force and effect. (a) the Cash Consideration; 17 (b) share certificates representing the Purchase Shares issued as set forth in Section 1.2(a)(ii); (c) the Noncompetition Agreement for each of Seller and Brown, executed by the Purchaser and Acacia; (d) the Assumption Agreement, executed by the Purchaser; (e) the Consulting Agreement, executed by the Purchaser; (f) the Registration Rights Agreement, executed by the Purchaser and Acacia; and (g) a Certificate executed by the Secretary of each of the Purchaser and Acacia, certifying as to the true, correct, complete and current (i) certificate of incorporation and bylaws of the Purchaser and Acacia, respectively, (ii) resolutions of the board of directors of each of the Purchaser and Acacia approving the Transactional Agreements and performance of the Transactions, as applicable, and (iii) incumbency of the officers of each of the Purchaser and Acacia executing any of the Transactional Agreements or any related certificates, as applicable. 5. POST-CLOSING COVENANTS OF THE PARTIES. 5.1. FILINGS AND CONSENTS. Purchaser and Seller shall use best efforts that: (a) each other filing or notice required to be made or given (pursuant to any applicable Legal Requirement, Order or Contract, or otherwise) by Purchaser or Seller in connection with the execution and delivery of any of the Transactional Agreements or in connection with the consummation or performance of any of the Transactions (including each of the filings and notices identified in Part 2.8(c) of the Disclosure Schedule), to the extent not made or given prior to the Closing, is made or given as soon as possible after the Closing; (b) each Consent required to be obtained (pursuant to any applicable Legal Requirement, Order or Contract, or otherwise) by Seller in connection with the execution and delivery of any of the Transactional Agreements or in connection with the consummation or performance of any of the Transactions (including each of the Consents identified in Part 2.8(c) of the Disclosure Schedule), to the extent not obtained prior to the Closing, is obtained as soon as possible after the Closing; and 18 (c) Seller shall cooperate with the Purchaser and with the Purchaser's Representatives, and prepare and make available such documents and take such other actions as the Purchaser may reasonably request, in connection with any filing, notice or Consent that the Purchaser is legally or contractually required to make, give or obtain in connection with the execution and delivery of any of the Transactional Agreements or in connection with the consummation or performance of any of the Transactions, including, without limitation, the preparation of audited financial statements for each of the Acquired Companies and/or the Purchaser. The Purchaser shall be responsible for all of the expenses associated with the preparation of any such filing, notice or Consent and the preparation of audited financial statements, including the costs and expenses of the Seller, the Seller's employees and the Seller's agents (including, but not limited to, the reasonable fees and expenses of the Seller's outside legal counsel but excluding legal fees and expenses set forth in Section 7.2(b)). 5.2. TAX ALLOCATION5. Purchaser and Seller agree that the Purchaser's purchase of the LLC Interests from Seller will be treated as an asset purchase for federal income tax purposes. 6. INDEMNIFICATION 6.1. SURVIVAL OF SELLER REPRESENTATIONS. (a) The representations, warranties, obligations and covenants of the Seller shall survive for a period of one (1) year following the Closing Date and all indemnification obligations of the Seller set forth in this Agreement shall expire on the one (1) year anniversary of the date hereof (the "Expiration Date"); PROVIDED, HOWEVER, that if, at any time prior to the Expiration Date, any Seller Indemnitee acting in good faith delivers to Seller a written notice alleging the existence of an inaccuracy of a representation or warranty or the Breach of a covenant made by Seller and asserting a claim for recovery under this Section 6.1 based upon such inaccuracy or Breach, then the claim asserted in such notice shall survive the Expiration Date until such time as the claim is fully and finally resolved. (b) The representations, warranties, covenants and obligations of the Seller and the rights and remedies that may be exercised by Seller Indemnitees, shall not be limited or otherwise affected by or as a result of any information furnished (except as set forth in the Disclosure Schedule) to, or any investigation made by, any of Seller Indemnitees or any of their Representatives, except to the extent such information is actually Known by Acacia, the Purchaser or any of their respective affiliates. (c) For purposes of this Agreement, each statement or other item of information set forth in the Disclosure Schedule shall be deemed to be part of the related representation and warranty made by Seller in this Agreement. 6.2. INDEMNIFICATION BY SELLER. 19 (a) Seller shall hold harmless and indemnify each of the Seller Indemnitees from and against, and shall pay, compensate and reimburse each of the Seller Indemnitees for, any Damages (including reasonable costs and expenses incurred in the investigation, defense or settlement of any claims against a Seller Indemnitee) which are suffered or incurred by any of the Seller Indemnitees or to which any of the Seller Indemnitees may otherwise become subject (regardless of whether or not such Damages relate to any third-party claim) and which arise from or as a result of: (i) any Breach of any representation or warranty made by Seller in this Agreement (without giving effect to any materiality or Material Adverse Effect qualifiers contained in such representation or warranty); or (ii) any Breach of any covenant or obligation of Seller contained in any of the Transactional Agreements; (b) Subject to Section 6.7, in the event any Seller Indemnitee believes that it shall have become entitled to indemnification pursuant to this Section 6.2, such Seller Indemnitee (subject to Section 6.4) shall notify Seller by registered mail at the address provided in Section 7.3; PROVIDED, HOWEVER, that the Seller Indemnitee's failure to so notify Seller shall not constitute a Breach of this Agreement or any of the other Transactional Agreements; PROVIDED, FURTHER, that the Seller shall not indemnify the Seller Indemnitee for (i) any additional expenses, costs or Damages resulting from the Seller Indemnitee's untimely notice or failure to provide notice pursuant to this Section 6.2 or (ii) any Damages whatsoever to the extent that the Seller Indemnitee's untimely notice or failure to provide notice pursuant to this Section 6.2 prejudices the Seller. 6.3. THRESHOLD; CEILING; LIMITS. (a) Seller shall not be required to make any indemnification payment pursuant to Section 6.2 for any Breach of any of its representations, warranties, covenants and obligations until such time as the total amount of all Damages (including the Damages arising from such Breach and all other Damages arising from any other Breaches of any representations or warranties or covenants) that have been directly or indirectly suffered or incurred by any one or more of the Seller Indemnitees, or to which any one or more of the Seller Indemnitees has or have otherwise become subject, exceeds $500,000 in the aggregate (the "Basket"); PROVIDED that any individual item of Damages or claim arising from or in connection with any breach of the representations, warranties, obligations or covenants of the Seller of less than $5,000 for which indemnification is sought under Section 6.2 shall not be aggregated for purpose of and shall not be applied towards the Basket. At such time as the total amount of such Damages exceeds the Basket in the aggregate, the Seller Indemnitees shall be entitled to be indemnified against such Damages above the Basket. 20 (b) Notwithstanding anything to the contrary contained in this Agreement, in no event shall Seller have any liability for indemnification pursuant to Section 6.2 OR OTHERWISE in an aggregate amount in excess of $2,000,000 (the "Cap"). 6.4. EXERCISE OF REMEDIES BY SELLER INDEMNITEES OTHER THAN PURCHASER. No Seller Indemnitee (other than the Purchaser or any successor thereto or assign thereof) shall be permitted to assert any indemnification claim or exercise any other remedy under this Agreement unless the Purchaser (or any successor thereto or assign thereof ) shall have consented to the assertion of such indemnification claim or the exercise of such other remedy. 6.5. SURVIVAL OF PURCHASER AND ACACIA REPRESENTATIONS. (a) The representations, warranties, obligations and covenants of Acacia and Purchaser shall survive for a period of one (1) year following the Closing Date and all indemnification obligations of Acacia and the Purchaser under this Agreement shall expire on the Expiration Date; PROVIDED, HOWEVER, that if, at any time prior to the Expiration Date, any Purchaser Indemnitee acting in good faith delivers to Purchaser or Acacia a written notice alleging the existence of an inaccuracy of a representation or warranty or the Breach of a covenant made by Purchaser or Acacia and asserting a claim for recovery under this Section 6.5 based upon such inaccuracy or Breach, then the claim asserted in such notice shall survive the Expiration Date until such time as the claim is fully and finally resolved. 6.6. INDEMNIFICATION BY ACACIA. (a) Acacia shall hold harmless and indemnify each of the Purchaser Indemnitees from and against, and shall pay, compensate and reimburse each of the Purchaser Indemnitees for, any Damages (including reasonable costs and expenses incurred in the investigation, defense or settlement of any claims against a Purchaser Indemnitee) which are suffered or incurred by any of the Purchaser Indemnitees or to which any of the Purchaser Indemnitees may otherwise become subject (regardless of whether or not such Damages relate to any third-party claim) and which arise from or as a result of: (i) any Breach of any representation or warranty made by Purchaser or Acacia in this Agreement; (ii) any Breach of any covenant or obligation of Purchaser or Acacia contained in this Agreements; (iii) any Proceeding involving one or more shareholders of Acacia arising from the Transactions or disclosures made by Acacia or required to be made by Acacia in connection with the Transactions, except for Proceedings relating to fraud or willful misconduct of such Purchaser Indemnitee in connection with the Transactions; or (iv) any Proceeding disclosed on Part 2.16 of the Disclosure Schedule, except for Proceedings relating to fraud or willful misconduct of such Purchaser Indemnitee or a Breach of a representation or warranty made by the Seller in this Agreement; 21 (v) any Proceeding relating to the actions or inactions of Acacia, the Purchaser or any of the Acquired Companies after the Closing Date; (vi) any Proceeding in which a Purchaser Indemnitee is named in their individual capacity as a Representative of the Seller or the Acquired Companies as a party to such Proceeding and such Proceeding relates to the actions or inactions of the Acquired Companies prior to the Closing Date, except to the extent of any Damages that are finally determined by a court of competent jurisdiction to have resulted from fraud or willful misconduct of such Purchaser Indemnitee; (vii) any Proceeding relating to the Cooper Matter described in Part 2.5(g) of the Disclosure Schedule arising directly or indirectly from the Transactions, the Transactional Agreements or the Letter of Intent as of December 15, 2004, by and among Acacia and Seller. (viii) the investigation, defense or settlement of any claims related to the matter described in Item 11 of Part 2.16 of the Disclosure Schedule. (b) In the event Purchaser Indemnitee believes that it shall have become entitled to indemnification pursuant to this Section 6.6, such Purchaser Indemnitee shall notify Acacia by registered mail at the address provided in Section 7.3; PROVIDED, HOWEVER, that the Purchaser Indemnitee's failure to so notify Acacia shall not constitute a Breach of this Agreement or any of the other Transactional Agreements; PROVIDED, FURTHER, that Acacia shall not indemnify the Purchaser Indemnitee (i) for any additional expenses, costs or Damages resulting from the Purchaser Indemnitee's untimely notice or failure to provide notice pursuant to this Section 6.6 or (ii) any Damages whatsoever to the extent that the Seller's untimely notice or failure to provide notice pursuant to this Section 6.6 prejudices Acacia. 6.7. NOTICE AND DEFENSE OF THIRD PARTY CLAIMS. The obligations of a party from whom indemnification is sought (the "Indemnitor") to indemnify the party seeking indemnification (the "Indemnitee") under this Article 6 with respect to Damages resulting from the assertion of liability by a third party (a "Third Party Claim"), will be subject to the following terms and conditions: (a) Any party against whom any Third Party Claim is asserted shall notify the Indemnitor by registered mail at the address provided in Section 7.3 of any such Third Party Claim promptly after learning of such Third Party Claim, and the Indemnitor may at its option undertake the defense thereof by representatives of its own choosing, who shall be reasonably satisfactory to the Indemnitee, PROVIDED, HOWEVER, that the Indemnitee's failure to so notify Indemnitor shall not constitute a Breach of this Agreement or any of the other Transactional Agreements; PROVIDED, FURTHER, that the Indemnitor shall not indemnify the Indemnitee (i) for any additional expenses, costs or Damages resulting from the Indemnitee's untimely notice or failure to provide notice pursuant to this Section 6.7 or (ii) any Damages whatsoever to the extent that the Indemnitee's untimely notice or failure to provide notice pursuant to this Section 6.7 materially prejudices the Indemnitor. If an Indemnitor, within thirty (30) days after notice of any such Third Party Claim, or such shorter period as is reasonably required, fails to assume the defense of such Third Party Claim, or does not continue to defend such Third Party Claim in good faith, the Indemnitee against whom such claim has been made shall (upon further notice to the Indemnitor) have the right to undertake jointly with the 22 Indemnitor the defense, compromise or settlement of such Third Party Claim on behalf of and for the account and risk, and at the expense, of the Indemnitor, by representatives selected by the Indemnitee who shall be reasonably satisfactory to the Indemnitor. If an Indemnitor elects to assume the joint defense of such Third Party Claim, the Indemnitee shall have the right to employ (at its expense) its own counsel and to participate in such defense. If an Indemnitee reasonably believes that the handling of the defense by the Indemnitor of the Third Party Claim itself would result in a material adverse effect on any Indemnitee or its Affiliates other than as a result of monetary damages for which it would be entitled to indemnification under this Article 6, then the Indemnitee may, at its option and expense and through counsel of its choice, jointly with the Indemnitor assume joint control of the defense of such Third Party Claim, provided that nothing in this sentence shall be deemed to relieve the Indemnitor of any liability it may have under this Article 6 other than liability for the expenses of Indemnitee's counsel. (b) Notwithstanding anything in this Section 6.7 to the contrary, the Indemnitor shall not enter into any settlement or compromise of any action, suit or proceeding or consent to the entry of any judgment (i) which does not include as an unconditional term thereof the delivery by the claimant or plaintiff to the Indemnitee of a written release from all liability in respect of such action, suit or proceeding or (ii) for other than monetary damages to be borne in full by the Indemnitor, without the prior written consent of the Indemnitee, which consent shall not be unreasonably withheld. Whether or not the Indemnitor shall have assumed the defense of a Third Party Claim, the Indemnitee shall not admit any liability with respect to, or settle, compromise or discharge, such Third Party Claim without the Indemnitor's prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed if and to the extent the Indemnitor has not assumed or failed to timely assume the defense of a Third Party Claim. (c) The parties hereto shall use commercially reasonable efforts to minimize Damages from Third Party Claims and shall act in good faith in responding to, defending against, settling or otherwise dealing with such claims, including cooperating in any defense and giving each other reasonable access to information relating thereto. 6.8. LOSSES NET OF INSURANCE, RECOVERIES, ETC. The amount of any Damages for which indemnification is provided under this Article 6 shall be (i) reduced by (A) any portion of such Damages previously indemnified, (B) any Damages previously indemnified under Article 6 to another Indemnitee with respect to the same facts and circumstances given rise to such indemnification obligation and (C) any amounts actually recovered by the Indemnitee under insurance policies in effect and applicable to such Damages or from any third party with respect to such Damages. 23 6.9. SOLE AND EXCLUSIVE REMEDIES. This Article 6 constitutes the sole and exclusive remedy of the parties hereto for any and all Damages under or in connection with this Agreement. No party to this Agreement may avoid such limitation on liability by seeking damages for breach of contract, tort or pursuant to any other theory of liability. No claim shall be brought or maintained by any party hereto or its Affiliates, successors or permitted assigns against any other party hereto, and no recourse shall be brought or granted against any of them, by virtue of or based upon any alleged misrepresentation or inaccuracy in or breach of any of the representations, warranties or covenants of any party set forth or contained in this Agreement, any information, document or material furnished or made available to Purchaser by the Seller or any of their respective authorized representatives in certain "data rooms," management presentations or in any other form in connection with the transactions contemplated by this Agreement, except and solely as set forth in this Article 6. Notwithstanding the foregoing, this exclusive remedy for damages does not preclude a party from bringing an action for fraud or for specific performance or injunctive relief. IN NO EVENT WILL PURCHASER OR SELLER BE LIABLE FOR ANY CONSEQUENTIAL, INDIRECT, EXEMPLARY, SPECIAL, OR INCIDENTAL DAMAGES ARISING FROM OR RELATING TO THIS AGREEMENT. 7. MISCELLANEOUS 7.1. FURTHER ASSURANCES. Each party hereto shall execute and/or cause to be delivered to each other party hereto such instruments and other documents, and shall take such other actions, as such other party may reasonably request (prior to, at or after the Closing) for the purpose of carrying out or evidencing any of the Transactions. 7.2. FEES AND EXPENSES. (a) Except for those expenses specifically set forth in Section 7.2(b), Purchaser shall bear and pay all fees, costs and expenses that have been incurred or that are in the future incurred by any party hereto in connection with (i) the negotiation, preparation and review of any letter of intent, term sheet or similar document relating to any of the Transactions; (ii) the furnishing of information to the Purchaser and its Representatives in connection with its investigation and review of each of the Acquired Companies or the Intellectual Property Rights; (iii) the negotiation, preparation and review of this Agreement (including the Disclosure Schedule), the other Transactional Agreements and all certificates, opinions and other instruments and documents delivered or to be delivered in connection with the Transactions (other than the legal fees and expenses payable to counsel for Seller); (iv) the preparation and submission of any filing or notice required to be made or given in connection with any of the Transactions, and the obtaining of any Consent required to be obtained by the Purchaser in connection with any of the Transactions; (v) the consummation and performance of the Transactions; and (vi) the registration of the Purchase Shares with the SEC and maintenance of the effectiveness of Acacia's resale registration statement on which such shares shall be registered (as set forth in the Registration Rights Agreement). Notwithstanding anything contained in this Section 7.2(a) to the contrary, Purchaser shall not be obligated to bear any fees, costs and expenses incurred by the Seller in a dispute between Purchase and the Seller with respect to this Agreement, other than such fees, costs or expenses that are otherwise indemnifiable by Purchaser to Seller under the terms of this Agreement, . 24 (b) The Seller shall bear and pay all fees, costs and expenses related to the legal advice and services provided by counsel for Seller in connection with (i) the negotiation, preparation and review of any letter of intent, term sheet or similar document relating to any of the Transactions; (ii) the negotiation, preparation and review of this Agreement (including the Disclosure Schedule), the other Transactional Agreements and all certificates, opinions and other instruments and documents delivered or to be delivered in connection with the Transactions; (iii) the registration of the Purchase Shares with the SEC and maintenance of the effectiveness of the Acacia's resale registration statement on which such shares shall be registered (as set forth in the Registration Rights Agreement); and (iv) the obtaining of any Consent required to be obtained by the Seller in connection with any of the Transactions. (c) None of the Acquired Companies shall bear or pay, and Seller shall not permit any of the Acquired Companies to bear or pay, any such fees, costs or expenses. 7.3. NOTICES. Any notice or other communication required or permitted to be delivered to any party under this Agreement shall be in writing and shall be deemed properly delivered, given and received when delivered (by hand, by registered mail, by courier or express delivery service or by facsimile) to the address or facsimile telephone number set forth beneath the name of such party below (or to such other address or facsimile telephone number as such party shall have specified in a written notice given to the other parties hereto): If to Seller: Global Patent Holdings, LLC 500 Skokie Blvd., Suite 585 Northbrook, IL 60062 Telephone: (847) 509-0774 Facsimile: (847) 509-1330 25 With a copy (in the cases of notices to Seller, which copy shall not constitute notice) to: Chistopher J. DiAngelo, Esq. Dewey Ballantine LLP 1301 Avenue of the Americas New York, NY 10019-6092 Telephone: (212) 259-8000 Facsimile: (212) 259-6333 If to the Purchaser: Acacia Global Acquisition Corporation 500 Newport Drive, Suite 700 Newport Beach, CA 92660 Attention: Robert Berman, Esq. Telephone: (949) 480-8333 Facsimile: (949) 480-8390 If to Acacia: Acacia Research Corporation 500 Newport Drive, Suite 700 Newport Beach, CA 92660 Attention: Robert Berman, Esq. Telephone: (949) 480-8333 Facsimile: (949) 480-8390 With a copy (in the cases of notices to the Purchaser or Acacia, which copy shall not constitute notice) to: Steven Anapoell, Esq. Greenberg Traurig, LLP 650 Town Center Drive, Suite 1700 Costa Mesa, California 92626 Telephone: (714) 708-6504 Facsimile: (714) 708-6501 26 7.4. TIME OF THE ESSENCE. Time is of the essence of this Agreement. 7.5. HEADINGS. The headings contained in this Agreement are for convenience of reference only, shall not be deemed to be a part of this Agreement and shall not be referred to in connection with the construction or interpretation of this Agreement. 7.6. COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement. 7.7. GOVERNING LAW. This Agreement shall be construed in accordance with, and governed in all respects by, the internal laws of the State of California (without giving effect to principles of conflicts of laws). 7.8. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon Seller and its successors and assigns (if any) and the Purchaser and its successors and assigns (if any). This Agreement shall inure to the benefit of Seller; the Purchaser; the other Indemnitees; and the respective successors and assigns (if any) of the foregoing. 7.9. WAIVER. (a) No failure on the part of any Person to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of any Person in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy. (b) No Person shall be deemed to have waived any claim arising out of this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of such Person; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given. 27 7.10. AMENDMENTS. This Agreement may not be amended, modified, altered or supplemented other than by means of a written instrument duly executed and delivered on behalf of the Purchaser and Seller. 7.11. SEVERABILITY. In the event that any provision of this Agreement, or the application of any such provision to any Person or set of circumstances, shall be determined to be invalid, unlawful, void or unenforceable to any extent, the remainder of this Agreement, and the application of such provision to Persons or circumstances other than those as to which it is determined to be invalid, unlawful, void or unenforceable, shall not be impaired or otherwise affected and shall continue to be valid and enforceable to the fullest extent permitted by law. 7.12. PARTIES IN INTEREST. Except for the provisions of Article 6 hereof, none of the provisions of this Agreement is intended to provide any rights or remedies to any Person other than the parties hereto and their respective successors and assigns (if any). Without limiting the generality of the foregoing, (i) no employee of Seller shall have any rights under this Agreement or under any of the other Transactional Agreements, except as expressly provided in such agreements, (ii) no creditor of Seller or any of the Acquired Companies shall have any rights under this Agreement or any of the other Transactional Agreements, and (iii) no shareholder of Acacia shall have any rights under this Agreement or any of the other Transactional Agreements. 7.13. LIMITATION OF INDIVIDUAL LIABILITY. Notwithstanding anything herein or any other Transactional Agreements to the contrary, or any theory of recovery or principle of law, none of the officers, employees, agents, managers or members of the Seller shall be individually liable for (i) any Breach of any of the representations and warranties made by the Seller, (ii) any Damages suffered by the Purchaser or any of the Seller Indemnitees for any reason whatsoever, (iii) the Indemnification obligations of the Seller pursuant to Article 6 and (iv) any other obligation of Seller contained in any of the Transactional Agreements, except to the extent otherwise expressly provided in the Noncompetition Agreement, the Goodwill Agreement and the Consulting Agreement with respect to the parties thereto. 7.14. ENTIRE AGREEMENT. The Transactional Agreements set forth the entire understanding of the parties relating to the subject matter thereof and supersede all prior agreements and understandings among or between any of the parties relating to the subject matter thereof. 28 7.15. CONSTRUCTION. (a) For purposes of this Agreement, whenever the context requires, the singular number shall include the plural, and vice versa; the masculine gender shall include the feminine and neuter genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender shall include the masculine and feminine genders. (b) The parties hereto agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in the construction or interpretation of this Agreement. (c) As used in this Agreement, the words "include" and "including," and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words "without limitation." (d) Except as otherwise indicated, all references in this Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this Agreement and Exhibits to this Agreement. [THIS SPACE INTENTIONALLY LEFT BLANK] 29 The parties hereto have caused this Agreement to be executed and delivered as of the date first written above. "PURCHASER": ACACIA GLOBAL ACQUISITION CORPORATION, a Delaware corporation By: /S/ Robert A. Berman ------------------------------------ Name: Robert A. Berman Title: Chief Operating Officer "ACACIA": ACACIA RESEARCH CORPORATION a Delaware corporation By: /S/ Robert A. Berman ------------------------------------ Name: Robert A. Berman Title: Chief Operating Officer "SELLER": GLOBAL PATENT HOLDINGS, LLC, an Delaware limited liability company By: /S/ Anthony O. Brown ------------------------------------ Name: Anthony O. Brown Title: Manager [SIGNATURE PAGE TO MEMBERSHIP INTEREST PURCHASE AGREEMENT] 30 EXHIBIT A CERTAIN DEFINITIONS For purposes of the Agreement (including this EXHIBIT A): ACACIA. "Acacia" shall have the meaning given that term in the Preamble. ACQUIRED COMPANIES. "Acquired Companies" shall mean the Entities listed on Part 2.1(e) of the Disclosure Schedule. ACTG STOCK. "ACTG Stock" shall mean Acacia Research-Acacia Technologies Common Stock, par value $0.001 per share. AFFILIATE. "Affiliate" shall mean with respect to any Person, any other Person controlling, controlled by or under common control with such Person. As used in the immediately preceding sentence, "control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through ownership of voting securities, by contract or otherwise. AGREEMENT. "Agreement" shall mean the Membership Interest Purchase Agreement to which this Exhibit A is attached (including the Disclosure Schedule), as it may be amended from time to time. ASSUMPTION AGREEMENT. "Assumption Agreement" has the meaning given that term in Section 4.1. Binding LOI. "Binding LOI" shall mean the Letter of Intent between Seller and the Purchaser dated December 15, 2004. BREACH. There shall be deemed to be a "Breach" of a representation, warranty, covenant, obligation or other provision if there is or has been any inaccuracy in or breach of, or any failure to comply with or perform, such representation, warranty, covenant, obligation or other provision and the term "Breach" shall be deemed to refer to any such inaccuracy, breach, failure, claim or circumstance. BROWN. "Brown" shall mean Anthony O. Brown. CASH CONSIDERATION. "Cash Consideration shall have the meaning specified in Section 1.2(a)(i). CLOSING. "Closing" shall have the meaning specified in Section 1.3(a). CLOSING DATE. "Closing Date" shall have the meaning specified in Section 1.3(a) CODE. "Code" shall mean the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder. A-1 COMPANY CONTRACT. "Company Contract" shall mean any Contract, other than IP Contracts: (a) to which any of the Acquired Companies is a party; (b) by which any of the Acquired Companies or any of their respective assets is or may become bound or under which any of the Acquired Companies has, or may become subject to, any obligation; or (c) under which any of the Acquired Companies has or may acquire any right or interest. CONSENT. "Consent" shall mean any approval, consent, ratification, permission, waiver or authorization (including any Governmental Authorization). CONSULTING AGREEMENT. "Consulting Agreement" has the meaning given to that term in Section 4.1. CONTRACT. "Contract" shall mean any written, oral, implied or other agreement, contract, understanding, arrangement, instrument, note, guaranty, indemnity, representation, warranty, deed, assignment, power of attorney, certificate, purchase order, work order, insurance policy, benefit plan, commitment, covenant, assurance or undertaking of any nature. DAMAGES. "Damages" shall mean any loss, damage, injury, claim, settlement, judgment, award, fine, penalty, Tax, charge, and expenses (including reasonable attorneys' fees). Notwithstanding anything in the foregoing to the contrary, "Damages" shall not include (i) any decline in value or lost opportunity or any loss, damage, injury, Liability, claim, settlement, judgment, award, fine, penalty, Tax, fee (including any legal fee, expert fee, accounting fee or advisory fee), charge, cost (including any cost of investigation) or expense of any nature related to either (a) infringement of the Intellectual Property Rights, (b) the validity of the Intellectual Property Rights, (c) the enforceability of the Intellectual Property Rights, or (d) changes in the valuation or calculation of potential revenue from licensing or enforcing the Intellectual Property Rights and (ii) any consequential, indirect, exemplary, special, or incidental damages. DISCLOSURE SCHEDULE. "Disclosure Schedule" shall mean the schedule (dated as of the date of the Agreement) delivered to the Purchaser on behalf of Seller, a copy of which is attached to the Agreement and incorporated in the Agreement by reference. EFFECTIVE TIME. "Effective Time" shall have the meaning specified in Section 1.3(a) EMPLOYEE BENEFIT Plan. "Employee Benefit Plan" shall have the meaning specified in Section 3(3) of ERISA. A-2 ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation, charge, mortgage, security interest, encumbrance, equity, trust, equitable interest, claim, royalty payment, preference, right of possession, lease, tenancy, license, encroachment, covenant, infringement, interference, Order, proxy, option, right of first refusal, preemptive right, community property interest, legend, defect, impediment, exception, reservation, limitation, impairment, imperfection of title, condition or restriction of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the receipt of any income derived from any asset, any restriction on the use of any asset and any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset); provided, that, "Encumbrances" shall not include (i) Encumbrances reserved against in the Financial Statements, to the extent so reserved, (ii) Encumbrances for current taxes not yet due and payable or taxes identified on Part A of the Disclosure Schedule which are being contested in good faith and for which there are adequate reserves provided by the Seller, (iii) Encumbrances arising by operation of the federal or state securities laws, including in connection with any private placements of securities, (iv) Encumbrances arising under third-party vendor license, consulting or maintenance agreements for commercially available or "off-the-shelf" software or hardware, (v) Encumbrances disclosed or arising under the Contracts listed in the Disclosure Schedule, (vi) Encumbrances arising under operations of law in the Ordinary Course of Business. ENTITY. "Entity" shall mean any corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, cooperative, foundation, society, political party, union, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization or entity. ERISA. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder. EFFECTIVE TIME. "Effective Time" shall have the meaning specified in Section 1.3(a) EXPIRATION DATE. "Expiration Date" . . . Section 6.1(a). FINANCIAL STATEMENTS. "Financial Statements" shall have the meaning specified in Section 2.4(a) of the Agreement. GAAP. "GAAP" shall mean generally accepted accounting principles consistently applied over the relevant period. GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any: (a) permit, license, certificate, franchise, concession, approval, consent, ratification, permission, clearance, confirmation, endorsement, waiver, certification, designation, rating, registration, qualification or authorization that is, has been or may in the future be issued, granted, given or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement; or (b)..right under any Contract with any Governmental Body. A-3 GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation, principality, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; (c) governmental or quasi-governmental authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, instrumentality, officer, official, representative, organization, unit, body or Entity and any court or other tribunal); (d) multi-national organization or body; or (e) individual, Entity or body exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing authority or power of any nature. INDEMNITEE. "Indemnitee" has the meaning given in Section 6.7. INDEMNITOR. "Indemnitor" has the meaning given in Section 6.7. INTELLECTUAL PROPERTY RIGHTS. "Intellectual Property Rights" shall mean, collectively, all proprietary rights or rights of use in and to all Patents listed in Parts 2.7(a)(i) and (ii) of the Disclosure Schedule, including all grants, registrations and applications relating thereto, and all non-U.S. counterparts thereof, which are (x) used in the business of the Acquired Companies and (y) the absence of which would reasonably be expected to have a Material Adverse Effect. INVESTMENT REPRESENTATION LETTER. "Investment Representation Letter" shall mean the investment representation letter attached hereto as EXHIBIT H. IP CONTRACT. "IP Contract" shall mean any material Contract: (a) between or among any of the Acquired Companies and/or the Seller and licensees of Intellectual Property Rights; (b) between or among any of the Acquired Companies and/or the Seller and inventors or other Persons who have or may reasonably be expected to claim an interest in any of the Intellectual Property Rights, whether by purchase or license agreements; or (c) between or among any of the Acquired Companies and/or the Seller and law firms engaged to represent the Seller and/or any of the Acquired Companies. KNOWLEDGE. "Knowledge" means knowledge of particular facts or circumstances attributable to a Person in accordance with the following rules: (a) with respect to the Seller and the Acquired Companies, those facts or circumstances which are actually known by an officer of the Seller; and A-4 (b) with respect to each of the Purchaser and Acacia, those facts or circumstances which are actually known by an officer of the Purchaser and Acacia, respectively. LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state, local, municipal, foreign or other law, statute, legislation, constitution, principle of common law, resolution, ordinance, code, edict, decree, proclamation, treaty, convention, rule, regulation, ruling, directive, pronouncement, requirement, specification, determination, decision, opinion or interpretation issued, enacted, adopted, passed, approved, promulgated, made, implemented or otherwise put into effect by or under the authority of any Governmental Body. LIABILITY. "Liability" shall mean any debt, obligation, duty or liability of any nature (including any unknown, undisclosed, unmatured, unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious, derivative, joint, several or secondary liability), regardless of whether such debt, obligation, duty or liability would be required to be disclosed on a balance sheet prepared in accordance with generally accepted accounting principles and regardless of whether such debt, obligation, duty or liability is immediately due and payable. LLC INTERESTS. "LLC Interests" shall have the meaning specified in Recital "C" to the Agreement. MATERIAL ADVERSE EFFECT. "Material Adverse Effect" shall mean: (a) with respect to the Seller and the Acquired Companies, any material adverse change, event, circumstance or development (or aggregation thereof) with respect to, or material adverse effect on, the business, assets, liabilities, financial condition or results of operations of the Seller and the Acquired Companies, taken as a whole, but shall not include any adverse effect due to (i) changes in conditions generally affecting the patent licensing and patent enforcement industries in which the Seller and the Acquired Companies participate, including legal decisions or regulatory changes generally affecting the patent licensing and patent enforcement industries in which the Seller and the Acquired Companies participate, (ii) changes in conditions generally affecting the United States economy as a whole, (iii) changes in the infringement, validity or enforceability of the Intellectual Property Rights, or (iv) changes in the valuation or calculation of potential revenue from licensing or enforcing the Intellectual Property Rights; and (b) with respect to the Purchaser, any material adverse change, event, circumstance or development (or aggregation thereof) with respect to, or material adverse effect on, the business, assets, liabilities, financial condition or results of operations of the Purchaser, taken as a whole, which shall include legal action taken by the SEC, a comparable state regulatory agency, state attorney general with regard to violations of any applicable securities laws or other applicable Legal Requirements which occurred prior to the date hereof, but shall not include any adverse effect due to (i) changes in conditions generally affecting the patent licensing and patent enforcement industries in which the Purchaser participates, including legal decisions or regulatory changes generally affecting the patent licensing and patent enforcement industries in which the Seller and Purchaser participates, (ii) changes in conditions generally affecting the United States economy as a whole, (iii) the infringement, validity or enforceability of the patents owned, licensed or managed by the Purchaser, or (iv) changes in the valuation or calculation of potential revenue from licensing or enforcing the patents owned, licensed or managed by the Purchaser; A-5 MEMBERSHIP ASSIGNMENT. "Membership Assignment" shall have the meaning set forth in Section 4.1. NONCOMPETITION AGREEMENT. "Noncompetition Agreement" has the meaning given to that term in Section 4.1. ORDER. "Order" shall mean any: (a) order, judgment, injunction, edict, decree, ruling, pronouncement, determination, decision, opinion, verdict, sentence, subpoena, writ or award that has been issued, made, entered, rendered or otherwise put into effect by or under the authority of any court, administrative agency or other Governmental Body or any arbitrator or arbitration panel. ORDINARY COURSE OF BUSINESS. An action taken by or on behalf of an Entity shall not be deemed to have been taken in the "Ordinary Course of Business" unless: (a) such action is customary and consistent with such Entity's past practices and is taken in the ordinary course of such Entity's normal day-to-day operations; (b) such action is not required to be authorized by such Entity's stockholders (or, in the case of a limited liability company, members), such Entity's board of directors or any committee of such Entity's board of directors (or, in the case of a limited liability company, managers) and does not require any other separate or special authorization of any nature; and (c) such action is similar in nature and magnitude to actions customarily taken, without any separate or special authorization, in the ordinary course of the normal day-to-day operations of other Entities that are engaged in businesses similar to the subject Entity's business. ORGANIZATIONAL DOCUMENTS. "Organizational Documents" means, with respect to any Person other than a natural person, the documents by which such Person was organized (such as a certificate of incorporation, articles of organization, partnership agreement or limited liability company operating agreement) or which relate to the internal governance of such Person (such as by-laws). PATENTS. "Patents" shall mean United States patents, grants, registrations and applications therefor (including, without limitation, any and all extensions, reissues, reexaminations, renewals, and continuation, divisional, and continuation-in-part applications). A-6 PATENT OFFICES. "Patent Offices" shall mean the PTO. PBGC. "PBGC" means the Pension Benefit Guaranty Corporation created by Section 4002(a) of ERISA, or any Governmental Body succeeding to the functions thereof. PERSON. "Person" shall mean any individual, Entity or Governmental Body. PLAN. "Plan" means any employee benefit plan or other plan established or maintained by any Person for the benefit of such Person's employees and to which Title IV of ERISA applies. PROCEEDING. "Proceeding" shall mean any action, suit, litigation, interference, opposition, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding and any informal proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination or investigation that is, has been or may in the future be commenced, brought, conducted or heard by or before, or that otherwise has involved or may involve, any Governmental Body or any arbitrator or arbitration panel. PTO. "PTO" shall mean the United States Patent and Trademark Office. PURCHASE PRICE. "Purchase Price" shall have the meaning specified in Section 1.2 of the Agreement. PURCHASE SHARES. "Purchase Shares" shall have the meaning specified in Section 1.2(a)(ii)of the Agreement. PURCHASER. "Purchaser" shall mean Acacia Global Acquisition Corporation, a Delaware corporation. PURCHASER FINANCIAL STATEMENTS. "Purchaser Financial Statements" shall have the meaning specified in Section 3.5 of the Agreement. PURCHASER INDEMNITEES. "Purchaser Indemnitees" shall mean the following Persons: (a) the Seller; (b) the members of the Seller; (c) the respective Representatives of the Persons referred to in clauses "(a)" and "(b)" above; and (d) the respective successors and assigns of the Persons referred to in clauses "(a)," "(b)," and "(c)" above. A-7 RECORD. "Record" shall mean information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. REGISTRATION RIGHTS AGREEMENT. "Registration Rights Agreement" has the meaning given to that term in Section 4.1. RELATED PARTY. Each of the following shall be deemed to be a "Related Party": (a) Seller, and any entity which directly or indirectly controls Seller, is controlled by Seller or is under common control with Seller; (b) each of the members of Seller; (c) each Person who is, or who has at any time been, a director, manager, member, shareholder or officer of Seller, or any of the Acquired Companies; (d) each member of the family of each of the individuals referred to in clauses "(a)," "(b)" and "(c)" above; and (e) any Entity (other than the Acquired Companies) in which any one of the individuals referred to in clauses "(a)", "(b)" "(c)" or "(d)" above holds (or in which more than one of such individuals collectively hold), beneficially or otherwise, a material voting, proprietary or equity interest. RELEASE. "Release" has the meaning given to that term in Section 4.1. REPRESENTATIVES. "Representatives" shall mean officers, directors, employees, agents, attorneys, accountants, advisors and representatives. SEC. "SEC" shall mean the U.S. Securities and Exchange Commission. SEC REPORTS. "SEC Reports" shall mean the meaning specified in Section 3.5 of the Agreement. SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933, as amended, and the regulations promulgated thereunder. SELLER. "Seller" shall mean Global Patent Holdings, LLC, an Illinois limited liability company. SELLER INDEMNITEES. "Seller Indemnitees" shall mean the following Persons: (a) the Purchaser; (b) the Purchaser's current and future Affiliates and Subsidiaries; (c) the respective Representatives of the Persons referred to in clauses "(a)" and "(b)" above; and (d) the respective successors and assigns of the Persons referred to in clauses "(a)," "(b)," and "(c)" above. SUBSIDIARY. "Subsidiary" shall mean with respect to any Person, any other Person (a) of which the initial Person directly or indirectly owns or controls more than 50% of the voting equity interests or has the power to elect or direct the election of a majority of the members of the governing body of such Person or (b) which is required to be consolidated with such Person under GAAP. A-8 TAX. "Tax" shall mean any tax (including any income tax, franchise tax, capital gains tax, estimated tax, gross receipts tax, value-added tax, surtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business tax, occupation tax, inventory tax, occupancy tax, withholding tax or payroll tax), levy, assessment, tariff, impost, imposition, toll, duty (including any customs duty), deficiency or fee, and any related charge or amount (including any fine, penalty or interest), imposed, assessed or collected by any taxing authority. TAX RETURN. "Tax Return" shall mean any return (including any information return), report, statement, declaration, estimate, schedule, notice, notification, form, election, certificate or other document or information filed with or submitted to, or required to be filed with or submitted to, any taxing authority in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation or enforcement of or compliance with any Legal Requirement relating to any Tax. THIRD PARTY. "Third Party" means a Person that is not a party to this Agreement. THIRD PARTY CLAIM. "Third Party Claim" has the meaning given that term in Section 6.7 TRANSACTIONAL AGREEMENTS. "Transactional Agreements" shall mean: (a) this Agreement; (b) the Membership Assignment; (c) the Noncompetition Agreement; (d) the Consulting Agreement; (e) the Assumption Agreement; and (f) the Registration Rights Agreement. TRANSACTIONS. "Transactions" shall mean (a) the execution and delivery of the respective Transactional Agreements, and (b) all of the transactions contemplated by the respective Transactional Agreements, including: (I) the sale of the LLC Interests by Seller to the Purchaser in accordance with the Agreement; and (II) the performance by Seller, its members and the Purchaser of their respective obligations under the Transactional Agreements and the exercise by Seller, its members and the Purchaser of their respective rights under the Transactional Agreements. A-9 EX-10.1 3 acacia_8kex10-1.txt EXHIBIT 10.1 REGISTRATION RIGHTS AGREEMENT ----------------------------- THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and entered into as of January 28, 2005, by and among ACACIA RESEARCH CORPORATION, a Delaware corporation (the "COMPANY"), ACACIA GLOBAL ACQUISITION CORPORATION, a Delaware corporation, and a wholly owned subsidiary of Company (the "Purchaser"), and GLOBAL PATENT HOLDINGS, LLC, a Delaware limited liability company (the "SELLER"). WHEREAS, the Purchaser and the Seller have entered into a Membership Interest Purchase Agreement dated as of even date herewith (the "PURCHASE AGREEMENT") pursuant to which the Purchaser is acquiring all of the outstanding membership interests of those subsidiaries of the Seller listed on SCHEDULE 1 hereto, each a limited liability company and a wholly owned subsidiary of the Seller. NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, and other good and valuable consideration the sufficiency of which is hereby acknowledged, the parties hereto further agree as follows: 1. DEFINITIONS. Each capitalized term used herein and not otherwise defined shall have the meaning given to such term in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings: "ADJUSTED EVENT DATE" has the meaning set forth in Section 2(b). "ADVICE" has the meaning set forth in Section 5(c). "COMMON STOCK" means Acacia Research-Acacia Technologies Common Stock, par value $0.001 per share, or any securities exchanged or substituted for such common stock. "EFFECTIVENESS PERIOD" has the meaning set forth in Section 2(a). "EVENT" has the meaning set forth in Section 2(b). "EVENT DATE" has the meaning set forth in Section 2(b). "FILING DATE" means, with respect to the Registration Statement required to be filed hereunder, a date that is the later of (i) within three (3) business days following the Closing; or (ii) within three (3) business days following the receipt by the Company of all information reasonably requested (the "REQUESTED INFORMATION") prior to the Closing Date by the Company for inclusion in the Registration Statement and necessary for the completion of the Registration Statement. "HOLDER" or "HOLDERS" means the Seller and the shareholders (the "Selling Shareholders") in whose name the Purchase Shares are issued at Closing pursuant to Section 1.2(a)(ii) of the Purchase Agreement. "INDEMNIFIED PARTY" has the meaning set forth in Section 7(c). "INDEMNIFYING PARTY" has the meaning set forth in Section 7(c). "LOSSES" has the meaning set forth in Section 5(a). "PROCEEDING" means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened. "REGISTRABLE SECURITIES" means any and all of the Purchase Shares issuable pursuant to the Purchase Agreement, together with any shares of Common Stock issued or issuable upon any stock split, dividend or other distribution, recapitalization or any similar event with respect to the foregoing, or any securities into which any such securities are converted, exchanged or substituted in any recapitalization or other capital reorganization of the Company. "REGISTRATION STATEMENT" means the registration statement registering the Registrable Securities pursuant to the Securities Act which are required to be filed hereunder, including (in each case) amendments and supplements to the registration statement, including pre- and post-effective amendments, all exhibits thereto , and all material incorporated by reference or deemed to be incorporated by reference in the registration statement. "RULE 415" means Rule 415 promulgated by the Securities and Exchange Commission (the "COMMISSION") pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. "RULE 424" means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. "SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the "SECURITIES ACT"). 2. REGISTRATION. (a) On or prior to the Filing Date, the Company shall prepare and file with the Commission the Registration Statement covering the resale of all of the Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement required hereunder shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which event Registration shall be on another appropriate form available for the sale of the Registrable Securities by the Holders in accordance herewith). Subject to the terms of this Agreement, the Company shall use its reasonable best efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, and to use its reasonable best efforts to keep the Registration Statement continuously effective under the Securities Act from the date on which the Commission declares it effective until the date on which all Registrable Securities covered by the Registration Statement have been sold or may be sold without volume restrictions pursuant to Rule 144(k) as determined by counsel to the Company pursuant to a written opinion letter to such effect, addressed and reasonably acceptable to the Company's transfer agent and the Holders subject to such restrictions (the "EFFECTIVENESS PERIOD"). 2 (b) If (i) a Registration Statement is not filed on or prior to the Filing Date, or (ii) the Commission fails to declare such Registration Statement effective within (A) thirty (30) days following the Closing; or (B) one hundred (100) days following the Closing under circumstances where the Commission has notified the Company that the Registration Statement is under "review" by the Commission with respect to compliance with the Securities Act (any such failure or breach being referred to as an "EVENT," and for the purposes of clause (A) or clause (B), the date on which such Event occurs being referred to as an "EVENT DATE"), then commencing on such Event Date until each Event is cured by filing (with respect to (i) above) or by a declaration of effectiveness of such Registration Statement or the expiration of the Effectiveness Period (with respect to (ii) above), as applicable, the Company shall pay to Seller the sum of Three Thousand Dollars ($3,000.00) per day, in cash, as liquidated damages (the "LIQUIDATED DAMAGES") and not as a penalty, for up to sixty (60) days from the date of such Event (the "LIQUIDATED DAMAGES PERIOD"), and Seller shall distribute such sum among the Selling Shareholders as the Seller and the Selling Shareholders may separately agree, it being understood by all parties hereto that, with respect to the distribution among the Selling Shareholders, the Company's sole obligation under this Section (b) is to pay the Liquidated Damages amount directly to Seller, and not to distribution among the Selling Shareholders. Payment for any such Liquidated Damages shall be made no later than the first Trading Day of each calendar month immediately following any date such Liquidated Damages are incurred. If the Company fails to pay such Liquidated Damages to Seller pursuant to this Section (b) in full within ten (10) days after the date on which such payment is due, the Company will pay interest thereon at the rate of ten percent (10%) per annum to Seller, accruing daily from the dates on which such Liquidated Damages are due until such amounts, including all interest thereon, are paid in full; PROVIDED, HOWEVER, that if the Company does not receive from Seller and each of the Holders the Requested Information (the "REQUEST DATE"), then the applicable Event Date shall be extended by the number of days beginning on the Request Date and ending on the day the Company has received all such Requested Information (the "ADJUSTED EVENT DATE"). Not withstanding anything contained in this Agreement to the contrary, if the Registration Statement has not been filed (with respect to (i) above) or declared effective (with respect to (ii) above) by the last day of the Liquidated Damages Period, then the Company shall continue to pay the Liquidated Damages to Seller as set forth above until the Event is cured by such filing or effectiveness, as applicable, in addition to any other rights to which the Seller and Holders may be entitled under either this Agreement or applicable law. (c) PLAN OF DISTRIBUTION. Each Selling Shareholder shall be named as a selling security holder in the Registration Statement and related Prospectus in such a manner as to permit such Selling Shareholder to deliver such Prospectus to purchasers of Registrable Securities in accordance with applicable law under ordinary circumstances. The "PLAN OF DISTRIBUTION" section of the Registration Statement and Prospectus shall be substantially in the form of EXHIBIT "A" hereto (to the extent such inclusion is permitted under applicable Commission regulations and is consistent with comments received from the Commission during any Commission review of the Registration Statement). 3 (d) BLACKOUT PERIODS. With respect to any registration statement filed or to be filed pursuant to this Section 2, if the Company shall determine, in its good faith judgment, that to maintain the effectiveness of such registration statement (or, if no registration statement has yet been filed or become effective, to file such a registration statement or cause it to become effective) would (i) require the public disclosure of material non-public information concerning any transaction or negotiations involving the Company or any of its affiliates that would materially interfere with such transaction or negotiations or (ii) otherwise require premature disclosure of information, in either case that would be materially disadvantageous (a "DISADVANTAGEOUS CONDITION"), the Company may, for the shortest period possible, notify the Selling Shareholders and the Seller that such registration statement is unavailable for use; provided, that the Company shall not exercise such rights for a period of more than 45 days from the date of delivery of such notice to the Seller and the Selling Shareholders, and in any event when aggregated with any other Disadvantageous Suspension or Regulatory Suspension not more than an aggregate of 90 days in any 365-day period. If the Company exercises such right, it will provide written notice thereof to the Seller and the Selling Shareholders and the Seller, and upon the receipt of any such notice, the Selling Shareholders shall forthwith discontinue use of the prospectus contained in such registration statement as provided in this Section 2(d) ("DISADVANTAGEOUS SUSPENSION"), subject to the payment of Liquidated Damages pursuant to Section (b); provided, that, if at the time of the receipt of such notice any of the Seller and Selling Shareholder shall have sold Registrable Securities (or have signed a firm commitment underwriting agreement with respect to the purchase of such securities) and the Disadvantageous Condition is not of a nature that would require a post-effective amendment to the Registration Statement, then the Company shall use its reasonable best efforts to take such action as will permit such securities to be timely delivered. If any Disadvantageous Condition shall cease to exist, the Company shall promptly notify the Selling Shareholders and the Seller to such effect. Liquidated Damages shall accrue commencing on and including the date of delivery to the Seller and the Selling Shareholders of the notice of a Disadvantageous Suspension and shall continue until the date of delivery of the notice of cessation referenced in the preceding sentence, and payment for any such Liquidated Damages shall be made no later than the first Trading Day of each calendar month immediately following any date such Liquidated Damages are accrued. 3. REGISTRATION PROCEDURES. In connection with the Company's registration obligations hereunder, the Company shall: (a) Not less than five (5) Trading Days prior to the filing of the Registration Statement or any related Prospectus or any amendment or supplement thereto, the Company shall furnish to Seller copies of all such documents proposed to be filed (including documents incorporated or deemed incorporated by reference to the extent requested by Seller). The Company shall not file the Registration Statement or any such Prospectus or any amendments or supplements thereto to which Seller shall reasonably object in good faith, provided that the Company is notified of such objection in writing no later than three (3) Trading Days after the Seller has been so furnished copies of such documents; provided further, that if such objection by Seller is based solely on information provided to the Company by any Holder or Holders, then any applicable Event Date shall be extended by the number of days which lapse between the date the Company is notified by Seller of such objection and the date which the revised or corrected information is delivered to the Company. 4 (b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to the Registration Statement and the Prospectus used in connection therewith as may be necessary to keep the Registration Statement continuously effective as to the applicable Registrable Securities during the Effectiveness Period; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to the Registration Statement or any amendment thereto and, as promptly as reasonably possible, upon request, provide the Seller true and complete copies of all correspondence from and to the Commission relating to the Registration Statement; and (iv) comply with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all securities covered by the Registration Statement during the applicable period in accordance with the intended methods of disposition by the Holders thereof set forth in the Registration Statement, as so amended, or in such Prospectus, as so supplemented. (c) Notify Seller as promptly as reasonably possible and confirm such notice in writing promptly following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to the Registration Statement is proposed to be filed; (B) when the Commission notifies the Company whether there will be a "review" of the Registration Statement and whenever the Commission comments in writing on the Registration Statement (the Company shall upon request provide true and complete copies thereof and all written responses thereto to Seller); and (C) with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission or any other Federal or state governmental authority during the Effectiveness Period for amendments or supplements to the Registration Statement or Prospectus; (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and (v) of the occurrence of any event or passage of time that makes (A) the financial statements included in the Registration Statement ineligible for inclusion therein or (B) any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to the Registration Statement, Prospectus or other documents so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and, in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 5 (d) Use reasonable best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of the Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any Registrable Security for sale in any jurisdiction, at the earliest practicable moment, in each case at the earliest practicable moment. The Company agrees to use its reasonable best efforts to amend the Registration Statement within fifteen (15) days after such cessation of effectiveness in a manner reasonably expected to obtain the withdrawal of any order suspending the effectiveness thereof. (e) Furnish to each Seller, without charge, at least one conformed copy of the Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by Seller, and all exhibits to the extent requested by Seller (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission. (f) Promptly deliver to each Holder, without charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such persons may reasonably request. Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the Company's giving of any notice pursuant to Section 3(c). (g) Prior to any resale of Registrable Securities by a Holder, (i) to register or qualify such Registrable Securities for the resale by the Holder under the securities laws of the United States, applicable states thereof or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the Registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, (ii) to cause such Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company, (iii) to keep such Registration Statement or qualification (or exemption therefrom) effective during the Effectiveness Period and (iv) to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction. (h) If requested by the Holders, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to the Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holders may request. 6 (i) Upon the occurrence of any event contemplated by Section 3(c)(v), as promptly as reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies Seller ("SUSPENSION NOTICE") of the occurrence of any event described in clauses (ii) through (v) of Section 3(c) above and to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made, then Seller shall inform Holders to suspend use of such Prospectus. The Company will use its best efforts to ensure that the use of the Registration Statement and Prospectus may be resumed by each of the Holders as promptly as is practicable and that the Regulatory Suspension (as hereinafter defined) remains in effect for the shortest period possible; PROVIDED, that the period of such Regulatory Suspension shall not exceed a period of 45 days from the date of delivery of notice thereof by the Company to the Selling Shareholders, and in any event when aggregated with any other Regulatory Suspension or Disadvantageous Suspension shall not exceed more than an aggregate of 90 days in any 365-day period. Subject to giving effect to the preceding sentence and after giving written notice thereof to the Selling Shareholders and the Seller, the Company shall be entitled to exercise its right under this Section 3(i) to suspend the availability of a Registration Statement and Prospectus ("REGULATORY SUSPENSION"), subject to the payment of Liquidated Damages pursuant to Section 2(b). Liquidated Damages shall accrue commencing on and including the date of delivery of such notice and shall continue until the date of termination of such Regulatory Suspension, and payment for any such Liquidated Damages shall be made no later than the first Trading Day of each calendar month immediately following any date such Liquidated Damages are accrued. (j) Comply with all applicable rules and regulations of the Commission. (k) Cause all Registrable Securities covered by such Registration Statement, or supplement or amendment thereto, to be listed on each securities exchange or markets on which the Common Stock, or securities exchanged or substituted for such Common Stock, are then listed or quoted, and cooperate with each seller (and any underwriter) participating in the disposition of such Registrable Securities, in connection with any filings required to be made with any such exchange or markets. (l) The Company may require each Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by such Holder and, if required by the Commission, the person thereof that has voting and dispositive control over the Purchase Shares. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration of the Registrable Securities solely because any Holder fails to furnish such information within five (5) Trading Days of the Company's request, any Liquidated Damages that are accruing at such time shall be tolled and any Event that may otherwise occur solely because of such delay shall be suspended, until such information is delivered to the Company. 7 (m) Use its commercially reasonable efforts to take all actions requested by a Holder or the managing underwriter engaged by the Holder in order to facilitate the disposition of such Registrable Securities. 4. REGISTRATION EXPENSES. All fees and expenses incident to the performance of or compliance with this Agreement shall be borne by the Company whether or not a Registration Statement is declared effective or any Registrable Securities are sold pursuant to the Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with any securities exchange or market on which the Common Stock is then listed for trading, and (B) relating to compliance and qualification with applicable state securities or Blue Sky laws), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, and (v) fees and expenses of all other persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. Notwithstanding the preceding sentence, other than as set forth in Section 5(c) hereof, the Holders shall be solely responsible for all fees and expenses of any counsel retained by any of them, and will bear all underwriting discounts and all selling commissions from the sale of the Registrable Securities by the Holders. 5. INDEMNIFICATION (a) INDEMNIFICATION BY THE COMPANY. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless Seller, each Holder, the officers, directors, agents and employees of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys' fees) and expenses (collectively, "LOSSES"), (i) arising out of or based upon any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or in any amendment or supplement thereto, or (ii) arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, or (iii) any violation by the Company of the Securities Act, the Exchange Act or any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law, except to the extent, but only to the extent, that such Losses are caused by (Y) such untrue statements or omissions or alleged untrue statements or omissions based upon information regarding any Holder furnished in writing to the Company by such Holder expressly for use therein, or (Z) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the date the Holder has received notice from the Company in writing that such Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 7(c). The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement. 8 (b) INDEMNIFICATION BY HOLDERS. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based upon (x) such Holder's failure to deliver the Prospectus provided by the Company in accordance with this Agreement, or (y) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information regarding any Holder so furnished in writing by such Holder to the Company expressly for inclusion in the Registration Statement or such Prospectus or (ii) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the date the Holder has received notice from, or has been delivered notice to Holder's address last given to, the Company in writing that such Prospectus is outdated or defective and prior to the receipt by or such delivery to such Holder of the Advice contemplated in Section 7(c). In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. (c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an "INDEMNIFIED PARTY"), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel mutually satisfactory to the parties and the payment of all fees and expenses incurred in connection with defense thereof, provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have prejudiced the Indemnifying Party. An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel 9 reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding(including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case of subclause (3), if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of one separate counsel for all Indemnified Parties shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding. Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party; provided, that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is not entitled to indemnification hereunder, determined based upon the relative faults of the parties (determined as set forth in Section 5(d) hereof). (d) CONTRIBUTION. If the indemnification provided for in this Section 5 is unavailable (by reason of, without limitation, public policy or otherwise) to an Indemnified Party under Section 6(a) or 6(b) in respect of any Losses or is insufficient to hold such Indemnified Party harmless, then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall severally but not jointly, contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party or Parties, on the one hand, and such Indemnified Party, on the other hand, in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party or Parties, on the one hand, and Indemnified Party, on the other hand, shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys' or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms. 10 The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Holder from the sale of the Registrable Securities subject or giving rise to the Proceeding, except in the case of fraud by such Holder. The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties. (e) The provisions of this Section 5 shall survive so long as Registrable Securities remain outstanding, notwithstanding any permitted transfer of the Registrable Securities by any Holder or any termination of this Agreement. 6. COMPANY REPRESENTATIONS. The Company represents and warrants to the Seller as follows: (a) AUTHORIZATION. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement and the performance of all obligations of the Company hereunder has been taken or will be taken prior to the Closing. (b) STATUS OF PURCHASE SHARES. The Purchase Shares, when issued pursuant to the terms of the Purchase Agreement, will be duly authorized, validly issued and outstanding, fully paid and nonassessable, free and clear of any mortgage, pledge, security interest, charge, lien or encumbrance of any kind, and will not be in violation of any preemptive or similar rights of any person. The Company is not bound by any agreement or understanding restricting its right to issue or transfer the Purchase Shares. (c) SEC FILINGS. Neither Company's Report on Form 10-K for the year ended December 31, 2003 nor any other document filed by the Company with the Securities and Exchange Commission ("SEC") since March 3, 2004 (collectively, the "SEC FILINGS"), contained a misstatement of a material fact or failed to state a material fact required to be stated therein or necessary to make the statements made therein not misleading as of the date such filing was made. The consolidated financial statements of the Company and its subsidiaries included in the SEC Filings comply as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, have been prepared or, for Company filings after the date hereof, will be prepared in accordance with GAAP applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto or, in the case of the unaudited interim financial statements, as permitted by Form 10-Q of the SEC) and fairly present or, for Company filings after the date hereof, will fairly present (subject, in the case of the unaudited interim financial statements, to normal, year-end audit adjustments, which are not material in amount) the consolidated financial position of the Company and its subsidiaries as at the dates thereof and the consolidated results of their operations and cash flow for the periods then ended. 11 (d) PRIVATE OFFERING; NO INTEGRATED OFFERING. Assuming the accuracy of the Seller's representations and warranties in Section 8 hereto, the offer and sale of the Purchase Shares to the Seller and issuance of the Purchase Shares to the Holders pursuant to the Purchase Agreement is exempt from the registration and prospectus delivery requirements of the Securities Act. Neither the Company nor any person acting on its behalf has offered or will offer Common Stock or the Purchase Shares or any part thereof or any similar securities for issuance or sale to, or has solicited or will solicit any offer to acquire any of the same from, any person so as to bring the issuance and sale by the Company of the Purchase Shares within the provisions of the registration and prospectus delivery requirements of the Securities Act. The Company has not offered, sold, contracted to sell, pledged or disposed of, and will not at any time offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any securities under circumstances where such offer, sale, pledge, contract or disposition would cause the exemption under the Securities Act pursuant to which the Purchase Shares are issuable without registration to the Seller and Holders to cease to be applicable to the offer and sale of the Purchase Shares or cause them to be integrated with any prior offering of securities of the Company for purposes of the Securities Act (in circumstances which would require registration of the Purchase Shares) or any applicable shareholder approval provisions under any securities exchange or market upon which the Common Stock is listed or quoted. (e) INVESTMENT COMPANY ACT. The Company is not, and during the term of this Agreement will not be, an "investment company," or a company "controlled by" an "investment company," within the meaning of the Investment Company Act of 1940, as amended. 7. MISCELLANEOUS. (a) REMEDIES. In the event of a breach by the Company or by a Holder, of any of their obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. (b) COMPLIANCE. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement. 12 (c) DISCONTINUED DISPOSITION. Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the Company of a Suspension Notice and subject to the provisions and limitation of Section 3(i), such Holder will forthwith discontinue disposition of such Registrable Securities under the Registration Statement until such Holder's receipt of the copies of the supplemented Prospectus and/or amended Registration Statement or until it is advised in writing (the "ADVICE") by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company may provide appropriate stop orders to enforce the provisions of this paragraph; provided, that the Company and any such stop orders comply with the provisions and limitations set forth in Section 3(i). (d) PIGGY BACK REGISTRATION. (i) REGISTRATION PROCEDURES. If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a Registration Statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalent forms relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the stock option or other employee benefit plans, then the Company shall send to each Holder a written notice of such proposed filing at least 25 days before the anticipated filing. The notice referred to in the preceding sentence shall (i) describe the proposed registration and offering and (ii) offer each Holder the opportunity to register, offer or sell such amount of Registrable Securities as any such Holder may request (a "PIGGYBACK REGISTRATION"). If within fifteen days after the date of such notice, any such Holder shall so request in writing, the Company shall include in such Piggyback Registration (and any related qualification under state blue sky laws and other compliance filings, and any underwriting involved therein) all Registrable Securities such Holder requests to be registered; PROVIDED, that, the Company shall not be required to register any Registrable Securities pursuant to this Section 7(d) that at such time may be resold pursuant to Rule 144(k) promulgated under the Securities Act or that are registered under a then effective Registration Statement which is not subject to a discontinuance of disposition pursuant to Section 7(c). Holder will be permitted to withdraw any or all of its Registrable Securities from a Piggyback Registration at any time prior to the effective date of such Piggyback Registration. If a Holder decides not to include all of its Registrable Securities in any Registration Statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent Registration Statement or Registration Statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth therein. (ii) FIRST PRIORITY PIGGYBACK REGISTRATION. The Company will cause the managing underwriter or underwriters, if any, of a proposed registration of securities of the Company through underwriters to permit any Holder, if holding Registrable Securities requested to be included in such registration, to include in the registration for such offering all such requested Registrable Securities on the same terms and conditions as any securities of the Company included therein; provided, that the Holder shall give 13 customary representations and warranties and the Holder's indemnification obligations shall be limited as set forth in Section 5(b) hereof. The Company shall cooperate with the Holder in order to limit any representations and warranties to, or agreements with, the Company or the underwriters to be made by Holder only to those representations, warranties or agreements regarding Holder's Registrable Securities and intended method of distribution, and as required by law. If such managing underwriter or underwriters advises Holder in writing to the effect that the total amount of securities that Holder, the Company and any other person propose to include in such offering is such as to materially and adversely affect the success of such offering, such Registrable Securities of such Holder shall be subject to customary underwriter cutbacks applicable to all holders of securities subject to registration in such offering. (e) AMENDMENTS AND WAIVERS, The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and each Holder of the then outstanding Registrable Securities. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of certain Holders and that does not directly or indirectly affect the rights of other Holders may be given by Holders of all of the Registrable Securities to which such waiver or consent relates. (f) NOTICES. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be made in accordance with the provisions of the Purchase Agreement. (g) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder and any permitted transferee. Each Holder may transfer (including, without limitation, by donation, devise or gift) or assign, by written agreement, any or all of such Holder's registration rights granted hereunder to any direct or indirect transferee or assignee of such Holder's Registrable Securities; PROVIDED, that such assignee or transferee shall agree, in form and substance reasonably satisfactory to the Company and the Holders, to be bound by the terms and provisions of this Agreement; PROVIDED, that the Company may not assign its obligations hereunder; FURTHER PROVIDED, that if the Company is a party to any merger, consolidation, recapitalization, reorganization or otherwise pursuant to which the Registrable Securities are converted into or exchanged for securities or the right to receive securities of any other person ("CONVERSION SECURITIES"), then the Company shall not effect any such action unless the issuer of such Conversion Securities shall have previously assumed in writing, to be delivered to all Holders, all obligations of the Company hereunder. Following any such transfer or assignment, such transferring or assigning Holder shall retain all rights under this Agreement with respect to the Registrable Securities that continue to be held by such Holder. 14 (h) EXECUTION AND COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof. (i) GOVERNING LAW. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined with the provisions of the Purchase Agreement. (j) CUMULATIVE REMEDIES. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. (k) SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. (l) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (m) INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The obligations of each Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement. Each Holder shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose. (n) DELAYS OR OMISSIONS. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any Holder, upon any breach, default or noncompliance of the Company under this Agreement shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character on any Holder's part of any breach, default or noncompliance under the Agreement or any waiver on such Holder's part of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. 15 8. INVESTMENT REPRESENTATIONS. Each Selling Shareholder understands that the Purchase Shares are being offered and sold pursuant to a private placement exemption from registration contained in the Securities Act based in part upon such Selling Shareholder's representations contained in this Agreement. Accordingly, each Selling Shareholder, severally and not jointly, represents and warrants to the Company and Purchaser as of the date hereof as follows: (a) Such Selling Shareholder has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to Company so that such Selling Shareholder is capable of evaluating the merits and risks of its investment in Company and has the capacity to protect its own interests. Selling Shareholder understands that it must bear the economic risk of this investment indefinitely unless the Purchase Shares are registered pursuant to the Securities Act, or an exemption from registration is available. (b) Selling Shareholder is acquiring the Purchase Shares for its own account for investment only, and not with a view towards their distribution. (c) Selling Shareholder represents that by reason of its, or of its management's, business or financial experience, Selling Shareholder has the capacity to protect its own interests in connection with the transactions contemplated in the Purchase Agreement. Further, Selling Shareholder is aware of no publication of any advertisement in connection with the transactions contemplated in the Purchase Agreement. (d) Selling Shareholder and each of its members, as applicable, are accredited investors within the meaning of Rule 501(a) of Regulation D under the Securities Act. (e) Selling Shareholder has had an opportunity to discuss Company's business, management and financial affairs with directors, officers and management of Company and has had the opportunity to review Company `s operations and facilities. Selling Shareholder also has had the opportunity to ask questions of and receive answers from Company and its management regarding the terms and conditions of this investment. (f) Selling Shareholder acknowledges and agrees that the Purchase Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Selling Shareholder has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act as in effect from time to time, which permits limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things: the availability of certain current public information about the Company, the resale occurring following the required holding period under Rule 144 and the number of shares being sold during any three-month period not exceeding specified limitations. (g) The office or offices of Selling Shareholder in which its investment decision was made is located at the address or addresses of Seller set forth in Part 2.23(g) of the Disclosure Schedule. Selling Shareholder is a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended). 16 (h) Selling Shareholder acknowledges and agrees that the Purchase Shares are subject to restrictions on transfer as set forth in the applicable securities laws. 9. CERTIFICATIONS. All certificates representing the purchase shares shall have endorsed thereon legends in substantially the following forms (in addition to any other legend which may be required by other agreements between the parties hereto): (a) (i) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED." (ii) Any legend required by appropriate blue sky officials. (b) The Company shall be obligated to reissue promptly certificates without the foregoing legend upon the request of any Holder thereof, if the Holder shall have obtained an opinion of counsel reasonably acceptable to the Company to the effect that the securities proposed to be disposed of may lawfully be disposed of without registration, qualification or legend. (c) Any legend endorsed on an instrument pursuant to applicable state securities laws and the stop-transfer instruction with respect to such securities shall be removed upon receipt by the Company of an opinion of counsel reasonably satisfactory to the Company or an order of the appropriate blue sky authority authorizing such removal. 10. BOARD REPRESENTATION. As long as Anthony O. Brown ("Brown") and his affiliates collectively own, either directly or beneficially, not less than 495,465 shares of Common Stock, subject to adjustment for any stock split, dividend or other distribution, recapitalization or any similar event (the "BROWN MINIMUM HOLDINGS"), upon written request by Brown, the Company shall use its reasonable best efforts to cause Brown or his designee (which designee must be reasonably acceptable to Acacia) to be elected to the Board of Directors of the Company. Without limitation of the foregoing, the Company shall nominate Brown or his designee to serve on the Board of Directors upon such request by Brown, to be voted on in the next succeeding annual or special meeting for election of directors following such request by Brown, and in successive annual meetings thereafter so long as Brown continues to own the Brown Minimum Holdings, until Brown is so elected, and shall treat Brown or his designee in the same manner as other nominees selected by the Board of Directors of the Company. The parties agree and acknowledge that pursuant to the Company's Bylaws, the Board of Directors has the right to appoint an interim director to fill any vacancy, but any election of a board member must be pursuant to the 17 vote of the Company's shareholders. The provisions of this Section 10 shall survive any termination of this agreement and continue in accordance with the terms hereof. Notwithstanding anything contained in the Agreement to the contrary, the parties hereby acknowledge and agree that Brown shall be entitled to enforce the rights and privileges under this Section 10 in his sole discretion and, without limiting any remedies available at law or equity, Brown shall be entitled to seek specific performance or injunctive relief to enforce this Section 10. [THIS SPACE INTENTIONALLY LEFT BLANK] 18 IN WITNESS WHEREOF, the parties have duly executed this Registration Rights Agreement as of the day and year first above written. COMPANY: ACACIA RESEARCH CORPORATION, a Delaware corporation By: /S/ Robert A Berman ----------------------------------- Name: Robert A Berman Title: Chief Operating Officer PURCHASER: ACACIA GLOBAL ACQUISITION CORPORATION, a Delaware corporation By: /S/ Robert A Berman ----------------------------------- Name: Robert A Berman Title: Chief Operating Officer SELLER: GLOBAL PATENT HOLDINGS, LLC an Illinois limited liability company By: /S/ Anthony O. Brown ----------------------------------- Name: Anthony O. Brown Title: Manager SELLING SHAREHOLDERS: By: /S/ Richard Angell ---------------------------------- Richard Angell By: /S/ Anthony O. Brown ---------------------------------- Anthony O. Brown By: /S/ Scott Paseltiner ---------------------------------- Scott Paseltiner By: /S/ Dooyong Lee ---------------------------------- Dooyong Lee By: /S/ Scott Turbin ---------------------------------- Scott Turbin Partner KDS LLC By: /S/ Daniel Asher ---------------------------------- Daniel Asher By: /S/ Robert Krasnow ---------------------------------- Robert Krasnow By: /S/ James D. Esser ---------------------------------- James D. Esser By: /S/ Marshall N. Toplansky ---------------------------------- Marshall N. Toplansky By: /S/ James Cohen ---------------------------------- James Cohen 19 By: /S/ Richard R. Taylor ---------------------------------- Richard R. Taylor By: /S/ Thomas M. Harney, Trustee ---------------------------------- Thomas M. Harney, Trustee Thomas M. Harney, Revocable Trust UTD 5/31/88 By: /S/ Michael Vender ---------------------------------- Michael Vender By: /S/ Patrick J. McGarvey ---------------------------------- Patrick J. McGarvey By: /S/ Jack Lavin ---------------------------------- Jack Lavin By: /S/ Thomas Henrich ---------------------------------- Thomas Henrich 20 EXHIBIT "A" PLAN OF DISTRIBUTION We are registering the shares of AR-Acacia Technologies common stock on behalf of the selling stockholders. A selling stockholder is a person named in the section entitled "Selling Stockholders" and also includes any donee, pledgee, transferee or other successor-in-interest selling shares received after the date of this prospectus from a selling stockholder as a gift or other non-sale related transfer. We do not know of any plan of distribution for the resale of our AR-Acacia Technologies common stock by the Selling Stockholders. We will not receive any of the proceeds from the sale by the Selling Stockholders of any of the resale shares. We expect that the Selling Stockholders or transferees may sell the resale shares from time to time in one or more transactions on Nasdaq or any other exchange upon which the company may become listed, in privately negotiated transactions, through put or call option transactions relating to the shares, or a combination of such methods of sale, at fixed prices which may be changed, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The Selling Stockholders may sell the resale shares to or through broker-dealers, and such broker-dealers may receive compensation from the Selling Stockholders or the purchasers of the resale shares, or both. The selling stockholders may also enter into hedging transactions, options or other transactions with broker-dealers or other financial institutions that require the delivery to these broker-dealers or other financial institutions of shares offered by this prospectus, which shares these broker-dealer or other financial institution may resell pursuant to this prospectus (as amended or supplemented to reflect such transaction). These broker-dealers may receive compensation in the form of discounts, concessions or commissions from selling stockholders and/or the purchasers of shares for whom these broker-dealers may act as agents or to whom they sell as principal, or both. For example, the Selling Stockholders may: o enter into transactions with a broker-dealer or affiliate of a broker-dealer or other third party in connection with which that other party will become a Selling Stockholder and engage in short sales of securities under this prospectus, in which case the other party may use securities received from the Selling Stockholders to close out any short positions; o sell short the securities under this prospectus and use the securities held by it to close out any short position; o enter into options, forwards or other transactions that require the Selling Stockholders to deliver, in a transaction exempt from registration under the Securities Act, the securities to a broker-dealer or an affiliate of a broker-dealer or other third party who may then become a Selling Stockholder and publicly resell or otherwise transfer the securities under this prospectus; or Exhibit A, Page 1 o loan or pledge the securities to a broker-dealer or an affiliate of a broker-dealer or other third party who may then become a Selling Stockholder and sell the loaned securities or, upon an event of default in the case of a pledge, become a Selling Stockholder and sell the pledged securities, under this prospectus. The Selling Stockholders have advised us that they have not entered into any agreements, arrangements or understandings with any underwriter, broker-dealer or agent regarding the sale of their securities. The selling stockholders and any broker-dealers that act in connection with the sale of shares may be "underwriters" within the meaning of Section 2(11) of the Securities Act, and any commissions received by these broker-dealers or any profit on the resale of the shares sold by them while acting as principals might be deemed to be underwriting discounts or commissions under the Securities Act. Because selling stockholders may be "underwriters" within the meaning of Section 2(11) of the Securities Act, the selling stockholders may be subject to the prospectus delivery requirements of the Securities Act. Furthermore, selling stockholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act, provided they meet the criteria and conform to the requirements of Rule 144. We have informed the selling stockholders that the anti-manipulative provisions of Regulation M promulgated under the Exchange Act may apply to their sales in the market. In addition, if we are notified by a selling stockholder that a donee, pledgee or transferee or other successor in interest intends to sell more than 500 shares, a supplement to this prospectus will be filed. At any time a particular offer of resale shares is made, to the extent required, a supplemental prospectus will be distributed which will set forth the number of resale shares offered and the terms of the offering including the name or names of any underwriters, dealers or agents, the purchase price paid by any underwriter for the resale shares purchased from the selling stockholders, any discounts, commission and other items constituting compensation from the selling stockholders and any discounts, concessions or commissions allowed or paid to dealers. We do not presently intend to use any forms of prospectus other than print. The Selling Stockholders and any other persons participating in the sale or distribution of the resale shares will be subject to the federal securities laws and must comply with certain terms of the requirements of the Securities Act and the Exchange Act, including Rule 10b-5 and Regulation M under the Exchange Act. These rules and regulations may limit the timing of purchases and sales of shares of our AR-Acacia Technologies common stock by the Selling Stockholders or other persons. Under these rules and regulations, generally, except as otherwise permitted the thereby, Selling Stockholders and other persons participating in the sale or distribution: Exhibit A, Page 2 o may not engage in any stabilization activity in connection with our AR-Acacia Technologies common stock, o must furnish each broker which offers resale shares covered by this prospectus with the number of copies of this prospectus and any supplement which are required by the broker, and o may not bid for or purchase any of our AR-Acacia Technologies common stock or attempt to induce any person to purchase any of our AR-Acacia Technologies common stock other than as permitted under the Exchange Act. We will make copies of this prospectus available to the Selling Stockholders, and we have informed the Selling Stockholders of the need for delivery of a copy of this prospectus to each purchaser of the resale shares prior to or at the time of any sale of the resale shares offered hereby. We may suspend the effectiveness or use of, or trading under, the registration statement if we determine that the sale of any securities pursuant to the registration statement would: o materially impede, delay or interfere with any material pending or proposed financing, acquisition, corporate reorganization or other similar transaction involving the company for which we have authorized negotiations; materially adversely impair the consummation of any pending or proposed material offering or sale of any class of securities by the company, or o require disclosure of material nonpublic information that, if disclosed at such time, would be materially harmful to the interests of the company and our stockholders. We will pay all costs and expenses associated with registering and qualifying the resale shares being offered hereunder with the SEC and any state securities agencies. The selling stockholders will bear their own legal fees and costs and all commissions, discounts and expenses of underwriters or brokers, if any, attributable to the sales of the shares. We and the selling stockholders have agreed to indemnify each other against certain liabilities that could arise from the registration and sale of the shares. Exhibit A, Page 3 EX-10.2 4 acacia_8kex10-2.txt EXHIBIT 10.2 CONSULTING AGREEMENT THIS CONSULTING AGREEMENT (the "AGREEMENT") is entered into and effective as of January 28, 2005 (the "EFFECTIVE DATE"), between ACACIA GLOBAL ACQUISITION CORPORATION, a Delaware corporation, and its successors or assignees ("CLIENT"), and CASCADES VENTURES, INC., an Illinois corporation (the "CONSULTANT"). RECITALS A. Pursuant to a Membership Interest Purchase Agreement ("PURCHASE AGREEMENT") dated as of even date herewith between Client and Global Patent Holdings, LLC ("PATENT HOLDINGS"), Patent Holdings is selling all of the outstanding membership interests of the Acquired Companies (as defined below) to Client (the "TRANSACTION"). B. Consultant is a newly formed corporation, organized for the sole purpose of providing the Client with certain consulting services, as more fully described below. C. Anthony O. Brown ("BROWN") is the sole shareholder, officer and director of Consultant and, immediately prior to the Effective Date, was a member, manager and an equity holder of Patent Holdings. AGREEMENT NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Consultant and Client (each, a "PARTY") hereby agree as follows: 1. DEFINITIONS. As used in this Agreement: 1.1 "ACACIA" means Acacia Research Corporation, a Delaware corporation. 1.2 "ACTG STOCK" means the common stock of Acacia, 0.001 par value. 1.3 "ACQUIRED COMPANIES" means the entities listed on SCHEDULE 1 to this Agreement. 1.4 "BANKRUPTCY EVENT" means, with respect to Acacia, any of the following unless the same is dismissed, voided, nullified or discharged within ninety (90) days of commencement appointment or entry: (a) the filing of an application by Acacia for, or Acacia's consent to, the appointment of a trustee, receiver, or custodian of Acacia's assets; (b) the entry of an order for relief with respect to Acacia in proceedings under the United States Bankruptcy Code, as amended or superseded from time to time; (c) the making by Acacia of a general assignment for the benefit of creditors; (d) the entry of an order, judgment, or decree by any court of competent jurisdiction appointing a trustee, receiver, or custodian of the assets of Acacia; or (e) the commencement of any proceedings seeking liquidation, reorganization or other relief with respect to Acacia under any bankruptcy, insolvency or other similar law now or hereafter in effect shall be commenced. 1 1.5 "CASH" means, at any time, any coin or currency of the United States. 1.6 "CASH EQUIVALENTS" means (a) the following types of property, all with an original maximum maturity of 60 days: (i) interest bearing savings deposits, certificates of deposit and banker's acceptances of banks having a short-term rating in one of the two highest ratings categories by any nationally recognized credit rating agency; (ii) commercial paper having a short-term rating in one of the two highest ratings categories by any nationally recognized credit rating agency, other than commercial paper issued by any bank holding company; and (iii) United States Treasury bills; and (b) amounts on deposit in demand deposit accounts with nationally recognized banking institutions having a short-term rating in one of the two highest ratings categories by any nationally recognized credit rating agency. 1.7 "CONFIDENTIAL INFORMATION" means any non-public information (whether or not in written form and whether or not expressly designated as confidential) relating directly or indirectly to the Client, Acacia, any of the Acquired Companies or any of the Client's or Acacia's other subsidiaries or relating directly or indirectly to the business, operations, financial affairs, performance, assets, technology, processes, products, contracts, customers, licensees, sublicensees, suppliers, personnel, consultants or plans of the Client, Acacia, any of the Acquired Companies or any of the Client's or Acacia's other subsidiaries (including any such information consisting of or otherwise relating to trade secrets, know-how, technology, inventions, prototypes, designs, drawings, sketches, processes, license or sublicense arrangements, formulae, proposals, research and development activities, customer lists or preferences, pricing lists, referral sources, marketing or sales techniques or plans, operations manuals, service manuals, financial information, projections, lists of consultants, lists of suppliers or lists of distributors); PROVIDED, HOWEVER, that "Confidential Information" shall not include any information which (i) is generally known to the public or is made generally available in the public domain (except as a result of the violation of any of its confidentiality obligations by Brown, Consultant or the Seller (as defined in the Purchase Agreement)); (ii) is already in the rightful possession of Brown at the time of disclosure (excluding, however, information relating to the Acquired Companies prior to the date of this Agreement, which information shall be governed by the Noncompetition Agreement), without confidentiality restrictions, by Client or its Affiliates as shown by Brown's files and records immediately prior to the date hereof; (iii) is obtained by Brown from a third party without a breach of such third party's obligations of confidentiality (excluding, however, information relating to the Acquired Companies prior to the date of this Agreement, which information shall be governed by the Noncompetition Agreement). 1.8 "DAMAGES" means any loss, damage, injury, Liability, claim, settlement, judgment, award, fine, penalty, tax, charge, or cost of investigation. 1.9 "INTELLECTUAL PROPERTY RIGHTS" shall be as defined in the Purchase Agreement. 1.10 "LIABILITY" shall mean any debt, obligation, duty or liability of any nature (including any unknown, undisclosed, unmatured, unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious, derivative, joint, several or secondary liability), regardless of whether such debt, obligation, duty or liability would be required to be disclosed on a balance sheet prepared in accordance with generally accepted accounting principles and regardless of whether such debt, obligation, duty or liability is immediately due and payable. 2 1.11 "NONCOMPETITION AGREEMENT" shall mean the Noncompetition Agreement entered into between Brown and Client, dated as of the date hereof. 1.12 "PURCHASE AGREEMENT" has the meaning given in Recital A to this Agreement. Unless otherwise specified, capitalized terms used herein shall have the same meaning as in the Purchase Agreement. 1.13 "WORKING CAPITAL" means all assets of the Client consisting of Cash and Cash Equivalents. 2. ENGAGEMENT 2.1 SCOPE OF SERVICES. During the term of this Agreement, Consultant shall cause Anthony O. Brown to perform those services requested from time to time by Client and described on Exhibit A hereto (the "SERVICES"), provided that in no event will Consultant be required to perform Services in excess of twelve hundred (1200) hours per year. All Services must be within Anthony O. Brown's area of experience and expertise with the Seller and/or each of the Acquired Companies. 2.2 PERFORMANCE OF SERVICES. Consultant shall at all times materially comply with all applicable laws in the course of performing the Services. Consultant will have exclusive control over the manner and means of performing the Services including the choice of place and time. For avoidance of doubt, Client may not require relocation of Consultant's offices. The President or Vice President of Client may, in writing, grant Consultant express authority with respect to certain matters. 2.3 PERSONS PROVIDING SERVICES. The Services shall be provided by approved representatives or such other employees of Consultant who are approved by the Client in writing prior to performing any of the Services, which approval may be withheld for any reason or no reason in Client's sole and absolute discretion. Consultant shall be responsible for a breach of this Agreement by any of its employees. As of the Effective Date, Anthony O. Brown ("BROWN") is the only person approved by Client to perform the Services and Consultant shall cause Anthony O. Brown to perform the Services in accordance with the provisions of this Agreement. 2.4 ACCESS RULES AND PROCEDURES. While on Client's premises, Consultant agrees to materially comply with Client's then-current access rules and procedures, including those procedures pertaining to safety, security, and confidentiality. Consultant agrees and acknowledges that Consultant has no expectation of privacy with respect to Client's telecommunications, networking, or information processing systems (including stored computer files, email messages, and voice messages) and that the contents of files and messages that are sent to or received by Consultant may be reviewed and disclosed, at any time without notice. 2.6 TRAVEL. In no event shall Brown be required to travel or be away from his office in excess of 5 consecutive days or in excess of 35 days in the aggregate in any twelve month period. In no event shall Brown be required to travel outside of the United States without his consent. 3 3. INDEPENDENT CONTRACTOR RELATIONSHIP. Consultant's relation to Client under this Agreement is that of an independent contractor. Nothing in this Agreement is intended or should be construed to create a partnership, joint venture, or employer-employee relationship between Client and Consultant. Neither Consultant nor any employee of Consultant will take any position with respect to or on any tax return or application for benefits, or in any proceeding directly or indirectly involving Client, that is inconsistent with Consultant being an independent contractor (and not an employee) of Client and any such employee of Consultant being an employee of Consultant and not Client. Except as provided in Section 2.2 above, Consultant is not the agent of Client and is not authorized, and must not represent to any third party that Consultant is authorized, to make any commitment or otherwise act on behalf of Client. Without limiting the generality of the foregoing, Consultant agrees, acknowledges and understands that: (i) no employee providing services under this Agreement shall have the status of an employee of the Client and none of Consultant's employees shall participate in any employee benefit plans or group insurance plans or programs (including, but not limited to salary, bonus or incentive plans, stock option or purchase plans, or plans pertaining to retirement, deferred savings, disability, medical or dental), even if such employees are considered eligible to participate pursuant to the terms such plans; (ii) none of its employees shall participate in any plans, arrangements, or distributions by the Client pertaining to or in connection with any pension, stock, bonus, profit-sharing, or other similar benefit program the Client may have for its employees, regardless of whether Consultant's employees are classified as an employees for any other purpose or are otherwise eligible to participate in such plans; (iii) Consultant is solely responsible for all taxes, withholdings, and other similar statutory obligations relating to Consultant's employees including, without limitation, Workers' Compensation Insurance, Unemployment Insurance, or State Disability Insurance. Consultant shall defend, indemnify and hold Client harmless from any and all claims made by any entity on account of an alleged failure by Consultant to satisfy any such tax or withholding obligations. 4. COMPENSATION 4.1 FEES. Subject to the terms and conditions of this Agreement, Client will pay Consultant, as sole and complete compensation for all Services provided by Consultant under this Agreement, an aggregate fee of $2,000,000, payable in equal installments at the end of each two-week period (consistent with Client's payroll practices) an amount equal to $38,461.54. Except as otherwise expressly provided in this Agreement, no other fees will be owed by Client under this Agreement. 4.2 EXPENSES. The Client shall reimburse Consultant for all reasonable expenses incurred in connection with the performance of the Services, including but not limited to, all travel and all out-of-pocket expenses incurred by the Consultant in connection with the performance of its duties hereunder, the rent for Consultant's office space, the salary and health benefits of Consultant's office manager (Emily Brown) and other office expenses including, but not limited to, telephone, copying and courier services. Reimbursable expenses shall be invoiced to the Client on a monthly basis, together with supporting documentation reasonably required by the Client, and the Client shall pay such invoices within thirty (30) days of receipt of invoice. The Client and Consultant agree that (i) the salary and health benefits to be paid by Consultant to an office manager shall be an amount not exceed $57,200 per year (except as otherwise authorized by Client in writing), (ii) the rent to be paid 4 by Consultant for that certain office space located at 500 Skokie Boulevard, Suite 585, Northbrook Illinois 60062, or at any other premises subsequently occupied by Consultant, in an amount not to exceed $2,200.00 per month (subject to adjustment, if any, pursuant to the terms of the lease), (iii) business-class (where available and if not available, first class) airline travel expenses and (iv) accommodations at first class or business-class hotels are reasonable expenses. Except as expressly provided above, reimbursable expenses shall at no time include any salary or other remuneration or benefits to be paid to Consultant's employees or independent contractors. 4.3 NO RIGHTS OF SETOFF. Client may not withhold, delay the payment of, or set off against any amount to which Consultant may be entitled under this Agreement, including, but not limited to amounts due to Consultant under Sections 4.1, 4.2, 7.2.1 and 7.3.1: (a) any amounts payable or claimed to be payable from, or any actual or alleged claims, Liability, expenses or causes of action against, any Person, including without limitation Brown, Patent Holdings, the Acquired Companies or any member of Patent Holdings, under the Transaction Agreements or under any theory of law, including, but not limited to, any amounts owed or claimed to be owed by Patent Holdings or the Acquired Companies under Section 6 of the Purchase Agreement or (b) any amount owed or claimed to be owed by Brown under the Noncompetition Agreement entered into with Brown. 4.4 INTEREST ON PAST DUE AMOUNTS. If Client fails to pay any amount due hereunder on or before the due date, Client shall pay interest on such past due amount at the rate of twelve percent (12%) interest, compounded semi-annually. 5. NO CONFLICTS. Consultant will refrain from any activity, and will not enter into any agreement or make any commitment, that prevents the Consultant from performing the Services. Consultant represents and warrants that Consultant is not subject to any contract or duty that would be breached by Consultant's entering into or performing Consultant's obligations under this Agreement or that is otherwise inconsistent with this Agreement. Consultant will not disclose to Client, will not bring into Client's facilities, and will not induce Client to use any information that Consultant knows is confidential or proprietary information of any third party. Client acknowledges that Consultant and the employees and/or agents of the Consultant shall be engaged in the licensing and enforcement and related activities with respect to the Rozmanith patent. 6. LIMITATION OF LIABILITY. 6.1 In no event will Client be liable for any consequential, indirect, exemplary, special, punitive or incidental damages arising from or relating to this Agreement. Client's total cumulative liability in connection with this Agreement, whether in contract or tort or otherwise, will not exceed the aggregate amount of Fees and Expenses owed by Client to Consultant for Services performed under this Agreement, plus interest owed on past due amounts under Section 4.4 plus legal fees owed under Section 10.5. 6.2 In no event will Consultant be liable for any consequential, indirect, exemplary, special, punitive or incidental damages arising from or relating to this Agreement. Consultant's total cumulative liability in connection with this Agreement, whether in contract or tort or otherwise, will not exceed the aggregate amount of Fees paid by Client to Consultant for Services performed under this Agreement. 5 7. TERM AND TERMINATION 7.1 TERM. This Agreement will commence on the Effective Date and will continue in effect until January 28, 2007, unless earlier terminated as provided below. 7.2 TERMINATION BY CLIENT FOR CAUSE/VOLUNTARY TERMINATION. Client may terminate this Agreement for Cause upon written notice to Consultant. "Cause" for purposes of this Section 7.2 shall be any of the following: (a) material breach by the Consultant of this Agreement (for any reason other than those set forth in Section 7.3), which material breach continues for thirty (30) days after written notice to the Consultant by the Client describing such material breach in reasonable detail; (b)(i) commission by the Consultant of theft or embezzlement of property belonging to the Client or any of its Affiliates or (ii) conviction or plea of nolo contendere by the Consultant to a crime punishable by imprisonment; or (c) commission of an act by the Consultant in the performance of its duties hereunder constituting willful misconduct that is reasonably likely to materially harm Client and failure to desist from such misconduct within thirty (30) days after written notice describing such misconduct in reasonable detail. The determination of a single arbitrator in accordance with the Commercial Rules of Arbitration of the American Arbitration Association, which determination shall be binding on the parties, shall be necessary in order to establish that there is "Cause" pursuant to clause (a) or (c) above. Consultant may voluntarily terminate this Agreement at any time and for any reason upon written notice to Client. 7.2.1 EFFECTS OF TERMINATION. Subject to Section 7.4.1, upon Termination of this Agreement under this Section 7.2, all rights and duties of the Client and Consultant toward each other shall cease except Client will pay Consultant a lump sum payment, within thirty (30) days after the effective date of termination, equal to any unpaid portion of the consulting fee provided for in Section 4.1 hereof through the date of termination (with pro-rata payments for any partial payroll period to the date of termination) plus any other amounts due to the Consultant hereunder through the date of termination, including all unreimbursed expenses, if any, submitted in accordance with the Client's policies and in accordance with the provisions of this Agreement. 7.3 AUTOMATIC TERMINATION. Unless waived in writing by Consultant, this Agreement shall automatically terminate immediately upon the occurrence of any of the following events: (a) Client shall fail to pay when due any payment on the due date hereunder and such payment shall not have been made within five (5) days of Company's receipt of Consultant's written notice to Client of such failure to pay; (b) a judgment is entered against Client or Acacia in an amount exceeding one-third of Client's or Acacia's Working Capital on such date; (c) Acacia's Working Capital is less than the product of three multiplied by an amount equal to the sum of (A) the excess of (1) $2,000,000 over (2) all amounts paid by Client to Consultant under Section 4.1 plus (B) all unreimbursed expenses, if any, submitted by Consultant in accordance with the Client's policies and in accordance with the provisions of this Agreement; (d) Client or Acacia is subject to any Bankruptcy Event; (e) the death of Brown; (f) the medically documented physical or psychological inability of Brown to materially perform the Services (which Consultant shall cause Brown to cooperate with Client or Acacia undergoing appropriate physical or mental examination); or (g) material breach by the Client of this Agreement, which material breach continues for thirty (30) days after written notice to the Client by the Consultant describing such material breach in reasonable detail. 6 7.3.1 EFFECTS OF AUTOMATIC TERMINATION. Subject to 7.4.1, upon Termination of this Agreement under this Section 7.3, all rights and duties of the Client and Consultant toward each other shall cease except Client will pay Consultant, within thirty (30) days after the effective date of termination, a lump sum payment equal to the sum of (a) the excess of (i) $2,000,000 over (ii) all amounts paid by Client to Consultant Section 4.1 plus (b) all unreimbursed expenses, if any, submitted in accordance with the Client's policies and in accordance with the provisions of this Agreement. 7.4 EFFECTS OF TERMINATION GENERALLY. 7.4.1 SURVIVAL. Notwithstanding anything in this Agreement to the contrary, the termination or expiration of this Agreement will not affect either Party's liability for any breach of this Agreement such Party may have committed before such expiration or termination and Section 9 will survive the termination or expiration of this Agreement for a period of three (3) years following such expiration or termination. 7.4.2 RETURN OF CLIENT PROPERTY. Upon termination of this Agreement and payment by Client of all amounts due to Consultant under this Agreement, Consultant will deliver to Client any and all documents, prototypes, samples, and other materials (including all copies thereof) in Consultant's possession or control that contain, summarize, or disclose any Intellectual Property provided by or on behalf of Client. In addition, upon Client's request and upon any termination or expiration of this Agreement and upon payment of any amounts due Consultant, Consultant will promptly (a) return to Client or, if so directed by Client, destroy all tangible embodiments of the Confidential Information (in every form and medium) in its possession, (b) permanently erase all electronic files containing or summarizing any Confidential Information, and (c) certify to Client in writing that Consultant has fully complied with the foregoing obligations. 8. INDEMNIFICATION. 8.1 Client shall hold harmless and indemnify Consultant and Brown from and against, and shall pay, compensate and reimburse the Consultant and Brown for, any Damages (including costs and expenses incurred in the investigation, defense or settlement of any claims against the Consultant or Brown) which are directly or indirectly suffered or incurred by the Consultant or Brown or to which the Consultant or Brown may otherwise become subject at any time (regardless of whether or not such Damages relate to any third party claim) and which arise directly or indirectly from or as a direct or indirect result of, or are directly or indirectly connected with: 8.1.1 the performance of the Services, unless as a result of Consultant's gross negligence or willful misconduct; or 7 8.1.2 all Damages relating to or arising in whole or in part from the exercise of Consultant's authority under Section 2.2 hereof. 8.2 In the event Consultant believes that it shall have become entitled to indemnification pursuant to this Section 8, Consultant shall notify Client by registered mail; provided, however, that Consultant's failure to so notify Client shall not constitute a breach of this Agreement or any of the other Transactional Agreements; provided further, that Client shall not indemnify Consultant (a) for any additional expenses, costs or Damages resulting from Consultant's untimely notice or failure to provide notice pursuant to this Section 8 or (b) any Damages whatsoever to the extent that Consultant's untimely notice or failure to provide notice pursuant to this Section 8 prejudices Client. 9. CONFIDENTIALITY (a) Consultant acknowledges the confidential and proprietary nature of the Confidential Information and agrees (and shall cause Brown to agree) that such Confidential Information shall be kept confidential and shall not be disclosed or used by the Consultant or Brown in any way, except (i) as otherwise expressly permitted by the terms of this Agreement, (ii) as required by law (subject to Section 9(c) below), (iii) with the prior written consent of an authorized representative of Client (each, a "Client Contact"), (iv) as reasonably required by Consultant or Brown to perform the Services under this Agreement or in connection with the licensing and enforcement of only the Rozmanith patent, (v) disclosures to, and use by, individuals bound by law or professional codes of conduct to keep such Confidential Information confidential, including, but not limited to, attorneys and accountants and (vi) to the extent required in connection with tax or accounting reporting purposes. (b) Notwithstanding anything contained herein to the contrary, Brown may disclose Confidential Information to the extent such disclosure is either (i) necessary to enforce Brown's rights under the Transactional Agreements (as defined in the Purchase Agreement) or (ii) necessary as part of a Proceeding in which Brown is named as a defendant (subject to paragraph (c) below). (c) If Brown or Consultant becomes compelled in any Proceeding (including any disclosure necessary to enforce Brown's or Consultant's rights under this Agreement) or is requested by any taxing authority to make any disclosure that is prohibited or otherwise constrained by this Section 9, Consultant or Brown shall provide a Client Contact with prompt notice of such compulsion or request so that Client may seek an appropriate protective order or other appropriate remedy or waive compliance with the provisions of this Section 9. In the absence of a protective order or other remedy, Consultant or Brown, as applicable, may disclose that portion (and only that portion) of the Confidential Information that, based upon advice of the Consultant's counsel, Consultant or Brown, as applicable, is legally compelled to disclose or that has been requested by such taxing authority, provided, however, that Consultant shall, and shall cause Brown to, use commercially reasonable efforts to obtain reliable assurance that confidential treatment will be accorded by any Person to whom any Confidential Information is so disclosed. "Proceeding" shall mean any action, suit, litigation, interference, opposition, arbitration, proceeding 8 (including any civil, criminal, administrative, investigative or appellate proceeding and any informal proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination or investigation that is, has been or may in the future be commenced, brought, conducted or heard by or before, or that otherwise has involved or may involve, any Governmental Body or any arbitrator or arbitration panel. "Governmental Body" shall mean any: (a) nation, principality, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; (c) governmental or quasi-governmental authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, instrumentality, officer, official, representative, organization, unit, body or entity and any court or other tribunal); or (d) individual, entity or body exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing authority or power of any nature. 10. GENERAL PROVISIONS 10.1 GOVERNING LAW; VENUE. This Agreement is governed by the laws of the State of California without reference to any conflict of laws principles that would require the application of the laws of any other jurisdiction. 10.2 SEVERABILITY. If any provision of this Agreement is, for any reason, held to be invalid or unenforceable, the other provisions of this Agreement will be unimpaired and the invalid or unenforceable provision will be deemed modified so that it is valid and enforceable to the maximum extent permitted by law. 10.3 NO ASSIGNMENT. This Agreement and Consultant's rights and obligations under this Agreement may not be assigned, delegated, or otherwise transferred, in whole or in part, by operation of law or otherwise, by Consultant without Client's express prior written consent. This Agreement and Client's rights and obligations under this Agreement may not be assigned, delegated, or otherwise transferred, in whole or in part, by operation of law or otherwise, by Client without Consultant's express prior written consent, other than to Acacia or its wholly-owned subsidiaries. Any attempted assignment, delegation, or transfer in violation of the foregoing will be null and void. 10.4 NOTICES. Each Party must deliver all notices, consents, and approvals required or permitted under this Agreement in writing to the other Party at the address listed on the signature page by courier, by certified or registered mail (postage prepaid and return receipt requested), or by a nationally-recognized overnight carrier. Notice will be effective upon receipt or refusal of delivery. Each Party may change such Party's address for receipt of notice by giving notice of such change to the other Party. 10.5 LEGAL FEES. The prevailing Party in any litigation between the Parties relating to this Agreement will be entitled to recover such Party's reasonable attorneys' fees and court costs, in addition to any other relief that such Party may be awarded. 10.6 INJUNCTIVE RELIEF. Consultant acknowledges that any breach Section 9 of this Agreement by Consultant would cause irreparable injury to Client for which monetary damages would not be an adequate remedy and, therefore, Client will be entitled to injunctive relief (including specific performance). 9 10.7 CONSTRUCTION. Section headings are included in this Agreement merely for convenience of reference; they are not to be considered part of this Agreement or used in the interpretation of this Agreement. When used in this Agreement, "including" means "including without limitation." Unless otherwise specified, whenever Client's or Consultant's consent or approval is required under this Agreement, such party may grant or deny its consent or approval in its sole and absolute discretion. No rule of strict construction will be applied in the interpretation or construction of this Agreement. 10.8 WAIVER. All waivers must be in writing and signed by the Party to be charged. Any waiver or failure to enforce any provision of this Agreement on one occasion will not be deemed a waiver of any other provision or of such provision on any other occasion. 10.9 ENTIRE AGREEMENT; AMENDMENTS. This Agreement is the final, complete, and exclusive agreement of the Parties with respect to the subject matter hereof and supersedes and merges all prior or contemporaneous communications and understandings between the Parties. No modification of or amendment to this Agreement will be effective unless in writing and signed by the Party to be charged. 10 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date. "CLIENT": "CONSULTANT": ACACIA GLOBAL ACQUISITION CORPORATION, CASCADES VENTURES, INC., a Delaware corporation an Illinois corporation Signed: /S/ Robert A. Berman Signed: /S/ Anthony O. Brown ----------------------------- --------------------------- Name: Robert A. Berman Name: Anthony O. Brown Title: Chief Operating Officer Title: President 500 Newport Drive, Suite 700 TechSearch, LLC Newport Beach, CA 92660 500 Skokie Blvd, Suite 585 Telephone No.: (949) 480-8333 Northbrook, IL 60062 Facsimile: (949) 480-8390 Telephone No.: (847) 509-0774 Facsimile: (847) 509-1330 11 EXHIBIT A CONSULTANT SERVICES 1. Consultant shall consult with Client as to the intellectual property matters which, as of the date hereof, relate to patents that are either owned by any of the Acquired Companies or as to which any of the Acquired Companies has rights to license. 2. Consultant shall be available at Client's request, during regular business hours, to respond to questions from Client, to review documents relating to the foregoing patent matters and to meet with Client, its attorneys, the patent owners or inventors. 3. Client and Consultant agree that Consultant will not be required to provide legal services or legal advice to Client and that no consulting services provided by Consultant shall be considered the rendering of legal services or advice. GUARANTEE THIS GUARANTEE is entered into as of this January 28, 2005, by and between Acacia Research Corporation ("Company") and CASCADES VENTURES, INC., an Illinois corporation ("Cascades"). For good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company hereby agrees as follows: 1. The Company unconditionally, absolutely and irrevocably guarantees to Cascades the timely discharge or satisfaction by Acacia Global Acquisition Corporation ("Global") of Global's obligations ("Obligations") under that certain Consulting Agreement between Global and Cascades dated as of even date herewith ("Consulting Agreement"). 2. The Obligations shall be the immediate, direct and primary obligation of the Company and shall not be contingent upon Global's discharge or satisfaction of the Obligations. 3. This Guarantee shall continue in favor of Cascades notwithstanding any extension, modification, alteration or assignment of the Consulting Agreement; and that no extension, modification, alteration or assignment of the Consulting Agreement shall release or discharge the Company; and that the obligation of the Company hereunder shall in no way be terminated, affected or impaired by the reason of the failure of Cascades, its successors or assigns, to enforce any terms, covenants, or conditions of the Consulting Agreement or this Guarantee. 4. The obligations under this Guarantee shall remain in full force and effect and shall be binding on all successors and assigns of the Company and Global and shall continue unchanged without regard to, and shall not be impaired or affected by, nor shall the Company be exonerated or discharged by, any of the following events: (a) insolvency, bankruptcy, reorganization, arrangement, adjustment, composition, or assignment for the benefit of creditors of Global; or (b) any merger, acquisition, consolidation or change in the structure of Global or the Company or any sale, lease, transfer or disposition of any or all of the assets or ownership interests of Global or the Company. This Guarantee shall be governed by and construed in accordance with the internal laws of the State of California (without giving effect to principles of conflicts of laws). This Guarantee may be executed in counterparts, all of which together shall be deemed to be one and the same instrument. [SIGNATURES ON NEXT PAGE] The parties hereto have caused this Guarantee to be executed and delivered as of the date first written above. Acacia Research Corporation, a Delaware corporation By: /S/ Robert A. Berman ------------------------------- Name: Robert A. Berman Title: Chief Operating Officer Accepted: CASCADES VENTURES, INC., an Illinois corporation By: /S/ Anthony O. Brown ---------------------------- Anthony O. Brown Its: President EX-10.3 5 acacia_8kex10-3.txt EXHIBIT 10.3 GOODWILL PURCHASE AGREEMENT GOODWILL PURCHASE AGREEMENT (this "AGREEMENT"), dated as of January 28, 2005, by and between Acacia Global Acquisitions, LLC ("PURCHASER"), and Anthony O. Brown ("BROWN"). WHEREAS, Brown wishes to sell to Purchaser, and Purchaser wishes to purchase from Brown, the goodwill owned by Brown and relating solely to the businesses of the Acquired Companies; NOW, THEREFORE, in consideration of the mutual undertakings expressed in this Agreement and for such other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, Purchaser and Brown hereby agree as follows: 1. Definitions. Unless the context otherwise requires, capitalized terms used herein but not otherwise defined shall have the meanings assigned to them in the Membership Interest Purchase Agreement, dated as of the date hereof, between the Purchaser and Global Patent Holdings, LLC, as amended or modified from time to time. In addition, for purposes of this Agreement: "GOODWILL" shall mean all right, title and interest personally owned by Brown on or prior to the date hereof, anywhere in the world, in and to all goodwill relating solely to the Business, including the Seller's contacts and relationships with patent owners, attorneys, inventors, experts and others in the intellectual property business as such relates solely to the Business. Notwithstanding the foregoing, (a) Goodwill shall not include any trademarks, goodwill or other assets, tangible or intangible, owned by any of the Acquired Companies, and (b) Brown retains all right, title and interest in and to any and all goodwill relating to any activities other than the Business and to his name. "BUSINESS" shall mean the acquisition, licensing or enforcement of any patents or patent applications by the Acquired Companies on or prior to the date hereof. 2. Assignment. Brown hereby transfers, grants and assigns to Purchaser Brown's entire right, title and interest in and to the Goodwill. 3. Purchase Price. As consideration for the Goodwill sold by Brown to Purchaser, Purchaser shall pay to Brown Two Million Dollars ($2,000,000) on the Closing Date. 4. Disclaimer. EACH PARTY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR TITLE. WITHOUT LIMITATION OF THE FOREGOING, BROWN DISCLAIMS ANY REPRESENTATION OR WARRANTY RESPECTING THE INTELLECTUAL PROPERTY RIGHTS OF THE ACQUIRED COMPANIES GIVEN, INCLUDING REPRESENTATIONS OR WARRANTIES AS TO INFRINGEMENT, VALIDITY OR ENFORCEABILITY OF ANY SUCH RIGHT OR THE REVENUES THAT MAY BE OBTAINED THROUGH LICENSING OR ENFORCING SUCH RIGHTS. 5. Additional Covenant. Except as otherwise recommended by the Purchaser's tax advisors or accountants, Purchaser hereby agrees not to take any position or action for tax purposes that is inconsistent with the terms of this Agreement. 6. Limitations. THE PARTIES HERETO AGREE THAT, NOTWITHSTANDING ANY OTHER PROVISION HEREOF OR UNDER ANY OTHER AGREEMENT OR THEORY OF LAW, NEITHER PARTY NOR ANY OF ITS AFFILIATES SHALL BE LIABLE TO THE OTHER PARTY OR ANY OTHER PERSON OR ENTITY FOR DAMAGES IN THE FORM OF INDIRECT, CONSEQUENTIAL, INCIDENTAL OR SPECIAL DAMAGES, LOST PROFITS, LOST SAVINGS OR OTHERWISE, OR FOR EXEMPLARY DAMAGES, EVEN IF THE FIRST PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 7. Miscellaneous 7.1 Further Assurances. Each party hereto shall execute and/or cause to be delivered to each other party hereto such instruments and other documents, and shall take such other actions, as such other party may reasonably request (prior to, at or after the Closing) for the purpose of carrying out or evidencing any of the transactions contemplated under this Agreement. 7.2 Notices. Any notice or other communication required or permitted to be delivered to any party under this Agreement shall be in writing and shall be deemed properly delivered, given and received when delivered (by hand, by registered mail, by courier or express delivery service or by facsimile) to the address or facsimile telephone number set forth beneath the name of such party below (or to such other address or facsimile telephone number as such party shall have specified in a written notice given to the other parties hereto): If to Brown: Anthony O. Brown 500 Skokie Blvd., Suite 585 Northbrook, IL 60062 Facsimile: (847) 509-1330 If to Purchaser: Acacia Global Acquisition Corporation 500 Newport Drive, Suite 700 Newport Beach, CA 92660 Attention: Robert Berman, Esq. Telephone: (949) 480-8333 Facsimile: (949) 480-8390 With a copy (in the cases of notices to Purchaser, which copy shall not constitute notice) to: 2 Steven Anapoell, Esq. Greenberg Traurig, LLP 650 Town Center Drive, Suite 1700 Costa Mesa, California 92626 Telephone: (714) 708-6504 Facsimile: (714) 708-6501 7.3 Headings. The headings contained in this Agreement are for convenience of reference only, shall not be deemed to be a part of this Agreement and shall not be referred to in connection with the construction or interpretation of this Agreement. 7.4 Counterparts. This Agreement may be executed in several counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement. 7.5 Governing Law. This Agreement shall be construed in accordance with, and governed in all respects by, the internal laws of the State of California (without giving effect to principles of conflicts of laws). 7.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of Brown and Purchaser and its successors. 7.7 Waiver. (a) No failure on the part of any Person to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of any Person in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy. (b) No Person shall be deemed to have waived any claim arising out of this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of such Person; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given. 7.8 Amendments. This Agreement may not be amended, modified, altered or supplemented other than by means of a written instrument duly executed and delivered on behalf of Purchaser and Brown. 7.9 Severability. In the event that any provision of this Agreement, or the application of any such provision to any Person or set of circumstances, shall be determined to be invalid, unlawful, void or unenforceable to any extent, the remainder of this Agreement, and the application of such provision to Persons or circumstances other than those as to which it is determined to be invalid, unlawful, void or unenforceable, shall not be impaired or otherwise affected and shall continue to be valid and enforceable to the fullest extent permitted by law. 3 7.10 Parties In Interest. None of the provisions of this Agreement is intended to provide any rights or remedies to any Person other than the parties hereto and their respective heirs, personal representatives, and successors. 7.11 Entire Agreement. This Agreement sets forth the entire understanding of the parties relating to the subject matter thereof and supersedes all prior agreements and understandings among or between any of the parties relating to the subject matter thereof. 7.12 Construction. (a) For purposes of this Agreement, whenever the context requires, the singular number shall include the plural, and vice versa; the masculine gender shall include the feminine and neuter genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender shall include the masculine and feminine genders. (b) The parties hereto agree that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be applied in the construction or interpretation of this Agreement. (c) As used in this Agreement, the words "include" and "including," and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words "without limitation." Except as otherwise indicated, all references in this Agreement to "Sections" are intended to refer to Sections of this Agreement. 4 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. ACACIA GLOBAL ACQUISITIONS, LLC By: /S/ Robert A. Berman ------------------------------ Name: Robert A. Berman Title: COO /S/ Anthony O. Brown --------------------------------- Anthony O. Brown 5 EX-99.1 6 acacia_8k-pressrelease.txt EXHIBIT 99.1 ACACIA RESEARCH CORPORATION CONTACTS: Rob Stewart FOR RELEASE Investor Relations - ----------- Tel (949) 480-8300 January 31, 2005 Fax (949) 480-8301 Email: rs@acaciares.com ACACIA TECHNOLOGIES COMPLETES ACQUISITION OF RIGHTS TO 27 PATENT PORTFOLIOS ACQUISITION EXPANDS REVENUE --------------------------- GENERATING OPPORTUNITIES ------------------------ Newport Beach, CA. - (BUSINESS WIRE) January 31, 2005 - Acacia Research Corporation (Nasdaq: ACTG: CBMX) announced today that it has acquired the assets of Global Patent Holdings, LLC, a privately held patent holding company based in Northbrook, Illinois, which owns 11 patent licensing companies including TechSearch, LLC (www.techsearch-llc.com). Acacia had previously announced the signing of a binding letter of intent, subject to Acacia's due diligence which was recently completed. The acquisition gives the Acacia Technologies Group ownership of companies that control 27 patent portfolios, which include 120 U.S. patents and certain foreign counterparts, and cover technologies used in a wide variety of industries. Acacia paid $5 million in cash and issued approximately 3.9 million shares of Acacia Research--Acacia Technologies stock, and will pay an additional $2 million in cash over two years. "This acquisition significantly expands and diversifies our revenue generating opportunities and accelerates the execution of our business strategy of acquiring, developing and licensing patented technologies. We will continue to acquire additional patent portfolios, as Acacia moves toward its goal of becoming the leading technology licensing company," said Paul Ryan, Chairman & CEO of Acacia. The new patents relate to certain aspects of various technologies or products, including: o Broadcast Equipment o Broadcasting and Data Transmission o Cache Coherency o Credit Card Receipt Processing o Data File Synchronization o Datamatrix Bar Codes o Dynamic Manufacturing Models o Encryption and Product Activation o Hand Held Endoscopes o Image Resolution or Enhancement o Interactive Simulation Systems o Interstitial Internet Advertising o Peer to Peer Network Communications o Programs for Resource Scheduling/Displaying Interrelated Tables o Spreadsheet Programs o Video Noise Reduction and Audio/Video Synchronization Acacia is currently licensing its Digital Media Transmission (DMT(R)) technology and has entered into 293 DMT(R) licensing agreements, including 107 cable TV licenses, 181 licenses for online entertainment, movies, news, sports, e-learning and corporate websites and licenses with 5 companies that provide over 90% of video-on-demand TV entertainment to the hotel industry in the United States. ABOUT ACACIA RESEARCH CORPORATION Acacia Research Corporation comprises two operating groups, Acacia Technologies group and CombiMatrix group. The Acacia Technologies group develops, acquires, and licenses patented technologies. Acacia controls 29 patent portfolios, which include 126 U.S. patents, and certain foreign counterparts, covering technologies used in a wide variety of industries. Acacia's Digital Media Transmission (DMT(R)) technology relates to transmission and receiving systems commonly known as video-on-demand, and audio/video streaming, and is used for distributing digital content via several means including Internet, cable, satellite and wireless systems. The CombiMatrix group is developing a platform technology to rapidly produce customizable active biochips, which are semiconductor-based tools for use in identifying and determining the roles of genes, gene mutations and proteins. CombiMatrix's technology has a wide range of applications including DNA synthesis/diagnostics, drug discovery, and immunochemical detection. CombiMatrix's Express Track(sm) drug discovery program is a systems biology approach, using its technology, to target common viral diseases with siRNA compounds. Acacia Research-Acacia Technologies (Nasdaq: ACTG) and Acacia Research-CombiMatrix (Nasdaq: CBMX) are both classes of common stock issued by Acacia Research Corporation and are intended to reflect the performance of the respective operating groups and are not issued by the operating groups. INFORMATION ABOUT THE ACACIA TECHNOLOGIES GROUP AND THE COMBIMATRIX GROUP IS AVAILABLE AT www.acaciaresearch.com. ---------------------- SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This news release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and speak only as of the date hereof. Our actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including the recent economic slowdown affecting technology companies, our ability to successfully develop products, rapid technological change in our markets, changes in demand for our future products, legislative, regulatory and competitive developments and general economic conditions. Our Annual Report on Form 10-K, recent and forthcoming Quarterly Reports on Form 10-Q, recent Current Reports on Forms 8-K and 8-K/A, and other SEC filings discuss some of the important risk factors that may affect our business, results of operations and financial condition. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. EX-99.2 7 acacia_8kex99-2.txt EXHIBIT 99.2 ACACIA RESEARCH CORPORATION CONTACTS: Rob Stewart Investor Relations FOR RELEASE Tel (949) 480-8300 - ----------- Fax (949) 480-8301 January 31, 2005 Email:rs@acaciares.com ACACIA TECHNOLOGIES NAMES EXECUTIVE OFFICERS Newport Beach, CA. - (BUSINESS WIRE) January 31, 2005 - Acacia Research Corporation (Nasdaq: ACTG: CBMX) announced today that it's Acacia Technologies group has promoted Robert Berman to Chief Operating Officer, and that Dooyong Lee, formerly Chief Operating Officer of Global Patent Holdings, has joined the company as Executive Vice President, Business Development. "Robert Berman's promotion reflects his outstanding contributions to Acacia and the new position anticipates the growth in our business resulting from the acquisition of the rights to 27 new patent portfolios from Global Patent Holdings," said Paul Ryan, Chairman & CEO of Acacia. Mr. Berman, who has managed Acacia's patent acquisition, licensing and enforcement efforts over the past 4 years, joined Acacia in 2000, was named Senior Vice President, Business Development and General Counsel in 2001, and was named Executive Vice President in 2003. Prior to joining Acacia, Mr. Berman had extensive licensing and business development experience with media technology companies and held the position of Director of New Business Development at National Media Corporation from 1997 to 1998 and at QVC from 1993 - 1997. He practiced law at the Philadelphia law firm of Blank, Rome, Comisky and McCauley from 1989 to 1993. Mr. Berman received a B.S. from the University of Pennsylvania's Wharton School, and a J.D. from Northwestern Law School. "Dooyong Lee has over 20 years of experience in patent licensing and technology management with a long track record of success. Since joining Global as their COO in May 2003, he has been responsible for business development and has achieved exceptional results acquiring the rights to 20 new patent portfolios consisting of 81 patents, all of which are included in the acquisition from Global. His extensive experience in both patent licensing and business development will be instrumental in the continued growth of our company," concluded Mr. Ryan. Prior to Global, Mr. Lee was President of LPS Group, a patent licensing company he founded in early 2001 as a division of Information Holdings Inc. (now part of The Thomson Corporation, NYSE: TOC), that achieved profitability in less than two years. Prior to LPS Group, he co-founded FRI, an intellectual property consulting firm under the sponsorship of Fish & Richardson PC, and helped major corporations worldwide establish and manage patent licensing organizations and also negotiated patent licenses for corporate and individual clients. Prior to FRI, he was a licensing executive at AT&T Bell Laboratories/Lucent Technologies, where he was responsible for developing new business as well as licensing long distance carriers and voicemail vendors, and spearheaded major process re-engineering efforts for the 260-person intellectual property organization. Mr. Lee received a B.A. from Oberlin College and an M.S. from the University of California at Berkeley. He holds six U.S. patents and is the inventor of the popular telemarketing feature that provides expected waiting time announcements to incoming callers. ABOUT ACACIA RESEARCH CORPORATION Acacia Research Corporation comprises two operating groups, Acacia Technologies group and CombiMatrix group. The Acacia Technologies group develops, acquires, and licenses patented technologies. Acacia controls 29 patent portfolios, which include 126 U.S. patents, and certain foreign counterparts, covering technologies used in a wide variety of industries. Acacia's Digital Media Transmission (DMT(R)) technology relates to transmission and receiving systems commonly known as video-on-demand, and audio/video streaming, and is used for distributing digital content via several means including Internet, cable, satellite and wireless systems. The CombiMatrix group is developing a platform technology to rapidly produce customizable active biochips, which are semiconductor-based tools for use in identifying and determining the roles of genes, gene mutations and proteins. CombiMatrix's technology has a wide range of applications including DNA synthesis/diagnostics, drug discovery, and immunochemical detection. CombiMatrix's Express Track(sm) drug discovery program is a systems biology approach, using its technology, to target common viral diseases with siRNA compounds. Acacia Research-Acacia Technologies (Nasdaq: ACTG) and Acacia Research-CombiMatrix (Nasdaq: CBMX) are both classes of common stock issued by Acacia Research Corporation and are intended to reflect the performance of the respective operating groups and are not issued by the operating groups. INFORMATION ABOUT THE ACACIA TECHNOLOGIES GROUP AND THE COMBIMATRIX GROUP IS AVAILABLE AT WWW.ACACIARESEARCH.COM. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This news release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon our current expectations and speak only as of the date hereof. Our actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including the recent economic slowdown affecting technology companies, our ability to successfully develop products, rapid technological change in our markets, changes in demand for our future products, legislative, regulatory and competitive developments and general economic conditions. Our Annual Report on Form 10-K, recent and forthcoming Quarterly Reports on Form 10-Q, recent Current Reports on Forms 8-K and 8-K/A, and other SEC filings discuss some of the important risk factors that may affect our business, results of operations and financial condition. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. -----END PRIVACY-ENHANCED MESSAGE-----