SEC Contract Filing

Filing Date: 2019-11-19

Document Content:
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<TYPE>EX-10.3
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<FILENAME>d836502dex103.htm
<DESCRIPTION>EX-10.3
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right"><B>Exhibit 10.3 </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right">EXECUTION VERSION </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>GOVERNANCE
AGREEMENT </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">This Governance Agreement (this &#147;<U>Agreement</U>&#148;) is made and entered into as of November&nbsp;18, 2019 by and
among Acacia Research Corporation (the &#147;<U>Company</U>&#148;) and the entities and natural persons set forth in the signature pages hereto (collectively, &#147;<U>Starboard</U>&#148;) (each of the Company and Starboard, a
&#147;<U>Party</U>&#148; to this Agreement, and collectively, the &#147;<U>Parties</U>&#148;). </P> <P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>RECITALS </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">WHEREAS, the Company and Starboard are parties to that certain Securities Purchase Agreement, dated as of November&nbsp;18, 2019 (the
&#147;<U>Purchase Agreement</U>&#148;), and Registration Rights Agreement, dated as of November&nbsp;18, 2019 (collectively with the Purchase Agreement, the &#147;<U>Investment Agreements</U>&#148;), pursuant to which Starboard (i)&nbsp;has become
the holder of 350,000 shares of Series A Convertible Preferred Stock of the Company, par value $0.001 per share (the &#147;<U>Series A Preferred Shares</U>&#148;) and Series A Warrants (the &#147;<U>Series A Warrants</U>&#148;) exercisable to
purchase up to 5,000,000 shares of common stock of the Company, par value $0.001 per share (the &#147;<U>Common Stock</U>&#148;), (ii) may receive Series B warrants (the &#147;<U>Series B Warrants</U>&#148; and, together with the Series A Warrants,
the &#147;<U>Warrants</U>&#148;) exercisable to purchase Common Stock and (iii)&nbsp;has the option to acquire senior secured notes of the Company (the &#147;<U>Notes</U>&#148;) in an aggregate principal amount of up to $365&nbsp;million (subject to
certain limitations, including the consent of the Company) on or prior to the announcement of an Approved Investment (as defined in the Purchase Agreement); </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">WHEREAS, in connection with the investment contemplated by the Investment Agreements, the Company and Starboard have determined to come to an
agreement with respect to certain governance matters, including the composition of the Board of Directors of the Company (the &#147;<U>Board</U>&#148;) and the composition of certain committees of the Board, as well as certain other matters, as
provided in this Agreement. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements contained
herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound hereby, agree as follows: </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">1. <U>Board Appointments and Related Agreements</U>. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">(a) <U>Board Appointments</U> </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:9%; font-size:10pt; font-family:Times New Roman">(i) The Company agrees that the Board and all applicable committees of the Board shall take all necessary actions, effective immediately
following the execution of this Agreement, to (A)&nbsp;increase the size of the Board from six (6)&nbsp;to seven (7)&nbsp;members and (B)&nbsp;appoint Jonathan Sagal (the &#147;<U>Initial Starboard Appointee</U>&#148; and together with the
Additional Appointees (as defined below), the &#147;<U>Appointed Directors</U>&#148;) as a director of the Company. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:9%; font-size:10pt; font-family:Times New Roman">(ii) Starboard shall
also have the right, following the execution of this Agreement, to recommend two (2)&nbsp;additional directors (when appointed, the &#147;<U>Additional Appointees</U>&#148;) for appointment to the Board, either of whom may be: (i)&nbsp;a partner or
senior employee of Starboard (the &#147;<U>Additional Starboard Appointee</U>&#148; or the &#147;<U>Additional Starboard </U> </P>
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<U>Appointees</U>&#148;, as applicable, and together with the Initial Starboard Appointee, the &#147;<U>Starboard Appointees</U>&#148;) and/or (ii)&nbsp;another individual, in each case, who
meets the criteria set forth in this Section&nbsp;1(a)(ii). Any Additional Appointee must (A)&nbsp;be reasonably acceptable to the Nominating and Corporate Governance Committee of the Board (the &#147;<U>Nominating and Corporate Governance
Committee</U>&#148;) and the Board (such acceptance not to be unreasonably withheld), (B) qualify as &#147;independent&#148; pursuant to Nasdaq Stock Market listing standards, and (C)&nbsp;have the relevant financial and business experience to be a
director of the Company (in the case o