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As filed with the Securities and Exchange Commission on August 24, 1998
Registration No. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________
LINKON CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 13-3469932
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation)
140 SHERMAN STREET
FAIRFIELD, CONNECTICUT 06430
(Address of Principal Executive Offices) (Zip Code)
LINKON CORPORATION
1996 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
(Full Title of the Plan)
LEE W. HILL
PRESIDENT AND CHIEF EXECUTIVE OFFICER
140 SHERMAN STREET
FAIRFIELD, CONNECTICUT 06430
(203) 319-3100
(Name, address and telephone number, including area code, of agent for service)
____________________
Copies to:
DAVID I. ALBIN, ESQ.
FINN DIXON & HERLING LLP
ONE LANDMARK SQUARE
STAMFORD, CONNECTICUT 06901
(203) 325-5000
<TABLE>
<CAPTION>
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CALCULATION OF REGISTRATION FEE
================================================================================================
<S> <C> <C> <C> <C>
Proposed Maximum Proposed Maximum Amount of
Title of Securities Amount Offering Aggregate Registration
to be Registered to be Registered Price Per Share Offering Price Fee
- ------------------------------------------------------------------------------------------------
Common Stock,
$.001 par value.... 2,500,000 shares $1.18(1) $2,950,000.00(1) $870.25(1)
================================================================================================
</TABLE>
(1) Estimated in accordance with Rule 457(h) and Rule 457(c) solely for the
purpose of calculating the registration fee on the basis of the weighted
average of (i) $1.03 per share for 1,674,150 options granted to date and
outstanding under the plan; and (ii) $1.50 per share for the remaining
825,850 shares issuable under the Plan, which price is the average of the
closing bid and asked prices per share of Common Stock of the Registrant
reported on the National Quotations Bureau "pink sheets" on August 19,
1998.
<PAGE>
EXPLANATORY NOTE
Linkon Corporation, a Delaware corporation (the "Company"), adopted the
Linkon Corporation 1996 Stock Option and Performance Incentive Plan, which was
amended and restated on July 15, 1998 (as amended and restated, the "Plan"). A
total of 2,500,000 shares of the common stock of the Company, $0.001 par value
per share (the "Common Stock"), reserved for issuance upon the exercise of
options and other awards granted pursuant to the Plan, have been registered
under the Securities Act of 1933, as amended (the "Act").
This Registration Statement is intended to register the issuance by the
Company of 2,500,000 shares of Common Stock which may be issued by the Company
pursuant to the exercise of options or other awards granted under the Plan.
Also, this Registration Statement and the reoffer prospectus included
herein, are intended to register for reoffer and/or resale shares of Common
Stock that may be acquired in the future under options awarded under the Plan by
persons who may be considered affiliates of the Company as defined by Rule 405
under the Act.
The materials constituting the reoffer prospectus have been prepared
pursuant to Part I of Form S-3, in accordance with General Instruction C to Form
S-8.
<PAGE>
REOFFER PROSPECTUS
UP TO 2,500,000 SHARES
LINKON CORPORATION
COMMON STOCK
This Prospectus relates to the resale of up to 2,500,000 shares of Common
Stock, $0.001 par value ("Common Stock"), of Linkon Corporation (the "Company")
which may in the future be issued pursuant to the exercise of options awarded to
date, and which in the future may be awarded, under the Linkon Corporation 1996
Stock Option and Performance Incentive Plan, as amended and restated (the
"Plan") to, and which may be offered for resale from time to time by, certain
employees and directors of the Company and its subsidiaries named in Annex I
hereto (the "Selling Stockholders"). See "Selling Stockholders."
The Company will not receive any of the proceeds from the sale of the Common
Stock offered hereby (hereinafter, the "Securities"). The Company will pay all
of the expenses associated with the registration of the Securities and this
Prospectus. The Selling Stockholders will pay the other costs, if any,
associated with any sale of the Securities.
The Common Stock is not listed on either any national securities exchange or
the NASDAQ Stock Market. The Common Stock is listed on the National Quotation
Bureau "pink sheets" under the symbol "LKON".
The Company's principal executive offices are located at 140 Sherman Street,
Fairfield Connecticut 06430 and its telephone number is (203) 319-3100.
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 BELOW.
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.
AUGUST 24, 1998
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RISK FACTORS
In addition to the other information contained in this Prospectus, the
prospective purchaser of the Common Stock offered hereby should carefully
consider the following factors:
ABSENCE OF PROFITABLE OPERATING HISTORY
The Company was created by the merger of Linkon Corporation, a privately held
New York corporation, and Deals are Good, Inc., a publicly held Nevada
corporation, in 1990 and, to date, the Company's sales revenues have not been
sufficient to cover its operating costs. The Company has not made a profit since
its creation in 1990, and has accumulated a net loss through the fiscal year
ended January 31, 1998 of approximately $9.8 million. The Company's operations
have been financed principally by a series of equity sales, and there can be no
assurance that the Company will be able to obtain such financing in the future
or that the Company will become profitable and able to finance its operations
through operating revenues.
DEVELOPING MARKET AND TECHNOLOGICAL CHANGE
The market for the Company's products is relatively new and still developing,
and is subject to rapid and material technological change. The future financial
performance of the Company will depend in part on the development and continuing
growth of this market. There can be no assurances that any of the Company's
products will gain sufficient market acceptance for the Company to become
profitable. Current or new competitors may introduce new products that could
adversely affect the Company's competitive position. The Company believes that,
to remain competitive, it must continue to improve its products and develop and
successfully market new products. There can be no assurance that the Company
will be able to do so. The success of new products depends on a variety of
factors, including understanding market needs and being able to develop products
that solve such needs. There can be no assurances that the Company will be able
to identify new product opportunities successfully and develop and bring to
market such new products or that the Company will be able to respond effectively
to technological changes or new products developed by competitors. Furthermore,
even if the Company develops a successful product, there can be no assurances
that the Company will be able to produce and sell such product on the necessary
scale.
WORKING CAPITAL POSITION
As of January 31, 1998, the Company had a working capital deficit (current
assets minus current liabilities) of approximately $815,000. While the Company's
sale of equity securities and refinancing of borrowed money indebtedness
consummated during the first quarter of fiscal 1999 has given the Company
positive working capital on a pro forma basis as of January 31, 1998 of
approximately $1.2 million (see "Recent Developments" below), and actual working
capital as of April 30, 1998 of approximately $570,000, the Company's prior
working capital deficiencies have, at times, rendered the Company unable to pay
certain obligations. Therefore, while the Company's liquidity has recently been
significantly improved from its position in the last few years, the Company's
ability to continue its operations is dependent upon its ability to generate
positive cash flow from operations and/or raise additional funds. There can be
no assurance that the Company will be able to raise any additional funds, either
at an acceptable cost or at all, or generate cash flow from operations.
Furthermore, any funds raised through the issuance of equity will dilute the
Company's outstanding equity. In addition, the Company has $300,000 of borrowed
money indebtedness coming due in the fiscal year ending January 31, 1999 and
another $1.1 million of borrowed money indebtedness coming due in the fiscal
year ending January 31, 2001. There can be no assurances that the Company will
be able to repay such indebtedness.
EFFECT OF COMPETITION
The markets in which the Company competes are extremely competitive.
Competitors to the Company's various product lines include, among others:
For the Maestro/TM/ Systems products, Dialogic Corporation, Rhetorex, a
division of the Octel Division of Lucent, Brooktrout Technology, Inc. and
Natural Microsystems, Inc.
<PAGE>
For the Escape/TM/ Platform products, Conversant, a division of Lucent
Technologies, Brite Voice, Intervoice, Periphonics, and Syntellect manufacture
IVR systems.
For the LinkNet/TM/ System products, Dialogic Corporation, Natural
Microsystems, Analogic Corporation and Brooktrout Technology, Inc. have
introduced competing IP telephony hardware/software components. For LinkNet/TM/
Gateway (server) products, Netspeak, Vocaltec, InterTel, Vienna Systems and
other companies, as well as several proprietary products companies, have built
competing IP Telephony gateway products that utilize components from one or more
of the companies listed above.
In addition, the Company believes that competition could further intensify in
the Company's field as the technology becomes more commercially utilized. Many
of these companies, and other potential competitors, have considerably greater
financial and marketing resources than the Company, and have (or have the
ability to acquire) considerable technical resources.
INTELLECTUAL PROPERTY RISKS
The Company's success will depend in part on its ability to obtain and
maintain patent, trademark and copyright protection for its products, to
preserve its trade secrets and to operate without infringing on the proprietary
rights of third parties. While the Company has obtained a registration for its
TERAVOX(R) trademark from the U.S. Patent and Trademark Office and intends to
seek source code copyright protection on its future operating systems and
utilities, the Company has not to date obtained any patents or registered any
copyrights for any of its products, nor has it historically expended material
effort in utilizing legal procedures to protect its technology. Although the
Company has never been party to a law suit involving its technology, disputes
over intellectual property rights can result in significant and expensive
litigation. Any assertions of intellectual property claims could require the
Company to cease the manufacture and sale of infringing products, to incur
significant litigation costs and to develop noninfringing technology or acquire
licenses to the alleged infringed technology. There can be no assurance that the
Company would be able to obtain such licenses on acceptable terms or to develop
noninfringing technology. In addition, there can be no assurance that any of the
Company's products and processes will not be copied, challenged, invalidated or
circumvented or that any trade secret protections that the Company may have will
provide competitive advantages to the Company. Furthermore, the laws of certain
countries do not protect the Company's intellectual property rights to the same
extent as do the laws of the United States.
RISKS OF INTERNATIONAL SALES
The Company has sold and intends to sell its products in markets throughout
the world. A number of risks are inherent in international transactions.
International sales may be limited or disrupted by the imposition of
governmental controls, regulations, export license requirements, political
instability, trade restrictions, changes in tariffs and difficulty in satisfying
customers in distant locations. In addition, fluctuations in rates of exchange
between the U.S. Dollar and nonDollar currencies may have a material adverse
effect on the Company's sales.
YEAR 2000 ISSUE
The "Year 2000 Issue" results from computer programs being written using two
digits, instead of four, to define a given year. Programs running time sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000, which could result in disruptions to various activities and operations,
miscalculations and even system failures.
The Company has designed all of its currently manufactured software and
hardware to be Year 2000 ready. The Company has commenced an investigation and
is making written inquiry to its suppliers as to whether the component parts of
certain of its products that are supplied by such third parties are Year 2000
compliant. With respect to the Company's own operating systems, the Company is
taking steps to remediate any existing Year 2000 Issues and does not expect the
costs of such efforts to be material.
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Based upon preliminary data, the Company does not believe that the Year 2000
Issue will have a material adverse impact on the Company's financial condition,
results of operation or future cash flows. If, however, the Company, its
suppliers and other third parties with whom the Company maintains business
relations are unable to resolve any arising Year 2000 problems in a timely
manner, risk to the Company's financial condition could result. Furthermore, the
Company is unable to predict the likelihood of Year 2000 problems to utilities,
banks and other infrastructure services interfering with its ability to do
business.
DEPENDENCE ON KEY PERSONNEL
The Company's success depends, in large part, upon a small number of key
managerial, engineering, sales and technical personnel, and the loss of certain
key personnel could have an adverse effect on the Company's business. The
Company does not maintain key personnel life insurance on any of its officers or
employees.
DIVIDENDS NOT LIKELY
For the foreseeable future, it is anticipated that earnings (if any) will be
used to finance the operations of the Company and that dividends will not be
paid. The Company's loan agreement with the RG Fund (as defined below), its
principal lender, prohibits the payment of dividends.
SIGNIFICANT STOCKHOLDERS
As of May 29, 1998, the Company's Directors and Executive Officers
beneficially owned in the aggregate approximately 36.2% of the Company's common
stock. In addition, two institutional investors beneficially owned approximately
18.7% and 6.8% of the Company's common stock, respectively. (Because of the
Securities and Exchange Commission's rules on calculating beneficial ownership
percentages, the percentage of the Company's common stock beneficially owned by
all of such parties combined would be somewhat less than if the aforesaid
percentages were merely added together (approximately 53.2%)). This
concentration of common stock in the hands of a small number of individuals and
entities means that there may be limited opportunities for other stockholders to
influence the business and affairs of the Company by the exercise of voting
rights. Furthermore, the aforesaid concentration in shares may cause extreme
fluctuations in the trading volume of the Company's stock in a given period,
which in turn may cause the Company's common stock to suffer market price
fluctuations without regard to the Company's operating results.
POSSIBLE EFFECT OF ADDITIONAL PREFERRED STOCK ISSUANCES
The Restated Articles of Incorporation of the Company (the "Articles of
Incorporation") authorize the issuance of up to 1,000,000 shares of preferred
stock, $0.001 par value per share ("Preferred Stock"). The Board of Directors is
authorized to issue shares of Preferred Stock from time to time in one or more
series and, subject to the limitations contained in the Articles of
Incorporation and any limitations prescribed by law, to establish and designate
series and to fix the number of shares and the relative rights, conversion
rights, voting rights, rights and terms of redemption (including sinking fund
provisions) and liquidation preferences of each such series. Currently, no
preferred stock is outstanding. If shares of Preferred Stock with voting rights
are issued, such issuance could affect the voting rights of the holders of the
Company's Common Stock by increasing the number of outstanding shares having
voting rights, and by the creation of special class or series voting rights. In
addition, if the Board authorized the issuance of shares of Preferred Stock with
conversion rights, the number of shares of Common Stock outstanding could
potentially be increased. Also, additional Preferred Stock could have
preferences with respect to dividend and liquidation rights. The Company has no
present plans to issue Preferred Stock.
NO CUMULATIVE VOTING
The Articles of Incorporation do not provide for cumulative voting. Therefore,
holders of less than a majority of the Company's outstanding Common Stock have
no right to elect any of the Company's directors.
3
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LIQUIDITY OF STOCK
The Company's Common Stock is currently trading on the National Quotations
Bureau Bulletin Board in the "over the counter" market. Thus, only bid and asked
prices between dealers (rather than sales prices) are currently available with
respect to the Common Stock. The fact that the Company is trading on the
National Quotations Bureau Bulletin Board rather than on the National
Association of Securities Dealers Automated Quotations System ("NASDAQ") or an
exchange could have the effect of significantly reducing news coverage of the
Company and might cause the market price of the Common Stock to be lower than it
otherwise would be. Although the Company intends to apply for listing on NASDAQ
as soon as possible, it currently would not qualify to be so listed. Thus,
holders of the Common Stock might not realize the extent of liquidity that they
might were the stock listed on NASDAQ or a national securities exchange. In
addition, there can be no assurances that either the fact of this Registration
Statement or the sale of the Company's Common Stock hereunder will not adversely
effect the market price of the Common Stock.
BROKER-DEALER SALES OF COMPANY'S COMMON STOCK
The Company's Common Stock is covered by a rule under the Exchange Act that
imposes additional requirements on broker-dealers who sell such "penny stock"
to, or effect the purchase of such "penny stock" by, any person in a transaction
in which the purchaser is not an established customer, that does not meet the
requirements of Rule 505 or Rule 506 under the Securities Act, that does not
fall within Section 4(2) under the Securities Act or that is not exempt under
Rule 15g1 of the Exchange Act. For transactions covered by the rule, prior to
the transaction the broker-dealer must make a special suitability determination
for the purchaser and must have received the purchaser's written agreement to
the transaction prior to the sale. Consequently, the rule may affect the ability
of the broker-dealers to sell the Company's securities and also may affect the
ability of a purchaser in this offering to sell its shares in the secondary
market.
DILUTION
As of August 15, 1998, there were outstanding warrants and options to
purchase an aggregate of approximately 3.7 million shares of Common Stock of the
Company at exercise prices ranging from a high of $3.50 per share to a low of
$0.5625 per share. In the event of a substantial increase in the market value of
the Company's Common Stock, it is likely that many or all of those warrants and
options would be exercised. Since the exercise prices would be likely to be less
than the market value of the Common Stock, the market value of each share of
Common Stock would be reduced by any such exercise, and holders of Common Stock
would to that extent suffer a dilution of the value of their Common Stock.
CONCENTRATION OF CUSTOMERS
To date, the bulk of the Company's revenues have been concentrated in a very
small number of customers. The Company's two largest customers in fiscal 1998,
AT&T and Cat Technologies accounted for approximately 67% and 9% of sales,
respectively. The loss of any one such customer would have a material adverse
effect on the Company's results of operations.
NEVADA GENERAL CORPORATION LAW
The terms of Chapter 78 of the Nevada Revised Statutes (referenced as the
Nevada General Corporation Law, or the "NGCL"), apply to the Company. Under
certain circumstances, the provisions of the NGCL described in the following
paragraphs may delay or make more difficult acquisitions or changes of control
of the Company. The Company's Articles of Incorporation and Bylaws do not
exclude the Company from such provisions of the NGCL. Such provisions may make
it more difficult to accomplish transactions that shareholders may believe are
in their best interests. Such provisions may also have the effect of preventing
changes in the Company's management.
4
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CONTROL SHARE ACQUISITIONS.
Under Sections 78.378 to 78.3793 of the NGCL (the "Control Share Act"), an
"acquiring person" who acquires a "controlling interest" in an "issuing
corporation" may not exercise voting rights on any "control shares" unless such
voting rights are conferred by a majority vote of the disinterested shareholders
of the issuing corporation at a special meeting of such shareholders held upon
the request and at the expense of the acquiring person. If the control shares
are accorded full voting rights and the acquiring person acquires control shares
with a majority or more of all the voting power, any shareholder, other than the
acquiring person, who does not vote for authorizing voting rights for the
control shares, is entitled to demand payment for the fair value of their
shares, and the corporation must comply with the demand. For the above
provisions, "acquiring person" means (subject to certain exceptions) any person
who, individually or in association with others, acquires or offers to acquire,
directly or indirectly, a controlling interest in an issuing corporation.
"Controlling interest" means the ownership of outstanding voting shares of an
issuing corporation sufficient to enable the acquiring person, individually or
in association with others, directly or indirectly, to exercise (i) one fifth or
more but less than one third, (ii) one third or more but less than a majority,
and/or (iii) a majority or more of the voting power of the issuing corporation
in the election of directors. Voting rights must be conferred by a majority of
the disinterested shareholders as each threshold is reached and/or exceeded.
"Control Shares" means those outstanding voting shares of an issuing corporation
which an acquiring person acquires or offers to acquire in an acquisition or
within 90 days immediately preceding the date when the acquiring person became
an acquiring person. "Issuing corporation" means a corporation that is organized
in Nevada, has 200 or more shareholders (at least 100 of whom are shareholders
of record and residents of Nevada) and does business in Nevada directly or
though an affiliated corporation. The above does not apply if the articles of
incorporation or bylaws of the corporation in effect on the 10th day following
the acquisition of a controlling interest by an acquiring person provide that
said provisions do not apply. The Articles of Incorporation and Bylaws do not
exclude it from the restrictions imposed by such provisions.
CERTAIN BUSINESS COMBINATIONS.
Sections 78.411 to 78.444 of the NGCL, (the "Business Combinations Act")
restrict the ability of a "resident domestic corporation" to engage in any
combination with an "interested stockholder" for three years following the
interested stockholder's date of acquiring the shares that cause such
stockholder to become an interested stockholder, unless the combination or the
purchase of shares by the interested stockholder on the interested stockholder's
date of acquiring the shares that cause such stockholder to become an interested
stockholder is approved by the board of directors of the resident domestic
corporation before that date. If the combination was not previously approved,
the interested stockholder may effect a combination after the three year period
only if such stockholder receives approval from a majority of the disinterested
shares or the offer meets certain fair price criteria. For the above provisions,
"resident domestic corporation" means a Nevada corporation that has 200 or more
shareholders. The provisions of the Business Combinations Act do not apply,
however, to any combination of a resident domestic corporation which does not,
as of the date of acquiring shares, have a class of voting shares registered
with the Securities and Exchange Commission under Section 12 of the Securities
Exchange Act, unless the corporation's original articles of incorporation
provide otherwise. "Interested stockholder", when used in reference to any
resident domestic corporation, means any person, or its subsidiaries, who is (i)
the beneficial owner, directly or indirectly, of 10% or more of the voting power
of the outstanding voting shares of the resident domestic corporation or (ii) an
affiliate or associate of the resident domestic corporation and, at any time
within three years immediately before the date in question, was the beneficial
owner, directly or indirectly, of 10% or more of the voting power of the then
outstanding shares of the resident domestic corporation. The above does not
apply to corporations that so elect in a charter amendment approved by a
majority of the disinterested shares. Such a charter amendment, however, would
not become effective for 18 months after its passage and would apply only to
stock acquisitions occurring after its effective date. The Articles of
Incorporation do not exclude it from the restrictions imposed by such
provisions.
DIRECTORS DUTIES.
Section 78.138 of the NGCL allows directors and officers, in exercising their
respective powers with a view
5
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toward the interest of the Company, to consider the interests of the Company's
employees, suppliers, creditors, and customers, the economy of the state and the
nation; the interests of the community and of society and the long and short
term interests of the Company and its shareholders, including the possibility
these interests may be best served by the continued independence of the Company
in the case of an offer to acquire the Company. Directors may resist a change or
potential change in control if the directors by a majority vote of a quorum
determine that the change or potential change is opposed to or not in the best
interest of the Company upon consideration of the interests set forth above or
if the board has reasonable grounds to believe that, within a reasonable time,
the debt created as a result of the change in control would cause the assets of
the Company or any successor to be less than the liabilities or would render the
Company or any successor insolvent or would lead to bankruptcy proceedings.
SELLING STOCKHOLDERS
The table attached as Annex I hereto sets forth, as of the date of this
Prospectus or a subsequent date if amended or supplemented, (a) the name of each
Selling Stockholder and his or her relationship to the Company during the past
three years; (b) the number of shares of Common Stock that each Selling
Stockholder beneficially owns (assuming that all options to acquire shares are
exercisable within 60 days); (c) the number of Securities offered pursuant to
this Prospectus by each Selling Stockholder; and (d) the amount and percentage
of the Common Stock outstanding to be held by such Selling Stockholder after
giving effect to this offering. The information contained in Annex I may be
amended or supplemented from time to time.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Securities offered hereby.
PLAN OF DISTRIBUTION
The Securities covered hereby may be offered and sold from time to time by the
Selling Stockholders. The Selling Stockholders will act independently of the
Company in making decisions with respect to the timing, manner and size of each
sale. Such sales may be made in the over the counter market or otherwise, at
prices related to the then current market price or in negotiated transactions,
including one or more of the following methods: (a) purchases by a broker-dealer
as principal and resale by such broker or dealer for its account pursuant to
this Prospectus; (b) ordinary brokerage transactions and transactions in which
the broker solicits purchasers; (c) block trades in which the broker dealer so
engaged will attempt to sell the Securities as agent but may position and resell
a portion of the block as principal to facilitate the transaction; and (d) by
sales directly to purchasers in negotiated transactions. Sales may be made at
fixed prices which may be changed, at market prices prevailing at the time of
sale, or at negotiated prices. The Company has been advised by each Selling
Stockholder that it has not made any arrangements relating to the distribution
of the Securities owned by it covered by this Prospectus. In effecting sales,
broker-dealers engaged by the Selling Stockholders may arrange for other broker-
dealers to participate. Broker-dealers may receive commissions, discounts or
other concessions from the Selling Stockholders and/or the purchasers for whom
such broker-dealers may act as agents or to whom they may sell as principals or
otherwise in amounts to be negotiated (which compensation as to a particular
broker-dealer may exceed customary commissions).
In offering the Securities covered hereby, the Selling Stockholders and any
broker-dealers and any other participating broker-dealers who execute sales for
the Selling Stockholders may be deemed to be "underwriters" within the meaning
of the Securities Act in connection with such sales, and any profits realized by
the Selling Stockholders and the compensation of such broker-dealer may be
deemed to be underwriting discounts and commissions. In addition, any
Securities covered by this Prospectus which qualify for sale pursuant to Rule
144 may be sold under Rule 144 rather than pursuant to this Prospectus.
In order to comply with certain states' securities laws, if applicable, the
Securities offered hereby will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, the Securities may not
be sold in certain states unless they have been registered or qualified for sale
in such state or an exemption from
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regulation or qualification is available and is complied with. The Company
intends to use its best efforts to register or qualify the Securities for resale
or to seek an exemption from registration or qualification in any state required
in order to facilitate, as to a particular sale, the sale of the Securities by
the Selling Stockholders.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered hereby will
be passed upon for the Company by Sklar, Warren & Conway LLP, Las Vegas, Nevada.
EXPERTS
The consolidated financial statements of Linkon Corporation at January 31,
1998 and 1997 and for the years then ended, incorporated by reference in this
Prospectus and Registration Statement from the Company's Form 10-KSB for the
period ended January 31, 1998, as amended, have been audited by Radin Glass &
Co., LLP, independent public auditors, and are incorporated herein in reliance
upon such report given upon the authority of such firm as experts in auditing
and accounting.
AVAILABLE INFORMATION
A Registration Statement on Form S-8 under the Act, including amendments
thereto, relating to the Securities offered hereby has been filed by the Company
with the Securities and Exchange Commission (the "Commission"), Washington, D.C.
This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and the Securities offered hereby,
reference is made to such Registration Statement and exhibits and schedules
filed as a part thereof. The Company also files periodic reports, proxy
statements and other information with the Commission. A copy of the
Registration Statement and such other materials may be inspected by anyone
without charge at the Public Reference Section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located at 7 World Trade Center, Suite 1300,
New York, New York 10048 and Northwest Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of all or any portion of the
Registration Statement and other such materials may be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, upon payment of prescribed fees. The Commission maintains a Web site
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of the Commission's Web site is http://www.sec.gov.
Statements made in this Prospectus as to the contents of any contract,
agreement or other document are not necessarily complete. With respect to each
such contract, agreement or other document filed as an exhibit to the
Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.
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INCORPORATION OF DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this Prospectus the following
documents and information heretofore filed with the Securities and Exchange
Commission (the "SEC"):
(a) The Company's Annual Report on Form 10-KSB, as amended, for the fiscal
year ended January 31, 1998, filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
(b) The Company's Proxy Statement dated June 12, 1998;
(c) The Company's Quarterly Report on Form 10-QSB for the fiscal quarter
ended April 30, 1998, filed pursuant to Section 13(a) or 15(d) of the Exchange
Act; and
(d) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 10, filed pursuant to Section 12(g)
of the Exchange Act on December 2, 1991.
All reports and other documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of this offering shall be incorporated by reference into this Prospectus and
shall be deemed to be part of this Prospectus from the date of filing of such
reports and documents. Any statement contained herein or in a document
incorporated by reference shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained in this
Prospectus or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide, upon written or oral request, without charge to each
person to whom a copy of this Prospectus has been delivered, a copy of any or
all of the documents which have been or may be incorporated in this Prospectus
by reference, other than certain exhibits to such documents. Requests for such
copies should be directed to: Linkon Corporation, 140 Sherman Street, Fairfield
Connecticut 06430 (Attention: Thomas V. Cerabona) (telephone: (203) 319-3100).
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
As permitted by Section 78.037 of the Nevada General Corporation Law, the
Company has included in its restated Articles of Incorporation a provision which
states that a director or officer of the Company shall not be liable to the
Company or its stockholders for damages for acts or omissions resulting in a
breach of fiduciary duty as a director or officer, except if such acts or
omissions involve (a) intentional misconduct, fraud or a knowing violation of
the law; or (b) the payment of dividends in violation of Section 78.300 of the
Nevada General Corporation Law.
As permitted by Section 78.751 of the Nevada General Corporation Law, Article
Ninth of the Company's Restated Articles of Incorporation provides for the
indemnification by the Company of each director, officer, employee or agent
thereof to the fullest extent permitted by Nevada Law.
As permitted by the Nevada General Corporation Law, Article Tenth of the
Company's Restated Articles of Incorporation allows the Company to maintain
director's and officer's liability insurance for its directors and officers
against certain liabilities. The Company has not, do date, obtained such
insurance.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
8
<PAGE>
ANNEX I
SELLING STOCKHOLDERS
Set forth below is: (a) the name of each Selling Stockholder and his or her
relationship to the Company during the past three years; (b) the number of
shares of Common Stock that each Selling Stockholder beneficially owns (assuming
that all options to acquire shares are exercisable within 60 days); (c) the
number of Securities offered pursuant to this Prospectus by each Selling
Stockholder (assuming that all options are fully exercisable); and (d) the
amount and percentage of the Common Stock outstanding to be held by such Selling
Stockholder after giving effect to this offering. Notwithstanding their
inclusion in this Annex I, all of the Selling Stockholders expressly disclaim
that they are affiliates of the Company. The Selling Stockholders are listed
herein, whether or not they have a present intent to resell.
<TABLE>
<CAPTION> No. of
No. of Shares Percentage
Relationships to Beneficially No. of Shares Owned After Ownership
Name of Beneficial Owner the Company Shares Owned Offered Hereby Offering After the Offering
- ------------------------- ---------------- ------------ -------------- -------- -------------------
<S> <C> <C> <C> <C> <C>
Lee W. Hill (1) Director; 600,000 600,000 0 0.0%
President and
Chief Executive
Officer
Charles Castelli (2) Chairman and 2,069,000 269,000 1,800,000 13.24%
Director; Chief
Technology
Officer
</TABLE>
- -------------------------
(1) Comprised of (i) 400,000 shares currently acquirable upon the exercise of
options to purchase Common Stock at an exercise price equal to $0.75 per
share, (ii) 50,000 shares currently acquirable upon the exercise of options
to purchase Common Stock at an exercise price equal to $0.56 per share and
(iii) 150,000 shares currently acquirable upon the exercise of options to
purchase Common Stock at an exercise price equal to $1.50 per share.
(2) Comprised of (i) 1,800,000 shares of Common Stock held by Mr. Castelli,
(ii) 162,000 shares currently acquirable upon the exercise of options to
purchase Common Stock at an exercise price equal to $0.83 per share, (iii)
7,000 shares currently acquirable upon the exercise of options to purchase
Common Stock at an exercise price equal to $0.62 per share and (iv) 100,000
shares currently acquirable upon the exercise of options to purchase Common
Stock at an exercise price equal to $1.65 per share.
9
<PAGE>
- --------------------------------------------------------------------------------
UP TO 2,500,000 SHARES
LINKON CORPORATION
COMMON STOCK
------------
REOFFER PROSPECTUS
------------
TABLE OF CONTENTS
PAGE
RISK FACTORS............................................. 1
SELLING STOCKHOLDERS..................................... 6
USE OF PROCEEDS.......................................... 6
PLAN OF DISTRIBUTION..................................... 6
LEGAL MATTERS............................................ 7
EXPERTS.................................................. 7
AVAILABLE INFORMATION.................................... 7
INCORPORATION OF DOCUMENTS BY REFERENCE.................. 8
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS...... 8
ANNEX I - SELLING STOCKHOLDERS........................... 9
No dealer, salesperson or other person has been authorized to give any
information or to make any representations in connection with this offering
other than those contained in this Prospectus and, if given or made, such
information or representations 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 by anyone in any
jurisdiction in which such offer to sell or solicitation is not authorized, or
in which the person making the offer or solicitation is not qualified to do so,
or to any person to whom it is unlawful to make such offer or solicitation.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any date subsequent to the date hereof.
August 24, 1998
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
There are hereby incorporated by reference in this Registration Statement
the following documents and information heretofore filed with the Securities and
Exchange Commission:
(a) The Company's Annual Report on Form 10-KSB, as amended, for the
fiscal year ended January 31, 1998, filed pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act");
(b) The Company's Proxy Statement dated June 12, 1998;
(c) The Company's Quarterly Report on Form 10-QSB for the fiscal
quarter ended April 30, 1998, filed pursuant to Section 13(a) or 15(d) of
the Exchange Act; and
(d) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 10, filed pursuant to Section
12(g) of the Exchange Act on December 2, 1991.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act on or after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or which deregisters
all securities then remaining unsold shall be deemed to be incorporated by
reference in this Registration Statement and to be part hereof from the date of
filing of such reports or documents. Statements made herein as to the contents
of any contract, agreement or other document are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by Section 78.037 of the Nevada General Corporation Law, the
Company has included in its restated Articles of Incorporation a provision which
states that a director or officer of the Company shall not be liable to the
Company or its stockholders for damages for acts or omissions resulting in a
breach of fiduciary duty as a director or officer, except if such acts or
omissions involve (a) intentional misconduct, fraud or a knowing violation of
the law; or (b) the payment of dividends in violation of Section 78.300 of the
Nevada General Corporation Law.
As permitted by Section 78.751 of the Nevada General Corporation Law,
Article Ninth of the Company's Restated Articles of Incorporation provides for
the indemnification by the Company of each director, officer, employee or agent
thereof to the fullest extent permitted by Nevada Law.
<PAGE>
As permitted by the Nevada General Corporation Law, Article Tenth of the
Company's Restated Articles of Incorporation allows the Company to maintain
director's and officer's liability insurance for its directors and officers
against certain liabilities. The Company has not, do date, obtained such
insurance.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibit
Number
------
3.1 Restated Articles of Incorporation (incorporated by reference to
Exhibit A to the Company's Proxy Statement dated February 24,
1997).
3.2 By-laws (incorporated by reference to Exhibit 8 to the Company's
Registration Statement on Form S-18 (File Number 33-22054-NY)
which became effective on December 14, 1990).
4.1* Linkon Corporation 1996 Stock Option and Performance Incentive
Plan, as amended and restated (the "Plan").
4.2 Form of Incentive Stock Option Agreement under the Plan
(incorporated by reference to Exhibit 10.18 to the Company's 10-
KSB, as amended, for the fiscal year ended January 31, 1998 (the
"1998 10-KSB")).
4.3 Form of Non Qualified Stock Option Agreement under the Plan
(incorporated by reference to Exhibit 10.19 to the 1998 10-KSB").
5.1* Opinion of Sklar, Warren & Conway LLP as to the legality of the
securities being registered.
23.1* Consent of Radin Glass & Co., LLP.
23.2 Consent of Sklar, Warren & Conway LLP (contained in Exhibit 5.1
hereto).
24.1 Power of Attorney (included on the signature pages).
_________________________
*Filed herewith.
ITEM 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities,
a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information set
forth in the registration statement; and Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total dollar value
of securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum
<PAGE>
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) Include any additional or changed material information on
the plan of distribution.
(2) For determining liability under the Securities Act of 1933, treat
each post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
[remainder of page intentionally left blank]
<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 Town of Fairfield, State of Connecticut on this 21st day of
August, 1998.
LINKON CORPORATION
By: /s/ Thomas V. Cerabona
----------------------------------
Name: Thomas V. Cerabona
Title: Senior Vice President of Operations,
Treasurer and Secretary
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Lee W. Hill and Thomas V. Cerabona, or any
of them, his attorneys-in-fact and agents, with full power of substitution and
resubstitution for him in any and all capacities, to sign any and all amendments
or post-effective amendments to this Registration Statement, and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto each of such attorneys-in-
fact and agents full power and authority to do and perform each and every act
and thing requisite and necessary in connection with such matters and hereby
ratifying and confirming all that each of such attorney's-in-fact and agents or
his substitute or substitutes may 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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Lee Hill Chief Executive Officer, August 21, 1998
- ---------------------------- President and Director
Lee W. Hill (Principal Executive Officer)
/s/ Thomas V. Cerabona Senior Vice President of August 21, 1998
- ---------------------------- Operations, Treasurer and
Secretary (Principal Financial
Thomas V. Cerabona and Accounting Officer)
Director August __, 1998
- ----------------------------
Joao Manuel Da M.V. Carvalho
/s/ Charles Castelli Director August 21, 1998
- ----------------------------
Charles Castelli
/s/ Daniel Zwiren Director August 21, 1998
- ----------------------------
Daniel Zwiren
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- ----------- ----------- --------
<C> <S> <C>
3.1 Restated Articles of Incorporation (incorporated by reference to Exhibit
A to the Company's Proxy Statement dated February 24, 1997).
3.2 By-laws (incorporated by reference to Exhibit 8 to the Company's
Registration Statement on Form S-18 (File Number 33-22054-NY)
which became effective on December 14, 1990).
4.1* Linkon Corporation 1996 Stock Option and Performance Incentive
Plan, as amended and restated (the "Plan").
4.2 Form of Incentive Stock Option Agreement under the Plan
(incorporated by reference to Exhibit 10.18 to the Company's 10-KSB,
as amended, for the fiscal year ended January 31, 1998 (the "1998 10-
KSB")).
4.3 Form of Non-Qualified Stock Option Agreement under the Plan
(incorporated by reference to Exhibit 10.19 to the 1998 10-KSB").
5.1* Opinion of Sklar, Warren & Conway LLP as to the legality of the
securities being registered.
23.1* Consent of Radin Glass & Co. LLP.
23.2 Consent of Sklar, Warren & Conway LLP (contained in Exhibit 5.1
hereto).
24.1 Power of Attorney (included on the signature pages).
</TABLE>
- -----------------------------
*Filed herewith
<PAGE>
EXHIBIT 4.1
AMENDED AND RESTATED
LINKON CORPORATION
1996 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
<PAGE>
AMENDED AND RESTATED
LINKON CORPORATION
1996 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
TABLE OF CONTENTS
-----------------
ARTICLE 1.................................................... - 1 -
ESTABLISHMENT AND PURPOSE.................................... - 1 -
1.1 Establishment and Effective Date................ - 1 -
--------------------------------
1.2 Purpose......................................... - 1 -
-------
ARTICLE 2.................................................... - 1 -
AWARDS....................................................... - 1 -
2.1 Form of Awards.................................. - 1 -
--------------
2.2 Maximum Shares Available........................ - 2 -
------------------------
2.3 Return of Prior Awards.......................... - 2 -
----------------------
ARTICLE 3.................................................... - 2 -
ADMINISTRATION............................................... - 2 -
3.1 Committee....................................... - 2 -
---------
3.2 Powers of Committee............................. - 3 -
-------------------
3.3 Delegation...................................... - 3 -
----------
3.4 Interpretations................................. - 3 -
---------------
3.5 Liability; Indemnification...................... - 3 -
--------------------------
ARTICLE 4.................................................... - 4 -
ELIGIBILITY.................................................. - 4 -
ARTICLE 5.................................................... - 4 -
STOCK OPTIONS................................................ - 4 -
5.1 Grant of Options................................ - 4 -
----------------
5.2 Designation as Non-qualified Stock Option or
--------------------------------------------
Incentive Stock Option.......................... - 4 -
----------------------
5.3 Option Price.................................... - 4 -
------------
5.4 Limitation on Amount of Incentive
---------------------------------
Stock Options................................... - 5 -
-------------
5.5 Limitation on Time of Grant..................... - 5 -
---------------------------
5.6 Exercise and Payment............................ - 5 -
--------------------
5.7 Term............................................ - 6 -
----
-i-
<PAGE>
5.8 Rights as a Stockholder........................ - 6 -
-----------------------
5.9 General Restrictions........................... - 6 -
--------------------
5.10 Cancellation of Stock Appreciation Rights...... - 6 -
-----------------------------------------
ARTICLE 6................................................... - 7 -
STOCK APPRECIATION RIGHTS................................... - 7 -
6.1 Grants of Stock Appreciation Rights............... - 7 -
-----------------------------------
6.2 Limitations on Exercise........................... - 7 -
-----------------------
6.3 Surrender or Exchange of Tandem Stock
-------------------------------------
Appreciation Rights............................... - 7 -
-------------------
6.4 Exercise of Nontandem Stock Appreciation Rights... - 7 -
-----------------------------------------------
6.5 Settlement of Stock Appreciation Rights........... - 8 -
---------------------------------------
6.6 Cash Settlement................................... - 8 -
---------------
ARTICLE 7................................................... - 8 -
NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS. - 8 -
ARTICLE 8................................................... - 9 -
EFFECT OF TERMINATION OF EMPLOYMENT, RELOCATION EVENT,
DISABILITY, RETIREMENT, DEATH OR SPECIAL EVENT........... - 9 -
ARTICLE 9................................................... - 12 -
RESTRICTED SHARES........................................... - 12 -
9.1 Grant of Restricted Shares........................ - 12 -
--------------------------
9.2 Restrictions...................................... - 12 -
------------
9.3 Restricted Stock Certificates..................... - 12 -
-----------------------------
9.4 Rights of Holders of Restricted Shares............ - 12 -
--------------------------------------
9.5 Forfeiture........................................ - 12 -
----------
9.6 Delivery of Restricted Shares..................... - 13 -
-----------------------------
ARTICLE 10.................................................. - 13 -
PERFORMANCE SHARES.......................................... - 13 -
10.1 Award of Performance Shares...................... - 13 -
---------------------------
10.2 Performance Period............................... - 13 -
------------------
10.3 Right to Payment of Performance Shares........... - 13 -
--------------------------------------
10.4 Payment for Performance Shares................... - 13 -
------------------------------
10.5 Voting and Dividend Rights....................... - 14 -
--------------------------
-ii-
<PAGE>
ARTICLE 11.............................................. - 14 -
PERFORMANCE UNITS....................................... - 14 -
11.1 Award of Performance Units................... - 14 -
--------------------------
11.2 Right to Payment of Performance Units........ - 14 -
-------------------------------------
11.3 Payment for Performance Units................ - 15 -
-----------------------------
ARTICLE 12.............................................. - 15 -
UNRESTRICTED SHARES..................................... - 15 -
12.1 Award of Unrestricted Shares................. - 15 -
----------------------------
12.2 Delivery of Unrestricted Shares.............. - 15 -
-------------------------------
ARTICLE 13.............................................. - 16 -
GRANTS TO NON-EMPLOYEE DIRECTORS........................ - 16 -
ARTICLE 14.............................................. - 16 -
TAX OFFSET PAYMENTS..................................... - 16 -
ARTICLE 15.............................................. - 16 -
ADJUSTMENT UPON CHANGES IN CAPITALIZATION............... - 16 -
ARTICLE 16.............................................. - 17 -
AMENDMENT AND TERMINATION............................... - 17 -
ARTICLE 17.............................................. - 17 -
WRITTEN AGREEMENT....................................... - 17 -
ARTICLE 18.............................................. - 17 -
MISCELLANEOUS PROVISIONS................................ - 17 -
18.1 Tax Withholding.............................. - 17 -
---------------
18.2 Compliance With Section 16(b)................ - 18 -
-----------------------------
18.3 Successors................................... - 18 -
----------
18.4 General Creditor Status...................... - 18 -
-----------------------
18.5 No Right to Employment....................... - 18 -
----------------------
18.6 Notices...................................... - 19 -
-------
18.7 Severability................................. - 19 -
------------
18.8 Governing Law................................ - 19 -
-------------
-iii-
<PAGE>
AMENDED AND RESTATED
LINKON CORPORATION
1996 STOCK OPTION AND PERFORMANCE INCENTIVE PLAN
ARTICLE 1.
ESTABLISHMENT AND PURPOSE
1.1 Establishment and Effective Date. Linkon Corporation, a Nevada
--------------------------------
corporation (the "Corporation"), hereby establishes a stock incentive plan to be
known as the "Linkon Corporation 1996 Stock Option and Performance Incentive
Plan" (the "Plan"). The Plan shall become effective as of December 1, 1996,
subject to the approval of the Corporation's stockholders at the 1996 Annual
Meeting of Stockholders. In the event that such stockholder approval is not
obtained, any awards made hereunder shall be cancelled and all rights with
respect to such awards shall thereupon cease. Upon approval by the Board of
Directors of the Corporation (the "Board") and the Board's Management
Compensation and Stock Option Committee (the "Committee"), awards may be made as
provided herein.
1.2 Purpose. The purpose of the Plan is to encourage and enable
-------
selected employees, officers, directors and independent contractors (subject to
such requirements as may be prescribed by the Committee) of the Corporation and
its subsidiaries to acquire a proprietary interest in the Corporation through
the ownership of the Corporation's common stock, par value $0.001 per share
("Common Stock"), and other rights with respect to the Common Stock. Such
ownership will provide such persons with a more direct stake in the future
welfare of the Corporation and encourage them to exert their best efforts for
the Corporation and its subsidiaries. It is also expected that the Plan will
encourage qualified persons to seek and accept employment with or provide
services to the Corporation and its subsidiaries.
ARTICLE 2.
AWARDS
2.1 Form of Awards. Awards under the Plan may be granted in any one
--------------
or all of the following forms: (i) incentive stock options ("Incentive Stock
Options") meeting the requirements of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"); (ii) non-qualified stock options ("Non-
qualified Stock Options") (unless otherwise indicated, references in the Plan to
"Options" shall include both Incentive Stock Options and Non-qualified Stock
Options); (iii) stock appreciation rights ("Stock Appreciation Rights"), as
described in Article 6 hereof, which may be awarded either in tandem with
Options ("Tandem Stock Appreciation Rights") or on a stand-alone basis
("Nontandem Stock Appreciation Rights"); (iv) shares of Common Stock which are
restricted as provided in Article 9 hereof ("Restricted Shares"); (v) units
representing shares of Common Stock, as described in Article 10 hereof
<PAGE>
("Performance Shares"); (vi) units which do not represent shares of Common Stock
but which may be paid in the form of Common Stock, as described in Article 11
hereof ("Performance Units"); (vii) shares of Common Stock that are not subject
to any conditions to vesting ("Unrestricted Shares"); and (viii) tax offset
payments ("Tax Offset Payments"), as described in Article 13 hereof.
2.2 Maximum Shares Available. The maximum aggregate number of shares
------------------------
of Common Stock available for award under the Plan is 2,500,000 subject to
adjustment pursuant to Article 15 hereof. In addition, Tax Offset Payments
which may be awarded under the Plan will not exceed the number of shares
available for issuance under the Plan. Shares of Common Stock issued pursuant
to the Plan may be either authorized but unissued shares or issued shares
reacquired by the Corporation. In the event that prior to the end of the period
during which Options may be granted under the Plan, any Option or any Nontandem
Stock Appreciation Rights under the Plan expires unexercised or is terminated,
surrendered or cancelled (other than in connection with the exercise of Stock
Appreciation Rights) without being exercised in whole or in part for any reason,
or any Restricted Shares, Performance Shares or Performance Units are forfeited,
or if such awards are settled in cash in lieu of shares of Common Stock, then
such shares or units shall be available for subsequent awards under the Plan,
upon such terms as the Committee may determine.
2.3 Return of Prior Awards. As a condition to any subsequent award,
----------------------
the Committee shall have the right, at its discretion, to require recipients of
awards previously granted under the Plan to return to the Corporation any such
awards. Subject to the provisions of the Plan, such new award shall be upon
such terms and conditions as are specified by the Committee at the time the new
award is granted.
ARTICLE 3.
ADMINISTRATION
3.1 Committee. Awards shall be determined, and the Plan shall be
---------
administered, by the Committee as appointed from time to time by the Board,
which Committee shall consist of not less than two (2) members of the Board.
Except as permitted by Rule 16b-3 of the Securities Exchange Act of 1934, as
amended (the "Act"), and by Section 162(m) of the Code (or Regulations
promulgated thereunder), no member of the Board may serve on the Committee if
such member: (i) is or has been granted or awarded stock, stock options, stock
appreciation rights or any other equity security or derivative security of the
Corporation or any of its affiliates pursuant to the Plan or any other plan of
the Corporation or its affiliates either while serving on the Committee or
during the one year period prior to being appointed to the Committee; (ii) is an
employee or former employee of the Corporation; or (iii) receives remuneration
from the Corporation, either directly or indirectly, in any capacity other than
as a director.
-2-
<PAGE>
3.2 Powers of Committee. Subject to the express provisions of the
-------------------
Plan, the Committee shall have the power and authority (i) to grant Options and
to determine the purchase price of the Common Stock covered by each Option, the
term of each Option, the number of shares of Common Stock to be covered by each
Option and any performance objectives or vesting standards applicable to each
Option; (ii) to designate Options as Incentive Stock Options or Non-qualified
Stock Options and to determine which Options, if any, shall be accompanied by
Tandem Stock Appreciation Rights, (iii) to grant Tandem Stock Appreciation
Rights and Nontandem Stock Appreciation Rights and to determine the terms and
conditions of such rights; (iv) to grant Restricted Shares and to determine the
term of the restricted period and other conditions and restrictions applicable
to such shares; (v) to grant Performance Shares and Performance Units and to
determine the performance objectives, performance periods and other conditions
applicable to such shares or units; (vi) to grant Unrestricted Shares; (vii) to
determine the amount of, and to make, Tax Offset Payments; and (viii) to
determine the persons to whom, and the time or times at which, Options, Stock
Appreciation Rights, Restricted Shares, Performance Shares, Performance Units
and Unrestricted Shares shall be granted.
3.3 Delegation. The Committee may delegate to one or more of its
----------
members or to any other person or persons such ministerial duties as it may deem
advisable; provided, however, that the Committee may not delegate any of its
responsibilities hereunder if such delegation would cause the Plan to fail to
comply with the "disinterested administration" rules under Section 16 of the
Act. The Committee may also employ attorneys, consultants, accountants or other
professional advisors and shall be entitled to rely upon the advice, opinions or
valuations of any such advisors.
3.4 Interpretations. The Committee shall have sole discretionary
---------------
authority to interpret the terms of the Plan, to adopt and revise rules,
regulations and policies to administer the Plan and to make any other factual
determinations which it believes to be necessary or advisable for the
administration of the Plan. All actions taken and interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Corporation, all employees who have received awards under the Plan and
all other interested persons.
3.5 Liability; Indemnification. No member of the Committee, nor any
--------------------------
person to whom ministerial duties have been delegated, shall be personally
liable for any action, interpretation or determination made with respect to the
Plan or awards made thereunder, and each member of the Committee shall be fully
indemnified and protected by the Corporation with respect to any liability he or
she may incur with respect to any such action, interpretation or determination,
to the extent permitted by applicable law and to the extent provided in the
Corporation's Certificate of Incorporation and Bylaws, as amended from time to
time, or under any agreement between any such member and the Corporation.
-3-
<PAGE>
ARTICLE 4.
ELIGIBILITY
Awards may be made to all employees, officers, directors and
independent contractors of the Corporation or any of its subsidiaries (subject
to such requirements as may be prescribed by the Committee); provided, however,
-------- -------
that no person may receive awards of or relating to more than 100,000 shares of
Common Stock in the aggregate in any fiscal year of the Corporation. Awards may
be made to an officer, director or independent contractor of the Corporation,
whether or not such person is also an employee of the Corporation, provided that
no award may be granted to a director who is a member of the Committee (except
pursuant to Article 13 below). In determining the persons to whom awards shall
be granted and the number of shares to be covered by each award, the Committee
shall take into account the nature of the services rendered by such persons,
their present and potential contributions to the success of the Corporation and
its subsidiaries and such other factors as the Committee in its sole discretion
shall deem relevant.
As used herein, the term "subsidiary" shall mean any present or future
corporation, partnership or joint venture in which the Corporation owns,
directly or indirectly, 40% or more of the economic interests. Notwithstanding
the foregoing, only employees of the Corporation and any present or future
corporation which is or may be a "subsidiary corporation" of the Corporation (as
such term is defined in Section 424 (f) of the Code) shall be eligible to
receive Incentive Stock Options.
ARTICLE 5.
STOCK OPTIONS
5.1 Grant of Options. Options may be granted under the Plan for the
----------------
purchase of shares of Common Stock. Options shall be granted in such form and
upon such terms and conditions, including the satisfaction of corporate or
individual performance objectives and other vesting standards, as the Committee
shall from time to time determine.
5.2 Designation as Non-qualified Stock Option or Incentive Stock
------------------------------------------------------------
Option. In connection with any grant of Options, the Committee shall designate
- ------
in the written agreement required pursuant to Article 17 hereof whether the
Options granted shall be Incentive Stock Options or Non-qualified Stock Options,
or in the case both are granted, the number of shares of each.
5.3 Option Price. The purchase price per share under each Incentive
------------
Stock Option shall be not less than the Market Price (as hereinafter defined) of
the Common Stock on the date the Incentive Stock Option is granted. The
purchase price per share under each Non-qualified Stock Option shall be
specified by the Committee. In no case, however, shall the
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<PAGE>
purchase price per share of either an Incentive Stock Option or Non-qualified
Stock Option be less than the par value of the Common Stock ($.001).
Notwithstanding the foregoing, to the extent required by the Code, the purchase
price per share under each Non-qualified Stock Option granted to an employee who
is treated as a "covered employee" (as defined in Section 162(m)(3) of the Code)
on the date such Non-Qualified Option is exercised shall not be less than 100%
of the Market Price of the Common Stock on the date of grant. In the case of an
Incentive Stock Option granted to an employee owning (actually or constructively
under Section 424(d) of the Code), more than 10% of the total combined voting
power of all classes of stock of the Corporation or of a subsidiary (a "10%
Stockholder"), the option price shall not be less than 110% of the Market Price
of the Common Stock on the date of grant.
The "Market Price" of the Common Stock on any day shall be determined
as follows: (i) if the Common Stock is listed on a national securities exchange
or quoted through the NASDAQ National Market System, the Market Price on any day
shall be the average of the high and low reported Consolidated Trading sales
prices, or if no such sale is made on such day, the average of the closing bid
and asked prices reported on the Consolidated Trading listing for such day; (ii)
if the Common Stock is quoted on the NASDAQ inter-dealer quotation system, the
Market Price on any day shall be the average of the representative bid and asked
prices at the close of business for such day; or (iii) if the Common Stock is
not listed on a national stock exchange or quoted on NASDAQ, the Market Price on
any day shall be the average of the high bid and low asked prices reported by
the National Quotation Bureau, Inc. for such day. In no event shall the Market
Price of a share of Common Stock subject to an Incentive Stock Option be less
than the fair market value as determined for purposes of Section 422(b)(4) of
the Code.
The Option price so determined shall also be applicable in connection
with the exercise of any Tandem Stock Appreciation Rights granted with respect
to such Option.
5.4 Limitation on Amount of Incentive Stock Options. In the case of
-----------------------------------------------
Incentive Stock Options, the aggregate Market Price (determined at the time the
Incentive Stock Option is granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any optionee
during any calendar year (under all plans of the Corporation and any subsidiary)
shall not exceed $100,000.
5.5 Limitation on Time of Grant. No grant of an Incentive Stock
---------------------------
Option shall be made under the Plan more than ten (10) years after the date the
Plan is approved by stockholders of the Corporation.
5.6 Exercise and Payment. Options may be exercised in whole or in
--------------------
part. Common Stock purchased upon the exercise of Options shall be paid for in
full at the time of purchase. Such payment shall be made in cash or, in the
discretion of the Committee, through delivery of shares of Common Stock or
surrender of Options (or a portion of an Option) held by the optionee (provided
that the then-Market Price of Common Stock exceeds the exercise price of such
Options) or a combination of the foregoing, to the extent permitted in
accordance with procedures to be established by the Committee. Any shares of
Common Stock so delivered
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<PAGE>
shall be valued at their Market Price on the date of exercise. Any Option (or
portion of an Option) so surrendered shall be valued at the product of (a) the
difference between (i) the Market Price of one (1) share of Common Stock on the
date of exercise and (ii) the exercise price under such Option, multiplied by
(b) the number of shares of Common Stock covered by such Option (or the portion
of such Option which is surrendered). Upon receipt of notice of exercise and
payment in accordance with procedures to be established by the Committee, the
Corporation or its agent shall deliver to the person exercising the Option (or
his or her designee) a certificate for such shares.
5.7 Term. The term of each Option granted hereunder shall be
----
determined by the Committee; provided, however, that, notwithstanding any other
-------- -------
provision of the Plan, in no event shall an Incentive Stock Option be
exercisable after ten (10) years from the date it is granted, or in the case of
an Incentive Stock Option granted to a 10% Stockholder, five (5) years from the
date it is granted.
5.8 Rights as a Stockholder. A recipient of Options shall have no
-----------------------
rights as a stockholder with respect to any shares issuable or transferable upon
exercise thereof until the date on which a recipient shall have exercised his or
her Option in accordance herewith. Except as otherwise expressly provided in
the Plan, no adjustment shall be made for cash dividends or other rights for
which the record date is prior to the date such stock certificate is issued.
5.9 General Restrictions. Each Option granted under the Plan shall
--------------------
be subject to the requirement that, if at any time the Board shall determine, in
its discretion, that the listing, registration or qualification of the shares
issuable or transferable upon exercise thereof upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such Option or the issue, transfer, or purchase of shares
thereunder, such Option may not be exercised in whole or in part unless such
listing, registration, qualification, consent, or approval shall have been
effected or obtained free of any conditions not acceptable to the Board.
The Board or the Committee may, in connection with the granting of any
Option, require the person to whom the Option is to be granted to enter into an
agreement with the Corporation stating that as a condition precedent to each
exercise of the Option, in whole or in part, such person shall if then required
by the Corporation represent to the Corporation in writing that such exercise is
for investment only and not with a view to distribution, and also setting forth
such other terms and conditions as the Board or the Committee may prescribe.
5.10 Cancellation of Stock Appreciation Rights. Upon exercise of all
-----------------------------------------
or a portion of an Option, the related Tandem Stock Appreciation Rights shall be
cancelled with respect to an equal number of shares of Common Stock as are
issuable upon exercise of such Option.
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<PAGE>
ARTICLE 6.
STOCK APPRECIATION RIGHTS
6.1 Grants of Stock Appreciation Rights. Tandem Stock Appreciation
-----------------------------------
Rights may be awarded by the Committee in connection with any Option granted
under the Plan, either at the time the Option is granted or thereafter at any
time prior to the exercise, termination or expiration of the Option. Nontandem
Stock Appreciation Rights may also be granted by the Committee at any time. At
the time of grant of Nontandem Stock Appreciation Rights, the Committee shall
specify the number of shares of Common Stock covered by such right and the base
price of shares of Common Stock to be used in connection with the calculation
described in Section 6.4 below. The base price of any Nontandem Stock
Appreciation Rights shall be not less than 100% of the Market Price of a share
of Common Stock on the date of grant. Stock Appreciation Rights shall be
subject to such terms and conditions not inconsistent with the other provisions
of the Plan as the Committee shall determine.
6.2 Limitations on Exercise. Tandem Stock Appreciation Rights shall
-----------------------
be exercisable only to the extent that the related Option is exercisable and
shall be exercisable only for such period as the Committee may determine (which
period may expire prior to the expiration date of the related Option). Upon the
exercise of all or a portion of Tandem Stock Appreciation Rights, the related
Option shall be cancelled with respect to an equal number of shares of Common
Stock. Shares of Common Stock subject to Options, or portions thereof,
surrendered upon exercise of Tandem Stock Appreciation Rights shall not be
available for subsequent awards under the Plan. Nontandem Stock Appreciation
Rights shall be exercisable during such period as the Committee shall determine.
6.3 Surrender or Exchange of Tandem Stock Appreciation Rights.
---------------------------------------------------------
Tandem Stock Appreciation Rights shall entitle the recipient to surrender to the
Corporation unexercised the related Option, or any portion thereof, and to
receive from the Corporation in exchange therefor that number of shares of
Common Stock having an aggregate Market Price equal to (A) the excess of (i) the
Market Price of one (1) share of Common Stock as of the date the Tandem Stock
Appreciation Rights are exercised over (ii) the option price per share specified
in such Option, multiplied by (B) the number of shares of Common Stock subject
to the Option, or portion thereof, which is surrendered. Cash shall be
delivered in lieu of any fractional shares.
6.4 Exercise of Nontandem Stock Appreciation Rights. The exercise of
-----------------------------------------------
Nontandem Stock Appreciation Rights shall entitle the recipient to receive from
the Corporation that number of shares of Common Stock having an aggregate Market
Price equal to (A) the excess of (i) the Market Price of one (1) share of Common
Stock as of the date on which the Nontandem Stock Appreciation Rights are
exercised over (ii) the base price of the shares covered by the Nontandem Stock
Appreciation Rights, multiplied by (B) the number of shares of Common Stock
covered by the Nontandem Stock Appreciation Rights, or the portion thereof being
exercised. Cash shall be delivered in lieu of any fractional shares.
-7-
<PAGE>
6.5 Settlement of Stock Appreciation Rights. As soon as is
---------------------------------------
reasonably practicable after the exercise of any Stock Appreciation Rights, the
Corporation shall (i) issue, in the name of the recipient, stock certificates
representing the total number of full shares of Common Stock to which the
recipient is entitled pursuant to Section 6.3 or 6.4 hereof and cash in an
amount equal to the Market Price, as of the date of exercise, of any resulting
fractional shares, and (ii) if the Committee causes the Corporation to elect to
settle all or part of its obligations arising out of the exercise of the Stock
Appreciation Rights in cash pursuant to Section 6.6 hereof, deliver to the
recipient an amount in cash equal to the Market Price, as of the date of
exercise, of the shares of Common Stock it would otherwise be obligated to
deliver.
6.6 Cash Settlement. The Committee, in its discretion, may cause the
---------------
Corporation to settle all or any part of its obligation arising out of the
exercise of Stock Appreciation Rights by the payment of cash in lieu of all or
part of the shares of Common Stock it would otherwise be obligated to deliver in
an amount equal to the Market Price of such shares on the date of exercise.
ARTICLE 7.
NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS
No Option or Stock Appreciation Rights may be transferred, assigned,
pledged or hypothecated (whether by operation of law or otherwise), except as
provided by will or the applicable laws of descent and distribution, and no
Option or Stock Appreciation Rights shall be subject to execution, attachment or
similar process. Any attempted assignment, transfer, pledge, hypothecation or
other disposition of an Option or Stock Appreciation Rights not specifically
permitted herein shall be null and void and without effect. An Option or Stock
Appreciation Rights granted to an individual may be exercised by the recipient
only during his or her lifetime, or following his or her death pursuant to
Section 8.4 hereof.
Notwithstanding anything to the contrary in the preceding paragraph,
the Committee may, in its sole discretion, cause the written agreement relating
to any Non-qualified Stock Options or Stock Appreciation Rights granted
hereunder to provide that the recipient of such Non-qualified Stock Options or
Stock Appreciation Rights may transfer any of such Non-qualified Stock Options
or Stock Appreciation Rights other than by will or the laws of descent and
distribution in any manner authorized under applicable law; provided, however,
-------- -------
that in no event may the Committee permit any transfers which would cause this
Plan to fail to satisfy the applicable requirements of Rule 16b-3 under the Act,
or would cause any recipient of awards hereunder to fail to be entitled to the
benefits Rule 16b-3 or other exemptive rules under Section 16 of the Act or be
subject to liability thereunder.
-8-
<PAGE>
ARTICLE 8.
EFFECT OF TERMINATION OF EMPLOYMENT, RELOCATION EVENT, DISABILITY, RETIREMENT,
DEATH OR SPECIAL EVENT
8.1 General Rule. Except as expressly determined by the Committee in
------------
its sole discretion, no Option or Stock Appreciation Rights shall be exercisable
after three months following the recipient's termination of employment with or,
in the case of a nonemployee recipient, cessation of providing services to the
Corporation or a subsidiary, unless such termination or cessation occurs by
reason of (i) a Relocation Event (as defined in Section 8.2), (ii) Retirement
(as defined in Section 8.3), (iii) death, or (iv) a Special Event (as defined in
Section 8.5), provided that, in the case of a Special Event, the Committee shall
have modified such Option or Stock Appreciation Rights to remain exercisable as
provided in Section 8.5.
Options and Stock Appreciation Rights shall not be affected by any
change of duties so long as the recipient continues to be employed by or provide
services to either the Corporation or a subsidiary. The Committee may, in its
sole discretion, cause any Option or Stock Appreciation Rights to be forfeited
upon an award recipient's termination of employment or other arrangement for the
provision of services if the recipient was terminated for one (or more) of the
following reasons: (i) the conviction of, or plea of guilty or nolo contendere
---- ----------
to, the commission of a felony, (ii) the commission of any fraud,
misappropriation or misconduct which causes demonstrable injury to the
Corporation or a subsidiary, (iii) an act of dishonesty by the recipient
resulting or intended to result, directly or indirectly, in gain or personal
enrichment at the expense of the Corporation or a subsidiary, (iv) any breach of
the recipient's fiduciary duties to the Corporation, or (v) a serious violation
by the recipient of a Corporation policy. It shall be within the sole
discretion of the Committee to determine whether the recipient's termination was
for one of the foregoing reasons, and the decision of the Committee shall be
final and conclusive.
8.2 Relocation Event. Options and Stock Appreciation Rights granted
----------------
to a recipient shall remain outstanding after termination of such recipient's
employment with or, in the case of a nonemployee recipient, cessation of
providing services to the Corporation or a subsidiary, if such termination or
cessation solely occurs by reason of a "Relocation Event," which shall be deemed
to occur if (i) a husband and wife are both current employees, officers,
directors or independent contractors of or to the Corporation, (ii) the
Corporation transfers one spouse to a new location, (iii) the Corporation is
unable to offer the other spouse a position that is substantially comparable to
his or her current position, and (iv) as a result, the other spouse's employment
with or other arrangement for the provision of services to the Corporation is
terminated and the other spouse, as recipient, holds outstanding Options or
Stock Appreciation Rights.
In case of a Relocation Event, the Options or Stock Appreciation
Rights held by a terminated recipient shall be exercisable for a period equal to
the lesser of (i) the period such Options or Stock Appreciation Rights would be
exercisable absent such termination, and (ii) the
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<PAGE>
period such Options or Stock Appreciation Rights would be exercisable if granted
to the spouse continuing as an employee, officer, director or independent
contractor of the Corporation on the date originally granted to the terminated
spouse.
8.3 Disability or Retirement. Except as expressly provided otherwise
------------------------
in the written agreement relating to any Option or Stock Appreciation Rights
granted under the Plan, in the event of the Disability or Retirement of an
employee, officer or director who is the recipient of Options or Stock
Appreciation Rights, the Options or Stock Appreciation Rights which are held by
such recipient on the date of such Disability or Retirement, whether or not
otherwise exercisable on such date, shall be exercisable at any time until the
expiration date of the Options or Stock Appreciation Rights; provided, however,
-------- -------
that any Incentive Stock Option of such recipient shall no longer be treated as
an Incentive Stock Option unless exercised within three (3) months of the date
of such Disability or Retirement (or within one (1) year in the case of an
employee who is "disabled" within the meaning of Section 22(e)(3) of the Code).
"Disability" shall mean any termination of employment with or, in the
case of a nonemployee officer or director, status as an officer or director of
the Corporation or a subsidiary because of a long-term or total disability, as
determined by the Committee in its sole discretion. "Retirement" shall mean a
termination of employment with or, in the case of a nonemployee officer or
director, status as an officer or director of the Corporation or a subsidiary
either (i) on a voluntary basis by a recipient who is at least 60 years of age
and has at least 15 years of service with the Corporation or a subsidiary or
(ii) otherwise with the written consent of the Committee in its sole discretion.
The decision of the Committee shall be final and conclusive.
8.4 Death. Except as expressly provided otherwise in the written
-----
agreement relating to any Option or Stock Appreciation Rights granted under the
Plan, in the event of the death of a recipient of Options or Stock Appreciation
Rights while an employee, officer or director of the Corporation or any
subsidiary, Options or Stock Appreciation Rights which are held by such
recipient at the date of death, whether or not otherwise exercisable on the date
of death, shall be exercisable by the beneficiary designated by such recipient
for such purpose (the "Designated Beneficiary") or if no Designated Beneficiary
shall be appointed or if the Designated Beneficiary shall predecease such
recipient, by such recipient's personal representatives, heirs or legatees at
any time within three (3) years from the date of death (subject to the
limitation in Section 5.7 hereof), at which time such Options or Stock
Appreciation Rights shall terminate; provided, however, that any Incentive Stock
-------- -------
Option of such recipient shall no longer be treated as an Incentive Stock Option
unless exercised within three (3) months of the date of the recipient's death.
In the event of the death of a recipient of Options or Stock
Appreciation Rights following a termination of employment or, in the case of an
a nonemployee officer or director, status as an officer or director due to
Retirement, Disability or a Special Event (as defined in Section 8.5 hereof), if
such death occurs before the Options or Stock Appreciation Rights are exercised,
the Options or Stock Appreciation Rights which are held by such recipient on the
date
-10-
<PAGE>
of termination shall be exercisable by such recipient's Designated Beneficiary,
or if no Designated Beneficiary shall be appointed or if the Designated
Beneficiary shall predecease such recipient, by such recipient's personal
representatives, heirs or legatees to the same extent such Options or Stock
Appreciation Rights were exercisable by the recipient following such termination
of employment.
8.5 Special Event. In the case of a Special Event, the Committee in
-------------
its sole discretion may elect to modify all or any lesser number of any Options
or Stock Appreciation Rights held by a recipient terminated as a result of a
Special Event which are or are not exercisable on the date of termination, to
provide that any of such Options or Stock Appreciation Rights may continue to be
exercisable for the term and in the manner specified therein or for such other
term and subject to such other provisions and conditions (including, without
limitation, acceleration of the time or times at which any such Options or Stock
Appreciation Rights may be exercised) as the Committee shall specify. The
Committee shall have the sole discretion to determine the recipients to whom and
in the manner in which any such modification shall be made. If the Committee
does not elect to modify an Option or Stock Appreciation Rights, then only
Options and Stock Appreciation Rights currently exercisable at the date of
termination shall be exercisable as provided in the first sentence of Section
8.1 hereof.
A "Special Event" shall mean (i) the sale or other disposition of a
subsidiary or division of the Corporation; (ii) the closing or discontinuation
of a specific operation of the Corporation or any subsidiary; (iii) the
elimination of job categories; or (iv) a limited program of terminations in
connection with a personnel reorganization or restructuring of the Corporation
or any subsidiary of the Corporation scheduled to be completed on a date
certain, provided, however, that only those recipients who meet the terms and
conditions as established by the Board or the Committee in its discretion shall
be eligible to receive accelerated vesting of Options and Stock Appreciation
Rights.
8.6 Leave of Absence. In the case of an employee, officer or
----------------
director on an approved leave of absence, the Options and Stock Appreciation
Rights of such person shall not be affected unless such leave is longer than 13
weeks. The date of exercisability of any Options or Stock Appreciation Rights
of an employee, officer or director which are unexercisable at the beginning of
an approved leave of absence lasting longer than 13 weeks shall be postponed for
a period equal to the length of such leave of absence. Notwithstanding the
foregoing, the Committee may, in its sole discretion, waive in writing any such
postponement of the date of exercisability of any Options or Stock Appreciation
Rights due to a leave of absence.
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<PAGE>
ARTICLE 9.
RESTRICTED SHARES
9.1 Grant of Restricted Shares. The Committee may from time to time
--------------------------
cause the Corporation to grant Restricted Shares under the Plan to employees,
officers, directors or independent contractors of the Corporation, subject to
such restrictions, conditions and other terms as the Committee may determine.
9.2 Restrictions. At the time a grant of Restricted Shares is made,
------------
the Committee shall establish a period of time (the "Restricted Period")
applicable to such Restricted Shares. Each grant of Restricted Shares may be
subject to a different Restricted Period. The Committee may, in its sole
discretion, at the time a grant is made, prescribe restrictions in addition to
or other than the expiration of the Restricted Period, including the
satisfaction of corporate or individual performance objectives, which shall be
applicable to all or any portion of the Restricted Shares. The Committee may
also, in its sole discretion, shorten or terminate the Restricted Period or
waive any other restrictions applicable to all or a portion of such Restricted
Shares. None of the Restricted Shares may be sold, transferred, assigned,
pledged or otherwise encumbered or disposed of during the Restricted Period or
prior to the satisfaction of any other restrictions prescribed by the Committee
with respect to such Restricted Shares.
9.3 Restricted Stock Certificates. The Corporation shall issue, in
-----------------------------
the name of each person to whom Restricted Shares have been granted, stock
certificates representing the total number of Restricted Shares granted to the
recipient, as soon as reasonably practicable after the grant. The Corporation,
at the direction of the Committee, shall hold such certificates, properly
endorsed for transfer, for the recipient's benefit until such time as the
Restricted Shares are forfeited to the Corporation, or the restrictions lapse.
9.4 Rights of Holders of Restricted Shares. Holders of Restricted
--------------------------------------
Shares shall not have the right to vote such shares or the right to receive any
cash dividends with respect to such shares. All distributions, if any, received
by a recipient with respect to Restricted Shares as a result of any stock split,
stock distribution, a combination of shares, or other similar transaction shall
be subject to the restrictions of this Article 9.
9.5 Forfeiture. Any Restricted Shares granted pursuant to the Plan
----------
shall be forfeited if the recipient terminates employment with or, in the case
of a nonemployee recipient, the cessation of providing services to the
Corporation or its subsidiaries prior to the expiration or termination of the
Restricted Period and the satisfaction of any other conditions applicable to
such Restricted Shares. Upon such forfeiture, the Restricted Shares that are
forfeited shall be retained in the treasury of the Corporation and available for
subsequent awards under the Plan, unless the Committee directs that such
Restricted Shares be cancelled upon forfeiture. If the recipient's employment
or other arrangement for the provision of services terminates as a result of
Disability, Retirement or death, or a Relocation Event or Special Event, all
Restricted Shares
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<PAGE>
of such recipient shall be forfeited, unless the Committee, in its sole
discretion, shall determine otherwise.
9.6 Delivery of Restricted Shares. Upon the expiration or
-----------------------------
termination of the Restricted Period and the satisfaction of any other
conditions prescribed by the Committee, the restrictions applicable to the
Restricted Shares shall lapse and a stock certificate for the number of
Restricted Shares with respect to which the restrictions have lapsed shall be
delivered, free of all such restrictions, to the recipient or the recipient's
beneficiary or estate, as the case may be.
ARTICLE 10.
PERFORMANCE SHARES
10.1 Award of Performance Shares. For each Performance Period (as
---------------------------
defined in Section 10.2), Performance Shares may be granted under the Plan to
such employees, officers, directors and independent contractors of the
Corporation and its subsidiaries as the Committee shall determine in its sole
discretion. Each Performance Share shall be deemed to be equivalent to one (1)
share of Common Stock. Performance Shares granted to such a recipient shall be
credited to an account (a "Performance Share Account") established and
maintained for such recipient.
10.2 Performance Period. "Performance Period" shall mean such period
------------------
of time as shall be determined by the Committee in its sole discretion.
Different Performance Periods may be established for different recipients
receiving Performance Shares. Performance Periods may run consecutively or
concurrently.
10.3 Right to Payment of Performance Shares. With respect to each
--------------------------------------
award of Performance Shares under the Plan, the Committee shall specify
performance objectives (the "Performance Objectives") which must be satisfied in
order for the recipient to vest in the Performance Shares which have been
awarded to such recipient for the Performance Period. If the Performance
Objectives established for a recipient for the Performance Period are partially
but not fully met, the Committee may, nonetheless, in its sole discretion,
determine that all or a portion of the Performance Shares have vested. If the
Performance Objectives for a Performance Period are exceeded, the Committee may,
in its sole discretion, grant additional, fully vested Performance Shares to the
recipient. The Committee may also determine, in its sole discretion, that
Performance Shares awarded to a recipient shall become partially or fully vested
upon the recipient's Disability, Retirement or death, or upon a Relocation Event
or Special Event, or upon the termination of the recipient's employment or other
arrangement for the provision of services to the Corporation prior to the end of
the Performance Period.
10.4 Payment for Performance Shares. As soon as practicable
------------------------------
following the end of a Performance Period, the Committee shall determine whether
the Performance Objectives
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<PAGE>
for the Performance Period have been achieved (or partially achieved to the
extent necessary to permit partial vesting at the discretion of the Committee
pursuant to Section 10.3). If the Performance Objectives for the Performance
Period have been exceeded, the Committee shall determine whether additional
Performance Shares shall be granted to the recipient pursuant to Section 10.3.
As soon as reasonably practicable after such determinations, or at such later
date as the Committee shall determine at the time of grant, the Corporation
shall pay to the recipient an amount with respect to each vested Performance
Share equal to the Market Price of a share of Common Stock on such payment date
or, if the Committee shall so specify at the time of grant, an amount equal to
(i) the Market Price of a share of Common Stock on the payment date less (ii)
the Market Price of a share of Common Stock on the date of grant of the
Performance Share. Payment shall be made entirely in cash, entirely in Common
Stock (including Restricted Shares) or in such combination of cash and Common
Stock as the Committee shall determine in its sole discretion.
10.5 Voting and Dividend Rights. Except as provided in Article 15
--------------------------
hereof, no recipient of Performance Shares shall be entitled to any voting
rights, to receive any cash dividends, or to have such recipient's Performance
Share Account credited or increased as a result of any cash dividends or other
distribution with respect to Common Stock. Notwithstanding the foregoing,
within sixty (60) days from the date of payment of a cash dividend by the
Corporation on its shares of Common Stock, the Committee, in its sole
discretion, may credit a recipient's Performance Share Account with additional
Performance Shares having an aggregate Market Price equal to the cash dividend
per share paid on the Common Stock multiplied by the number of Performance
Shares credited to such recipient's account at the time the cash dividend was
declared.
ARTICLE 11.
PERFORMANCE UNITS
11.1 Award of Performance Units. For each Performance Period (as
--------------------------
defined in Section 10.2), Performance Units may be granted under the Plan to
such employees, officers, directors and independent contractors of the
Corporation and its subsidiaries as the Committee shall determine in its sole
discretion. The award agreement covering such Performance Units shall specify a
value for each Performance Unit or shall set forth a formula for determining the
value of each Performance Unit at the time of payment (the "Ending Value"). If
necessary to make the calculation of the amount to be paid to the recipient
pursuant to Section 11.3, the Committee shall also state in the award agreement
the initial value of each Performance Unit (the "Initial Value"). Performance
Units granted to a recipient shall be credited to an account (a "Performance
Unit Account") established and maintained for such recipient.
11.2 Right to Payment of Performance Units. With respect to each
-------------------------------------
award of Performance Units under the Plan, the Committee shall specify
Performance Objectives which must be satisfied in order for the recipient to
vest in the Performance Units which have been
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<PAGE>
awarded to such recipient for the Performance Period. If the Performance
Objectives established for a recipient for the Performance Period are partially
but not fully met, the Committee may, nonetheless, in its sole discretion,
determine that all or a portion of the Performance Units have vested. If the
Performance Objectives for a Performance Period are exceeded, the Committee may,
in its sole discretion, grant additional, fully vested Performance Units to the
recipient. The Committee may, in its sole discretion, adjust the Performance
Objectives or the Initial Value or Ending Value of any Performance Units to
reflect extraordinary events, such as stock splits, recapitalizations, mergers,
combinations, divestitures, spin-offs and the like. The Committee may also
determine, in its sole discretion, that Performance Units awarded to a recipient
shall become partially or fully vested upon the recipient's termination of
employment or other arrangement for the provision of services to the Corporation
due to Disability, Retirement, death or otherwise, or upon a Relocation Event or
Special Event.
11.3 Payment for Performance Units. As soon as practicable following
-----------------------------
the end of a Performance Period, the Committee shall determine whether the
Performance Objectives for the Performance Period have been achieved (or
partially achieved to the extent necessary to permit partial vesting at the
discretion of the Committee pursuant to Section 11.2). If the Performance
Objectives for the Performance Period have been exceeded, the Committee shall
determine whether additional Performance Units shall be granted to the recipient
pursuant to Section 11.2. As soon as reasonably practicable after such
determinations, or at such later date as the Committee shall determine at the
time of grant, the Corporation shall pay to the recipient an amount with respect
to each vested Performance Unit equal to the Ending Value of the Performance
Unit or, if the Committee shall so specify at the time of grant, an amount equal
to (i) the Ending Value of the Performance Unit less (ii) the Initial Value of
the Performance Unit. Payment shall be made entirely in cash, entirely in
Common Stock (including Restricted Shares) or in such combination of cash and
Common Stock as the Committee shall determine in its sole discretion.
ARTICLE 12.
UNRESTRICTED SHARES
12.1 Award of Unrestricted Shares. The Committee may cause the
----------------------------
Corporation to grant Unrestricted Shares to employees, officers, directors or
independent contractors of the Corporation at such time or times, in such
amounts and for such reasons as the Committee, in its sole discretion, shall
determine. No payment shall be required for Unrestricted Shares.
12.2 Delivery of Unrestricted Shares. The Corporation shall issue,
-------------------------------
in the name of each person to whom Unrestricted Shares have been granted, stock
certificates representing the total number of Unrestricted Shares granted to the
recipient, and shall deliver such certificates to the recipient as soon as
reasonably practicable after the date of grant or on such later date as the
Committee shall determine at the time of grant.
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<PAGE>
ARTICLE 13.
GRANTS TO NON-EMPLOYEE DIRECTORS
Non-Employee Directors (as defined in Rule 16b-3 of the Act) who
remain as such on the last day of any given fiscal quarter shall be issued
quarterly, in arrears, such number of shares of Common Stock as have a Market
Price on the last day of such fiscal quarter equal to $3,750, with such amount
being pro rated for any Non-Employee Director who serves less than such full
fiscal quarter. If there shall be a merger, reorganization, consolidation,
recapitalization, stock dividend or other change in corporate structure such
that the shares of Common Stock are changed into or become exchangeable for a
different security, thereafter the shares to be granted to Non-Employee
Directors hereunder shall be similarly adjusted.
ARTICLE 14.
TAX OFFSET PAYMENTS
The Committee shall have the authority at the time of any award under
the Plan or anytime thereafter to make Tax Offset Payments, in cash or
Unrestricted Shares, to assist recipients in paying income taxes incurred as a
result of their participation in the Plan. The Tax Offset Payments shall be
determined by multiplying a percentage established by the Committee by all or a
portion (as the Committee shall determine) of the taxable income recognized by a
recipient upon (i) the exercise of Non-qualified Stock Options or Stock
Appreciation Rights, (ii) the disposition of shares received upon exercise of
Incentive Stock Options, (iii) the lapse of restrictions on Restricted Shares,
(iv) the award of Unrestricted Shares, or (v) payments for Performance Shares or
Performance Units. The percentage shall be established, from time to time, by
the Committee at that rate which the Committee, in its sole discretion,
determines to be appropriate and in the best interests of the Corporation to
assist recipients in paying income taxes incurred as a result of the events
described in the preceding sentence.
ARTICLE 15.
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
Notwithstanding any other provision of the Plan, the Committee may:
(i) at any time, make or provide for such adjustments to the Plan or to the
number and class of shares available thereunder or (ii) at the time of grant of
any Options, Stock Appreciation Rights, Restricted Shares or Performance Shares,
provide for such adjustments to such Options, Stock Appreciation Rights,
Restricted Shares or Performance Shares, in each case, as the Committee shall
deem appropriate to prevent dilution or enlargement of rights, including,
without limitation, adjustments in the event of stock dividends, stock splits,
recapitalizations, mergers,
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<PAGE>
consolidations, combinations or exchanges of shares, separations, spin-offs,
reorganizations, liquidations and the like.
ARTICLE 16.
AMENDMENT AND TERMINATION
The Board may suspend, terminate, modify or amend the Plan, provided
that any amendment that would (i) materially increase the aggregate number of
shares which may be issued under the Plan, (ii) materially increase the benefits
accruing to persons eligible to receive awards under the Plan, or (iii)
materially modify the requirements as to eligibility for participation in the
Plan, shall be subject to the approval of the Corporation's stockholders, except
that any such increase or modification that may result from adjustments
authorized by Article 15 hereof shall not require such stockholder approval. If
the Plan is terminated, the terms of the Plan shall, notwithstanding such
termination, continue to apply to awards granted prior to such termination. No
suspension, termination, modification or amendment of the Plan may, without the
consent of the recipient to whom an award shall theretofore have been granted,
adversely affect the rights of such recipient under such award.
ARTICLE 17.
WRITTEN AGREEMENT
Each award of Options, Stock Appreciation Rights, Restricted Shares,
Performance Shares, Performance Units, Unrestricted Shares and Tax Offset
Payments shall be evidenced by a written agreement containing such restrictions,
terms and conditions, if any, as the Committee may require. In the event of any
conflict between a written agreement and the Plan, the terms of the Plan shall
govern.
ARTICLE 18.
MISCELLANEOUS PROVISIONS
18.1 Tax Withholding. The Corporation shall have the right to
---------------
require recipients or their beneficiaries or legal representatives to remit to
the Corporation an amount sufficient to satisfy Federal, state and local
withholding tax requirements, or to deduct from all payments under the Plan,
including Tax Offset Payments, amounts sufficient to satisfy all withholding tax
requirements. Whenever payments under the Plan are to be made to a recipient in
cash, such payments shall be net of any amounts sufficient to satisfy all
Federal, state and local withholding tax requirements. The Committee may, in
its sole discretion, permit a recipient to satisfy his or her tax withholding
obligation either by (i) surrendering shares of Common Stock owned by
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<PAGE>
the recipient or (ii) having the Corporation withhold from shares of Common
Stock otherwise deliverable to the employee. Shares surrendered or withheld
shall be valued at their Market Price as of the date on which income is required
to be recognized for income tax purposes.
18.2 Compliance With Section 16(b). In the case of recipients of
-----------------------------
awards under the Plan who are or may be subject to Section 16 of the Act, it is
the intent of the Corporation that the Plan and any award granted hereunder
satisfy and be interpreted in a manner that satisfies the applicable
requirements of Rule 16b-3, so that such persons will be entitled to the
benefits of Rule 16b-3 or other exemptive rules under Section 16 of the Act and
will not be subjected to liability thereunder. If any provision of the Plan or
any award would otherwise conflict with the intent expressed herein, that
provision, to the extent possible, shall be interpreted and deemed amended so as
to avoid such conflict. To the extent of any remaining irreconcilable conflict
with such intent, such provision shall be deemed void as applicable to
recipients who are or may be subject to Section 16 of the Act.
18.3 Successors. The obligations of the Corporation under the Plan
----------
shall be binding upon any successor corporation or organization resulting from
the merger, consolidation or other reorganization of the Corporation, or upon
any successor corporation or organization succeeding to all or substantially all
of the assets and business of the Corporation. In the event of any of the
foregoing, the Committee may, at its discretion prior to the consummation of the
transaction and subject to Article 16 hereof, cancel, offer to purchase,
exchange, adjust or modify any outstanding awards, at such time and in such
manner as the Committee deems appropriate and in accordance with applicable law.
18.4 General Creditor Status. Recipients of awards under the Plan
-----------------------
shall have no right, title, or interest whatsoever in or to any investments
which the Corporation may make to aid it in meeting its obligations under the
Plan. Nothing contained in the Plan, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Corporation and any recipient of an award
under the Plan or any beneficiary or legal representative of such a recipient.
To the extent that any person acquires a right to receive payments from the
Corporation under the Plan, such right shall be no greater than the right of an
unsecured general creditor of the Corporation. All payments to be made
hereunder shall be paid from the general funds of the Corporation and no special
or separate fund shall be established and no segregation of assets shall be made
to assure payment of such amounts except as expressly set forth in the Plan.
18.5 No Right to Employment. Nothing in the Plan or in any written
----------------------
agreement entered into pursuant to Article 17 hereof, nor the grant of any
award, shall confer upon any person any right to continue in the employ of or be
retained in any capacity by the Corporation or a subsidiary or to be entitled to
any remuneration or benefits not set forth in the Plan or such written agreement
or interfere with or limit the right of the Corporation or a subsidiary to
modify the terms of or terminate at any time such person's employment or other
arrangement for the provision of services to the Corporation.
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<PAGE>
18.6 Notices. Notices required or permitted to be made under the
-------
Plan shall be sufficiently made if personally delivered to a recipient of an
award under the Plan or sent by regular mail addressed (a) to the recipient at
the recipient's address as set forth in the books and records of the Corporation
or its subsidiaries, or (b) to the Corporation or the Committee at the principal
office of the Corporation clearly marked "Attention: Stock Option Committee."
18.7 Severability. In the event that any provision of the Plan shall
------------
be held illegal or invalid for any reason, such illegality or invalidity shall
not affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.
18.8 Governing Law. To the extent not preempted by Federal law, the
-------------
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Nevada.
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<PAGE>
EXHIBIT 5.1
Sklar Warren & Conway LLP
221 North Buffalo Drive, Suite A
Las Vegas, Nevada 89128
August 21, 1998
Linkon Corporation
140 Sherman Street
Fairfield, Connecticut 06430
Re: Linkon Corporation -- Registration Statement on Form S-8
--------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Linkon Corporation, a Nevada corporation (the
"Company"), in connection with the preparation and filing with the Securities
and Exchange Commission of a registration statement on Form S-8 (the
"Registration Statement") of the Company, covering 2,500,000 shares (the
"Shares") of the Common Stock, $0.001 par value per share, of the Company, to be
issued pursuant to the Amended and Restated Linkon Corporation 1996 Stock Option
and Performance Incentive Plan (the "Plan").
In rendering the opinion set forth herein, we have examined executed
copies, telecopies or photocopies of: (i) the Registration Statement and the
Plan; (ii) the Restated Articles of Incorporation and the By-laws of the
Company; and (iii) such other records, documents, certificates and other
instruments as in our judgment are necessary or appropriate as a basis for the
opinion expressed below. In our examination of such documents we have assumed
the genuineness of all signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies, and the authenticity of the originals of such copies. As to any facts
material to this opinion which we did not independently establish or verify, we
have relied upon statements and representations of officers and other
representatives of the Company.
Based upon the foregoing, and in reliance thereon, and subject to the
qualifications, assumptions and exceptions heretofore and hereinafter set forth,
and assuming: (i) the conformity of the certificates representing the Shares to
the form of specimen thereof examined by us; and (ii) the due execution and
delivery of such certificates, we are of the opinion that, upon the issuance of
the Shares in accordance with the Plan (and in accordance with the terms of any
written options, option agreements or other agreements issued or entered into
pursuant to the Plan) and as contemplated by the Registration Statement, the
Shares will be validly issued, fully paid and non-assessable.
We do not express, or purport to express, any opinion with respect to the
laws of any jurisdiction other than the laws of the State of Nevada.
<PAGE>
Linkon Corporation
August 21, 1998
Page 2
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and further consent to the use of our name under the
caption "Legal Matters" in the Registration Statement. In giving this consent,
we do not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations promulgated thereunder by the Securities and Exchange
Commission. This opinion is given as of the date hereof and we assume no
obligation to update or supplement this opinion to reflect any facts or
circumstances which may hereafter occur or come to our attention or any changes
in law which may hereafter occur.
Very truly yours,
/s/ SKLAR, WARREN & CONWAY LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference into this Registration
Statement on Form S-8 of our report dated April 6, 1998, included in Linkon
Corporation's Form 10-KSB, as amended, for the fiscal year ended January 31,
1998, and to all references to our Firm included in this Registration Statement.
/s/ Radin, Glass & Co., LLP
Radin, Glass & Co., LLP
Certified Public Accountants
New York, New York
August 19, 1998
