EXHIBIT 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”), dated September 3, 2019 is entered
into by and among Acacia Research Group LLC, a Texas limited liability company
("Acacia”), Acacia Research Corporation (the “Company”) and Clifford Press
(“You”), on the following terms and conditions.

 

BACKGROUND

 

Acacia, the Company and You desire to enter into this Agreement, subject to the
terms and conditions as set forth below.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants set
forth herein, Acacia and You, intending to be legally bound, hereby agree as
follows:

 

1.    Position and Responsibilities. You will be employed as Chief Executive
Officer of the Company and serve as a member of the Board of Directors of the
Company (the “Board”) with duties, responsibilities and authorities commensurate
with such positions, reporting directly and exclusively to the Board. The start
date at which You will begin employment at Acacia will be September 3, 2019
(“Start Date”). You agree that, at all times during your employment hereunder,
You will be subject to and comply with Acacia's personnel policies including
Acacia's Insider Trading Policy (attached hereto as Exhibit A), Sexual
Harassment Policy and general Harassment Policy (attached hereto as Exhibits B-1
and B-2, respectively) and Employee Handbook, all as may be modified from time
to time. You will devote substantially all of your working time and efforts to
Acacia's business; provided that, so long as such activities do not materially
interfere with Your duties to the Company, You shall be permitted to (a) serve
on civic and charitable boards, (b) manage personal, financial and legal affairs
and investments and (c) serve on at least one additional for profit board of
directors (and any committees related thereto); provided, further, that in all
events you shall be permitted to continue to engage in the activities set forth
on Schedule A. The Company shall adopt, and You agree to be subject to and
comply with, policies related to Your outside business activities, which
policies shall also address any fees You may receive during the term of Your
employment in connection with serving on boards or committees of any third party
entities.

 

2.    Employment. Your employment will be at-will and may be terminated by
Acacia or You for any reason. This at-will arrangement cannot be changed during
your employment, unless agreed to in writing by the Board.

 

3.    Compensation. For all services rendered by You pursuant to this Agreement,
Acacia will pay You, subject to your adherence to all of the terms of this
Agreement, and You will accept as full compensation hereunder, the following:

 

3.1 Salary. Acacia will pay You an annual salary of $475,000, which shall be
reviewed by the Compensation Committee of the Board (the “Committee”) at least
annually for increase, but not decrease (such salary as increased from time to
time (the “Salary”). The Salary will be subject to all appropriate federal and
state withholding taxes and will be payable bi-weekly, in accordance with the
normal payroll procedures of Acacia. In addition, within 15 days of the Start
Date, Acacia will pay you $79,166.66 in consideration for services provided by
You on behalf of the Company from July 1, 2019 through the date hereof.

 

3.2 Discretionary Bonus. At the end of each calendar year, if employed at
Acacia, You will be eligible for a discretionary cash bonus of between 50% and
150% of the Salary, with a target bonus of 100% of Your Salary (the “Target
Bonus”), based on the achievement of operational and strategic performance goals
established by the Committee in consultation with You. For calendar year 2019,
(a) the performance goals established by the Committee shall be strategic, (b)
the bonus paid shall be prorated based on the number of days that You were
employed during the year commencing on the Start Date, and (c) the bonus shall
be paid to You no later than December 31, 2019. Except as provided in the
immediately preceding sentence, such discretionary annual bonus will be
evaluated and paid (if applicable) no later than the end of the month following
the calendar year to which such bonus relates. The discretionary annual bonus
will be subject to all appropriate federal and state withholding taxes in
accordance with the normal payroll procedures of Acacia.

 

 

 

 

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3.3 Restricted Stock Units. As of the date hereof, You will be granted
restricted stock units of the Company (Nasdaq: ACTG) having a grant date fair
value of $650,000 on the terms and conditions (including the vesting terms) set
forth on Exhibit RS (the “Initial Equity Grant”).

 

3.4 Inducement Payment. In consideration for Your agreement to accept Your
position with Acacia and to relinquish various positions that You currently hold
with other organizations, Acacia shall pay to you a lump sum cash payment of
$350,000, of which $150,000 has been paid to you prior to the date hereof and of
which the remaining $200,000 shall be paid to you within 15 days of the Start
Date. The payment described in the immediately preceding sentence will be
subject to all appropriate federal and state withholding taxes in accordance
with the normal payroll procedures of Acacia.

 

3.5 Benefits and Perquisites. Acacia will make benefits available to You,
including, but not limited to, health, death and disability insurance, and the
like, to the extent and on the terms made available to other similarly situated
executives of Acacia. This provision does not alter Acacia's right to modify or
eliminate any employee benefit and does not guarantee the continuation of any
kind or level of benefits. Except to the extent otherwise expressly provided
herein, all such benefits will cease upon the termination of your employment
under this Agreement.

 

3.6 Termination. The employment relationship between You and Acacia created
hereunder will terminate upon the occurrence of any one of the following events:

 

3.7 Death or Permanent Disability. Acacia may terminate this Agreement and any
further obligations to You if You die or, due to physical or mental disability,
You are, for a period in excess of 90 consecutive days or 120 days in any 180
day period, either (a) unable to reasonably and effectively carry out your
duties with reasonable accommodations by Acacia or (b) unable to reasonably and
effectively carry out your duties because any reasonable accommodation which may
be required would cause Acacia undue hardship. In the event of a disagreement
concerning your perceived disability, You will submit to such examinations as
are deemed appropriate by three practicing physicians specializing in the area
of your disability, one selected by You, one selected by Acacia, and one
selected by both such physicians. The majority decision of such three physicians
will be final and binding on the parties.

 

3.8 Termination for Cause. Your employment may be terminated at any time with or
without Cause. For purposes of this Agreement, “Cause” shall mean:

 

(a)  Your willful refusal to substantially perform your duties hereunder, or
willful breach any of your material obligations under this Agreement;

 

(b)  Your willful misconduct or gross negligence, which is likely to have the
effect of demonstrably injuring the reputation, business or business
relationship of Acacia;

 

(c)  You are convicted of or plead guilty or nolo contendre to any criminal
offense, or felony; or

 

(d)  You embezzle or steal any of Acacia's funds or assets or commit any act of
fraud with respect to any aspect of Acacia's business;

 

provided that Cause shall not apply to any act or omission described above
unless the Board provides written notice of the act or omission and, with
respect to clauses (a) or (b), the act or omission is cured within 10 days after
receipt of such notice. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or upon the instructions of
the Board or reasonably based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by You in good faith
and in the best interests of the Company and no act or failure to act on Your
part shall be considered “willful,” so long as you reasonably believed that such
action, or failure to act, was in the best interests of the Company.

 

 

 

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3.9 Resignation by You with or without Good Reason. You may resign at any time
without Good Reason upon providing the Company with 30 days prior written
notice. You may resign at any time for Good Reason. For purposes of this
Agreement, “Good Reason” shall mean, without Your prior written consent:

 

(a) A material reduction in Your Salary or Target Bonus (provided, that so long
as the Target Bonus is in the range set forth in Section 3.2, there shall be no
deemed “material reduction” in such Target Bonus even if the amount of the
potential Target Bonus to be earned by You in a given year is less than the
amount of the potential Target Bonus to be earned by you in the prior year);

 

(b) A change in Your title(s) or reporting relationship or a material reduction
in your duties, responsibilities or authorities;

 

(c) A relocation of Your principal place of business from Manhattan, NY; or

 

(d) A material breach of this Agreement;

 

Your termination of employment will not be for Good Reason unless (1) You notify
the Company in writing of the existence of the condition that You believe
constitutes Good Reason within 60 days of the initial existence of such
condition (which notice specifically identifies such condition), (2) the Company
fails to remedy such condition within 30 days after the date on which it
receives such notice (the “Remedial Period”), and (3) so long as the Company
acknowledges in writing the existence of Good Reason by the end of the Remedial
Period, You actually terminate employment within 30 days following the
expiration of the Remedial Period and before the Company remedies such
condition. If the Company does not acknowledge the existence of Good Reason by
the end of the Remedial Period, You shall only be required to resign for Good
Reason within two years after the end of the Remedial Period, unless at any time
during such two year period the Company provides written notice to You that Good
Reason exists in which case You shall have 30 days from Your receipt of such
notice to resign for Good Reason.

 

4.    Compensation Upon Termination.

 

4.1  Termination for Any Reason. Upon termination of your employment under this
Agreement for any reason, the Company or one of its affiliates shall pay You:
(i) unpaid salary earned through the date of termination; (ii) for any vacation
time earned but not used as of the date Your employment terminates in accordance
with Company policies as then in effect; (iii) reimbursement, in accordance with
the Company’s and its affiliates policies and procedures, for business expenses
incurred by You but not yet paid to You as of the date Your employment
terminates; (iv) except in the case of a termination by the Company and its
affiliates for Cause, Your annual bonus for any completed fiscal year to the
extent not yet paid and earned; and (v) all other payments, benefits or fringe
benefits to which You are entitled under the terms of the applicable
arrangements and/or applicable law (all of the foregoing clauses (i)-(v)
collectively, the “Accrued Obligations”).

 

4.2  Other Than Cause/For Good Reason. Upon termination of your employment under
this Agreement by the Company and its affiliates other than for Cause, Death or
Disability or by You for Good Reason, in addition to the Accrued Obligations,
subject to Your execution and non-revocation of a release in the form attached
hereto as Exhibit A and Your compliance with the restrictive covenants in
Sections 5 through 8 below, You will be entitled to (i) a severance payment
equal to the product of (A) 1.5 and (B) Your Salary (provided that if such
termination occurs within one (1) year following a Change in Control (as defined
on Exhibit CIC), such amount shall be equal to the product of (A) two and (B)
sum of (1) Your Salary and (2) the Target Bonus), which severance payment shall
be paid in 18 monthly installments commencing on the 60th day following Your
date of termination, (ii) a payment in an amount equal to the product of (A) the
Target Bonus and (B) a fraction, the numerator of which is the number of days in
the year in which the date of termination occurs through the date of termination
(or if the termination occurs in 2019 the number of days in the year from the
Start Date until the date of termination) and the denominator of which is 365
(the “Pro Rata Bonus”), which payment shall be paid in 18 monthly installments
commencing on the 60th day following Your date of termination, and (iii) to the
extent that You participate in Acacia’s health programs, the Company shall pay
You an amount in cash, on a monthly basis, equal to the employer portion of the
premiums for Your health plan benefits for You and Your eligible dependents for
a period of 18 months commencing on Your date of termination (the “Health
Benefits”). In addition, upon a termination by the Company without Cause or a
resignation by You for Good Reason, in each case if such termination occurs
within one (1) year following a Change in Control, with respect to the Initial
Equity Grant, You will immediately be deemed to have satisfied any time-based
and performance-based vesting requirements (the “Equity Benefits”).

 

 

 

 

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4.3  Death/Disability. Upon termination of Your employment under this Agreement
by reason of Your death or Disability, in addition to the Accrued Obligations,
You (or Your estate or guardian, as applicable) shall be paid or provided the
Pro Rata Bonus and the Health Benefits.

 

4.4  Remedy. Should Acacia terminate your employment for Cause, and it is later
determined that Acacia did not have Cause for the termination, then Acacia’s
decision to terminate You will be deemed to have been made without Cause and
Acacia will pay You the compensation as set forth in this Agreement, as your
sole and exclusive remedy.

 

5.    Confidentiality.

 

5.1  Confidential Information. Acacia and You recognize that You will acquire
certain confidential and proprietary information relating to Acacia's business
and the business of Acacia's affiliates. Such confidential and proprietary
information is information that derives independent economic value, actual or
potential, from not being generally known to the public or to other persons who
can obtain economic value from its disclosure or use, and is the subject of
efforts that are reasonable under the circumstances to maintain its secrecy
(“Confidential Information"). Confidential Information may include, without
limitation, the following: business plans, projections, information (including,
without limitation, privileged information) relating to any litigation or other
proceeding to which Acacia or any of its affiliates are parties to, planning and
strategies, marketing plans, materials, pricing, programs and related data,
product information, services, budgets, acquisition plans, the names or
addresses of any employees, independent contractors or customers, licensing
strategy, statistical data, financial information or arrangements, manuals,
forms, techniques, know-how, trade secrets, software, any method or procedure of
Acacia's business, whether developed by Acacia or developed, or contributed to,
by You during the course of your employment, or made available to You by Acacia
or any of Acacia's affiliates in the course of your employment, or any market
development, research or expansion projects, business systems and procedures and
other confidential business and proprietary information. Confidential
Information may be contained in written materials, verbal communications, the
unwritten knowledge of employees, or any other tangible medium, such as tape,
computer, or other means of electronic storage of information.

 

5.2  Obligation of Confidentiality. You acknowledge and agree that (a) all of
the Confidential Information constitutes special, unique and valuable assets of
Acacia and trade secrets, the disclosure of which would cause irreparable harm
and substantial loss to Acacia and/or its affiliates. In view of the foregoing,
You agree that at no time will You, directly or indirectly, and whether during
or after your employment with Acacia, use, reveal, disclose or make known any
Confidential Information without specific written authorization from or written
direction by Acacia. You further agree that, immediately upon termination or
expiration of your employment for any reason whatsoever, or at any time upon
request by Acacia, You will return to Acacia all Confidential Information.
Notwithstanding the foregoing, any restriction on Your use, disclosure, or
conveyance of Confidential Information shall not apply to (i) any Confidential
Information that enters the public domain through no fault of Yours or any
person affiliated with You; (ii) any Confidential Information that You are
required to disclose pursuant to applicable law or legal process, an order of a
court of competent jurisdiction or a government agency having appropriate
authority, solely to the extent necessary to comply with such order; and (iii)
any use or disclosure, during the course of Your service with Acacia of
Confidential Information made necessary by the proper conduct of the business of
Acacia and consistent with the instructions of Acacia. Nothing in any code,
agreement, manual or in any other policies, procedures or agreements of Acacia
or its affiliates shall prohibit or restrict You or Your counsel from providing
information in connection with: (a) any disclosure of information required by
law or legal process; (b) reporting possible violations of federal or state law
or regulation to any governmental agency, commission or entity or
self-regulatory organization (collectively “Government Agencies”) (c) filing a
charge or complaint with Government Agencies; (d) making disclosures that are
protected under the whistleblower provisions of federal or state law or
regulation (collectively the “Whistleblower Statutes”); or (e) from initiating
communications directly with, responding to any inquiry from, volunteering
information to, testifying or otherwise participating in or assisting in any
inquiry, investigation or proceeding brought by Government Agencies in
connection with (a) through (e).  You are not required to advise or seek
permission from Acacia or its affiliates before engaging in any activity set
forth in (a) through (e).  Further, Acacia and its affiliates do not in any
manner limit Your right to receive an award from Government Agencies for
information provided to Government Agencies or pursuant to the Whistleblower
Statutes. In no event shall You be prohibited from disclosing Confidential
Information to Your legal advisors or from providing information regarding Your
compensation or the terms of this Agreement to any financial or tax advisors.

 

 

 

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6.    Intellectual Property. You agree that any and all discoveries, concepts,
ideas, inventions, writings, plans, articles, devices, products, designs,
treatments, structures, processes, methods, formulae, techniques and drawings,
and improvements or modifications related to the foregoing that are in any way
related to intellectual property owned or controlled by Acacia or its affiliates
or subsidiaries, whether patentable, copyrightable or not, which are made,
developed, created, contributed to, reduced to practice, or conceived by You,
whether solely or jointly with others, in connection with your employment with
Acacia (collectively, the “Intellectual Property”) will be and remain the
exclusive property of Acacia, and, to the extent applicable, a “work made for
hire,” and Acacia will own all rights, title and interests thereto, including,
without limitation, all rights under copyright, patent, trademark, statutory,
common law and/or otherwise. By your execution of this Agreement, You hereby
irrevocably and unconditionally assign to Acacia all right, title and interest
in any such Intellectual Property. You further agree to take all such steps and
all further action as Acacia may reasonably request to effectuate the foregoing,
including, without limitation, the execution and delivery of such documents and
applications as Acacia may reasonably request to secure the rights to
Intellectual Property worldwide by patent, copyright or otherwise to Acacia or
its successors and assigns. You further agree promptly and fully to disclose any
Intellectual Property to the officers of Acacia and to deliver to such officers
all papers, drawings, models, data and other material (collectively, the
“Material”) relating to any Intellectual Property made, reduced to practice,
developed, created or contributed to by You and, upon termination, or expiration
of your employment with Acacia, to turn over to Acacia all such Material. Any
intellectual property which was developed by You prior to the date of this
agreement, or which is developed by You during or after the termination of this
Agreement and is not in any way related to any of Acacia's or any of its
subsidiaries' or affiliates' intellectual property, will be owned by You.

 

7.    Other Activities, Non-Solicitation. During the term of this Agreement, You
will not engage in any activities that are competitive with Acacia, or any of
its affiliates or subsidiaries, or that would result in a conflict of interest.
In the event of the termination of your employment for any reason, You, for a
period of one year will not: (a) solicit for employment and then employ any
employee of Acacia or any of its affiliates or subsidiaries or any person who is
an independent contractor involved in any of its affiliates or subsidiaries; (b)
make any public statement concerning Acacia, or any of its affiliates or
subsidiaries, or your employment, unless previously approved by Acacia, except
as may be required by law or as otherwise provided in Section 8 below; or (c)
induce, attempt to induce or knowingly encourage any Customer of Acacia or any
of its affiliates or subsidiaries to divert any business or income from Acacia
or any of its affiliates or subsidiaries or to stop or alter the manner in which
they are then doing business with Acacia or any of its affiliates or
subsidiaries. In addition, in the event of the termination of your employment
for any reason, You, for a period of two years will not serve as a director,
officer, employee or consultant to any public company engaged in the business of
acting as a patent assertion entity (“PAE”); provided that (i) You may be
employed by or provide services to an affiliated group that has a business unit
that acts as a PAE, which business unit comprises no more than fifteen percent
(15%) of such affiliated group’s overall business as measured by revenue,
provided that You do not provide any direct services to the business unit (for
the avoidance of doubt, it shall not be a violation of this Agreement for You to
render services to a different business unit or to serve the parent of such
business unit), and comply with Your obligations with respect to the Company’s
Confidential Information and (ii) You may become employed by or provide services
to any private equity fund, hedge fund, or other similar investment vehicle that
invests in or holds a position in a public entity that acts as a PAE, provided
that Your services to such investment vehicle or its managers or advisors do not
involve investment or management decisions with respect to any of such
investment vehicle’s public portfolio companies engaged as PAEs and You do not
use any of the Company’s Confidential Information. The term “Customer” will mean
any individual or business firm that was or is a customer, client, licensee
and/or licensor of, or one that was or is a party in an investor agreement with,
or whose business was actively solicited by, Acacia or any of its affiliates or
subsidiaries at any time, regardless of whether such customer was generated, in
whole or in part, by your efforts.

 

 

 

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8.    Non-Disparagement. Because Acacia’s and its affiliates’ respective
businesses involve a significant amount of third party litigation, You and other
employees of Acacia will, from time-to-time during your employment under this
Agreement, be in possession of privileged and/or sensitive information, which if
used or disclosed in a manner adverse to Acacia and/or its affiliates would have
a material and adverse effect on Acacia and/or its affiliates. Accordingly,
during Your employment with Acacia or any of its subsidiaries and at all times
thereafter, You agree not to (i) make any statements outside of Acacia (whether
directly or through any other person or entity, and whether orally or in
writing) that disparage, denigrate or malign Acacia or any of its affiliates or
any of their respective businesses, activities, operations or the reputations of
any of their respective directors, officers, managers, employees,
representatives, owners or equityholders, or (ii) voluntarily participate,
assist or testify in any legal proceeding against Acacia. This Non-Disparagement
provision will not apply (1) if You are compelled to testify in a legal
proceeding, solely with respect to the specific information that You are
compelled to include in such testimony, (2) if in connection with You filing a
charge with, participating in a proceeding before or otherwise communicating
with the Equal Employment Opportunity Commission, the National Labor Relations
Board, the Occupational Safety and Health Administration, the Securities and
Exchange Commission or any other federal, state or local governmental agency or
commission, (3) in connection with any arbitration claim, or other proceeding
brought by You, or in which You are a plaintiff, against Acacia or any of its
affiliates or any of their respective directors, officers, managers, employees,
representatives, owners or equityholders, or (4) to the extent precluded by
applicable law.

 

9.    Remedies. Each of the parties to this Agreement will be entitled to
enforce its rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction for injunctive relief without the need
for an undertaking in order to enforce or prevent any violations of the
provisions of this Agreement.

 

10.  Assignment. This Agreement is personal to You and may not be assigned in
any way by You without the prior written consent of Acacia. Any such attempted
assignment without Acacia's written consent will be void.

 

11.  Severability and Reformation. The parties intend all provisions of this
Agreement to be enforced to the fullest extent permitted by law. If, however,
any provision of this Agreement is held to be illegal, invalid, or unenforceable
under present or future law, such provision will be fully severable, and this
Agreement will be construed and enforced as if such illegal, invalid, or
unenforceable provision were never a part hereof and the remaining provisions
will remain in full force and effect. Moreover, any provision so affected will
be limited only to the extent necessary to bring the Agreement within the
applicable requirements of law.

 

12.  Governing Law and Venue. This Agreement is to be governed by and construed
in accordance with the laws of the State of New York applicable to contracts
made and to be performed wholly within such State, and without regard to the
conflicts of laws principles thereof.

 

 

 

 

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13.  Arbitration. Except as otherwise set forth in Section 9 above, any
controversy, claim or dispute arising out of or in any way relating to this
Agreement, the alleged breach thereof, and/or your employment with Acacia or its
termination including, without limitation, claims for breach of any express or
implied contract, tort claims, claims for violation of any federal, state or
other governmental law, statute, ordinance, Executive Order or regulation, and
any and all claims for employment discrimination or harassment, will be
determined by binding arbitration administered by the American Arbitration
Association under its National Rules for Resolution of Employment Disputes
("Rules") which are in effect at the time of the arbitration. In reaching a
decision, the arbitrator will have no authority to change, extend, modify or
suspend any of the terms of this Agreement. The arbitration will be commenced
and heard in New York County, New York. The arbitrator will apply the
substantive law (and the law of remedies, if applicable) of New York or federal
law, or both, as applicable to the claim(s) asserted. The Arbitrator will issue
a written decision explaining his/his award. Judgment on the award may be
entered in any court of competent jurisdiction, even if a party who received
notice under the Rules fails to appear at the arbitration hearing(s). The
parties may seek, from a court of competent jurisdiction, provisional remedies
or injunctive relief in support of their respective rights and remedies
hereunder without waiving any right to arbitration. However, the merits of any
action that involves such provisional remedies or injunctive relief, including,
without limitation, the terms of any permanent injunction, will be determined by
arbitration under this paragraph. Notwithstanding the foregoing, claims for
workers' compensation benefits, unemployment compensation benefits, or claims
based upon an employee benefit plan which provides by its own terms for
arbitration are exempted from the provisions of this Paragraph. In any
arbitration hereunder, the parties will each pay for their costs and attorneys'
fees, if any. However, if either party prevails on a statutory claim which
entitles the prevailing party to attorneys' fees, the arbitrator may award
reasonable attorneys' fees to the prevailing party in accordance with that
statute. If any claim or class of claim is determined by applicable law not to
be subject to arbitration, this Agreement to arbitrate will remain in full force
and effect with respect to all other claims asserted between the parties.

 

14.  Entire Agreement, Amendment and Waiver. This Agreement contains the entire
understanding and agreement between the parties, and supersedes any other
agreement between Acacia and You, whether oral or in writing, with respect to
the subject matter hereof. This Agreement may not be altered or amended, nor may
any of its provisions be waived, except by a writing signed by both parties
hereto or, in the case of an asserted waiver, by the party against whom the
waiver is sought to be enforced. Waiver of any provision of this Agreement, or
any breach thereof, will not be deemed to be a waiver of any other provision or
any subsequent alleged breach of this Agreement.

 

15.  Survival and Counterparts. The provisions of Sections 4, 5, 6, 7, 8, 9, 10,
11, 12, 13, 14 and 15 of this Agreement will survive the termination of this
Agreement. This Agreement may be executed in counterparts, with the same effect
as if both parties had signed the same document. All such counterparts will be
deemed an original, will be construed together and will constitute one and the
same instrument

 

16.  Stock Purchase Right. The Company hereby consents to Your purchase of up to
7.5 percent of the Company’s common stock (subject to your compliance with the
Company’s blackout policies and any other prohibition on purchasing securities
while in possession of material non-public information) and shall take such
actions as may be necessary to permit such purchases under the Company’s Tax
Benefits Preservation Plan.

 

17.  Clawback, Stock Ownership and Holding Period Requirements. Notwithstanding
any other provision in this Agreement to the contrary, You shall be subject to
the written policies of the Company’s Board of Directors applicable to Company
executives, relating to recoupment or “clawback” of incentive compensation.

 

 

 

 

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18.    Section 280G Cutback.

 

(a) Anything in this Agreement to the contrary notwithstanding, in the event
that the Accounting Firm shall determine that receipt of all Payments would
subject You to tax under Section 4999 of the Code, the Accounting Firm shall
determine whether some amount of Agreement Payments meets the definition of
“Reduced Amount.”  If the Accounting Firm determines that there is a Reduced
Amount, then the aggregate Agreement Payments shall be reduced to such Reduced
Amount.

 

(b)   If the Accounting Firm determines that the aggregate Agreement Payments
should be reduced to the Reduced Amount, the Company shall promptly give You
notice to that effect and a copy of the detailed calculation thereof, and You
may then elect, in Your sole discretion, which and how much of the Agreement
Payments shall be eliminated or reduced (as long as after such election the
Present Value of the aggregate Agreement Payments equals the Reduced Amount). 
All determinations made by the Accounting Firm under this Paragraph shall be
binding upon the Company and its affiliates.  In connection with making
determinations under this Paragraph, the Accounting Firm shall take into account
the value of any reasonable compensation for services to be rendered by You
before or after the Change in Control, including any non-competition provisions
that may apply to You and the Company and its affiliates shall cooperate in the
valuation of any such services, including any non-competition provisions.

 

(c)  As a result of the uncertainty in the application of Section 4999 of the
Code at the time of the initial determination by the Accounting Firm hereunder,
it is possible that amounts will have been paid or distributed by the Company or
its affiliates to or for Your benefit pursuant to this Agreement which should
not have been so paid or distributed (each, an “Overpayment”) or that additional
amounts which will have not been paid or distributed by the Company to or for
Your benefit pursuant to this Agreement could have been so paid or distributed
(each, an “Underpayment”), in each case, consistent with the calculation of the
Reduced Amount hereunder.  In the event that the Accounting Firm, based upon the
assertion of a deficiency by the Internal Revenue Service against either the
Company or You which the Accounting Firm believes has a high probability of
success determines that an Overpayment has been made, any such Overpayment paid
or distributed by the Company to or for Your benefit shall be repaid by You to
the Company together with interest at the applicable federal rate provided for
in Section 7872(f)(2) of the Code; provided, however, that no such repayment
shall be required if and to the extent such deemed repayment would not either
reduce the amount on which You are subject to tax under Section 1 and
Section 4999 of the Code or generate a refund of such taxes.  In the event that
the Accounting Firm, based upon controlling precedent or substantial authority,
determines that an Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to or for Your benefit together with interest at
the applicable federal rate provided for in Section 7872(f)(2) of the Code. All
fees and expenses of the Accounting Firm in implementing the provisions of this
Paragraph shall be borne by the Company.

 

(d)  The following terms shall have the following meanings for purposes of this
Paragraph. (1)  A “Payment” shall mean any payment or distribution in the nature
of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for
your benefit, whether paid or payable pursuant to this Agreement or otherwise;
(2)  “Agreement Payment” shall mean a Payment paid or payable pursuant to this
Agreement (disregarding this Paragraph); (3)  “Net After-Tax Receipt” shall mean
the Present Value of a Payment net of all taxes imposed on you with respect
thereto under Sections 1 and 4999 of the Code and under applicable state and
local laws, determined by applying the highest marginal rate under Section 1 of
the Code and under state and local laws which applied to your taxable income for
the immediately preceding taxable year, or such other rate(s) as you shall
certify, in your sole discretion, as likely to apply to you in the relevant tax
year(s); (4)  “Accounting Firm” shall mean Golden Parachute Tax Solutions LLC or
such other nationally recognized accounting firm selected by you; (5) 
“Parachute Value” of a Payment shall mean the present value as of the date of
the change of control for purposes of Section 280G of the Code of the portion of
such Payment that constitutes a “parachute payment” under Section 280G(b)(2), as
determined by the Accounting Firm for purposes of determining whether and to
what extent the Excise Tax will apply to such Payment; and (6) “Reduced Amount”
shall mean the amount of Agreement Payments that (x) has a Present Value that is
less than the Present Value of all Agreement Payments and (y) results in
aggregate Net After-Tax Receipts for all Payments that are greater than the Net
After-Tax Receipts for all Payments that would result if the aggregate Present
Value of Agreement Payments were any other amount that is less than the Present
Value of all Agreement Payments.

 

 

 

 

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19.    Section 409A. To the extent (i) any payments to which You become entitled
under this agreement, or any agreement or plan referenced herein, in connection
with Your termination of employment with the Company and its affiliates,
constitute deferred compensation subject to Section 409A of the Internal Revenue
Code (“Section 409A”) and (ii) You are deemed at the time of such termination of
employment to be a “specified” employee under Section 409A, then such payment or
payments shall not be made or commence until the earlier of (i) the expiration
of the 6-month period measured from the date of your “separation from service”
(as such term is at the time defined in regulations under Section 409A) with the
Company and its affiliates and (ii) the date of Your death following such
separation from service, provided, however, that such deferral shall be effected
only to the extent required to avoid adverse tax treatment to You, including
(without limitation) the additional twenty-percent (20%) tax for which You would
otherwise be liable under Section 409A(a)(1)(B) in the absence of such deferral.
Upon the expiration of the applicable deferral period, any payments which would
have otherwise been made during that period (whether in a single sum or in
installments) in the absence of this paragraph shall be paid to You or Your
beneficiary in one lump sum (without interest). To the extent that any provision
of this Agreement is ambiguous as to its exemption or compliance with Section
409A, the provision will be read in such a manner so that (i) all payments
hereunder are exempt from Section 409A to the maximum permissible extent and,
(ii) for any payments where such construction is not tenable, so that those
payments comply with Section 409A to the maximum permissible extent. Payments
pursuant to this Agreement (or referenced in this Agreement), and each
installment thereof, are intended to constitute separate payments for purposes
of Section 1.409A-2(b)(2) of the regulations under Section 409A. All references
to termination of employment or similar terms shall be deemed to mean separation
from service within the meaning of Section 409A. Notwithstanding anything to the
contrary herein, except to the extent any expense, reimbursement or in-kind
benefit provided pursuant to this Agreement does not constitute a “deferral of
compensation” within the meaning of Section 409A: (x) the amount of expenses
eligible for reimbursement or in-kind benefits provided to You during any
calendar year will not affect the amount of expenses eligible for reimbursement
or in-kind benefits provided to You in any other calendar year, (y) the Company
or its affiliates will reimburse You for expenses for which You are entitled to
be reimbursed on or before the last day of the calendar year following the
calendar year in which the applicable expense is incurred or, if earlier, within
30 days after You have substantiated the expense, and (z) the right to payment
or reimbursement or in-kind benefits hereunder may not be liquidated or
exchanged for any other benefit.

 

 

 

 

 

 

 

 9 

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

 

ACACIA RESEARCH GROUP LLC

 

 

 

By: /s/ Marc W. Booth 

Name: Marc W. Booth

Its: CEO and President

 

 

 

ACACIA RESEARCH CORPORATION

 

 

 

By: /s/ Maureen O’Connell 

Name: Maureen O’Connell

Its: Chairman

 

 

 

/s/ Clifford Press  

Clifford Press

 

 

 

 

 

 

 

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EXHIBIT RS

 

Initial Equity Grant

 

The restricted stock units granted pursuant to the Initial Equity Grant shall
vest in accordance with the following schedule: (i) 80,000 restricted stock
units shall vest on September 3, 2022 (the “Vesting Date”) if the Company
achieves a total shareholder return (“TSR”) compound annual growth rate (“CAGR”)
of 8.0% during the performance period starting on September 3, 2019 and ending
on the Vesting Date (the “Performance Period”), (ii) 140,000 additional
restricted stock units shall vest on the Vesting Date if the Company achieves a
TSR CAGR of 12.0% during the Performance Period, and (iii) 230,000 additional
restricted stock units shall vest on the Vesting Date if the Company achieves a
TSR CAGR of 16.0% during the Performance Period.

 

 

 

 

 

 

 

 

 

 

 

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