<PAGE>
As filed with the Securities and Exchange Commission on October 8, 1998
Registration Statement No. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
Registration Statement
Under The Securities Act of 1933
LEVEL ONE COMMUNICATIONS, INCORPORATED
(Exact name of Registrant as specified in its charter)
CALIFORNIA 33-0128224
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9750 GOETHE ROAD
SACRAMENTO, CALIFORNIA 95827
(Address of Principal Executive Offices)
ACCLAIM COMMUNICATIONS, INC.
1996 STOCK INCENTIVE PLAN
(Full Title of Plans)
ROBERT S. PEPPER, PH.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
LEVEL ONE COMMUNICATIONS, INCORPORATED
9750 GOETHE ROAD
SACRAMENTO, CALIFORNIA 95827
(916) 855-5000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
GILLES S. ATTIA, ESQ.
GRAHAM & JAMES LLP
400 CAPITOL MALL, 24TH FLOOR
SACRAMENTO, CALIFORNIA 95814-4411
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
TITLE OF SECURITIES AMOUNT TO BE PROPOSED PROPOSED AMOUNT OF
TO BE REGISTERED REGISTERED MAXIMUM MAXIMUM REGISTRATION
OFFERING PRICE AGGREGATE FEE
PER SHARE(2) OFFERING PRICE (2)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Acclaim Communications, Inc. 775,534 $1.06 $822,066 $242.51
1996 Stock Incentive Plan (1) shares
Common Stock, no par value
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to an Agreement and Plan of Reorganization dated as of June 25,
1998 (the "REORGANIZATION AGREEMENT"), by and between the Registrant, Aardvark
Acquisition Corp. and Acclaim Communications, Inc. ("ACCLAIM"), the Registrant
assumed all of the outstanding options to purchase common stock of Acclaim under
the Acclaim Plan (the "ASSUMED OPTIONS"), with appropriate adjustments to the
number of shares and exercise price of each Assumed Option to reflect the ratio
at which the common stock of Acclaim was converted into common stock of the
Registrant under the Reorganization Agreement.
(2) Estimated solely for the purpose of computing the registration fee required
by Section 6(b) of the Securities Act and computed pursuant to Rule 457(h)(1)
under the Securities Act based upon the weighted average of the per share
exercise price of $1.06 for the Assumed Options.
<PAGE>
PART I
INFORMATION REQUIRED IN THE PROSPECTUS
ITEM 1. PLAN INFORMATION.
-----------------
The Registrant will send or give the documents containing the information
specified in this Item 1 to employees, officers, directors or others as
specified by Rule 428(b)(1). In accordance with the rules and regulations of
the Securities and Exchange Commission (the "COMMISSION") and the instructions
to Form S-8, the Registrant is not filing such documents with the Commission
either as part of this Registration Statement or as prospectuses or prospectus
supplements pursuant to Rule 424.
ITEM 2. REGISTRATION INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
--------------------------------------------------------------
The Registrant will send or give the documents containing the information
specified in this Item 2 to employees, officers, directors or others as
specified by Rule 428(b)(1). In accordance with the rules and regulations of
the Commission and the instructions to Form S-8, the Registrant is not filing
such documents with the Commission either as part of this Registration Statement
or as prospectuses or prospectus supplements pursuant to Rule 424.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
----------------------------------------
The following documents and information heretofore filed with the
Commission by the Registrant are incorporated herein by reference:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
December 28, 1997 filed pursuant to the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT");
(b) The Registrant's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 29, 1998 and June 28, 1998 filed pursuant to the
Exchange Act;
(c) The Registrant's current report on Form 8-K, Form 8-K/A (Amend.
No.1) and Form 8-K/A (Amend. No. 2) filed with the Commission on July 17,
1998, September 21, 1998 and October 7, 1998; and
(d) The description of the Registrant's Common Stock contained in Items 1
and 2 of the Registrant's Registration Statement on Form 8-A filed pursuant
to Section 12 of the Exchange Act, filed with the Commission on July 9,
1993.
All documents subsequently filed with the Commission by the Registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered hereunder have been sold or which deregisters all securities then
remaining unsold under this Registration Statement, shall be deemed to be
incorporated by reference in this Registration Statement and to be part hereof
from the date of filing of such documents. Any statement contained herein or in
a document incorporated or
<PAGE>
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such earlier statement. Any statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
--------------------------
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
---------------------------------------
None.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
------------------------------------------
The Registrant has provisions in its Amended and Restated Articles of
Incorporation which eliminate the liability of the Registrant's directors to the
Registrant and its shareholders for monetary damages to the fullest extent
permissible under California law and provisions which authorize the Registrant
to indemnify its directors and agents by bylaws, agreements or otherwise, to the
fullest extent permitted by law. Such limitation of liability does not affect
the availability of equitable remedies such as injunctive relief or rescission.
The Registrant's Bylaws, as amended, provide that the Registrant shall indemnify
its directors and officers to the fullest extent permitted by California law,
including circumstances in which indemnification is otherwise discretionary
under California law.
In addition, the Registrant has entered into agreements with its directors
and executive officers that will require the Registrant, among other things, to
indemnify them against certain liabilities that may arise by reason of their
status of service as directors or executive officers to the fullest extent not
prohibited by law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
------------------------------------
Not applicable.
ITEM 8. INDEX TO EXHIBITS.
------------------
Exhibit Description of Document
Number
4.1 Amended and Restated Articles of Incorporation of Registrant (which
is incorporated by reference to Exhibit 3.1 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended December 28,
1997).
<PAGE>
Exhibit Description of Document
Number
4.2 Bylaws of Registrant (which is incorporated by reference to
Registration Statement No. 33-65810 filed with the Commission on
August 19, 1994).
4.3 Acclaim Communications, Inc. 1996 Stock Incentive Plan and related
agreements.
5.1 Opinion of Counsel as to legality of securities being registered.
23.1 Consent of Arthur Andersen LLP, Independent Auditors.
23.2 Consent of Deloitte and Touche LLP, Independent Auditors.
23.3 Consent of Counsel (which is contained in Exhibit 5.1).
24.1 Powers of Attorney (which are included as part of the signature
page of this registration statement).
ITEM 9. UNDERTAKINGS.
-------------
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "CALCULATION OF REGISTRATION FEE"
table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sacramento, State of California, on this 5th day of
October 1998.
LEVEL ONE COMMUNICATIONS,
INCORPORATED
BY: /s/ Robert S. Pepper
------------------------------------------
Robert S. Pepper,President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert S. Pepper and John Kehoe jointly
and severally, as such person's attorneys-in-fact, each with the power of
substitution, for him or her in any and all capacities, to sign any amendments
to this Registration Statement on Form S-8 and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each of said
attorney-in-fact, or his or her substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons on the
5th day of October, 1998 in the capacities indicated.
SIGNATURES Title
__________ _____
/s/ Robert S. Pepper President, Chief Executive Officer and
------------------------
Robert S. Pepper, Ph.D. Chairman of the Board
/s/ John Kehoe Senior Vice President and Chief Financial
------------------------
John Kehoe Officer
/s/ Thomas J. Connors Director
------------------------
Thomas J. Connors
/s/ Paul Gray Director
------------------------
Paul Gray, Ph.D.
/s/ Martin Jurick Director
------------------------
Martin Jurick
/s/ Henry Kressel Director
------------------------
Henry Kressel
/s/ Joseph P. Landy Director
------------------------
Joseph P. Landy
/s/ Kenneth A. Pickar Director
------------------------
Kenneth A. Pickar
<PAGE>
/s/ Martin Jurick Director
________________________
Martin Jurick
/s/ Henry Kressel Director
________________________
Henry Kressel
/s/ Joseph P. Landy Director
________________________
Joseph P. Landy
/s/ Kenneth A. Pickar Director
________________________
Kenneth A. Pickar
<PAGE>
Index to Exhibits
-----------------
Exhibit Description of Document
Number
4.1 Amended and Restated Articles of Incorporation of Registrant
(which is incorporated by reference to Exhibit 3.1 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 28, 1997).
4.2 Bylaws of Registrant (which is incorporated by reference to
Registration Statement No. 33-65810 filed with the Commission
on August 19, 1994).
4.3 Acclaim Communications, Inc. 1996 Stock Incentive Plan and
related agreements.
5.1 Opinion of Counsel as to legality of securities being
registered.
23.1 Consent of Arthur Andersen LLP, Independent Auditors.
23.2 Consent of Deloitte and Touche LLP, Independent Auditors.
23.3 Consent of Counsel (which is contained in Exhibit 5.1).
24.1 Powers of Attorney (which are included as part of the
signature page of this registration statement).
<PAGE>
Index to Exhibits
-----------------
Exhibit Description of Document
Number
4.1 Amended and Restated Articles of Incorporation of Registrant
(which is incorporated by reference to Exhibit 3.1 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended December 28, 1997).
4.2 Bylaws of Registrant (which is incorporated by reference to
Registration Statement No. 33-65810 filed with the Commission
on August 19, 1994).
4.3 Acclaim Communications, Inc. 1996 Stock Incentive Plan and
related agreements.
5.1 Opinion of Counsel as to legality of securities being
registered.
23.1 Consent of Arthur Andersen LLP, Independent Auditors.
23.2 Consent of Counsel.
24.1 Powers of Attorney.
<PAGE>
EXHIBIT 4.3
<PAGE>
ACCLAIM COMMUNICATIONS, INC.
1996 STOCK INCENTIVE PLAN
(As Adopted and Effective June 6, 1996)
(As Amended July 14, 1997)
SECTION 1. PURPOSE.
- ------------------
The purpose of the Plan is to offer selected employees, directors and
consultants an opportunity to acquire a proprietary interest in the success of
the Company, or to increase such interest, to encourage such selected persons to
remain in the employ of the Company and to attract new employees with
outstanding qualifications by purchasing Shares of the Company's Common Stock.
The Plan provides for both the direct award or sale of Shares and for the grant
of Options to purchase Shares. Options granted under the Plan may include
Nonstatutory Options as well as incentive stock options intended to qualify
under section 422 of the Internal Revenue Code.
SECTION 2. DEFINITIONS.
- ----------------------
(a) "Board of Directors" shall mean the Board of Directors of the Company,
------------------
as constituted from time to time.
(b) "Change in Control" means the occurrence of any of the following
-----------------
events:
(i) the consummation of the acquisition of fifty-one percent (51%)
or more of the outstanding stock of the Company by one person or by two or
more persons acting as a partnership, limited partnership, syndicate or
other group pursuant to a tender offer validly made under any federal or
state law (other than a tender offer by the Company);
(ii) the consummation of a merger, consolidation or other
reorganization of the Company (other than a reincorporation of the
Company), if after giving effect to such merger,
<PAGE>
consolidation or other reorganization of the Company, the shareholders of
the Company immediately prior to such merger, consolidation or other
reorganization do not represent a majority in interest of the holders of
voting securities (on a fully diluted basis) with the ordinary voting power
to elect directors of the surviving or resulting entity after such merger,
consolidation or other reorganization;
(iii) the sale of all or substantially all of the assets of the
Company to a third party who is not an affiliate (including a Subsidiary)
of the Company;
(iv) the dissolution of the Company pursuant to action validly taken
by the shareholders of the Company in accordance with applicable state law;
or
(v) such other event as determined by the Board of Directors.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
----
(d) "Committee" shall mean a committee of the Board of Directors which is
---------
authorized to administer the Plan under Section 3.
(e) "Company" shall mean Acclaim Communications, Inc., a Delaware
-------
corporation.
(f) "Disability" shall means that an Optionee is unable to engage in any
----------
substantial gainful activity by reason of any medically determinable physical or
mental impairment.
(g) "Employee" shall mean (i) any individual who is a common-law employee
--------
of the Company or of a Subsidiary, (ii) a member of the Board of Directors, or
(iii) a consultant who performs services for the Company or a Subsidiary.
Service as a member of the Board of Directors or as a consultant shall be
considered employment for all purposes of the Plan except the second sentence of
Section 4(a).
(h) "Exercise Price" shall mean the amount for which one Share may be
--------------
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
(i) "Fair Market Value" shall mean the fair market value of a Share, as
-----------------
determined by the Committee in good faith. Such determination shall be
conclusive and binding on all persons.
<PAGE>
(j) "ISO" shall mean an employee incentive stock option described in Code
---
section 422(b).
(k) "Nonstatutory Option" or "NSO" shall mean an employee stock option
------------------- ---
that is not an ISO.
(l) "Offeree" shall mean an individual to whom the Committee has offered
-------
the right to acquire Shares under the Plan (other than upon exercise of an
Option).
(m) "Option" shall mean an ISO or Nonstatutory Option granted under the
------
Plan and entitling the holder to purchase Shares.
(n) "Optionee" shall mean an individual who holds an Option.
--------
(o) "Plan" shall mean this Acclaim Communications, Inc. 1996 Stock
----
Incentive Plan.
(p) "Purchase Price" shall mean the consideration for which one Share may
--------------
be acquired under the Plan (other than upon exercise of an Option), as specified
by the Committee.
(q) "Service" shall mean service as an Employee.
-------
(r) "Share" shall mean one share of Stock, as adjusted in accordance with
-----
Section 9 (if applicable).
(s) "Stock" shall mean the common stock of the Company.
-----
(t) "Stock Option Agreement" shall mean the agreement between the Company
----------------------
and an Optionee which contains the terms, conditions and restrictions pertaining
to his or her Option.
(u) "Stock Purchase Agreement" shall mean the agreement between the
------------------------
Company and an Offeree who acquires Shares under the Plan which contains the
terms, conditions and restrictions pertaining to the acquisition of such Shares.
(v) "Subsidiary" shall mean any corporation, of which the Company and/or
----------
one or more other Subsidiaries own not less than fifty percent (50%) of the
total combined voting power of all classes of outstanding stock of such
corporation. A corporation that attains the status of a Subsidiary on a date
after the adoption of the Plan shall be considered a Subsidiary commencing as of
such date.
<PAGE>
SECTION 3. ADMINISTRATION.
- -------------------------
(a) Committee Membership. The Plan shall be administered by the Committee,
--------------------
which shall consist of members of the Board of Directors. The members of the
Committee shall be appointed by the Board of Directors. If no Committee has been
appointed, the entire Board of Directors shall constitute the Committee.
(b) Committee Procedures. The Board of Directors shall designate one of the
--------------------
members of the Committee as chairperson. The Committee may hold meetings at such
times and places as it shall determine. The acts of a majority of the Committee
members present at meetings at which a quorum exists, or acts reduced to or
approved in writing by all Committee members, shall be valid acts of the
Committee.
(c) Committee Responsibilities. Subject to the provisions of the Plan, the
--------------------------
Committee shall have full authority and discretion to take the following
actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms relating
to the Plan;
(iii) To authorize any person to execute, on behalf of the Company,
any instrument required to carry out the purposes of the Plan;
(iv) To determine when Shares are to be awarded or offered for sale
and when Options are to be granted under the Plan;
(v) To select the Offerees and Optionees;
(vi) To determine the number of Shares to be offered to each Offeree
or to be made subject to each Option;
(vii) To prescribe the terms and conditions of each award or sale of
Shares, including (without limitation) the Purchase Price, and to specify
the provisions of the Stock Purchase Agreement relating to such award or
sale;
<PAGE>
(viii) To prescribe the terms and conditions of each Option,
including (without limitation) the Exercise Price, to determine whether
such Option is to be classified as an ISO or as a Nonstatutory Option, and
to specify the provisions of the Stock Option Agreement relating to such
Option;
(ix) To amend or terminate any outstanding Stock Purchase Agreement
or Stock Option Agreement, subject to applicable legal restrictions and to
the consent of the Offeree or Optionee who entered into such agreement;
(x) To determine the disposition of an Option in the event of an
Optionee's divorce or dissolution of marriage;
(xi) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan, any Stock Purchase Agreement and any Option;
(xii) To prescribe the consideration for the grant of each Option or
other right under the Plan and to determine the sufficiency of such
consideration; and
(xiii) To take any other actions deemed necessary or advisable for
the administration of the Plan.
All decisions, interpretations and other actions of the Committee shall be
final and binding on all Offerees, all Optionees, and all persons deriving their
rights from an Offeree or Optionee. No member of the Committee shall be liable
for any action that he or she has taken or has failed to take in good faith with
respect to the Plan, any Option or any right to acquire Shares under the Plan.
(d) Financial Reports. To the extent required by applicable law, and not
-----------------
less often than annually, the Company shall furnish to Offerees, Optionees and
shareholders who have received Stock under the Plan its financial statements
including a balance sheet regarding the Company's financial condition and
results of operations, unless such Offerees, Optionees or shareholders have
duties with the Company that assure them access to equivalent information. Such
financial statements need not be audited.
<PAGE>
SECTION 4. ELIGIBILITY.
- ----------------------
(a) General Rule. Only Employees, as defined in Section 2(g), shall be
------------
eligible for designation as Offerees or Optionees by the Committee. In addition,
only individuals who are employed as common-law employees by the Company or a
Subsidiary shall be eligible for the grant of ISOs.
(b) Ten-Percent Shareholders. An Employee who owns more than ten percent
------------------------
(10%) of the total combined voting power of all classes of outstanding stock of
the Company or any of its Subsidiaries shall not be eligible for designation as
an Offeree or Optionee unless (i) the Exercise Price for an ISO (and a NSO to
the extent required by applicable law) is at least one hundred ten percent
(110%) of the Fair Market Value of a Share on the date of grant, (ii) the
Purchase Price of Shares is at least one hundred percent (100%) of the Fair
Market Value of a Share on the date of grant, and (iii) in the case of an ISO,
such ISO by its terms is not exercisable after the expiration of five years from
the date of grant.
(c) Attribution Rules. For purposes of Subsection (b) above, in determining
-----------------
stock ownership, an Employee shall be deemed to own the stock owned, directly or
indirectly, by or for his brothers, sisters, spouse, ancestors and lineal
descendants. Stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust shall be deemed to be owned proportionately by or
for its shareholders, partners or beneficiaries. Stock with respect to which
such Employee holds an option shall not be counted.
(d) Outstanding Stock. For purposes of Subsection (b) above, "outstanding
-----------------
stock" shall include all stock actually issued and outstanding immediately after
the grant. "Outstanding stock" shall not include shares authorized for issuance
under outstanding options held by the Employee or by any other person.
SECTION 5. STOCK SUBJECT TO PLAN.
- --------------------------------
(a) Basic Limitation. Shares offered under the Plan shall be authorized but
----------------
unissued Shares. The aggregate number of Shares which may be issued under the
Plan shall not exceed Three Million (3,000,000) Shares, subject to adjustment
pursuant to Section 9. The number of Shares which are subject to Options or
<PAGE>
other rights outstanding at any time under the Plan shall not exceed the number
of Shares which then remain available for issuance under the Plan. The Company,
during the term of the Plan, shall at all times reserve and keep available
sufficient Shares to satisfy the requirements of the Plan.
(b) Additional Shares. In the event that any outstanding Option or other
-----------------
right for any reason expires or is canceled or otherwise terminated, the Shares
allocable to the unexercised portion of such Option or other right shall again
be available for the purposes of the Plan.
SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES.
- --------------------------------------------------
(a) Stock Purchase Agreement. Each award or sale of Shares under the Plan
------------------------
(other than upon exercise of an Option) shall be evidenced by a Stock Purchase
Agreement between the Offeree and the Company. Such award or sale shall be
subject to all applicable terms and conditions of the Plan and may be subject to
any other terms and conditions which are not inconsistent with the Plan and
which the Committee deems appropriate for inclusion in a Stock Purchase
Agreement. The provisions of the various Stock Purchase Agreements entered into
under the Plan need not be identical.
(b) Duration of Offers and Nontransferability of Rights. Any right to
---------------------------------------------------
acquire Shares under the Plan (other than an Option) shall automatically expire
if not exercised by the Offeree within thirty (30) days after the grant of such
right was communicated to the Offeree by the Committee. Such right shall not be
transferable and shall be exercisable only by the Offeree to whom such right was
granted.
(c) Purchase Price. The Purchase Price of Shares to be offered under the
--------------
Plan shall not be less than eighty-five percent (85%) of the Fair Market Value
of a Share on the date of grant, except as otherwise provided in Section 4(b).
Subject to the preceding sentence, the Purchase Price shall be determined by the
Committee in its sole discretion. The Purchase Price shall be payable in a form
described in Section 8.
<PAGE>
(d) Withholding Taxes. As a condition to the purchase of Shares, the
-----------------
Offeree shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with such purchase or the vesting of the Shares.
SECTION 7. TERMS AND CONDITIONS OF OPTIONS.
- ------------------------------------------
(a) Stock Option Agreement. Each grant of an Option under the Plan shall be
----------------------
evidenced by a Stock Option Agreement between the Optionee and the Company. Such
Option shall be subject to all applicable terms and conditions of the Plan and
may be subject to any other terms and conditions which are not inconsistent with
the Plan and which the Committee deems appropriate for inclusion in a Stock
Option Agreement. The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical.
(b) Number of Shares. Each Stock Option Agreement shall specify the number
----------------
of Shares that are subject to the Option and shall provide for the adjustment of
such number in accordance with Section 9. The Stock Option Agreement shall also
specify whether the Option is an ISO or a Nonstatutory Option.
(c) Exercise Price. Each Stock Option Agreement shall specify the Exercise
--------------
Price. The Exercise Price of an ISO shall not be less than one hundred percent
(100%) of the Fair Market Value of a Share on the date of grant, except as
otherwise provided in Section 4(b). To the extent required by applicable law,
the Exercise Price of a Nonstatutory Option shall not be less than eighty-five
percent (85%) of the Fair Market Value of a Share on the date of grant. Subject
to the preceding two sentences, the Exercise Price under any Option shall be
determined by the Committee in its sole discretion. The Exercise Price shall be
payable in a form described in Section 8.
(d) Withholding Taxes. As a condition to the exercise of an Option, the
-----------------
Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with such exercise. The Optionee shall also make
such
<PAGE>
arrangements as the Committee may require for the satisfaction of any
federal, state, local or foreign withholding tax obligations that may arise in
connection with the disposition of Shares acquired by exercising an Option.
(e) Exercisability. Each Stock Option Agreement shall specify the date
--------------
when all or any installment of the Option is to become exercisable. To the
extent required by applicable law, an Option shall become exercisable no less
rapidly than the rate of 20% per year for each of the first five years from the
date of grant. Subject to the preceding sentence, the exercisability of any
Option shall be determined by the Committee in its sole discretion.
(f) Effect of Change in Control. The Committee may determine, at the time
---------------------------
of granting an Option or thereafter, that such Option shall become fully
exercisable as to all Shares subject to such Option in the event that a Change
in Control occurs with respect to the Company.
(g) Term. The Stock Option Agreement shall specify the term of the Option.
----
The term shall not exceed ten years from the date of grant (or five (5) years
for ten percent (10%) shareholders as provided in Section 4(b)). Subject to the
preceding sentence, the Committee at its sole discretion shall determine when an
Option is to expire.
(h) Nontransferability. No Option shall be transferable by the Optionee
------------------
other than by will or by the laws of descent and distribution. An Option may be
exercised during the lifetime of the Optionee only by the Optionee or by his or
her guardian or legal representative. No Option or interest therein may be
transferred, assigned, pledged or hypothecated by the Optionee during the
Optionee's lifetime, whether by operation of law or otherwise, or be made
subject to execution, attachment or similar process. Notwithstanding the
foregoing, the Committee may grant transferable Nonstatutory Options in
accordance with the requirements of applicable law.
(i) Exercise of Options on Termination of Service. Each Option shall set
---------------------------------------------
forth the extent to which the Optionee shall have the right to exercise the
Option following termination of the Optionee's Service with the
<PAGE>
Company and its Subsidiaries. Such provisions shall be determined in the sole
discretion of the Committee, need not be uniform among all Options issued
pursuant to the Plan, and may reflect distinctions based on the reasons for
termination of employment. Notwithstanding the foregoing, and to the extent
required by applicable law, each Option shall provide that the Optionee shall
have the right to exercise the vested portion of any Option held at termination
for at least thirty (30) days following termination of Service with the Company
for any reason, and that the Optionee shall have the right to exercise the
Option for at least six months if the Optionee's Service terminates due to death
or Disability.
(j) No Rights as a Shareholder. An Optionee, or a transferee of an
--------------------------
Optionee, shall have 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.
(k) Modification, Extension and Assumption of Options. Within the
-------------------------------------------------
limitations of the Plan, the Committee may modify, extend or assume outstanding
options or may accept the cancellation of outstanding options (whether granted
by the Company or another issuer) in return for the grant of new Options for the
same or a different number of Shares and at the same or a different Exercise
Price or for other consideration.
(l) Restrictions on Transfer of Shares. Any Shares issued upon exercise of
----------------------------------
an Option shall be subject to such rights of repurchase, rights of first refusal
and other transfer restrictions as the Committee may determine. Such
restrictions shall be set forth in the applicable Stock Option Agreement and
shall apply in addition to any restrictions that may apply to holders of Shares
generally.
SECTION 8. PAYMENT FOR SHARES.
- -----------------------------
(a) General Rule. The entire Purchase Price or Exercise Price of Shares
------------
issued under the Plan shall be payable in lawful money of the United States of
America at the time when such Shares are purchased, except as provided in
Subsections (b), (c) and (d) below.
<PAGE>
(b) Surrender of Stock. To the extent that a Stock Option Agreement so
------------------
provides, payment may be made all or in part with Shares which have already been
owned by the Optionee or the Optionee's representative for any time period
specified by the Committee and which are surrendered to the Company in good form
for transfer. Such Shares shall be valued at their Fair Market Value on the date
when the new Shares are purchased under the Plan.
(c) Services Rendered. At the discretion of the Committee, Shares may be
-----------------
awarded under the Plan in consideration of services rendered to the Company or a
Subsidiary prior to the award.
(d) Promissory Notes. To the extent that a Stock Option Agreement or
----------------
Stock Purchase Agreement so provides, payment may be made all or in part with a
full recourse promissory note executed by the Optionee or Offeree. The interest
rate and other terms and conditions of such note shall be determined by the
Committee. The Committee may require that the Optionee or Offeree pledge his or
her Shares to the Company for the purpose of securing the payment of such note.
In no event shall the stock certificate(s) representing such Shares be released
to the Optionee or Offeree until such note is paid in full.
(e) Cashless Exercise. To the extent that a Stock Option Agreement so
-----------------
provides and a public market for the Shares exists, payment may be made all or
in part by delivery (on a form prescribed by the Committee) of an irrevocable
direction to a securities broker to sell Shares and to deliver all or part of
the sale proceeds to the Company in payment of the aggregate Exercise Price.
SECTION 9. ADJUSTMENT OF SHARES.
- -------------------------------
(a) General. In the event of a subdivision of the outstanding Stock, a
-------
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Stock into a lesser
number of Shares, a recapitalization, a reclassification or a similar
occurrence, the Committee shall make appropriate adjustments in one or more of
(i) the number of Shares available for future awards under Section 5
<PAGE>
(ii) the number of Shares covered by each outstanding Option or Purchase
Agreement or (iii) the Exercise Price or Purchase Price under each outstanding
Option or Stock Purchase Agreement.
(b) Reorganizations. In the event that the Company is a party to a merger
---------------
or reorganization, outstanding Options shall be subject to the agreement of
merger or reorganization.
(c) Reservation of Rights. Except as provided in this Section 9, an
---------------------
Optionee or an Offeree shall have no rights by reason of (i) any subdivision or
consolidation of shares of stock of any class, (ii) the payment of any dividend
or (iii) any other increase or decrease in the number of shares of stock of any
class. Any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number, Exercise
Price or Purchase Agreement of Shares subject to an Option or Stock Purchase
Agreement. The grant of an award pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
SECTION 10. LEGAL REQUIREMENTS.
- ------------------------------
Shares shall not be issued under the Plan unless the issuance and delivery
of such Shares complies with (or is exempt from) all applicable requirements of
law, including (without limitation) the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder, state securities laws and
regulations, and the regulations of any stock exchange on which the Company's
securities may then be listed.
SECTION 11. NO EMPLOYMENT RIGHTS.
- --------------------------------
No provision of the Plan, nor any right or Option granted under the Plan,
shall be construed to give any person any right to become, to be treated as, or
to remain an Employee. The Company and its Subsidiaries reserve the right to
terminate any person's Service at any time and for any reason.
<PAGE>
SECTION 12. DURATION AND AMENDMENTS.
- -----------------------------------
(a) Term of the Plan. The Plan, as set forth herein, shall become
----------------
effective on the date of its adoption by the Board of Directors, subject to the
approval of the Company's shareholders. In the event that the shareholders fail
to approve the Plan within twelve (12) months after its adoption by the Board of
Directors, any grants already made shall be null and void, and no additional
grants shall be made after such date. The Plan shall terminate automatically ten
(10) years after its adoption by the Board of Directors and may be terminated on
any earlier date pursuant to Subsection (b) below.
(b) Right to Amend or Terminate the Plan. The Board of Directors may amend
------------------------------------
the Plan at any time and from time to time. Rights and obligations under any
right or Option granted before amendment of the Plan shall not be materially
altered, or impaired adversely, by such amendment, except with consent of the
person to whom the right or Option was granted. An amendment of the Plan shall
be subject to the approval of the Company's shareholders only to the extent
required by applicable laws, regulations or rules.
(c) Effect of Amendment or Termination. No Shares shall be issued or sold
----------------------------------
under the Plan after the termination thereof, except upon exercise of an Option
granted prior to such termination. The termination of the Plan, or any amendment
thereof, shall not affect any Shares previously issued or any Option previously
granted under the Plan.
<PAGE>
SECTION 13. EXECUTION.
- ---------------------
To record the adoption of the Plan by the Company, the Board of Directors
has caused its authorized officer to execute the same, to be effective as of
July 14, 1997.
ACCLAIM COMMUNICATIONS, INC.
By \s\ Visveswar Akella
-----------------------------------------------
As Its President and Chief Executive Officer
-------------------------------------------
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE
OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.
ACCLAIM COMMUNICATIONS, INC.
1996 STOCK INCENTIVE PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
Acclaim Communications, Inc., a Delaware corporation (the "Company"),
hereby grants an Option to purchase shares of its common stock ("Shares") to the
Optionee named below. The terms and conditions of the Option are set forth in
this cover sheet, in the attachment and in the Company's 1996 Stock Incentive
Plan (the "Plan").
Date of Grant:_______________________________________________________________
Name of Optionee:____________________________________________________________
Optionee's Social Security Number:___________________________________________
Number of Shares Covered by Option:__________________________________________
Exercise Price per Share: $_________________________________________________
[must be at least 85% of Fair Market Value on Date of Grant]
Vesting Start Date:__________________________________________________________
_____ Check here if Optionee is a 10% owner (so that Exercise Price must
be 110% of Fair Market Value).
BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS
DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A COPY OF WHICH IS
ALSO ATTACHED.
Optionee:____________________________________________________________________
(Signature)
Company:_____________________________________________________________________
(Signature)
Title:_____________________________________________________________
<PAGE>
ACCLAIM COMMUNICATIONS, INC.
1996 STOCK INCENTIVE PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
NONSTATUTORY This Option is not intended to be an incentive stock option
STOCK OPTION under section 422 of the Code and will be interpreted
accordingly.
VESTING This Option is immediately exercisable; provided, however,
that the Company shall have the right (the "Vesting
Repurchase Right"), exercisable at any time during the sixty
(60) day period following the date your Service terminates
for any reason, to repurchase at the Exercise Price all or
(at the discretion of the Committee and with your consent)
any portion of the Shares in which you have not acquired a
vested interest in accordance with this Agreement (the
"Unvested Shares"). The Vesting Repurchase Right shall
terminates with respect to any Unvested Shares for which it
is not timely exercised as described in this paragraph. In
addition, the Vesting Repurchase Right shall terminate with
respect to any and all Shares in which you vest in
accordance with the schedule below. Accordingly, provided
that you continue to be a common-law Employee of the Company
(or any Subsidiary), you shall acquire a vested interest in,
and the Vesting Repurchase Right shall terminate with
respect to, twelve and one half percent (12.5%) of the
Shares subject to this Option on the six-month anniversary
of the Vesting Start Date as shown on the cover sheet and
thereafter in a series of successive monthly installments,
each equal to one forty-eighth of the Shares subject to this
Option. All Shares as to which the Vesting Repurchase Right
lapses shall, however, continue to be subject to (i) the
Restrictions on Exercise and Resale and (ii) the Company's
Right of First Refusal.
The certificates representing any Shares purchased hereunder
and subject to the Vesting Repurchase Right shall be held in
escrow by the Secretary of the Company as discussed below.
Upon exercise, you shall be required to deliver to the
Secretary of the Company a duly executed blank Assignment
Separate from Certificate in the form provided by the
Company at the time of exercise.
<PAGE>
ESCROW Upon issuance following exercise, the certificates for the
Shares subject to the Vesting Repurchase Right shall be
deposited in escrow with the Secretary of the Company to be
held in accordance with the provisions of this paragraph.
Each deposited certificate shall be accompanied by a duly
executed Assignment Separate from Certificate in the form
provided by the Company at the time of exercise. The
deposited certificates, together with any other assets or
securities from time to time deposited pursuant to these
requirements, shall remain in escrow until such time or
times as the certificates (or other assets and securities)
are to be released or otherwise surrendered for cancellation
as discussed below. Upon delivery of the certificates (or
other assets and securities) to the Company, you shall be
issued an instrument of deposit acknowledging the number of
Shares (or other assets and securities) delivered in escrow
to the Secretary of the Company.
All regular cash dividends on the Shares (or other
securities at the time held in escrow) shall be paid
directly to you and shall not be held in escrow. However, in
the event of any stock dividend, stock split,
recapitalization or other change affecting the Company's
outstanding Stock effected without receipt of consideration,
any new, substituted or additional securities or other
property which is by reason of such transaction distributed
with respect to the Shares shall be immediately delivered to
the Secretary of the Company to be held in escrow hereunder,
but only to the extent the Shares are at the time subject to
the escrow requirements hereof.
The Shares, together with any other assets or securities
held in escrow hereunder, shall be subject to the following
terms and conditions relating to their release from escrow
or their surrender to the Company for repurchase and
cancellation:
. Should the Company exercise the Vesting Repurchase Right
with respect to any Unvested Shares, then the escrowed
certificates for such Unvested Shares (together with any
other assets or securities issued with respect thereto)
shall be delivered to the Company for cancellation,
concurrently with the payment to you, in cash or cash
equivalent (including the cancellation of any purchase-
money indebtedness), of an amount equal to the aggregate
Exercise Price for such Unvested Shares, and you shall
have no further rights with respect to such Unvested
Shares (or other assets or securities).
<PAGE>
. Should the Company elect not to exercise its Right of
First Refusal with respect to any Shares held at the time
in escrow hereunder, then the escrowed certificates for
such Shares (together with any assets or securities
issued with respect thereto) shall be surrendered to you
for disposition according to the provisions of the
Company's Right of First Refusal.
. As your interest in the Shares (or any other assets or
securities issued with respect thereto) vests as
described above, the certificates for such vested Shares
(as well as all other vested assets and securities) shall
be released from escrow and delivered to you, at your
request, in accordance with the following schedule:
- The initial release of any vested Shares (or other
vested assets and securities) from escrow shall be
effected within thirty (30) days following the
expiration of the initial one (1) year period measured
from the Vesting Start Date.
- Subsequent releases of any vested Shares (or other
vested assets and securities) from escrow shall be
effected at annual intervals thereafter, with the
first such annual release to occur two (2) years after
the Vesting Start Date.
- Upon termination of your Service for any reason,
except upon a Change in Control of the Company, any
escrowed Shares (or other assets or securities ) in
which you are at the time vested shall be promptly
released from escrow.
- Upon any earlier termination of the Company's Vesting
Repurchase Right as described above, the Shares (or
other assets or securities) at the time held in escrow
shall promptly be released to you as fully vested
Shares or other property.
<PAGE>
SECTION 83(B) Under Section 83 of the Internal Revenue Code of 1986,
ELECTION as amended (the "Code"), the difference between the
Exercise Price paid for the Shares and their Fair
Market Value on the date any forfeiture restrictions
applicable to such Shares lapse will be reportable as
ordinary income at that time. For this purpose,
"forfeiture restrictions" include the Vesting
Repurchase Right described above. You may elect to be
taxed at the time the Unvested Shares are acquired to
the extent the Fair Market Value of such Shares
differs from the Exercise Price rather than when and
as such Shares cease to be subject to such forfeiture
restrictions, by filing an election under Section
83(b) of the Code with the Internal Revenue Service
within thirty (30) days after the date of exercise.
The form for making this election is attached as
Exhibit A hereto. Failure to make this filing within
the thirty (30) day period will result in the
recognition of ordinary income by you (in the event
the Fair Market Value of the Shares increases after
the date of exercise) as the forfeiture restrictions
lapse. YOU ACKNOWLEDGE THAT IT IS YOUR SOLE
RESPONSIBILITY, AND NOT THE COMPANY'S, TO FILE A
TIMELY ELECTION UNDER SECTION 83(b), EVEN IF YOU
REQUEST THE COMPANY OR ITS REPRESENTATIVES TO MAKE
THIS FILING ON YOUR BEHALF. YOU ARE RELYING SOLELY ON
YOUR OWN ADVISORS WITH RESPECT TO THE DECISION AS TO
WHETHER OR NOT TO FILE AN 83(b) ELECTION.
TERM This Option will expire in any event at the close of
business at Company headquarters on the day before the
tenth anniversary of the Date of Grant, as shown on
the cover sheet. (It will expire earlier if your
Service terminates, as described below.)
REGULAR If your Service terminates for any reason except death
TERMINATION or Disability, this Option will expire at the close of
business at Company headquarters on the 30th day after
your termination date. During that thirty (30) day
period, you may exercise that portion of your Option
that was vested on your termination date.
<PAGE>
DEATH If your Services terminates because of your death,
this Option will expire at the close of business at
Company headquarters on the date six (6) months after
the date of death. During that six (6) month period,
your estate or heirs may exercise that portion of this
Option that was vested on your date of death.
DISABILITY If your Service terminates because of your Disability,
this Option will expire at the close of business at
Company headquarters on the date six (6) months after
your termination date. During that six (6) month
period, you may exercise that portion of your Option
that was vested on the date of your Disability.
"Disability" means that you are unable to engage in
any substantial gainful activity by reason of any
medically determinable physical or mental impairment.
LEAVES OF ABSENCE For purposes of this Option, your Service does not
terminate when you go on a bona fide leave of absence
that was approved by the Company in writing, if the
terms of the leave provide for continued service
crediting, or when continued service crediting is
required by applicable law. Your Service terminates in
any event when the approved leave ends unless you
immediately return to active work. The Company
determines which leaves count for this purpose, and
when your Service terminates for all purposes under
the Plan and this Agreement. The Company also
determines to what extent your Option may be exercised
during a leave of absence.
NOTICE OF EXERCISE When you wish to exercise this Option, you must notify
the Company by filing the proper "Notice of Exercise"
form at the address given on the form. Your Notice of
Exercise must specify how many Shares you wish to
purchase. Your Notice of Exercise must also specify
how your Shares should be registered (in your name
only, in your and your spouse's names as community
property or as joint tenants with right of
survivorship, or in a trust for your benefit). The
Notice will be effective when it is received by the
Company. If someone else wants to exercise this Option
after your death, that person must prove to the
Company's satisfaction that he or she is entitled to
do so.
<PAGE>
FORM OF PAYMENT When you submit your Notice of Exercise, you must
include payment of the Exercise Price for the Shares
you are purchasing. Payment may be made in one (or a
combination) of the following forms:
. Your personal check, a cashier's check or a money
order.
. Shares which have already been owned by you for
more than six (6) months and which are surrendered
to the Company. The value of the Shares, determined
as of the effective date of the option exercise,
will be applied to payment of the aggregate
Exercise Price.
. To the extent that a public market for the Shares
exists, as determined by the Company, by delivery
(on a form prescribed by the Committee) of an
irrevocable direction to a securities broker to
sell Shares and to deliver all or part of the sale
proceeds to the Company in payment of the aggregate
Exercise Price.
WITHHOLDING TAXES You will not be allowed to exercise this Option unless
you make acceptable arrangements to pay any
withholding or other taxes that may be due as a result
of the Option exercise.
<PAGE>
RESTRICTIONS ON By signing this Agreement, you agree not to exercise
EXERCISE AND RESALE this Option or sell any Shares acquired upon exercise
of this Option at a time when applicable laws,
regulations or Company trading policies prohibit
exercise or sale, including, without limitation,
during any periods (typically during the period
preceding the announcement of quarterly earnings or
other material events) in which the Company closes the
"trading window" for sales thereby prohibiting sales
during such periods by Company officers, directors and
others.
If requested by the Company and an underwriter of the
Common Stock (or other securities) of the Company, you
shall not pledge, sell, offer to sell, contract to
sell, grant any option to purchase, make any short
sale or otherwise dispose of any Shares of the
Company, or any options or warrants to purchase any
shares of the Common Stock of the Company or any
securities convertible into or exchangeable for shares
of Common Stock of the Company, whether now owned or
hereinafter acquired, owned directly by you or with
respect to which you have beneficial ownership within
the rules and regulations of the Securities and
Exchange Commission (the "Commission"); otherwise than
(i) as a bona fide gift or gifts, provided that the
donee or donees thereof agree to be bound by the
restrictions set forth herein, (ii) a transfer to any
trust for the direct or indirect benefit of you or
your immediate family provided that the trustee of the
trust agrees to be bound by the restrictions set forth
herein, during the one hundred eighty (180) day period
following the effective date of a registration
statement of the Company filed under the Securities
Act of 1933, as amended (the "Securities Act"),
provided that:
(a) such one hundred eighty (180) day "market
stand-off" agreement shall only apply to the first
such registration statement of the Company, including
securities to be sold on its behalf to the public in
an underwritten offering, and provided further that,
for subsequent filings of registration statements
under the Securities Act the period during which you
shall not sell or otherwise transfer or dispose of
any Shares (other than those included in the
registration) shall be ninety (90) days. The market
stand-off agreement with respect to subsequent
filings of registration statements under the
Securities Act shall no longer apply to you at such
time as you own less than five percent (5%) of the
outstanding Common Stock of the Company and you cease
to be
<PAGE>
deemed an affiliate of the Company for purposes of
the Securities Act.
(b) In the event of any stock dividend, stock
split, recapitalization, or other change affecting
the Company's outstanding Common Stock effected
without receipt of consideration, then any new,
substituted, or additional securities distributed
with respect to the Shares shall be immediately
subject to the provisions of this section, to the
same extent the Shares are at such time covered by
such provisions.
For purposes of this section, "immediate family" shall
mean any relationship by blood, marriage or adoption,
not more remote than first cousin. You also agree and
consent to the entry of stop transfer instructions
with the Company's transfer agent and registrar
against the transfer of your Shares except in
compliance with the foregoing restrictions.
The obligations described in this provision shall not
apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms
that may be promulgated in the future, or a
registration relating solely to a Commission Rule 145
transaction on Form S-4 or similar forms that may be
promulgated in the future.
If the sale of Shares under the Plan is not registered
under the Securities Act of 1933, as amended (the
"Securities Act"), but an exemption is available which
requires an investment or other representation, you
shall represent and agree at the time of exercise that
the Shares being acquired upon exercise of this Option
are being acquired for investment, and not with a view
to the sale or distribution thereof, and shall make
such other representations as are deemed necessary or
appropriate by the Company and its counsel.
<PAGE>
THE COMPANY'S RIGHT In the event that you propose to sell, pledge or
OF FIRST REFUSAL otherwise transfer to a third party any vested Shares
acquired upon exercise of this Option, or any interest
in such vested Shares, the Company shall have the
"Right of First Refusal" with respect to all (and not
less than all) of such vested Shares. You may not
transfer Unvested Shares. If you desire to transfer
Shares acquired upon exercise of this Option, you must
give a written "Transfer Notice" to the Company
describing fully the proposed transfer, including the
number of Shares proposed to be transferred, the
proposed transfer price and the name and address of
the proposed transferee. The Transfer Notice shall be
signed both by you and by the proposed transferee and
must constitute a binding commitment of both parties
to the transfer of the Shares. The Company shall have
the right to purchase all, but not less than all, of
the Shares on the terms described in the Transfer
Notice (subject, however, to any change in such terms
permitted in the next paragraph) by delivery of a
Notice of Exercise of the Right of First Refusal
within thirty (30) days after the date when the
Transfer Notice is received by the Company. The
Company's rights under this Subsection shall be freely
assignable by the Company, in whole or in part.
If the Company fails to exercise its Right of First
Refusal within thirty (30) days after the date when it
received the Transfer Notice, you may, not later than
ninety (90) days following receipt of the Transfer
Notice by the Company, conclude a transfer of the
Shares subject to the Transfer Notice on the terms and
conditions described in the Transfer Notice. Any
proposed transfer on terms and conditions different
from those described in the Transfer Notice, as well
as any subsequent proposed transfer by you, shall
again be subject to the Right of First Refusal and
shall require compliance with the procedure described
in the paragraph above. If the Company exercises its
Right of First Refusal, the parties shall consummate
the sale of the Shares on the terms set forth in the
Transfer Notice within sixty (60) days after the date
the Company receives the Transfer Notice (or within
such longer period as may have been specified in the
Transfer Notice); provided, however, that in the event
the Transfer Notice provides that payment for the
Shares is to be made in a form other than lawful money
paid at the time of transfer, the Company shall have
the option of paying for the Shares with lawful money
equal to the present value of the consideration
described in the Transfer Notice.
<PAGE>
The Company's Right of First Refusal shall be freely
assignable by the Company, shall inure to the benefit
of its successors and assigns and shall be binding
upon any transferee of the Shares.
The Company's Right of First Refusal shall terminate
in the event that Stock is listed or traded on an
established stock exchange.
RIGHT OF REPURCHASE Following termination of your Service for any reason,
the Company shall have the right to purchase all of
those Shares that you have or will acquire upon
exercise of this Option. If the Company fails to
provide you with written notice of its intention to
purchase such Shares before or within thirty (30) days
of the date the Company receives written notice from
you of your termination of Service, the Company's
right to purchase such Shares shall terminate. If the
Company exercises its right to purchase such Shares,
the Company will consummate the purchase of such
Shares within sixty (60) days of the date of its
written notice to you. The purchase price for any
Shares repurchased shall be the aggregate Exercise
Price for such Shares and shall be paid in cash.
TRANSFER OF OPTION Prior to your death, only you may exercise this
Option. You cannot transfer or assign this Option. For
instance, you may not sell this Option or use it as
security for a loan. If you attempt to do any of these
things, this Option will immediately become invalid.
You may, however, bequest this Option in your will.
Regardless of any marital property settlement
agreement, the Company is not obligated to honor a
Notice of Exercise from your spouse or former spouse,
nor is the Company obligated to recognize such
individual's interest in your Option in any other way.
RETENTION RIGHTS THIS AGREEMENT DOES NOT GIVE YOU THE RIGHT TO BE
RETAINED BY THE COMPANY IN ANY CAPACITY. THE COMPANY
RESERVES THE RIGHT TO TERMINATE YOUR SERVICE AT ANY
TIME AND FOR ANY REASON WITHOUT THEREBY INCURRING ANY
LIABILITY TO YOU.
<PAGE>
SHAREHOLDER RIGHTS You, or your estate or heirs, have no rights as a
shareholder of the Company until a certificate for the
Shares acquired upon exercise of this Option has been
issued. No adjustments are made for dividends or other
rights if the applicable record date occurs before
your stock certificate is issued, except as described
in the Plan.
ADJUSTMENTS In the event of a stock split, a stock dividend or a
similar change in the Stock, the number of Shares
covered by this Option and the Exercise Price may be
adjusted pursuant to the Plan. Your Option shall be
subject to the terms of the agreement of merger,
liquidation or reorganization in the event the Company
is subject to such corporate activity.
LEGENDS All certificates representing Shares issued upon
exercise of this Option shall, where applicable, have
endorsed thereon the following legends:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER AND OPTIONS TO
PURCHASE SUCH SHARES SET FORTH IN AN AGREEMENT BETWEEN
THE COMPANY AND THE REGISTERED HOLDER, OR HIS OR HER
PREDECESSOR IN INTEREST. A COPY OF SUCH AGREEMENT IS
ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND
WILL BE FURNISHED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD OF
THE SHARES REPRESENTED BY THIS CERTIFICATE.
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT
AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN
OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND
ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
APPLICABLE LAW This Agreement will be interpreted and enforced under
the laws of the State of California (without regard to
their choice of law provisions).
<PAGE>
THE PLAN AND OTHER The text of the Plan is incorporated in this Agreement
AGREEMENTS by reference. Certain capitalized terms used in this
Agreement are defined in the Plan.
This Agreement and the Plan constitute the entire
understanding between you and the Company regarding
this Option. Any prior agreements, commitments or
negotiations concerning this Option are superseded
hereby.
BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE TERMS
AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE
OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.
ACCLAIM COMMUNICATION, INC.
1996 STOCK INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
Acclaim Communication, Inc., a Delaware corporation (the "Company"), hereby
grants an Option to purchase shares of its common stock ("Shares") to the
Optionee named below. The terms and conditions of the Option are set forth in
this cover sheet, in the attachment and in the Company's 1996 Stock Incentive
Plan (the "Plan").
Date of Grant:_____________________________________________________________
Name of Optionee:__________________________________________________________
Optionee's Social Security Number:_________________________________________
Number of Shares Covered by Option:________________________________________
Exercise Price per Share: $________________________________________________
[must be at least 100% of Fair Market Value on Date of Grant]
Vesting Start Date:________________________________________________________
_____ Check here if Optionee is a 10% owner (so that Exercise Price must
be 110% of Fair Market Value and term will not exceed five (5)
years).
BY SIGNING THIS COVER SHEET, YOU AGREE TO ALL OF THE TERMS AND
CONDITIONS DESCRIBED IN THE ATTACHED AGREEMENT AND IN THE PLAN, A
COPY OF WHICH IS ALSO ATTACHED.
Optionee:__________________________________________________________________
(Signature)
Company:___________________________________________________________________
(Signature)
<PAGE>
ACCLAIM COMMUNICATION, INC.
1996 STOCK INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
INCENTIVE STOCK OPTION This Option is intended to be an incentive stock
VESTING option under section 422 of the Code and will be
interpreted accordingly. This Option is immediately
exercisable; provided, however, that the Company shall
-------- -------
have the right (the "Vesting Repurchase Right"),
exercisable at any time during the sixty (60) day
period following the date your Service terminates for
any reason, to repurchase at the Exercise Price all or
(at the discretion of the Committee and with your
consent) any portion of the Shares in which you have
not acquired a vested interest in accordance with this
Agreement (the "Unvested Shares"). The Vesting
Repurchase Right shall terminates with respect to any
Unvested Shares for which it is not timely exercised
as described in this paragraph. In addition, the
Vesting Repurchase Right shall terminate with respect
to any and all Shares in which you vest in accordance
with the schedule below. Accordingly, provided that
you continue to be a common-law Employee of the
Company (or any Subsidiary), you shall acquire a
vested interest in, and the Vesting Repurchase Right
shall terminate with respect to, twelve and one-half
percent (12.5%) of the Shares subject to this Option
on the six (6) month anniversary of the Vesting Start
Date as shown on the cover sheet and thereafter in a
series of successive monthly installments, each equal
to one forty-eighth (1/48th) of the Shares subject to
this Option. All Shares as to which the Vesting
Repurchase Right lapses shall, however, continue to be
subject to (i) the Restrictions on Exercise and Resale
and (ii) the Company's Right of First Refusal.
The certificates representing any Shares purchased
hereunder and subject to the Vesting Repurchase Right
shall be held in escrow by the Secretary of the
Company as discussed below. Upon exercise, you shall
be required to deliver to the Secretary of the Company
a duly executed blank Assignment Separate from
Certificate in the form provided by the Company at the
time of exercise.
<PAGE>
ESCROW Upon issuance following exercise, the certificates for
the Shares subject to the Vesting Repurchase Right
shall be deposited in escrow with the Secretary of the
Company to be held in accordance with the provisions
of this paragraph. Each deposited certificate shall be
accompanied by a duly executed Assignment Separate
from Certificate in the form provided by the Company
at the time of exercise. The deposited certificates,
together with any other assets or securities from time
to time deposited pursuant to these requirements,
shall remain in escrow until such time or times as the
certificates (or other assets and securities) are to
be released or otherwise surrendered for cancellation
as discussed below. Upon delivery of the certificates
(or other assets and securities) to the Company, you
shall be issued an instrument of deposit acknowledging
the number of Shares (or other assets and securities)
delivered in escrow to the Secretary of the Company.
All regular cash dividends on the Shares (or other
securities at the time held in escrow) shall be paid
directly to you and shall not be held in escrow.
However, in the event of any stock dividend, stock
split, recapitalization or other change affecting the
Company's outstanding Stock effected without receipt
of consideration, any new, substituted or additional
securities or other property which is by reason of
such transaction distributed with respect to the
Shares shall be immediately delivered to the Secretary
of the Company to be held in escrow hereunder, but
only to the extent the Shares are at the time subject
to the escrow requirements hereof.
The Shares, together with any other assets or
securities held in escrow hereunder, shall be subject
to the following terms and conditions relating to
their release from escrow or their surrender to the
Company for repurchase and cancellation:
. Should the Company exercise the Vesting Repurchase
Right with respect to any Unvested Shares, then the
escrowed certificates for such Unvested Shares
(together with any other assets or securities
issued with respect thereto) shall be delivered to
the Company for cancellation, concurrently with the
payment to you, in cash or cash equivalent
(including the cancellation of any purchase-money
indebtedness), of an amount equal to the aggregate
Exercise Price for such Unvested Shares, and you
shall have no further rights with respect to such
Unvested Shares (or other assets or securities).
<PAGE>
. Should the Company elect not to exercise its Right of
First Refusal with respect to any Shares held at the
time in escrow hereunder, then the escrowed
certificates for such Shares (together with any assets
or securities issued with respect thereto) shall be
surrendered to you for disposition according to the
provisions of the Company's Right of First Refusal.
. As your interest in the Shares (or any other assets or
securities issued with respect thereto) vests as
described above, the certificates for such vested
Shares (as well as all other vested assets and
securities) shall be released from escrow and
delivered to you, at your request, in accordance with
the following schedule:
- The initial release of any vested Shares (or other
vested assets and securities) from escrow shall be
effected within thirty (30) days following the
expiration of the initial one (1) year period
measured from the Vesting Start Date.
- Subsequent releases of any vested Shares (or other
vested assets and securities) from escrow shall be
effected at annual intervals thereafter, with the
first such annual release to occur two (2) years
after the Vesting Start Date.
- Upon termination of your Service for any reason,
except upon a Change in Control of the Company, any
escrowed Shares (or other assets or securities ) in
which you are at the time vested shall be promptly
released from escrow.
- Upon any earlier termination of the Company's
Vesting Repurchase Right as described above, the
Shares (or other assets or securities) at the time
held in escrow shall promptly be released to you as
fully vested Shares or other property.
<PAGE>
SECTION 83(B) Under Section 83 of the Internal Revenue Code of 1986,
ELECTION as amended (the "Code"), the difference between the
Exercise Price paid for the Shares and their Fair
Market Value on the date any forfeiture restrictions
applicable to such Shares lapse will be reportable as
ordinary income at that time. For this purpose,
"forfeiture restrictions" include the Vesting
Repurchase Right described above. You may elect to be
taxed at the time the Unvested Shares are acquired to
the extent the Fair Market Value of such Shares
differs from the Exercise Price rather than when and
as such Shares cease to be subject to such forfeiture
restrictions, by filing an election under Section
83(b) of the Code with the Internal Revenue Service
within thirty (30) days after the date of exercise.
The form for making this election is attached as
Exhibit A hereto. Failure to make this filing within
---------
the thirty (30) day period will result in the
recognition of ordinary income by you (in the event
the Fair Market Value of the Shares increases after
the date of exercise) as the forfeiture restrictions
lapse. YOU ACKNOWLEDGE THAT IT IS YOUR SOLE
RESPONSIBILITY, AND NOT THE COMPANY'S, TO FILE A
TIMELY ELECTION UNDER SECTION 83(b), EVEN IF YOU
REQUEST THE COMPANY OR ITS REPRESENTATIVES TO MAKE
THIS FILING ON YOUR BEHALF. YOU ARE RELYING SOLELY ON
YOUR OWN ADVISORS WITH RESPECT TO THE DECISION AS TO
WHETHER OR NOT TO FILE AN 83(b) ELECTION.
TERM This Option will expire in any event at the close of
business at Company headquarters on the day before the
tenth anniversary of the Date of Grant, as shown on
the cover sheet. (It will expire earlier if your
Service terminates, as described below.)
REGULAR TERMINATION If your Service terminates for any reason except death
or Disability, this Option will expire at the close of
business at Company headquarters on the 30th day after
your termination date. During that thirty (30) day
period, you may exercise that portion of your Option
that was vested on your termination date.
<PAGE>
DEATH If your Services terminates because of your death,
this Option will expire at the close of business at
Company headquarters on the date six (6) months after
the date of death. During that six (6) month period,
your estate or heirs may exercise that portion of this
Option that was vested on your date of death.
DISABILITY If your Service terminates because of your Disability,
this Option will expire at the close of business at
Company headquarters on the date six (6) months after
your termination date. During that six (6) month
period, you may exercise that portion of your Option
that was vested on the date of your Disability.
"Disability" means that you are unable to engage in
any substantial gainful activity by reason of any
medically determinable physical or mental impairment.
LEAVES OF ABSENCE For purposes of this Option, your Service does not
terminate when you go on a bona fide leave of absence
that was approved by the Company in writing, if the
terms of the leave provide for continued service
crediting, or when continued service crediting is
required by applicable law. Your Service terminates in
any event when the approved leave ends unless you
immediately return to active work. The Company
determines which leaves count for this purpose, and
when your Service terminates for all purposes under
the Plan and this Agreement. The Company also
determines to what extent your Option may be exercised
during a leave of absence.
<PAGE>
NOTICE OF EXERCISE When you wish to exercise this Option, you must notify
the Company by filing the proper "Notice of Exercise"
form at the address given on the form. Your Notice of
Exercise must specify how many Shares you wish to
purchase. Your Notice of Exercise must also specify
how your Shares should be registered (in your name
only, in your and your spouse's names as community
property or as joint tenants with right of
survivorship, or in a trust for your benefit). The
Notice will be effective when it is received by the
Company. If someone else wants to exercise this Option
after your death, that person must prove to the
Company's satisfaction that he or she is entitled to
do so.
FORM OF PAYMENT When you submit your Notice of Exercise, you must
include payment of the Exercise Price for the Shares
you are purchasing. Payment may be made in one (or a
combination) of the following forms:
. Your personal check, a cashier's check or a money
order.
. Shares which have already been owned by you for more
than six (6) months and which are surrendered to the
Company. The value of the Shares, determined as of
the effective date of the option exercise, will be
applied to payment of the aggregate Exercise Price.
. To the extent that a public market for the Shares
exists, as determined by the Company, by delivery
(on a form prescribed by the Committee) of an
irrevocable direction to a securities broker to sell
Shares and to deliver all or part of the sale
proceeds to the Company in payment of the aggregate
Exercise Price.
<PAGE>
WITHHOLDING TAXES You will not be allowed to exercise this Option unless
you make acceptable arrangements to pay any
withholding or other taxes that may be due as a result
of the Option exercise.
RESTRICTIONS ON By signing this Agreement, you agree not to exercise
EXERCISE AND RESALE this Option or sell any Shares acquired upon exercise
of this Option at a time when applicable laws,
regulations or Company trading policies prohibit
exercise or sale, including, without limitation,
during any periods (typically during the period
preceding the announcement of quarterly earnings or
other material events) in which the Company closes the
"trading window" for sales thereby prohibiting sales
during such periods by Company officers, directors and
others.
If requested by the Company and an underwriter of the
Common Stock (or other securities) of the Company, you
shall not pledge, sell, offer to sell, contract to
sell, grant any option to purchase, make any short
sale or otherwise dispose of any Shares of the
Company, or any options or warrants to purchase any
shares of the Common Stock of the Company or any
securities convertible into or exchangeable for shares
of Common Stock of the Company, whether now owned or
hereinafter acquired, owned directly by you or with
respect to which you have beneficial ownership within
the rules and regulations of the Securities and
Exchange Commission (the "Commission"); otherwise than
(i) as a bona fide gift or gifts, provided that the
donee or donees thereof agree to be bound by the
restrictions set forth herein, (ii) a transfer to any
trust for the direct or indirect benefit of you or
your immediate family provided that the trustee of the
trust agrees to be bound by the restrictions set forth
herein, during the one hundred eighty (180) day period
following the effective date of a registration
statement of the Company filed under the Securities
Act of 1933, as amended (the "Securities Act"),
provided that:
(a) such one hundred eighty (180) day "market
stand-off" agreement shall only apply to the first
such registration statement of the Company,
including securities to be sold on its behalf to the
public in an underwritten offering, and provided
further that, for subsequent filings of registration
statements under the Securities Act the period
during which you shall not sell or otherwise
transfer or dispose of any Shares (other than those
included in the registration) shall be ninety (90)
days. The market stand-off agreement with respect
<PAGE>
to subsequent filings of registration statements
under the Securities Act shall no longer apply to
you at such time as you own less than five percent
(5%) of the outstanding Common Stock of the Company
and you cease to be deemed an affiliate of the
Company for purposes of the Securities Act.
(b) In the event of any stock dividend, stock
split, recapitalization, or other change affecting
the Company's outstanding Common Stock effected
without receipt of consideration, then any new,
substituted, or additional securities distributed
with respect to the Shares shall be immediately
subject to the provisions of this section, to the
same extent the Shares are at such time covered by
such provisions.
For purposes of this section, "immediate family" shall
mean any relationship by blood, marriage or adoption,
not more remote than first cousin. You also agree and
consent to the entry of stop transfer instructions
with the Company's transfer agent and registrar
against the transfer of your Shares except in
compliance with the foregoing restrictions.
The obligations described in this provision shall not
apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms
that may be promulgated in the future, or a
registration relating solely to a Commission Rule 145
transaction on Form S-4 or similar forms that may be
promulgated in the future.
If the sale of Shares under the Plan is not registered
under the Securities Act of 1933, as amended (the
"Securities Act"), but an exemption is available which
requires an investment or other representation, you
shall represent and agree at the time of exercise that
the Shares being acquired upon exercise of this Option
are being acquired for investment, and not with a view
to the sale or distribution thereof, and shall make
such other representations as are deemed necessary or
appropriate by the Company and its counsel.
<PAGE>
THE COMPANY'S RIGHT OF In the event that you propose to sell, pledge or
FIRST REFUSAL otherwise transfer to a third party any vested Shares
acquired upon exercise of this Option, or any interest
in such vested Shares, the Company shall have the
"Right of First Refusal" with respect to all (and not
less than all) of such vested Shares. You may not
transfer Unvested Shares. If you desire to transfer
Shares acquired upon exercise of this Option, you must
give a written "Transfer Notice" to the Company
describing fully the proposed transfer, including the
number of Shares proposed to be transferred, the
proposed transfer price and the name and address of
the proposed transferee. The Transfer Notice shall be
signed both by you and by the proposed transferee and
must constitute a binding commitment of both parties
to the transfer of the Shares. The Company shall have
the right to purchase all, but not less than all, of
the Shares on the terms described in the Transfer
Notice (subject, however, to any change in such terms
permitted in the next paragraph) by delivery of a
Notice of Exercise of the Right of First Refusal
within thirty (30) days after the date when the
Transfer Notice is received by the Company. The
Company's rights under this Subsection shall be freely
assignable by the Company, in whole or in part.
If the Company fails to exercise its Right of First
Refusal within thirty (30) days after the date when it
received the Transfer Notice, you may, not later than
ninety (90) days following receipt of the Transfer
Notice by the Company, conclude a transfer of the
Shares subject to the Transfer Notice on the terms and
conditions described in the Transfer Notice. Any
proposed transfer on terms and conditions different
from those described in the Transfer Notice, as well
as any subsequent proposed transfer by you, shall
again be subject to the Right of First Refusal and
shall require compliance with the procedure described
in the paragraph above. If the Company exercises its
Right of First Refusal, the parties shall consummate
the sale of the Shares on the terms set forth in the
Transfer Notice within sixty (60) days after the date
the Company receives the Transfer Notice (or within
such longer period as may have been specified in the
Transfer Notice); provided, however, that in the event
the Transfer Notice provides that payment for the
Shares is to be made in a form other than lawful money
paid at the time of transfer, the Company shall have
the option of paying for the Shares with lawful money
equal to the present value of the consideration
described in the Transfer Notice.
<PAGE>
The Company's Right of First Refusal shall be freely
assignable by the Company, shall inure to the benefit
of its successors and assigns and shall be binding
upon any transferee of the Shares.
The Company's Right of First Refusal shall terminate
in the event that Stock is listed or traded on an
established stock exchange.
RIGHT OF REPURCHASE Following termination of your Service for any reason,
the Company shall have the right to purchase all of
those Shares that you have or will acquire upon
exercise of this Option. If the Company fails to
provide you with written notice of its intention to
purchase such Shares before or within thirty (30) days
of the date the Company receives written notice from
you of your termination of Service, the Company's
right to purchase such Shares shall terminate. If the
Company exercises its right to purchase such Shares,
the Company will consummate the purchase of such
Shares within sixty (60) days of the date of its
written notice to you. The purchase price for any
Shares repurchased shall be the aggregate Exercise
Price for such Shares and shall be paid in cash.
TRANSFER OF OPTION Prior to your death, only you may exercise this
Option. You cannot transfer or assign this Option. For
instance, you may not sell this Option or use it as
security for a loan. If you attempt to do any of these
things, this Option will immediately become invalid.
You may, however, bequest this Option in your will.
Regardless of any marital property settlement
agreement, the Company is not obligated to honor a
Notice of Exercise from your spouse or former spouse,
nor is the Company obligated to recognize such
individual's interest in your Option in any other way.
RETENTION RIGHTS THIS AGREEMENT DOES NOT GIVE YOU THE RIGHT TO BE
RETAINED BY THE COMPANY IN ANY CAPACITY. THE COMPANY
RESERVES THE RIGHT TO TERMINATE YOUR SERVICE AT ANY
TIME AND FOR ANY REASON WITHOUT THEREBY INCURRING ANY
LIABILITY TO YOU.
<PAGE>
SHAREHOLDER RIGHTS You, or your estate or heirs, have no rights as a
shareholder of the Company until a certificate for the
Shares acquired upon exercise of this Option has been
issued. No adjustments are made for dividends or other
rights if the applicable record date occurs before
your stock certificate is issued, except as described
in the Plan.
ADJUSTMENTS In the event of a stock split, a stock dividend or a
similar change in the Stock, the number of Shares
covered by this Option and the Exercise Price may be
adjusted pursuant to the Plan. Your Option shall be
subject to the terms of the agreement of merger,
liquidation or reorganization in the event the Company
is subject to such corporate activity.
LEGENDS All certificates representing Shares issued upon
exercise of this Option shall, where applicable, have
endorsed thereon the following legends:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND
OPTIONS TO PURCHASE SUCH SHARES SET FORTH IN AN
AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED
HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST. A
COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON
WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY BY
THE HOLDER OF RECORD OF THE SHARES REPRESENTED BY
THIS CERTIFICATE.
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED.
APPLICABLE LAW This Agreement will be interpreted and enforced under
the laws of the State of California (without regard to
their choice of law provisions).
<PAGE>
THE PLAN AND OTHER The text of the Plan is incorporated in this Agreement
AGREEMENTS by reference. Certain capitalized terms used in this
Agreement are defined in the Plan.
This Agreement and the Plan constitute the entire
understanding between you and the Company regarding
this Option. Any prior agreements, commitments or
negotiations concerning this Option are superseded
hereby.
BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE TERMS
AND CONDITIONS DESCRIBED ABOVE AND IN THE PLAN.
<PAGE>
EXHIBIT 5.1
<PAGE>
[Graham & James Letterhead]
October 5, 1998
RE: REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 (the "REGISTRATION
STATEMENT") to be filed by Level One Communications, Incorporated, a
California corporation (the "REGISTRANT" or "YOU"), with the Securities and
Exchange Commission on or about October 5, 1998, in connection with the
registration under the Securities Act of 1933, as amended, of an aggregate of
775,534 shares of your Common Stock, no par value (the "SHARES"), reserved for
issuance pursuant to the Acclaim Communications, Inc. 1996 Stock Incentive
Plan (collectively, the "PLAN") and the outstanding stock option agreements
thereunder. As your legal counsel, we have reviewed the actions proposed to be
taken by you in connection with the proposed sale and issuance of the Shares
by the Registrant under the Plan.
It is our opinion that, upon completion of the actions being taken, or
contemplated by us as your counsel to be taken by you prior to the issuance of
the Shares pursuant to the Registration Statement and the Plan, and upon
completion of the actions being taken in order to permit such transactions to be
carried out in accordance with the securities laws of the various states where
required, the Shares will be legally and validly issued, fully paid and
nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement and any subsequent amendment thereto.
Very truly yours,
GRAHAM & JAMES LLP
/s/ Graham & James LLP
1
<PAGE>
EXHIBIT 23.1
<PAGE>
EXHIBIT 23.1
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated March 13, 1998 and
September 18, 1998 included in Level One Communications, Incorporated's Form
10-K for the year ended December 28, 1997 and the Form 8-K/A filed on July 17,
1998, amended on September 21, 1998 and amended on October 6, 1998,
respectively, and to all references to our Firm included in this registration
statement.
Sacramento, California
October 2, 1998
Arthur Andersen LLP
BY: /s/ Arthur Andersen LLP
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Level One Communications, Incorporated on Form S-8 of our report on Acclaim
Communications, Inc. dated June 18, 1997, appearing in the Amendment No. 2 to
the Current Report on Form 8-K/A of Level One Communications, Incorporated as
filed on October 7, 1998. We also consent to the reference to us under the
heading "Experts" in such Prospectus.
/s/ Deloitte & Touche LLP
- ---------------------------------
San Jose, California
October 7, 1998
