SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
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[ ] Soliciting Material Under Rule 14a-12
ACACIA RESEARCH CORPORATION
---------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
______________________________________________________
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
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ACACIA
RESEARCH
CORPORATION
April 10, 2003
Dear Stockholder:
You are cordially invited to attend Acacia Research Corporation's
Annual Meeting of Stockholders to be held on Tuesday, May 13, 2003. The meeting
will be held at 610 Newport Center Drive, Suite 130, in Newport Beach,
California, beginning at 10:00 a.m. local time. The formal meeting notice and
Proxy Statement are attached.
At this year's meeting, stockholders are being asked to re-elect three
directors to serve on the Company's Board of Directors, ratify the appointment
of PricewaterhouseCoopers LLP as the Company's independent accountants for 2003,
and transact such other business as may properly come before the meeting.
Whether or not you plan to attend the Annual Meeting, it is important
that your shares be represented and voted at the meeting. Therefore, I urge you
to complete, sign, date and promptly return the enclosed proxy in the enclosed
postage-paid envelope. Returning your completed proxy will ensure your
representation at the Annual Meeting.
We look forward to seeing you on May 13.
Sincerely,
/s/ Paul R. Ryan
Paul R. Ryan
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
ACACIA RESEARCH CORPORATION
500 NEWPORT CENTER DRIVE
NEWPORT BEACH, CALIFORNIA 92660
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 2003
TO OUR STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Acacia Research Corporation, a Delaware corporation (the "Company"), will be
held on Tuesday, May 13, 2003 at 10:00 a.m. at 610 Newport Center Drive, Suite
130, Newport Beach, California, for the following purposes, as more fully
described in the Proxy Statement accompanying this Notice:
1. To elect three directors to serve on the Company's Board of
Directors until the 2006 Annual Meeting of Stockholders and until
their successors are duly elected and qualified.
2. To ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants of the Company for the fiscal year ending
December 31, 2003.
3. To transact such other business as may properly come before the
meeting or at any postponement or adjournment thereof.
Only stockholders of record at the close of business on April 3, 2003
are entitled to receive notice of and to vote at the Annual Meeting and any
adjournment or postponement thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, to assure your representation at the Annual Meeting, you are
urged to mark, sign, date and return the enclosed proxy card promptly in the
postage-paid envelope enclosed for that purpose. Any stockholder attending the
Annual Meeting may vote in person even if he or she previously returned a proxy.
Sincerely,
/s/ Robert A. Berman
Robert A. Berman
SENIOR VICE PRESIDENT OF BUSINESS DEVELOPMENT,
GENERAL COUNSEL AND SECRETARY
Newport Beach, California
April 10, 2003
YOUR VOTE IS IMPORTANT. IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING,
YOU ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY AS
POSSIBLE AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
ACACIA RESEARCH CORPORATION
500 NEWPORT CENTER DRIVE
NEWPORT BEACH, CALIFORNIA 92660
_______________________________
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 2003
_______________________________
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Acacia Research Corporation, a Delaware corporation ("Acacia" or the "Company"),
for use at Acacia's annual meeting of stockholders (the "Annual Meeting") to be
held on Tuesday, May 13, 2003 at 10:00 a.m., and at any adjournment or
postponement thereof. The Annual Meeting will be held at 610 Newport Center
Drive, Suite 130, Newport Beach, California. These proxy solicitation materials
were mailed on or about April 10, 2003 to all stockholders entitled to vote at
the Annual Meeting.
QUESTIONS AND ANSWERS
Following are some commonly asked questions raised by our stockholders
and answers to each of those questions.
1. WHAT MAY I VOTE ON AT THE ANNUAL MEETING?
At the Annual Meeting, stockholders will consider and vote upon the
following matters: (1) the re-election of three directors to serve on the
Company's Board of Directors until the 2006 Annual Meeting of Stockholders; (2)
the ratification of the appointment of PricewaterhouseCoopers LLP as independent
accountants of the Company for the fiscal year ending December 31, 2003; and (3)
such other matters as may properly come before the Annual Meeting or any
adjournment or postponement thereof.
2. HOW DOES THE BOARD RECOMMEND THAT I VOTE ON THE PROPOSALS?
The Board of Directors recommends a vote FOR each proposal.
3. HOW DO I VOTE?
Sign and date each proxy card you receive and return it in the
postage-paid envelope prior to the Annual Meeting.
4. CAN I REVOKE MY PROXY?
You have the right to revoke your proxy at any time before the Annual
Meeting by: (1) notifying the Secretary of the Company in writing; (2) voting in
person; or (3) returning a later-dated proxy card.
5. WHO WILL COUNT THE VOTE?
U.S. Stock Transfer Corporation will count the votes and act as the
inspector of election.
6. WHAT SHARES ARE INCLUDED ON THE PROXY CARD(S)?
The shares on your proxy card(s) represent ALL of your shares. If you
do not return your proxy card(s), your shares will not be voted.
7. WHAT DOES IT MEAN IF I GET MORE THAN ONE PROXY CARD?
If your shares are registered differently and are in more than one
account, you will receive more than one proxy card. Sign and return all proxy
cards to ensure that all your shares are voted. We encourage you to have all
accounts registered in the same name and address (whenever possible). You can
accomplish this by contacting our transfer agent, U.S. Stock Transfer
Corporation, or if your shares are held in "street name," by contacting the
broker or bank holding your shares.
8. WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING?
Only holders of record of the Company's Acacia Research - Acacia
Technologies common stock ("AR - Acacia Technologies stock") and Acacia Research
- CombiMatrix common stock ("AR - CombiMatrix stock") as of the close of
business on April 3, 2003 are entitled to notice of and to vote at the Annual
Meeting. The AR - Acacia Technologies stock and the AR - CombiMatrix stock are
sometimes referred to collectively as "Acacia common stock".
9. HOW MANY VOTES MAY BE CAST?
As of April 3, 2003, the record date for the Annual Meeting, 19,640,808
shares of AR--Acacia Technologies stock and 22,985,186 shares of AR--CombiMatrix
stock, the only outstanding voting securities of the Company, were issued and
outstanding. At the meeting, each outstanding share of AR--Acacia Technologies
stock will be entitled to .679 of a vote, and each outstanding share of
AR--CombiMatrix stock will be entitled to one vote. The voting rights of the
AR--Acacia Technologies stock have been determined based on recent market values
of each class of Acacia common stock in accordance with the formula set forth in
our Restated Certificate of Incorporation. The holders of AR--Acacia
Technologies stock and AR--CombiMatrix stock will vote together as a single
class at the meeting.
10. WHAT IS A "QUORUM" AT THE ANNUAL MEETING?
A "quorum" is a majority of the outstanding shares entitled to vote.
The shares may be present or represented by proxy. For the purposes of
determining a quorum, shares held by brokers or nominees will be treated as
present even if the broker or nominee does not have discretionary power to vote
on a particular matter or if instructions were never received from the
beneficial owner. These shares are called "broker non-votes." Abstentions will
be counted as present for quorum purposes.
11. WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
For the election of directors, once a quorum has been established, the
nominees for director who receive the most votes will be elected directors of
the Company. To ratify the appointment of the independent accountants, a
majority of the shares represented at the Annual Meeting, either in person or by
proxy, must be voted in favor of the proposal.
If a broker indicates on its proxy that it does not have discretionary
authority to vote on a particular matter, the affected shares will be treated as
not present and entitled to vote with respect to that matter, even though the
same shares may be considered present for quorum purposes and may be entitled to
vote on other matters.
12. WHAT HAPPENS IF I ABSTAIN?
Proxies marked "abstain" will be counted as shares present for the
purpose of determining the presence of a quorum, but for purposes of determining
the outcome of a proposal, shares represented by such proxies will not be
treated as affirmative votes. For proposals requiring an affirmative vote of a
majority of the outstanding shares entitled to vote or a majority of the shares
present, an abstention is equivalent to a "no" vote.
2
13. HOW WILL VOTING ON ANY OTHER BUSINESS BE CONDUCTED?
Although the Company does not know of any business to be considered at
the Annual Meeting other than the proposals described in this proxy statement,
if any other business is properly presented at the Annual Meeting, your signed
proxy card gives authority to the proxy holders, Paul R. Ryan and Robert A.
Berman, to vote on such matters at their discretion.
14. WHO ARE THE LARGEST PRINCIPAL STOCKHOLDERS?
For information regarding holders of more than 5% of the Company's
outstanding common stock, see "Security Ownership of Certain Beneficial Owners
and Management."
15. WHO WILL BEAR THE COST OF THIS SOLICITATION?
The Company will bear the entire cost of the solicitation. The Company
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for their reasonable out-of-pocket expenses incurred in sending proxies and
proxy solicitation materials to stockholders. Proxies may also be solicited in
person, by telephone, or by facsimile by directors, officers and employees of
the Company without additional compensation. The Company has retained Georgeson
Shareholder to perform various solicitation services. The Company will pay
Georgeson Shareholder a fee of $4,500, plus phone and other related expenses, in
connection with their solicitation services.
3
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
GENERAL
The number of directors of the Company is fixed at eight. The Company's
Board of Directors is divided into three classes, with each class being as
nearly equal in number of directors as possible. The term of a class expires,
and their successors are elected for a term of three years, at each annual
meeting of the Company's stockholders.
The Board of Directors has nominated Paul R. Ryan, G. Louis Graziadio,
III, and Rigdon Currie for re-election at the Annual Meeting to a term of office
expiring in 2006. The nominees have agreed to serve if elected, and management
has no reason to believe that the nominees will be unavailable for service. If
any nominee of the Company is unable or declines to serve as a director at the
time of the Annual Meeting, the proxies will be voted for such other nominees as
may be designated by the present Board of Directors.
The following table sets forth information as to the persons who serve
as our directors.
DIRECTOR
NAME AGE SINCE POSITIONS WITH THE COMPANY
--------------------------- -------- ----------- ----------------------------------------
Paul R. Ryan 57 1995 Chairman and Chief Executive Officer
Robert L. Harris, II 44 2000 President and Director
Thomas B. Akin* 50 1998 Director
Fred A. de Boom*+ 67 1995 Director
Edward W. Frykman*+ 66 1996 Director
G. Louis Graziadio, III+ 53 2002 Director
Rigdon Currie 72 2003 Director
Amit Kumar, Ph.D. 38 2003 Director
..........
* MEMBER OF THE AUDIT COMMITTEE
+ MEMBER OF THE COMPENSATION COMMITTEE
Biographical information regarding the nominees for election as a
director and each other person whose term of office as a director will continue
after the Annual Meeting is set forth below.
INFORMATION REGARDING THE NOMINEES (CLASS III)
PAUL R. RYAN has served as a director since August 1995, as Chief
Executive Officer since January 1997 and as Chairman since April 2000. He also
served as President of the Company from January 1997 until July 2000. Prior to
being named Chief Executive Officer, he was Executive Vice President and Chief
Investment Officer of the Company from 1996 through 1997 and Vice President,
Capital Management, of the Company from 1995 through 1996. He was formerly
co-founder and general partner of the American Health Care Fund, L.P., held
positions with Young & Rubicam, Ogilvy & Mather, and Merrill Lynch and was a
private venture capital investor. Mr. Ryan holds a B.S. from Cornell University
and attended the New York University Graduate School of Business.
G. LOUIS GRAZIADIO, III has been a director since February 2002. Mr.
Graziadio has held the positions of Chairman and Chief Executive Officer of
Second Southern Corp., the managing partner of Ginarra Partners, L.L.C., a
California company engaged in a wide range of investment activities and business
ventures, since 1990. He also serves as Chairman and Chief Executive Officer of
Boss Holdings, Inc., a director of Graziadio Development Company, G.I.C. Corp.,
Beachcliff Real Estate, Inc., and Boss Manufacturing, Co.
4
RIGDON CURRIE has been a director since January 2003. Mr. Currie is a
retired Special Limited Partner of MK Global Ventures in Palo Alto, California.
Mr. Currie serves as a director and a member of the Compensation Committee of
DISC, Inc., a publicly-traded manufacturer of storage libraries; a director and
a member of the Compensation Committee of ESP, Inc., which develops software for
managing industrial environmental issues; Chairman of the Board of Opportunity
Capital Corporation, a private venture capital firm focused on minority
business; and a director of W3 Commerce, Inc., a private software firm focused
on Internet commerce traffic generation. Mr. Currie received a B.S.I.E. from the
Georgia Institute of Technology and an M.B.A. from Harvard Business School.
DIRECTORS WITH TERMS EXPIRING IN 2004 (CLASS I)
ROBERT L. HARRIS, II has served as a director since April 2000 and as
President since July 2000. Mr. Harris was previously the President and Director
of Entertainment Properties Trust from 1997 to July 2000. Mr. Harris founded
Entertainment Properties Trust, a publicly-traded company that purchases real
estate from major entertainment companies. Mr. Harris led the International
Division and served as Senior Vice President of AMC Entertainment from 1993 to
1997, and served as President of Carlton Browne and Company, Inc., a holding
company and trust with assets in real estate, insurance and financial services,
from 1984 to 1992. Mr. Harris serves on the Board of Directors of the George L.
Graziadio School of Business and Management at Pepperdine University.
FRED A. DE BOOM has served as a director since February 1995. Mr. de
Boom has been a principal in Sonfad Associates since 1995. Sonfad Associates is
a Los Angeles-based investment banking firm that is involved in mergers and
acquisitions, private debt and equity placements, strategic and financial
business planning, leveraged buy-outs and ESOP funding, bank debt refinance,
asset based and lease financing, and equity for debt restructuring. Previously,
he was employed as a Vice President of Tokai Bank for five years and as a Vice
President of Union Bank for eight years. Mr. de Boom is a director of Molecular
Medicine, Inc. Mr. de Boom received his B.A. degree from Michigan State
University and his M.B.A. degree from the University of Southern California.
AMIT KUMAR, PH.D. has served as a director since January 2003. Dr.
Kumar joined Acacia Research Corporation in July 2000 as Senior Vice President
of Life Sciences. Dr. Kumar was appointed to the position of Chief Executive
Officer and President of CombiMatrix Corporation in September 2001. From 1999 to
2000, Dr. Kumar was CEO and President of Signature Biosciences, a genomic,
proteomic, and drug discovery company. From 1998 to 1999, he was an Entrepreneur
in Residence at Oak Investment Partners, specializing in emerging life science
and biotechnology companies. Dr. Kumar held the position of Senior Manager at
IDEXX Laboratories, and was Head of Research and Development at Idetek
Corporation from 1995 to 1998. He held the position of Sr. Scientist at Idetek
Corporation from 1994-1995. Dr. Kumar is a director of Digital Campaigns, Inc.,
a private company, and is a member of the Scientific Advisory Board of
BioProcessors Inc., a private company. Dr. Kumar received his bachelor's degree
from Occidental College in 1986, his Ph.D. from the California Institute of
Technology in 1991, and completed his Post-Doctorate Fellowship at Harvard
University in 1993.
DIRECTORS WITH TERMS EXPIRING 2005 (CLASS II)
THOMAS B. AKIN has served as a director since May 1998. Mr. Akin has
been the Managing General Partner of four private investment funds (Talkot
Partners I, Talkot Partners II, LLC, Talkot Crossover Fund, L.P., and Talkot
Capital) since 1996. Mr. Akin previously served in a variety of capacities for
Merrill Lynch and Co., including Managing Director of Western Regional Sales
from 1986 to 1994. Mr. Akin holds a B.A. from the University of California at
Santa Cruz and attended the University of California at Los Angeles Graduate
School of Business.
EDWARD W. FRYKMAN has served as a director since April 1996. Mr.
Frykman has been an Account Executive with Crowell, Weedon & Co. since 1992.
Previously, Mr. Frykman served as Senior Vice President of L.H. Friend & Co.
Both Crowell, Weedon & Co. and L.H. Friend & Co. are investment brokerage firms
located in Southern California. In addition, Mr. Frykman was a Senior Account
Executive with Shearson Lehman Hutton where he served as the Manager of the Los
Angeles Regional Retail Office.
5
BOARD MEETINGS AND COMMITTEES
The Board of Directors held a total of ten (10) meetings during the
fiscal year ended December 31, 2002. During that period, no incumbent director
attended fewer than 75% of the sum of the total number of meetings of the Board
of Directors and the total number of meetings of all committees of the Board of
Directors on which that director served. The Board of Directors has an Audit
Committee and a Compensation Committee, but does not have a nominating
committee.
AUDIT COMMITTEE. The Audit Committee currently consists of Fred A. de
Boom, Thomas B. Akin and Edward W. Frykman. The Audit Committee is responsible
for retaining, evaluating and, if appropriate, recommending the termination of
the Company's independent accountants and is primarily responsible for approving
the services performed by the Company's independent accountants and for
reviewing and evaluating the Company's accounting principles, financial
reporting practices, and its system of internal accounting controls. The Audit
Committee held seven (7) meetings during the fiscal year ended December 31,
2002. The Audit Committee is also responsible for maintaining communication
between the Board of Directors and the Company's independent accountants.
COMPENSATION COMMITTEE. The Compensation Committee currently consists
of Fred A. de Boom, Edward W. Frykman and G. Louis Graziadio, III. The
Compensation Committee is primarily responsible for making recommendations to
the Board of Directors regarding the Company's executive compensation policies
and incentive compensation for employees and consultants to the Company. In
addition, the Compensation Committee administers the 2002 Acacia Technologies
Stock Incentive Plan and the 2002 CombiMatrix Stock Incentive Plan. The
Compensation Committee held five (5) meetings during the fiscal year ended
December 31, 2002.
DIRECTOR COMPENSATION
Directors who are also employees of the Company receive no separate
compensation from the Company for their service as members of the Board of
Directors. Non-employee directors receive a nondiscretionary grant of options to
purchase 20,000 shares of AR--Acacia Technologies stock and 20,000 shares of
AR--CombiMatrix stock upon initially joining the Board of Directors and
subsequent non-discretionary annual grants of options to purchase 15,000 shares
of AR--Acacia Technologies stock and 15,000 shares of the Company's
AR--CombiMatrix stock while serving as Board members, all such grants at an
exercise price equal to the market price on the date of grant. In addition,
non-employee directors receive compensation in the amount of $1,500 per month
for their service as members of the Board of Directors, as well as $1,000 for
each meeting of the Board of Directors attended in person, $1,000 for each
meeting attended by telephone if the meeting is longer than one hour in length,
and $500 for each meeting attended by telephone if the meeting is one hour or
less in length. Non-employee directors receive the same compensation for each
Board committee meeting attended that does not immediately proceed or follow a
Board of Directors meeting. Directors are also reimbursed for expenses incurred
in connection with attendance at meetings of the Board of Directors and Board
committees and the performance of Board duties.
CERTAIN RELATIONSHIPS
There is no family relationship among any directors or executive
officers of the Company.
REQUIRED VOTE
To elect directors, the nominees for director who receive the most
votes will become directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
THREE NOMINEES LISTED ABOVE. PROXIES RECEIVED WILL BE VOTED FOR EACH OF THE
NOMINEES UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THE PROXY.
6
PROPOSAL NO. 2:
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP, the Company's independent
accountants for the year ended December 31, 2002, was recommended by the Audit
Committee, whose selection was approved by the Board of Directors, to act in
such capacity for the fiscal year ending December 31, 2003, subject to
ratification by the stockholders.
PricewaterhouseCoopers LLP has served as the principal independent
accountants for the Company since April 1997. There are no affiliations between
the Company and PricewaterhouseCoopers LLP, its partners, associates or
employees, other than as pertain to the engagement of PricewaterhouseCoopers LLP
as independent accountants for the Company.
If the stockholders of the Company do not ratify the selection of
PricewaterhouseCoopers LLP, or if such firm should decline to act or otherwise
become incapable of acting, or if the Company's employment of
PricewaterhouseCoopers LLP should be discontinued, the Board of Directors, on
the recommendation of the Audit Committee, will appoint substitute independent
accountants. A representative of PricewaterhouseCoopers LLP will be present at
the Annual Meeting, will be given the opportunity to make a statement if he or
she so desires, and will be available to respond to appropriate questions.
REQUIRED VOTE
The favorable vote of a majority of votes cast regarding the proposal
is required to ratify the appointment of PricewaterhouseCoopers LLP.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP TO SERVE AS THE
COMPANY'S INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2003.
PROXIES RECEIVED WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THE
PROXY.
OTHER MATTERS
The Company knows of no other matters to be submitted to the
stockholders at the Annual Meeting. If any other matters properly come before
the stockholders at the Annual Meeting, it is the intention of the persons named
on the enclosed proxy card to vote the shares they represent as the Board of
Directors may recommend.
7
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
with respect to the beneficial ownership of the Company's common stock as of
April 3, 2003 by (i) all persons known to the Company to beneficially own five
percent (5%) or more of either class of the Company's common stock, (ii) each
director of the Company, (iii) the executive officers named in the "Summary
Compensation Table" of the "Executive Compensation and Other Information"
section of this Proxy Statement, and (iv) all current directors and executive
officers as a group.
AMOUNT AND NATURE
OF BENEFICIAL AMOUNT AND NATURE OF
OWNERSHIP OF AR- PERCENT BENEFICIAL OWNERSHIP PERCENT
ACACIA TECHNOLOGIES OF OF AR-COMBIMATRIX OF
BENEFICIAL OWNER STOCK CLASS(1) STOCK CLASS(1)
------------------------------------------------ ------------------- -------- --------------------- --------
DIRECTORS AND EXECUTIVE OFFICERS(2)
Paul R. Ryan(3) 1,169,536 5.7% 639,351 2.7%
Thomas B. Akin(4) 121,089 * 102,580 *
Rigdon Currie(5) 5,000 * 60,833 *
Fred A. de Boom(6) 61,050 * 36,962 *
Edward W. Frykman(7) 71,840 * 41,757 *
Robert L. Harris, II(8) 549,837 2.7% 329,084 1.4%
G. Louis Graziadio, III(9) 25,750 * 16,030 *
Amit Kumar, Ph.D.(10) 305,072 1.5% 520,566 2.2%
Clayton J. Haynes(11) 44,000 * 24,560 *
Robert A. Berman(12) 270,972 1.4% 151,255 *
All Directors and Executive Officers as a Group 2,624,146 13.0% 1,922,978 8.2%
(ten persons)(13)
5% STOCKHOLDERS
Barry Rubenstein (14) 0 * 1,664,367 7.2%
Donald D. Montgomery, Ph.D. (15) 37,381 * 2,255,983 9.8%
--------------
* Less than one percent
(1) The percentage of shares beneficially owned is based on 19,640,808 shares
of AR--Acacia Technologies stock and 22,985,186 shares of AR--CombiMatrix
stock outstanding as of April 3, 2003. Beneficial ownership is determined
under rules and regulations of the Securities and Exchange Commission
("SEC"). Shares of common stock subject to options that are currently
exercisable or exercisable within 60 days after April 3, 2003 are deemed
to be outstanding and beneficially owned by the person holding such
options for the purpose of computing the number of shares beneficially
owned and the percentage ownership of such person, but are not deemed to
be outstanding for the purpose of computing the percentage ownership of
any other person. Except as indicated in the footnotes to this table, and
subject to applicable community property laws, the Company believes that
such persons have sole voting and investment power with respect to all
shares of the Company's common stock shown as beneficially owned by them.
(2) The address for each of the Company's directors and executive officers is
the Company's principal offices, Acacia Research Corporation, 500 Newport
Center Drive, Newport Beach, California 92660.
(3) Includes 736,549 shares of AR--Acacia Technologies stock and 454,470
shares of AR--CombiMatrix stock issuable upon exercise of options that
are currently exercisable or will become exercisable within 60 days of
April 3, 2003.
(4) Includes 61,239 shares of AR--Acacia Technologies Stock and 34,183 shares
of AR--CombiMatrix stock held by Talkot Crossover Fund, L.E. ("Talkot")
and 59,850 shares of AR--Acacia Technologies stock and 68,397 shares of
AR--CombiMatrix stock issuable to Talkot upon exercise of options that
are currently exercisable or will become exercisable within 60 days of
April 3, 2003. Mr. Akin serves as managing general partner of Talkot.
8
(5) Includes 5,000 shares of AR--Acacia Technologies stock and 60,833 shares
of AR--CombiMatrix stock issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days of April
3, 2003.
(6) Includes 37,850 shares of AR--Acacia Technologies stock and 22,784 shares
of AR--CombiMatrix stock issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days of April
3, 2003.
(7) Includes 57,650 shares of AR--Acacia Technologies stock and 33,836 shares
of AR--CombiMatrix stock issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days of April
3, 2003.
(8) Includes 20,000 shares of AR--Acacia Technologies stock held by the R&S
Harris Trust, of which Mr. Harris is a Trustee and 529,837 shares of
AR--Acacia Technologies stock and 329,084 shares of AR--CombiMatrix stock
issuable upon exercise of options that are currently exercisable or will
become exercisable within 60 days of April 3, 2003.
(9) Includes 25,750 shares of AR--Acacia Technologies stock and 16,030 shares
of AR--CombiMatrix stock issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days of April
3, 2003.
(10) Includes 303,972 shares of AR--Acacia Technologies stock and 509,952
shares of AR--CombiMatrix stock issuable upon exercise of options that
are currently exercisable or will become exercisable within 60 days of
April 3, 2003.
(11) Includes 44,000 shares of AR--Acacia Technologies stock and 24,560 shares
of AR--CombiMatrix stock issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days of April
3, 2003.
(12) Includes 270,972 shares of AR--Acacia Technologies stock and 151,255
shares of AR--CombiMatrix stock issuable upon exercise of options that
are currently exercisable or will become exercisable within 60 days of
April 3, 2003.
(13) Includes 2,071,430 shares of AR--Acacia Technologies stock and 1,671,201
shares of AR--CombiMatrix stock issuable upon exercise of options that
are currently exercisable or will become exercisable within 60 days of
April 3, 2003.
(14) Based solely on a Schedule 13G filed with the Securities and Exchange
Commission on February 27, 2003. According to such Schedule 13G, the
address for Mr. Rubenstein is 68 Wheatley Road, Brookville, New York
11545.
(15) Includes 8,595 shares of AR--Acacia Technologies stock and 21,253 shares
of AR--CombiMatrix stock issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days of April
3, 2003.
9
EXECUTIVE OFFICER COMPENSATION AND OTHER INFORMATION
EXECUTIVE OFFICERS
Set forth below is certain information concerning the executive
officers of the Company as of the date hereof.
NAME AGE POSITIONS WITH THE COMPANY
------------------------- ----- ------------------------------------------------------------
Paul R. Ryan 57 Chairman and Chief Executive Officer
Robert L. Harris, II 44 President
Amit Kumar, Ph.D. 38 Chief Executive Officer and President of CombiMatrix
Corporation
Clayton J. Haynes 33 Chief Financial Officer, Treasurer and Senior Vice
President, Finance
Robert A. Berman 40 Senior Vice President, General Counsel and Secretary
The following is biographical information and a brief description of
the capacities in which each of the executive officers has served during the
past five years. Biographical information on Messrs. Ryan, Harris and Kumar is
set forth above under "Proposal No. 1: Election of Directors."
CLAYTON J. HAYNES joined the Company in April 2001 as Treasurer and
Senior Vice President, Finance. In November 2001, Mr. Haynes was appointed Chief
Financial Officer of the Company. From 1992 to March 2001, Mr. Haynes was
employed by PricewaterhouseCoopers LLP, ultimately serving as a Manager in the
Audit and Advisory Business Services practice. Mr. Haynes received a B.A. from
the University of California at Los Angeles, is a Certified Public Accountant
and is a member of the American Institute of Certified Public Accountants.
ROBERT A. BERMAN joined the Company in 2000 and was named Senior Vice
President and General Counsel in February 2001. Mr. Berman has 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 1999 and at QVC from 1993 to 1997. He practiced law at
the Philadelphia law firm of Blank, Rome, Comsikey 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.
10
EXECUTIVE OFFICER COMPENSATION
The following table sets forth information concerning compensation
earned for services rendered in all capacities to the Company during the last
three fiscal years for (a) the Company's Chief Executive Officer and (b) the
four most highly compensated executive officers, other than the Chief Executive
Officer, whose annual cash compensation exceeded $100,000 in the last fiscal
year. The listed individuals are collectively referred to herein as the "Named
Executive Officers."
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING
SALARY BONUS COMPENSATION OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#)(1) COMPENSATION
---------------------------------- ---- ------- ------ ------------ ---------- ------------
Paul R. Ryan 2002 266,019 5,096 0 161,000(2) 0
Chairman and Chief Executive 30,000(3)
Officer 2001 257,568 5,096 0 275,001(2) 0
153,504(3)
2000 224,173 0 0 453,753(2) 0
278,282(3)
Robert L. Harris III 2002 251,077 5,000 0 161,000(2) 0
President(4) 30,000(3)
2001 227,280 4,615 0 275,001(2) 0
153,504(3)
2000 91,385 0 0 484,000(2) 0
295,167(3)
Amit Kumar, Ph.D. 2002 267,038 25,000 0 0(2) 0
Chief Executive Officer and 300,000(3)
President of CombiMatrix(5) 2001 218,258 0 0 177,101(2) 0
98,856(3)
2000 84,135 25,000 0 220,002(2) 0
172,804(3)
Clayton J. Haynes, Chief 2002 147,135 3,173 0 52,500(2) 0
Financial Officer and 0(3)
Treasurer 2001 81,140 2,404 0 66,000(2) 0
36,840(3)
Robert A. Berman 2002 205,846 4,038 0 105,000(2) 0
Senior Vice President, General 0(3)
Counsel and Secretary(7) 2001 165,395 28,846 0 177,102(2) 0
98,857(3)
2000 105,000 0 0 159,501(2) 0
89,032(3)
(1) All share and option figures reflect appropriate adjustments for a
one-for-ten stock dividend paid in December 2001. No stock appreciation
rights were granted or outstanding during the periods covered by the
table.
(2) Options granted with respect to AR--Acacia Technologies stock.
(3) Options granted with respect to AR--CombiMatrix stock.
(4) Mr. Harris was appointed as President in July 2000. Mr. Harris also
serves as a member of the Board of Directors.
11
(5) Dr. Kumar joined the Company in July 2000 and became an executive officer
upon his appointment as Chief Executive Officer and President of
CombiMatrix Corporation in September 2001.
(6) Mr. Haynes joined the Company in April 2001 and became an executive
officer upon his appointment as Chief Financial Officer in November 2001.
(7) Mr. Berman joined the Company in 2000 and became an executive officer in
2002.
12
STOCK OPTION GRANTS AND EXERCISES
The following table sets forth information regarding stock options
granted to the Named Executive Officers during 2002 No stock appreciation rights
were granted to any of the Named Executive Officers during 2002.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-----------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE VALUE AT
TOTAL ASSUMED ANNUAL RATE
NUMBER OF OPTIONS OF STOCK PRICE APPRECIATION
SECURITIES GRANTED TO FOR OPTION TERM(1)
UNDERLYING EMPLOYEES EXERCISE OR -----------------------------
OPTIONS IN FISCAL BASE EXPIRATION
NAME GRANTED (#) YEAR PRICE($/SH) DATE 5%($) 10%($)
------------------------- ------------ ---------- ----------- ---------- ------------- ------------
Paul R. Ryan 161,000(2) 14.3% $ 1.85 12/16/12 $ 187,316 $ 474,696
30,000(3) 3.9% $ 12.00 2/27/12 $ 226,402 $ 573,747
Robert L. Harris, II 161,000(2) 14.3% $ 1.85 12/16/12 $ 187,316 $ 474,696
30,000(3) 3.9% $ 12.00 2/27/12 $ 226,402 $ 573,747
Amit Kumar, Ph.D. 300,000(4) 38.9% $ 12.00 1/25/12 $ 2,264,021 $ 5,737,473
Clayton J. Haynes 52,500(5) 4.7% $ 1.85 12/16/12 $ 61,081 $ 154,792
Robert A. Berman 105,000(2) 9.3% $ 1.85 12/16/12 $ 122,163 $ 309,584
------------
(1) The 5% and 10% assumed rates of appreciation are prescribed by the rules
and regulations of the SEC and do not represent the Company's estimate or
projection of the future trading prices of its common stock. Unless the
market price of the common stock appreciates over the option term, no
value will be realized from these option grants. Actual gains, if any, on
stock option exercises are dependent on numerous factors, including,
without limitation, the future performance of the Company, overall
business and market conditions, and the optionee's continued employment
with the Company throughout the vesting period and option term, which
factors are not reflected in this table.
(2) The option was granted with respect to shares of AR--Acacia Technologies
stock and becomes exercisable in 21 successive equal monthly installments
upon the completion of service over the 21-month period measured from
March 28, 2004.
(3) The option was granted with respect to shares of AR--CombiMatrix stock.
On May 27, 2002, options to purchase 2,500 shares of AR--CombiMatrix
stock vested and became exercisable. Thereafter, on August 27, 2002, and
each quarterly anniversary thereof until February 27, 2005, upon
completion of service, options representing an additional 2,500 shares
will vest and become exercisable.
(4) The option was granted with respect to shares of AR--CombiMatrix stock.
Options to purchase 200,000 shares of AR--CombiMatrix stock become
exercisable in thirty-six (36) monthly installments, upon completion of
service, over the thirty-six (36) month period measured from February 1,
2002. Options to purchase 100,000 shares of AR--CombiMatrix stock are
subject to the completion of certain milestones. The criteria have been
met for 50,000 of the option shares. Notwithstanding the forgoing, all
unvested options shall vest no later than January 25, 2006.
(5) The option was granted with respect to shares of AR--Acacia Technologies
stock and becomes exercisable in 21 successive equal monthly installments
upon the completion of service over the 21-month period measured from
April 2, 2004.
13
AGGREGATED OPTION EXERCISES AND FISCAL YEAR END VALUES
The following table provides information, with respect to the Named
Executive Officers, concerning the exercise of options to purchase AR--Acacia
Technologies stock during 2002 and unexercised options held by them at the end
of that fiscal year. None of the Named Executive Officers exercised any stock
appreciation rights during 2002 and no stock appreciation rights were held by
the Named Executive Officers at the end of such year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT 2002 IN-THE-MONEY OPTIONS AT
SHARES YEAR-END(#) 2002 YEAR-END (1)($)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE(#) REALIZED(2)($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------------------- ----------- -------------- ----------- ------------- ----------- -------------
Paul R. Ryan 0 0 686,131 316,832 0 90,160
Robert L. Harris 0 0 448,255 471,746 0 90,160
Amit Kumar, Ph.D. 0 0 258,417 138,686 0 0
Clayton J. Haynes 0 0 33,000 85,500 0 29,400
Robert A. Berman 0 0 239,623 201,980 0 58,800
-------------
(1) Represents the difference between the exercise price of the options and
the average of the closing prices of the Company's AR--Acacia
Technologies stock on the Nasdaq National Market on December 31, 2002 of
$2.41 per share.
(2) Value realized represents the difference between the exercise price of
the options and the value of the underlying securities on the date of
exercise.
The following table provides information, with respect to the Named
Executive Officers, concerning the exercise of options to purchase
AR--CombiMatrix stock during 2002 and unexercised options held by them at the
end of that fiscal year. None of the Named Executive Officers exercised any
stock appreciation rights during 2002 and no stock appreciation rights were held
by the Named Executive Officers at the end of such year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT 2002 IN-THE-MONEY OPTIONS AT
SHARES YEAR-END(#) 2002 YEAR-END (1)($)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE(#) REALIZED(2)($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------------------- ----------- -------------- ----------- ------------- ----------- -------------
Paul R. Ryan 0 0 419,244 115,734 68,797 33,853
Robert L. Harris 0 0 276,463 202,208 47,396 33,854
Amit Kumar, Ph.D. 0 0 299,105 272,555 23,698 16,927
Clayton J. Haynes 0 0 18,420 18,420 9,173 9,173
Robert A. Berman 0 0 133,754 54,135 23,699 16,925
-------------
(1) Represents the difference between the exercise price of the options and
the average of the closing prices of the Company's AR-CombiMatrix stock
on the Nasdaq SmallCap Market on December 31, 2002 of $3.64 per share.
(2) Value realized represents the difference between the exercise price of
the options and the value of the underlying securities on the date of
exercise.
14
EMPLOYMENT AGREEMENTS
The Company has not entered into employment contracts with any of its
Named Executive Officers nor does the Company have any agreement or arrangement
with any such Named Executive Officers relating to a change in control of the
Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors
currently consists of Messrs. de Boom, Frykman and Graziadio. None of these
individuals was an officer or employee of the Company at any time during 2002 or
at any other time. No current executive officer of the Company has ever served
as a member of the board of directors or compensation committee of any other
entity that has or has had one or more executive officers serving as a member of
the Company's Board of Directors or Compensation Committee.
15
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. The Compensation Committee is
responsible for approving the compensation package of each executive officer and
recommending it to the Board of Directors as well as administering the 2002
Acacia Technologies Stock Incentive Plan and the 2002 CombiMatrix Stock
Incentive Plan. In making decisions regarding executive compensation, the
Compensation Committee considers the input of the Company's management and other
directors.
The Company's executive compensation program consists of a mixture of
base salary, cash bonuses and stock option awards. In determining the total
amount and mixture of the compensation package for each executive officer, the
Compensation Committee and the Board of Directors subjectively consider the
overall value to the Company of each executive in light of numerous factors such
as competitive position, individual performance, including past and expected
contribution to the Company's goals of each executive officer, and the Company's
long-term needs and goals, including attracting and retaining key management
personnel.
The Compensation Committee will periodically review the individual base
salaries of the executive officers, and adjust salaries based on individual job
performance and changes in the officer's duties and responsibilities. In making
salary decisions, the Compensation Committee exercises its discretion and
judgment based on these factors. No specific formula is applied to determine the
weight of each factor.
Long-term incentive compensation is realized through granting of stock
options to most employees, including eligible executive officers. The Company
has no other long-term incentive plans. Stock options are granted by the Company
to aid in the retention of employees and to align the interests of employees
with those of the stockholders. In addition, the Compensation Committee believes
that the grant of an equity interest serves to link management interests with
stockholder interests and to motivate executive officers to make long-term
decisions that are in the best interests of the Company and the stockholders as
well as provides an incentive to maximize stockholder value. Stock options have
value for an employee only if the price of the Company's common stock increases
above the exercise price, and the employee remains in the Company's employ for
the period required for the stock to be exercisable, thus providing an incentive
to remain in the Company's employ.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. Paul R. Ryan, the Company's
Chairman and Chief Executive Officer, received an annual base salary of $266,019
and a bonus in the amount of $5,096 in 2002. The cash amount paid to Mr. Ryan in
the form of base salary and bonus was recommended to the Board of Directors by
the Compensation Committee. In exercising its discretion and judgment in
reaching its recommendation, the Compensation Committee took into consideration
the various factors and criteria described above. The Board of Directors
approved the Compensation Committee's recommendation.
SECTION 162(M) OF THE INTERNAL REVENUE CODE. The Company does not
believe Section 162(m) of the Internal Revenue Code of 1986, as amended, which
disallows a tax deduction for certain compensation in excess of $1 million, will
generally have an effect on the Company. The Compensation Committee reviews the
potential effect of Section 162(m) periodically and will consider various
alternatives for preserving the deductibility of compensation payments. However,
the Compensation Committee will not necessarily limit compensation to that which
is deductible.
Respectfully Submitted by the Compensation
Committee of the Board of Directors,
FRED A. DE BOOM
EDWARD W. FRYKMAN
G. LOUIS GRAZIADIO, III
16
AUDIT COMMITTEE REPORT
The following is the report of the Audit Committee with respect to the
Company's audited financial statements for 2002, which include the consolidated
balance sheets of the Company as of December 31, 2002 and 2001, and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the three years in the period ended December 31, 2002, and the notes
thereto.
COMPOSITION. The Audit Committee of the Board of Directors is comprised
of three directors, and operates under a written charter adopted by the Board of
Directors, a copy of which was attached as Appendix A to the Company's 2001
proxy statement. The members of the Audit Committee are Fred A. de Boom
(Chairman), Thomas B. Akin and Edward W. Frykman. All members of the Audit
Committee are "independent", as defined in SEC Release 34-47137 proposing new
Rule 10A-3 under the Securities Exchange Act of 1934 and Rule 4200(a)(14) of the
Marketplace Rules contained in the National Association of Securities Dealers
Manual, and financially literate.
RESPONSIBILITIES. The responsibilities of the Audit Committee include
recommending to the Board of Directors an accounting firm to be engaged as the
Company's independent accountants. Management has primary responsibility for the
Company's internal controls and financial reporting process. The independent
accountants are responsible for performing an independent audit of the Company's
consolidated financial statements in accordance with generally accepted auditing
standards and for issuing a report thereon. The Audit Committee's responsibility
is to oversee these processes and the activities of the Company's internal audit
department.
REVIEW WITH MANAGEMENT AND INDEPENDENT ACCOUNTANTS. The Audit Committee
has reviewed the Company's consolidated audited financial statements and met
separately, and held discussions with, management and PricewaterhouseCoopers
LLP, the Company's independent accountants. Management represented to the Audit
Committee that the Company's consolidated financial statements were prepared in
accordance with generally accepted accounting principles. The Audit Committee
discussed with PricewaterhouseCoopers LLP matters required to be discussed by
Statement on Auditing Standards No. 61, "Communication with Audit Committees."
The Company's independent accountants also provided to the Audit
Committee the written disclosures and the letter required by Independence
Standards Board Standard No. 1, "Independence Discussions with Audit
Committees," and the Audit Committee discussed with the independent accountants,
PricewaterhouseCoopers LLP, the firm's independence.
CONCLUSION. Based upon the Audit Committee's discussions with
management and the independent accountants, the Audit Committee's review of the
representations of management and the report of the independent accountants to
the Audit Committee, the Audit Committee recommended that the Board of Directors
include the audited consolidated financial statements in the Company's Annual
Report on Form 10-K for the year ended December 31, 2002, as filed with the SEC.
REAPPOINTMENT OF INDEPENDENT AUDITORS. In February 2003 the Audit
Committee recommended to the Board of Directors the reappointment of
PricewaterhouseCoopers LLP as the Company's independent accountants for the
fiscal year ending December 31, 2003.
This report is submitted by the Audit Committee of the Board of
Directors.
THOMAS B. AKIN
FRED A. DE BOOM
EDWARD W. FRYKMAN
17
AUDIT AND RELATED FEES
AUDIT FEES. The aggregate fees billed by PricewaterhouseCoopers LLP for
professional services for the audit of the Company's annual consolidated
financial statements for fiscal 2002 and the review of the consolidated
financial statements included in the Company's Quarterly Reports on Form 10-Q
for fiscal 2002 were $254,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. There
were no fees billed by PricewaterhouseCoopers LLP to the Company for financial
information systems design and implementation fees for fiscal 2002.
ALL OTHER FEES. The aggregate fees billed to the Company for all other
services rendered by PricewaterhouseCoopers LLP for fiscal 2002 were $1,071,000.
These services include non-recurring audit and tax-related services provided by
PricewaterhouseCoopers LLP, primarily associated with the Company's Registration
Statement on Form S-4 and the related recapitalization and merger transactions
of $910,000, tax compliance and consultations of $119,000, and fees for
accounting related consultations of $42,000.
The Audit Committee has determined that the provision of services
rendered above for all other fees is compatible with maintaining
PricewaterhouseCoopers LLP's independence.
18
STOCK PERFORMANCE GRAPH
The Stock Performance Graph depicted below compares the yearly change
in the Company's cumulative total stockholder return for the last five fiscal
years with the cumulative total return of the Nasdaq Stock Market (U.S.) Index
and the Nasdaq Biotech Index.
[GRAPH APPEARS HERE]
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
Acacia Research Corporation $ 100 $ 109 $ 748 $ 445 $ 304 $ 122
Nasdaq Index $ 100 $ 140 $ 259 $ 157 $ 124 $ 85
Nasdaq Biotech Index $ 100 $ 144 $ 291 $ 358 $ 300 $ 164
The graph covers the period from December 31, 1997 to December 31,
2002. Cumulative total returns are calculated assuming that $100 was invested on
December 31, 1997 in the Company's common stock, and in each index, and that all
dividends were reinvested. The Company has not paid or declared any cash
dividends on its common stock. On December 13, 2002, each share of the Company's
common stock was converted into one share of AR--Acacia Technologies stock and
0.5582 of a share of AR--CombiMatrix stock. As a result, the graph reflects a
composite return for the two new classes of the Company's common stock.
Stockholder returns over the indicated period should not be considered
indicative of future stock prices or shareholder returns.
The preceding Stock Performance Graph, Audit Committee Report and
Compensation Committee Report are not considered proxy solicitation materials
and are not deemed filed with the SEC. Notwithstanding anything to the contrary
set forth in any of the Company's previous filings made under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), that might incorporate future filings made by the Company under
those statutes, the Stock Performance Graph, Audit Committee Report and
Compensation Committee Report shall not be incorporated by reference into any
such prior filings or into any future filings made by the Company under those
statutes.
19
CERTAIN TRANSACTIONS
Since January 1, 2002 there has not been any transaction or series of
similar transactions to which the Company was or is a party in which the amount
involved exceeded or exceeds $60,000 and in which any director, executive
officer, holder of more than 5% of any class of the Company's voting securities,
or any member of the immediate family of any of the foregoing persons had or
will have a direct or indirect material interest.
INDEMNIFICATION AGREEMENTS WITH DIRECTORS AND OFFICERS. In addition to
the indemnification provisions contained in the Company's Restated Certificate
of Incorporation and Bylaws, the Company has entered into separate
indemnification agreements with each of its directors and officers. These
agreements require the Company, among other things, to indemnify each such
director or officer against expenses (including attorneys' fees), damages,
judgments, fines, penalties and settlements paid by such individual in
connection with any action, suit or proceeding arising out of such individual's
status or service as a director or officer of the Company (other than
liabilities with respect to which such individual receives payment from another
source, arising in connection with certain final legal judgments, arising from
willful misconduct or conduct that is knowingly fraudulent or deliberately
dishonest, or which the Company is prohibited by applicable law from paying) and
to advance expenses incurred by such individual in connection with any
proceeding against such individual with respect to which such individual may be
entitled to indemnification by the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, as amended, requires the Company's
directors, executive officers and holders of more than 10% of the Company's
common stock to file with the SEC initial reports of ownership and reports of
changes in ownership of the Company's common stock. The Company believes that,
based on the written representations of its directors and officers, and the
copies of reports filed with the SEC during the fiscal year ended December 31,
2002, its directors, officers and holders of more than 10% of the Company's
common stock complied with the requirements of Section 16(a).
FORM 10-K
On March 27, 2003 the Company filed with the SEC an Annual Report on
Form 10-K for the 2002 fiscal year. A copy of the Company's Form 10-K has been
mailed concurrently with this Proxy Statement to all stockholders entitled to
notice of and to vote at the Annual Meeting. The Form 10-K is not incorporated
into this Proxy Statement and is not considered proxy solicitation material.
In accordance with a notice sent earlier this year to certain
street-name stockholders who share a single address, we are sending only one
Form 10-K report and proxy statement to that address unless we received contrary
instructions from any stockholder at that address. This practice, known as
"householding," is designed to reduce our printing and postage costs. However,
if any stockholder residing at such an address wishes to receive a separate Form
10-K or proxy statement in the future, they may telephone our Corporate
Secretary at (949) 480-8300 or write to him at Acacia Research Corporation, 500
Newport Center Drive, Newport Beach, California 92660. If you are receiving
multiple copies of our annual report and proxy statement, you can request
householding by contacting the Secretary in the same manner.
20
STOCKHOLDER PROPOSALS FOR THE 2004 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 2004 Annual
Meeting must be received by the Company by December 12, 2003 to be considered
for inclusion in the Company's proxy statement relating to that meeting.
Stockholders desiring to present a proposal at the 2004 Annual Meeting but who
do not desire to have the proposal included in the proxy materials distributed
by the Company must deliver written notice of such proposal to the Company on or
after January 14, 2004 and on or before February 13, 2004 or the persons
appointed as proxies in connection with the 2004 Annual Meeting will have
discretionary authority to vote on any such proposal.
April 10, 2003
By Order of the Board of Directors,
/s/ Robert A. Berman
Robert A. Berman
SENIOR VICE PRESIDENT OF BUSINESS DEVELOPMENT,
GENERAL COUNSEL AND SECRETARY
21
PROXY PROXY
ACACIA RESEARCH CORPORATION
ANNUAL MEETING OF STOCKHOLDERS MAY 13, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF ACACIA RESEARCH CORPORATION
The undersigned revokes all previous proxies, acknowledges receipt of
the Notice of the Annual Meeting of Stockholders and the accompanying Proxy
Statement and appoints Paul R. Ryan and Robert A. Berman and each of them, the
Proxy of the undersigned, with full power of substitution and revocation, to
vote all shares of Acacia Research - Acacia Technologies Common Stock and Acacia
Research - CombiMatrix Common Stock held of record by the undersigned on April
3, 2003, either on his or her own behalf or on behalf of any entity or entities,
at the Annual Meeting of Stockholders of Acacia Research Corporation (the
"Company") to be held May 13, 2003, or at any postponements or adjournments
thereof, with the same force and effect as the undersigned might or could do if
personally present thereat. The shares represented by this Proxy shall be voted
in the manner set forth on the reverse side.
THIS PROXY, WHEN PROPERLY SIGNED, DATED AND RETURNED, WILL BE VOTED AS DIRECTED.
UNLESS OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
THREE DIRECTOR NOMINEES AND FOR EACH OF THE OTHER PROPOSALS.
(SEE REVERSE SIDE)
22
The Board of Directors recommends a vote FOR the nominees listed below and a
vote FOR each of the listed proposals.
(1) To elect three directors to serve until the 2006 Annual
Meeting of Stockholders and until their successors are duly
elected and qualified.
Nominees: Paul R. Ryan
G. Louis Graziadio, III
Rigdon Currie
[ ] FOR all nominees listed above (except as marked to
the contrary below.)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed
below. (INSTRUCTION: To withhold authority to vote
for any nominee, write that nominee's name in the
space below.)
----------------- ---------------- ----------------
(2) To ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants of the Company for the fiscal year
ending December 31, 2003.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) To transact such other business as may properly come before
the Annual Meeting or at any postponements or adjournments
thereof. As to such matters, the undersigned hereby confers
discretionary authority and authorizes the proxyholders to
vote the proxies cumulatively in their discretion if
cumulative voting is in effect.
Dated:________________________________________________________
(Please Print Name)___________________________________________
(Signature of Holder of Common Stock)_________________________
(Additional Signature if Held Jointly)________________________
NOTE: Please sign exactly as your name is printed. Each joint tenant should
sign. Executors, administrators, trustees, and guarantors should give full
titles when signing. Corporations and partnerships should sign in full corporate
or partnership name by authorized person. Please mark, sign, date and return
your Proxy promptly in the enclosed envelope, which requires no postage if
marked in the United States.
23