Preliminary Proxy
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(RULE
14a-101)
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act
of
1934
(Amendment
No. )
Filed
by
Registrant [X]
Filed
by
a Party other than the Registrant [ ]
Check
the
appropriate box:
[X] Preliminary
Proxy Statement
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[
] Confidential,
for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
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[
] Definitive
Proxy Statement
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[
] Definitive
Additional Materials
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[
] Soliciting
Material Under Rule 14a-12
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ACACIA
RESEARCH CORPORATION
(Name
of
Registrant as Specified In Its Charter)
(Name
of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
[
]
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1) |
Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction
applies:
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(3) |
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was
determined):
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(4) |
Proposed
maximum aggregate value of
transaction:
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[
] |
Fee
paid previously with preliminary
materials:
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[
] |
Check
box if any part of the fee is offset as provided by Exchange
Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1) |
Amount
Previously Paid:
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(2) |
Form,
Schedule or Registration Statement
No.:
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April
10,
2006
Dear
Stockholder:
You
are
cordially invited to attend Acacia Research Corporation's Annual Meeting of
Stockholders to be held on Tuesday, May 16, 2006. 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:
(1)
re-elect three directors to serve on the Company's Board of Directors;
(2)
ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent accountants for 2006;
(3)
approve an amendment to the Company's Restated Certificate of Incorporation
to
increase the number of authorized shares of common stock from 100,000,000 to
200,000,000; and
(4)
to
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 16.
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 16, 2006
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 16, 2006, 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:
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1. |
To
elect three directors to serve on the Company's Board of Directors
until
the 2009 Annual Meeting of Stockholders or until their successors
are duly
elected and qualified;
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2. |
To
ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants for the Company for the fiscal year ending December 31,
2006;
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3. |
To
approve an amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of common
stock
from 100,000,000 to 200,000,000;
and
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4. |
To
transact such other business as may properly come before the meeting
or at
any postponement or adjournment
thereof.
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Only
stockholders of record at the close of business on March 27, 2006, 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
Chief
Operating Officer
General
Counsel and Secretary
Newport
Beach, California
April
10,
2006
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.
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ACACIA
RESEARCH CORPORATION
500
Newport Center Drive
Newport
Beach, California 92660
_______________________________
PROXY
STATEMENT
FOR
THE ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON MAY 16, 2006
_______________________________
General
The
enclosed proxy is solicited on behalf of the Board of Directors of Acacia
Research Corporation, a Delaware corporation (the "Company"), for use at the
Company’s annual meeting of stockholders (the "Annual Meeting") to be held on
Tuesday, May 16, 2006, at 10:00 a.m., local time, 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, 2006, 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.
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What
may I vote on at the Annual
Meeting?
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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 2009 Annual Meeting of Stockholders; (2) the ratification
of
the appointment of PricewaterhouseCoopers LLP as independent accountants for
the
Company for the fiscal year ending December 31, 2006; (3) the approval of an
amendment to the Company's Restated Certificate of Incorporation to increase
the
number of authorized shares of common stock from 100,000,000 to 200,000,000;
and; and (4) 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?
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The
Board
of Directors recommends a vote FOR each proposal.
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?
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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?
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U.S.
Stock Transfer Corporation will count the votes and act as the inspector of
election.
6.
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What
shares are included on the proxy
card(s)?
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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?
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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 March
27,
2006, 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?
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As
of
March 27, 2006, the record date for the Annual Meeting, 27,766,909 shares of
AR
- Acacia Technologies stock and 38,992,402 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 4.043 votes,
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 the 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?
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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?
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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. To approve the amendment of the Company’s Restated
Certificate of Incorporation, a majority of the outstanding shares entitled
to
vote 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.
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What
happens if I abstain?
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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.
13. |
How
will voting on any other business be
conducted?
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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, Robert L. Harris, II and Robert A. Berman,
to vote on such matters at their discretion.
14. |
Who
are the largest principal
stockholders?
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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?
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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 Communications, Inc. ("Georgeson") to perform various solicitation
services. The Company will pay Georgeson a fee of $5,500, plus phone and other
related expenses, in connection with their solicitation services.
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 (the “Board”) 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
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 2009. 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.
The
following table sets forth information as to the persons who serve as our
directors.
Name
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Age
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Director
Since
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Positions
with the Company
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Paul
R. Ryan
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60
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1995
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Chairman
and Chief Executive Officer
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Robert
L. Harris, II
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47
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2000
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President
and Director
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Thomas
B. Akin*^
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53
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1998
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Director
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Fred
A. de Boom*+^
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70
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1995
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Director
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Edward
W. Frykman*+^
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69
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1996
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Director
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G.
Louis Graziadio, III+^
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56
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2002
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Director
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Rigdon
Currie+^
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75
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2003
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Director
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Amit
Kumar, Ph.D.
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41
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2003
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Director,
President and Chief Executive Officer of CombiMatrix
Corporation
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*
Member of the Audit Committee
+
Member of the Compensation Committee
^
Member of the Nominating and Governance 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 serves as President 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., which operates primarily in the work gloves and protective
wear
business, since 1999. Mr. Graziadio also serves as a director of True Religion
Apparel Inc. and has been named as a director nominee for Rosetta Resources
Inc.
Rigdon
Currie has
been
a director since January 2003. Mr. Currie is retired; however, he serves as
a
director and a member of the Compensation Committee of ESP, Inc., which develops
software for managing industrial environmental issues; he is Chairman of the
Board of Opportunity Capital Corporation, a private venture capital firm focused
on minority business; a director of W3 Commerce, Inc., a private software firm
focused on Internet commerce traffic generation and a director of Incuity
Software, Inc., which develops and sells high level manufacturing analytical
software. 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 2007 (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 as a director of True Religion Apparel Inc.
Fred
A. de Boom has
served as a director since February 1995. Mr. de Boom serves as a Director
of
Pacific Coast National Bank. 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 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 Director 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 serves as a director of Aeolus Pharmaceuticals, Inc. and
Leuchemix, Inc. and is a member of the Scientific Advisory Board of
BioProcessors, Inc and QuantumSphere, Inc.. He is also a board member of the
NanoBusiness Alliance. 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 in 2008 (Class II)
Thomas
B. Akin has
served as a director since May 1998. Mr. Akin serves as the managing partner
of
Talkot Capital, LLC since 1996. In that capacity Mr. Akin is the general
partner of Talkot Fund and Talkot Capital IV, LLC. From 1986 to 1994, Mr.
Akin was the Western regional Institutional Director for Merrill Lynch serving
institutional clients from Colorado to Hawaii. From 1981 to 1986 Mr. Akin was
an
institutional sales vice president in the Los Angeles Office of Merrill Lynch
Institutional. From 1978 to 1981 Mr. Akin was an institutional sales executive
for Salomon Brothers in the Los Angeles Office. Mr. Akin serves as the
Chairman of the Board and member of the Compensation Committee of Dynex Capital,
Inc., as Chairman of the Board and member of the Audit Committee of ADX
Corporation and as Chairman of the Board of CENTIV. Mr. Akin holds a B.A.
from the University of California at Santa Cruz and an M.B.A. in finance from
the University of California at Los Angeles.
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. Mr. Frykman serves as a director of Arrowhead Research
Corp. Mr. Frykman holds a BSBA degree from the University of Florida.
Board
Meetings and Committees
The
Board
of Directors held a total of eleven meetings during the fiscal year ended
December 31, 2005. During that period, no incumbent director, other than
Mr. Currie and Mr. Graziadio, 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, a Compensation Committee, a
Nominating and Governance Committee and a Disclosure Committee. The Board of
Directors has adopted charters for each of these committees; each of the
charters may be viewed on our website at www.acaciaresearch.com.
Audit
Committee.
The
Audit Committee currently consists of Thomas B. Akin, Fred A. de Boom and Edward
W. Frykman, each of whom is independent under the listing standards of the
NASDAQ Stock Market. 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 system of internal accounting controls. The Audit Committee held eight
meetings during
the fiscal year ended December 31, 2005. The Audit Committee is also
responsible for maintaining communication between the Board of Directors and
the
Company's independent accountants.
The
Board
has determined that Mr. Akin is an audit committee financial expert as defined
by Item 401(h) of Regulation S−K of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
Compensation
Committee.
The
Compensation Committee currently consists of Fred A. de Boom, Rigdon Currie,
Edward W. Frykman and G. Louis Graziadio, III, each of whom is independent
under
the listing standards of the NASDAQ Stock Market. 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 six meetings during the fiscal year ended December 31, 2005.
Nominating
and Governance Committee.
The
Nominating and Governance Committee currently consists of Thomas B. Akin, Fred
A. de Boom, Edward W. Frykman, G. Louis Graziadio, III and Rigdon Currie each
of
whom is independent under the listing standards of the Nasdaq Stock Market.
The
Nominating and Governance Committee met on February 16, 2006, to recommend
director nominees to the Board of Directors for election at the 2006 annual
meeting of stockholders. The Nomination and Governance Committee held one
meeting during the fiscal year ended December 31, 2005. The charter for the
Nominating and Governance Committee provides that, among
its
specific responsibilities, the Committee shall:
·
|
Establish
criteria and qualifications for Board membership, including standards
for
assessing independence;
|
·
|
Identify
and consider candidates, including those recommended by stockholders
and
others, to fill positions on the Board, and assess the contributions
and
independence of incumbent directors in determining whether to recommend
them for reelection to the Board;
|
·
|
Recommend
to the Board candidates for election or reelection at each annual
meeting
of stockholders;
|
·
|
Annually
review the Company’s corporate governance processes, and its governance
principles, including such issues as the Board’s organization, membership
terms, and the structure and frequency of Board meetings, and recommend
appropriate changes to the Board;
|
·
|
Administer
the Company's corporate Codes of Conduct and annually review and
assess
the adequacy of the corporate Codes of Conduct and recommend any
proposed
changes to the Board. Specifically, the Nominating and Governance
Committee shall discuss with management their compliance with the
corporate Codes of Conduct, including any insider and affiliated
party
transactions, and the Company's procedures to monitor compliance
throughout the Company with the corporate Codes of
Conduct;
|
·
|
Review
periodically with the Company's Chief Executive Officer and the Board,
the
succession plans relating to positions held by senior executives,
and make
recommendations to the Board regarding the selections of individuals
to
fill these positions;
|
·
|
Oversee
the continuing education of Company directors and the orientation
of new
directors;
|
·
|
Monitor
the functions of the Board and its committees, as set forth in their
respective charters, and coordinate and oversee annual evaluations
of the
Board’s performance and procedures, including an evaluation of individual
directors, and of the Board’s committees; and
|
·
|
Assess
annually the performance of the duties specified in the Nominating
and
Governance Committee Charter by the Nominating and Governance Committee
and its individual members.
|
Director
Qualification Standards
There
are
no specific minimum qualifications that the Nominating and Governance Committee
requires to be met by a director nominee recommended for a position on the
Board, nor are there any specific qualities or skills that are necessary for
one
or more members of our Board to possess, other than as are necessary to meet
the
requirements of the rules and regulations applicable to us. The
Nominating and Governance Committee considers
a potential candidate’s experience, areas of expertise, and other factors
relative to the overall composition of the Board, including
the
following characteristics:
· |
the
highest ethical standards and
integrity;
|
· |
a
willingness to act on and be accountable for Board
decisions;
|
· |
an
ability to provide wise, informed, and thoughtful counsel to top
management on a range of issues;
|
· |
a
history of achievement that reflects high standards for the director
candidate and others;
|
· |
loyalty
and commitment to driving the success of the
Company;
|
· |
the
independence requirements imposed by the Securities and Exchange
Commission and the Nasdaq Stock Market;
and
|
· |
a
background that provides a portfolio of experience and knowledge
commensurate with the Company’s needs.
|
The
Nominating and Governance Committee has the following policy with regard
to the
consideration of any director candidates recommended by security
holders:
· |
A
stockholder wishing to nominate a candidate for election to the
Board at
the next annual meeting is required to give written notice addressed
to
the Secretary, Acacia Research Corporation, 500 Newport Center
Drive, 7th
Floor, Newport Beach, CA 92660, of his or her intention to make
such a
nomination. The notice of nomination must have been received by
the
Secretary at the address below no later than December 31, 2006,
in order
to be considered for nomination at the next annual
meeting.
|
· |
The
notice of nomination must include information regarding the recommended
candidate relevant to a determination of whether the recommended
candidate
would be barred from being considered independent under Nasdaq
Stock
Market's Listing Qualifications or, alternatively, a statement
that the
recommended candidate would not be so barred. A nomination which
does not
comply with the above requirements will not be
considered.
|
The
Nominating and Governance Committee considers director candidates that are
suggested by members of the Nominating and Governance Committee, the Board,
as
well as management and stockholders. The Nominating and Governance Committee
may, in the future, also retain a third-party executive search firm to identify
candidates on terms and conditions acceptable to the Nominating and Governance
Committee, in its sole discretion. The process by the Nominating and Governance
Committee for identifying and evaluating nominees for director, including
nominees recommended by stockholders, involves (with or without the assistance
of a retained search firm), compiling names of potentially eligible candidates,
conducting background and reference checks, conducting interviews with the
candidate and others (as schedules permit), meeting to consider and approve
the
final candidates and, as appropriate, preparing and presenting to the full
Board
an analysis with regard to particular recommended candidates. The Nominating
and
Governance Committee endeavors to identify director nominees who have the
highest personal and professional integrity, have demonstrated exceptional
ability and judgment, and, together with other director nominees and members,
are expected to serve the long term interest of our stockholders and contribute
to our overall corporate goals.
Disclosure
Committee.
The
Disclosure Committee currently consists Robert A. Berman, Clayton J. Haynes,
Amit Kumar, Ph.D., Robert Stewart, Vice President of Investor Relations, Scott
Burell, Vice President of Finance of CombiMatrix Corporation and Cheryl
Willeford, corporate paralegal. The Disclosure Committee is primarily
responsible for oversight of the accuracy and timeliness of the disclosures
made
by the Company. The Disclosure Committee held four meetings during the fiscal
year ended December 31, 2005.
Codes
of Conduct
The
Company has adopted a corporate Code of Conduct and a Board of Directors Code
of
Conduct, both of which may be viewed on our website at www.acaciaresearch.com.
The
corporate Code of Conduct applies to all officers, directors and employees
of
the Company,
including
the
Company's principal executive officer, principal financial and accounting
officer and controller,
or
persons performing similar functions.
The
Board of Directors Code of Conduct specifically applies to the Board of
Directors. Any waiver of these Codes of Conduct for any of the Company's
executive officers or directors may be made only by the Board and must be
promptly disclosed to stockholders in the manner required by applicable
law.
Stockholder
Communications with Directors
Stockholders
wishing to communicate with the Board or with a particular member or committee
of the Board should address communications to the Board, the particular member
or committee of the Board, c/o Acacia Research Corporation, Attention:
Secretary, 500 Newport Center Drive, 7th Floor, Newport Beach, California 92660.
All communications addressed to the Board or a particular member or committee
of
the Board will be relayed to that addressee. From time to time, the Board may
change the process through which stockholders communicate with the Board or
its
members or committees. Please refer to the Company’s website at www.acaciaresearch.com
for
changes in this process. The Board, the particular director or committee of
the
Board to which a communication is addressed will, if it deems appropriate,
promptly refer the matter either to management or to the full Board depending
on
the nature of the communication.
Board
Member Attendance at Annual Stockholder Meetings
Although
the Company does not have a formal policy regarding director attendance at
annual stockholder meetings, directors are expected to attend these meetings
absent extenuating circumstances. Each current director of the Company attended
last year's annual meeting of stockholders.
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. 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 and subsequent non-discretionary annual grants
of
options to purchase 15,000 shares of AR - Acacia Technologies stock and 15,000
shares of AR - CombiMatrix stock while serving as members of the Board, all
such
grants at an exercise price equal to the closing market price on the date of
grant. The options vest in four equal quarterly installments over the 12-month
period measured from the grant date.
Non-employee
directors receive compensation in the amount of $1,500 per month for their
service as members of the Board. In addition, Mr. Akin receives compensation
in
the amount of $500 per month for his services as Chairman of the Audit
Committee. Non-employee directors receive $1,000 for each meeting of the Board
or of any committee of the Board 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, except that no compensation shall be received for each Compensation
or
Nominating and Corporate Governance Committee meeting attended that immediately
precedes or follows a meeting of the Board. Directors are also reimbursed for
expenses incurred in connection with attendance at meetings of the Board and
committees of the Board and in connection with the performance of Board
duties.
Required
Vote
The
nominees for Class III directors who receive the greatest number of affirmative
votes will be elected to the Board of Directors.
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.
PROPOSAL
NO. 2:
RATIFICATION
OF INDEPENDENT ACCOUNTANTS
The
firm
of PricewaterhouseCoopers LLP, the Company's independent accountants for the
year ended December 31, 2005, 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, 2006, 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 is expected to
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, 2006.
Proxies received will be so voted unless stockholders specify otherwise in
the
proxy.
PROPOSAL
NO. 3:
APPROVAL
OF AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
The
stockholders are being asked to approve an amendment to the Company's Restated
Certificate of Incorporation (the "Restated Certificate") to increase the number
of authorized shares of common stock from 100,000,000 to 200,000,000, with
100,000,000 each designated as AR - Acacia Technologies Common Stock and AR
-
CombiMatrix Common Stock.
On
February 16, 2006, the Company's Board of Directors adopted resolutions
approving and authorizing the amendment and directing that the amendment be
submitted to a vote of the stockholders at the Annual Meeting. A copy of the
proposed amendment to our Restated Certificate affecting the increase in our
authorized shares is attached hereto as Exhibit
A.
The
Board determined that the amendment is advisable and in the best interests
of
the Company and its stockholders and unanimously recommends approval by the
stockholders.
If
the
stockholders approve the proposed amendment, the Board of Directors may proceed
to file the amendment, thereby making the increase in authorized capital
effective upon the filing of such amendment. The Board of Directors may, in
its
discretion, abandon the amendment to increase the authorized capital. If the
Board of Directors determines that it advisable and is in the best interests
of
the Company and its stockholders to proceed with the increase in authorized
capital, the Board of Directors will, subject to stockholder approval, file
with
the Secretary of State of the State of Delaware a Certificate of Amendment
to
the Restated Certificate increasing the Company's authorized capital as set
forth in this proposal.
The
Restated Certificate currently authorizes the issuance of up to 110,000,000
shares of its capital stock, including 50,000,000 shares designated as AR -
Acacia Technologies Common Stock, 50,000,000 shares designated as AR -
CombiMatrix Common Stock and 10,000,000 shares designated as Preferred Stock.
Of
the 110,000,000 shares of stock currently authorized, as of the close of
business on March 27, 2006, there were 27,766,909 shares of AR - Acacia
Technologies Common Stock issued and outstanding, 38,992,402 shares of AR -
CombiMatrix Common Stock issued and outstanding, and no shares of Preferred
Stock issued and outstanding. In addition, as of March 27, 2006, the Company
has
reserved up to approximately 15,605,373 shares of common stock for issuance
pursuant to outstanding stock options and warrants.
Reasons
for Increase
The
Board
of Directors has proposed this amendment to ensure that the Company has
sufficient shares available for general corporate purposes including, without
limitation, equity financings, acquisitions, establishing strategic
relationships with corporate partners, providing equity incentives to employees,
and payments of stock dividends, stock splits or other recapitalizations. The
Company considers, from time to time, acquisitions, equity financings, strategic
relationships and other transactions as market conditions or other opportunities
arise. Without an increase in the shares of common stock authorized for
issuance, the Company might not be able to conclude any such transaction in
a
timely fashion.
Effect
of Increase
If
the
stockholders approve the proposed amendment, the Board may cause the issuance
of
additional shares of common stock without further vote of the stockholders
of
the Company, except as may be required in particular cases by the Company's
charter documents, applicable law or the rules of any national securities
exchange on which shares of common stock of the Company may then be listed.
Under the Company's Restated Certificate, the Company's stockholders do not
have
preemptive rights to subscribe to additional securities that may be issued
by
the Company, which means that current stockholders do not have a prior right
to
purchase any new issue of capital stock of the Company in order to maintain
their proportionate ownership of common stock. In addition, if the Board elects
to cause the Company to issue additional shares of common stock or securities
convertible into or exercisable for common stock, such issuance could have
a
dilutive effect on the voting power and earnings per share of existing
stockholders.
The
increase in the number of authorized shares of common stock could have an
anti-takeover effect, although this is not the intent of the Board in proposing
the amendment. For example, if the Board issues additional shares in the future,
such issuance could dilute the voting power of a person seeking control of
the
Company, thereby deterring or rendering more difficult a merger, tender offer,
proxy contest or an extraordinary transaction opposed by the Board of Directors.
As of the date of this Proxy Statement, the Board is not aware of any attempt
or
plan to obtain control of the Company.
The
Board of Directors recommends that the stockholders vote FOR the approval of
the
amendment to the Restated Certificate of Incorporation increasing the number
of
authorized shares of common stock.
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.
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
The
following tables set forth certain information known to the Company with respect
to the beneficial ownership of the Company’s common stock as of March 27, 2006,
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.
Beneficial
Owner
|
|
Amount
and Nature
of
Beneficial
Ownership
of AR -
Acacia
Technologies stock
|
|
Percent
of
Class(1)
|
|
Amount
and Nature of Beneficial Ownership of AR - CombiMatrix
stock
|
|
Percent
of
Class(1)
|
|
Directors
and Executive Officers(2)
|
|
|
|
|
|
|
|
|
|
Paul
R. Ryan(3)
|
|
|
1,512,548
|
|
|
5.3%
|
|
|
699,571
|
|
|
1.8%
|
|
Thomas
B. Akin(4)
|
|
|
160,394
|
|
|
*
|
|
|
153,898
|
|
|
*
|
|
Rigdon
Currie(5)
|
|
|
45,750
|
|
|
*
|
|
|
131,250
|
|
|
*
|
|
Fred
A. de Boom(6)
|
|
|
100,550
|
|
|
*
|
|
|
78,892
|
|
|
*
|
|
Edward
W. Frykman(7)
|
|
|
89,340
|
|
|
*
|
|
|
71,407
|
|
|
*
|
|
Robert
L. Harris, II(8)
|
|
|
1,023,556
|
|
|
3.6%
|
|
|
516,391
|
|
|
1.3%
|
|
G.
Louis Graziadio, III(9)
|
|
|
70,750
|
|
|
*
|
|
|
61,030
|
|
|
*
|
|
Amit
Kumar, Ph.D.(10)
|
|
|
428,203
|
|
|
1.5%
|
|
|
1,110,824
|
|
|
2.8%
|
|
Clayton
J. Haynes(11)
|
|
|
159,369
|
|
|
*
|
|
|
66,840
|
|
|
*
|
|
Robert
A. Berman(12)
|
|
|
556,637
|
|
|
2.0%
|
|
|
227,889
|
|
|
*
|
|
All
Directors and Executive Officers as a Group (ten
persons)(13)
|
|
|
4,147,097
|
|
|
13.3%
|
|
|
3,117,992
|
|
|
7.5%
|
|
* Less
than
one percent
(1) |
The
percentage of shares beneficially owned is based on 27,766,909 shares
of
AR - Acacia Technologies stock and 38,992,402 shares of AR - CombiMatrix
stock outstanding as of March 27, 2006. 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 March 27, 2006, 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
9,000 shares of AR - Acacia Technologies Stock and 10,000 shares
of AR -
CombiMatrix stock held by Mr. Ryan’s daughter, and 1,020,309 shares of AR
- Acacia Technologies stock and 521,786 shares of AR - CombiMatrix
stock
issuable upon exercise of options that are currently exercisable
or will
become exercisable within 60 days of March 27, 2006.
|
(4) |
Includes
85,244 shares of AR - Acacia Technologies Stock and 35,412 shares
of AR -
CombiMatrix stock held by Talkot Fund, L.E. ("Talkot"), and 75,150
shares
of AR - Acacia Technologies stock and 118,486 shares of AR - CombiMatrix
stock issuable upon exercise of options that are currently exercisable
or
will become exercisable within 60 days of March 27, 2006. Mr. Akin
serves
as managing general partner of
Talkot.
|
(5) |
Includes
45,750 shares of AR - Acacia Technologies stock and 131,250 shares
of AR -
CombiMatrix stock issuable upon exercise of options that are currently
exercisable or will become exercisable within 60 days of March 27,
2006.
|
(6)
|
Includes
75,150 shares of AR - Acacia Technologies stock and 63,486 shares
of AR -
CombiMatrix stock issuable upon exercise of options that are currently
exercisable or will become exercisable within 60 days of March 27,
2006.
|
(7) |
Includes
69,350 shares of AR - Acacia Technologies stock and 63,486 shares
of AR -
CombiMatrix stock issuable upon exercise of options that are currently
exercisable or will become exercisable within 60 days of March 27,
2006.
|
(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 968,556 shares of AR
- Acacia
Technologies stock and 516,391 shares of AR - CombiMatrix stock issuable
upon exercise of options that are currently exercisable or will become
exercisable within 60 days of March 27,
2006.
|
(9) |
Includes
70,750 shares of AR - Acacia Technologies stock and 61,030 shares
of AR -
CombiMatrix stock issuable upon exercise of options that are currently
exercisable or will become exercisable within 60 days of March 27,
2006.
|
(10) |
Includes
427,103 shares of AR - Acacia Technologies stock and 1,082,210 shares
of
AR - CombiMatrix stock issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days of
March
27, 2006.
|
(11) |
Includes
144,369 shares of AR - Acacia Technologies stock and 66,840 shares
of AR -
CombiMatrix stock issuable upon exercise of options that are currently
exercisable or will become exercisable within 60 days of March 27,
2006.
|
(12) |
Includes
526,637 shares of AR - Acacia Technologies stock and 227,889 shares
of AR
- CombiMatrix stock issuable upon exercise of options that are currently
exercisable or will become exercisable within 60 days of March 27,
2006.
|
(13) |
Includes
3,423,124 shares of AR - Acacia Technologies stock and 2,852,854
shares of
AR - CombiMatrix stock issuable upon exercise of options that are
currently exercisable or will become exercisable within 60 days of
March
27, 2006.
|
|
|
Amount
and Nature
of
Beneficial
Ownership
of AR -
Acacia
Technologies stock
|
|
Percent
of
Class(1)
|
|
Amount
and Nature of Beneficial Ownership of AR - CombiMatrix
stock
|
|
Percent
of
Class(1)
|
|
Beneficial
Owner 5% Stockholders
|
|
Sole
Voting
Power
|
|
Shared
Voting Power
|
|
Sole
Investment Power
|
|
Shared
Investment Power
|
|
Total
|
|
|
|
|
|
|
|
David
M. Knott(1)
|
|
|
1,321,626
|
|
|
79,700
|
|
|
1,407,126
|
|
|
10,000
|
|
|
1,417,126
|
|
|
5.1%
|
|
|
0
|
|
|
*
|
|
Dorset
Management Corporation(1)
|
|
|
1,321,626
|
|
|
79,700
|
|
|
1,407,126
|
|
|
10,000
|
|
|
1,417,126
|
|
|
5.1%
|
|
|
0
|
|
|
*
|
|
Apex
Capital, LLC(2)
|
|
|
0
|
|
|
3,193,300
|
|
|
0
|
|
|
3,193,300
|
|
|
3,193,300
|
|
|
11.5%
|
|
|
0
|
|
|
*
|
|
Sanford
J. Colen(2)
|
|
|
45,000
|
|
|
3,193,300
|
|
|
45,000
|
|
|
3,193,300
|
|
|
3,238,300
|
|
|
11.7%
|
|
|
0
|
|
|
*
|
|
Daniel
S. Katz
|
|
|
164,000
|
|
|
3,193,300
|
|
|
164,000
|
|
|
3,193,300
|
|
|
3,357,300
|
|
|
12.1%
|
|
|
0
|
|
|
*
|
|
* Less
than
one percent
(1) |
The
same 1,417,126 shares of AR-Acacia Technologies stock are beneficially
owned by both David M. Knott and Dorset Management Corporation and
are
reported separately for each in accordance with Item 403 of Regulation
S-K. The information reported is based solely on a Schedule 13G filed
jointly by David M. Knott and Dorset Management Corporation with
the SEC
on January 6, 2006. According to such Schedule 13G, the address for
Mr.
Knott and Dorset Management Corporation is 485 Underhill Boulevard,
Suite
205, Syosset, New York 11791.
|
(2) |
The
same 3,193,300 shares of AR-Acacia Technologies stock are beneficially
owned by Apex Capital, LLC, Sanford J. Colen and Daniel S. Katz,
and are
reported separately for each in accordance with Item 403 of Regulation
S-K. Apex Capital, LLC, is a registered investment advisor whose
clients
have the right to receive or the power to direct the receipt of dividends
from, or the proceeds from the sale of, the AR - Acacia Technologies
stock. Mr. Colen is the Manager of Apex Capital, LLC, and has sole
voting
and dispositive power with respect to 45,000 shares of AR - Acacia
Technologies stock. Mr. Katz is a portfolio manager of Apex Capital,
LLC,
and has sole voting and dispositive power with respect to 164,000
shares
of AR - Acacia Technologies stock. The information reported is based
solely on a Schedule 13G filed jointly by Apex Capital, LLC, Sanford
J.
Colen and Daniel S. Katz. According the Schedule 13G, the address
for Apex
Capital, LLC, Sanford J. Colen and Daniel S. Katz is 25 Orinda Way,
Suite
300, Orinda, California 94563.
|
.
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
|
|
60
|
|
Chairman
and Chief Executive Officer
|
Robert
L. Harris, II
|
|
47
|
|
President
|
Amit
Kumar, Ph.D.
|
|
41
|
|
Chief
Executive Officer and President of CombiMatrix
Corporation
|
Clayton
J. Haynes
|
|
36
|
|
Chief
Financial Officer, Treasurer and Senior Vice President, Finance
|
Robert
A. Berman
|
|
43
|
|
Chief
Operating Officer, 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 Business Advisory 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
is
Acacia’s Chief Operating Officer and General Counsel. Since joining the company
in 2000, he has directed patent licensing and enforcement programs which have
generated over $50 million in revenue. Prior to joining Acacia, Mr. Berman
held business development and legal positions at National Media Corporation,
QVC, and the law firm of Blank Rome. Mr. Berman received a B.S. from the
University of Pennsylvania’s Wharton School, and a J. D. from Northwestern Law
School.
Executive
Officer Compensation
The
following table sets forth information concerning all cash and non-cash
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 $100,000
in
the last fiscal year. The listed individuals are referred to as our "Named
Executive Officers."
SUMMARY
COMPENSATION TABLE
|
|
|
|
Annual
Compensation
|
|
Long-Term
Compensation
|
|
|
|
Name
and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Other
Annual
Compen-sation
($)
|
|
Restricted
Stock Awards
($)(1)
|
|
Securities
Underlying Options
(#)(2)
|
|
All
Other Compen-sation
|
|
Paul
R. Ryan
Chairman
and
|
|
|
2005
|
|
|
299,481
|
|
|
5,894
|
|
|
0
|
|
|
$ 164,500
|
|
|
0
|
|
|
0
|
|
Chief
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
287,356
|
|
|
5,613
|
|
|
0
|
|
|
0
|
|
|
91,667
|
(3)
|
|
0
|
|
|
|
|
2003
|
|
|
272,619
|
|
|
5,346
|
|
|
0
|
|
|
0
|
|
|
191,667
50,000
|
(3)
(4)
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
L. Harris III
President
|
|
|
2005
|
|
|
294,099
|
|
|
5,788
|
|
|
0
|
|
|
$
164,500
|
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
282,188
|
|
|
5,513
|
|
|
0
|
|
|
0
|
|
|
91,667
|
(3)
|
|
0
|
|
|
|
|
2003
|
|
|
267,600
|
|
|
5,250
|
|
|
0
|
|
|
0
|
|
|
131,667
50,000
|
(3)
(4)
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amit
Kumar, Ph.D.
Chief
Executive Officer and
|
|
|
2005
|
|
|
398,755
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
90,000
|
(4)
|
|
0
|
|
President
of CombiMatrix(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
379,586
|
|
|
24,000
|
|
|
0
|
|
|
0
|
|
|
250,000
|
(4)
|
|
0
|
|
|
|
|
2003
|
|
|
318,855
|
|
|
57,500
|
|
|
0
|
|
|
0
|
|
|
30,000
300,000
|
(3)
(4)
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clayton
J. Haynes, Chief
Financial
Officer and
|
|
|
2005
|
|
|
198,974
|
|
|
4,135
|
|
|
0
|
|
|
$
70,500
|
|
|
0
|
|
|
0
|
|
Treasurer
(6)
|
|
|
2004
|
|
|
178,822
|
|
|
3,493
|
|
|
0
|
|
|
0
|
|
|
37,620
30,000
|
(3)
(4)
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2003
|
|
|
169,696
|
|
|
3,327
|
|
|
0
|
|
|
0
|
|
|
50,950
|
(3)
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
A. Berman
Chief
Operating Officer,
|
|
|
2005
|
|
|
274,934
|
|
|
25,452
|
|
|
0
|
|
|
$
141,000
|
|
|
28,000
|
(3)
|
|
0
|
|
General
Counsel and
Secretary
(7)
|
|
|
2004
|
|
|
232,572
|
|
|
34,543
|
|
|
0
|
|
|
0
|
|
|
75,000
|
(3)
|
|
0
|
|
|
|
|
2003
|
|
|
218,423
|
|
|
24,327
|
|
|
0
|
|
|
0
|
|
|
107,105
40,000
|
(3)
(4)
|
|
0
|
|
(1) |
The
amounts shown in this column represent the dollar value of the restricted
stock awards as of their grant date based on the closing price of
AR-Acacia Technologies Common Stock on the grant date. The number
and
aggregate values of restricted stock, based on the closing price
of
AR-Acacia Technologies Common Stock on December 31, 2005, held by
Mr. Ryan, Mr. Harris, Mr. Berman and Mr. Haynes were as follows: Mr.
Ryan (35,000 and $241,500); Mr. Harris (35,000 and $241,500);
Mr. Berman (30,000 and $207,000); and Mr. Haynes (15,000 and
$103,500). All restricted stock vest in full on August 1, 2007. The
numbers described in this footnote regarding the total number of
shares of
restricted stock held by each named executive officer also reflect
the
number of shares awarded in this year that are reported in the Summary
Compensation Table above. The restricted stock awards are entitled
to any
dividends paid by the Company.
|
(2) |
No
stock appreciation rights were granted or outstanding during the
periods
covered by the table.
|
(3) |
Options
granted with respect to AR - Acacia Technologies
stock.
|
(4) |
Options
granted with respect to AR - CombiMatrix
stock.
|
(5) |
Dr.
Kumar joined the Company in July 2000 and became an executive officer
upon
his appointment as Chief Executive Officer and President of CombiMatrix
Corporation in September 2001.
|
(6) |
Mr.
Haynes joined the Company in April 2001 and became an executive officer
upon his appointment as Chief Financial Officer in November
2001.
|
(7) |
Mr.
Berman joined the Company in 2000 and became an executive officer
in
2002.
|
Stock
Option Grants and Exercises
The
following table sets forth information regarding stock options granted to the
Named Executive Officers during 2005. No stock appreciation rights were granted
to any of the Named Executive Officers during 2005.
OPTION
GRANTS IN LAST FISCAL YEAR
|
|
Individual
Grants
|
|
Potential
Realizable Value at
Assumed
Annual Rate
of
Stock Price Appreciation
for
Option Term(1)
|
|
Name
|
|
Number
of Securities Underlying Options Granted (#)
|
|
Percent
of Total Options Granted to Employees in Fiscal
Year
|
|
Exercise
or Base Price($/Sh)
|
|
Expiration
Date
|
|
5%($)
|
|
10%($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
R. Ryan
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
L. Harris, II
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amit
Kumar, Ph.D.
|
|
|
90,000
|
(2)
|
|
8.92%
|
|
|
$
2.98
|
|
|
5/26/15
|
|
|
$
168,670
|
|
|
$
427,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clayton
J. Haynes
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
A. Berman
|
|
|
28,000
|
(3)
|
|
4.64%
|
|
|
$
5.86
|
|
|
1/25/15
|
|
|
$
103,189
|
|
|
$
261,501
|
|
(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 - CombiMatrix stock
at an
exercise price equal to the closing price of AR—CombiMatrix stock on the
date of grant and has a term of ten years. One-sixth (1/6) of the
option
shares vested upon completion of six (6) months of service measured
from
May 26, 2005, with the balance of the option shares vesting in thirty
(30)
successive equal monthly installments upon the completion of service
over
the thirty (30) month period measured from May 25, 2005.
|
(3) |
The
option was granted with respect to shares of AR - Acacia Technologies
stock at an exercise price equal to the closing price of AR—Acacia
Technologies stock on the date of grant and has a term of ten years.
The
option shares vest in twenty-four (24) successive equal monthly
installments upon the completion of service of the twenty-four (24)
month
period measured from December 28,
2004.
|
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 2005 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 2005, 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
|
|
Shares
Acquired
on
|
|
Value
|
|
Number
of Securities Underlying Unexercised Options at 2005
Year-End(#)
|
|
Value
of Unexercised
in-the-Money
Options at
2005
Year-End (1)($)
|
|
Name
|
|
Exercise(#)
|
|
Realized(2)($)
|
|
Exercisable
|
|
Unexercisable
|
|
Exercisable
|
|
Unexercisable
|
|
Paul
R. Ryan
|
|
|
0
|
|
|
0
|
|
|
988,087
|
|
|
185,001
|
|
|
2,129,932
|
|
|
420,003
|
|
Robert
L. Harris
|
|
|
0
|
|
|
0
|
|
|
938,001
|
|
|
183,334
|
|
|
1,835,323
|
|
|
411,585
|
|
Amit
Kumar, Ph.D.
|
|
|
0
|
|
|
0
|
|
|
424,602
|
|
|
2,501
|
|
|
588,529
|
|
|
12,630
|
|
Clayton
J. Haynes
|
|
|
0
|
|
|
0
|
|
|
129,330
|
|
|
77,740
|
|
|
514,088
|
|
|
181,539
|
|
Robert
A. Berman
|
|
|
0
|
|
|
0
|
|
|
501,603
|
|
|
150,105
|
|
|
1,160,370
|
|
|
327,272
|
|
(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 30, 2005 of $6.90 per
share.
|
(2) |
Value
realized represents the difference between the exercise price of
the
options and the value of the underlying securities on the date of
exercise.
|
The
following table provides information, with respect to the Named Executive
Officers, concerning the exercise of options to purchase AR - CombiMatrix stock
during 2005 and unexercised options held by them at the end of that fiscal
year.
None of the Named Executive Officers exercised any stock appreciation rights
during 2005 and no stock appreciation rights were held by the Named Executive
Officers at the end of such year.
AGGREGATED
OPTION EXERCISES IN LAST FISCAL YEAR
AND
FISCAL YEAR-END OPTION VALUES
|
|
Shares
Acquired
on
|
|
Value
|
|
Number
of Securities Underlying Unexercised Options at 2005
Year-End(#)
|
|
Value
of Unexercised
in-the-Money
Options at
2005Year-End
(1)($)
|
|
Name
|
|
Exercise(#)
|
|
Realized(2)($)
|
|
Exercisable
|
|
Unexercisable
|
|
Exercisable
|
|
Unexercisable
|
|
Paul
R. Ryan
|
|
|
0
|
|
|
0
|
|
|
519,008
|
|
|
2,778
|
|
|
0
|
|
|
0
|
|
Robert
L. Harris
|
|
|
0
|
|
|
0
|
|
|
513,613
|
|
|
2,778
|
|
|
0
|
|
|
0
|
|
Amit
Kumar, Ph.D.
|
|
|
0
|
|
|
0
|
|
|
976,655
|
|
|
235,005
|
|
|
0
|
|
|
0
|
|
Clayton
J. Haynes
|
|
|
0
|
|
|
0
|
|
|
65,173
|
|
|
1,667
|
|
|
0
|
|
|
0
|
|
Robert
A. Berman
|
|
|
0
|
|
|
0
|
|
|
225,667
|
|
|
2,222
|
|
|
0
|
|
|
0
|
|
(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 National Market on December 30, 2005 of $1.37 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.
|
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, Currie, Frykman and Graziadio. None of these individuals
was an officer or employee of the Company at any time during 2005 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.
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, stock option awards and restricted stock 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 and
restricted stock awards to most employees, including eligible executive
officers. The Company has no other long-term incentive plans. Stock options
and
restricted stock awards 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 $299,481 and a bonus in the amount of $5,894
in
2005, as
well as
a restricted stock award of 35,000 shares of AR - Acacia Technologies stock
as
set forth above under the Summary Compensation Table. The cash amount paid
to
Mr. Ryan in the form of base salary and bonus and the stock option grant 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,
Rigdon
Currie
Fred
A. de Boom
Edward
W. Frykman
G.
Louis Graziadio, III
AUDIT
COMMITTEE REPORT
The
following is the report of the Audit Committee with respect to the Company’s
audited financial statements for 2005, which include the consolidated balance
sheets of the Company as of December 31, 2005 and 2004, and the related
consolidated statements of operations, shareholders’ equity and cash flows for
each of the three years in the period ended December 31, 2005, 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. The members of the
Audit Committee are Fred
A.
de Boom, Thomas B. Akin and Edward W. Frykman. All members of the Audit
Committee are "independent," as defined in Rule 10A-3 under the Exchange Act
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.
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, 2005, as filed with the SEC.
Reappointment
of Independent Auditors.
In
February 2006 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, 2006. The Audit Committee wishes to thank
Robert Irving of Pricewaterhouse Coopers LLP for his service to the Company
as
audit partner over the past five years. The Audit Committee looks forward to
working with Anne-Marie Vitale, who will be the Company’s audit partner at
Pricewaterhouse Coopers LLP for the next five years.
This
report is submitted by the Audit Committee of the Board of
Directors.
Thomas
B. Akin
Fred
A. de Boom
Edward
W. Frykman
The
Audit
Committee has selected PricewaterhouseCoopers LLP as independent accountant
for
the company in 2006.
Representatives
of PricewaterhouseCoopers LLP will be present at the 2006 Annual Meeting, where
they may make a statement and will be available to respond to questions.
Audit
and Related Fees
Audit
Fees
-
PricewaterhouseCoopers LLP was the company's independent registered public
accounting firm for the years ended December 31, 2005 and 2004. Total fees
paid
to PricewaterhouseCoopers LLP for audit services rendered during 2005 and 2004
were $769,000 and $880,000, respectively.
Audit-Related
Fees
- Total
fees paid to PricewaterhouseCoopers LLP for audit-related services during 2005
and 2004 were $136,000 and $0, respectively. Audit-related fees primarily
relate to review services provided in connection with certain of the company's
registration statements filed during 2005 and to consulting services on
accounting matters related to the company's 2005 business
acquisition.
Tax
Fees -
Total
fees paid to PricewaterhouseCoopers LLP for tax services rendered during 2005
and 2004 were $72,000 and $95,000, respectively, related primarily to tax
related compliance and consultation services.
All
Other Fees
- There
were no fees paid to PricewaterhouseCoopers LLP for other services rendered
during 2005 and 2004.
Audit
Committee Pre-Approval Policy
The
Audit
Committee has established policies and procedures regarding pre-approval of
all
services provided by the independent accountant. At the beginning of the fiscal
year, the Committee pre-approves the engagement of the independent accountant
to
provide audit services based on fee estimates. The Committee also pre-approves
proposed audit-related services, tax services and other permissible services,
based on specified project and service details, fee estimates, and aggregate
fee
limits for each service category. The Committee receives a report at each
meeting on the status of services provided or to be provided by the independent
accountant and the related fees.
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.
|
|
2001
|
|
2002
|
|
2003
|
|
2004
|
|
2005
|
|
Acacia
Research Corporation
|
|
$
|
100
|
|
$
|
28
|
|
$
|
66
|
|
$
|
69
|
|
$
|
70
|
|
Nasdaq
Index
|
|
$
|
100
|
|
$
|
68
|
|
$
|
103
|
|
$
|
111
|
|
$
|
113
|
|
Nasdaq
Biotech Index
|
|
$
|
100
|
|
$
|
55
|
|
$
|
80
|
|
$
|
85
|
|
$
|
87
|
|
The
graph
covers the period from December 31, 2001 to December 31, 2005. Cumulative
total returns are calculated assuming that $100 was invested on December 31,
2001, 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 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 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.
Certain
Transactions
Since
January 1, 2005, 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 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, 2005, 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
16, 2006 the Company filed with the SEC an Annual Report on Form 10-K for the
2005 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.
Householding
We
are
sending only one Form 10-K report and proxy statement to certain street-name
stockholders who share a single 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.
Stockholder
Proposals for the 2007 Annual Meeting
Stockholders
may submit proposals on matters appropriate for stockholder action at subsequent
annual meetings of the Company consistent with Rule 14a-8 promulgated under
the
Securities Exchange Act of 1934, as amended. Proposals
of
stockholders intended to be presented at the Company’s
2007
Annual Meeting
of
Stockholders
must be
received by the Company (Attention:
Secretary, at the principal offices of the Company), no later than December
31,
2006,
for
inclusion in the Board’s proxy statement and form of proxy for that meeting. In
order for a stockholder proposal not intended to be subject to Rule 14a-8 (and
thus not subject to inclusion in our proxy statement) to be considered “timely”
within the meaning of Rule 14a-4 under the Securities Exchange Act of 1934,
as
amended, and pursuant to our bylaws, notice of any stockholder proposals must
be
delivered to the Company’s Secretary in writing not less than the close of
business on the 90th
day nor
earlier than the close of business on the 120th
day
prior to the first anniversary of the 2006 Annual Meeting, after which a
proposal is untimely. In the event that the date of the 2007 Annual Meeting
is
more than 30 days before or more than 70 days after such anniversary date,
notice by the stockholder must be so delivered not earlier than the close of
business on the 120th
day
prior to the 2007 Annual Meeting and not later than the close of business on
the
later of the 90th
day
prior to the 2007 Annual Meeting or the 10th
day
following the day on which public announcement of the date of the 2007 Annual
Meeting is first made by the Company. A stockholder’s notice to the Secretary
must set forth for each matter proposed to be brought before the annual meeting
(a) a brief description of the matter the stockholder proposes to bring before
the meeting and the reasons for conducting such business at the meeting,
(b) the name and address of the stockholder proposing such business, (c)
the number of shares of the Company’s common stock which are beneficially owned
by the stockholder, and (d) any material interest of the stockholder in such
business.
Incorporation
of Financial Statements and Related Material
Our
financial statements, management's discussion and analysis of financial
condition and results of operations, and quantitative
and qualitative disclosures about market risk are incorporated by reference
to
our Annual Report on Form 10-K for the period ended December 31,
2005.
April
10,
2006
By
Order
of the Board of Directors,
/s/
Robert A. Berman
Robert
A.
Berman
Chief
Operating Officer, General Counsel and Secretary
Exhibit
A
CERTIFICATE
OF AMENDMENT TO
RESTATED
CERTIFICATE OF INCORPORATION
OF
ACACIA
RESEARCH CORPORATION
Acacia
Research Corporation (the "Corporation"),
a
corporation organized and existing under the General Corporation Law of the
State of Delaware, does hereby certify:
1. The
name
of the corporation is Acacia Research Corporation.
2. That
at a
meeting of the Board of Directors of Acacia Research Corporation, resolutions
were duly adopted setting forth a proposed amendment of the Certificate of
Incorporation of said corporation, declaring said amendment to be advisable
and
calling a meeting of the stockholders of said corporation for consideration
thereof. The resolution setting forth the proposed amendment is as
follows:
RESOLVED,
that
the Certificate of Incorporation of this corporation be amended by changing
Article IV, Section 1.1, so that, as amended, said Article shall be and read
as
follows:
Article
IV, Section 1.1 of the Restated Certificate of Incorporation of the Corporation
is hereby amended and restated in full as follows:
SECTION
1.1 AUTHORIZATION.
The
aggregate number of shares of stock which
the
Corporation shall have authority to issue is two hundred and ten million
(210,000,000)
shares,
of which one hundred million
(100,000,000) shares shall be shares of a class of common stock designated
as
"Acacia Research - CombiMatrix Common Stock," having a par value of $0.001
per
share (the "CombiMatrix Stock"), one hundred million (100,000,000) shares shall
be shares of a class of common stock designated as "Acacia Research - Acacia
Technologies Common Stock," having a par value of $0.001 per share (the "Acacia
Technologies Stock"), and ten million (10,000,000) shares shall be shares of
a
class of preferred stock having a par value of $0.001 per share (the "Preferred
Stock") and issuable in one or more series as hereinafter provided. For purposes
of this Article IV, references to the "Board of Directors"
shall refer to the Board of Directors of the Corporation, as established in
accordance with Article V of the certificate of incorporation of the
Corporation, and references to "the Certificate of Incorporation" shall refer
to
this Restated Certificate of Incorporation as the same may be amended from
time
to time. Certain capitalized terms used in this Article IV, shall have the
meanings set forth in Section 2.6 of this Article. For purposes of this Article
IV, the CombiMatrix Stock, when issued, shall be considered issued in respect
of
the CombiMatrix Group and the Acacia Technologies Stock, when issued, shall
be
considered issued in respect of the Acacia Technologies Group. The number of
authorized shares of any class or classes of capital stock of the Corporation
may be increased or decreased (but not below the number of shares
thereof then outstanding) by the affirmative vote of the holders of a majority
of the voting power of the stock of the Corporation entitled to vote generally
in the election of directors.
3. Thereafter,
pursuant to resolution of its Board of Directors, a meeting of the stockholders
of said corporation was duly called and held upon notice in accordance with
Section 222 of the General Corporation Law of the State of Delaware at which
meeting the necessary number of shares as required by statute were voted in
favor of the amendment.
4. The
amendment herein certified was duly adopted in accordance with the provisions
of
Section 242 of the General Corporation Law of the State of
Delaware.
IN
WITNESS WHEREOF,
said
corporation has caused this certificate to be signed this ________________
day
of ________________, 20_____.
ACACIA
RESEARCH CORPORATION,
a
Delaware corporation
By:___________________________________________
Robert
A.
Berman
Title:
Secretary
DETACH
PROXY HERE AND RETURN
|
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 2009 Annual Meeting of Stockholders
or
until each of their successors are duly elected and qualified.
Nominees:
Paul R. Ryan, G. Louis Graziadio, III and 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 registered
accountants for the Company for the fiscal year ending December 31,
2006.
[
]
FOR
[
]
AGAINST
[
]
ABSTAIN
(3)
To
approve an amendment to the Company's Restated Certificate of Incorporation
to
increase the number of authorized shares of common stock from 100,000,000 to
200,000,000.
[
]
FOR
[
]
AGAINST
[
]
ABSTAIN
(4)
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.
PROXY
ACACIA RESEARCH CORPORATION PROXY
Annual
Meeting of Stockholders May 16, 2006
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 Robert L. Harris, II 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 March 27, 2006,
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 16, 2006, 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)
30