As filed with the Securities and Exchange
Commission on April 25, 1997
Registration No. 333-____
- -----------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-8/S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
MIKROS SYSTEMS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 3490 U.S. Rte 1, Bldg 5 14-1598-200
(State or Other Princeton, New Jersey 08540 (I.R.S. Employer
Jurisdiction of (Address of Principal Identification No.)
Incorporation Executive Offices)
(Zip Code)
Incentive Stock Option Plan (1981)
1992 Incentive Stock Option Plan
(Full Title of the Plans)
--------------------
THOMAS J. MEANEY
Chief Executive Officer
Mikros Systems Corporation
3490 U.S. Rte 1, Bldg. 5
Princeton, New Jersey 08540
(609) 987-1513
(Name, Address and Telephone Number,
Including Area Code, of Agent for Service)
--------------------
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Securities Amount to Proposed Maximum Proposed Maximum Amount of
to be Registered be Registered Offering Price Aggregate Offering Registration
(1) Per Share Price Fee
<C> <C> <C> <C> <C>
Common Stock, par
value $.01 per share
Issued under the
Incentive Stock
Option Plan (1981) 200,000 $ 0.0625 (2) $ 12,500 (2) $ 3.79
To be issued under
the 1992 Incentive
Stock Option Plan 725,000 $ 1.4375 (3) $ 1,042,188 (3) $ 315.81
Issued under the
1992 Incentive
Stock Option Plan 1,275,000 $ 0.2442 (4) $ 311,355 (4) $ 94.35
Total: 2,200,000 $ 1,366,043 $ 413.95
</TABLE>
- --------------------
1) For the sole purpose of calculating the registration fee,
the number of shares under this Registration Statement has
been divided among three subtotals.
2) Pursuant to Rule 457(h), these prices are calculated based
on the weighted average exercise price of $0.0625 per share
covering 200,000 shares subject to stock options granted
under the Incentive Stock Option Plan (1981).
3) Pursuant to Rule 457(h) and 457(c), these prices are
estimated solely for the purpose of calculating the
registration fee and are based upon the average of the bid
and asked prices of the Registrant's Common Stock on the
NASD Bulletin Board on April 18, 1997.
4) Pursuant to Rule 457(h), these prices are calculated based
on the weighted average exercise price of $0.2442 per share
covering 1,275,000 shares subject to stock options granted
under the 1992 Incentive Stock Option Plan.
Pursuant to Rule 416 under the Securities Act of 1933, as
amended, this Registration Statement also covers an indeterminate
number of shares as may be issued as a result of the anti-dilution
provisions of the Plans.
--------------------
<PAGE>
EXPLANATORY NOTE
- ----------------
This Registration Statement contains two parts. The first part
contains a Reoffer Prospectus ("Prospectus") prepared in
accordance with the requirements of Part I of Form S-3 (in
accordance with Section C of the General Instructions to Form S-8) which covers
reoffers and resales by "affiliates" (as that term is defined in Rule 405 of
the General Rules and Regulations under the Securities Act of 1933, as amended
(the "Securities Act") of shares of Common Stock, par value $.01 per share
("Common Stock"), of Mikros Systems Corporation (the "Company")
which will be or have been issued to directors, key employees and
consultants pursuant to the exercise of options granted to
employees pursuant to the Mikros Systems Corporation Incentive
Stock Option Plan (1981) and 1992 Incentive Stock Option Plan
(collectively, the "Plans"). The Form S-3 Prospectus filed
herewith may be utilized for reofferings and resales of
registered shares of Common Stock of the Company which may be
issued in the future upon the exercise of options granted under
the Plans. The second part contains "Information Required in the
Registration Statement" pursuant to Part II of Form S-8.
Because the Company, at the time of the filing of the Prospectus,
did not satisfy the requirements for use of Form S-3, the amount
of securities to be reoffered or resold by means of the
Prospectus, by each person, and any other person with whom he or
she is acting in concert for the purpose of selling securities of
the Company, may not exceed, during any three-month period, the
amount specified in Rule 144(e) under the Securities Act.
<PAGE>
PROSPECTUS
S-3 Reoffer Prospectus dated April 25, 1997
MIKROS SYSTEMS CORPORATION
200,000 Shares of Common Stock
Issuable under the Incentive Stock Option Plan (1981)
2,000,000 Shares of Common Stock
Issuable under the 1992 Incentive Stock Option Plan
This Reoffer Prospectus (this "Prospectus") is being used in
connection with the offering from time to time by certain
stockholders (the "Selling Stockholders") of Mikros Systems
Corporation (the "Company"), of up to 2,200,000 shares of Common
Stock, par value $.01 per share ("Common Stock"), of the Company
which have been or may be acquired upon the exercise of stock
options granted pursuant to the Company's Incentive Stock Option
Plan (1981) and 1992 Incentive Stock Option Plan (collectively,
the "Plans"). Options or shares of Common Stock may be issued
under the Plans in amounts and to persons not presently known by
the Company; when known, such persons, their holdings of Common
Stock and certain other information may be included in a
subsequent version of this Prospectus. The Company will receive
no proceeds from the sale by the Selling Stockholders of the
shares of Common Stock.
The Common Stock issuable upon exercise of the options covered by
the Plans (the "Shares") may be sold from time to time by the
Selling Stockholders or by pledgees, donees, transferees or other
successors in interest. Such sales may be made on the NASD
Bulletin Board at prices and at terms then prevailing or at
prices related to the then current market price, or in negotiated
transactions. See "Plan of Distribution."
The Selling Stockholders and any broker executing selling orders
on behalf of the Selling Stockholders may be deemed to be an
"underwriter" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), in which event any commission
received by such broker may be deemed to be underwriting
commissions under the Securities Act.
The Shares of the Company are listed on the NASD Bulletin Board
under the symbol "MKRS". The closing price of the Company's
Shares as reported on the NASD Bulletin Board on April 18, 1997
was $ 1.375.
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 4 HEREOF.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is April 25, 1997.
<PAGE>
TABLE OF CONTENTS
- ----------------- Page
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . .8
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . .9
History of Losses; Lack of Liquidity; Working Capital
Deficit. . . . . . . . . . . . . . . . . . . . . . . .9
Additional Financing Requirement; Merger and Partnering
Opportunities. . . . . . . . . . . . . . . . . . . . .9
Department of Defense Contracts . . . . . . . . . . . . . 10
Reliance on a Limited Number of Customers . . . . . . . . 10
Uncertainty of Market Acceptance. . . . . . . . . . . . . 10
Limited Marketing Experience. . . . . . . . . . . . . . . 10
Government Regulation . . . . . . . . . . . . . . . . . . 11
Changing Technology; Potential Infringement . . . . . . . 11
Competition . . . . . . . . . . . . . . . . . . . . . . . 11
Dependence on Key Personnel; Ability to Attract New
Personnel. . . . . . . . . . . . . . . . . . . . . . 12
Potential Dilutive Effect of Preferred Stock, Warrants and
Options; Possible Adverse Effect on the Company's
Ability to Obtain Additional Financing . . . . . . . 12
Potential Future Sales. . . . . . . . . . . . . . . . . . 12
No Dividends. . . . . . . . . . . . . . . . . . . . . . . 13
Public Market; Possible Volatility of Stock Price . . . . 13
Concentration of Share Ownership. . . . . . . . . . . . . 13
Anti-Takeover Provisions. . . . . . . . . . . . . . . . . 14
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . 15
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . 18
SELLING STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . 19
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . 20
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . 21
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
INFORMATION INCORPORATED BY REFERENCE. . . . . . . . . . . . . 21
INDEMNIFICATION OF DIRECTORS AND OFFICERS. . . . . . . . . . . 22
No person is authorized to give any information or to make any
representation, other than as contained herein, in connection
with the offering described in this Prospectus, and any
information or representation not contained herein must not be
relied upon as having been authorized by the Company or the
Selling Stockholders. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, nor shall
there be any sale of these securities by any person in any
jurisdiction in which it is unlawful for such person to make such
offer, solicitation or sale. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any
circumstances, create any implication that the information
contained herein is correct as of any time subsequent to the date
hereof.
<PAGE>
AVAILABLE INFORMATION
- ---------------------
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and in accordance therewith files reports, proxy statements and
other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other
information may be inspected and copied at the public reference
facilities of the Commission at Judiciary Plaza Building, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and its
Regional Offices located at Seven World Trade Center, 13th Floor,
New York, New York 10048; and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
materials may be obtained from the Commission at Judiciary Plaza
Building, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission also maintains a Web site that
contains reports, proxy and information statements and other
information regarding issuers that file electronically with the
Commission at http://www.sec.gov.
The Common Stock is traded on the NASD Bulletin Board. The
foregoing materials should be available for inspection at the
National Association of Securities Dealers Inc., 1735 "K" Street,
N.W., Washington, D.C. 20206.
In addition, the Company will provide without charge to each
person to whom this Prospectus is delivered, upon either the
written or oral request of any such person, a copy of all
documents required to be delivered pursuant to Rule 428(b) and
any and all of the information that has been or may be
incorporated by reference in this Prospectus, other than exhibits
to such documents. Requests for such copies should be directed
to Patricia A. Bird, Secretary, Mikros Systems Corporation, 3490
U.S. Route 1, Building 5, Princeton, New Jersey 08540. The
Company's telephone number at that location is (609) 987-1513.
The Company has filed with the Commission a Registration
Statement on Form S-8/S-3 (the "Registration Statement") under
the Securities Act with respect to the Shares. This Prospectus,
which is a part of the Registration Statement, does not contain
all the information set forth in, or annexed as exhibits to, such
Registration Statement, certain portions of which have been
omitted pursuant to rules and regulations of the Commission. For
further information with respect to the Company and the Shares,
reference is hereby made to such Registration Statement,
including the exhibits thereto. Copies of the Registration
Statement, including exhibits, may be obtained from the
aforementioned public reference facilities of the Commission upon
payment of the fees prescribed by the Commission, or may be
examined without charge at such facilities. Statements contained
herein concerning any document filed as an exhibit are not
necessarily complete and, in each instance, reference is made to
the copy of such document filed as an exhibit to the Registration
Statement. Each such statement is qualified in its entirety by
such reference.
<PAGE>
RISK FACTORS
- ------------
Certain statements included in this Prospectus are forward-looking statements
within the meaning of Section 27A of the Securities Act. The factors
discussed below and expressed from time to time in the Company's filings
with the Commission could cause actual results and developments to be
materially different from those expressed in or implied by such statements.
Accordingly, in addition to the other information contained in
this Prospectus, the following factors should be considered
carefully by prospective investors in evaluating an investment in
the shares of Common Stock offered hereby.
History of Losses; Lack of Liquidity; Working Capital Deficit.
- --------------------------------------------------------------
The Company incurred a net loss of $1,447,641 for the year ended
December 31, 1996. As of December 31, 1996, the Company had an
accumulated deficit of $11,278,643 and had negative working
capital of $125,657. In addition, the Company expects to incur
substantial expenditures to expand its commercial wireless
communications business. The Company's working capital, plus
revenue from product sales and research contracts from its
military business will not be sufficient to meet such objectives
as presently structured. There can be no assurances that the
Company will achieve a profitable level of operations in the
future.
Additional Financing Requirement; Merger and Partnering
Opportunities.
- -------------------------------------------------------
In May 1996, the Company completed a series of debt financings
that raised an aggregate of $641,500. In November 1996, the
Company consumated an equity financing that raised an aggregate
of $1,000,000. In addition, the Company will consider the sale
of additional debt and equity securities under appropriate market
conditions, alliances or other partnership agreements with
entities interested in supporting the Company's commercial and
military programs, or other business transactions which would
generate resources sufficient to assure continuation of the
Company's operations and research programs. There can be no
assurance, assuming the Company successfully raises additional
funds or enters into a business alliance, that the Company will
achieve profitability or positive cash flow. If the Company is
unable to obtain additional adequate financing or enter into such
business alliance, management will be required to sharply curtail
its operations. Failure to obtain such additional financing on
terms acceptable to the Company, if coupled with a material
shortfall from the Company's 1997 operating plan, may materially
adversely affect the Company's ability to continue as a going
concern.
<PAGE>
Department of Defense Contracts.
- --------------------------------
The Company is dependent on Department of Defense contracts and
could be vulnerable to future budget cuts by the U.S. Navy
Department. The Company's present contracts are for equipment
related to ongoing shipbuilding programs and the Company has no
knowledge of budget cuts that would affect its present contracts.
There can be no assurance, however, that such programs will not
be subject to budget cuts.
Reliance on a Limited Number of Customers.
- ------------------------------------------
The Company, like many small businesses, relies heavily on its
major customers and programs. The loss of any of the Company's
prime contracts will significantly slow the Company's growth and
the Company believes that such a loss would have a material
adverse effect on the Company's results of operations. There can
be no assurance that the Company will generate business from
other clients.
Uncertainty of Market Acceptance.
- ---------------------------------
In 1995, the Company expanded its initiatives in commercial
wireless communications in current and emerging radio data
broadcasting and personal communications services markets.
Market acceptance of the Company's products in the commercial
sector will be determined in large part by the Company's ability
to develop commercial products based on advanced wireless
communications technology originally developed for the military
and its ability to demonstrate the cost-effectiveness and
performance features of such products. To date, the Company has
limited evidence with which to evaluate the market reaction to
its products in the commercial sector because there has been
limited commercial experience with these products. There can be
no assurance that the Company's products will meet with market
acceptance.
Limited Marketing Experience.
- -----------------------------
The Company will be required to develop a marketing and sales
network that will effectively demonstrate the advantages of its
commercial sector products over competing products. The
Company's marketing experience with its new commercial products
is limited, and the Company has not yet sold any of these
products. The Company currently does all its marketing using its
own employees. There can be no assurance that the Company will
be successful in its marketing efforts, that it will be able to
establish adequate sales and distribution capabilities, or that
it will be able to enter into marketing agreements or
relationships with third parties on financially acceptable terms.
<PAGE>
Government Regulation.
- ----------------------
Under current Federal Communications Commission ("FCC")
regulations, designated portions of the FM radio broadcast
spectrum, known as subcarriers, may be used to transmit
information in addition to normal station programming. Listeners
with specially equipped FM radios can decode the subcarrier
information, while standard FM radios continue to receive normal
radio station programs. FM subcarrier broadcasting currently is
a $100 million industry operating within well-established and
stable FCC regulatory guidelines. Any significant change in
these regulatory requirements or the enforcement thereof could
adversely affect the Company's prospects.
Changing Technology; Potential Infringement.
- --------------------------------------------
The Company's business is subject to rapid changes in technology
including potential introduction of new types of wireless
communications and digital signal processor technologies which
could have a material adverse impact on the Company's business.
There can be no assurance that research and development by others
will not render the Company's technology-obsolete or
uncompetitive. In addition, in a technology based industry,
there can be no assurance that a claim of patent or other
infringement will not be made against the Company. While the
Company is not aware of any such claims, no infringement studies
have been conducted on behalf of the Company.
Competition.
- ------------
High technology products such as those made and being developed
by the Company often require large investments of both money and
talent. Many large companies with greater financial and human
resources than the Company are currently investing heavily in
products that compete directly with the Company's products.
There is no assurance that the Company's products can be
successfully marketed against such competition. In addition,
being first in the market with new high technology is a critical
factor in a company's success in the market. There is no
assurance that the Company will be able to introduce new products
to the market before any of its competitors.
Dependence on Key Personnel; Ability to Attract New Personnel.
- --------------------------------------------------------------
The success of the Company is dependent upon the efforts of
Thomas J. Meaney, Chief Executive Officer, and Dr. Joseph R.
Burns, its Senior Vice President and Chief Scientist, the loss of
either of whom would have a material adverse impact on the
Company. In addition, the Company's success is dependent on its
ability to recruit and retain additional management and technical
personnel with experience in wireless communications and digital
signal processor technologies. The loss of key personnel, or the
inability to attract and retain additional, highly-skilled
employees required for the expansion of the Company's activities
could adversely affect its business.
<PAGE>
Potential Dilutive Effect of Preferred Stock, Warrants and
Options; Possible Adverse Effect on the Company's Ability to
Obtain Additional Financing.
- ------------------------------------------------------------
The outstanding securities of the Company include shares of
preferred stock convertible into shares of Common Stock, options
and warrants. During the respective terms of the options and
warrants, and while the preferred stock is outstanding, the
holders thereof are given an opportunity to profit from a rise in
the market price of the Common Stock, with a resulting dilution
of the interests of the existing stockholders. Thus, the terms
upon which the Company may obtain additional financing during
that period may be adversely affected. The holders of preferred
stock, options and warrants might be expected to exercise their
respective rights to acquire Common Stock at a time when the
Company would, in all likelihood, be able to obtain needed
capital through a new offering of securities on terms more
favorable than those provided by these outstanding securities.
In the event that such holders exercise these rights to acquire
shares of Common Stock at such time, the net tangible book value
per share of the Common Stock might be subject to dilution.
Potential Future Sales.
- -----------------------
Future sales of shares by existing stockholders under Rule 144 of
the Securities Act or through the exercise of outstanding options
and warrants or otherwise could have negative impact on the
market price of the Common Stock. The Company is unable to
estimate the number of shares that may be sold under Rule 144
since this will depend on the market price for the Common Stock
of the Company, the personal circumstances of the sellers and
other factors. Any sale of substantial amounts of Common Stock
or other securities of the Company in the open market may
adversely affect the market price of the securities offered
hereby and may adversely affect the Company's ability to obtain
future financing in the capital markets as well as create a
potential market overhang.
No Dividends.
- -------------
The Company has never paid cash dividends on its Common Stock.
Any payment of cash dividends in the future will depend upon the
Company's earnings (if any), financial condition, and capital
requirements. In addition, the Company has executed certain loan
agreements which prohibit the payment of a dividend on the Common
Stock as long as such agreements are in place. Accordingly, any
potential investor who anticipates the need for current dividends
from its investment should not purchase any of the securities
offered hereby.
<PAGE>
Public Market; Possible Volatility of Stock Price.
- --------------------------------------------------
The Company's Common Stock currently is traded over-the-counter
on the NASD Bulletin Board. There can be no assurance that an
active market in any of the Company's securities will be
sustained. In the absence of a public trading market, an
investor may be unable to liquidate its investment. The Company
believes that factors such as the Company's and its competitors'
announcements of the availability of new services and new
contracts, quarterly fluctuations in the Company's financial
results and general conditions in the communications industry
could cause the price of the Common Stock to fluctuate
substantially. In addition, stock markets have experienced
extreme price volatility in recent years. This volatility has
had a substantial effect on the market prices of securities
issued by many companies for reasons unrelated to the operating
performance of the specific companies.
Concentration of Share Ownership.
- ---------------------------------
The Company's directors, officers and principal stockholders, and
certain of their affiliates, beneficially own approximately 55.6%
(without giving effect to any outstanding options, warrants or
other convertible securities) of the outstanding Common Stock and
will have significant influence over the outcome of all matters
submitted to the stockholders for approval, including the
election of directors of the Company. In addition, such
influence by management could have the effect of discouraging
others from attempting to take-over the Company thereby
increasing the likelihood that the market price of the Common
Stock will not reflect a premium for control.
Anti-Takeover Provisions.
- -------------------------
The Company has 960,000 shares of undesignated preferred stock
which may be issued by the Board of Directors on such terms and
with such rights, preferences and designations as the Board may
determine. Issuance of such preferred stock, depending upon the
rights, preferences and designations thereof, may have the effect
of delaying, deterring or preventing a change in control of the
Company. The 2,581,663 shares of issued and outstanding
preferred stock have certain rights and preferences, including
dividend and liquidation preferences, which also may have the
effect of delaying, deterring or preventing a change in control
of the Company. In addition, certain "anti-takeover" provisions
of the Delaware General Corporation Law, among other things,
restrict the ability of stockholders to effect a merger or
business combination or obtain control of the Company, and may be
considered disadvantageous by a stockholder.
<PAGE>
THE COMPANY
- -----------
Mikros Systems Corporation was founded in 1978 in Albany, New
York to exploit microprocessor technology developed at the
General Electric Research and Development Center. The Company was
incorporated under the laws of the State of Delaware in 1978 and
acquired all rights of General Electric Venture Capital Corp., a
subsidiary of General Electric Company, to certain microcomputer
technology. The Company's headquarters are located at 3490 US
Route 1, Princeton, New Jersey 08540, telephone (609) 987-1513.
Mikros Systems Corporation is a high-technology company in
Princeton, New Jersey with a successful record in the defense
communications business. The Company's strategy is to develop
algorithms and associated products which take advantage of
ongoing price/performance improvements in digital signal
processors (DSPs) and transmit the maximum of data possible over
a given frequency.
Since 1986, the Company has focussed on improving the
performance of digital communication systems used by the U.S.
Navy, particularly the "Link-11" digital radio network. More
recently, Mikros has begun to diversify and explore the
application of "dual-use" technologies to commercial wireless
communications applications.
In 1996 Mikros secured key development contracts in both the
defense and commercial segments of its business. The U.S. Navy
selected Mikros competitively to develop and manufacture its next
generation data terminal set, the successor to the system which
Mikros currently manufactures.
The commercial development program which Mikros initiated in 1994
accelerated in 1996. Mikros will soon be in a position to begin
production of its first generation of commercial products based
on advanced wireless communications technology originally
developed for the military. The high-speed wireless technology
for FM subcarrier datacasting, originally developed for Data
Broadcasting Corporation, was successfully field tested during
the fourth quarter of 1996. Mikros entered into a joint venture
with Safeguard Scientifics (Delaware), Inc to develop wireless
products and services using Mikros' Amplitude Modulation (AM)
technology.
Mikros believes that the global demand for leading edge wireless
communications and information technology will remain strong,
particularly for products which enable corporations to offer new
and more efficient communications solutions. Mikros believes
that it is well positioned to take advantage of these trends.
<PAGE>
Radio Frequency Data Links
- --------------------------
1997 will mark the tenth anniversary of Mikros involvement in the
U.S. Navy's Multi-Frequency Link-11 program. This program was
initiated by the U.S. Navy to improve wireless data
communications for Navy battle groups. Mikros' first generation
system, the AN/USQ-120, was jointly developed with the Applied
Physics Laboratory of Johns Hopkins University. The system,
based on technology developed under the Small Business Innovation
Research Program (SBIR) overcame problematic radio frequency
propagation anomalies by using simulcast techniques. Mikros used
its expertise in real-time systems design and digital signal
processing to achieve an unprecedented connectivity rate of 98%.
The development program which began in 1987 resulted in a first
production run in 1995. AN/USQ-120 systems have been deployed in
nine U.S. Navy Battle Groups, and the response from the fleet has
consistently been highly positive. In 1996 Mikros received
additional orders for further AN/USQ-120 systems, the majority of
which will be delivered during 1997.
In June 1996, Mikros was selected as one of the First Annual
Tibbets Award Winners from the Small Business Administration for
SBIR excellence for the innovative work performed.
In November 1996 Mikros was awarded a five year contract to
produce the next generation standard data terminal set for the
U.S. Navy. This digital wireless communications system is
referred to as the Common Shipboard Data Terminal Set (CSDTS).
Mikros based its design of CSDTS on its AN/USQ-120 system. This
award was the result of a competitive procurement. The initial
order has a value of $432,000.
This award was particularly important because the winner became
the exclusive source to the U.S. Navy of this mission critical
technology. Previously, Mikros was one of two suppliers of data
terminal sets to the U.S. Navy. Mikros' new status of sole
source will significantly strengthen its relationships with the
U.S. Navy and makes Mikros the defacto standard and the
compelling choice for allied navies which need a wireless intra-fleet
communications system.
In the wake of CSDTS, Mikros expects to broaden its relationship
with the U.S. Navy with new development contracts in the area of
digital wireless communications.
Acoustic Communications
- -----------------------
Mikros has also developed advanced digital signal processing
techniques, which cancel noise and interference, providing high-quality
underwater communications. Mikros participated in a SBIR
Program to develop a system which would allow U.S. Navy surface
ships to radio link with submerged submarines up to 100 miles
from the ships. This program concluded with encouraging "in-water"
test results. Mikros has now partnered with Lockheed
Sanders and expects to participate in an Advanced Technology
Demonstration in 1997.
<PAGE>
The Department of Defense is reviewing many possible applications
of this technology which include: underwater telephones, command
and control of unmanned underwater vehicles, and communication
with intelligent sensors.
Commercial applications include underwater voice for recreational
divers, control data links for off-shore drilling equipment,
control of underwater vehicles, and underwater transmission of
video images.
Commercial Programs
- -------------------
In 1995, Mikros identified that the wireless communication
technology which it had originally developed for the military
could be modified for use in high-speed point to multi-point data
broadcasting via regular FM and AM radio frequencies. By
increasing the amount of data which may be transmitted over a
given frequency, Mikros' technology enables new and existing
service providers to increase the number and complexity of the
products which they offer to their customers.
AM development has also opened the door to a variety of new
business opportunities. In particular, it has enabled Mikros to
diversify into the area of providing broadcast data services via
its interest in a joint venture with Safeguard Scientifics
(Delaware), Inc.
The convergence of the media, computer, and telecommunication
industries continues unabated, and the use of digital wireless
transmission technology is increasing dramatically. Mikros is
confident that its FM and AM technologies will play an important
role in wireless communications solutions of the future. The
enormous coverage of the FM and AM radio network infrastructures
combined with the high-speed data rates achieved by Mikros'
technology offers service providers the ability to cost-effectively and
simultaneously transmit large amounts of data to a potentially unlimited group
of customers.
FM Data Broadcasting
- --------------------
Mikros selected FM data broadcasting as its first commercial
target market. Data broadcasting companies use ordinary FM radio
to provide mobile paging, real-time financial data and other
specialized wireless services. Under current Federal
Communication Commission (FCC) regulations, designated portions
of the FM radio broadcast spectrum, known as subcarriers, may be
used to transmit information in addition to normal station
programming. Listeners with specially equipped FM radios can
decode the subcarrier information, while standard FM radios
continue to receive normal radio station programs. Mikros'
technology allows service providers to broadcast at a much higher
data rate. Information providers are able to increase the
quantity and quality of the services, while paging companies can
service many more subscribers using the same network. In both
cases, the service provider is increasing the return on its
investment in network infrastructure.
<PAGE>
Recently the Company became aware of an emerging trend which
could create a higher level of demand for datacasting technology.
Internet service providers are increasingly broadcasting selected
data to their customers rather than requiring their customers to
retrieve it. Proper use of 57.6 kbps of broadcast (point to
multi-point) capacity could help to reduce congestion on the
Internet and free up capacity for point to point communication.
Mikros intends to vigorously pursue this market in the coming
year.
AM Data Broadcasting
- --------------------
Mikros began developing its AM technology in 1995. This system
is also based on proprietary technology which Mikros originally
conceived for the U.S. Navy and subsequently patented. The
initial system was capable of transmitting between 1200 and 2400
bits per second (bps). However, new breakthroughs in 1996 have
yielded a version of this technology which may allow data to be
transmitted at rates as high as 28.8 kbps.
This development interested Safeguard Scientifics (Delaware),
Inc., a large, publicly traded (NYSE: SFE) company. Safeguard
invested directly in Mikros and together with Mikros founded a
new company, Mobile Broadcasting Corporation (MBC). MBC intends
to use the untapped AM resource and offer a wide array of
broadcast data services. Mikros will develop and manufacture
transmitters and receivers which incorporate the AM technology.
MBC currently has the exclusive right to use this technology in
North America. However, licenses can be granted to selected
companies on a case by case basis.
USE OF PROCEEDS
- ---------------
The Company will not receive any of the proceeds from the sale of
the Shares offered by this Prospectus. While the Company will
receive sums upon any exercise of options by the Selling
Stockholders, the Company currently has no plans for their
application, other than for general corporate purposes. There
can be no assurance that any of such options will be exercised.
SELLING STOCKHOLDERS
- --------------------
The Shares being registered hereunder include shares of Common
Stock which have been or will be issued upon the exercise of
options previously granted by the Company. The Company will not
receive any of the proceeds from the sales of the Shares by the
Selling Stockholders. The Shares may not be sold or otherwise
transferred by the Selling Stockholders unless and until the
applicable options are exercised in accordance with their terms.
<PAGE>
The following table sets forth: (i) the name of each Selling
Stockholder, whose name is known as of the date of the filing of
the registration statement of which this Prospectus forms a part,
under the Plans who may sell Common Stock pursuant to this
Prospectus, (ii) his or her position(s), office or other material
relationship with the Company and its predecessors or affiliates,
over the last three years, (iii) the number of shares of Common
Stock owned (or subject to option) by each Selling Stockholder as
of the date of this Prospectus, (iv) the number of shares of
Common Stock which may be offered and are being registered for
the account of each Selling Stockholder by this Prospectus (all
of which may be acquired by the Selling Stockholders pursuant to
the exercise of options) and (v) the amount of the class to be
owned by each such Selling Stockholder if such Selling
Stockholder were to sell all of the shares of Common Stock
covered by this Prospectus. There can be no assurance that any
of the Selling Stockholders will offer for sale or sell any or
all of the Shares offered by them pursuant to this Prospectus.
Options or shares of Common Stock may be issued under the Plans
in amounts and to persons not presently known by the Company;
when known, such persons, their holdings of Common Stock and
certain other information may be included in a subsequent version
of this Prospectus.
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
(both directly held NUMBER OF NUMBER OF SHARES
or subject to option SHARES OF OF COMMON STOCK
POSITION WITH prior to COMMON STOCK AFTER
NAME THE COMPANY Offering/Percentage)(1) TO BE OFFERED(2) OFFERING/PERCENTAGE (2)
<C> <C> <C> <C> <C>
Christopher Bade Technical Admin. 10,000/** 10,000 --/--
Robert Baker Engineer 51,800/** 25,000 26,800/**
Joseph Benek V.P. Finance 125,000/** 125,000 --/--
Patricia Bird Corp. Secretary 93,750/** 50,000 43,750/**
Mary Bullard Accountant 20,000/** 20,000 --/--
Thomas Delaney Quality Control Mgr. 25,000/** 25,000 --/--
Kurt Dustin Engineering Mgr. 170,000/1.4% 150,000 20,000/**
Timothy Dyson Sr. Staff Scientist 193,750/1.6% 150,000 43,750/**
Kathryn Filion Operations Admin. 45,000/** 45,000 --/--
John Fleck Engineer 35,000/** 35,000 --/--
William V. Goodwin Director 123,760/** 100,000 23,760/**
Randy Hollstein Stockholder 75,000/** 75,000 --/--
David Kissinger Engineer 35,000/** 35,000 --/--
William Macre Engineer 75,000/** 75,000 --/--
Mark Magee Stockholder 15,000/** 15,000 --/--
Wayne E. Meyer Chairman of the Board 831,750/6.7% 200,000 631,750/5.0%
Deborah Montagna Exec. V.P. 370,000/2.9% 250,000 120,000/**
Harold Mulliken Engineer 25,000/** 25,000 --/--
Dorothy Schroeder Asst. Controller 45,000/** 45,000 --/--
Phillip Thompson Purchasing Clerk 20,000/** 20,000 --/--
</TABLE>
** Less than one percent.
(1) Applicable percentage of ownership is based on 12,440,702
shares of Common Stock outstanding, plus any Common Stock
equivalents held by such holder.
(2) Assumes that all Shares are sold pursuant to this offering
and that no other shares of Common Stock are acquired or
disposed of by the Selling Stockholders prior to the
termination of this offering. Because the Selling
Stockholders may sell all, some or none of their Shares or
may acquire or dispose of other shares of Common Stock, no
reliable estimate can be made of the aggregate number of
Shares that will be sold pursuant to this offering or the
number or percentage of shares of Common Stock that each
Selling Stockholder will own upon completion of this
offering.
<PAGE>
PLAN OF DISTRIBUTION
- --------------------
The Selling Stockholders have not advised the Company of any
specific plan for distribution of the Shares offered hereby, but
it is anticipated that the Shares will be sold from time to time
by the Selling Stockholders or by pledgees, donees, transferees
or other successors in interest. Such sales may be made over-the-counter on
the NASD Bulletin Board at prices and at terms then prevailing or at prices
related to the then current market price, or in negotiated transactions. The
Shares may be sold by one or more of the following: (i) a block trade in which
the broker or dealer so engaged will attempt to sell the Shares as
agent but may position and resell a portion of the block as
principal to facilitate the transaction; (ii) purchases by a
broker or dealer for its account pursuant to this Prospectus; or
(iii) ordinary brokerage transactions and transactions in which
the broker solicits purchases. In effecting sales, brokers or
dealers engaged by the Selling Stockholders may arrange for other
brokers or dealers to participate. Brokers or dealers will
receive commissions or discounts from Selling Stockholders in
amounts to be negotiated immediately prior to the sale. Such
brokers or dealers and any other participating brokers or dealers
may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales, and any commissions
received by them and any profit realized by them on the resale of
shares as principals may be deemed underwriting compensation
under the Securities Act. The expenses of preparing this
Prospectus and the related Registration Statement with the
Commission will be paid by the Company. Shares of Common Stock
covered by this Prospectus also may qualify to be sold pursuant
to Rule 144 under the Securities Act, rather than pursuant to
this Prospectus. The Selling Stockholders have been advised that
they are subject to the applicable provisions of the Exchange
Act, including without limitation, Rules 10b-5, 10b-6 and 10b-7
thereunder.
Neither the Company nor the Selling Stockholders can estimate at
the present time the amount of commissions or discounts, if any,
that will be paid by the Selling Stockholders on account of their
sales of the Shares from time to time.
LEGAL MATTERS
- -------------
The validity of the shares of Common Stock offered hereby will be
passed upon the Company by Buchanan Ingersoll, 500 College Road
East, Princeton, New Jersey.
EXPERTS
- -------
The financial statements of the Company incorporated in this
Prospectus by reference to the Company's Annual Report on Form
10-K have been audited by Druker, Rahl & Fein, independent public
accountants. Such financial statements are incorporated herein
in reliance upon such report given upon the authority of such
firm as experts in auditing and accounting.
<PAGE>
INFORMATION INCORPORATED BY REFERENCE
- -------------------------------------
There are hereby incorporated by reference in this Prospectus the
following documents and information heretofore filed with the
Commission:
1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1996 filed pursuant to Section 13(a) or 15(d)
of the Exchange Act;
2) All reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since December 31, 1996.
3) The description of the Company's Common Stock, $.01 par
value, which is contained in the Company's Registration
Statement on Form S-18 (Registration No. 2-67918-NY) filed
August 29, 1980 pursuant to Section 12 of the Exchange Act
and declared effective September 3, 1980.
All documents subsequently filed by the Company 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 registered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be
incorporated by reference and to be a part hereof from the date
of filing of such documents.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
- -----------------------------------------
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides, in effect, that any person made a part to any action by
reason of the fact that he is or was a director, officer,
employee or agent of the Company may and, in certain cases, must
be indemnified by the Company against, in the case of a non-derivative action,
judgments, fines, amounts paid in settlement and reasonable expenses (including
attorney's fees), if in either type of action he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the Company and, in a non-derivative action, which involves a
criminal proceeding, in which such person had no reasonable cause
to believe his conduct was unlawful. This indemnification does
not apply in a derivative action, to matters as to which it is
adjudged that the director, officer, employee or agent is liable
to the Company, unless upon court order it is determined that,
despite such adjudication of liability, but in view of all the
circumstances of the case, he is fairly and reasonably entitled
to indemnity for expenses.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been informed that in
the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is therefore
unenforceable.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
- -------------------------------------------------
There are hereby incorporated by reference in this Prospectus the
following documents and information heretofore filed with the
Commission:
1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1996 filed pursuant to Section 13(a) or 15(d)
of the Exchange Act;
2) All reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since December 31, 1996.
3) The description of the Company's Common Stock, $.01 par
value, which is contained in the Company's Registration
Statement on Form S-18 (Registration No. 2-67918-NY) filed
August 29, 1980 pursuant to Section 12 of the Exchange Act
and declared effective September 3, 1980.
All documents subsequently filed by the Company 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 registered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be
incorporated by reference and to be a part hereof from the date
of filing of such documents.
Item 4. Description of Securities.
- -----------------------------------
Not applicable.
Item 5. Interests of Named Experts and Counsel.
- ------------------------------------------------
The validity of the shares of Common Stock offered hereby will be
passed upon the Company by Buchanan Ingersoll, 500 College Road
East, Princeton, New Jersey.
The financial statements of the Company incorporated by reference
in and made a part of this Registration Statement have been so
incorporated herein in reliance upon the report of Druker, Rahl &
Fein, independent public accountants, given on the authority of
said firm as experts in auditing and accounting.
<PAGE>
Item 6. Indemnification of Directors and Officers.
- ---------------------------------------------------
Section 145 of the Delaware General Corporation Law (the "DGCL")
provides, in effect, that any person made a part to any action by
reason of the fact that he is or was a director, officer,
employee or agent of the Company may and, in certain cases, must
be indemnified by the Company against, in the case of a non-derivative action,
judgments, fines, amounts paid in settlement and reasonable expenses (including
attorney's fees), if in either type of action he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the Company and, in a non-derivative action, which involves a
criminal proceeding, in which such person had no reasonable cause
to believe his conduct was unlawful. This indemnification does
not apply in a derivative action, to matters as to which it is
adjudged that the director, officer, employee or agent is liable
to the Company, unless upon court order it is determined that,
despite such adjudication of liability, but in view of all the
circumstances of the case, he is fairly and reasonably entitled
to indemnity for expenses.
Item 7. Exemption from Registration Claimed.
- ---------------------------------------------
The issuance of the Shares being offered by the Form S-3 reoffer
prospectus were deemed exempt from registration under the
Securities Act in reliance upon Section 4(2) of the Securities
Act.
Item 8. Exhibits.
- ------------------
Exhibit
Number Description
- ------- -----------
4.1 Incentive Stock Option Plan (1981).
4.2 1992 Incentive Stock Option Plan.
5.1 Opinion of Buchanan Ingersoll.
23.1 Consent of Druker, Rahl & Fein.
23.2 Consent of Buchanan Ingersoll(contained in the
opinion filed as Exhibit 5.1).
24 Power of Attorney (see "Power of Attorney" below).
Item 9. Undertakings.
- ----------------------
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 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.
<PAGE>
2) That, for the purpose of determining any liability under the
Securities Act, 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.
3) To file a post-effective amendment to remove from
registration any of the securities that remain unsold at the
end of the offering.
Insofar as indemnification for liabilities arising under the
Securities Act 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 Commission such indemnification is against
public policy as expressed in the Securities Act and is,
therefore, unenforceable.
<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 Princeton, State of New Jersey, on this 25th day of April,
1997.
MIKROS SYSTEMS CORPORATION
By: /s/ Thomas J. Meaney
---------------------------
Thomas J. Meaney
Chief Executive Officer
POWER OF ATTORNEY
- -----------------
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints Thomas J.
Meaney, his true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this
Registration Statement, and to file the same with all exhibits
thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent 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 attorney-in-fact and agent or his 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 by the following persons
in the capacities and on the dates indicated.
<PAGE>
Signature Title Date
/s/ Thomas J. Meaney Chief Executive Officer April 25, 1997
- ------------------------ and Director (principal
Thomas J. Meaney executive officer)
/s/ Joseph R. Benek Vice President, Finance April 25, 1997
- ------------------------ (principal financial and
Joseph R. Benek accounting officer)
/s/ Wayne E. Meyer Chairman of the Board and April 25, 1997
- ------------------------ Director
Wayne E. Meyer
/s/ Joseph R. Burns Senior Vice President, Chief April 25, 1997
- ------------------------ Scientist and Director
Joseph R. Burns
/s/ William V. Goodwin Director April 25, 1997
- ------------------------
William V. Goodwin
/s/ F. Joseph Loeper Director April 25, 1997
- ------------------------
F. Joseph Loeper
/s/ Thomas C. Lynch Director April 25, 1997
- ------------------------
Thomas C. Lynch
/s/ Frederick C. Tecce Director April 25, 1997
- ------------------------
Frederick C. Tecce
/s/ John B. Torkelsen Director April 25, 1997
- ------------------------
John B. Torkelsen
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
4.1 Incentive Stock Option Plan (1981).
4.2 1992 Incentive Stock Option Plan.
5.1 Opinion of Buchanan Ingersoll.
23.1 Consent of Druker, Rahl & Fein.
23.2 Consent of Buchanan Ingersoll (contained in the
opinion filed as Exhibit 5.1).
24 Power of Attorney (see "Power of Attorney" below).
<PAGE>
EXHIBIT 4.1
- -----------
MIKROS SYSTEMS CORPORATION
INCENTIVE STOCK OPTION PLAN (1981)
1. Establishment of Plan
- ---------------------------
MIKROS SYSTEMS CORPORATION, a Delaware corporation (hereinafter
referred to as the "Company") proposes to grant to selected key
employees of the Company or any or all of its subsidiaries stock
options for the purpose of (a) furnishing maximum incentive to
those employees deemed capable of responding thereto by improving
operations and increasing profits and (b) encouraging such
persons to accept or continue employment with the Company and its
subsidiaries and become owners of shares of its common stock.
Such options shall be deemed granted pursuant to the Plan herein
set forth, which shall be known as the MIKROS SYSTEMS CORPORATION
INCENTIVE STOCK OPTION PLAN (1981) (hereinafter referred to as
the "Plan").
2. Stock Reserved for Options
- --------------------------------
Thirty-three thousand (33,000) shares of Common Stock of the
Company (subject to adjustment in accordance with Section 7
below) are reserved for issuance upon the exercise of options
granted under the Plan. The shares issued under this Plan may be
either authorized but unissued or treasury shares of the Company.
Any shares subject to options granted from time to time under
this Plan may be made subject to new options under this Plan in
the event of the lapse, expiration or cancellation of such
options.
3. Administration of the Plan
- --------------------------------
The Board of Directors shall appoint a Stock Option Committee
(hereinafter referred to as the "Committee") consisting of not
less than three (3) members of the Board of Directors to
administer the Plan. Subject to the provisions of the Plan, the
Committee shall determine the individuals to whom and the time or
times at which options shall be granted, the number of shares to
be subject to each option, and the period of any such option, and
shall determine other terms and provisions of the respective
options, which may or may not be identical. The Committee shall
also interpret the Plan, prescribe, amend and rescind rules and
regulations relating to the Plan, and make all other
determinations necessary or advisable for the administration of
the Plan. The determinations of the Committee shall be made in
accordance with its judgment as to the best interests of the
Company and its stockholders and in accordance with the purposes
of the Plan. A majority of members of the Committee shall
constitute a quorum, and all determinations of the Committee
shall be made by a majority of its members. Any determination of
the Committee under the Plan may be made without notice or
meeting of the Committee, by writing signed by a majority of the
Committee members.
<PAGE>
The Committee may authorize the modification of any option
outstanding under the Plan when and, subject to such conditions,
as deemed to be in the best interests of the Company and in
accordance with the purposes of the Plan, provided no such
modification shall reduce the purchase price set forth in such
option, except for anti-dilution adjustments made in accordance
with Section 7 hereof.
In the absence of the appointment of the Committee, the Board of
Directors shall administer the Plan.
4. Eligibility
- -----------------
Options may be granted to key employees (including officers) of
the Company or its subsidiaries, such key employees being those
employees who, in the judgment of the Committee, are mainly
responsible for success of the Company and such subsidiaries. A
Director of the Company or of a subsidiary who is not also an
employee of the Company or of a subsidiary shall not be eligible
to receive an option. An employee who has been granted an option
hereunder may be granted an additional option or options.
5. Option Price
- ------------------
Options granted hereunder shall be at such per share option price
as the Committee may determine, but not less than 100% of the
fair market value of Common Stock of the Company at the time the
option is granted, or in the case of employees owning 10% or more
of the total combined voting power of all classes of stock of the
Company at the time the option is granted, not less than 110% of
the fair market value of Common Stock of the Company at the time
the option is granted.
6. Maximum Number of Shares
- ------------------------------
The maximum number of shares for which options may be granted to
any employee in any calendar year under this Plan and any other
Plans of the Company and its subsidiaries shall be determined by
dividing $100,000 by the fair market value of the shares covered
by the options a the date(s) of grant, except that in any
calendar year after 1981, the $100,000 amount referred to above
may be increased by one-half of the amount by which $100,000
exceeded the fair market value at date(s) of grant of the common
stock covered by options granted to the employee in each of the
three preceding calendar years, commencing with the calendar year
1981, reduced in any succeeding calendar year by the amount of
such carryover which was used in prior calendar years.
<PAGE>
7. Adjustment Provisions
- ---------------------------
In the event that there is any increase in the number of issued
shares of Common Stock without new consideration to the Company
(such as by stock dividends or stock splits), then (a) the total
number of shares at the time remaining available for issue under
the Plan and the total number of shares at the time unexercised
under each outstanding options shall be increased in proportion
to such increase in issued shares; and (b) the option price for
the unexercised portion of any options theretofore granted shall
be adjusted so that the total consideration payable to the
Company upon the purchase of all shares not theretofore purchased
shall not be changed by reason of such increase in the number of
issued Common Shares of the Company. Options may also contain
provisions for the continuation of the options and other
equitable adjustments after changes in the Company's shares,
including changes resulting from a combination of outstanding
shares or other recapitalization, reorganization, issuance of
stock rights or warrants, sale of assets, merger, consolidation,
etc.
8. Option Period
- -------------------
Each option granted hereunder shall expire five years after the
date of grant.
9. Exercise of Options
- -------------------------
Options granted under the Plan shall be exercisable as to 25%
immediately upon grant, as to an additional 25% thereof on or
after the first anniversary of the date of grant, as to an
additional 25% thereof on and after the second anniversary of the
date of grant and as to any remaining unexercised balance on and
after the third anniversary of the date of grant and prior to the
fifth anniversary of the date of grant.
<PAGE>
The exercise of any option will be contingent upon receipt from
the optionee (or the purchaser acting under Section 10 below) of
a representation that at the time of such exercise it is his then
present intention to acquire the shares being purchased for
investment and not for resale. Payment of the purchase price
upon exercise of any option shall be made in cash or common stock
of the Company (subject to rules promulgated by the Committee)
and the person exercising such option shall supply the Company
such other information and data as the Company may deem
necessary. Each option granted under the Plan shall provide that
it shall not be exercisable until exercise in full or expiration
by lapse of time of any outstanding incentive stock option to
purchase stock of the Company which was granted prior to the
granting of such option. Except as provided hereinafter, no
option may be exercised unless the holder thereof, at all times
during the period beginning on the date of granting of the option
and ending on the day three (3) months before the date of such
exercise or one (1) year before the date of such exercise if the
employee is disabled, has been an employee of the Company or of
one of its subsidiaries. An optionee shall have none of the
rights of a stockholder with respect to the shares subject to
option until such shares shall be issued to him upon the exercise
of his option. The Company shall be afforded reasonable
opportunity after exercise of any option to comply with any
requirements for stock exchange listing and/or for registration
under applicable Federal Securities Laws, State Blue Sky Laws,
and other laws, before issuance of the shares, being purchased on
such exercise.
10. Nontransferability of Option
- ----------------------------------
Each option granted under the Plan to an employee shall not be
transferable by him otherwise than by will or the laws of descent
and distribution, and shall be exercisable, during his lifetime,
only by him. In the event of the death of an optionee during
employment or within three (3) months thereafter, or within one
(1) year thereafter in the case of an employee who was disabled
on termination of employment, the option theretofore granted to
him shall be exercisable only within six (6) months after his
death (but not more than five (5) years from the date of the
granting of the option), and then only:
(a) by the executor or administrator of the estate of the
deceased, or the person or persons to whom the deceased
optionee's rights under the option shall pass by will or the
laws of descent and distribution; and
(b) to the extent that the deceased optionee was entitled
to do so the date of his death.
<PAGE>
11. Termination of Employment
- -------------------------------
In the event that the employment of an optionee shall be
terminated (otherwise than by reason of death) after the granting
date, his option may with the consent of the Company be exercised
by him (to the extent that the employee was entitled to exercise
such option at the termination of his employment) at any time
within three (3) months after such termination, or at any time
within one (1) year in the case of an employee who was disabled
on termination of employment but not thereafter and only within
the original period for such option. Retirement pursuant to any
pension or retirement plan of the Company shall be deemed to be a
termination of employment for the purposes of this Section 11.
Nothing in the Plan or in any option shall confer on any employee
any right to continue in the employ of the company or of any of
its subsidiaries or to interfere with the right of the Company or
of any such subsidiary to terminate his employment at any time.
12. Amendment and Termination
- -------------------------------
The Plan may be abandoned or terminated at any time by the Board
of Directors except with respect to any options then outstanding
under the Plan. The Board of Directors may make such changes in
and additions to the Plan as it may deem proper and in the best
interests of the Company or as may be necessary to comply with
Sections 421-425 of the Internal Revenue Code of 1954 (including
the regulations promulgated thereunder) or other applicable laws
or regulations; provided, however, that no such action shall
affect or impair any option theretofore granted under the Plan,
and provided further that, except for modification under Section
5 above and adjustments under Section 7 above (a) the total
number of shares for which options may be granted under the Plan
shall not be increased, (b) the minimum purchase price shall not
be changed, and (c) the class of employees eligible to receive
options shall not be changed. If not otherwise terminated prior
thereto, the authority to grant options under this Plan shall
terminate ten (10) years from the date of first approval of the
Plan by the Directors or stockholders of the Company.
13. Miscellaneous
- -------------------
(a) For the purposes of this Plan:
(i) All references anywhere in this Plan to Sections
421-425 of the Internal Revenue Code of 1954 shall
include any provisions amending or superseding such
sections
(ii) The term "subsidiary" shall include any
corporation defined as a subsidiary of the Company in
Sections 421-425 of the Internal Revenue Code of 1954.
(iii) Fair market value for Common Shares of the
Company on any particular date shall be determined in
such manner as the Committee may deem equitable
provided that all requirements of applicable provisions
or regulations under the Internal Revenue Code are
satisfied.
<PAGE>
(b) This Plan shall be deemed adopted when approved by the
Board of Directors, subject to approval by the affirmative
vote of the holders of a majority of the Company's shares
outstanding and entitled to vote, as provided for in (c)
immediately below, and shall be deemed in full force and
effect on and after the date on which it is so adopted on
behalf of the Company by its Board of Directors.
(c) This Plan shall be submitted to the stockholders of the
company for their approval at their next regular or special
meeting, and it shall not become effective unless its
adoption is approved by the stockholders at such a meeting
or an adjournment thereof by affirmative vote of the holders
of a majority of the outstanding shares of Common Stock of
the Company; provided, however, that upon such approval of
the Plan shall take effect without further action by the
Company, and the effective date of the Plan shall be
determined on the date of approval of the Board of Directors
as provided hereinabove without regard to the date of the
meeting at which such stockholder approval is given.
No option may be granted hereunder on or after October 16, 1991.
<PAGE>
AMENDED AND RESTATED STOCK PLAN (1988)
1. Establishment of Plan
- ---------------------------
MIKROS SYSTEMS CORPORATION, a Delaware Corporation (hereinafter
referred to as the "Company") proposes to grant to selected key
employees of the Company or any or all of its subsidiaries stock
options for the purpose of (a) furnishing maximum incentive to
those employees deemed capable of responding thereto by improving
operations and increasing profits and (b) encouraging such
persons to accept or continue employment with the Company and its
subsidiaries and become owners of shares of its common stock.
Such options shall be deemed granted pursuant to the Plan herein
set forth, which shall be known as the AMENDED AND RESTATED
MIKROS SYSTEMS CORPORATION INCENTIVE STOCK OPTION PLAN (1988)
(hereinafter referred to as the "Plan").
2. Stock Reserved for Options
- --------------------------------
Two million (2,000,000) shares of Common Stock of the Company
(subject to adjustment in accordance with Section 7 below) are
reserved for issuance upon the exercise of options granted under
the Plan. The shares issued under this Plan may be either
authorized but unissued or treasury shares of the Company. Any
shares subject to options granted from time to time under this
Plan may be made subject to new options under this Plan in the
event of the lapse, expiration or cancellation of such options.
3. Administration of the Plan
- --------------------------------
The Board of Directors shall appoint a Compensation Committee
(hereinafter referred to as the "Committee") consisting of not
less than three (3) members of the Board of Directors to
administer the Plan. Subject to the provisions of the Plan, the
Committee shall determine the individuals to whom and the time or
times at which options shall be granted, the number of shares to
be subject to each option, and the period of any such option, and
shall determine other terms and provisions of the respective
options, which may or may not be identical. The terms and
conditions of the option shall be contained in a stock option
agreement between the Company and the recipient of the option.
The committee shall also interpret the Plan, prescribe, amend and
rescind rules and regulations relating to the Plan, and make all
other determinations necessary or advisable for the
administration of the Plan. The determinations of the Committee
shall be made in accordance with its judgment as to the best
interests of the Company and its stockholders and in accordance
with the purposes of the Plan. A majority of members of the
Committee shall constitute a quorum, and all determinations of
the Committee shall be made by a majority of its members. Any
determination of the Committee under the Plan may be made without
notice or meeting of the Committee, by writing signed by a
majority of the Committee members.
<PAGE>
The Committee may authorize the modification of any option
outstanding under the Plan when and, subject to such conditions,
as deemed to be in the best interests of the Company and in
accordance with the purposes of the Plan, provided no such
modification shall reduce the purchase price set forth in such
option, except for the anti-dilution adjustments made in
accordance with Section 7 hereof.
In the absence of the appointment of the Committee, the Board of
Directors shall administer the Plan.
4. Eligibility
- -----------------
Options may be granted to key employees (including officers) of
the Company or its subsidiaries, such key employees being those
employees who, in the judgment of the Committee, are mainly
responsible for success of the Company and such subsidiaries. A
Director of the Company or of a subsidiary who is not also an
employee of the Company or of a subsidiary shall not be eligible
to receive an option. An employee who has been granted an option
hereunder may be granted an additional option or options.
5. Option Price
- ------------------
Options granted hereunder shall be at such per share option price
as the Committee may determine, but not less than 100 of the fair
market value of Common Stock of the Company at the time the
option is granted, or in the case of employees owning 10 or more
of the total combined voting power of all classes of stock of the
Company at the time the option is granted, not less than 110% of
the fair market value of the Common Stock of the Company at the
time the option is granted.
6. Limitations
- -----------------
The aggregate fair market value of stock (determined as of the
time an option is granted) with respect to which options are
exercisable for the first time by an employee during any calendar
year (under this Plan or under any other Incentive Stock Option
Plan of the Company or its subsidiaries) shall not exceed
$100,000. This paragraph shall be applied by taking options into
account in the order in which they are granted.
<PAGE>
7. Adjustment Provisions
- ---------------------------
In the event that there is any increase in the number of issued
shares of Common Stock without new consideration to the Company
(such as by stock dividends or stock splits), then (a) the total
amount of shares at the time remaining available for issue under
the Plan and the total number of shares at the time unexercised
under each outstanding option shall be increased in proportion to
such increase in issued shares; and (b) the option price for the
unexercised portion of any options theretofore granted shall be
adjusted so that the total consideration payable to the Company
upon the purchase of all shares not theretofore purchased shall
not be changed by reason of such increase in the number of issued
Common Shares of the Company. Options may also contain
provisions for the continuation of the options and other
equitable adjustments after changes in the Company's shares,
including changes resulting from a combination of outstanding
shares or other recapitalization, reorganization, issuance of
stock rights or warrants, sale of assets, merger, consolidation,
etc.
8. Option Period
- -------------------
Each option granted hereunder shall expire five years after the
date of grant.
9. Exercise of Options
- -------------------------
Options granted under the Plan, unless otherwise determined by
the Committee and set forth in the stock option agreement between
the Company and the recipient shall be exercisable as to 25%
thereof on and after the first anniversary of the date of grant,
as to an additional 25% thereof on and after the second
anniversary of the date of grant, as to an additional 25% thereof
on and after the third anniversary of the grant and as to any
remaining unexercised balance on and after the fourth anniversary
of the date of grant and prior to the fifth anniversary of the
date of grant.
<PAGE>
Payment of the purchase price upon exercise of any option shall
be made in cash or Common Stock of the Company (subject to rules
promulgated by the Committee) and the person exercising such
option shall supply the Company with such other information and
data as the Company may deem necessary. Except as provided
hereinafter, no option may be exercised unless the holder
thereof, at all times during the period beginning on the date of
granting of the option and ending on the date three (3) months
before the date of such exercise or one (1) year before the date
of such exercise if the employee is disabled, has been an
employee of the Company or one of its subsidiaries. An optionee
shall have none of the rights of a stockholder with respect to
the shares subject to option until such shares shall be issued to
him upon the exercise of his option. No option shall be
exercisable unless the issuance of Common Stock upon such
exercise is in compliance with all applicable requirements of
law, including, without limitation, compliance with the
Securities Act of 1933, as amended, all applicable state
securities laws and compliance with the requirements of any stock
exchange on which the Common Stock of the Company may be listed.
The Company shall be under no obligation to register the Common
Stock issuable upon exercise of options with the Securities
Exchange Commission or to effect compliance with the registration
or qualification requirements of any state securities laws or
stock exchange.
10. Nontransferability of Option
- ----------------------------------
Each option granted under the Plan to an employee shall not be
transferable by him otherwise than by will or the laws of descent
and distribution, and shall be exercisable, during his lifetime,
only by him. In the event of the death of an optionee during
employment or within three (3) months thereafter, or within one
(1) year thereafter in the case of an employee who was disabled
on termination of employment, the option therefore granted to him
shall be exercisable only within six (6) months after his death
(but not more than five (5) years from the date of the granting
of the option), and then only:
(a) by the executor or administrator of the estate of the
deceased or the person or persons to whom the deceased
optionee's rights under the option shall pass by will or the
laws of descent and distribution; and
(b) to the extent that the deceased optionee was entitled
to do so at the date of his death.
<PAGE>
11. Termination of Employment
- -------------------------------
In the event that the employment of an Optionee shall be
terminated (otherwise than by reason of death) after the granting
date, his option may with the consent of the Company be exercised
by him (to the extent that the employee was entitled to exercise
such option at the termination of his employment) at any time
within three (3) months thereafter, or within one (1) year in the
case of an employee who was disabled on termination of employment
but not thereafter and only within the original period for such
option. Retirement pursuant to any pension or retirement plan of
the Company shall be deemed to be a termination of employment for
the purposes of this Section 11. Nothing in the Plan or in any
option shall confer on any employee any right to continue in the
employ of the Company or any of its subsidiaries or to interfere
with the right of the Company or of any such subsidiary to
terminate his employment at any time.
12. Amendment and Termination
- -------------------------------
The Plan may be abandoned or terminated at any time by the Board
of Directors except with respect to any options then outstanding
under the Plan. The Board of Directors may make such changes in
and additions to the Plan as it may deem proper and in the best
interests of the Company or as may be necessary to comply with
Section 421-425 of the Internal Revenue Code of 1986 (including
the regulations promulgated thereunder) or other applicable laws
or regulations; provided, however, that no such action shall
affect or impair any option theretofore granted under the Plan,
and provided further that, except for adjustments under Section 7
above (a) the total number of shares for which options may be
granted under the Plan shall not be increased, (b) the minimum
purchase price shall not be changed, and (c) the class of
employees eligible to receive options shall not be changed. If
not otherwise terminated prior thereto, the authority to grant
options under this Plan shall terminate ten (10) years from the
date of first approval of the Plan by the Directors or
stockholders of the Company.
13. Miscellaneous
- -------------------
(a) For the purposes of this Plan:
(i) All references anywhere in this Plan to Section
421-425 of the Internal Revenue Code of 1986 shall
include any provisions amending or superseding such
sections.
(ii) The term "subsidiary" shall include any
corporation defined as a subsidiary of the Company in
Section 421-425 of the Internal Revenue Code of 1986.
(iii) Fair market value for Common Stock of the
Company on any particular date shall be determined in
such a manner as the Committee may deem equitable
provided that all requirements of applicable provisions
or regulations under the Internal Revenue Code are
satisfied.
<PAGE>
(b) This Plan shall be deemed adopted when approved by the
Board of Directors, subject to approval by the affirmative
vote of the holders of a majority of the Company's shares
outstanding and entitled to vote, as provided for in (c)
immediately below, and shall be deemed in full force and
effect on and after the date on which it is so adopted on
behalf of the Company by its Board of Directors.
(c) This Plan shall be submitted to the stockholders of the
Company for their approval at their next regular or special
meeting, and it shall not become effective unless its
adoption is approved by the stockholders at such a meeting
or an adjournment thereof by affirmative vote of the holders
of a majority of the outstanding shares of Common Stock of
the Company; provided, however, that upon such approval the
Plan shall take effect without further action by the
Company, and the effective date of the Plan shall be
determined on the date of approval of the Board of Directors
as provided hereinabove without regard to the date of the
meeting at which such stockholder approval is given.
No option may be granted hereunder on or after October 16, 1991.
<PAGE>
EXHIBIT 4.2
- -----------
MIKROS SYSTEMS CORPORATION
1992 STOCK OPTION PLAN
1. PURPOSE.
- --------------
This 1992 Stock Option Plan ("Plan") is intended to provide
incentives for selected persons and to advance the interests of
Mikros Systems Corporation, a Delaware corporation (the
"Company"), and its investors and shareholders, by permitting the
Company to grant options to purchase certain of its shares of
Common Stock, $.01 par value per share.
2. DEFINITIONS.
- ------------------
The following terms shall have the meanings ascribed to them
below:
a. "Board" means the Board of Directors of the Company.
b. "Common Stock" means the Company's $.01 par value
Common Stock.
c. "Company" means Mikros Systems Corporation, a Delaware
Corporation.
d. "Date of Approval" means the date this Plan is first
approved by the Shareholders. Such date of approval
shall occur within 12 months before or after the date
this Plan is adopted by the Board.
e. "Date of Grant" means the date on which an Option is
granted under this Plan.
f. "Expiration Date" means the date on which an Option
must be exercised or all rights to exercise such Option
shall expire.
g. "ISO" means incentive stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as
amended.
h. "NQSO" means non-qualified stock options.
I. "Option" means an option granted under this Plan.
j. "Option Agreement" means the agreement which must be
entered into between the Optionee and the Company upon
the grant of an Option by the Company to the Optionee.
k. "Optionee" means an employee, officer, director,
consultant or independent contractor of the Company to
whom an option, which has not expired, has been granted
under this Plan, and any persons or entities entitled
to exercise an Option pursuant to Section 17 below.
<PAGE>
l. "Option Price" means the price per share of Common
Stock which the Optionee must pay to the Company upon
any exercise of any Option, determined pursuant to
Section 10 of the Plan.
m. "Shareholders" means the holders at any point in time
of the outstanding shares of the Company's voting
stock.
3. TYPES OF OPTIONS.
- -----------------------
Options granted under this Plan may be either ISOs or NQSOs, as
designated at the time of grant.
4. STOCK SUBJECT TO PLAN.
- ----------------------------
Only Common Stock shall be subject to the Options. The aggregate
number of shares of Common Stock which may be issued pursuant to
Options shall not exceed 2,000,000 shares, subject to adjustment
under the terms of Section 21 below. The shares of Common Stock
issuable upon exercise of any Option shall be either shares
authorized but unissued by the Company or shares issued and
reacquired by the Company. At all times during the term of this
Plan and prior to the Expiration Date of any Options, the Company
shall reserve and keep available such number of shares of its
Common Stock as shall be sufficient for the requirements of this
Plan and of any Options. If any Option shall expire, terminate
or be surrendered without having been exercised in full, the
unpurchased shares subject to such Option shall again be
available for the purposes of this Plan.
5. ELIGIBILITY AND PARTICIPATION.
- ------------------------------------
Options may be granted only to such employees, officers,
directors, consultants and independent contractors of the Company
or any subsidiary of the Company as the Board shall select from
time to time in its sole discretion, provided that only employees
of the Company who do not own stock possessing more than 10
percent of the total combined voting power of all classes of
stock of the Company or any parent or subsidiary corporation
shall be eligible to receive ISOs. An Optionee may be granted
more than one Option under this Plan.
6. LIMITATIONS.
- ------------------
The aggregate fair market value of stock (determined as of the
time an option is granted) with respect to which options are
exercisable for the first time by an employee during any calendar
year (under this Plan or under any other ISO or NQSO plan of the
Company or its subsidiaries) shall not exceed $100,000. This
paragraph shall be applied by taking options into account in the
order in which they are granted.
<PAGE>
7. EFFECTIVE DATE AND APPROVAL OF PLAN.
- ------------------------------------------
No Option shall be granted pursuant to this Plan prior to the
Date of Approval and this Plan shall become effective only upon
the Date of Approval. All Options under this Plan must be
granted within 10 years from the Date of Approval.
8. OPTION GRANT AND AGREEMENT.
- ---------------------------------
The Board shall determine whether each option is to be an ISO or
an NQSO, the number of shares of Common Stock for which the
Option shall be granted the exercise price of the Option, the
periods during which the Option may be exercised, and all other
terms and conditions of the option pursuant to this Plan. Each
Option granted under this Plan shall be evidenced by a written
Option Agreement dated as of the Date of Grant and executed by
the Company and the Optionee. Each Option Agreement shall set
forth such terms and conditions as may be determined by the Board
and as are consistent with the Plan. Unless otherwise determined
by the Board, the Company shall require no monetary consideration
from an Optionee in exchange for the grant of an Option.
9. PERIOD FOR EXERCISE OF OPTIONS.
- -------------------------------------
The Option Agreement shall state the date on which each Option,
and all rights under such Option, shall become exercisable and
shall expire. All Options granted under this Plan shall vest and
shall become exercisable in accordance with Section 12 of the
Plan. The Expiration Date shall be 10 years from the Date of
Grant. Options shall be subject to early termination as provided
by this Plan and the Option Agreements.
10. OPTION PRICE.
- -------------------
The Option Agreement shall state the Option Price. The Option
Price shall be the fair market value of the Common Stock which
shall be equal to the quoted closing price of the Common Stock on
the Date of Grant. If the Common Stock did not trade on the Date
of Grant the Option Price shall be equal to the closing price on
the last business day prior to the Date of Grant on which the
Common Stock traded. If no quoted closing price is available as
to the Common Stock, the fair market value shall be determined in
good faith by the Board of Directors on the Date of Grant.
11. NON-TRANSFERABILITY OF OPTION
- -----------------------------------
a. No option shall be transferable or assignable in any way
by an Optionee, otherwise than by will or by the laws of
descent and distribution. Each Option shall be exercisable
only by the Optionee or by his heirs or legal
representatives. No Option may be pledged or hypothecated
in any way or subjected to execution, attachment, or similar
process.
<PAGE>
b. Each Option is subject to the provisions of this Section
regardless of any community property interest of any spouse
of the Optionee in the Option, or such spouse's successor in
interest. In the event that any spouse of the Optionee
shall have acquired a community property interest in such
Option, the Optionee or his successor shall have the sole
authority and discretion to exercise the Option on behalf of
the spouse of the Optionee or such spouse's successors in
interest.
12. EXERCISE OF OPTION
- ------------------------
a. Each Option shall be exercisable as to 25% thereof on
and after the first anniversary of the Date of Grant, as to
an additional 25% thereof on and after the second
anniversary of the Date of Grant, as to an additional 25%
thereof on and after the third anniversary of the Date of
Grant and as to any remaining unexercised balance on and
after the fourth anniversary of the Date of Grant and prior
to the Expiration Date, unless earlier terminated in
accordance with the provisions of this Plan or the Option
Agreement under which such Option is granted. However, the
Board may, by the provisions of the Option Agreement, define
or limit the number of shares purchasable under the Option
to or in any period or periods of time following the first
anniversary of the Date of Grant.
b. The Option shall be exercised by the Optionee by giving
written notice to the Secretary of the Company specifying
the number of shares to be purchased and accompanied by
payment of the full Option Price of the shares in whatever
manner the Board authorizes.
c. Within a reasonable period after receipt by the
Secretary of the Company of notice and payment, the Company
shall issue the shares purchased in the name of the Optionee
and deliver the certificates evidencing the shares;
provided, however, that the Company shall not issue the
shares unless and until the Company effects or obtains the
satisfaction of withholding tax or other withholding
liabilities, or the listing, registration, or qualifications
of any shares upon any securities exchange or under any
state or federal law, or the consent or approval of any
regulatory body, which the Company, in its discretion, deems
necessary or desirable.
13. INVESTMENT PURPOSE.
- -------------------------
Each Option under the Plan shall be granted on the condition that
the purchases of shares shall be for investment purposes, and not
with a view to resale or distribution except that in the event
the stock subject to such Option is registered under the
Securities Act of 1933, as amended, or in the event a resale of
such stock without such registration would otherwise be
permissible. Such condition shall be inoperative if in the
opinion of counsel for the Company such condition is not required
under the Securities Act of 1933, as amended, or any other
applicable law, regulation, or rule of any governmental agency.
<PAGE>
14. RESTRICTIVE LEGEND.
- -------------------------
A restrictive legend shall be placed on each certificate of stock
issued pursuant to the exercise of an Option if the securities
are unregistered, setting forth the unregistered nature of the
securities, and the restrictions upon repurchase or resale of
such securities as provided in this Plan, the By-Laws or
Certificate of Incorporation of the Company, the Option
Agreements, or any other document or agreement pertaining to the
shares.
15. VESTING OF SHAREHOLDER RIGHTS.
- ------------------------------------
No Optionee shall have any of the rights of a shareholder until
the certificates evidencing the shares purchased are properly
delivered to the Optionee. No adjustment shall be made for any
type of dividend or distribution or right for which the record
date is prior to the date of shares are delivered, except as
provided in this Plan.
16. CONTINUATION OF SERVICES.
- -------------------------------
The granting of an Option to an Optionee does not alter in any
way the Company's or Shareholders' existing rights to remove such
Optionee from the Board (if applicable), terminate the employment
of the Optionee (if applicable) or terminate the Company's use of
the Optionee's services in any other manner, nor does it confer
upon any such Optionee any rights or privileges, except as
specifically provided in this Plan.
17. EARLY TERMINATION OF OPTIONS: DEATH OR DISABILITY OF
OPTIONEE.
- -----------------------------------------------------------------
a. If an Optionee leaves the Board or the employ of the
Company or ceases to work as a consultant or independent
contractor due to death or disability with an outstanding
Option, his Option privileges shall be limited to the shares
which were immediately purchasable by him on the date he
left the Board or the employ of the Company or ceased to
work as a consultant or independent contractor. Such Option
privileges shall expire unless exercised by the Optionee, or
by the executor or administrator of the Optionee's estate or
the person or persons to whom the Option has to will or laws
of descent and distribution, within twelve months after the
date the Optionee left the Board or the employ of the
Company or ceased to work as a consultant or independent
contractor or within the remaining term of the Option,
whichever is less.
b. Any person or entity succeeding to the right to exercise
an Option pursuant to this Section 17 shall be bound by all
of the provisions of this Plan and the relevant Option
Agreement as an Optionee.
<PAGE>
18. EARLY TERMINATION OF OPTIONS: OTHER.
- ------------------------------------------
If an Optionee leaves the Board or the employ of the Company or
ceases to work as than (i) cause (see Section 23 of this Plan) or
(ii) death or disability (see Section 17 of this Plan) with an
outstanding Option, his Option privileges shall be limited to the
shares which were immediately purchasable by him on the date he
left the Board or the employ of the Company or ceased to work as
a consultant or independent contractor for the Company. Such
option privileges shall expire unless exercised by the Optionee
within three months after the date the Optionee left the Board or
the employ of the Company or ceased to work as a consultant or
independent contractor for the Company or within the remaining
term of the Option, whichever is less.
19. RESTRICTIONS.
- -------------------
The shares acquired pursuant to the exercise of an Option shall
be subject to any further restrictions as the Board may
determine.
20. ADMINISTRATION OF PLAN AND ADDITIONAL TERMS AND CONDITIONS
OF OPTIONS.
- -----------------------------------------------------------------
a. This Plan shall be administered by the Board or, to the
extent authorized by a resolution of the Board, a Committee
of the Board. Acts approved, or reduced to writing, by a
majority of the Board shall be valid acts.
b. The Board shall have full and final authority, in its
sole discretion, subject to the provisions of this Plan, to:
(i) construe and interpret this Plan;
(ii) determine the terms and provisions of the
respective Option Agreements, which need not be
identical, including, without limitation, terms
covering the payment of the Option Price and the
periods and number of shares as to and during which
Options may be exercised;
(iii) delegate any of its duties to the Committee of
the Board; and
(iv) make all other determination under this Plan
which determinations shall be conclusively binding for
all purposes upon all persons interested in this Plan.
c. All terms and conditions of any Option which are not
specified in the text of this Plan shall be stated in the
Option Agreement and shall not conflict with the provisions
of this Plan nor require Shareholder approval as a
modification or amendment of this Plan.
<PAGE>
21. ADJUSTMENTS.
- ------------------
a. In the event that the issued and outstanding shares of
the Common Stock are increased, decreased, changed into, or
exchanged for, a different number of kind of shares or other
securities of the Company or of another corporation, by
reason of recapitalization, reclassification, merger,
consolidation, stock split, or combination or shares,
appropriate adjustment shall be made by the Board in the
number and kind of shares available for purchase under
outstanding options. Such adjustment in outstanding Options
shall be made with an adjustment in the Option Price and the
number of shares subject to Option, but without change in
the total Option Price.
b. In the event of the dissolution of the Company, all
outstanding Options shall terminate as of a date to be fixed
by the Board, provided that not less than thirty days'
written notice of the date so fixed shall be given to each
Optionee and each such Optionee shall have the right during
such period to exercise his Option as to all or part of the
shares subject to the Option including shares as to which
such Option would not otherwise be exercisable by reason of
an insufficient lapse of time.
c. Adjustments and determination under this paragraph 21
shall be made by the Board and shall be final, binding and
conclusive on all interested persons.
22. NOTICE OF DISPOSITION OF SHARES.
- --------------------------------------
Each Optionee shall agree pursuant to an Option Agreement to
promptly notify the Company of any disposition, sale, exchange,
gift or transfer of legal title of the Shares acquired by the
Optionee pursuant to an Option, and of any other event which, to
the Optionee's knowledge, requires the Optionee to include in his
gross income any amount in connection with the Option or any
Option Shares.
23. FORFEITURE OF OPTIONS AND OPTION SHARES.
- ----------------------------------------------
The Option Agreement shall state the circumstances under which an
Option and shares acquired pursuant to such Option shall be
forfeitable. At the discretion of the Board, the Option
Agreements may provide that an Optionee shall forfeit options
and/or surrender shares acquired pursuant to an Option, with or
without consideration, automatically if, in the opinion of the
Board, the Optionee has taken action adverse to the Company's
interests, including but not limited to, the following:
a. The Optionee performs services, without the Board's
consent, for another person or entity engaged in a business
which competes, indirectly or directly, with the Company, at
any time within a period of time determined by the Board;
b. The Optionee breaches any written agreement existing
between the Company and the Optionee and fails to remedy
such breach within a period of time determined by the Board;
<PAGE>
c. The Optionee discloses confidential information received
from the Company to unauthorized parties;
d. The Optionee engages in a business in direct or indirect
competition with the Company within a period of time
determined by the Board; or
e. The Optionee takes any action causing him to be removed
from the Board for cause.
24. AMENDMENT, SUSPENSION AND TERMINATION OF PLAN.
- ----------------------------------------------------
The Board may at any time suspend or terminate this Plan or may
amend it from time to time in such respects as the Board may deem
advisable in order that the Options may conform
<PAGE>
EXHIBIT 5.1
- -----------
OPINION OF BUCHANAN INGERSOLL
We have acted as counsel to Mikros Systems Corporation, a
Delaware corporation (the "Company"), in connection with the
filing by the Company of a registration statement on Form S-*/S-3
(the "Registration Statement"), under the Securities Act of 1933,
as amended, relating to the registration of an aggregate of
2,200,000 shares of the Company's Common Stock, $0.01 par value,
of which: i) 200,000 share (the "1981 Plan Shares") of Common
Stock have been issued by the Company to its employees, officers,
directors and consultants under the 1981 Incentive Stock Option
Plan (the "1981 Plan"); ii) 725,000 shares (the "Option Shares")
of Common Stock are to be offered by the Company to its
employees, officers, directors and consultants under the 1992
Incentive Stock Option Plan (the "1992 Plan"); and iii)
1,275,000 shares (the "1992 Plan Shares") of Common Stock have
been issued by the Company to its employees, officers, directors
and consultants under the 1992 Plan.
In connection with the Registration Statement, we have examined
such corporate records and documents, other documents and such
questions of law as we have deemed necessary or appropriate for
purposes of this opinion. On the basis of such examination, it
is our opinion that:
1) Each of the 1981 Plan Shares and the 1992 Plan Shares have
been duly and validly authorized and are validly issued,
fully paid and non-assessable;
2) The issuance of the Option Shares has been duly and validly
authorized; and
3) The Option Shares, when issued, delivered and sold in
accordance with the terms of the respective 1992 Plan and
the stock options or other instruments authorized by such
Plans, granted or to be granted thereunder, will be validly
issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5 to
the Registration Statement.
Buchanan Ingersoll
April 25, 1997
<PAGE>
EXHIBIT 23.1
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INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement, dated April 25, 1997, of Mikros Systems Corporation on
Form S-8, pertaining to the Incentive Stock Option Plan (1981)
and 1992 Incentive Stock Option Plan of Mikros Systems
Corporation for the registration of an aggregate of 2,200,000
shares of its common stock, of our report which expresses an
unqualified opinion dated February 13, 1997, appearing in and
incorporated by reference in the Annual Report on Form 10-K of
Mikros Systems Corporation for the year ended December 31, 1996
and to the reference to us under the heading "Experts" in the
Prospectus, which is part of such Registration Statement.
DRUKER, RAHL & FEIN
Princeton, New Jersey
April 25, 1997
<PAGE>
EXHIBIT 23.2
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CONSENT OF BUCHANAN INGERSOLL
(CONTAINED IN THE OPINION FILED AS EXHIBIT 5.1)
<PAGE>
EXHIBIT 24
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints Thomas J.
Meaney, his true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this
Registration Statement, and to file the same with all exhibits
thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent 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 attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
