<PAGE>
As filed with the Securities and Exchange Commission on June 18, 1998
Registration No. 333-
---------
-------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
------------------
DSP COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0389180
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
20300 Stevens Creek Blvd.,
Cupertino, California 95014
(Address of Principal Executive Offices) (Zip Code)
DSP Communications, Inc.
1996 Stock Option Plan, as amended
(Full title of the Plan)
Nathan Hod
DSP COMMUNICATIONS, INC.
20300 Stevens Creek Blvd.
Cupertino, California 95014
(Name and address of agent for service)
Telephone Number (408) 777-2700
(Telephone number, including area code, of agent for service)
Copy to:
Bruce P. Johnson, Esq.
PEZZOLA & REINKE
1999 Harrison Street, Suite 1300
Oakland, California 94612
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Proposed Proposed
Number of Maximum Maximum Amount
Title of Shares Offering Aggregate of
Securities to to be Price Offering Registration
be Registered Registered per Share(1) Price(1) Fee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 2,000,000 $13.75 $27,500,000 $8,113
$.001 par
value per share
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(1) Estimated in accordance with Rule 457(h) under the Securities Act of 1933,
as amended, solely for the purpose of calculating the registration fee.
Computation based upon the average of the high and low prices of the
registrant's Common Stock as reported on the New York Stock Exchange on
June 16, 1998, which average price was $13.75 per share.
<PAGE>
EXPLANATORY NOTE
This Registration Statement on Form S-8 relates to the registration of
2,000,000 shares of Common Stock, $0.001 par value ("Common Stock"), of DSP
Communications, Inc. Such shares are additional securities of the same class
as other securities for which a previously filed Registration Statement on
Form S-8, relating to the DSP Communications, Inc. 1996 Stock Option Plan
(the "Plan"), is effective. Pursuant to the provisions of Paragraph E of the
General Instructions to Form S-8, the contents of the Company's Registration
Statement on Form S-8 (Registration No. 333-19883, filed with the Securities
and Exchange Commission (the "Commission") on January 16, 1997 and relating
to 3,000,000 shares of Common Stock under the Plan, are hereby incorporated
herein by reference.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit Number Exhibit Description
- -------------- -------------------------------------------------------
<C> <S>
5 Opinion of Pezzola & Reinke as to the legality of the
securities being registered.
10.19 1996 Stock Option Plan, as amended.
23.1 Consent of Ernst & Young LLP
23.2 Consent of Pezzola & Reinke (contained in the opinion of
counsel filed as Exhibit 5 to this Registration Statement).
24 Power of Attorney (set forth on the signature page of this
Registration Statement).
</TABLE>
<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 Cupertino, State of California on
June 17, 1998.
DSP COMMUNICATIONS, INC.,
a Delaware corporation
By: /s/ Nathan Hod
--------------------------------------
Nathan Hod
Chief Executive Officer, President and
Chairman of the Board
<PAGE>
POWER OF ATTORNEY AND ADDITIONAL SIGNATURES
Each person whose signature appears below constitutes and appoints
Nathan Hod and Gerald Dogon, and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement,
including post-effective amendments, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full
power and authority to do and perform each and every act and thing requisite
and necessary to be done in and about the premises, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitutes,
may lawfully do or cause to be done by virtue thereof.
Further, pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Nathan Hod Chairman of the Board of Directors, June 17, 1998
- --------------------- President and Chief Executive Officer
Nathan Hod (Principal Executive Officer)
/s/ Gerald Dogon Executive Vice President, Chief June 17, 1998
- --------------------- Financial Officer, and Director
Gerald Dogon (Principal Financial and Accounting
Officer)
/s/ Neill Brownstein Director June 17, 1998
- ---------------------
Neill Brownstein
/s/ Lewis Broad Director June 17, 1998
- ---------------------
Lewis Broad
/s/ Andrew Schonzeit Director June 17, 1998
- ---------------------
Andrew Schonzeit
/s/ Shigeru Iwamoto Director June 17, 1998
- ---------------------
Shigeru Iwamoto
/s/ Avraham Fischer Director June 17, 1998
- ---------------------
Avraham Fischer
</TABLE>
<PAGE>
EXHIBIT LIST
<TABLE>
<CAPTION>
Exhibit Number Exhibit Description
- -------------- ----------------------------------------------------------------
<C> <S>
5 Opinion of Pezzola & Reinke as to the legality of the securities
being registered.
10.19 1996 Stock Option Plan, as amended.
23.1 Consent of Ernst & Young LLP
23.2 Consent of Pezzola & Reinke (contained in the opinion of counsel
filed as Exhibit 5 to this Registration Statement).
24 Power of Attorney (set forth on the signature page of this
Registration Statement).
</TABLE>
<PAGE>
EXHIBIT 5
PEZZOLA & REINKE
A Professional Corporation
Counselors at Law
Lake Merritt Plaza Building
1999 Harrison Street, Suite 1300
Oakland, California 94612
Telephone (510) 273-8750
Facsimile (510) 834-7440
June 17, 1998
DSP COMMUNICATIONS, INC.
20300 Stevens Creek Blvd.
Cupertino, California 95014
RE: REGISTRATION STATEMENT ON FORM S-8
Gentlemen:
As outside counsel to DSP Communications, a Delaware corporation (the
"Company"), we have been asked by the Company to review the Registration
Statement on Form S-8 to be filed by the Company with the Securities and
Exchange Commission on, or about, June 18, 1998 (the "Registration
Statement"). This is in connection with the registration under the Securities
Act of 1933, as amended, of two million (2,000,000) shares of the Company's
Common Stock, $0.001 par value per share (the "Plan Shares"), none of which
are presently issued and outstanding.
As your outside counsel, we have examined the proceedings and such other
documents as we have deemed necessary relating to the issuance of two million
(2,000,000) Plan Shares to be issued under the Company's 1996 Stock Option
Plan.
In rendering this opinion, we have assumed, without investigation, the
genuineness of all signatures; the correctness of all certificates; the
authenticity of all documents submitted to us as originals; the conformity to
original documents of all documents submitted to us as certified, photostatic
or facsimile copies and the authenticity of the originals of such copies; and
the accuracy and completeness of all records made available to us by, or on
behalf of, the Company. In addition, we have assumed, without investigation,
the accuracy of the representations and statements as to factual matters made
by the Company, its officers and employees, and public officials. Nothing
has come to our attention, however, which would lead us to question the
accuracy or completeness of such representations, warranties or statements.
<PAGE>
DSP Communications, Inc.
June 17, 1998
Page 2
RE: REGISTRATION STATEMENT ON FORM S-8
In rendering the opinion hereinafter expressed, we have examined and
relied upon such documents and instruments as we have deemed necessary and
appropriate. It is our opinion that the Plan Shares, when subsequently issued
upon payment therefor in accordance with the terms of the 1996 Stock Option
Plan, will be validly issued, fully paid and nonassessable.
We are admitted to practice law only in the State of California, and we
express no opinion concerning any law other than the law of the State of
California. This opinion is intended solely for your benefit and is not to
be relied upon by any other person, firm, or entity without our prior written
consent.
We consent to the use of this opinion as an Exhibit to the Registration
Statement, and further consent to all references to this Firm in the
Registration Statement and any amendments thereto.
Very truly yours,
/s/ Pezzola & Reinke, APC
PEZZOLA & REINKE
A Professional Corporation
<PAGE>
EXHIBIT 10.19
DSP COMMUNICATIONS, INC.
1996 STOCK OPTION PLAN
(AS AMENDED AND RESTATED ON MAY 12, 1998)
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are
to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to Employees,
Directors and Consultants of the Company and its Subsidiaries and to promote
the success of the Company's business. Options granted under the Plan may be
Incentive Stock Options or Non-Qualified Stock Options, as determined by the
Administrator at the time of grant.
2. DEFINITIONS. As used herein, the following definitions shall apply:
a. "ADMINISTRATOR" means the Board or any of the Committees
appointed to administer the Plan.
b. "AFFILIATE" and "ASSOCIATE" shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.
c. "APPLICABLE LAWS" means the legal requirements relating to the
administration of stock option plans, if any, under applicable provisions of
federal securities laws, state corporate and securities laws, the Code, the
rules of any applicable stock exchange or national market system, and the
rules of any foreign jurisdiction applicable to Options granted to residents
therein.
d. "BOARD" means the Board of Directors of the Company.
e. "CODE" means the Internal Revenue Code of 1986, as amended.
f. "COMMITTEE" means any committee appointed by the Board to
administer the Plan.
g. "COMMON STOCK" means the common stock of the Company.
h. "COMPANY" means DSP Communications, Inc., a Delaware
corporation.
i. "CONSULTANT" means any person who is engaged by the Company or
any Parent or Subsidiary to render consulting or advisory services as an
independent contractor and is compensated for such services.
j. "CONTINUING DIRECTORS" means members of the Board who either
(i) have been Board members continuously for a period of at least thirty-six
(36) months or (ii) have been Board members for less than thirty-six (36)
months and were elected or nominated for election as Board members by at
least a majority of the Board members described in clause (i) who were still
in office at the time such election or nomination was approved by the Board.
<PAGE>
k. "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT"
means that the employment, director or consulting relationship with the
Company, any Parent, or Subsidiary, is not interrupted or terminated.
Continuous Status as an Employee, Director or Consultant shall not be
considered interrupted in the case of (i) any leave of absence approved by
the Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. A leave of absence
approved by the Company shall include sick leave, military leave, or any
other personal leave approved by an authorized representative of the Company.
For purposes of Incentive Stock Options, no such leave may exceed ninety
(90) days, unless reemployment upon expiration of such leave is guaranteed by
statute or contract.
l. "CORPORATE TRANSACTION" means any of the following
stockholder-approved transactions to which the Company is a party:
i. a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;
ii. the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital stock of
the Company's subsidiary corporations) in connection with the complete
liquidation or dissolution of the Company; or
iii. any reverse merger in which the Company is the
surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's outstanding
securities are transferred to a person or persons different from those who
held such securities immediately prior to such merger.
m. "COVERED EMPLOYEE" means an Employee who is a "covered
employee" under Section 162(m)(3) of the Code.
n. "DIRECTOR" means a member of the Board.
o. "EMPLOYEE" means any person, including an Officer or Director,
who is an employee of the Company or any Parent or Subsidiary of the Company
for purposes of Section 422 of the Code. The payment of a director's fee by
the Company shall not be sufficient to constitute "employment" by the Company.
p. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
q. "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
i. Where there exists a public market for the Common
Stock, the Fair Market Value shall be (A) the closing sales price for a Share
for the last market trading day prior to the time of the determination (or,
if no sales were reported on that date, on the last trading date on which
sales were reported) on the stock exchange determined by the Administrator to
be the primary market for the Common Stock or the Nasdaq National Market,
whichever is applicable or (B) if the Common Stock is not traded on any such
exchange or national market system, the average of the closing bid and asked
prices of a Share on the Nasdaq Small Cap Market for the day prior to the
time of the determination (or, if no such prices were reported on that date,
on the last date on which such prices were reported), in each case, as
<PAGE>
reported in THE WALL STREET JOURNAL or such other source as the Administrator
deems reliable; or
ii. In the absence of an established market of the type
described in (i), above, for the Common Stock, the Fair Market Value thereof
shall be determined by the Administrator in good faith.
r. "INCENTIVE STOCK OPTION" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code
s. "NON-QUALIFIED STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
t. "OFFICER" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
u. "OPTION" means a stock option granted pursuant to the Plan.
v. "OPTION AGREEMENT" means the written agreement evidencing the
grant of an Option executed by the Company and the Optionee, including any
amendments thereto.
w. "OPTIONED STOCK" means the Common Stock subject to an Option.
x. "OPTIONEE" means an Employee, Director or Consultant who
receives an Option under the Plan.
y. "PARENT" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
z. "PERFORMANCE - BASED COMPENSATION" means compensation
qualifying as "performance-based compensation" under Section 162(m) of the
Code.
aa. "PLAN" means this 1996 Stock Option Plan.
bb. "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange
Act or any successor thereto.
cc. "SHARE" means a share of the Common Stock.
dd. "SUBSIDIARY" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN.
a. Subject to the provisions of Section 10, below, the maximum
aggregate number of Shares which may be optioned and sold under the Plan is
5,000,000 Shares. The Shares may be authorized, but unissued, or reacquired
Common Stock.
b. If an Option expires or becomes unexercisable without having
been exercised in full, or is surrendered pursuant to an Option exchange
program, such unissued or
<PAGE>
retained Shares shall become available for future grant under the Plan
(unless the Plan has terminated). Shares that actually have been issued
under the Plan shall not be returned to the Plan and shall not become
available for future distribution under the Plan, except that if unvested
Shares are forfeited, or repurchased by the Company at their original
purchase price, such Shares shall become available for future grant under the
Plan.
4. ADMINISTRATION OF THE PLAN.
a. PLAN ADMINISTRATOR.
i. ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS.
With respect to grants of Options to Directors or Employees who are also
Officers or Directors of the Company, the Plan shall be administered by (A)
the Board or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the Applicable Laws and to
permit such grants and related transactions under the Plan to be exempt from
Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board.
ii. ADMINISTRATION WITH RESPECT TO CONSULTANTS AND OTHER
EMPLOYEES. With respect to grants of Options to Employees or Consultants who
are neither Directors nor Officers of the Company, the Plan shall be
administered by (A) the Board or (B) a Committee designated by the Board,
which Committee shall be constituted in such a manner as to satisfy the
Applicable Laws. Once appointed, such Committee shall continue to serve in
its designated capacity until otherwise directed by the Board. The Board may
authorize one or more Officers to grant such Options and may limit such
authority by requiring that such Options must be reported to and ratified by
the Board or a Committee within six (6) months of the grant date, and if so
ratified, shall be effective as of the grant date.
iii. ADMINISTRATION WITH RESPECT TO COVERED EMPLOYEES.
Notwithstanding the foregoing, grants of Options to any Covered Employee
intended to qualify as Performance-Based Compensation shall be made only by a
Committee (or subcommittee of a Committee) which is comprised solely of two
or more Directors eligible to serve on a committee granting Options
qualifying as Performance-Based Compensation. In the case of such Options
granted to Covered Employees, references to the "Administrator" or to a
"Committee" shall be deemed to be references to such Committee or
subcommittee.
iv. ADMINISTRATION ERRORS. In the event an Option is
granted in a manner inconsistent with the provisions of this subsection (a),
such Option shall be presumptively valid as of its grant date to the extent
permitted by the Applicable Laws.
b. POWERS OF THE ADMINISTRATOR. Subject to Applicable Laws and
the provisions of the Plan (including any other powers given to the
Administrator hereunder), and except as otherwise provided by the Board, the
Administrator shall have the authority, in its discretion:
i. to select the Employees, Directors and Consultants to
whom Options may be granted from time to time hereunder;
<PAGE>
ii. to determine whether and to what extent Options are
granted hereunder;
iii. to determine the number of Shares to be covered by each
Option granted hereunder;
iv. to approve forms of Option Agreement for use under the
Plan;
v. to determine the terms and conditions of any Option
granted hereunder;
vi. to establish additional terms, conditions, rules or
procedures to accommodate the rules or laws of applicable foreign
jurisdictions and to afford Optionees favorable treatment under such laws;
provided, however, that no Option shall be granted under any such additional
terms, conditions, rules or procedures with terms or conditions which are
inconsistent with the provisions of the Plan;
vii. to amend the terms of any outstanding Option granted
under the Plan, including a reduction in the exercise price of any Option to
reflect a reduction in the Fair Market Value of the Common Stock since the
grant date of the Option, provided that any amendment that would adversely
affect the Optionee's rights under an outstanding Option shall not be made
without the Optionee's written consent;
viii. to construe and interpret the terms of the Plan and
Options granted pursuant to the Plan; and
ix. to take such other action, not inconsistent with the
terms of the Plan, as the Administrator deems appropriate.
c. EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be conclusive
and binding on all persons.
5. ELIGIBILITY. Non-Qualified Stock Options may be granted to
Employees, Directors and Consultants. Incentive Stock Options may be granted
only to Employees. An Employee, Director or Consultant who has been granted
an Option may, if otherwise eligible, be granted additional Options. Options
may be granted to such Employees of the Company and its subsidiaries who are
residing in foreign jurisdictions as the Administrator may determine from
time to time.
6. TERMS AND CONDITIONS OF OPTIONS.
a. DESIGNATION OF OPTIONS. Each Option shall be designated as
either an Incentive Stock Option or a Non-Qualified Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair
Market Value of Shares subject to Options designated as Incentive Stock
Options which become exercisable for the first time by an Optionee during any
calendar year (under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options, to the extent of the Shares covered
thereby in excess of the foregoing limitation, shall be treated as
Non-Qualified Stock Options. For this purpose, Incentive Stock Options shall
be taken into account in the order in which they were granted, and
<PAGE>
the Fair Market Value of the Shares shall be determined as of the date the
Option with respect to such Shares is granted.
b. CONDITIONS OF OPTION. Subject to the terms of the Plan, the
Administrator shall determine the provisions, terms, and conditions of each
Option including, but not limited to, the Option vesting schedule, repurchase
provisions, rights of first refusal, forfeiture provisions, and satisfaction
of any performance criteria. The performance criteria established by the
Administrator may be based on any one of, or combination of, increase in
share price, earnings per share, total stockholder return, return on equity,
return on assets, return on investment, net operating income, cash flow,
revenue, economic value added, personal management objectives, or other
measure of performance selected by the Administrator. Partial achievement of
the specified criteria may result in vesting corresponding to the degree of
achievement as specified in the Option Agreement.
c. INDIVIDUAL OPTION LIMIT. The maximum number of Shares with
respect to which Options may be granted to any Employee in any fiscal year of
the Company shall be eight hundred thousand (800,000) Shares. The foregoing
limitation shall be adjusted proportionately in connection with any change in
the Company's capitalization pursuant to Section 10, below. To the extent
required by Section 162(m) of the Code or the regulations thereunder, in
applying the foregoing limitation with respect to an Employee, if any Option
is canceled, the canceled Option shall continue to count against the maximum
number of Shares with respect to which Options may be granted to the
Employee. For this purpose, the repricing of an Option shall be treated as
the cancellation of the existing Option and the grant of a new Option.
d. TERM OF OPTION. The term of each Option shall be the term
stated in the Option Agreement, provided, however, that the term of an
Incentive Stock Option shall be no more than ten (10) years from the date of
grant thereof. However, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of
the Company or any Parent or Subsidiary, the term of the Option shall be five
(5) years from the date of grant thereof or such shorter term as may be
provided in the Option Agreement.
e. TRANSFERABILITY OF OPTIONS. Incentive Stock Options may not
be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may
be exercised, during the lifetime of the Optionee, only by the Optionee.
Non-Qualified Stock Options shall be transferable to the extent provided in
the Option Agreement.
f. TIME OF GRANTING OPTIONS. The date of grant of an Option
shall for all purposes, be the date on which the Administrator makes the
determination to grant such Option, or such other date as is determined by
the Administrator. Notice of the grant determination shall be given to each
Employee, Director or Consultant to whom an Option is so granted within a
reasonable time after the date of such grant.
7. OPTION EXERCISE PRICE, CONSIDERATION AND TAXES.
a. EXERCISE PRICE. The exercise price for an Option shall be as
follows:
i. In the case of an Incentive Stock Option:
<PAGE>
(1) granted to an Employee who, at the time of the
grant of such Incentive Stock Option owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be not less than
one hundred ten percent (110%) of the Fair Market Value per Share on the date
of grant.
(2) granted to any Employee other than an Employee
described in the preceding paragraph, the per Share exercise price shall be
not less than one hundred percent (100%) of the Fair Market Value per Share
on the date of grant.
ii. In the case of Options intended to qualify as
Performance-Based Compensation, the per Share exercise price shall be not
less than one hundred percent (100%) of the Fair Market Value per Share on
the date of grant.
iii. In the case of a Non-Qualified Stock Option, the per
Share exercise price shall be not less than eighty-five percent (85%) of the
Fair Market Value per Share on the date of grant.
b. CONSIDERATION. Subject to Applicable Laws, the consideration
to be paid for the Shares to be issued upon exercise of an Option including
the method of payment, shall be determined by the Administrator (and, in the
case of an Incentive Stock Option, shall be determined at the time of grant).
In addition to any other types of consideration the Administrator may
determine, the Administrator is authorized to accept as consideration for
Shares issued under the Plan the following:
i. cash;
ii. check;
iii. delivery of Optionee's promissory note with such
recourse, interest, security, and redemption provisions as the Administrator
determines as appropriate;
iv. surrender of Shares (including withholding of Shares
otherwise deliverable upon exercise of the Option) which have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised (but only to the extent
that such exercise of the Option would not result in an accounting
compensation charge with respect to the Shares used to pay the exercise price
unless otherwise determined by the Administrator);
v. delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker,
if applicable, shall require to effect an exercise of the Option and delivery
to the Company of the sale or loan proceeds required to pay the exercise
price; or
vi. any combination of the foregoing methods of payment.
c. TAXES. No Shares shall be delivered under the Plan to any
Optionee or other person until such Optionee or other person has made
arrangements acceptable to the Administrator for the satisfaction of any
foreign, federal, state, or local income and employment tax withholding
obligations, including, without limitation, obligations incident to the
receipt of
<PAGE>
Shares or the disqualifying disposition of Shares received on exercise of an
Incentive Stock Option. Upon exercise of an Option, the Company shall
withhold or collect from Optionee an amount sufficient to satisfy such tax
obligations.
8. EXERCISE OF OPTION.
a. PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER.
i. Any Option granted hereunder shall be exercisable at
such times and under such conditions as determined by the Administrator under
the terms of the Plan and specified in the Option Agreement.
ii. An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of
the Company) of the stock certificate evidencing such Shares, no right to
vote or receive dividends or any other rights as a stockholder shall exist
with respect to Optioned Stock, notwithstanding the exercise of an Option.
The Company shall issue (or cause to be issued) such stock certificate
promptly upon exercise of the Option. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in the Option Agreement or
Section 10, below.
b. EXERCISE OF OPTION FOLLOWING TERMINATION OF EMPLOYMENT,
DIRECTOR OR CONSULTING RELATIONSHIP.
i. Upon termination of an Optionee's Continuous Status as
an Employee, Director or Consultant, other than upon the Optionee's death or
disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration
of the term of such Option as set forth in the Option Agreement). In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for three (3) months following the Optionee's termination. If,
on the date of termination, the Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his
or her Option within the time specified by the Administrator, the Option
shall terminate, and the Shares covered by such Option shall revert to the
Plan.
ii. DISABILITY OF OPTIONEE. If an Optionee's Continuous
Status as an Employee, Director or Consultant terminates as a result of the
Optionee's disability, the Optionee may exercise the Option to the extent the
Option is vested on the date of termination, but only within twelve (12)
months from the date of such termination (and in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement). If such disability is not a "disability" as such term is defined
in Section 22(e)(3) of the Code, in the case of an Incentive Stock Option
such Incentive Stock Option shall automatically convert to a Non-Qualified
Stock Option on the day three months and one day following such termination.
If, on the date of termination, the Optionee is not vested as to the entire
Option, the Shares covered by the unvested portion of the Option shall revert
to the Plan. If, after termination, the Option
<PAGE>
is not exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
iii. DEATH OF OPTIONEE. In the event of the death of an
Optionee, the Option may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement) to the extent
vested on the date of death. If, at the time of death, the Optionee is not
vested as to the entire Option, the Shares covered by the unvested portion of
the Option shall revert to the Plan. The Option may be exercised by the
executor or administrator of the Optionee's estate or, if none, by the
person(s) entitled to exercise the Option under the Optionee's will or the
laws of descent or distribution. If the Option is not so exercised within
the time specified herein, the Option shall terminate, and the Shares covered
by such Option shall revert to the Plan.
c. BUYOUT PROVISIONS. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
9. CONDITIONS UPON ISSUANCE OF SHARES.
a. Shares shall not be issued pursuant to the exercise of an
Option unless the exercise of such Option and the issuance and delivery of
such Shares pursuant thereto shall comply with all Applicable Laws, and shall
be further subject to the approval of counsel for the Company with respect to
such compliance.
b. As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the
time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation
is required by any Applicable Laws.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any
required action by the stockholders of the Company, the number of Shares
covered by each outstanding Option, and the number of Shares which have been
authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan, as well as the price
per share of Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other similar event resulting in an increase or decrease in the number of
issued shares of Common Stock. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason hereof shall be made with respect to, the number or
price of Shares subject to an Option.
11. CORPORATE TRANSACTIONS.
a. In the event of any Corporate Transaction, each Option which
is at the time outstanding under the Plan automatically shall become fully
vested and exercisable and be released from any restrictions on transfer and
repurchase or forfeiture rights, immediately prior
<PAGE>
to the specified effective date of such Corporate Transaction, for all of the
Shares at the time represented by such Option. However, an outstanding
Option under the Plan shall not so fully vest and be exercisable and released
from such limitations if and to the extent: (i) such Option is, in connection
with the Corporate Transaction, either to be assumed by the successor
corporation or Parent thereof or to be replaced with a comparable Option with
respect to shares of the capital stock of the successor corporation or Parent
thereof, (ii) such Option is to be replaced with a cash incentive program of
the successor corporation which preserves the compensation element of such
Option existing at the time of the Corporate Transaction and provides for
subsequent payout in accordance with the same vesting schedule applicable to
such Option or (iii) the vesting, exercisability and release from such
limitations of such Option is subject to other limitations imposed by the
Administrator at the time of the grant of the Option. The determination of
Option comparability under clause (i) above shall be made by the
Administrator, and its determination shall be final, binding and conclusive.
b. Effective upon the consummation of the Corporate Transaction,
all outstanding Options under the Plan shall terminate and cease to remain
outstanding, except to the extent assumed by the successor company or its
Parent.
c. The portion of any Incentive Stock Option accelerated under
this Section 11 in connection with a Corporate Transaction shall remain
exercisable as an Incentive Stock Option under the Code only to the extent
the $100,000 dollar limitation of Section 422(d) of the Code is not exceeded.
To the extent such dollar limitation is exceeded, the accelerated excess
portion of such Option shall be exercisable as a Non-Qualified Stock Option.
12. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the stockholders of the
Company. It shall continue in effect for a term of ten (10) years unless
sooner terminated.
13. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN.
a. The Board may at any time amend, suspend or terminate the
Plan. To the extent necessary to comply with Applicable Laws, the Company
shall obtain stockholder approval of any Plan amendment in such a manner and
to such a degree as required.
b. No Option may be granted during any suspension of the Plan or
after termination of the Plan.
c. Any amendment, suspension or termination of the Plan shall not
affect Options already granted, and such Options shall remain in full force
and effect as if the Plan had not been amended, suspended or terminated,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
14. RESERVATION OF SHARES.
a. The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.
<PAGE>
b. The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any
Shares hereunder, shall relieve the Company of any liability in respect of
the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
15. NO EFFECT ON TERMS OF EMPLOYMENT. The Plan shall not confer upon
any Optionee any right with respect to continuation of employment or
consulting relationship with the Company, nor shall it interfere in any way
with his or her right or the Company's right to terminate his or her
employment or consulting relationship at any time, with or without cause.
16. STOCKHOLDER APPROVAL. The grant of Incentive Stock Options under
the Plan shall be subject to approval by the stockholders of the Company
within twelve (12) months before or after the date the Plan is adopted. Such
stockholder approval shall be obtained in the degree and manner required
under Applicable Laws. The Administrator may grant Incentive Stock Options
under the Plan prior to approval by the stockholders, but until such approval
is obtained, no such Incentive Stock Option shall be exercisable. In the
event that stockholder approval is not obtained within the twelve (12) month
period provided above, all Incentive Stock Options previously granted under
the Plan shall terminate.
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8), pertaining to the DSP Communications, Inc. 1996 Stock Option Plan
of our reports dated January 13, 1998 (except for Note 13, as to which the
date is February 9, 1998) with respect to the consolidated financial
statements and schedule of DSP Communications, Inc. included in its Annual
Report (Form 10-K) for the year ended December 31, 1997, filed with the
Securities and Exchange Commission.
Palo Alto, California
June 17, 1998
