PROSPECTUS Pursuant to Rule 424(b)(3)
Registration No. 33-59819
1,306,300 Shares
ACCLAIM ENTERTAINMENT, INC.
Common Stock
Of the 1,306,300 shares of common stock, par value $0.02 per share (the
"Common Stock"), of Acclaim Entertainment, Inc. (the "Company") covered by this
Prospectus, up to 185,424 shares (the "Primary Shares") of Common Stock are
deliverable by the Company from time to time upon the exercise of outstanding
options (the "Options") granted by the Company. The Options, which are not
currently exercisable, entitle the holders thereof to purchase the Primary
Shares at a purchase price ranging from $13.25 to $16.00 per share (the weighted
average exercise price of the Primary Shares is approximately $13.53 per
share). See "Optionholders; Exercise of Options." The proceeds of any such
exercise will be added to the Company's working capital.
The remaining 1,120,876 shares (the "Resale Shares") of Common Stock are
being offered and sold by the selling stockholders named herein
and certain transferees thereof (collectively, the "Selling Stockholders").
833,337 of the Resale Shares (the "Iguana Shares") were originally issued
by the Company to certain of the Selling Stockholders in a privately-negotiated
transaction pursuant to the exemption from registration provided under Section
4(2) of the Securities Act of 1933 (the "Securities Act"); 140,463 of such
shares (the "Voyager Shares") were originally issued by the Company to certain
of the Selling Stockholders in a registered exchange offering in connection with
the acquisition by the Company of Acclaim Comics, Inc.; the remaining 147,076
shares (the "Option Shares") are issuable by the Company upon exercise of
currently exercisable options pursuant to the exemption from registration
provided under Section 4(2) of the Securities Act. The Option Shares are
exercisable at purchase prices ranging from $3.9167 to $16.00 per share (the
weighted average exercise price of the Option Shares is approximately $13.48 per
share). See "Selling Stockholders."
The Company will not receive any proceeds from the sale of shares by the
Selling Stockholders. The Company has been advised by the Selling Stockholders
that they may from time to time sell all or a portion of the Resale Shares on
The NASDAQ Stock Market, in negotiated transactions or otherwise, at prices then
prevailing or related to the then current market price or in private
transactions at negotiated prices and on terms to be determined at the time of
sale. The Resale Shares may be sold directly, through an underwritten offering,
through agents designated from time to time or to or through broker-dealers
designated from time to time. To the extent required, the number of Resale
Shares to be sold, the purchase price, the public offering price, if applicable,
the name of any such agent or broker-dealer, and any applicable commissions,
discounts or other items constituting compensation to such underwriters, agents
or broker-dealers with respect to a particular offering will be set forth in a
supplement or supplements to this Prospectus. The Selling Stockholders may also
sell all or a portion of the Resale Shares pursuant to Rule 144 promulgated
under the Securities Act, to the extent that such sales may be made in
compliance with such Rule. See "Plan of Distribution." The Company knows of no
selling arrangement between any underwriter, agent or broker-dealer and the
Selling Stockholders.
The Selling Stockholders and any broker-dealers or agents who participate
with the Selling Stockholders in the distribution of any Resale Shares may be
deemed to be "underwriters" as such term is defined under the Securities Act and
any discount or commission received by them and any profit on the sale of the
Resale Shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
The Selling Stockholders have agreed to indemnify the Company, and the
Company has agreed to indemnify the Selling Stockholders, against certain
liabilities, including liabilities under the Securities Act of 1933. See "Plan
of Distribution" for a description of this agreement and other arrangements
between the Company and the Selling Stockholders. Expenses of this offering
(excluding legal fees incurred by the Selling Stockholders, which will be borne
in full by them), estimated at $27,000, will be paid in part by the Company
(approximately $22,500) and in part by certain of the Selling Stockholders
(approximately $4,500).
The Common Stock is traded on The NASDAQ Stock Market National Market
under the symbol "AKLM." On August 10, 1995, the last reported sale price of
the Common Stock was $25.875 per share.
The offering is subject to withdrawal and cancellation at any time,
without notice.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
----------------------------------
The date of this Prospectus is August 10, 1995.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934 (the "Exchange Act") and in
accordance therewith files reports and other information with the
Securities and Exchange Commission (the "Commission"). Such
reports and other information can be inspected and copied at the
public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549 and at the Commission's regional offices at 7 World Trade
Center, 13th floor, New York, New York 10048 and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
The Company has filed with the Commission a registration
statement on Form S-3 (herein, together with all amendments and
exhibits, referred to as the "Registration Statement") under the
Securities Act of 1933 (the "Securities Act") with respect to the
registration of the securities offered hereby. This Prospectus
does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission.
Statements contained herein concerning the contents of any
documents are not necessarily complete and, in each instance,
reference is made to the copy of such document filed as an
exhibit to the Registration Statement. Each such statement is
qualified in its entirety by such reference. The Registration
Statement, as well as items of information omitted from this
Prospectus but contained in the Registration Statement and
reports and other information filed by the Company, may be
inspected without charge at the public reference facilities
referred to above and copies of all or any part thereof may be
obtained from the Commission upon request and payment of the
prescribed fee.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the
Commission pursuant to the Exchange Act are incorporated herein
by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal
year ended August 31, 1994, filed on November 28, 1994 (File
No. 0-16986) (the "Form 10-K");
(b) The Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended November 30, 1994, filed on January 13,
1995 (File No. 0-16986);
(c) The Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended February 28, 1995, filed on April 10,
1995 (File No. 0-16986);
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(d) The Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended May 31, 1995, filed on July 17, 1995
(File No. 0-16986);
(e) The Company's Current Report on Form 8-K filed on
October 31, 1994 (File No. 0-16986);
(f) The Company's Current Report on Form 8-K filed on
February 10, 1995 (File No. 0-16986);
(g) The Company's Current Report on Form 8-K filed on March
31, 1995 (File No. 0-16986);
(h) The Company's Proxy Statement relating to the Annual
Meeting of its stockholders held on January 31, 1995, filed
on January 3, 1995 (File No. 0-16986); and
(i) The information in respect of the Common Stock under
the caption "Description of Registrant's Securities to be
Registered" contained in the Registration Statement on Form
8-A, filed on June 8, 1988 (File No. 0-16986), as amended by
the Current Report on Form 8-K, filed on August 25, 1989
(File No. 33-9460-C), relating to the one-for-two reverse
stock split effected by the Company.
All documents filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the shares described herein shall
be deemed to be incorporated by reference into this Prospectus
and to be a part hereof from the respective dates of the filings
of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained
herein or in any subsequently filed document which also is or is
deemed to be incorporated herein by reference modifies or
supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company undertakes to provide, without charge, to each
person, including any beneficial owner, to whom this Prospectus
is delivered, upon the written or oral request of such person, a
copy of any and all of the documents incorporated herein by
reference (other than exhibits to such documents unless such
exhibits are specifically incorporated by reference herein).
Requests for such documents should be directed to the Secretary,
Acclaim Entertainment, Inc., One Acclaim Plaza, Glen Cove, New
York 11542. Telephone requests for such copies should be
directed to the Secretary at (516) 656-5000.
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THE COMPANY
Acclaim Entertainment, Inc. (hereinafter, "Acclaim"),
together with its subsidiaries (Acclaim and its subsidiaries are
collectively hereinafter referred to as the "Company"), is an
entertainment publisher which engages in or plans to engage in
(i) the publication of interactive entertainment software
("Software") for use with interactive entertainment hardware
platforms; (ii) the development and publication of comic books,
which commenced in July 1994 through the acquisition of Acclaim
Comics, Inc. ("Acclaim Comics"), formerly Voyager Communications
Inc.; (iii) the marketing of its motion capture technology and
studio services, which commenced in the first quarter of fiscal
1995; (iv) the distribution of coin-operated arcade games, which
is anticipated to commence in fiscal 1996 (and, with respect to
redemption games, will commence upon the consummation of the
proposed merger of a wholly-owned subsidiary of Acclaim with and
into Lazer-Tron; see "Recent Developments"); (v) the distribution
of Software for affiliated labels, which commenced in the first
quarter of fiscal 1995; and (vi) the electronic distribution of
interactive entertainment through the partnership established in
October 1994 between a subsidiary of Acclaim and a subsidiary of
Tele-Communications, Inc. ("TCI"). To date, the Company's
principal business has been as a leading publisher of Software
for dedicated interactive entertainment hardware platforms
("Entertainment Platforms").
The Company had net revenues of $214.6 million, $327.1
million, $480.8 million and $423.3 million for the fiscal years
ended August 31, 1992, 1993 and 1994, and for the nine months
ended May 31, 1995, respectively, and net income of $13.8
million, $28.1 million, $45.1 million and $38.3 million for the
fiscal years ended August 31, 1992, 1993 and 1994, and for the
nine months ended May 31, 1995, respectively.
A Delaware corporation, Acclaim was founded in 1987 and has
overseas operations in Japan, Canada, France, Germany, Spain and
the United Kingdom. Acclaim's executive offices are located at
One Acclaim Plaza, Glen Cove, New York 11542-2708 and its
telephone number is (516) 656-5000.
Products
The Company attempts to produce families of high quality
products and address a wide range of interactive entertainment
categories, such as puzzle, sports, action/adventure and fantasy,
based on the Company's intellectual properties (the
"Properties"). The Company intends to continue its strategy for
maximizing the revenue generated from each of its Properties by
publishing Software titles for use on multiple hardware platforms
and creating successive Software products using the same
Properties in order to form the basis for families of products
which can capitalize upon the exposure and name recognition
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associated with the Properties. For example, the Company has
released at least one product each year based on World Wrestling
Federation ("WWF") characters since 1988 resulting in a total of
17 products to date. A similar strategy has been utilized with
The Simpsons and NBA Properties. The Company's strategy is to
continue to use recognizable personalities and icons, generally
obtained through licenses from the owners of these intellectual
properties, to market its Software. To date, the Company has
obtained licenses from a variety of sources for properties such
as The Simpsons (television), Batman Forever (motion picture),
NFL Quarterback Club, World Wrestling Federation (sports), Mortal
Kombat (arcade games), and Spiderman (comics).
Marketing
The Company attempts to release Software simultaneously
across a series of hardware platforms. As the Company releases
families of products for multiple platforms, it is able to take
advantage of cross-merchandising opportunities and benefit from
marketing economies of scale. Promotional activities can become
more efficiently focused on the particular intellectual property
theme available in several configurations for multiple hardware
systems. The Company markets its Software primarily to mass
merchandise companies, large retail toy store chains, department
stores and specialty stores. The Software is also sold, to a
lesser extent, to wholesale distributors. The target customers
for the Company's products are primarily males aged 11 to 21. In
selecting an existing game or a new concept for development and
distribution, the Company's management seeks products it believes
will appeal to the imagination of its target customers and
develops a packaging concept and advertising strategy consistent
with the product's theme to attract that customer. The Company
supports its products with advertisements, both on television and
in print, promotions and public relations. For its major multi-
platform releases, the Company creates marketing events through
pre-release promotions and point-of-sale materials. These events
are similar to promotional concepts utilized in the film and
record industries.
Acclaim Comics has created a superhero and action/adventure
comic book series based on characters who co-exist in the
"VALIANT" Universe. The "VALIANT" Universe concept permits
Acclaim Comics to use the popularity of its characters to
introduce a new character in an existing comic or to develop more
fully an existing but relatively unknown character.
Distribution and Operations
The Company distributes its Software through independent
sales representatives in the United States to reach over 20,000
store locations. The Company also distributes its Software
products directly to retail in France, Germany, Spain and the
United Kingdom utilizing independent sales representatives. For
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Software sales in the other European markets, the Company uses
national distributors. The Company also sells and distributes
directly in Japan and Canada. The Company's Software is
available in over 50 countries and in over 50,000 stores
worldwide.
The Company's comic books are distributed through
independent distributors to the comic book direct market, which
consists of comic book specialty stores and mail order comic book
dealers, in the United States.
The Company seeks to manage its operations to achieve a
relatively low fixed-cost structure and provide maximum
operational flexibility. The Company's strategic alliances with
independent development teams for Software products, its use of
subcontractors to manufacture its Software products, its royalty
based compensation of comic book artists and its use of
independent sales representatives contribute to increasing the
Company's variable costs and minimizing its fixed overhead.
Similarly, the Company utilizes the services of outside warehouse
and distribution facilities on a territory-by-territory basis.
However, as the Company continues to grow, it may become cost
efficient or strategically advantageous for the Company to
perform some or all of these functions itself. Accordingly, in
January 1995, the Company completed the acquisition of Iguana
Entertainment, Incorporated ("Iguana USA"), a developer of
software products. The Company maintains a computer network,
which allows for the electronic transmission of information among
its various offices and utilizes electronic data interchange with
its major domestic customers.
In June 1993, the Company launched Acclaim Distribution,
Inc., a wholly-owned subsidiary, to handle distribution of its
labels as well as affiliated labels. The Company commenced
shipping products for its first affiliated label, Digital
Pictures, Inc., in the first quarter of fiscal 1995.
Technology
The engineering staff within the Company's Advanced
Technologies Group ("ATG") provides technical support and
programming tools to enhance game play and product quality. With
the advancement of CD-ROM technology, ATG's activities have
expanded to include the development of a new animation creation
process and designing tools for use in programming Software for
CD-ROM or cartridge-based platforms utilizing 32- or 64-bit
processors. In September 1994, the Company completed the
construction of its "motion capture" studio for the application
of its animation technology. In addition to the use of this
technology in its own Software, the Company is marketing its
motion capture technology and selling its studio services for use
in other entertainment media. For example, in December 1994,
Warner Bros. utilized the Company's motion capture technology and
6
studio services to create certain of the special effects for the
motion picture Batman Forever, which was released in June 1995.
No assurance can be given that the Company will be successful in
marketing its technology and selling its studio services and,
even if it were successful, that revenues generated therefrom
will be material.
In July 1994, the Company established Acclaim Coin-Operated
Entertainment, Inc., a wholly-owned subsidiary based in
California, for the creation and distribution of stand-alone
coin-operated games. The subsidiary is currently in the start-up
phase and anticipates shipping its first game, Batman Forever, in
fiscal 1996. It is the Company's current intention to release,
commencing in fiscal 1996, between three to four coin-operated
games per year. The successful creation and marketing of such
games will be dependent, in large part, on the Company's ability
to hire and retain developers for the creation of, and to license
or create properties for use in, coin-operated games which
achieve widespread market acceptance. There can be no assurance
that the Company will be successful in creating and marketing
coin-operated games or that any revenues derived by the Company
from the sale of such games will be material.
On October 19, 1994, Acclaim Cable Holdings, Inc., a wholly-
owned subsidiary of Acclaim, entered into a Partnership Agreement
with TCI GameCo Ventures, Inc., an indirect wholly-owned
subsidiary of TCI, for the creation of a Delaware limited
partnership (the "Joint Venture"), the interests in which are
indirectly held 65% by the Company and 35% by TCI. The principal
purposes of the Joint Venture are to develop and acquire
(including by purchase or license) entertainment software for
interactive networks, as well as to promote a standard for
broadband network gaming to be incorporated into advanced set-top
boxes.
Interactive Entertainment Industry
The interactive entertainment industry is characterized by
rapid technological change, resulting in hardware platform and
related Software product cycles. No single hardware platform or
system has achieved long-term dominance. The Company's strategy
is to develop and/or publish Software for the hardware platforms
that dominate the market and to develop Software for the hardware
platforms that the Company perceives as having the potential to
achieve mass market acceptance in the future, rather than to be
the first Software publisher for an emerging hardware platform;
in order to promote its strategic relationships, however, the
Company may from time to time publish Software for a hardware
platform before it attains mass market appeal. The Company's
revenues have traditionally been derived from sales of Software
for the then dominant platforms. Accordingly, the Company's
revenues are subject to fluctuation during transition periods
7
when new hardware platforms have been introduced but none has
achieved mass market acceptance or become dominant.
From inception through fiscal 1991, substantially all of the
Company's revenues were derived from sales of Software for the 8-
bit Nintendo Entertainment System. Although the Company
commenced the publication of Software for Game Boy, the portable
system marketed by Nintendo Co., Ltd. (Japan) (Nintendo and its
subsidiary, Nintendo of America, Inc., are collectively
hereinafter referred to as "Nintendo"), in fiscal 1990, for the
Super Nintendo Entertainment System ("SNES") in fiscal 1991 and
for Genesis and Game Gear, the 16-bit dedicated and portable
hardware systems, respectively, marketed by Sega Enterprises Ltd.
("Sega") in fiscal 1992, the Company did not derive significant
revenues from the sale of portable or 16-bit Software until
fiscal 1992. The 16-bit systems are more sophisticated than the
8-bit systems, producing faster and more complex images with more
lifelike animation and better sound effects and, by 1993, had
replaced the 8-bit Entertainment Platform as the dominant
Entertainment Platform. In fiscal 1994, most of the Company's
revenues were derived from sales of Software for the 16-bit SNES
and Genesis systems. The Company anticipates that most of its
revenues in fiscal 1995 will be derived from sales of Software
for the 16-bit Entertainment Platforms.
The interactive entertainment industry is undergoing, and
the Company anticipates that in both the short- and long-term
future it will continue to undergo, significant changes due, in
large part, to the introduction of the next generation of
Entertainment Platforms incorporating 32- and 64-bit processors,
as well as the success of personal computer/compact
disk/multimedia hardware systems ("PC CD Systems"), the
development of remote and electronic delivery systems and the
entry and participation of new companies in the industry. The
new hardware platforms may use read-only memory ("ROM")
cartridges, compact disk ("CD"), flash memory and/or other
technologies as the dominant software storage device. Additional
CD platforms, including personal computer systems for which
Software products are published, are currently marketed by
Philips, Sega, Commodore, Apple, IBM, IBM-compatible
manufacturers and The 3DO Company. Atari launched Jaguar, its
64-bit cartridge-based system, in November 1993 and Sega launched
32X, its 32-bit cartridge-based attachment for its 16-bit Genesis
system, in November 1994. Sega and Sony launched their 32-bit
CD-based systems in Japan in November 1994 and Sega has shipped
limited quantities of its system in the United States commencing
in May 1995. Sony Corporation has announced plans to release its
new 32-bit CD-based system in the United States in September 1995
and Nintendo has announced plans to release a new 64-bit ROM
cartridge-based system in the United States in 1996.
The Company believes that sales of new 16-bit hardware
systems peaked in calendar 1993. Based on historical industry
8
cycles, the Company believes that 16-bit Software sales peaked in
calendar 1994 (the year following the peak year for hardware
sales). The Company as well as industry analysts anticipate,
based on Software sales information for calendar year 1994 and
the continuing decline in 16-bit hardware sales, that the market
for 16-bit Software will decline in calendar 1995 and thereafter.
Although the Company believes that hardware incorporating
32- and 64-bit processors will become the dominant Entertainment
Platforms in the interactive entertainment industry over the next
few years, the Company is unable to predict which, if any, of the
newly introduced or announced platforms will achieve commercial
success or the timing thereof or their impact on the industry.
No assurance can be given that the Company will correctly
identify the systems with such potential or be successful in
publishing Software for such platforms and systems. The
uncertainty associated with the transition from 16-bit cartridge-
based Entertainment Platforms to the next generation
Entertainment Platforms decreases the Company's ability to
predict with any certainty its results of operations and
profitability during this transition phase.
Historically, management believed that the floppy and
personal computer market was characterized by (i) numerous
hardware and software incompatibilities; (ii) high price points
for multimedia PC hardware; (iii) a large number of software
titles; and (iv) technological limitations of the hardware
systems for gaming as compared to the Entertainment Platforms.
Accordingly, the Company participated in this category through
distribution agreements which, in the opinion of the Company,
provided the greatest return on the investment of time and effort
needed to service a fragmented market. However, based on
management's belief that this category now has sufficient mass
market penetration to warrant publishing Software directly, and
due to technological advancements incorporated in the newer PC CD
Systems and the higher gross margins realized by publishers of
Software for this category, in the second quarter of fiscal 1995,
the Company commenced marketing Software for PC CD Systems.
The Company commenced the development and sale of Software
for the Sega CD system in fiscal 1994 and for Sega's 32X in the
second quarter of fiscal 1995. The Company has announced that it
is developing Software for Sega's Saturn system, Nintendo's Ultra
64 system and Sony's CD-based Play Station. However, the Company
believes that the installed base of the new generation of
Entertainment Platforms will not rival the current installed base
of 16-bit Entertainment Platforms in the near-term. As a result,
the sales growth of Software for these new Entertainment
Platforms and PC CD Systems may not offset the decline in sales
of Software for the 16-bit Entertainment Platforms in this
calendar year and, as a result, overall industry growth rates may
decline in the near-term.
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Based on the decline of the 16-bit hardware market and the
related slowdown in retail sell-through of 16-bit Software on an
industry-wide basis, the Company believes that retailers, in
order to reduce inventory levels, may reduce purchases of the
Company's 16-bit Software in the next several fiscal quarters as
compared to prior fiscal quarters. Any such reduction in retail
purchasing, to the extent not offset by growth in Software sales
for the new Entertainment Platforms and PC CD Systems, would
decrease the Company's rate of growth as discussed below. As
retail sell-through of 16-bit Software continues to slow down,
this may result in a build-up of retail inventory which, in turn,
may force the Company to liquidate excess inventory levels at
retail by offering price protection and other concessions to its
customers in future periods. As the transition to the next
generation of Entertainment Platforms continues and as new
Entertainment Platforms achieve market acceptance, the risk of
returns of the Company's 16-bit Software titles has increased and
will continue to increase. Although management believes that it
has adequate reserves for such concessions and returns, no
assurance can be given that future price protection, returns and
other similar concessions will not exceed such reserves. In
addition, the Company has incurred and expects to continue to
incur higher marketing expenses in connection with the sale of
16-bit Software, which higher expenses may adversely affect the
Company's profitability.
Due to the decline of the market for Software for 16-bit
Entertainment Platforms in 1995 and the related transition to the
next generation of Entertainment Platforms, the Company believes
that it will experience a lower rate of growth in fiscal 1995 and
fiscal 1996 as compared to fiscal 1994, and a materially lower
rate of growth, if any, in the fourth quarter of fiscal 1995 as
compared to the first three quarters of fiscal 1995.
The release of individual "hit" Software products or
families of products can significantly affect revenues.
Historically, "hit" products or families of titles have accounted
for significant portions of the Company's gross revenues during
particular periods. In prior periods, the Simpsons family of
products and the WWF family of products have accounted for
significant portions of the Company's gross revenues. Continuing
this historic pattern, in the quarter ended May 31, 1994, the NBA
Jam family of products accounted for a significant portion of the
Company's gross revenues and in the nine months ended May 31,
1994, each of the NBA Jam and Mortal Kombat family of products
accounted for a significant portion of the Company's gross
revenues. In the nine months ended May 31, 1995, each of the
Mortal Kombat II and NBA Jam Tournament Edition family of
products accounted for a significant portion of the Company's
gross revenues. In the quarter ended May 31, 1995, although
sales of the Judge Dredd and Justice League families of products
were material, no single family of products accounted for a
significant portion of the Company's revenues. However, the
10
Company believes that it will continue to derive significant
revenues from "hit" products or families of products in future
periods.
The timing of the release of Software products can cause
quarterly revenue and earnings fluctuations. A significant
portion of the Company's revenues in any quarter is generally
derived from Software products or families of products first
shipped in that quarter. Product development schedules are
difficult to predict due, in large part, to the difficulty of
scheduling accurately the creative process and, with respect to
Software for new hardware platforms, the use of new development
tools and the learning process associated with development for
new technologies, including the Company's own motion capture and
related technologies. As the industry trend toward more
sophisticated Entertainment Platforms continues, the related
Software products frequently include more original, creative
content and are more complex to develop and, accordingly, cause
additional development and scheduling risk. As a result, the
Company's quarterly results of operations are difficult to
predict and the failure to meet product development schedules or
even minor delays in product deliveries could cause a shortfall
in shipments in any given quarter, which could cause the results
of operations and net income for such quarter to fall
significantly below anticipated levels.
The Company's ability to sustain its current results of
operations and profitability and to generate sales growth in the
future will be dependent in large part on (i) the Company's
ability to identify, develop and publish "hit" Software titles
for the hardware platforms that are established in the mass
market, (ii) the growth of the interactive entertainment Software
market and (iii) the Company's ability to develop and generate
revenues from its other entertainment operations. In addition,
the Company has incurred and expects to continue to incur
increased research and development as well as general and
administrative expenses in connection with the start-up of its
new business operations (e.g., coin-operated games). If the
Company is not successful in generating revenues from these new
businesses, its profitability will be adversely affected.
Recent Developments
On March 22, 1995, Acclaim and Lazer-Tron Corporation
("Lazer-Tron") entered into an Agreement and Plan of Merger, as
amended by Amendment No. 1 dated as of June 15, 1995 and
Amendment No. 2 dated as of July 24, 1995 (as so amended, the
"Merger Agreement") pursuant to which Acclaim agreed to acquire
Lazer-Tron through the merger (the "Merger") of Acclaim Arcade
Holdings, Inc., a wholly-owned subsidiary of Acclaim, with and
into Lazer-Tron. Lazer-Tron designs, develops, manufactures and
markets coin- and token-operated redemption games for use in
family entertainment centers and other entertainment venues. As
11
a result of the Merger, Lazer-Tron will be the surviving
corporation and will become a wholly-owned subsidiary of Acclaim.
The Merger is currently anticipated to be consummated in August
1995, subject to the satisfaction of certain conditions including
the approval of Lazer-Tron's shareholders. Upon consummation of
the proposed Merger, the surviving corporation will not be a
"significant subsidiary" of Acclaim under applicable accounting
regulations. Accordingly, neither historical financial
statements of Lazer-Tron nor pro forma financial statements of
the Company reflecting the effect of the proposed Merger are
provided in this Prospectus. Under applicable Delaware law (the
jurisdiction of incorporation of Acclaim), the Merger is not
required to be, and will not be, submitted to a vote of the
stockholders of Acclaim. There can be no assurance that the
Merger will be consummated. Acclaim intends to account for the
transaction as a pooling of interests.
Under the Merger Agreement as in effect prior to the July
24, 1995 amendment, Acclaim's obligation to consummate the Merger
was conditioned on, among other things, Lazer-Tron meeting
certain financial criteria (including net worth, working capital
and sales tests) as of June 30, 1995 and satisfying other
conditions. In July 1995, Acclaim disputed the calculations and
Lazer-Tron's financial condition as presented in the closing
balance sheet delivered by Lazer-Tron under the Merger Agreement.
A dispute arose between the parties as to such calculations and
financial conditions and, in order to avoid litigation and
preserve the benefits of the Merger, the parties entered into the
July 24, 1995 amendment pursuant to which the Merger
consideration was fixed at the low end of the previously agreed
upon range (as described below). In addition, certain of
Acclaim's other conditions to closing, including the Lazer-Tron
financial tests and the satisfactory completion of Acclaim's due
diligence, were modified or deleted or made subject to a
$1,000,000 "material adverse effect" test.
Pursuant to the Agreement, each issued and outstanding share
of Lazer-Tron's common stock will be exchanged for a fraction of
a share of Common Stock equal to the product of (i) one and (ii)
a fraction, the numerator of which is $8.00 and the denominator
of which is the average price of the Common Stock for the 20 days
ending on the second day prior to the date of the special meeting
of shareholders of Lazer-Tron to approve the Merger or the latest
adjournment thereof. If the average price of the Common Stock
for such 20-day period is less than $12.50 per share, each of
Acclaim and Lazer-Tron shall have the right to terminate the
Merger Agreement.
Lazer-Tron's shareholders holding the right to vote
approximately 28% of the outstanding shares of Lazer-Tron common
stock entitled to vote on the Merger have agreed to vote in favor
of the Merger. Lazer-Tron's Board of Directors has agreed,
12
subject to its fiduciary obligations, to recommend that its
shareholders vote in favor of the Merger.
In connection with entering into the Merger Agreement,
Lazer-Tron has granted to the Company an option to acquire
250,000 shares of common stock of Lazer-Tron at an exercise price
of $8.00 per share, exercisable for a period of two years if the
Merger is not consummated as a result of the exercise by the
Board of Directors of Lazer-Tron of its fiduciary duty to
consider competing transactions. In addition, the Company would
receive a payment from Lazer-Tron of $200,000 in the event the
Merger Agreement is terminated and an amount equal to 5% (net of
such $200,000 payment) of the consideration paid by a third party
in connection with the consummation of such a competing
transaction.
On April 28, 1995, Lazer-Tron and certain of its directors
and officers were named as defendants in a lawsuit filed in the
Superior Court of the State of California, County of Alameda --
Eastern Division. This action, titled Goldstein v. Lazer-Tron
Corporation, et al., has been filed seeking, among other things,
certification of the lawsuit as a class action on behalf of all
Lazer-Tron shareholders, a preliminary and permanent injunction
to prohibit consummation of the Merger and to compel the
individual defendants to fulfill what the plaintiff claims are
their fiduciary duties to, among other things, cooperate with any
other entity with an interest in acquiring Lazer-Tron and enhance
Lazer-Tron's value as a merger candidate. On May 30, 1995, an
amended complaint was filed. The plaintiff has alleged that the
individual defendants have violated state law by committing
unfair business practices, and have breached their fiduciary
duties as a result of the manner in which, and the timing of, the
determination to merge Lazer-Tron occurred, the manner in which
negotiations with Acclaim were conducted and in recommending
approval of the Merger Agreement and the Merger. Lazer-Tron and
the individual defendants have not yet filed an answer to the
complaint and discovery has recently commenced. Lazer-Tron
intends vigorously to defend this action. The Company has been
advised that management of Lazer-Tron believes, based on the
allegations stated in the complaint, discovery proceedings to
date, its own view of the relevant facts and circumstances
surrounding the negotiation of the Merger Agreement and
preliminary settlement discussions, that the ultimate outcome of
this action is not expected to have a material adverse effect on
Lazer-Tron or the consummation of the Merger. However, no
assurance can be given that Lazer-Tron's management's assessment
will prove correct. Pursuant to the terms of the Merger
Agreement, Acclaim has agreed to assume the defense of this
action and to indemnify Lazer-Tron and its directors and officers
from any damages and costs in connection with this action,
subject to Acclaim's rights under the Merger Agreement to decide
in the future not to proceed with the Merger and to discontinue
its defense of this action and indemnification of Lazer-Tron and
13
its directors and officers subsequent to the date the Merger
Agreement is terminated or the Merger is abandoned.
OPTIONHOLDERS; EXERCISE OF OPTIONS
The Primary Shares covered by this Prospectus are issuable
by the Company upon exercise of Options granted by the Company to
certain sales representatives of the Company and certain transferees
thereof, and the principal of a consultant to the Company. The following
sets forth certain information in respect of the Options and the holders
thereof:
Acclaim granted options to purchase 75,000 shares in May
1993 to Fergus McGovern, the principal of a consultant to the
Company, one-fourth of which options was immediately exercisable
at a price of $13.25 per share, an additional one-fourth of which
options became exercisable in May 1994 at a price of $16.00 per
share and an additional one-fourth of which options became
exercisable in May 1995 at a price of $16.00 per share. See
"Selling Stockholders." The remaining options to purchase 18,750
shares (which are included in the Primary Shares covered by this
Prospectus) will become exercisable in May 1996 at a price of
$16.00 per share and, if not exercised prior thereto, will expire
in May 1998.
In April 1994, Acclaim granted options to purchase 250,000
shares at a price of $13.25 per share to various independent
sales representatives in conjunction with the execution of sales
representation agreements with such representatives, approximately
one-third of which options became exercisable in April 1995 (see "Selling
Stockholders"); the remaining options to purchase 166,674 shares (which are
included in the Primary Shares covered by this Prospectus), most of which
are assignable or transferable with Acclaim's consent to shareholders,
directors, officers or employees of the sales representatives, will become
exercisable in equal installments in April 1996 and April 1997 and, if not
exercised in full prior thereto, will expire in April 2004.
The holders of the Options may exercise them by delivering
to the Company written notice of exercise, specifying the number
of Options being exercised, and by making payment of the price
for the Options being exercised, in cash or by certified or bank
check payable to the Company or by wire transfer to the Company.
Pursuant to its agreements with the sales representatives,
the Company has agreed to keep the Registration Statement of
which this Prospectus is a part effective until April 1, 2000 (or
until all of the Primary Shares have been issued, if earlier).
14
USE OF PROCEEDS
The net proceeds received by the Company upon the issuance
of the Primary Shares will be used to increase working capital.
The Company will not receive any proceeds from the sale of any
Resale Shares by the Selling Stockholders.
SELLING STOCKHOLDERS
The Resale Shares covered hereby will be offered and sold by
the holders of the Iguana Shares, the Voyager Shares and the
Option Shares (collectively, the "Selling Stockholders").
Iguana Transaction
The Iguana Shares covered by this Prospectus were issued to
Jeffrey Spangenberg, Nigel Cook, Cyrus Lum, Matthew Stubbington,
Darrin Stubbington, Craig Galley, James Moon, Peter Suarez, Beth
Spangenberg, Darren Falcus and Jason Falcus (each, an "Iguana
Selling Stockholder" and, collectively, the "Iguana Selling
Stockholders") in January 1995 by the Company pursuant to the
exemption from registration provided under Section 4(2) of the
Securities Act. Each of the Iguana Selling Stockholders is an
officer and/or employee (and Mr. Spangenberg is also a director)
of Iguana USA, which was acquired by the Company on January 4,
1995, or its subsidiary, Iguana Entertainment Ltd. ("Iguana UK";
Iguana USA and Iguana UK are collectively referred to as
"Iguana"). Each of the Iguana Selling Stockholders was an
officer and/or employee of Iguana prior to its acquisition (the
"Acquisition") by the Company. In addition, prior to the
Acquisition, Jeffrey Spangenberg (who is Beth Spangenberg's
spouse), Beth Spangenberg and Darrin Stubbington were directors
of Iguana USA and Messrs. Spangenberg, D. Falcus and J. Falcus
were directors of Iguana UK. Mr. Spangenberg was also the
founder and sole shareholder of Iguana USA and owned 5% of Iguana
UK (Messrs. D. Falcus and J. Falcus owned 20% of Iguana UK and
Iguana USA owned the remaining 75%) prior to the Acquisition.
Iguana is an interactive entertainment software developer.
Iguana, founded in 1991, designed numerous titles for the Company
and other interactive entertainment publishers, including such
titles as the Company's NBA Jam and NFL Quarterback Club, and
derived a significant portion of its revenues during the years
ended December 31, 1994 and 1993 from the Company. Except as a
result of their respective employment by Iguana and, with respect
to Messrs. Spangenberg, D. Falcus and J. Falcus, their respective
ownership of stock of Iguana USA and Iguana UK, neither the
Company nor any of its affiliates has had within the past three
years any material relationship with any of the Iguana Selling
Stockholders or any of their respective affiliates.
On January 4, 1995, the Company completed the Acquisition of
Iguana USA for $5.5 million, net of cash received. As part of
the Acquisition, Iguana USA purchased the shares of Iguana UK
held by Messrs. Spangenberg, D. Falcus and J. Falcus.
Concurrently with the closing of the Acquisition, the Company and
Iguana entered into five-year employment agreements with Messrs.
Spangenberg, Cook, Lum, M. Stubbington, D. Stubbington, Galley,
D. Falcus and J. Falcus. The Iguana Shares were issued to the
15
Iguana Selling Stockholders pursuant to their employment
agreements or employment arrangements, as applicable, without the
payment of any additional compensation therefor.
The Iguana Shares received by the Iguana Selling
Stockholders are restricted securities within the meaning of the
Securities Act and cannot be offered or sold without an effective
registration statement covering such offer and sale or pursuant
to an applicable exemption from the registration requirements of
the Securities Act. Pursuant to the terms of registration rights
agreements entered into between Acclaim and each of the Iguana
Selling Stockholders at the closing of the Acquisition, Acclaim
filed the Registration Statement (of which this Prospectus is a
part) and will use its best efforts to keep the Registration
Statement effective until no later than January 4, 1998 (or until
all of the Iguana Shares are disposed of by the Selling
Stockholders, if earlier, subject to the availability of the
provisions of Rule 144(k)). None of the expenses of this
offering will be borne by the Iguana Selling Shareholders
(excluding the fees of legal counsel for the Iguana Selling
Stockholders, which will be borne in full by them).
The Iguana Shares are held in escrow pursuant to escrow
agreements among each of the Iguana Selling Stockholders, Iguana
USA, Acclaim and an escrow agent. The Iguana Shares will
generally be released from escrow in five equal annual
installments, commencing on January 1, 1996, so long as the
respective Iguana Selling Stockholder remains employed by Iguana.
Depending upon the circumstances of the termination of an Iguana
Selling Stockholder's employment by Iguana, all Iguana Shares
issued to such Iguana Selling Stockholder and remaining in escrow
at the time of termination (i) may be released from escrow to
such Iguana Selling Stockholder and may become available for
resale by such person, (ii) may be forfeited by the Iguana
Selling Stockholder (other than Mr. Spangenberg) and be delivered
to the escrow agent and held in escrow with Mr. Spangenberg's
shares in accordance with Mr. Spangenberg's escrow agreement, or
(iii) may be forfeited by Mr. Spangenberg and returned to
Acclaim. While the Iguana Shares are held in escrow, each Iguana
Selling Stockholder has agreed, pursuant to the terms of voting
agreements, to vote the Iguana Shares held by him or her in
accordance with the recommendation of the Board of Directors of
Acclaim on all matters that are presented to the stockholders of
Acclaim at any annual or special meeting.
16
The following table sets forth certain information as of
August 9, 1995 with respect to the Iguana Shares held by each
Iguana Selling Stockholder:
Shares Benefi- Shares Shares Benefi-
cially Owned Being cially Owned After
Name Prior to Offering Offered (1) the Offering (1)
---- ----------------- ----------- ------------------
Jeffrey R. Spangenberg (2) 555,556 555,556 -0-
Nigel Cook 5,556 5,556 -0-
Cyrus Lum 27,778 27,778 -0-
Matthew Stubbington (3) 55,556 55,556 -0-
Darrin Stubbington (3) 55,556 55,556 -0-
Craig Galley 27,778 27,778 -0-
James Moon 27,778 27,778 -0-
Peter Suarez 16,667 16,667 -0-
Beth Spangenberg (2) 5,556 5,556 -0-
Darren Falcus (4) 27,778 27,778 -0-
Jason Falcus (4) 27,778 27,778 -0-
------------
(1) Assumes that all of the Iguana Shares are sold by the Iguana Selling
Stockholders pursuant to this Prospectus. Any Iguana Selling Stockholder
may choose to dispose of none or only a portion of the Iguana Shares held
by him or her pursuant to this Prospectus upon release of such shares from
escrow as described above. Acclaim is not required, pursuant to its
agreements with the Iguana Selling Stockholders, to keep the Registration
Statement effective past January 4, 1998. Accordingly, it is currently
anticipated that unsold Iguana Shares (whether or not held in escrow) would
be sold thereafter in reliance upon Rule 144 promulgated under the
Securities Act.
(2) The Iguana Shares shown as beneficially owned by Jeffrey Spangenberg
and Beth Spangenberg, respectively, do not include the Iguana Shares held
by the other in which each of them would have a community property
interest.
(3) Matthew Stubbington and Darrin Stubbington are brothers, but each of
them disclaims any beneficial ownership in the Iguana Shares held by the
other.
(4) Darren Falcus and Jason Falcus are brothers, but each of them
disclaims any beneficial ownership in the Iguana Shares held by the other.
Acclaim Comics Transaction
The Voyager Shares covered by this Prospectus were issued to
Steven Massarsky, Robert Layton and Jon Hartz (each, a "Voyager
Selling Stockholder" and, collectively, the "Voyager Selling
Stockholders") in July 1994 by the Company in a registered
offering of securities made in conjunction with the acquisition
by the Company of Acclaim Comics. Each of the Voyager Selling
Stockholders is an officer and employee of Acclaim Comics, which
was acquired by the Company on July 29, 1994 and, immediately
prior to its acquisition by the Company, each of them was also a
shareholder of Acclaim Comics.
Acclaim Comics is a creator and publisher of comic books in
the United States. Prior to its acquisition by the Company,
Acclaim Comics' largest advertiser was the Company. Except as a
result of their respective employment by Acclaim Comics and their
respective stock ownership of Acclaim Comics prior to its
17
acquisition by the Company, neither the Company nor any of its
affiliates has had within the past three years any material
relationship with any of the Voyager Selling Stockholders or any
of their respective affiliates.
In July 1994, the Company completed the acquisition of
Acclaim Comics for $65,000,000, $50,000,000 of which was paid in
cash and $15,000,000 of which was paid in shares of Common Stock
valued at $15.45 per share. Messrs. Massarsky, Layton and Hartz
received 131,013 shares, 37,732 shares and 37,732 shares,
respectively, in payment of the portion of the purchase price
payable by the Company to each of them in shares of Common Stock.
All of such shares, as well as a portion of the cash purchase
price paid to each of them (collectively, the "Escrow Fund"),
were placed in escrow in July 1994 pursuant to escrow agreements
among each of them, Acclaim Comics, Acclaim and an escrow agent.
The escrow agreements generally provide that one-fifth of the
Escrow Fund will be released on each of the first, second, third,
fourth and fifth anniversaries of the date of the acquisition,
subject to the fulfillment of certain conditions. The Voyager
Shares, which represent a portion of the shares of Common Stock
included in the Escrow Fund, were released from escrow on July
29, 1995 in accordance with the terms of the escrow agreements
and the offer and sale of such shares by the Voyager Selling
Stockholders is covered by the Registration Statement of which
this Prospectus is a part. A portion of the expenses of this
offering (approximately $3,000) will be borne by the Voyager
Selling Stockholders collectively.
The following table sets forth certain information as of
August 9, 1995 with respect to the Voyager Shares held by each
Voyager Selling Stockholder:
Shares Benefi- Shares Shares Benefi-
cially Owned Being cially Owned After
Name Prior to Offering Offered (1) the Offering (1)
---- ----------------- ----------- ------------------
Steven J. Massarsky 131,013 89,215 41,798
Robert Layton 37,732 25,624 12,108
Jon Hartz 37,732 25,624 12,108
------------
(1) Assumes that all of the Voyager Shares are sold by the Voyager Selling
Stockholders pursuant to this Prospectus. Any Voyager Selling Stockholder
may choose to dispose of none or only a portion of the Voyager Shares
offered by him pursuant to this Prospectus. Acclaim is not required,
pursuant to its agreements with the Voyager Selling Stockholders, to keep
the Registration Statement of which this Prospectus is a part effective
past July 29, 1996. Accordingly, it is currently anticipated that unsold
Voyager Shares would be sold thereafter in reliance upon Rule 144
promulgated under the Securities Act.
18
Option Shares
The Option Shares are issuable upon the exercise of
currently exercisable options to purchase (a) 83,326 shares of Common Stock
granted by the Company to certain of its sales representatives (and certain
transferees thereof), (b) 11,250 shares of Common Stock granted by the
Company to Richard Lehrberg, a former agent of Arena Entertainment, Inc. (a
wholly-owned subsidiary of the Company which was acquired in January 1992)
and (c) 56,250 shares granted by the Company to Fergus McGovern. See
"Optionholders; Exercise of Options." The Option Shares, when exercised,
will be issued by the Company in reliance on the exemption from
registration provided in Section 4(2) of the Securities Act and the offer
and sale thereof by the beneficial owners of the Option Shares (including
transferees and assignees of the sales representatives) is covered
by the Registration Statement of which this Prospectus is a part. A
portion of the expenses of this offering (approximately $1,500) will be
borne by Mr. McGovern.
The following sets forth certain information as of August 9,
1995 with respect to the Option Shares held by each holder
thereof:
Shares Benefi- Shares Shares Benefi-
cially Owned Being cially Owned After
Name Prior to Offering Offered the Offering
---- ----------------- ------- ------------------
Arundel-Doerr-Harrison Co.,
Inc.(1) 10,000 10,000 -0-
Brake & Associates(1) 1,666 1,666
Martin Flaherty &
Associates(1) 6,666 6,666 -0-
Peake Marketing(1) 1,666 1,666 -0-
Joel Myden Sales Inc.(1) 6,666 6,666 -0-
Perlmutter Victor Cavanagh
Assoc., Inc.(1) 6,666 6,666 -0-
Phillips Sales(1) 8,333 8,333 -0-
The Owen Company(1) 1,666 1,666 -0-
SMA Inc.(1) 1,666 1,666 -0-
Watt & Company Consumer
Electronics Group(1) 11,666 11,666 -0-
Watt/Spohn-Universal, Ltd.(1) 1,666 1,666 -0-
Lou Jannetty(1) 11,666 11,666 -0-
Ross Pakula(1) 13,333 13,333 -0-
Richard Lehrberg(2) 15,000 11,250 3,750
Fergus McGovern(3) 56,250 56,250 -0-
------------
(1) Represents shares which may be acquired upon exercise of currently
exercisable options. The options, most of which are assignable or
transferable with Acclaim's consent to shareholders, directors, officers or
employees of the sales representatives, are exercisable at a price of $13.25 per
share, and will remain generally exercisable until April 13, 2004.
(2) Represents shares which may be acquired upon exercise of currently
exercisable options. The options are exercisable at a price of $3.9167 per
share, and will remain generally exercisable until July 7, 1997. The offer
and sale by Mr. Lehrberg of up to 3,750 shares was previously registered by
the Company in January 1993.
(3) Represents shares which may be acquired upon exercise of currently
exercisable options. The options are exercisable at a price of $13.25 per
share, with respect to up to 18,750 shares, and at a price of $16.00 per
share, with respect to the remaining 37,500 shares, and will remain
generally exercisable until May 19, 1998.
19
PLAN OF DISTRIBUTION
The Selling Stockholders may from time to time sell all or a
portion of the Resale Shares on The NASDAQ Stock Market or in any
other securities market on which the Common Stock is then listed
or traded, in negotiated transactions or otherwise, at prices
then prevailing or related to the then current market price or at
negotiated prices. Sales on or through The NASDAQ Stock Market
will be effected at such prices as may be obtainable and as may
be satisfactory to such Selling Stockholder. No sales or
distributions other than as disclosed herein will be effected
until after this Prospectus shall have been appropriately amended
or supplemented, if required, to set forth the terms thereof.
Normal commission expenses and brokerage fees will be paid
individually by the Selling Stockholders. The Resale Shares may
be sold directly or through brokers or dealers, or in a
distribution by one or more underwriters on a firm commitment or
best efforts basis. The method by which the Resale Shares may be
sold include (a) a block trade (which may involve crosses) in
which the broker or dealer so engaged will attempt to sell the
securities as agent but may position and resell a portion of the
block as principal to facilitate the transaction; (b) purchases
by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this Prospectus; (c) exchange
distributions and/or secondary distributions in accordance with
the rules of The NASDAQ Stock Market; (d) ordinary brokerage
transactions in which the broker solicits purchasers; and (e)
privately negotiated transactions. The Selling Stockholders may
from time to time deliver all or a portion of the Resale Shares
held by them to cover a short sale or sales or upon exercise of a
put equivalent position. In addition, any Resale Shares that
qualify for sale under Rule 144 or Rule 144A under the Securities
Act may be sold under any such rules rather than pursuant to this
Prospectus.
Brokers or dealers may receive commission or discounts from
the Selling Stockholders in amounts to be negotiated immediately
prior to the sale. The Selling Stockholders and any
underwriters, dealers or agents that participate in the
distribution of the Resale Shares may be deemed to be
"underwriters" within the meaning of the Securities Act, and any
profit on the resale of the Resale Shares by them or any
discounts, commissions or concessions received by any such
underwriters, dealers or agents may be deemed to be underwriting
discounts and commissions under the Securities Act.
The Company has agreed to indemnify the Selling
Stockholders, and each underwriter, if any, of the Resale Shares
(including any broker or dealer through which such shares may be
sold) and each person, if any, who controls each such Selling
Stockholder or any such underwriter within the meaning of Section
15 of the Securities Act, against certain liabilities, including
liabilities under the Securities Act.
20
Each of the Selling Stockholders has represented and
warranted to, and agreed with the Company that, during such time
as he may be engaged in a distribution of the Resale Shares, such
Selling Stockholder will, among other things, (a) not engage in
any stabilization activity in connection with the Company's
securities, (b) furnish to each broker or dealer through whom or
which he offers securities copies of the Prospectus, as may be
required, (c) inform such broker or dealer as to the number of
Resale Shares such person is selling, that such securities are
part of a distribution and that such person is subject to the
provisions of Rule 10b-6 of the General Rules and Regulations
under the Exchange Act, (d) report to the Company any disposition
of the Resale Shares if any such disposition shall have occurred,
and (e) not bid for, or purchase, any Company securities other
than as permitted under the Exchange Act.
LEGAL MATTERS
Certain legal matters in respect of the shares offered
hereby will be passed upon for the Company by Rosenman & Colin,
575 Madison Avenue, New York, New York 10022.
EXPERTS
The financial statements and schedules of the Company for
the years ended August 31, 1994, 1993 and 1992 incorporated in
this Prospectus by reference to the Form 10-K have been so
incorporated in reliance on the report of Grant Thornton LLP,
independent accountants, given on the authority of such firm as
experts in accounting and auditing.
21
=====================================================
No dealer, salesman or other person has
been authorized to give any information or to
make any representation not contained in this
Prospectus or any Prospectus Supplement in
connection with the offering described herein and,
if given or made, such information or
representation must not be relied upon as having
been authorized by the Company or the Selling
Stockholders. This Prospectus and any Prospectus
Supplement do not constitute an offer to sell or a
solicitation of an offer to buy any of the securities
offered hereby in any jurisdiction to any person
whom it is unlawful to make such an offer in such
jurisdiction. Neither the delivery of this
Prospectus or any Prospectus Supplement nor any
sale made hereunder shall, under any
circumstances, create an implication that there
has been no change in the affairs of the Company
since the date hereof or that the information
contained herein is correct as of any time
subsequent to its date.
-------------------
TABLE OF CONTENTS
Page
----
Available Information . . . . . . . . . . . . . 2
Incorporation of Certain Documents by
Reference. . . . . . . . . . . . . . . . . . . 2
The Company . . . . . . . . . . . . . . . . . . 4
Optionholders; Exercise of Options . . . . . . 14
Use of Proceeds . . . . . . . . . . . . . . . . 15
Selling Stockholders . . . . . . . . . . . . . 15
Plan of Distribution . . . . . . . . . . . . . 20
Legal Matters . . . . . . . . . . . . . . . . . 21
Experts . . . . . . . . . . . . . . . . . . . . 21
ACCLAIM
ENTERTAINMENT, INC.
1,306,300 Shares
Common Stock
August 10, 1995
=====================================================
