ACACIA RESEARCH CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is dated as of the (date) day of (month), 199_
by and between Acacia Research Corporation, a California corporation
(the "Corporation") and (name) (the "Optionee").
W I T N E S S E T H
WHEREAS, the Committee believes that the grant of an Option to the
Optionee will promote the interests of the Corporation by inducing the
Optionee to render faithful and efficient services to the Corporation; and
WHEREAS, pursuant to the Acacia Research Corporation 1996 Stock Option
Plan (the "Plan"), the Corporation has granted to the Optionee, effective as
of the (date) day of (month), 199_ (the "Award Date"), an Incentive Stock
Option (as defined in the Plan, "ISO") to purchase all or any part of (number)
authorized but unissued Shares, par value, upon the terms and conditions set
forth herein and in the Plan (the "Option"). [Only individuals who are
employed as employees by the Corporation or a Subsidiary Corporation (as
defined in the Plan) are eligible for Incentive Stock Options.]
NOW, THEREFORE, in consideration of the [past and] prospective services
[rendered and] to be rendered by the Optionee, and the mutual promises and
covenants made herein and the mutual benefits to be derived herefrom, the
parties agree as follows:
1. Defined Terms. Capitalized terms used herein and not otherwise
defined herein shall have the meaning assigned to such terms in the Plan.
2. Grant of Option. This Incentive Stock Option agreement evidences
the Corporation's grant to the Optionee of the right and option to purchase,
on the terms and conditions set forth herein and in the Plan, all or any part
of an aggregate of (number) authorized but unissued Shares at the price of $
(price) per Share (the "Exercise Price"). [To qualify as an ISO: (i) for
Optionees who are not ten percent stockholders, the Exercise Price must equal
at least 100 percent of the Fair Market Value of a share on the Award Date;
and (ii) for Optionees who are ten percent stockholders, the Exercise Price
must equal at least 110 percent of the Fair Market Value of a Share on the
Award Date.] The Corporation has granted the Option as a matter of separate
inducement in connection with the Optionee's employment, and not in lieu of
any salary or other compensation for the Optionee's services.
3. Term. The Option shall expire on (date) (the "Expiration Date").
[For Optionees who are not ten percent stockholders, the term may not exceed
10 years from the Award Date. For Optionees who are ten percent stockholders,
the term may not exceed 5 years from the Award Date.]
4. Character of Option. The Option is an ISO. However to the extent
that the aggregate Fair Market Value on the Award Date of Stock with respect
to which this Option and any other ISOs are exercisable for the first time by
the Optionee during any calendar year (under any stock option plans of the
Corporation, Parent Corporation or a Subsidiary Corporation exceeds $100,000,
such options shall be treated as Nonstatutory Options.
5. Vesting of Option.
[Alternative 1: The option shall vest on (date).]
[Alternative 2: The Option shall vest in installments for a number of shares
(subject to adjustment as provided in Section 13) as follows:
Date of Vesting Number of Shares (subject
of Option to adjustment) as to
Installment which Option vests
date number
date number
date number
date number]
6. Exercisability of Option. No Options shall become exercisable
prior to six months after the Award Date. After such date, the Option (as to
vested shares only) may be exercised in whole or in part, at the discretion of
the Optionee, from time to time until its expiration or earlier termination.
To the extent that the Optionee does not in any period purchase all or any
part of the Shares to which the Optionee is entitled, the Optionee has the
right cumulatively thereafter to purchase any Shares not so purchased and such
right shall continue until the Option terminates or expires. Fractional Share
interests shall be disregarded, but may be cumulated for purposes of
determining how many Shares have been purchased at any time under the Option.
No fewer then 1,000 Shares may be purchased at any time, unless the number
purchased is the total number then available for purchase under the Option.
7. Method of Exercise of Option.
(a) Written Notice. Each exercise of the Option shall be
by written notice of exercise duly delivered to the
Corporation, specifying the number of Shares with respect to
which the Option is being exercised.
(b) Payment. Such written notice must be accompanied by
payment in full for the Shares to be purchased, and payment
may take [one or a combination of] the following form [s]:
[(i)] lawful money of the United States of America or
a certified or bank cashier's check;
[Optional: (ii) Shares, surrendered to the Corporation in good form
for transfer, which have already been owned by the Optionee or a
representative of the Optionee for more than six months. Such Shares shall be
valued at their Fair Market Value as of the date when the new Shares are
purchased under the Option;]
[Optional: (iii) delivery (on a form prescribed by the Corporation)
of an irrevocable direction to a securities broker approved by the Corporation
to sell Shares and to deliver all or part of the sales proceeds to the
Corporation in payment of all or part of the Exercise Price and any
withholding taxes;]
[Optional: (iv) a promissory note executed by the Optionee in favor
the Corporation upon the following terms, and conditions: [insert key terms].
Such promissory note shall be secured by the Stock issuable upon exercise of
the Option in compliance with applicable law (including, without limitation,
state corporate law and federal margin requirements):]
[Optional: (iv) any other method of payment which the Committee, in
its sole discretion, deems acceptable.]
(c) Securities Laws. The written notice of exercise shall specify
that the Shares are being acquired by the Optionee for investment only and not
with a view to resale or distribution.
8. Withholding Taxes. Upon the exercise of the Option, [Alternative 1:
[insert requirement for the satisfaction of any federal, state, local, or
foreign withholding tax obligations arising in connection with the exercise of
the Option, for example, specify that the Optionee shall provide cash payment
of tax, allow for the deduction of tax, allow for a reduction in number of
Shares or obtain a loan of the tax from the Corporation]/ Alternative 2: the
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax
obligations arising in connection with the exercise of the Option.] The
Optionee agrees that on disposition of Shares acquired by exercising the
Option, the Optionee shall comply with all requirements of the Committee for
satisfaction of any federal, state, local or foreign withholding tax
obligations arising in connection with the disposition of the Shares.
9. Effect of Termination of Employment. Should the Optionee cease to be
an employee, [insert effect of termination of employment on the rights and
benefits of the Option]
[Optional: (i) Options shall cease to vest on the date of
termination of Optionee's employment with the Corporation;]
[Optional: (ii) except as provided in clause (iii) below, the
Option may be exercised at any time within [one] year[s] after
Employee's termination of employment (to the extent it was
exercisable on such date):]
[Optional: (iii) if Optionee's employment with the Corporation
was terminated for cause (as determined by the Committee in
its sole discretion), the Option and all rights hereunder, to
the extent no previously exercised, shall terminate and become
null and void at such time as Optionee ceases to be employed
by the Corporation;]
[Optional: (iv) if an Optionee dies while employed by the
Corporation or during the period referred to in clause (ii)
above, the Option shall expire [one] year[s] after the date of
death. During the [one] year[s] period after the death of the
Optionee, the Option may be exercised (to the extent it was
exercisable as of the date of death or earlier termination of
such Optionee's employment) by the person or persons to whom
the Optionee's rights under the option shall pass by will or
by the applicable laws of descent and distribution;]
[Optional: (v) if an Optionee's employment by the Corporation
was terminated as a result of a "permanent and total
disability" within the meaning of Section 22(e) (3) of the
Code, the Optionee or the Optionee's personal representative
as an agent for the Optionee, shall have [one] year[s] from
the date of termination of employment to exercise the Option
(to the extent it was exercisable on such date).]
Nothing in this Section 9 shall be deemed to extend the term of the Option
beyond the Expiration Date nor to limit the Corporation's ability to terminate
the Option at an earlier date pursuant to the other provision of this
Agreement and the Plan.
10. Non-Transferability of Option. This Option and any other rights of
the Optionee under this Agreement or the Plan are non-transferrable as
provided in Section 6 of the Plan.
11. No Rights as Shareholder. The Optionee, or a transferee of the
Optionee, has no rights as a shareholder with respect to any Shares covered by
an Option until the date of the issuance of a stock certificate for such
Shares.
12. Modification, Extension and Assignation of Option. The Option may
be modified, extended or assumed from time to time by the Committee within the
limitations of and by the means specified in Section 10 of the Plan.
13. Adjustment of Option.
(a) Generally. As provided in Section 9 of the Plan, the
Committee may make adjustments to the number of Shares covered
by the Option, the Exercise Price of the Option or any other
Provision in this Agreement that the Committee deems
necessary or advisable to adjust.
(b) Reorganizations. In the event that the Corporation
is a party to a merger or other reorganization, or in
contemplation of such a merger or other reorganization, and to
the extent that the Committee, in its sole discretion, so
directs, the Corporation may:
(i) terminate the Option paying the Optionee the
difference between the Exercise Price and the
consideration to be received by stockholders of the
Corporation for "in-the-money" options and terminate all
other options without payment;
(ii) provide for assumption of the Option by the
surviving corporation;
(iii) if the Corporation is a surviving corporation,
continue the Option; or
(iv) take any action with respect to the Option that
the Committee, in its sole discretion, deems necessary or advisable.
14. Notices. Any notice to be given under the terms of this Agreement
shall be in writing addressed to the Corporation at its principal office
located at 00 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxx, XX 00000, to the attention of
Xxxxxxx Xxxx-Xxx Xxx, and to the Optionee at the address given beneath the
Optionee's signature hereto, or at such other address as either party may
hereafter designate in writing to the other.
15. Plan. The Option is subject to, and the Optionee agrees to be bound
by, all of the terms and conditions of the Plan. The Optionee acknowledges
receipt of a copy of the Plan, which is made a part hereof by this reference.
16. Successors. Subject to the Plan, where the context permits,
"Optionee" as used in this Incentive Stock Option Agreement shall include the
Optionee's executor, administrator or persons to whom Optionee's rights pass
by will or the applicable laws of descent and distribution.
17. Governing Law. The interpretation, performance, and enforcement of
this Agreement shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed on its behalf by a duly authorized officer and the Optionee has
hereunto set his or her hand.
ACACIA RESEARCH CORPORATION
By_________________________
Title______________________
OPTIONEE
___________________________
(Signature)
___________________________
(Print Name)
___________________________
(Address)
___________________________
(City, State, Zip Code)
