UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
Linkon Corporation
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, Par Value $.001 Per Share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
24231700
--------------------------------------------------
(CUSIP Number)
Eric M. Lerner, Esq., c/o Rosenman & Colin LLP
575 Madison Avenue, New York, NY 10022 (212) 940-8800
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
April 6, 1998
--------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 (the "Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
Page 1 of 61
<PAGE>
CUSIP No. 24231700
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
James Scibelli
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
N/A
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
United States
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares 1,000,000 Shares*
Beneficially --------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 1,680,000 Shares*
Person --------------------------------------------------------
With 9 Sole Dispositive Power
2,680,000 Shares*
--------------------------------------------------------
10 Shared Dispositive Power
0
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
2,680,000 Shares
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
18.7%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
- ----------
* Please see Item 6 below.
Page 2 of 61
<PAGE>
CUSIP No. 24231700
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Roberts & Green, Inc.
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
WC
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
New York
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares 1,000,000 Shares
Beneficially --------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 0
Person --------------------------------------------------------
With 9 Sole Dispositive Power
1,000,000 Shares
--------------------------------------------------------
10 Shared Dispositive Power
0
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,000,000 Shares
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
7.0%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 3 of 61
<PAGE>
CUSIP No. 24231700
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
RG Capital Fund, LLC
- --------------------------------------------------------------------------------
2 Check the Appropriate Box If a Member of a Group*
a. |_|
b. |X|
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds*
WC
- --------------------------------------------------------------------------------
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
New York
- --------------------------------------------------------------------------------
7 Sole Voting Power
Number of
Shares 0
Beneficially --------------------------------------------------------
Owned By 8 Shared Voting Power
Each
Reporting 1,680,000 Shares
Person --------------------------------------------------------
With 9 Sole Dispositive Power
1,680,000 Shares
--------------------------------------------------------
10 Shared Dispositive Power
0
--------------------------------------------------------
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,680,000 Shares
- --------------------------------------------------------------------------------
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares* |_|
- --------------------------------------------------------------------------------
13 Percent of Class Represented By Amount in Row (11)
12.6%
- --------------------------------------------------------------------------------
14 Type of Reporting Person*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 4 of 61
<PAGE>
Item 1. Security and Issuer
This statement relates to the shares of Common Stock, par value
$.001 per share (the "Common Stock"), of Linkon Corporation (the
"Company"), a corporation organized under the laws of the State of
Nevada. The principal executive offices of the Company are located
at 140 Sherman Street, Fairfield, Connecticut 06430.
Item 2. Identity and Background
(a) Pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), this Schedule 13D is being filed jointly by James
Scibelli, an individual, Roberts & Green, Inc. ("Roberts & Green"),
a corporation and RG Capital Fund, LLC ("RG"), a limited liability
company. The individual and entities hereinabove set forth are
collectively called the "Reporting Persons". Each Reporting Person
expressly disclaims the existence of a "group" within the meaning of
Section 13(d)(3) of the Exchange Act with the other Reporting
Persons. Neither the filing of this Statement nor any of its
contents shall be deemed to constitute an admission that the
Reporting Persons constitute a "group" under Section 13(d)(3) of the
Exchange Act.
(b)-(c)
JAMES SCIBELLI
James Scibelli is principally employed as an investment banker,
private investor and consultant. Mr. Scibelli's principal business
address is One Hollow Lane, Suite 208, Lake Success, New York 11040.
ROBERTS & GREEN, INC.
Roberts & Green is a New York corporation that provides investment
banking and financial advisory services. The principal business
address of Roberts & Green is One Hollow Lane, Suite 208, Lake
Success, New York 11040. Mr. Scibelli is the sole shareholder, sole
director and sole officer of Roberts & Green.
RG CAPITAL
RG is a New York limited liability company that engages in investing
of securities. The principal business address of RG is One Hollow
Lane, Suite 208, Lake Success, New York 11040. The Managing Director
of RG is SG Capital Corp., a New York corporation which principally
functions as the Managing Director of RG. Mr. Scibelli is the sole
shareholder, sole director and sole officer of SG Capital Corp. The
principal
Page 5 of 61
<PAGE>
business address of SG Capital Corp. is One Hollow Lane, Suite 208,
Lake Success, New York 11040.
(d) To the best knowledge of the Reporting Persons, during the last
five years, none of the persons named in this Item 2 has been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).
(e) To the best knowledge of the Reporting Persons, during the last
five years, none of the persons names in this Item 2 was a party to
a civil proceeding of a judicial or administrative body of competent
jurisdiction which as a result of such proceeding was or is subject
to any judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, Federal or
state securities laws or finding any violation with respect to such
laws.
(f) Mr. Scibelli is a United States citizen.
Item 3. Source and Amount of Funds or Other Consideration.
The aggregate amount of funds used by RG to purchase the shares of
Common Stock reported herein as being beneficially owned by RG was
$1,260,000. The source of funds used by RG to make such purchase was
working capital invested by its members.
As is more fully described in Item 5, the shares of Common Stock
reported herein as being beneficially owned by Mr. Scibelli
(indirectly), and by Roberts & Green (directly), include Roberts and
Green's ownership of stock purchase warrants to acquire 1,000,000
shares of the Company's Common Stock at an exercise price of $1.50
per share. The stock purchase warrants were issued to Roberts &
Green as partial compensation for its role as investment advisor to
the Company pursuant to that certain Warrant Purchase Agreement (the
"Warrant Purchase Agreement"), dated as of April 6, 1998.
Item 4. Purpose of Transaction.
The Reporting Persons acquired the securities reported herein as
being beneficially owned by such Reporting Persons for investment
purposes. Depending upon market conditions and other factors that
the Reporting Persons may deem material to its investment decisions,
the Reporting Persons may purchase additional shares of the
securities of the Company in the open market or in private
transactions, or may dispose of all or a portion of the securities
of the Company that it owns or hereafter may acquire, subject to
limitations agreed with the Company and described in Item 6 below.
Except
Page 6 of 61
<PAGE>
as otherwise set forth herein, the Reporting Persons have no plans
or proposals which relate to, or could result in any matters
referred to in paragraphs (b) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a)-(b)
Roberts & Green, Inc.
Roberts & Green beneficially owns 1,000,000 shares of the Company's
Common Stock comprising approximately 7.0% of the issued and
outstanding shares of the Company's Common Stock, based on
information received from the Company. All such shares are
beneficially owned by Roberts & Green by virtue of its ownership of
warrants (the "Warrants") to purchase 1,000,000 shares of the
Company's Common Stock.
Roberts & Green has the sole power to vote and dispose of all such
shares.
RG Capital Fund, LLC
RG beneficially owns 1,680,000 shares of the Company's Common Stock
comprising approximately 12.6% of the issued and outstanding shares
of the Company's Common Stock, based on information received from
the Company.
RG shared power to vote and sole power to dispose of all such shares
subject to certain restrictions, as described in Item 6 below.
James Scibelli
Mr. Scibelli, by virtue of the fact that he is the sole shareholder,
sole director and sole officer of Roberts & Green, has the sole
power to vote and dispose of the shares of Common Stock held by
Roberts & Green. Mr. Scibelli, by virtue of the fact that he is the
sole shareholder, sole director and sole officer of SG Capital
Corp., the Managing Director of RG, has the shared power to vote and
sole power to dispose of the shares of Common Stock held by RG
subject to certain limitations, as described in Item 6 below. As
such, Mr. Scibelli beneficially owns 2,680,000 shares of the
Company's Common Stock comprising approximately 18.7% of the issued
and outstanding shares of the Company's Common Stock, based on
information received from the Company.
(c) Roberts & Green acquired the Warrants on April 6, 1998 pursuant
to the Warrant Purchase Agreement as partial consideration for its
role as investment
Page 7 of 61
<PAGE>
advisor to the Company.
RG purchased the shares of Common Stock reported herein as being
owned by it pursuant to that certain Subscription and Stock Purchase
Agreement (the "Subscription and Purchase Agreement"), dated as of
April 6, 1998, at a price of $0.75 per share.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the Issuer.
1. Each of the Warrants entitles Roberts & Green to purchase from
the Company, at any time during the period commencing on April 6,
1998 through the close of business on October 6, 1999, one share of
the Company's Common Stock at a price of $1.50, subject to certain
adjustments and conditions set forth in the Warrant Certificate.
2. Pursuant to the Registration Rights Agreement (the "Registration
Rights Agreement"), dated as of April 6, among RG, Roberts & Green
and the Company, the Company agreed to provide certain registration
rights to Roberts & Green and RG, respectively, with respect to the
shares of Common Stock into which the Warrants are convertible and
the shares of Common Stock purchased by RG pursuant to the
Subscription and Purchase Agreement, respectively.
3. On March 11, 1998, Mr. Scibelli loaned 300,000 to the Company;
the proceeds of the sale of shares have been applied to retire such
indebtedness.
4. On April 6, 1998, RG loaned $1,100,000 to the Company (the
"Loan").
5. Pursuant to the Subscription and Purchase Agreement, RG has
agreed to vote the shares owned by it in accordance with the
recommendations of the Company's Board of Directors, until the
earlier of such time as RG and its affiliates own less than 5% of
the Common Stock or the Company is in breach of the agreements
entered into with RG, including the note in respect of the Loan. In
addition, RG has agreed (i) not to purchase additional shares of
Common Stock in open market transactions, until such time as RG and
its affiliates own less than 5% of the Common Stock and (ii) until
April 6, 2000, subject to certain exceptions, not to dispose of any
shares of Common Stock (x) other than in an underwriting offering or
(y) in amounts greater than what would otherwise be
Page 8 of 61
<PAGE>
permitted under Rule 144 of the Securities Act of 1933, in a private
transaction or in a registered but non-underwritten transaction.
Item 7. Material to be Filed as Exhibits
1. Agreement, dated April 15, 1998 among the Reporting Persons
relating to filing of a joint acquisition statement pursuant to Rule
13d-1(f)(1).
2. Warrant Certificate, dated April 6, 1998.
3. Subscription and Purchase Agreement dated as of April 6, 1998.
4. Registration Rights Agreement.
Page 9 of 61
<PAGE>
SIGNATURE
After reasonable inquiry, and to the best of our knowledge and
belief, the undersigned certify that the information set forth in this
statement is true, complete and correct.
Dated: April 15, 1998
By: /s/ James Scibelli
------------------------
James Scibelli
ROBERTS & GREEN, INC.
By: /s/ James Scibelli
------------------------
Name: James Scibelli
Title: President
RG CAPITAL FUND, LLC
By: SG Capital Corp.
its Managing Director
By: /s/ James Scibelli
------------------------
Name: James Scibelli
Title: President
Page 10 of 61
<PAGE>
Exhibit Index
Sequentially
Exhibit No. Description Numbered Page
----------- ----------- -------------
1. Agreement, dated April 15, 1998 among the
Reporting Persons relating to the filing
of a joint acquisition statement pursuant
to Rule 13d-1(f)(1).
2. Warrant Certificate, dated April 6, 1998.
3. Subscription and Purchase Agreement dated
April 6, 1998.
4. Registration Rights Agreement.
Page 11 of 61
EXHIBIT 1
The undersigned hereby agree to file a joint statement on Schedule 13D and
amendments thereto pertaining to their beneficial ownership of shares of Common
Stock of Linkon Corporation.
This Agreement may be terminated for any reason by any party hereto
immediately upon the personal delivery or facsimile transmission of notice to
that effect to the other parties hereto.
This agreement may be executed in counterparts and all so executed shall
constitute the agreement.
Date: April 15, 1998
By: /s/ James Scibelli
------------------------
James Scibelli
ROBERTS & GREEN, INC.
By: /s/ James Scibelli
------------------------
Name: James Scibelli
Title: President
RG CAPITAL FUND, LLC
By: SG Capital Corp.,
its Managing Director
By: /s/ James Scibelli
------------------------
Name: James Scibelli
Title: President
Page 12 of 61
EXHIBIT 2
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ISSUED PURSUANT TO AND ARE
SUBJECT TO THE TERMS AND CONDITIONS OF A WARRANT PURCHASE AGREEMENT DATED AS OF
APRIL 6, 1998 BETWEEN LINKON CORPORATION (THE "COMPANY") AND THE PURCHASER NAMED
THEREIN (A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY) AND
ARE ENTITLED TO THE BENEFITS THEREOF. THE SHARES OF COMMON STOCK ISSUABLE UPON
THE EXERCISE OF THE WARRANTS EVIDENCED HEREBY ARE SUBJECT TO CERTAIN RESALE
RESTRICTIONS SET FORTH IN SECTION 6 OF THAT CERTAIN SUBSCRIPTION AND STOCK
PURCHASE AGREEMENT, DATED AS OF APRIL 6, 1998, BETWEEN THE INITIAL HOLDER HEREOF
AND THE COMPANY (AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
COMPANY). THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS THERE IS IN EFFECT A
REGISTRATION STATEMENT UNDER SUCH ACT WITH RESPECT TO THE SECURITIES AND SUCH
SALE, OFFER FOR SALE, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS MADE IN
ACCORDANCE WITH SUCH REGISTRATION STATEMENT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
THE COMPANY, THAT SUCH SALE, OFFER FOR SALE, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION DOES NOT VIOLATE THE PROVISIONS OF SUCH ACT, SHALL HAVE BEEN
FURNISHED TO THE COMPANY.
Date: April 6, 1998
No. 98-1 1,000,000 Warrants
WARRANT CERTIFICATE
To Subscribe for and Purchase Common Stock, Par Value $0.001 Per Share, of
LINKON CORPORATION
1. THIS CERTIFIES that, for value received, Roberts & Green, Inc., with an
address of One Hollow Lane, Suite 208, Lake Success, New York 11040, or
permitted assigns (the "Holder") is the owner of the number of Warrants set
forth above, each of which entitles the Holder to purchase from Linkon
Corporation, a Nevada corporation (herein called the "Company"), at any time
during the period commencing on April 6, 1998 through the close of business on
October 6, 1999 (the "Exercise Period") one share of common stock, par value
$0.001 per share, of the Company ("Common Stock"), at a price of $1.50 (the
"Initial Exercise Price"), subject to the adjustments and conditions hereinafter
set forth.
Page 13 of 61
<PAGE>
2. The Warrants evidenced hereby may be exercised by the Holder, in whole
or in part, by the surrender of this Warrant Certificate, duly endorsed (unless
endorsement is waived by the Company), at the principal office of the Company,
140 Sherman Street, Fairfield, Connecticut 06430 (or such other office or agency
of the Company as it may be designate by notice in writing to the Holder at its
last address appearing on the books of the Company) and upon payment to it of
the Exercise Price (as defined below) for the Warrants so exercised. The Company
agrees that the shares of Common Stock purchased upon the exercise of the
Warrants shall be deemed to be issued to the Holder on the date on which this
Warrant Certificate shall have been surrendered and the Exercise Price paid as
aforesaid; provided, however, that no such surrender on any date when the stock
transfer books of the Company shall be closed shall be effective to constitute
the person entitled to receive such shares as the record holder thereon on such
date, but such surrender shall be effective to constitute the person entitled to
receive such shares as the record holder thereof for all purposes immediately
after the opening of business on the next succeeding day on which such stock
transfer books are open. The certificates for such shares shall be delivered to
the Holder within a reasonable time, not exceeding ten days, after Warrants
evidenced hereby shall have been so exercised and a new Warrant Certificate
evidencing the number of Warrants, if any, remaining unexercised shall also be
issued to the Holder within such time unless such Warrants shall have expired.
No fractional shares of capital stock of the Company, or scrip for any
fractional shares, shall be issued upon the exercise of any Warrants.
The above provisions are, however, subject to the following:
(a) Exercise Price. The Initial Exercise Price of $1.50 per share shall be
subject to adjustment from time to time as hereinafter provided (such price or
price as last adjusted being herein called the "Exercise Price").
(b) Subdivision of Stock. If, at any time after the Date of Issuance, the
number of shares of Common Stock outstanding is increased by a stock dividend
payable in shares of Common Stock, or by a subdivision or split-up, then,
concurrently with the effectiveness of such event, the number of shares of
Common Stock issuable on exercise of each Warrant shall be increased in
proportion to such increase in outstanding shares and the Exercise Price in
effect immediately prior to such event shall be decreased by multiplying such
Exercise Price by a fraction, the numerator of which shall be the number of
shares issuable upon exercise of each Warrant immediately prior to such increase
and the denominator of which shall be the number of shares issuable on exercise
of each Warrant immediately after such increase.
(c) Combination of Stock. If, at any time after the Date of Issuance, the
number of shares of Common Stock outstanding is decreased by a combination of
the outstanding shares of Common Stock, then, concurrently with the
effectiveness of such event, the number of shares of Common Stock issuable on
exercise of each Warrant shall be decreased in proportion to such decrease in
outstanding shares and the Exercise Price in effect immediately prior to such
event shall be increased by multiplying such Exercise Price by a
Page 14 of 61
<PAGE>
fraction, the numerator of which shall be the number of shares issuable upon
exercise of each Warrant immediately prior to such decrease and the denominator
of which shall be the number of shares issuable on exercise of each Warrant
immediately after such decrease.
(d) Reorganization, Reclassification, Consolidation, Merger or Sale. In
the event, at any time after the Date of Issuance, of any capital
reorganization, or any reclassification of the capital stock of the Company
(other than a change in par value from par value to no par value or from no par
value to par value or as a result of a stock dividend or subdivision, split-up
or combination of shares), or the consolidation or merger of the Company with or
into another person (other than a consolidation or merger in which the Company
is the continuing corporation and which does not result in any change in the
Common Stock, other than as a result of the issuance thereof in connection with
such merger or consolidation) or the sale or other disposition of substantially
all the properties and assets of the Company as an entirety to any other person,
each Warrant shall after such reorganization, reclassification, consolidation,
merger, sale or other disposition be exercisable into the kind and number of
shares of stock or other securities or property of the Company or of the
corporation resulting from such consolidation or surviving such merger or to
which such properties and assets shall have been sold or otherwise disposed to
which the holder of the number of shares of Common Stock deliverable
(immediately prior to the time of such reorganization, reclassification,
consolidation, merger, sale or other disposition) upon exercise of such Warrant
would have been entitled upon such reorganization, reclassification,
consolidation, merger or other disposition. The provisions of this paragraph
2(d) shall similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales or other dispositions.
(e) Notice of Adjustment. Upon any adjustment of the Exercise Price, then
and in each such case the Company shall give written notice thereof, by first
class mail, postage prepaid, addressed to the Holder at the address of the
Holder as shown on the books of the Company, which notice shall be signed by the
chief financial officer of the Company and shall state the Exercise Price
resulting from such adjustment and the increase or decrease, if any, in the
number of shares purchasable at such price upon the exercise of this Warrant
Certificate, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.
(f) Other Notices. In case at any time:
(1) the Company shall declare any cash dividend upon its Common
Stock payable at a rate in excess of the last regular cash dividend
theretofore paid;
(2) the Company shall declare any dividend upon its Common Stock
payable in stock or make any special dividend or other distribution (other
than regular cash dividends) to the holders of its Common Stock;
Page 15 of 61
<PAGE>
(3) the Company shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class or other
rights;
(4) there shall be any capital reorganization or reclassification of
the capital stock of the Company or any consolidation or merger of the
Company with, or sale of all or substantially all of its assets to,
another corporation; or
(5) there shall be a voluntary or involuntary dissolution,
liquidation or winding upon of the Company;
then, in any one or more of said cases, the Company shall give, by first class
mail, postage prepaid, addressed to the Holder at the address of the Holder as
shown on the books of the Company, (a) at least 20 days' prior written notice of
the date on which the books of the Company shall close or a record shall be
taken for such dividend, distribution or subscription rights, or (b) for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, at least 20 days' prior written notice of the date on which any
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up shall take place. Such notice in accordance with the
foregoing clause (a) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock shall be entitled thereto, and such notice in accordance with the
foregoing clause (b) shall also specify the date on which the holders of Common
Stock shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up, as the case may be. The
failure to give or receive the notice required by paragraph 2(e) or 2(f) hereof
or any defect therein shall not affect the legality or validity of any such
dividend, distribution, right or warrant or other action.
(g) Taxes on Exercise. The issuance of stock certificates on exercise of
the Warrants represented hereby shall be made without charge to the Holder for
any issue tax in respect of such issuance. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of stock in a name other than that of the Holder,
and the Company shall not be required to issue or deliver any such stock
certificate unless and until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of any such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
(h) Company to Provide Stock. The Company shall at all times reserve and
keep available out of the aggregate of its authorized but unissued stock or its
issued stock held in its treasury, or both, for the purpose of effecting the
conversion of the Warrants represented hereby, such number of its duly
authorized shares of Common Stock as shall from time to time be sufficient to
effect the conversion of these Warrants; and if at any time such number of
shares of Common Stock shall not be sufficient to effect the
Page 16 of 61
<PAGE>
conversion of these Warrants, the Company will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued Common Stock to, or otherwise acquire, such number of share as shall be
sufficient for such purpose.
3. Cashless Exercise.
(a) At any time during the Exercise Period, the Holder may, at its
option, exchange the Warrants represented by this Warrant Certificate, in
whole or in part (a "Warrant Exchange"), into the number of fully paid and
non-assessable shares of Common Stock determined in accordance with this
paragraph 3, by surrendering such Warrant Certificate at the principal
office of the Company or at the office of its transfer agent, accompanied
by a notice stating such Holder's intent to effect such exchange, the
number of shares of Common Stock to be exchanged and the date on which the
Holder requested that such Warrant Exchange occur (the "Notice of
Exchange"). The Warrant Exchange shall take place on or, as soon as
practicable after, the date specified in the Notice of Exchange or, if
later, the date the Notice of Exchange is received by the Company or, as
soon as practicable thereafter (the "Exchange Date"). Certificates for the
shares of Common Stock issuable upon such Warrant Exchange and, if
applicable, a new Warrant of like tenor evidencing the number of Warrants,
if any, remaining unexercised shall be issued as of the Exchange Date or,
as soon as practicable thereafter, and delivered to the Holder within
three days following the Exchange Date. In connection with any Warrant
Exchange, the Holder's Warrant Certificate shall represent the right to
subscribe for and acquire the number of shares of Common Stock (rounded to
the next highest integer) equal to (x) the number of shares of Common
Stock specified by the Holder in its Notice of Exchange (the "Total Share
Number") less (y) the number of shares of Common Stock equal to the
quotient obtained by dividing (i) the product of the Total Share Number
and the existing Exercise Price per share by (ii) the Current Market Price
(as hereinafter defined) of a share of Common Stock.
(b) As used herein, the phrase "Current Market Price" at any date
shall be the average of the last reported sale prices for the 20 trading
days, as officially reported by the principal securities exchange on which
the Common Stock is listed or admitted to trading or as reported in the
Nasdaq SmallCap System, or, if the Common Stock is not listed or admitted
to trading on any national securities exchange or quoted on the Nasdaq
SmallCap System, the last reported sale price as furnished by the National
Association of Securities Dealers, Inc. through Nasdaq or similar
organization if Nasdaq is no longer reporting such information, or if the
Common Stock is not quoted on Nasdaq, as determined in good faith by
resolution of the Board of Directors of the Company, ending two days
immediately preceding the date of the Notice of Exchange.
Page 17 of 61
<PAGE>
4. Rights of Holder. This Warrant Certificate shall not entitle the holder
hereof any voting rights or other right as a shareholder of the Company.
5. Non-transferability of this Warrant Certificate. This Warrant
Certificate, the Warrants evidenced hereby and any shares of Common Stock of the
Company issued upon any exercise hereof may not be assigned or transferred
except as expressly provided in the Warrant Purchase Agreement, dated as of
April 6, 1998, between the Company and the purchaser named therein.
6. Lost, Stolen or Mutilated Certificates. Upon receipt of any evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant Certificate, and in case of any such loss, theft or destruction,
upon delivery of an indemnity agreement satisfactory to the Company, or in case
of any such mutilation, upon surrender and cancellation of such certificate, the
Company at its expense will issue and deliver to the Holder a new Warrant
Certificate of like tenor, in lieu of such lost, stolen or mutilated
certificate.
7. Law Governing. This Warrant is delivered in the State of New York and
shall be construed and enforced in accordance with, and governed by, the laws of
the State of New York, without giving effect to conflicts of law principles.
8. Entire Agreement; Modification. This Agreement and the Warrant Purchase
Agreement and Registration Rights Agreement contain the entire understanding
between the parties hereto with respect to the subject matter hereof and may not
be modified or amended except in a writing duly signed by the party against whom
enforcement of the modification or amendment is sought.
IN WITNESS WHEREOF, LINKON CORPORATION, has caused this Warrant
Certificate to be signed by a duly authorized officer under its corporate seal,
and this Warrant Certificate to be dated the date first above written.
LINKON CORPORATION
By: /s/
------------------------
Its: President and CEO
Attest:
- ------------------------------
Secretary
Page 18 of 61
EXHIBIT 3
SUBSCRIPTION AND STOCK PURCHASE AGREEMENT
SUBSCRIPTION AND STOCK PURCHASE AGREEMENT, dated as of April 6, 1998
("Agreement"), between LINKON CORPORATION, a Nevada corporation (the "Company")
and RG CAPITAL FUND, LLC, a New York limited liability company (the "Investor").
W I T N E S S E T H:
WHEREAS, the Investor wishes to subscribe to purchase 2,400,000 shares
(the "Shares") of the Company's common stock, $0.001 par value per share (the
"Common Stock") from the Company and the Company wishes to issue the Shares to
the Investor for the subscription price and upon the terms set forth herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. ISSUANCE AND SUBSCRIPTION OF SHARES.
1.1 Issuance and Subscription of Shares. In reliance upon the
representations and warranties made herein and subject to the terms and
conditions set forth herein, the Company hereby agrees to issue to the Investor,
and the Investor hereby agrees to subscribe to purchase, the Shares, for a
subscription price of $0.75 per share, or an aggregate subscription price of
$1,800,000 (the "Subscription Price").
1.2 Use of Proceeds. The net proceeds from the Investor's
subscription to the Shares shall be used by the Company to pay concurrently with
the Second Closing (defined below) that certain promissory note in aggregate
principal amount of $300,000 to James Scibelli, dated March 11, 1998, together
with interest thereon, and the balance shall be used by the Company for working
capital; payment shall be made concurrently with the Second Closing by wire
transfer to EAB for the account of James Scibelli, as follows: ABA # 021001486,
Account # 130155781.
SECTION 2. CLOSINGS; DELIVERIES
2.1 Closings; Delivery. (a) The issuance of and subscription to the
Shares hereunder shall take place at two closings (the "First Closing" and the
"Second Closing", collectively referred to herein as the "Closings"), to be held
on the date hereof (the "First Closing Date") and one week thereafter (the
"Second Closing Date"), at the offices of Rosenman & Colin, 575 Madison Avenue,
New York, New York 10022, or at such other places or on such other dates as the
parties hereto may agree.
Page 19 of 61
<PAGE>
(b) On the First Closing Date, the Company shall deliver to the
Investor certificates representing seventy percent (70%) of the Shares
(1,680,000 shares of Common Stock) against payment of seventy percent (70%) of
the Subscription Price ($1,260,000) by wire transfer to the following:
(i) $1,093,833 to IBJ Schroder Bank & Trust Company, ABA #
026007825, Attention Bill Reyes, Loan Department, Ref: Linkon
Corporation; and
(ii) $1,266,167 to Bank of New York for the account of the
Company, ABA # 021000018, Account # 6300319422.
(c) On the Second Closing Date, the Company shall deliver to the
Investor or its designee certificates representing the remaining thirty percent
(30%) of the Shares (720,000) against payment of the balance of the Subscription
Price ($540,000) by wire transfer to Bank of New York for the account of the
Company, as follows: ABA # 021000018, Account # 6300319422. The Second Closing
shall be subject to and conditioned upon (i) the representations and warranties
of the Company being true and accurate in all material respects at that time as
though made as of and at such time, and the delivery to the Investor or its
designee of a certificate of the President of the Company to such effect and
(ii) the designee of the Investor being made a party to the Registration Rights
Agreement attached as Exhibit A hereto.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Investor as follows:
3.1 Organization and Good Standing. The Company is a corporation
duly organized, validly existing, and in good standing under the laws of the
state of its incorporation and has full corporate power and authority to enter
into and perform its obligations under this Agreement and to own, lease, license
and use its properties and to carry on its business as presently conducted. The
Company is duly qualified to do business and is in good standing as a foreign
corporation in every jurisdiction in which the failure to so qualify would have
a material adverse effect upon the Company.
3.2 Capitalization. (a) Prior to the consummation of the
transactions contemplated hereby, the authorized capital stock of the Company
consisted of 24,900,000 shares of Common Stock, of which 10,896,252 shares are
issued and outstanding (13,169,157 shares issued and outstanding including
shares subject to issuance upon exercise of outstanding stock options and
warrants but excluding shares subject to issuance upon the conversion of certain
convertible debentures), and 1,000,000 shares of Preferred Stock, par value
$0.001 per share, of which 0 shares are issued and outstanding. All of the
issued and outstanding shares of Common Stock, including the Shares, have been
duly authorized and validly
Page 20 of 61
<PAGE>
issued and are fully paid and nonassessable, free of preemptive or similar
rights. Except as set forth in Schedule 3.2 annexed hereto or in the "SEC
Reports" (defined below), there are no outstanding, nor is the Company subject
to any agreement under which there may become outstanding, any right to
purchase, or any security convertible into, or exercisable for, or exchangeable
for, any capital stock of the Company, including, but not limited to, options,
warrants, or rights. Except as set forth in Schedule 3.2 annexed hereto or in
the SEC Reports, there are no agreements, understandings, plans or arrangements
in existence which pertain to the dividend rights, voting, sale or transfer of
any capital stock of the Company.
3.3 Subsidiaries. Except as set forth on Schedule 3.3 annexed
hereto, the Company does not own, directly or indirectly, any equity or debt
securities of any corporation, partnership, or other entity.
3.4 Books and Records. The minute books, stock ledgers and other
books and records of the Company have been made available for inspection, are
complete and accurate and all signatures therein are genuine signatures of the
persons whose signatures appear thereon.
3.5 Financial Statements. The financial statements of the Company
for each of the fiscal years ended January 31, 1997, 1996 and 1995 (the
"Financial Statements"), true and complete copies of which have heretofore been
delivered to the Investor, fairly present with respect to the Company the
financial position, the results of operations, and the other information
purported to be shown therein at the respective dates and for the respective
periods to which they apply. Such Financial Statements and schedules (including
the related notes) have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved
("GAAP"), are correct and complete in all material respects, and are in
accordance with the books and records of the Company.
3.6 Proceedings. There is no material litigation, arbitration,
claim, governmental or other proceeding (formal or informal), or investigation
by any governmental authority or agency, pending or, to the Company's knowledge,
threatened with respect to the Company or any of its operations, businesses,
properties or assets except as may be properly described in Schedule 3.6 annexed
hereto.
3.7 No Violation; Compliance. (a) The Company is not in violation of
its Certificate of Incorporation or Bylaws. The Company is not in default or
breach with respect to any agreement or instrument to which it is a party or by
which it or any of its properties is subject, or, to the best of the Company's
knowledge, any statute or any order, rule, regulation, judgment or decree of any
court or governmental agency or body having jurisdiction over the Company or any
of its properties except as may be properly described in Schedule 3.7 annexed
hereto or in the SEC Reports or such as in the aggregate do not now have and
could not in the future have a material adverse effect upon the financial
position, results of operations, properties, business or
Page 21 of 61
<PAGE>
prospects of the Company; nor is the Company required to take any action in
order to avoid any such breach or default.
(b) The Company has properly filed all reports and other
documents required to be filed with any federal, state, local and foreign
government or subdivision or agency thereof with respect to which the failure to
file could have a material adverse effect on the Company. The Company has not
received any notice not heretofore complied with in all material respects from
any federal, state or local authority or any insurance or inspection body that
any of its assets or business procedures or practices fails to comply with any
applicable law, ordinance, regulation, building or zoning law or requirement of
any public authority or body.
3.8 Authorization. The Company has all requisite power and authority
to (i) execute, deliver, and perform its obligations under each of this
Agreement, the Registration Rights Agreement attached as Exhibit A hereto, the
Promissory Note attached as Exhibit B hereto and the Release and Termination
Agreement (the "Release") between the Company and IBJS Capital Corporation
("IBJS") attached as Exhibit C hereto (collectively, the "Documents") and (ii)
to issue, sell, and deliver the Shares. All necessary corporate proceedings of
the Company have been duly taken to authorize the execution, delivery, and
performance of the Documents. Concurrently with execution hereof and as a
condition to consummation of the transactions contemplated hereby the Company
has executed and delivered each of the Documents. Each Document has been duly
authorized by the Company and constitutes the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms.
3.9 No Consent. (a) No consent, authorization, approval, order,
license, certificate or permit of or from, or declaration or filing with, any
federal, state, local or other governmental authority or any court or any other
tribunal is required by the Company in connection with the execution, delivery
or performance by the Company of the Documents or the issuance, sale, and
delivery of the Shares (except such filings and consents as may be required and
have been or at the Closings or within the appropriate time thereafter will have
been made or obtained under federal and state securities laws).
(b) Except as described in Schedule 3.9 annexed hereto, no
consent of any party to any contract, agreement, instrument, lease, license,
arrangement or understanding to which the Company is a party or to which any of
its properties or assets are subject is required for the execution, delivery, or
performance by the Company of any of the Documents or the issuance or delivery
of the Shares.
3.10 No Conflict. The execution, delivery and performance of this
Agreement and the other Documents and the consummation of the transactions
herein and therein contemplated, including the issuance of the Shares, will not
conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any agreement or instrument to
which the Company is a party or by which it is bound or to
Page 22 of 61
<PAGE>
which any of the property of the Company is subject, the Certificate of
Incorporation or By-laws of the Company, or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any of its properties, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company.
3.11 No Misstatements or Omissions. This Agreement and all other
documents or instruments furnished by the Company to the Investor in connection
with the transaction contemplated hereby do not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or herein or necessary to make the statements therein or herein not misleading.
Without limiting the generality of the foregoing, there has been no material
adverse change, and the Company is aware of no fact which might result in a
material adverse change, in the financial condition, results of operations,
business, properties, assets, liabilities or prospects of the Company from the
latest information set forth in the Financial Statements other than losses
occurring in the ordinary course of business that have either been disclosed in
the SEC Reports or incurred since October 31, 1997.
3.12 IBJS. Concurrently with the First Closing of the transaction
contemplated hereby, and as a condition thereto, the Company has used the
proceeds of the Promissory Note to repay in full that certain 10% Senior Secured
Convertible Debenture (the "Debenture") dated October 27, 1994, as amended, in
principal amount of $1,000,000 issued by the Company to IBJS, and has obtained
the surrender and cancellation of the Debenture and those certain warrants for
IBJS to acquire an additional 200,000 shares, subject to adjustment, of Common
Stock at an initial exercise price of $2.00 per share and those certain warrants
for IBJS to acquire 60,000 shares of Common Stock at an initial exercise price
of $1.50 per share. The foregoing shall be accomplished pursuant to the Release
and such other documentation reasonably acceptable to the Investor. The Company
has no further obligations, arrangements or relationship of any kind with IBJS
or any of its affiliates.
3.13 Securityholders Voting Rights. Except as set forth in Schedule
3.13, neither the Company nor to the Company's knowledge any of its shareholders
are a party to any voting trust, agreement or arrangement affecting the exercise
of voting rights of the outstanding common stock of the Company.
3.14 Registration Rights. Except as set forth in the Registration
Rights Agreement or in Schedule 3.14 annexed hereto or in the SEC Reports,
neither the Company nor its shareholders are a party to any agreement pursuant
to which any other person or entity has the right to require the Company to
register any securities of the Company under any federal or state securities
laws.
3.15 Employees. Except as set forth in the SEC Reports or in
Schedule 3.15 annexed hereto or in the SEC Reports, the Company is not a party
to any existing employment agreement with executive officers of the
Page 23 of 61
<PAGE>
Company, deferred compensation, stock option, bonus, consulting, or retirement
agreements or plans, or other employee benefit plans of any kind including
without limitation any pension or welfare benefit plans. The Company does not
maintain, or ever has maintained, an Employee Pension Benefit Plan as defined in
Section 3(a) of the ERISA or a multiemployer plan as defined in Section 3(37) of
ERISA. No employee of the Company is represented by any labor union or
collective bargaining agreement, nor is any union organization effort pending or
threatened against the Company.
3.16 Brokers. No broker's, finder's or similar fees will be payable
by the Company in connection with the transactions contemplated by this
Agreement.
3.17 Properties. The Company has good and marketable title to its
material properties and assets. Such properties and assets are not subject to
any liens, mortgages, pledges, encumbrances or charges of any kind except liens
for current taxes and assessments not delinquent or those which are not material
in scope or amount and do not interfere with the conduct of the Company's
business and except those described in Schedule 3.17 annexed hereto or in the
SEC Reports. All leases pursuant to which the Company leases real or personal
property are in good standing and are valid and effective in accordance with
their respective terms and there exists no default or occurrence or condition
which could result in a default or termination of any such leases. The Company's
equipment and other tangible assets are in good operating condition and are
usable in the ordinary course of business, and the Company owns, or has a valid
leasehold interest in, all assets necessary for the conduct of its business as
presently conducted.
3.18 Environmental Health and Safety. Except as set forth in
Schedule 3.18 annexed hereto, the Company has, to the best of the Company's
knowledge, complied with all applicable federal, state, local and foreign
statutes, laws and regulations, ordinances, rules, judgements, orders, decrees,
permits, licenses or codes that are currently in effect and that relate to the
environment (hereinafter collectively referred to as the "Environmental Health
and Safety Laws") and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
the Company alleging any failure to comply. Without limiting the generality of
the preceding sentence, except as set forth in Schedule 3.18 or in the SEC
Reports, the Company has obtained and been in compliance with all of the terms
and conditions of all permits, licenses, and other authorizations which are
required under and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
time tables which are contained in the Environmental Health and Safety Laws. To
the best of the Company's knowledge, the Company has no liability or has not
handled or disposed of any substance, arranged for the disposal of any
substance, exposed any employee or other individual to any substance or
condition or owned or operated any property or facility in any manner that could
form the basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against the Company giving
rise to any liability for damage to any site, location or body of water (surface
Page 24 of 61
<PAGE>
or subsurface) for any illness of or personal injury to any employee or other
individual or for any reason under any Environmental Health and Safety Law. To
the best of the Company's knowledge, all properties and equipment used in the
business of the Company have been free of asbestos, PCB'S, methylene chloride,
trichloroethylene, dioxin, dibenzofurans or any other extremely hazardous
substance.
3.19 Material Contracts. Annexed hereto as Schedule 3.19 is a true
and complete list of all material contracts, agreements, instruments, leases,
licenses, arrangements or understandings, written or oral, to which the Company
is a party or to which any of its properties or assets are subject (collectively
with the documents listed in the SEC Reports, the "Material Contracts"), which
are not already listed as exhibits to the SEC Reports. All of the Material
Contracts are valid, binding and enforceable and in full force and effect and
the Company has substantially performed all of its current obligations
thereunder. No party to a Material Contract has made a claim to the effect that
the Company has failed to perform an obligation thereunder. Except as set forth
on Schedule 3.19, there is no known plan, intention or indication of any
contracting party to a Material Contract to cause the termination, cancellation
or modification of such Material Contract or to reduce or otherwise change its
activity thereunder so as to adversely affect the Company.
3.20 Loan Obligations and Commitments. Except for accounts payable
incurred in the ordinary course of business and except as set forth in Schedule
3.20 annexed hereto or in the SEC Reports, the Company is not a party to any
loan agreement, promissory note or other evidence of indebtedness and the
Company does not have any obligation for borrowed money. Neither the execution
nor consummation of this Agreement requires the consent of any lender or other
party.
3.21 Tax Returns and Payments. All federal, state and other tax
returns and reports of the Company required by law to be filed have been duly
filed, and all federal, state and other taxes, assessments, fees and other
governmental charges imposed upon the Company or any of its properties, assets,
income or franchises which are due and payable, or claimed by the taxing
authority to be due and payable, have been paid. Without limiting the foregoing,
the Company has paid all applicable income, withholding, excise, unemployment,
social security, occupation, transfer, franchise, property, sales and use taxes,
import duties and all penalties and interest in respect thereof.
3.22 Licenses, Patents, Trademarks.
(a) Ownership. The Company's Annual Report on Form 10-K (Item
1 - Description of Business) contains a narrative description of the status of
the Company's licenses, patents, copyrights, trade names and trademarks
(including applications therefor) owned by the Company or any employee of the
Company except for those owned by employees which are unrelated to the business
of the Company, other than any of the foregoing already described in
Page 25 of 61
<PAGE>
the SEC Reports. The Company owns, free and clear of all liens and encumbrances,
all the licenses, patents, copyrights, trade names, trademarks, trade secrets
and processes necessary for the conduct of its business as presently conducted
and as presently proposed to be conducted and has the unrestricted right to use
the foregoing without the payment of any royalty except as described in Schedule
3.22 or in the SEC Reports. The Company has taken reasonable security measures
to protect the secrecy, confidentiality and value of its trade secrets and other
technical information.
(b) No Infringement. Except as set forth in Schedule 3.22 or
in the SEC Reports, no person has asserted a claim that the Company has
infringed any patent, trade secret, copyright, trade name or trademark and the
Company has not made any claim that, and is unaware that, any third party is
infringing any license, patent, copyright, trademark, tradename, trade secret or
other intellectual property owned by or used by the Company. The Company does
not, and will not under its proposed plan of business, operate to conflict with,
infringe, override or interfere with the rights of any other person in any
license, patent, copyright, trade name, trademark, trade secret or process or
rights pertaining thereto and the Company has full right and authority to
utilize the processes, systems and techniques which it presently utilizes or
which it expects to utilize in the future.
(c) Assignment. All rights to processes, systems, patents,
copyrights and techniques used by the Company which were developed by any
employee of or consultant to the Company have been duly and validly assigned to
the Company.
3.23 Securities Laws Compliance; Registration Rights. Based in part
upon the representations of the Investor contained in Section 4 hereof (and with
respect to the Second Closing, of the designee of the Investor, if applicable,
pursuant to documentation substantially in the form hereof), the offer and sale
of the Shares has complied with all applicable federal and state securities
laws. The Company has complied with all applicable federal and state securities
laws in connection with all offers and sales of securities prior to the date of
this Agreement.
3.24 No Anti-Dilution Adjustments. Except as described in Schedule
3.24 annexed hereto, the issuance and sale of the Shares pursuant to this
Agreement will not result in an adjustment to the conversion price or exercise
price or in any other adjustment under any preferred stock, warrant, option,
note, debenture or other security of the Company.
3.25 SEC Reports. The Company has filed all reports, registration
statements, definitive proxy statements and other document and all amendments
thereto and supplements thereof (the "SEC Reports") required to be filed by it
with the Securities and Exchange Commission (the "Commission") since April 30,
1995, all of which have complied in all material respects with all applicable
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
rules and regulations promulgated
Page 26 of 61
<PAGE>
thereunder. As of the respective dates of filing in final or definitive form
(or, if amended or superseded by a subsequent filing, then on the date of such
subsequent filing), none of the Company's SEC Reports, including, without
limitation, any financial statements or schedules included therein, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading.
The balance sheets (including the related notes) in the Company's SEC Reports
fairly present the financial position of the Company as of the respective dates
thereof, and the other related financial statements (including the related
notes) included therein fairly presented the results of operations and changes
in financial position of the Company for the periods indicated, except, in the
case of interim financial statements, for year-end audit adjustments, consisting
only of normal recurring accruals. The financial statements (including the
related notes) included in the Company's SEC Reports have been prepared in
accordance with GAAP, except as otherwise noted therein or, in the case of
unaudited financial statements, as permitted by the applicable rules and
regulations of the Commission.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
The Investor hereby represents and warrants to the Company as follows:
4.1 Organization and Good Standing. The Investor is a limited
liability company duly formed, validly existing, and in good standing under the
laws of the state of its formation and has full power and authority to enter
into and perform its obligations under this Agreement.
4.2 Authorization. The Investor has all requisite power and
authority to (i) execute, deliver, and perform its obligations under each of the
Documents and (ii) to subscribe for the Shares. All necessary corporate
proceedings of the Investor have been duly taken to authorize the execution,
delivery, and performance of the Documents. Each Document has been duly
authorized by the Investor and, when executed and delivered by the Investor,
will constitute the legal, valid and binding obligations of the Investor
enforceable against the Investor in accordance with their respective terms.
4.3 No Consent. No consent, authorization, approval, order, license,
certificate or permit of or from, or declaration or filing with, any federal,
state, local or other governmental authority or any court or any other tribunal
is required by the Investor in connection with the execution, delivery or
performance by the Investor of the Documents or subscription for the Shares
(except such filings and consents as may be required and have been or at the
Closings or within the appropriate time thereafter will have been made or
obtained under federal and state securities laws).
4.4 The Investor is an "Accredited Investor" as that term is defined
in Section 501(a) of Regulation D promulgated under the Securities Act.
Page 27 of 61
<PAGE>
4.5 The Investor represents that: (i) the Company has made available
to it all information which it deemed material to making an informed investment
decision in connection with its purchase of the Shares or (ii) the Investor is
in a position regarding the Company which has enabled the Investor to obtain
information from the Company necessary to evaluate the merits and risks of an
investment in the Shares.
4.6 The Investor has such knowledge and experience in finance,
securities, investments and other business matters so as to be able to protect
its interests in connection with this transaction, and the Investor's investment
in the Company hereunder is not material when compared to the Investor's total
financial capacity.
4.7 The Investor understands the various risks of an investment in
the Company as proposed herein and can afford to bear such risks, including, but
not limited to, the risks of losing the entire investment.
4.8 The Investor has been advised by the Company that the Shares
have not been registered under the Securities Act, that the Securities will be
issued on the basis of the statutory exemption provided by Section 4(2) of the
Act or Regulation D promulgated thereunder, or both, relating to transactions by
an issuer not involving any public offering and under similar exemptions under
certain state securities laws. In particular, the Investor agrees that no sale,
assignment, or transfer of any of the Shares shall be valid or effective, and
the Company shall not be required to give any effect to any such sale,
assignment or transfer, unless (i) the sale, assignment or transfer of the
Shares is registered under the Act, it being understood that the Shares are not
currently registered for sale and that the Company has no obligation or
intention to so register the Shares except as contemplated in the Registration
Rights Agreement or (ii) such Shares are sold, assigned or transferred in
accordance with all the requirements and limitations of Rule 144 under the Act,
or (iii) such sale, assignment or transfer is otherwise exempt from registration
under the Act. The Investor acknowledges that the Shares shall be subject to a
stop transfer order and the certificate or certificates evidencing the Shares
shall bear the following or a substantially similar legend and such other
legends as may be required by state blue sky laws:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"),
or any state securities laws and neither such securities nor any
interest therein may be offered, sold, pledged, assigned, or
otherwise transferred unless (1) a registration statement with
respect thereto is effective under the Act and any applicable state
securities laws or (2) the Company receives an opinion of counsel to
the holder of such securities, which counsel and opinion are
reasonably satisfactory to the Company, that such securities may be
offered, sold, pledged, assigned, or
Page 28 of 61
<PAGE>
transferred in the manner contemplated without an effective
registration statement under the Act or applicable state securities
laws."
4.9 The Investor is acquiring the Shares for the Investor's own
account for investment and not with a view to the sale or distribution thereof
or the granting of any participation therein, and has no present intention of
distributing or selling to others any of such interest or granting any
participation therein.
4.10 Concurrently with the execution hereof and as a condition to
the consummation of the transactions contemplated hereby, the Investor has
executed and delivered each of the Documents to which it is a party and has
transferred to the Company the funds contemplated by the Promissory Note.
4.11 Accuracy of Representations and Warranties. No representation
or warranty of the Investor in this Agreement or the schedules or exhibits
hereto contains any untrue statement of material fact or omits to state any
material fact necessary to make the statements made not misleading.
SECTION 5. COVENANTS BY THE COMPANY.
5.1 Board of Directors. From and after the date hereof and for a
period of five years, the Company shall permit a designee of the Investor (the
"Designee") to be an unpaid advisor to the Board of Directors of the Company
(the "Board"), provided that notwithstanding anything to the contrary contained
herein or in the By-Laws or any other document affecting the governance of the
Company, such Designee shall have no voting rights otherwise conferred upon
directors of the Company but shall have all rights of a director with respect to
receiving notice of and attending meetings of the Board and any committees
thereof. The initial Designee shall be James Scibelli.
5.2 Access to Information. From and after the date hereof and until
the fifth anniversary of the date hereof, the Company will furnish the following
to the Investor or its Designee:
(a) As soon as practicable after the end of each fiscal year of the
Company, and in any event within 90 days thereafter, and as soon as practicable
after the end of each fiscal quarter of the Company and in any event within 45
days thereafter, consolidated balance sheets of the Company as of the end of
such fiscal period, and the related statements of income, cash flow and
shareholders' equity of the Company for such period, prepared in accordance with
GAAP and setting forth in each case in comparative form the figures for the
previous fiscal period, all in reasonable detail and certified with respect to
annual financial statements, if any, by independent public accountants of
nationally recognized standing, it being agreed that the Company's current
accountants are acceptable to the Investor.
Page 29 of 61
<PAGE>
(b) As soon as practicable, but in any event not less than 3 days
after filing, copies of any documents or reports filed by the Company with the
Commission.
(c) Such other information relating to the financial condition,
business, prospects or corporate affairs of the Company as the Investor or the
Designee may from time to time reasonably request.
SECTION 6. COVENANTS BY THE INVESTOR.
6.1 Voting of Shares. From and after the date hereof, provided that
the Company is not in default of its obligations hereunder or under any other
Document, which default has continued for a period of 15 days after the
occurrence thereof, and/or that no Event of Default, as such term is defined in
the Promissory Note has occurred and is continuing, the Investor shall vote all
of the Shares in accordance with the recommendations of the Board. Subject to
any such breach, the covenants of the Investor set forth in this paragraph 6.1
shall survive and continue until such time as the Investor and its affiliates
own less than 5% of the Company's Common Stock calculated in accordance with the
provisions of Section 13(d) of the Exchange Act.
6.2 Purchase of Common Stock. The Investor agrees not to purchase
any additional shares of Common Stock on the open market or from any person or
entity other than the Company without the prior written consent of the Company.
The covenants of the Investor set forth in this paragraph 6.2 shall survive and
continue until such time as the Investor and its affiliates own less than 5% of
the Company's Common Stock calculated in accordance with the provisions of
Section 13(d) of the Exchange Act.
6.3 Resales of Shares. Until the second anniversary of the date
hereof, the Investor shall not in any way sell, assign or otherwise transfer any
interest in the Shares (other than a distribution to the members of the
Investor, provided that the restrictions of this Section 6 shall continue to be
applicable to the Shares and such transferees shall agree in writing to be bound
by the provisions of this Agreement affecting the Shares so transferred);
provided, however, that the foregoing restriction shall not apply to any
transfer by the Investor in connection with an underwritten offering of shares
of Common Stock which has been registered with the Commission and provided,
further that during such two year period the Investor shall be permitted to
transfer shares of Common Stock in a privately negotiated transaction and/or
pursuant to registration of the Shares under the Registration Rights Agreement
in a non-underwritten offering in amounts that would otherwise be permitted
under Rule 144 of the Securities Act but without giving effect to the holding
period requirements thereof.
SECTION 7. INDEMNIFICATION.
7.1 Indemnification by the Company. The Company agrees to indemnify
and hold the Investor, its officers, directors, employees and agents
Page 30 of 61
<PAGE>
harmless against and in respect of any loss, cost, expense, liability or damage
(including, without limitation, attorneys' fees, expenses and disbursements)
suffered or incurred by the Investor arising from (a) any breach or failure to
perform by the Company of any of its respective covenants, agreements or other
obligations hereunder or under any Document, (b) any breach of any
representation or warranty of the Company contained herein in any exhibit,
certificate or document furnished or required to be furnished pursuant to this
Agreement by the Company to the Investor, or if any documents furnished to the
Investor in connection with the Closings hereunder shall be false or misleading
in any material respect, and (c) the allegation by a third party of a claim
based upon a state of facts which, if true, would constitute a breach of a
representation, warranty or covenant of the Company contained herein or in any
exhibit, certificate or document furnished or required to be furnished pursuant
to this Agreement by the Company to the Investor.
7.2 Indemnification by the Investor. The Investor agrees to
indemnify and hold the Company, its officers, directors, employees and agents
harmless against and in respect of any loss, cost, expense, liability or damage
(including, without limitation, attorneys' fees, expenses and disbursements)
suffered or incurred by the Company arising from (a) any breach or failure to
perform by the Investor of any of its respective covenants, agreements or other
obligations hereunder or under any Document, (b) any breach of any
representation or warranty of the Investor contained herein, in any exhibit,
certificate or document furnished or required to be furnished pursuant to this
Agreement by the Investor or if any documents furnished to the Company in
connection with the Closings shall be false or misleading in any material
respect, and (c) the allegation by a third party of a claim based upon a state
of facts which, if true, would constitute a breach of a representation, warranty
or covenant of the Purchaser contained herein or in any exhibit, certificate or
document furnished or required to be furnished pursuant to this Agreement by the
Investor to the Company.
7.3 Notice. If any event shall occur which may result in
indemnification hereunder, the indemnified party or parties agree to give the
indemnifying party or parties prompt written notice thereof. If such event
involves a claim by a third party, the indemnifying party or parties shall have
the right at its or their sole expense to control and assume the defense of the
matter giving rise to such indemnification with counsel reasonably satisfactory
to the indemnified party or parties and to compromise or settle any such matter,
provided that such compromise or settlement entirely and unconditionally
releases the indemnified party or parties from all liability with respect
thereto. If the indemnifying party or parties shall assume the defense of the
indemnified party or parties, the indemnified party or parties shall have the
right to participate in such defense but only at its or their own expense and
the indemnifying party or parties shall not be obligated to pay the fees of
counsel to the indemnified party or parties incurred after such assumption. If
the indemnifying party or parties do not assume the defense of such matter
within a reasonable time after notice thereof, the indemnified party or parties
may defend, settle or compromise such matter for the account and at the expense
of the indemnifying party or parties.
Page 31 of 61
<PAGE>
7.4 No Limitation of Remedies. The indemnification provided herein
shall not be the exclusive remedy of the indemnified party or parties and in no
manner shall limit any other remedy available to such party or parties under
this Agreement whether at law, in equity or otherwise.
SECTION 8. MISCELLANEOUS.
8.1 Representations and Agreements to Survive Delivery. All
representations, warranties, covenants, indemnities and agreements of the
parties hereto contained in this Agreement and in any agreement delivered or to
be delivered pursuant to this Agreement shall remain operative and in full force
and effect for a period of two years after the date hereof (unless, with respect
to the covenants of the parties, any covenant expressly indicates that it shall
remain operative and in full force and effect for a longer period) regardless of
any investigation made by or on behalf any party hereto notwithstanding
knowledge or notice of a breach thereof.
8.2 Notices. All notices and other communications given under this
Agreement shall be in writing and shall be deemed to have been given (i) on the
date delivered, if delivered personally or (ii) on the date deposited in the
United States mail, if sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the parties as follows:
(a) if to the Company:
Linkon Corporation
140 Sherman Avenue
Fairfield, CT 06430
Attention: Lee W. Hill, President
Copy to:
Finn Dixon & Herling LLP
One Landmark Square
Stamford, CT 06901
Attention: David I. Albin, Esq.
(b) if to the Investor:
RG Capital Fund LLC
One Hollow Lane, Suite 208
Lake Success, NY 11040
Page 32 of 61
<PAGE>
Attention: James Scibelli
Copy to:
Rosenman & Colin LLP
575 Madison Avenue
New York, NY 10022
Attention: Eric M. Lerner, Esq.
or to such other address as any party shall have specified by notice in writing
to the others in compliance with this Section 8.2, except that any notice
specifying a change in address shall only be deemed given when actually
received.
8.3 Agreement Binding on Successors. This Agreement shall be binding
upon and inure to the benefit of the parties hereto, the successors and assigns
of the Company, and the permitted successors, assigns, heirs and personal
representatives of the Investor.
8.4 Expenses. The Company shall pay the fees and expenses of its
counsel, accountants and other experts, and all other expenses incurred by it
incident to the negotiation, preparation, execution and delivery of this
Agreement and consummation of the transactions contemplated hereby. In addition,
the Company shall pay the fees and expenses of the Investor's counsel,
accountants and other experts, and all other expenses incurred by the Investor
incident to the negotiation, preparation, execution and delivery of this
Agreement and consummation of the transactions contemplated hereby, in an amount
not to exceed $15,000.
8.5 Headings. The headings in this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
8.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.7 Governing Law. This Agreement has been negotiated and shall be
consummated in the State of New York and shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
conflict of laws.
8.8 Consent to Jurisdiction. The parties hereto irrevocably consent
to the jurisdiction of the courts of the State of New York and of any federal
court located in such State in connection with any action or proceeding arising
out of or relating to this Agreement, any document or instrument delivered
pursuant to, in connection with or simultaneously with this Agreement, or a
breach of this Agreement or any such document or instrument. In any such action
or proceeding, each party hereto waives personal service of
Page 33 of 61
<PAGE>
any summons, complaint or other process and agrees that service thereof may be
made in accordance with Section 8.2. Within 30 days after such service, or such
other time as may be mutually agreed upon in writing by the attorneys for the
parties to such action or proceeding, the party so served shall appear or answer
such summons, complaint, or other process. Should the party so served fail to
appear or answer within such 30-day period or such extended period, as the case
may be, such party shall be deemed in default and judgment may be entered
against such party for the amount as demanded in any summons, complaint or other
process so served.
8.9 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable laws, such provision shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
8.10 Transferability. Neither this Agreement, nor any interest of
the undersigned herein, shall be assignable or transferable by the undersigned
in whole or in part except by operation of law.
8.11 Entire Agreement. This Agreement and the exhibits hereto set
forth the entire understanding of the parties with respect to the subject matter
hereof, supersede all existing agreements among them concerning such subject
matter and may be modified only by a written instrument duly executed by the
party to be charged.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
Page 34 of 61
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first set forth above.
LINKON CORPORATION
By: /s/ Thomas V. Cerabona
--------------------------
Name: Thomas V. Cerabona
Title: Vice President
RG CAPITAL FUND LLC
By: SG Capital Corp.,
its Managing Director
By: /s/ James Scibelli
--------------------------
Name: James Scibelli
Title: President
Page 35 of 61
<PAGE>
Schedules
Schedule 3.2 - Outstanding Options, Warrants, Rights, etc.
Schedule 3.3 - Subsidiaries
Schedule 3.6 - Litigation
Schedule 3.7 - Violations; Compliance
Schedule 3.9 - Consents
Schedule 3.13 - Securityholders Voting Rights
Schedule 3.14 - Registration Rights
Schedule 3.15 - Employees
Schedule 3.17 - Liens, etc.
Schedule 3.18 - Environmental Health and Safety
Schedule 3.19 - Material Contracts
Schedule 3.20 - Loan Obligations and Commitments
Schedule 3.22 - Licenses, Patents, Trademarks
Schedule 3.24 - Anti-Dilution Adjustments
Schedule 5.3 - Permitted Existing Indebtedness
Page 36 of 61
<PAGE>
SCHEDULE 3.2 TO EXHIBIT 3
OUTSTANDING OPTIONS, WARRANTS, RIGHTS, ETC.
1. 197,000 options were granted in December 1997 pursuant to the
Company's 1996 Stock Option and Performance Incentive Plan.
Page 37 of 61
<PAGE>
SCHEDULE 3.3 TO EXHIBIT 3
SUBSIDIARIES
(a) Linkon Europe B.V.
Page 38 of 61
<PAGE>
SCHEDULE 3.6 TO EXHIBIT 3
LITIGATION
None.
Page 39 of 61
<PAGE>
SCHEDULE 3.7 TO EXHIBIT 3
VIOLATIONS; COMPLIANCE
None.
Page 40 of 61
<PAGE>
SCHEDULE 3.9 TO EXHIBIT 3
CONSENTS
None.
Page 41 of 61
<PAGE>
SCHEDULE 3.13 TO EXHIBIT 3
SECURITYHOLDERS VOTING RIGHTS
None.
Page 42 of 61
<PAGE>
SCHEDULE 3.14 TO EXHIBIT 3
REGISTRATION RIGHTS
1. Registration rights granted pursuant to that certain Registration
Rights Agreement, dated as of October 27, 1994, among the Company, IBJS and
certain other investors party thereto.
2. Registration rights granted pursuant to Section 9 of that certain stock
Purchase Agreement, dated as of May 26, 1995, among the Company and the
investors party thereto.
3. Registration rights granted pursuant to Exhibit A to that certain
Subscription Agreement, dated as of August 1, 1995, among the Company and the
investors party thereto.
Page 43 of 61
<PAGE>
SCHEDULE 3.15 TO EXHIBIT 3
EMPLOYEES
None.
Page 44 of 61
<PAGE>
SCHEDULE 3.17 TO EXHIBIT 3
LIENS, ETC.
1. The security interest of Imperial Bank in the Company's account
receivable and to the extent necessary to perfect such security interest in
accounts receivable, in the Company's intellectual property arising under thaty
certain Agreement for Purchase of Receivables, dated as of March 19, 1998,
between the Company and Imperial Bank.
2. The security interest of Boston Financial and Equity Corporation in the
Company's accounts receivable and inventory pursuant to that certain Purchase
and Sale Agreement, dated as of June 23, 1997, between the Company and Boston
Financial and Equity Corporation.
3. Sun Microsystems Finance Security interest in certain leased equiment.
Page 45 of 61
<PAGE>
SCHEDULE 3.18 TO EXHIBIT 3
ENVIRONMENTAL HEALTH AND SAFETY
None.
Page 46 of 61
<PAGE>
SCHEDULE 3.19 TO EXHIBIT 3
MATERIAL CONTRACTS
Material Contracts Not Already Listed as Exhibits to SEC Reports.
1. Agreement for Purchase of Receivables, dated as of March 19, 1998,
between the Company and Imperial Bank.
2. Release and Termination Agreement, dated as of April 1998, between the
Company and IBJS.
3. Prommissory Note, dated as of March 11, 1998, by the Company in favor
of James Scibelli in the principal amount of $300,000.
Material Contracts That the Company Intends to Terminate
1. Purchase and Sale Agreement, dated as of June 23, 1997, between the
Company and Boston Financial and Equity Corporation.
Page 47 of 61
<PAGE>
SCHEDULE 3.20 TO EXHIBIT 3
LOANS OBLIGATIONS AND COMMITMENTS
1. Obligations to Imperial Bank pursuant to that certain Agreement for
Purchase of Receivables, dated as of March 19, 1998 between the Company and
Imperial Bank.
2. Obligations to Boston Financial and Equity Corporation pursuant to that
certain Purchas and Sale Agreement, dated as of June 23, 1997, between the
Company and Boston Financial and Equity Corporation.
3. Obligations to James Scibelli pursuant to that certain Promissory Note,
dated as of March 11, 1998, by the Company in favor of James Scibelli in the
principal amount of $300,000.
Page 48 of 61
<PAGE>
SCHEDULE 3.22 TO EXHIBIT 3
LICENSES, PATENTS, TRADEMARKS
Page 49 of 61
<PAGE>
SCHEDULE 3.24 TO EXHIBIT 3
ANTI-DILUTION ADJUSTMENTS
1. The issuance and sale of the Shares will result in an adjustment to the
exercise price of Warrants issued by the Company pursuant to that certain
Placement Agent Agreement, dated January 14, 1994, as amended, among the
Company, Sloan Securities Corp. and the investors party thereto.
Page 50 of 61
<PAGE>
SCHEDULE 5.3 TO EXHIBIT 3
PERMITTED EXISTING INDEBTEDNESS
Page 51 of 61
EXHIBIT 4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of April 6,
1998, among RG Capital Fund LLC, a New York limited liability company ("RG
Capital"), Roberts & Green, Inc., a New York corporation ("R&G") and Linkon
Corporation, a Nevada corporation (the "Company").
W I T N E S S E T H:
WHEREAS, RG Capital has agreed to subscribe to shares (the "Shares") of
common stock, par value $0.001 per share, of the Company (the "Common Stock")
pursuant to a Subscription and Stock Purchase Agreement (the "Subscription
Agreement") between the Company and RG Capital of even date herewith;
WHEREAS, pursuant to an Investment Banking and Financial Advisory Services
Agreement between R&G and the Company of even date herewith, R&G has been issued
warrants ("Warrants") to purchase additional shares of Common Stock (the
"Warrant Shares") pursuant to that certain Warrant Purchase Agreement dated of
even date herewith; and
WHEREAS, as additional consideration for the Shares and the Warrant
Shares, the Company desires to grant to RG Capital and R&G registration rights
with respect to the Shares and the Warrant Shares;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto agree as follows:
9. (a) Demand Registration. Promptly upon the execution of this Agreement,
and in any event prior to May 15, 1998 the Company shall, at the Company's sole
cost and expense (other than the fees and disbursements of counsel for RG
Capital) prepare and file with the Securities and Exchange Commission (the
"Commission") a registration statement sufficient to permit the resale of all or
part of the Shares and will use its good faith best efforts through its
officers, directors, auditors, and counsel to cause such registration statement
to become effective as promptly as practicable.
(b) Piggyback Registration. In addition to the Company's obligations
under Section 1(a) of this Agreement and not in limitation thereof, the Company
shall give RG Capital and R&G at least 30 days' prior written notice of each
filing by the Company of a registration statement (other than a registration
statement on Form S-4 or Form S-8 or on any successor forms thereto) with the
Commission. If requested by RG Capital or R&G in writing within 20 days after
receipt of any such notice, the Company shall, at the Company's sole expense
(other than the fees and disbursements of counsel for
Page 52 of 61
<PAGE>
RG Capital or R&G, and the underwriting discounts, if any, payable in respect of
the Shares or Warrant Shares sold by RG Capital or R&G, respectively), register
all or, at RG Capital's or R&G's option, any portion of the Shares or the
Warrant Shares concurrently with the registration of such other securities, all
to the extent requisite to permit the public offering and sale of the Shares or
the Warrant Shares through the facilities of the Nasdaq National Market or any
other securities exchange, if any, on which the Common Stock is being sold or on
the over-the-counter market, and will use its reasonable best efforts through
its officers, directors, auditors, and counsel to cause such registration
statement to become effective as promptly as practicable. If the managing
underwriter of any such offering shall determine and advise the Company that, in
its opinion, the distribution of all or a portion of the Shares or the Warrant
Shares requested to be included in the registration concurrently with the
securities being registered by the Company would materially adversely affect the
distribution of such securities by the Company then the Company will include in
such registration first, the securities that the Company proposes to sell,
second, any shares of Common Stock required to be registered by the terms of a
registration rights agreement listed on Schedule 3.14 to the Subscription
Agreement and third, the Shares or Warrant Shares requested to be included in
such registration, to the extent permitted by the managing underwriter.
(c) In the event of a registration pursuant to the provisions of
this Agreement, the Company shall use its reasonable best efforts to cause the
Shares or Warrant Shares so registered to be registered or qualified for sale
under the securities or blue sky laws of such jurisdictions as RG Capital or R&G
may reasonably request; provided, however, that the Company shall not be
required to qualify to do business in any state by reason of this Section 1(c)
in which it is not otherwise required to qualify to do business.
(d) The Company shall keep effective any registration or
qualification contemplated by this Section 1 and shall from time to time amend
or supplement each applicable registration statement, preliminary prospectus,
final prospectus, application, document and communication for such period of
time as shall be required to permit RG Capital or R&G to complete the offer and
sale of the Shares or Warrant Shares covered thereby.
(e) In the event of a registration pursuant to the provisions of
this Agreement, the Company shall furnish to RG Capital and R&G such reasonable
number of copies of the registration statement and of each amendment and
supplement thereto (in each case, including all exhibits), of each prospectus
contained in such registration statement and each supplement or amendment
thereto (including each preliminary prospectus), all of which shall conform to
the requirements of the Securities Act of 1933, as amended (the "Securities
Act") and the rules and regulations thereunder, and such other documents, as RG
Capital or R&G may reasonably request to facilitate the disposition of the
Shares or Warrant Shares included in such registration.
(f) The Company shall notify RG Capital and R&G promptly when such
registration statement has become effective or a supplement to any prospectus
forming a part of such registration statement has been filed.
Page 53 of 61
<PAGE>
(g) The Company shall advise RG Capital and R&G, promptly after it
shall receive notice or obtain knowledge of the issuance of any stop order by
the Commission suspending the effectiveness of such registration statement, or
the initiation or threatening of any proceeding for that purpose and promptly
use its reasonable best efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued.
(h) The Company shall promptly notify RG Capital and R&G at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act of the happening of any event as a result of which the prospectus
included in such registration statement, as then in effect, would include an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing, and at the reasonable request
of RG Capital or R&G prepare and furnish to it such number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Shares, Warrant Shares or
securities, such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the circumstances
under which they were made. RG Capital and R&G shall suspend all sales of the
Shares and the Warrant Shares, respectively, upon receipt of such notice from
the Company and shall not re-commence sales until they receive copies of any
necessary amendment or supplement to such prospectus, which shall be delivered
to RG Capital and R&G within 15 days of the date of such notice from the
Company.
(i) If requested by the underwriter for any underwritten offering of
Shares or Warrant Shares, the Company and RG Capital or R&G, as the case may be,
will enter into an underwriting agreement with such underwriter for such
offering, which shall be reasonably satisfactory in substance and form to the
Company, the Company's counsel, RG Capital and RG Capital's counsel or R&G and
R&G's counsel, as the case may be, and the underwriter, and such agreement shall
contain such representations and warranties by the Company and RG Capital or R&G
and such other terms and provisions as are customarily contained in an
underwriting agreement with respect to secondary distributions solely by selling
stockholders, including, without limitation, indemnities substantially to the
effect and to the extent provided in Section 2 of this Agreement.
(j) The Company agrees that until all the Shares or Warrant Shares
have been sold under a registration statement or pursuant to Rule 144
promulgated under the Securities Act, it shall use its reasonable best efforts
to keep current in filing all reports, statements and other materials required
to be filed with the Commission to permit the Company to maintain its
eligibility to use a Form S-2 registration statement and to permit RG Capital
and R&G to sell the Shares or Warrant Shares, respectively, under Rule 144.
(k) The Company shall furnish to RG Capital and R&G and to each
underwriter, if any, a signed counterpart, addressed to RG Capital and
Page 54 of 61
<PAGE>
R&G or each underwriter, of (i) an opinion of counsel to the Company, dated the
effective date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), and (ii) a "cold comfort" letter
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, a letter dated the date
of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of securities
provided, however, that the terms of this Section 1(k) shall not apply if the
Shares or Warrant Shares are registered in a "piggyback" registration in which
the party seeking registration does not receive an opinion of counsel or a "cold
comfort letter."
10. Indemnification.
10.1 Subject to the conditions set forth below, the Company agrees
to indemnify and hold harmless RG Capital and R&G, their officers, directors,
partners, employees, agents, and counsel, and each person, if any, who controls
any such person within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act") from and against any and all loss, liability, charge, claim,
damage, and expense whatsoever (which shall include, for all purposes of this
Section 2, but not be limited to, attorneys' fees and any and all reasonable
expenses whatsoever incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation) as and when incurred,
arising out of, based upon, or in connection with (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any registration
statement, preliminary prospectus, or final prospectus (as from time to time
amended and supplemented) or any amendment or supplement thereto, relating to
the sale of any of the Shares or Warrant Shares or (B) in any application or
other document or communication (in this Section 2 collectively called an
"application") executed by or on behalf of the Company or based upon written
information furnished by or on behalf of the Company filed in any jurisdiction
in order to register or qualify any of the Shares or Warrant Shares under the
securities or blue sky laws thereof or filed with the Commission or any
securities exchange; or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements made
therein not misleading, unless (x) such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company with respect to RG Capital or R&G by or on behalf of RG Capital or R&G
expressly for inclusion in any registration statement, preliminary prospectus,
or final prospectus, or any amendment or supplement thereto, or in any
application, as the case may be, or (y) such loss, liability, charge, claim,
damage or expense arises out of RG Capital's or R&G's failure
Page 55 of 61
<PAGE>
to comply with the terms and provisions of this Agreement, or (ii) any breach of
any representation, warranty, covenant, or agreement of the Company contained in
this Agreement. The foregoing agreement to indemnify shall be in addition to any
liability the Company may otherwise have, including liabilities arising under
this Agreement.
If any action is brought against RG Capital or R&G or any of their
officers, directors, partners, employees, agents, or counsel, or any controlling
persons of such person (an "indemnified party") in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
indemnified party or parties shall promptly notify the Company in writing of the
institution of such action (but the failure so to notify shall not relieve the
Company from any liability other than pursuant to this Section 2(a)) and the
Company shall promptly assume the defense of such action, including the
employment of counsel (reasonably satisfactory to such indemnified party or
parties) provided that the indemnified party shall have the right to employ its
or their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such action or the Company shall not have
promptly employed counsel reasonably satisfactory to such indemnified party or
parties to have charge of the defense of such action or such indemnified party
or parties shall have reasonably concluded that there may be one or more legal
defenses available to it or them or to other indemnified parties which are
different from or additional to those available to the Company, in any of which
events such fees and expenses shall be borne by the Company and the Company
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties. Anything in this Section 2 to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its written consent, which shall not be
unreasonably withheld. The Company shall not, without the prior written consent
of each indemnified party that is not released as described in this sentence,
settle or compromise any action, or permit a default or consent to the entry of
judgment in or otherwise seek to terminate any pending or threatened action, in
respect of which indemnity may be sought hereunder (whether or not any
indemnified party is a party thereto) unless such settlement, compromise,
consent, or termination includes an unconditional release of each indemnified
party from all liability in respect of such action. The Company agrees promptly
to notify RG Capital and R&G of the commencement of any litigation or
proceedings against the Company or any of its officers or directors in
connection with the sale of any Shares or Warrant Shares or any preliminary
prospectus, prospectus, registration statement, or amendment or supplement
thereto, or any application relating to any sale of any Shares or Warrant
Shares.
10.2 RG Capital and R&G agree to indemnify and hold harmless the
Company, each director of the Company, each officer of the Company who shall
have signed any registration statement covering Shares or Warrant Shares held by
RG Capital or R&G, respectively, each other person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, and its or their respective counsel, to
Page 56 of 61
<PAGE>
the same extent as the foregoing indemnity from the Company to RG Capital and
R&G in Section 2(a) but only with respect to statements or omissions, if any,
made in any registration statement, preliminary prospectus, or final prospectus
(as from time to time amended and supplemented) or any amendment or supplement
thereto, or in any application, in reliance upon and in conformity with written
information furnished to the Company with respect to RG Capital or R&G by or on
behalf of RG Capital or R&G, expressly for inclusion in any such registration
statement, preliminary prospectus, or final prospectus, or any amendment or
supplement thereto, or in any application, as the case may be. If any action
shall be brought against the Company or any other person so indemnified based on
any such registration statement, preliminary prospectus, or final prospectus, or
any amendment or supplement thereto, or in any application, and in respect of
which indemnity may be sought against RG Capital or R&G pursuant to this Section
2(b), RG Capital or R&G shall have the rights and duties given to the Company,
and the Company and each other person so indemnified shall have the rights and
duties given to the indemnified parties, by the provisions of Section 2(a).
10.3 To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 2(a) or
2(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Securities Act, the Exchange Act or otherwise, then
the Company (including for this purpose any contribution made by or on behalf of
any director of the Company, any officer of the Company who signed any such
registration statement, any controlling person of the Company, and its or their
respective counsel) as one entity, and RG Capital or R&G (including for this
purpose any contribution by or on behalf of an indemnified party) as a second
entity, shall contribute to the losses, liabilities, claims, damages, and
expenses whatsoever to which any of them may be subject, on the basis of
relevant equitable considerations such as the relative fault of the Company and
RG Capital or R&G in connection with the facts which resulted in such losses,
liabilities, claims, damages, and expenses. The relative fault, in the case of
an untrue statement, alleged untrue statement, omission, or alleged omission
shall be determined by, among other things, whether such statement, alleged
statement, omission or alleged omission relates to information supplied by the
Company or by RG Capital or R&G, and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such statement,
alleged statement, omission, or alleged omission. The Company, RG Capital and
R&G agree that it would be unjust and inequitable if the respective obligations
of the Company, RG Capital and R&G for contribution were determined by pro rata
or per capita allocation of the aggregate losses, liabilities, claims, damages,
and expenses (even if RG Capital or R&G and the other indemnified parties were
treated as one entity for such purpose) or by any other method of allocation
that does not reflect the equitable considerations referred to in this Section
2(c). No person guilty of a fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who is not guilty of such
Page 57 of 61
<PAGE>
fraudulent misrepresentation. For purposes of this Section 2(c) each person, if
any, who controls RG Capital or R&G within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act and each officer, director,
partner, employee, agent, and counsel of RG Capital or R&G or control person
shall have the same rights to contribution as RG Capital or R&G or control
person and each person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed any such registration statement,
each director of the Company, and its or their respective counsel shall have the
same rights to contribution as the Company, subject to each case to the
provisions of this Section 2(c). Anything in this Section 2(c) to the contrary
notwithstanding, no party shall be liable for contribution with respect to the
settlement of any claim or action effected without its written consent. This
Section 2(c) is intended to supersede any right to contribution under the
Securities Act, the Exchange Act or otherwise.
11. Miscellaneous.
11.1 Remedies. In the event of a breach by the Company of its
obligations under this Agreement, RG Capital and R&G, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of their rights under this Agreement.
11.2 Agreements and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, unless such amendment, modification or supplement is in writing
and signed by the parties hereto.
11.3 Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, or telecopies, initially to the address set forth
below, and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 3(c):
(a) if to the Company:
Linkon Corporation
140 Sherman Avenue
Fairfield, CT 06430
Attention: Lee W. Hill, President
Copy to:
Finn Dixon & Herling LLP
One Landmark Square
Stamford, CT 06901
Attention: David I. Albin, Esq.
Page 58 of 61
<PAGE>
(b) if to RG Capital:
RG Capital Fund LLC
One Hollow Lane, Suite 208
Lake Success, NY 11040
Attention: James Scibelli
Copy to:
Rosenman & Colin LLP
575 Madison Avenue
New York, NY 10022
Attention: Eric M. Lerner, Esq.
(c) if to R&G:
Roberts & Green, Inc.
One Hollow Lane, Suite 208
Lake Success, NY 11040
Attention: James Scibelli, President
Copy to:
Rosenman & Colin LLP
575 Madison Avenue
New York, NY 10022
Attention: Eric M. Lerner, Esq.
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; two business days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; and when receipt is acknowledged, if telecopied.
11.4 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties.
11.5 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
11.6 Headings. The headings in this Agreement are for convenience of
references only and shall not limit or otherwise affect the meaning hereof.
11.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without reference
to its conflicts of law provisions.
Page 59 of 61
<PAGE>
11.8 Severability. In the event that any one or more of the
provisions contained herein, or the application hereof in any circumstance is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provisions in every other respect and of the
remaining provisions contained herein shall not be affected or impaired thereby.
11.9 Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of this agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein, concerning the registration rights granted by the Company pursuant to
this Agreement.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
Page 60 of 61
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above.
RG CAPITAL FUND LLC
By: SG Capital Corp.,
its Managing Director
By:/s/
--------------------------
Name: James Scibelli
Title: President
ROBERTS & GREEN, INC.
By:/s/
--------------------------
Name: James Scibelli
Title: President
LINKON CORPORATION
By:/s/
--------------------------
Name: Thomas V. Cerabona
Title: Vice President
Page 61 of 61
