Acacia Research announced a strategic partnership with Starboard, a New York-based investment adviser. This financing will provide Acacia with access to up to $400M of new capital for strategic investments and acquisitions, and Starboard will work directly with Acacia to identify and execute on these opportunities. Starboard has made a $35M investment in Acacia, acquiring 350,000 shares of Series A convertible preferred stock convertible at $3.65 per share, a 38% premium to Acacia's 30-day trailing volume-weighted average price, or VWAP, and warrants to purchase five million shares of common stock with an exercise price of $3.65 per share. Acacia may issue up to $365M in senior secured notes due 2027 with a cash interest rate of 6% to Starboard, the proceeds of which may be used to fund investment opportunities and strategic acquisitions approved from time to time by the company and Starboard. Promptly upon the receipt of Acacia stockholder approval, Starboard will purchase warrants to purchase up to 100M shares of the company's common stock at a cash exercise price of $5.25 per share or by the cancellation of notes, to the extent the notes have been issued, at an exercise price of $3.65 per share. Acacia has reserved the right to offer existing Acacia common stockholders the opportunity to purchase up to $100M in notes and 27M warrants on substantially the same terms of the Notes and Series B Warrants. Jonathan Sagal, managing director of Starboard, has joined Acacia's baord and Starboard Value has certain other board appointment rights. Under the terms of the transaction agreements, Starboard has purchased 350,000 preferred shares, with a liquidation preference of $100 per share and an initial cash dividend rate of 3%, and Series A warrants to purchase up to five million shares of common stock, resulting in proceeds to Acacia of $35M. The conversion price of the preferred shares and the exercise price of the Series A warrants is $3.65. These proceeds will be held in escrow until used for an approved investment. Following the use of the proceeds to fund a strategic investment or acquisition, the dividend rate on the Preferred Shares will increase to 8%. The transaction also establishes a structure by which the company and Starboard may agree on approved investments from time to time to be financed by notes in an aggregate principal amount up to $365M with a 6% annual interest rate. Acacia will seek stockholder approval for the company's issuance of the securities described in the transaction agreements without giving effect to any limitations under the rules of Nasdaq and an amendment to its certificate of incorporation to increase the number of authorized shares of common stock to 300,000,000 shares. After the receipt of stockholder approval, Starboard will also purchase Series B Warrants to purchase up to 100 million shares of common stock at a cash exercise price of $5.25 until 30 months after their issuance date. The Series B warrants may also be exercised by the cancellation of outstanding notes at an exercise price of $3.65 per share at any time after the notes have been issued until the maturity date of the notes. The preferred shares, notes and warrants all contain limitations on conversion or exercise, such that Starboard may not convert or exercise its securities into greater than 4.89% of Acacia's outstanding common stock. The preferred shares contain and the notes, if and when issued, will contain, affirmative and negative covenants customary for transactions of this type, including but not limited to, limitations on the company's ability to incur debt, grant liens on its assets, make certain distributions in respect of its equity and make certain investments. Acacia's board intends to offer $100M of notes and warrants to purchase up to 27M shares of common stock, with substantially identical terms as the notes and Series B warrants held by Starboard, to Acacia's common stockholders. The company, subject to the board's discretion, intends to effect this through one or more rights offerings to stockholders of record on each date that an approved investment to be funded by the sale of notes to Starboard is announced. The company has entered into a governance agreement with Starboard whereby Jonathan Sagal of Starboard has joined the board and has the right to appoint two additional directors to the board.