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As filed with the Securities and Exchange Commission on November 25, 1997
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MEDIA LOGIC, INC.
----------------------------
(Exact name of registrant as specified in its charter)
Massachusetts
----------------------------
State or other jurisdiction of
incorporation or organization)
04-2772354
----------------------------
(I.R.S. Employer
Identification No.)
310 South Street, Plainville, Massachusetts 02762
(508) 695-2006
----------------------------
(Address, including zip code,
and telephone, including area code,
of registrant's principal executive offices)
William E. Davis, Jr.
Chief Executive Officer
Media Logic, Inc.
310 South Street
Plainville, Massachusetts 02762
(508) 695-2006
----------------------------
(Name, address, including zip code, and
telephone number, including area code,
of agent for service)
Copy to:
Richard R. Kelly, Esquire
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
(617) 542-6000
----------------------------
Approximate date of commencement of proposed sale to public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
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If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [x].
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the
same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
----------------------------
Calculation of Registration Fee
Proposed Proposed
maximum maximum
Title of each class offering aggregate Amount of
of securities to be Amount to be price per offering registration
registered registered unit (1) price (1) fee
_______________________________________________________________________________
Common Stock, par 3,508,445 $2.19 $7,688,973 $2,330
value $.01 per share
_______________________________________________________________________________
(1) Estimated solely for the purpose of calculating the registration fee and
in accordance therewith (i) pursuant to Rule 457(c) includes 1,757,575
shares based upon the average of the high and low sales prices of the
Registrant's Common Stock on the American Stock Exchange on November 20,
1997 which amount was $1.50 and (ii) pursuant to Rule 457(g) includes
1,750,870 shares subject to warrants based upon the price at which
such warrants may be exercised.
----------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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Subject to Completion Dated November 25, 1997
PROSPECTUS
MEDIA LOGIC, INC.
3,421,463 Shares of Common Stock
(Par Value $.01 Per Share)
----------------------------
The 3,421,463 shares of Common Stock of Media Logic, Inc., a
Massachusetts corporation (the "Company"), offered hereby are being sold by
the selling stockholders identified herein (the "Selling Stockholders").
Such offers and sales may be made on the American Stock Exchange, or
otherwise, at prices and on terms then prevailing, or at prices related to
the then-current market price, or in negotiated transactions, or by
underwriters pursuant to an underwriting agreement in customary form, or in a
combination of any such methods of sale. The Selling Stockholders may also
sell such shares in accordance with Rule 144 under the Securities Act of
1933, as amended (the "1933 Act"). The Selling Stockholders are identified
and certain information with respect to the Selling Stockholders is provided
under the caption "Selling Stockholders" herein, to which reference is made.
The expenses of the registration of the securities offered hereby, including
fees of counsel for the Company, will be paid by the Company. The following
expenses will be borne by the Selling Stockholders: underwriting discounts
and selling commissions, if any, and the fees of legal counsel, if any, for
the Selling Stockholders in connection with the registration of the shares
offered herein. The filing by the Company of this Prospectus in accordance
with the requirements of Form S-3 is not an admission that the person whose
shares are included herein is an "affiliate" of the Company.
The Selling Stockholders have advised the Company that they have not
engaged any person as an underwriter or selling agent for any of such shares,
but they may in the future elect to do so, and they will be responsible for
paying such a person or persons customary compensation for so acting. The
Selling Stockholders and any broker executing selling orders on behalf of any
Selling Stockholder may be deemed to be "underwriters" within the meaning of
the 1933 Act, in which event commissions received by any such broker may be
deemed to be underwriting commissions under the 1933 Act. The Company will
not receive any of the proceeds from the sale of the securities offered
hereby. The Common Stock is listed on the American Stock Exchange under the
symbol TST. On November 20, 1997, the closing sale price of the Common
Stock, as reported by the American Stock Exchange, was $1.50 per share.
----------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 4 OF THIS PROSPECTUS.
----------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------------------
No person is authorized in connection with any offering made hereby to
give any information or to make any representations other than as contained
in this Prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. This Prospectus is not an offer to sell, or a solicitation of an
offer to buy, by any person in any jurisdiction in which it is unlawful for
such person to make such an offer or solicitation. Neither the delivery of
this Prospectus nor any sales made hereunder shall under any circumstances
create any implication that the information contained herein is correct as of
any time subsequent to the date hereof.
----------------------------
The date of this Prospectus is _____________, 1997.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY STATE.
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AVAILABLE INFORMATION
The Company is subject to certain informational reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and in accordance therewith files reports and other information with
the Securities and Exchange Commission (the "Commission"). These reports,
proxy statements and other information can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024 of the
Commission's office at 450 Fifth Street, N.W., Judiciary Plaza, Washington,
DC 20549, and at its regional offices located at 7 World Trade Center, Suite
1300, New York, NY 10048 and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, IL 60661. Copies of such reports, proxy statements and other
information can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, DC 20549
at prescribed rates. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of the
Commission's Web site is http://www.sec.gov. The Company's Common Stock is
traded on the American Stock Exchange. Reports and other information
concerning the Company may be inspected at the offices of the American Stock
Exchange, 86 Trinity Place, New York, New York 10006-1181. Additional
updating information with respect to the securities covered herein may be
provided in the future to purchasers by means of appendices to this
Prospectus.
The Company has filed with the Commission in Washington, DC a
registration statement (herein, together with all amendments and exhibits,
referred to as the "Registration Statement") under the 1933 Act with respect
to the securities offered or to be offered hereby. This Prospectus does not
contain all of the information included in the Registration Statement,
certain items of which are omitted in accordance with the rules and
regulations of the Commission. For further information about the Company and
the securities offered hereby, reference is made to the Registration
Statement and the exhibits thereto.
The Company will provide without charge to each person to whom
this Prospectus is delivered, on the written or oral request of such person,
a copy of any document incorporated herein by reference, excluding exhibits.
Requests should be made to Media Logic, Inc., 310 South Street, Plainville,
MA 02762, telephone (508) 695-2006 and directed to the attention of Paul M.
O'Brien, Vice President and Chief Financial Officer.
2
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TABLE OF CONTENTS
PAGE
RISK FACTORS.......................................................... 4
THE COMPANY........................................................... 8
SELLING STOCKHOLDERS.................................................. 9
PLAN OF DISTRIBUTION.................................................. 11
LEGALITY OF COMMON STOCK.............................................. 11
EXPERTS............................................................... 11
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE..................... 11
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RISK FACTORS
An investment in the shares being offered by this Prospectus
involves a high degree of risk. In addition to the other information
contained in this Prospectus or incorporated herein by reference, prospective
investors should carefully consider the following risk factors before
purchasing the shares offered hereby. This Prospectus contains and
incorporates by reference forward-looking statements within the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995 which are
based on management's current expectations. To the extent that any of the
statements contained herein relating to the Company's products and its
operations are forward looking, such statements are based on management's
current expectations and involve a number of uncertainties and risks.
Reference is also made in particular to the discussion set
forth under "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Company's Annual Report on Form 10-K and
Amendment No. 1 to the Form 10-K on Form 10K/A (collectively, the "Form
10-K") for the fiscal year ended March 31, 1997 and in the Company's
Quarterly Reports on Form 10-Q for the quarters ended June 30, 1997 and
September 30, 1997 and under "Description of Business" in the Form 10-K,
incorporated into this Prospectus by reference. Both the forward-looking
statements contained in this Prospectus and those incorporated herein by
reference are based on current expectations that involve a number of
uncertainties including those set forth in the risk factors below. Actual
results could differ materially from those projected in the forward-looking
statements.
Shift in Business Focus. While in fiscal years 1996 and 1997,
the Company still derived most of its revenue from sales of its certifiers,
evaluators and duplicators for floppy disks and tape, the Company has shifted
its focus to its automated tape libraries for the data storage market. In
fiscal year 1996, the Company sold only pre-production units of its automated
data library ("ADL") products. The Company first commenced sales of its
production units of ADL products, other than evaluation units, in the second
quarter of fiscal year 1997 and therefore has limited experience in selling
its ADL products. The Company expects to derive a substantial majority of
its total revenue and net income from sales of its ADL products in the
future. Continued growth of the Company's ADL business will depend upon
several factors, including demand for these libraries, the Company's ability
to develop new products to meet the changing requirements of its customers,
technological change and competitive pressures. There can be no assurance
that the Company's ADL business will take hold and grow.
Competition. Competition in the data storage market,
including the automated tape library market, is intense, with a large number
of companies in these markets. Many of the Company's current and potential
competitors have longer operating histories, greater name recognition, larger
installed customer bases and significantly greater financial, technical and
marketing resources than the Company. As a result, such competitors may be
able to adapt more quickly to new or emerging technologies and changes in
customer requirements, or to devote greater resources to the promotion and
sale of their products than the Company. An increase in competition could
result in price reductions and loss of market share. Such competition and
any resulting reduction in gross margins could have a material adverse effect
on the Company's business, financial condition and results of operations.
Rapid Technological Change; Dependence on New Product
Development. The computer industry in general, and the markets for the
Company's automated tape library products in particular, are characterized by
rapidly changing technology, frequent new product introductions, and
significant competition. In order to keep pace with this rapidly changing
market environment, the Company must continually develop and incorporate into
its products new technological advances and features desired by the
marketplace at acceptable prices. The successful development and
commercialization of new products involves many risks, including the
identification of new product opportunities, timely completion of the
development process, the control and recoupment of development and production
costs and acceptance by customers of the Company's products. There can be no
assurance that the Company will be successful in identifying, developing,
manufacturing and marketing new products in a timely and cost effective
manner, that products or technologies developed by others will not render the
Company's products or technologies uncompetitive, or that the Company's
products will be accepted in the marketplace.
Protection of Proprietary Technology. The Company's ability
to compete effectively with other companies will depend, in part, on the
ability of the Company to maintain the proprietary nature of its technology.
There can be no assurance that competitors in both the United States and
foreign countries, many of which have substantially greater resources and
have made substantial investments in competing technologies, do not have or
will not obtain patents that will prevent, limit or interfere with the
Company's ability to make and sell its products or intentionally infringe the
Company's patents. While the Company possesses or licenses certain patent
rights, it relies in large part on unpatented proprietary technology, and
there can be no assurance that others may not independently develop the same
or similar technology, whether or not patented, or otherwise obtain access to
the Company's proprietary technology.
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Cyclical Nature of the Computer Industry. The computer
industry is highly cyclical and has historically experienced periodic
downturns. The cyclical nature of the computer industry is beyond the
control of the Company. As an example, the Company experienced a substantial
reduction in demand for its original product line (floppy disk certification,
testing and duplication equipment). A similar decrease in demand for the
Company's new automated tape library products could have a material adverse
effect on its business and products.
Uncertainties Related to Company's Ability to Raise Additional
Necessary Capital. The Company has spent and expects to continue to spend
substantial funds for continuation of the research and development of product
candidates and will also require additional funds in order to manufacture,
market and sell its products. In March 1997, the Company completed a private
placement of convertible subordinated debentures (the "March Private
Placement") which resulted in approximately $3,530,000 in gross proceeds to
the Company and in October 1997 the Company completed a private placement of
convertible debentures (the "October Private Placement") which resulted in
$750,000 in gross proceeds to the Company. However, because of its
continuing losses from operations, the Company anticipates that unless
revenues increase significantly, it will require additional capital in order
to continue its operations. See "--Recent Losses." The Company has no
assurance that it will be able to raise such additional capital, if needed,
in a timely manner or on favorable terms, if at all. If the Company is
unable to increase revenues significantly and/or secure additional financing,
the Company could be forced to curtail or discontinue its operations.
Recent Losses. For the six months ended September 30, 1997,
the Company incurred a loss of $2,098,630 on revenues of $767,626. For the
fiscal year ended March 31, 1997, the Company incurred a loss of $4,122,288
on revenues of $3,644,478, and for the fiscal year ended March 31, 1996, the
Company incurred a loss of $7,818,819 on revenues of $3,578,236. These recent
losses are primarily the result of a decline in the revenues generated in the
Company's traditional markets during a period when the Company was making a
large investment in its ADL technology. The Company believes that the trends
that resulted in its losses could continue for the foreseeable future.
Dependence on Key Personnel. The Company's success depends to
a significant extent on the performance of its senior management, including
its Chief Executive Officer and President, William E. Davis, Jr., its Vice
President of Sales, B. Edward Fitzgibbons, its Director of Engineering, James
Hackathorn, and its Vice President and Chief Financial Officer, Paul M.
O'Brien. Competition for highly skilled employees with technical, management
and other specialized training is intense in the computer industry. The
Company's failure to attract additional qualified employees or to retain the
services of key personnel could have a material adverse effect on the
Company's business.
Volatility of Share Price. Market prices for securities of
technology companies have been volatile. The market price for the Company's
Common Stock has fluctuated significantly since public trading commenced in
1987, and it is likely that the market price will continue to fluctuate in
the future. Quarterly fluctuations in operating results, announcements by
the Company or the Company's present or potential competitors, technological
innovations or new commercial products or services, developments or disputes
concerning patent or proprietary rights and other events or factors may have
a significant impact on the Company's business and on the market price of the
Common Stock.
Control by Existing Management and Stockholders. The
directors, officers and principal stockholders of the Company and certain of
their affiliates and/or family members beneficially own in the aggregate
approximately 38.7% of the Company's Common Stock (including shares issuable
upon exercise of options held by such persons, which options are currently
exercisable and shares issuable upon exercise of warrants held by such
persons, which warrants are currently exercisable). As a result of such
ownership, these stockholders will exert influence over all matters requiring
approval by the stockholders of the Company, including the election of
directors. One stockholder, Raymond Leclerc, has a contractual right to
Board representation.
Certain Charter and By-Law Provisions and Massachusetts Laws
May Affect Stock Price. The Company's Restated Articles of Organization and
By-laws contain provisions that may make it more difficult for a third party
to acquire control of, or discourage acquisition bids for, the Company. In
addition, certain Massachusetts laws contain provisions that may have the
effect of making it more difficult for a third party to acquire control of,
or discourage acquisition bids for, the Company. These provisions could
limit the price that certain investors might be willing to pay in the future
for shares of Common Stock.
Shares Eligible for Future Sale. Sales of substantial amounts
of Common Stock in the public market could have an adverse effect on the
price of the Company's Common Stock. Approximately 7,317,936 shares of
Common Stock are currently freely tradable on the open market. In addition,
approximately 1,245,300 shares are eligible for sale pursuant to Rule 701 or
Rule 144 of the 1933 Act. Also, there were a total of 575,138 options to
purchase Common Stock outstanding as of November 20, 1997 pursuant to the
Company's stock option plans, and 399,672 of such options were vested and can
be exercised at any time prior to their respective expiration dates. Lee H.
Elizer, the
5
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former Chief Executive Officer and President of MediaLogic ADL, is entitled
to receive 8,000 shares of Common Stock in October 1998, which, under the
terms of his separation agreement with the Company, are expected to be
registered under the 1933 Act following their issuance.
In June 1997, the Company registered for resale, on a
registration statement on Form S-3 (the "June 1997 Registration Statement"),
up to 3,565,656 shares of Common Stock issuable upon conversion of $3,530,000
aggregate principal amount of 7% convertible subordinated debentures due 2000
(the "March Debentures"), and interest thereon, issued by the Company to the
selling stockholders named therein. The principal amount of the March
Debentures is convertible at any time into shares of the Company's Common
Stock based on a predetermined formula. The price at which the March
Debentures will convert will be the lower of (i) $2.805, which amount is 120%
of the average closing bid price of the Common Stock as calculated over the
five trading-day period ending on March 21, 1997 (the "March Closing Date
Price") and (ii) 80% of the average closing bid price of the Common Stock as
calculated over the five trading-day period ending on the trading day
immediately preceding the date of conversion (the "March Conversion Date
Price"). Each individual $10,000 principal amount March Debenture may be
converted only in its entirety. The March Debentures bear interest at the
rate of 7% per year. Interest is payable only upon conversion of the March
Debentures and, at the Company's option, is payable either in cash or in
shares of the Company's Common Stock based on the average closing sale price
of the Common Stock as calculated over the five trading-day period ending on
the trading day immediately preceding the date of conversion.
The Company registered 3,565,656 shares of Common Stock (the
"Registered Shares") pursuant to the June 1997 Registration Statement to
insure that there would be a sufficient number of registered shares in the
event that the market price for the Company's Common Stock declined
substantially. The Registered Shares represented the approximate number of
shares which would be issuable upon conversion of the March Debentures
(excluding shares issuable upon conversion of accrued interest) if the March
Conversion Date Price were $0.99 per share. An aggregate of 1,907,626 shares
have been offered pursuant to the Prospectus contained in the June 1997
Registration Statement (the "June Prospectus"), which number is an estimate
of the number of shares issuable upon conversion of the March Debentures
based on an assumed March Conversion Date Price of $1.98 per share (80% of
the average of the closing bid prices of the Common Stock on the five trading
days ended May 14, 1997, as reported on the American Stock Exchange), and
assuming approximately 124,798 shares would be issuable upon conversion of
approximately one year's accrued interest of $247,100. In the event the
actual March Conversion Date Price were less than $1.98, more than 1,907,626
shares would be issuable upon conversion of the principal amount of the March
Debentures (including shares issuable upon conversion of accrued interest)
and the Company would be required to amend the June Prospectus to increase
the number of shares offered thereby accordingly. If the March Debentures
become convertible into more than 3,565,656 shares, the Company would be
obligated to register additional shares of Common Stock. Through November
20, 1997, approximately $2,830,000 aggregate principal amount of the March
Debentures have been converted into 2,177,463 shares of Common Stock, and
approximately $90,000 aggregate interest amount has been converted into
54,264 shares of Common Stock.
670,593 of the Shares offered hereby are issuable upon
conversion of $750,000 aggregate principal amount of 7% convertible
debentures due 2000 (the "October Debentures"), and interest thereon, issued
by the Company in the October Private Placement. At any time beginning on
January 12, 1998, the principal amount of the October Debentures is
convertible into shares of the Company's Common Stock based on a
predetermined formula. The price at which the Debentures will convert will
be the lower of (i) $1.95, which amount is 120% of the average closing bid
price of the Common Stock as calculated over the five trading-day period
ending on October 29, 1997 (the "October Closing Date Price") and (ii) 80% of
the average closing bid price of the Common Stock as calculated over the five
trading-day period ending on the trading day immediately preceding the date
of conversion (the "October Conversion Date Price"). The October Debentures
bear interest at the rate of 7% per year. Interest is payable only upon
conversion of the October Debentures and, at the Company's option, is payable
either in cash or in shares of the Company's Common Stock based on the
average closing sale price of the Common Stock as calculated over the five
trading-day period ending on the trading day immediately preceding the date
of conversion.
The Company has agreed to register for resale from time to
time by the purchasers thereof the shares of Common Stock underlying the
October Debentures. All of the shares registered for resale by the holders
thereof, including the shares offered hereby, may be reoffered and resold in
the public trading market from time to time during the period the Company has
agreed to maintain the effectiveness of the registration statement
registering those shares. Pursuant to the registration statement of which
this Prospectus is a part, the Company has registered 757,575 shares of
Common Stock for issuance upon conversion of the October Debentures. The
Company has registered this number of shares to insure that there would be a
sufficient number of registered shares in the event that the market price for
the Company's Common Stock declines substantially. The shares registered
represents the approximate number of shares which would be issuable upon
conversion of the October Debentures (excluding shares issuable upon
conversion of accrued interest) if the October Conversion Date Price were
$0.99 per share. An aggregate of 670,593 of the shares have been offered
pursuant to this Prospectus, which number is an estimate
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of the number of shares issuable upon conversion of the October Debentures
based on an assumed October Conversion Date Price of $1.18 per share (80% of
the average of the closing bid prices of the Common Stock on the five trading
days ended November 20, 1997, as reported on the American Stock Exchange),
and assuming approximately 35,000 shares would be issuable upon conversion of
approximately one year's accrued interest of $52,500. In the event the
actual October Conversion Date Price is less than $1.18, more than 670,593
shares will be issuable upon conversion of the principal amount of the
Debentures (including shares issuable upon conversion of accrued interest)
and the Company would be required to amend this Prospectus to increase the
number of shares offered hereby accordingly. If the October Debentures become
convertible into more than 757,575 shares, the Company will be obligated to
register additional shares of Common Stock.
650,870 of the Shares offered hereby are issuable upon
exercise of warrants to purchase Common Stock (the "Advent Warrants") issued
to ACFS Limited Partnership ("ACFS") and to Digital Media & Communications
L.P. ("Digital Media") in connection with the March Private Placement. The
Advent Warrants are exercisable at any time prior to September 22, 2001 at an
exercise price of $3.00 per share of Common Stock.
900,000 of the Shares offered hereby are issuable upon
exercise of warrants to purchase Common Stock (the "Adar Warrants") issued to
Adar Equities LLC in connection with the March Private Placement. The Adar
Warrants are exercisable at any time prior to March 24, 2002 at an exercise
price of $3.00 per share of Common Stock.
200,000 of the Shares offered hereby are issuable upon
exercise of warrants to purchase Common Stock (the "Rochon Warrants") issued
to Rochon Capital Group, Ltd. in connection with the March Private Placement.
The Rochon Warrants are exercisable at an exercise price of $2.00 per share
of Common Stock.
The Company has agreed to register for resale from time to
time by the purchasers thereof the shares of Common Stock underlying the
Advent Warrants, the Adar Warrants and the Rochon Warrants (collectively, the
"Warrants"). All of the shares registered for resale by the holders thereof,
including the shares offered hereby, may be reoffered and resold in the
public trading market from time to time during the period the Company has
agreed to maintain the effectiveness of the registration statement
registering those shares.
1,000,000 of the Shares offered hereby were issued to Raymond
W. Leclerc in a private placement in September 1995. The Company has agreed
to include such shares held by Mr. Leclerc in certain registrations filed by
the Company under the 1933 Act and accordingly, such shares are included in
the registration statement of which this Prospectus is a part.
The Company has agreed to issue Warrants (the "First Granite
Warrants") to purchase 500,000 shares of Common Stock to First Granite
Securities, Inc. in connection the October Private Placement. The First
Granite Warrants will be exercisable at any time during the period commencing
January 26, 1998 and ending January 26, 2003 at an exercise price of $2.00
per share.
Absence of Dividends. The Company has not paid dividends
since its inception and does not anticipate paying any dividends in the
foreseeable future.
Dilution. Dilution is likely to occur upon exercise of
outstanding warrants and existing stock options and upon the conversion of
the March Debentures and the October Debentures. See "--Shares Eligible For
Future Sale."
American Stock Exchange Listing. The Company does not fully
satisfy the American Stock Exchange guidelines for continued listing and
there is no assurance that the listing of the Common Stock on the American
Stock Exchange will be continued.
7
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THE COMPANY
Media Logic, Inc. was incorporated in 1982 to develop and
manufacture certification equipment to be used by manufacturers of flexible
storage media such as floppy disks. The Company's principal product line is
automated tape library systems for data storage and retrieval, which was
introduced in fiscal year 1996.
The Company's data storage libraries have been developed by
MediaLogic ADL, Inc. ("MediaLogic ADL"), a subsidiary of the Company which
was established in 1994 to develop, market and sell automated data storage
libraries. In fiscal year 1996, MediaLogic ADL introduced automated tape
libraries in 4mm and 8mm tape technologies and expects to introduce in fiscal
year 1998, automated tape libraries with digital linear tape ("DLT")
technology. Tape drives from a number of manufacturers are supported by the
libraries as are system management and software configurations from a variety
of vendors. In fiscal 1996, the Company sold only pre-production units, and
began delivering production units in the second quarter of fiscal 1997.
Potential customers for the ADL line of automated tape libraries are data
dependent companies in all types of businesses.
The certification, test and duplication product line,
representing the Company's historical products, but which is not expected to
be the basis for the bulk of the Company's future business, includes: (1)
certifiers which are used by computer disk manufacturers to test each disk as
it is manufactured and to sort disks into three industry established quality
categories, (2) tape certification and evaluation equipment used by
manufacturers and suppliers of magnetic tapes, to evaluate and qualify the
quality of the tapes, and (3) floppy disk duplication equipment utilizing
industrial disk drives which have been developed by the Company for use by
software publishers and duplicators.
The principal executive offices of the Company are located at
310 South Street, Plainville, Massachusetts 02762, and the Company's
telephone number is (508) 695-2006.
8
<PAGE>
SELLING STOCKHOLDERS
670,593 of the Shares offered hereby are issuable upon
conversion of the October Debentures which were issued to F.T.S. Worldwide
Corp. in the October Private Placement pursuant to a Securities Purchase
Agreement between the Company and F.T.S. Worldwide Corp. (the Debenture and
the Securities Purchase Agreement have been filed as Exhibits 99.9 and 99.8,
respectively, to the registration statement of which this Prospectus is a
part). 670,593 shares represents the number of shares issuable upon
conversion of the October Debentures as of the date of this Prospectus,
assuming that one year's interest of approximately $52,500 has accrued under
the October Debentures. The number of shares issuable upon conversion of the
October Debentures will increase if the market price of the Company's Common
Stock decreases. In addition, the number of shares issuable upon conversion
of accrued interest under the October Debentures will change if the October
Debentures are held for more or less than one year.
650,870 of the Shares offered hereby are issuable upon
exercise of the Advent Warrants, the form of which Warrants are filed as
Exhibits 99.2, 99.3, 99.4 and 99.5 to the registration statement of which
this Prospectus is a part. 900,000 of the Shares offered hereby are issuable
upon exercise of the Adar Warrants, the form of which Warrant is filed as
Exhibit 99.7 to the registration statement of which this Prospectus is a
part. 200,000 of the Shares offered hereby are issuable upon exercise of the
Rochon Warrants, the form of which Warrant is filed as Exhibit 99.6 to the
registration statement of which this Prospectus is a part.
1,000,000 of the Shares offered hereby were issued to Raymond
Leclerc in a private placement in October 1995 pursuant to a Stock Purchase
Agreement, dated September 25, 1995, between the Company and Mr. Leclerc, a
copy of which is filed as Exhibit 99.1 to the registration statement of which
this prospectus is a part.
The following table sets forth information with respect to the
beneficial ownership of the Company's Common Stock by the Selling
Stockholders as of November 20, 1997, as adjusted to reflect the sale of the
Common Stock offered hereby by each Selling Stockholder.
<TABLE>
<CAPTION>
Shares Owned Prior Shares Owned
to Offering (1) Number of After Offering (2)
------------------ Shares Being ------------------
Selling Stockholder Number Percent Offered Number Percent
- -------------------- --------- ------- ------------ ------- -------
<S> <C> <C> <C> <C> <C>
Digital Media &
Communications Limited
Partnership(3) 1,262,368 14.1% 410,870 851,498 9.5%
Raymond Leclerc(4) 1,168,300 13.6 1,000,000 168,300 2.0
F.T.S. Worldwide Corp.(5) 1,031,373 10.9 670,593 360,780 3.9
Adar Equities LLC(6) 900,000 9.5 900,000 0 --
ACFS Limited Partnership(7) 240,000 2.7 240,000 0 --
Rochon Capital Group, Ltd.(8) 200,000 2.3 200,000 0 --
</TABLE>
_____________
(1) The number of shares of Common Stock issued and outstanding on November
20, 1997 was 8,563,236. The calculation of percentage ownership for
each listed Selling Stockholder is based upon the number of shares of
Common Stock issued and outstanding at November 20, 1997, plus the
shares of Common Stock issuable upon exercise of the Warrants or
conversion of the October Debentures, as the case may be, which are
offered hereby by such Selling Stockholder.
(2) Assuming all shares offered hereby are sold to unaffiliated third
parties.
(3) Includes 410,870 shares issuable upon exercise of the Advent Warrants.
(4) Mr. Leclerc is a director of the Company.
9
<PAGE>
(5) Includes 670,593 shares issuable to F.T.S. Worldwide Corp. upon
conversion of October Debentures and interest thereon at an assumed
conversion price of $1.18, which is 80% of the average of the closing
bid prices of the Common Stock on the five trading days ended November
20, 1997, as reported by the American Stock Exchange. The price at
which the October Debentures will convert into shares of Common
Stock will be the lower of (i) $1.95, which amount is 120% of the average
closing bid price of the Common Stock as calculated over the five
trading-day period ending on October 29, 1997 and (ii) 80% of the average
closing bid price of the Common Stock as calculated over the five
trading-day period ending on the trading day immediately preceding the
date of conversion. Also includes 254,337 Shares issuable to F.T.S.
Worldwide Corp. upon conversion of March Debentures at an assumed
conversion price of $1.18, which is 80% of the average of the closing
bid prices of the Common Stock on the five trading days ended November
20, 1997, as reported by the American Stock Exchange. The price at which
the March Debentures will convert into Shares of Common Stock will be
the lower of (i) $2.805, which amount is 120% of the average closing
bid price of the Common Stock as calculated over the five trading-day
period ending on March 21, 1997 and (ii) 80% of the average closing bid
price of the Common Stock as calculated over the five trading-day period
ending on the trading day immediately preceding the date of conversion.
The general conversion price or prices for the March Debentures and the
October Debentures will vary accordingly, and the number and percentage
of shares of Common Stock beneficially owned by F.T.S. Worldwide Corp.
will be adjusted at the time of conversion to reflect changes in the
average closing bid price of the Common Stock, the amount of accrued
interest at the time of conversion, and stock splits, stock dividends
and other similar events.
(6) Represents shares issuable upon exercise of the Adar Warrants.
(7) Represents shares issuable upon exercise of the Advent Warrants.
(8) Represents shares issuable upon exercise of the Rochon Warrants.
10
<PAGE>
PLAN OF DISTRIBUTION
The 3,421,463 shares of Common Stock of the Company offered
hereby may be offered and sold from time to time by the Selling Stockholders,
or by pledgees, donees, transferees or other successors in interest. The
Selling Stockholders will act independently of the Company in making
decisions with respect to the timing, manner and size of each sale. Such
sales may be made on the American Stock Exchange or otherwise, at prices
related to the then current market price or in negotiated transactions,
including pursuant to an underwritten offering or one or more of the
following methods: (a) purchases by a broker-dealer as principal and resale
by such broker or dealer for its account pursuant to this Prospectus; (b)
ordinary brokerage transactions and transactions in which a broker solicits
purchasers; and (c) block trades in which a broker-dealer so engaged will
attempt to sell the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction. In effecting sales,
brokers or dealers engaged by the Selling Stockholders may arrange for other
brokers or dealers to participate. Brokers or dealers may receive commissions
or discounts from the Selling Stockholders or from the purchasers in amounts
to be negotiated immediately prior to the sale. The Selling Stockholders may
also sell such shares in accordance with Rule 144 under the 1933 Act.
The Company has agreed to best efforts to maintain the
effectiveness of the registration of the shares being offered hereunder until
the earlier of (i) September 21, 2001 and (ii) such time as all shares of
Common Stock issued or issuable upon exercise of the Warrants or upon
conversion of the October Debentures have been registered under the 1933 Act
and disposed of in accordance with an effective registration statement under
the 1933 Act.
The Selling Stockholders and any brokers participating in such
sales may be deemed to be underwriters within the meaning of the 1933 Act.
There can be no assurance that the Selling Stockholders will sell any or all
of the shares of Common Stock offered hereunder.
All proceeds from any such sales will be the property of the
Selling Stockholders who will bear the expense of underwriting discounts and
selling commissions, if any, and the Selling Stockholders' own legal fees, if
any.
LEGALITY OF COMMON STOCK
The validity of the issuance of the shares of Common Stock
offered hereby is being passed upon for the Company by Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., Boston, Massachusetts. Richard R. Kelly,
Esq., a member of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., is the
Clerk of the Company.
EXPERTS
The consolidated balance sheets of the Company as of March 31,
1997 and 1996 and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended March 31, 1997, incorporated by reference in this Prospectus and
elsewhere in the registration statement, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with
respect thereto, and are incorporated herein in reliance upon the authority
of said firm as experts in accounting and auditing in giving said reports.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the
Commission are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K and Amendment
No. 1 to the Form 10-K on Form 10-K/A for the fiscal year ended March 31,
1997, filed pursuant to Section 13 or 15(d) of the 1934 Act (File No. 1-9605).
(b) The Company's Quarterly Reports on Form 10-Q for the
fiscal quarters ended June 30, 1997 and September 30, 1997, filed pursuant to
Section 13 or 15(d) of the 1934 Act (File No. 1-9605).
(c) The description of the Company's capital stock contained
in the Company's registration statement on Form 8-A under the 1934 Act (File
No. 1-9605), including amendments or reports filed for the purpose of
updating such description.
All reports and other documents subsequently filed by the
Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d)
of the 1934 Act, prior to the filing of a post-effective amendment which
indicates that all securities covered by this Prospectus have been sold or
which deregisters all such securities then remaining unsold, shall be deemed
to be incorporated by reference herein and to be a part hereof from the date
of the filing of such reports and documents.
11
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following expenses incurred in connection with the sale of
the securities being registered will be borne by the Registrant. Other than
the registration fee, the amounts stated are estimates.
SEC Registration Fee $2,330.00
AMEX Fees *
Legal Fees and Expenses *
Accounting Fees and Expenses *
Miscellaneous *
---------
TOTAL $ *
----------
----------
* To be filed by amendment.
The Selling Stockholders will bear the expense of their own
legal counsel, if any.
Item 15. Indemnification of Officers and Directors
Article VI.A of the Company's Restated Articles of
Organization provides that no Director of the Company shall be personally
liable to the corporation or to any of its stockholders for monetary damages
for any breach of fiduciary duty by such Director as a Director
notwithstanding any provision of law imposing such liability; provided,
however, that, to the extent required from time to time by applicable law,
Article VI.A shall not eliminate the liability of a Director, to the extent
such liability is provided by applicable law, (a) for any breach of a
Director's duty of loyalty to the corporation or its stockholders, (b) for
acts or omissions not in good faith which involve intentional misconduct or a
knowing violation of law, (c) under Section 61 or Section 62 of the Business
Corporation Law of the Commonwealth of Massachusetts, or (d) for any
transaction from which the Director derived an improper personal benefit. No
amendment to or repeal of Article VI.A shall apply to or have any effect on
the liability or alleged liability of any Director for or with respect to any
acts or omissions of such Director occurring prior to the effective date of
such amendment or repeal.
In addition, the Company's By-Laws provide as follows:
Article First, Section 12. Indemnity. (a) The Corporation
shall indemnify and reimburse out of the corporate funds any
person (or the personal representative of any person) who at any
time serves or shall have served as a Director, officer or
employee of the Corporation, or as a Director, officer or
employee of another Corporation the majority of the stock of
which is owned by the Corporation, whether or not in office at
the time, against and for any and all claims and liabilities to
which he may be or become subject by reason of such service, and
against and for any and all expenses necessarily incurred in
connection with the defense or reasonable settlement of any legal
or administrative proceedings to which he is made a party by
reason of such service, except in relation to matters as to which
he shall be finally adjudged not to have acted in good faith in
the reasonable belief that his action was in the best interest of
the Corporation or to the extent that such matter relates to
service with respect to an employee benefit plan, in the best
interests of the participants or beneficiaries of such employee
benefit plan. In effecting such indemnity and reimbursement, the
stockholders may enter into such agreements and direct the
officers of the Corporation to make such payment or payments and
take such other action (including employment of counsel to defend
against such claims and liabilities) as may in their judgment be
reasonably necessary or desirable. Such indemnification or
reimbursement shall not be deemed to exclude any other rights or
privileges to which such person may be entitled.
(b) The Board of Directors may by vote act to indemnify any
or all officers of the Corporation from liability for acts done
by them in good faith on behalf of the Corporation.
(c) The Directors may vote to defray the expense of
defending any claims brought against one or more Directors or
other Officers on account of any action purported to have been
done in any official capacity, and may vote to reimburse any such
Director or other Officer for any sum paid by him to settle any
such claim; provided that if it shall be finally determined by
judgment or decree of any court that any such Director or other
Officer is personally liable on account of any such claim, he
shall reimburse the Company for his pro rata share of any expense
so defrayed or reimbursement so made by the Company.
(d) To the extent legally permissible, the Corporation
shall indemnify each of its Directors and Officers against all
liabilities including expenses imposed upon or reasonably
incurred by him in connection with any action, suit or other
proceeding in which he may be involved or with which he may be
threatened, while in office or thereafter, by reason of his acts
II-1
<PAGE>
or omissions as such Director or Officer, unless in such
proceeding he shall be finally adjudged liable by reason of
dereliction in the performance of his duty as such Director or
Officer; provided, however, that such indemnification shall not
cover liabilities in connection with any matter which shall be
disposed of through a compromise payment by such Director or
Officer, pursuant to a consent decree or otherwise, unless such
compromise shall be approved as in the best interests of the
Corporation, after notice that it involves such indemnification,
by a vote of the Board of Directors in which no interested
Director participates, or by a vote or the written approval of
the holders of a majority of the outstanding stock at the time
having the right to vote for Directors, not counting as
outstanding any stock owned by any interested Director or
Officer. The rights of indemnification hereby provided shall not
be exclusive of or affect any other rights to which any Director
or Officer may be entitled. As used in this paragraph, the terms
"Director" and "Officer" include their respective heirs,
executors and administrators, and an "interested" Director or
Officer is one against whom as such the proceedings in question
or another proceeding on the same or similar grounds is then
pending.
Item 16. Exhibits.
Exhibit
Number Description
- ------- -----------
4.1 Article 4 of Restated Articles of Organization of the Registrant
(incorporated by reference to Exhibit 3.1 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended March 31,
1993)
4.2 By-Laws of the Registrant (incorporated by reference to Exhibit
3.2 to the Registrant's Registration Statement on Form S-18,
No. 33-14722-B, effective July 23, 1987)
4.3 Form of Common Stock Certificate (incorporated by reference to
Exhibit 10.7 to the Registrant's Registration Statement on Form
S-18, No. 33-14722-B, effective July 23, 1987)
5* Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.,
with respect to the legality of the securities being registered
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
(see Exhibit 5)
24 Power of Attorney (filed in Part II of this Registration
Statement)
99.1 Stock Purchase Agreement between Media Logic, Inc. and Raymond
Leclerc, dated September 25, 1995
99.2 Warrant Agreement between Media Logic, Inc. and Digital
Media & Communications L.P., dated March 24, 1997
("Digital Media Warrant")
99.3 Amendment to Digital Media Warrant, dated September 30,
1997
99.4 Warrant Agreement between Media Logic, Inc. and ACFS Limited
Partnership, dated March 24, 1997 ("ACFS Warrant")
99.5 Amendment to ACFS Warrant, dated September 30, 1997
99.6* Warrant Agreement between Media Logic, Inc. and Rochon Capital
Group, Ltd., dated October 29, 1997
99.7 Warrant Agreement between Media Logic, Inc. and Adar
Equities LLC, dated March 25, 1997
99.8 Securities Purchase Agreement between Media Logic, Inc. and
F.T.S. Worldwide Corp., dated October 29, 1997
99.9 Media Logic, Inc. 7% Convertible Debenture due October 29, 2000,
dated October 29, 1997
II-2
<PAGE>
99.10 Registration Rights Agreement between Media Logic, Inc. and
F.T.S. Worldwide Corp., dated October 29, 1997
* To be filed by amendment.
Item 17. Undertakings.
A. Rule 415 Offering
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the 1933 Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) (Section 230.424(b)
of this chapter) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do
not apply if the registration statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant with or
furnished to the Commission pursuant to Section 13 or Section 15(d) of the
1934 Act that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the 1933 Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. Filings Incorporating Subsequent Exchange Act Documents by
Reference
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the 1933 Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
1934 Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the 1934 Act) that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
C. Request for Acceleration of Effective Date or Filing of
Registration Statement on Form S-8
Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act
and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Plainville, Massachusetts on
November 25, 1997.
MEDIA LOGIC, INC.
By: /s/ William E.Davis
----------------------------
William E. Davis, Jr.
Chief Executive Officer and
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints William E. Davis, Jr. and
Paul M. O'Brien, or any of them, his attorneys-in-fact, and agents each with
the power of substitution, for him in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this registration
statement (or any other registration statement for the same offering that is
to be effective upon filing pursuant to Rule 462(b) under the Securities Act
of 1933), and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, hereby
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as full to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them or their or his
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signatures Title Date
- ------------ ------- -----
/s/ William E. Davis Director and Chief November 25, 1997
- --------------------
William E. Davis, Jr. Executive Officer and President
(principal executive officer)
/s/ Paul M. O'Brien Vice President and Chief Financial November 25, 1997
- --------------------
Paul M. O'Brien Officer (principal financial and
accounting officer)
- -------------------- Director November ___, 1997
Joseph L. Mitchell
/s/ Francis S. Wyman Director November 25, 1997
- --------------------
Francis S. Wyman
- -------------------- Director November ___, 1997
Raymond W. Leclerc
/s/ Michael Salter Director November 25, 1997
- --------------------
Michael Salter
<PAGE>
MEDIA LOGIC, INC.
INDEX TO EXHIBITS FILED WITH
FORM S-3 REGISTRATION STATEMENT
Exhibit Sequential
Number Description Page No.
- ------- ----------- ----------
4.1 Article 4 of Restated Articles of Organization
of the Registrant (incorporated by reference
to Exhibit 3.1 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
March 31, 1993)
4.2 By-Laws of the Registrant (incorporated by
reference to Exhibit 3.2 to the Registrant's
Registration Statement on Form S-18,
No. 33-14722-B, effective July 23, 1987).
4.3 Form of Common Stock Certificate
(incorporated by reference to Exhibit 10.7
to the Registrant's Registration Statement
on Form S-18, No. 33-14722-B, effective
July 23, 1987)
5* Opinion of Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., with respect to
the legality of the securities being registered
23.1 Consent of Arthur Andersen LLP (filed herewith)
23.2 Consent of Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C. (reference is
made to Exhibit 5)
24 Power of Attorney (filed in Part II of
this Registration Statement)
99.1 Stock Purchase Agreement between Media Logic, Inc.
and Raymond Leclerc, dated September 25, 1995
(filed herewith)
99.2 Warrant Agreement between Media Logic, Inc.
and Digital Media & Communications L.P.,
dated March 24, 1997 (filed herewith)
("Digital Media Warrant")
99.3 Amendment to Digital Media Warrant, dated
September 30, 1997 (filed herewith)
99.4 Warrant Agreement between Media Logic, Inc.
and ACFS Limited Partnership, dated
March 24, 1997 (filed herewith)
("ACFS Warrant")
99.5 Amendment to ACFS Warrant, dated
September 30, 1997 (filed herewith)
<PAGE>
99.6* Warrant Agreement between Media Logic, Inc.
and Rochon Capital Group, Ltd., dated
October 29, 1997
99.7 Warrant Agreement between Media Logic, Inc.
and Adar Equities LLC, dated March 25, 1997
(filed herewith)
99.8 Securities Purchase Agreement
between Media Logic, Inc. and F.T.S
Worldwide Corp., dated October 29, 1997
(filed herewith)
99.9 Media Logic, Inc. 7% Convertible
Debenture due October 29, 2000,
dated October 29, 1997 (filed herewith)
99.10 Registration Rights Agreement between
Media Logic, Inc. and F.T.S. Worldwide
Corp., dated October 29, 1997 (filed herewith)
* To be filed by amendment.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated May 19, 1997
included in Media Logic Inc.'s Form 10-K for the year ended March 31, 1997
and to all references to our Firm included in this registration statement.
/s/: Arthur Andersen LLP
------------------------
ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 25, 1997
<PAGE>
EXHIBIT 99.1
MEDIA LOGIC, INC.
---------------------
1,000,000 shares of
Common Stock
---------------------
STOCK PURCHASE AGREEMENT
Dated as of September 25, 1995
---------------------
<PAGE>
STOCK PURCHASE AGREEMENT
This Agreement is by and between Media Logic, Inc., a Massachusetts
corporation (the "Company"), with principal offices at 310 South Street,
Plainville, Massachusetts 02762, and Raymond Leclerc (the "Purchaser"), an
individual residing at 4501 Pond Apple Drive, Naples, Florida 33999.
In consideration of the mutual covenants contained in this Agreement, the
parties agree as follows:
SECTION 1. Agreement to Sell and Purchase the Shares. At the Closing
(as hereinafter defined), the Company shall sell to the Purchaser, and the
Purchaser shall buy from the Company, upon the terms and conditions hereinafter
set forth, 1,000,000 shares (the "Shares") of Common Stock, $.01 par value per
share ("Common Stock"), of the Company at a purchase price of $5.00, being not
less than the average of the closing prices for the Common Stock on the American
Stock Exchange for the ten trading days immediately preceding the Closing.
SECTION 2. Acknowledgements and Agreements of the Purchaser. The
Purchaser acknowledges and agrees that:
(a) he will not resell any of the Shares for a year after the Closing and,
after that but prior to the third anniversary of the Closing, he will not sell
shares representing 5% or more of the Common Stock outstanding to any party
without the Company's consent, which will not be unreasonably withheld;
(b) prior to the third anniversary of the Closing, he will not acquire
shares of Common Stock which would result in his owning more than 25% of the
Common Stock then outstanding; and
(c) he acknowledges that the Shares are not registered under federal
securities laws and he will comply with all applicable securities laws in
connection with any future resale of Shares, including but not limited to the
SEC's Rule 144, with which he has familiarized himself.
SECTION 3. Agreements and Undertakings of the Company. In connection
with the sale and purchase of the Shares hereunder, the Company covenants and
agrees with the Purchaser as follows:
(a) the Purchaser will be appointed as a director of the Company as
promptly after the Closing as practicable and will be nominated and endorsed by
the Board as a director at each annual stockholders' meeting so long as he
beneficially owns 10% or more of the Common Stock outstanding;
(b) as a director, the Purchaser will be appointed to the Compensation
Committee of the Board;
(c) the Company will afford the Purchaser the opportunity to have Shares
included in registered public offerings that it does, if the Purchaser so
requests, subject to usual and customary provisions and, unless and until Rule
144 permits him to resell Shares after one year, he will also have the right to
demand one registration of the public resale of Shares; and
<PAGE>
(d) the net proceeds of the sale of the Shares to the Purchaser will be
used solely for the Company's automated data library (ADL) business.
SECTION 4. Changes; Counterparts. Any term of this Agreement may be
amended or compliance therewith waived with the written consent of both parties
hereto. This Agreement may be executed in counterparts, each of which shall
constitute an original, but all of which, when taken together, shall constitute
but one instrument, and shall become effective when one or more counterparts
have been signed by each party hereto and delivered to the other parties.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the 25th day of September, 1995.
THE COMPANY: MEDIA LOGIC, INC
By: /s/ William E. Davis, Jr.
--------------------------------
Name: William E. Davis, Jr.
Title: Chief Executive Officer
THE PURCHASER: /s/ Raymond Leclerc
--------------------------------
Raymond Leclerc
-3-
<PAGE>
Exhibit 99.2
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY NOT BE SOLD,
OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS SECURITY UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.
Right to Purchase 410,870
Shares of Common Stock
of Media Logic, Inc.
MEDIA LOGIC, INC.
Common Stock Purchase Warrant
MEDIA LOGIC, INC., a Massachusetts corporation (the "Company"), hereby
certifies that, for value received, DIGITAL MEDIA & COMMUNICATIONS L.P., or its
successors or registered assigns, is entitled, subject to the terms set forth
below, to purchase from the Company at any time or from time to time before 5:00
p.m., Boston time, on the Expiration Date (as hereinafter defined), that number
of fully paid and non-assessable shares of Common Stock of the Company as shall
be equal to the Warrant Number (as hereinafter defined), at an initial purchase
price per share of $3.00 (the "Purchase Price"). The Warrant Number and the
Purchase Price are subject to adjustment as provided in this Warrant.
As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:
(a) The term "Company" shall include Media Logic, Inc., and any
corporation that shall succeed to or assume the obligations of Media
Logic, Inc. hereunder.
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(b) The term "Common Stock" means the Company's common stock,
$.01 par value per share and any other securities into which or for
which any of such securities may be converted or exchanged pursuant to
a plan of recapitalization, reorganization, merger, sale of assets or
otherwise.
(c) The term "Other Securities" refers to any stock (other than
Common Stock) and other securities of the Company or any other person
(corporate or otherwise) which the holder of the Warrant at any time
shall be entitled to receive, or shall have received, on the exercise
of the Warrant, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for
or in replacement of Common Stock or Other Securities pursuant to
Section 4 or otherwise.
(d) The term "Expiration Date" means September 22, 2001.
(e) The term "Warrant Number" shall mean, subject to adjustment
pursuant to Sections 3, 4 or 5 hereof, four hundred ten thousand eight
hundred seventy (410,870) shares of Common Stock.
(f) The term "Penalty Shares" is defined in Section 6.
(g) The term "Warrant Shares" refers to any shares of Common
Stock issuable upon the exercise of the Warrants.
(h) The term "Registrable Securities" refers to the Warrant
Shares and the Penalty Shares; provided that Warrant Shares and
Penalty Shares cease to be Registrable Securities when they have been
effectively registered under Section 5 of the Securities Act of 1933,
as amended (the "Securities Act") and disposed of in accordance with
any Registration Statement.
(i) The term "Registration Statement" means any registration
statement under the Securities Act of the Company which, in accordance
with Section 6 hereof, covers any of the Registrable Securities
pursuant to the provisions of the Warrant.
(j) The term "Penalty Commencement Date" means the earlier of
(i) the fifth day after the Securities and Exchange Commission (the
"Commission") notifies the Company of the Commission's willingness to
declare the Registration Statement effective, or (ii) the first
business day after the 180th calendar day after the date of the
Warrant.
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<PAGE>
1. Exercise of Warrant.
(a) Method of Exercise. This Warrant may be exercised in full or
in part at any time or from time to time until the Expiration Date by
the holder hereof by surrender of this Warrant and the subscription
form annexed hereto (duly executed) by such holder, to the Company at
its principal office, accompanied by payment, in cash or by certified
or official bank check payable to the order of the Company in the
amount obtained by multiplying (a) the number of shares of Common
Stock designated by the holder in the subscription form by (b) the
Purchase Price then in effect. In addition to the method of payment
set forth above and in lieu of any cash payment required thereunder,
the holder may at any time and from time to time until the Expiration
Date exercise the Warrant in full or in part by surrendering the
Warrant in the manner specified above in exchange for a number of
shares of Common Stock equal to the product of (x) the number of
shares as to which the Warrant is being exercised multiplied by (y) a
fraction, the numerator of which is the Fair Market Value (as defined
below) of one share of Common Stock less the Purchase Price and the
denominator of which is such Fair Market Value of one share of Common
Stock.
(b) Partial Exercise. On any partial exercise, the Company at
its expense will forthwith issue and deliver to or upon the order of
the holder hereof a new Warrant or Warrants of like tenor, in the name
of the holder hereof or as such holder (upon payment by such holder of
any applicable transfer taxes) may request, providing in the aggregate
on the face or faces thereof for the number of shares of Common Stock
for which such Warrant or Warrants may still be exercised.
(c) Definition. Fair Market Value of a share of Common Stock
as of a particular date (the "Determination Date") shall mean the Fair
Market Value of a share of the Company's Common Stock. Fair Market
Value of a share of Common Stock as of a Determination Date shall
mean:
(i) If the Company's Common Stock is traded on an exchange or is
quoted on the Nasdaq National Market ("Nasdaq"), then the closing or
last sale price, respectively, reported for the last business day (on
which a sale in the Common Stock was made) immediately preceding the
Determination Date.
(ii) If the Company's Common Stock is not traded on an exchange
or on Nasdaq but is traded in the over-the-counter market, then the
mean of the closing bid and asked prices reported for the last
business day (on which a sale in the Common Stock was made)
immediately preceding the Determination Date.
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2. Delivery of Stock Certificates, etc., on Exercise. As soon as
practicable after the exercise of this Warrant, and in any event within 15
(fifteen) days thereafter, the Company at its expense (including the payment by
it of any applicable issue or stamp taxes) will cause to be issued in the name
of and delivered to the holder hereof, or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct, a certificate or
certificates for the number of fully paid and nonassessable shares of Common
Stock (or Other Securities) to which such holder shall be entitled on such
exercise, in such denominations as may be requested by such holder, plus, in
lieu of any fractional share to which such holder would otherwise be entitled,
cash equal to such fraction multiplied by the then Fair Market Value of one full
share, together with any other stock or other securities and property (including
cash, where applicable) to which such holder is entitled upon such exercise
pursuant to Section 1 or otherwise. The Company agrees that the shares so
purchased shall be deemed to be issued to the holder hereof as the record owner
of the shares as of the close of business on the date on which this Warrant
shall have been delivered to the Company and payment made for such shares as
aforesaid.
3. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc. In case at any time or from time to time, the holders of
Common Stock (or Other Securities) shall have received, or (on or after the
record date fixed for the determination of shareholders eligible to receive)
shall have become entitled to receive, without payment therefor,
(a) other or additional stock or other securities or property (other
than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of earnings
or earned surplus of the Company), or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate rearrangement
other than additional shares of Common Stock (or Other Securities) issued
as a stock dividend or in a stock-split (adjustments in respect of which
are provided for in Section 5), then and in each such case the holder of
this Warrant, on the exercise hereof as provided in Section 1, shall be
entitled to receive the amount of stock and other securities and property
(including cash in the cases referred to in subdivisions (b) and (c) of
this Section 3) which such holder would hold on the date of such exercise
if on the date hereof he had been the holder of record of the number of
shares of Common Stock called for on the face of this Warrant and had
thereafter, during the period from the date hereof to and including the
date of such exercise, retained such shares and all such other or
additional stock and other securities and property (including cash in the
cases referred to in subdivisions (b) and (c) of this Section 3) receivable
by him as aforesaid during such period, giving effect to all adjustments
called for during such period by Sections 4 and 5.
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<PAGE>
4. Adjustment for Reorganization, Consolidation, Merger, etc.
4.1 Reorganization. In case at any time or from time to time, the
Company shall (a) effect a reorganization, (b) consolidate with or merge into
any other person, or (c) transfer all or substantially all of its properties or
assets to any other person under any plan or arrangement contemplating the
dissolution of the Company, then, in each such case, the holder of this Warrant,
on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and property
(including cash) to which such holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be, if such
holder had so exercised this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in Sections 3 and 5.
4.2 Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, where
applicable) receivable by the holder of this Warrant after the effective date of
such dissolution pursuant to this Section 4 to the holder of a bank or trust
company having its principal office in Boston, Massachusetts as trustee for the
holder or holders of the Warrants.
4.3 Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 4, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant.
5. Adjustment for Extraordinary Events. In the event that the Company
shall (i) issue additional shares of the Common Stock as a dividend or other
distribution on outstanding Common Stock, (ii) subdivide or reclassify its
outstanding shares of Common Stock, or (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Purchase Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect.
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<PAGE>
The Purchase Price, as so adjusted, shall be readjusted in the same manner upon
the happening of any successive event or events described herein in this Section
5. The holder of this Warrant shall thereafter, on the exercise hereof as
provided in Section 1, be entitled to receive that number of shares of Common
Stock determined by multiplying the number of shares of Common Stock which would
be issuable on such exercise as of immediately prior to such issuance by a
fraction of which (i) the numerator is the Purchase Price in effect immediately
prior to such issuance and (ii) the denominator is the Purchase Price in effect
on the date of such exercise.
6. Registration Statement: Timing of Filing, Effectiveness and Period
of Usability
Subject to the provisions of Section 7 hereof, the Company shall
prepare and file with the Commission a Registration Statement on Form S-3 or,
if the Company is not then eligible to use Form S-3, on Form S-1, registering
resales of the Registrable Securities by the holders from time to time
through the automated quotation system of the American Stock Exchange or the
facilities of any national securities exchange or the Nasdaq National Market
if the Common Stock is then listed or quoted thereon and in
privately-negotiated transactions. The Registration Statement shall register
all of the Registrable Securities. The Company will use its best efforts to
cause the Registration Statement to be declared effective by the Commission
by September 22, 1997 (the first business day beginning 180 days following
the date of this Warrant).
If the Registration Statement is not declared effective by the
Commission on or before the Penalty Commencement Date, or if at any time after
the Registration Statement is declared effective, but prior to the Expiration
Date, the Warrant Shares may not be sold pursuant to the Registration Statement
for more than 30 days during any 12-month period (whether because the
Registration Statement is no longer effective, there is a material misstatement
or omission in the Registration Statement, or otherwise) (any such period in
excess of such 30 days is hereinafter referred to as an "Unavailability
Period"), the Company will have the obligation to pay penalty payments (the
"Penalty Payments") at the rate of $200 per 5,000 Warrant Shares per month
following the Penalty Commencement Date or following the commencement of the
Unavailability Period, as the case may be, until the Registration Statement is
declared effective or may be used following an Unavailability Period. The first
Penalty Payment shall be payable on the earlier to occur of the 30th calendar
day following the Penalty Commencement Date or following the commencement of the
Unavailability Period, as the case may be, or the date the Registration
Statement is declared effective or may be used following an Unavailability
Period. Subsequent Penalty Payments shall be payable on each 30-day anniversary
of the Penalty Commencement Date or following the commencement of the
Unavailability Period, as the case may be, except if the Registration Statement
shall be declared effective prior thereto or may be used following an
Unavailability Period, in which case the subsequent Penalty Payment shall be
made concurrently with such effectiveness or date on which the Registration
Statement may be used. Any date on which a Penalty Payment is required to be
paid is referred to herein as a "Penalty Payment Date." Penalty Payments shall
be paid to the holders of record of the Warrants on each Penalty Payment Date.
With respect to Warrants which have been exercised for Shares prior to a Penalty
Payment Date, the Penalty Payment with respect to such exercised Warrants shall
be paid to the holders on
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<PAGE>
such Penalty Payment Date of the Warrants Shares. The Company shall have the
option to pay Penalty Payments in respect of the first two Penalty Payment Dates
either in cash or in shares of Common Stock which shall be registered pursuant
to the Registration Statement (the "Penalty Shares") together with the Warrant
Shares, and Penalty Payments with respect to all subsequent Penalty Payment
Dates shall be paid by the Company solely in cash. The Penalty Payment shall
accrue and be prorated for partial months, assuming a 360-day year of twelve
30-day months. The number of Penalty Shares to be issued in payment of any
Penalty Payment shall be determined by dividing the amount of such Penalty
Payment by the average price of the Common Stock over the five (5) trading days
preceding the applicable Penalty Payment Date.
The Company will use its best efforts (i) to keep the Registration
Statement continuously effective and usable for resale of Registrable Securities
until the Expiration Date or such shorter period which will terminate when all
Warrant Shares and Penalty Shares have ceased to be Registrable Securities, and
(ii) to file with the Securities and Exchange Commission on a timely basis all
reports, notices and otherwise as the Company may be required to file under the
Securities Exchange Act of 1934, as amended.
7. Registration Procedures
In connection with the Company's obligation to file a Registration
Statement as provided in Section 6 hereof, the Company will as expeditiously as
possible:
(a) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement, and such supplements to
the Prospectus, as may be required by the rules, regulations or instructions
applicable to the registration form utilized by the Company or by the Securities
Act or rules and regulations thereunder for shelf registration or otherwise
necessary to keep the Registration Statement effective for the applicable period
and cause the Prospectus as so supplemented to be filed pursuant to Rule 424
under the Securities Act; and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the methods of
disposition by the sellers thereof set forth in such Registration Statement or
supplement to the Prospectus;
(b) notify the holders of Registrable Securities promptly, and
confirm such advice in writing,
(1) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the Registration
Statement or any post-effective amendment, when the same has become effective,
(2) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose, and
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<PAGE>
(3) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose;
(c) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(d) furnish, without charge, to each holder of Registrable
Securities, at least one conformed copy of the Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits (including
those incorporated by reference);
(e) deliver to Purchaser and each holder of Registrable Securities
without charge, as many copies of the Prospectus (including each preliminary
prospectus) and any amendment or supplement thereto as such Persons may
reasonably request; the Company consents to the use of the Prospectus or any
amendment or supplement thereto by each holder of Registrable Securities in
connection with the offering and sale of the Registrable Securities covered by
the Prospectus or any amendment or supplement thereto;
(f) use its reasonable efforts to cause the Registrable Securities
covered by the Registration Statement to be registered with or approved by such
governmental agencies or authorities as may be necessary to enable the holders
thereof to consummate the disposition of such Registrable Securities in such
jurisdictions as the holders may reasonably specify in response to inquiries to
be made by the Company, provided that the Company will not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service of
process in any such jurisdiction where it is not then so subject;
(g) if any event shall occur as a result of which it is necessary to
amend or supplement the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it is
delivered by a holder, promptly prepare a supplement or post-effective amendment
to the Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the holders of the Registrable Securities, the
Prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading;
(h) if at any time an event of the kind described in Section 10(g)
shall occur, notify the holders of Registrable Securities that the use of the
Prospectus must be discontinued (the Company will not declare any such
"black-out" periods in excess of twenty business days during any twelve month
period, unless otherwise required by law); and
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(i) on or prior to the date the Registration Statement is declared
effective by the Commission, cause all of the Warrant Shares and Penalty Shares
to be listed for trading on the American Stock Exchange or on any other national
securities exchange on which the Company's Common Stock is then listed.
Each holder of Registrable Securities as to which any registration is being
effected agrees, as a condition to the registration obligations with respect to
such holder provided herein, to furnish to the Company such information
regarding the distribution of such Registrable Securities as the Company may
from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company
described in this paragraph 7(i), such holder will forthwith discontinue
disposition of Registrable Securities until such holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 7(h) hereof,
or until it is advised in writing by the Company (which notice the Company shall
give as promptly as possible), that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings which are
incorporated by reference in the Prospectus, and, if so directed by the Company,
such holder will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such holder's possession, of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice.
8. Indemnification
(a) Indemnification of Holder. At such time as the Company registers any
of the Registrable Securities under the Act, the Company will indemnify and hold
harmless the holder, each of its directors, officers, partners, employees and
each person, if any, who controls the holder within the meaning of Section 15 of
the Act from and against any and all losses, claims, damages, expenses or
liabilities, to which it becomes subject under the Act or under any other
statute or at common law or otherwise, and, except as hereinafter provided, will
reimburse the holder for any legal or other expenses reasonably incurred by it
in connection with investigating or defending any actions whether or not
resulting in any liability, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the registration
statement, in any preliminary or amended preliminary prospectus or in the
prospectus (or the registration statement or prospectus as from time to time
amended or supplemented by the Company) or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, or any violation by the Company of any rule or regulation
promulgated under the Act applicable to the Company and relating to action or
inaction required of the Company in connection with such registration, unless
such untrue statement or omission was made in such registration statement,
preliminary or amended, preliminary prospectus or prospectus in reliance upon
and in conformity with information furnished in writing to the Company in
connection therewith by the holder expressly for use therein. Promptly after
receipt by the holder of notice of the commencement
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<PAGE>
of any action in respect of which indemnity may be sought against the
Company, the holder will notify the Company in writing of the commencement
thereof, and, subject to the provisions hereinafter stated, the Company shall
assume the defense of such action (including the employment of counsel, who
shall be counsel reasonably satisfactory to the holder), and the payment of
expenses insofar as such action shall relate to any alleged liability in
respect of which indemnity may be sought against the Company. The registered
holder shall have the right to employ separate counsel in any such action and
to participate in the defense thereof but the fees and expenses of such
counsel shall not be at the expense of the Company unless (i) the employment
of such counsel has been specifically authorized by the Company, or (ii) the
holder has reasonably determined that there may be a conflict between the
positions of the Company and the holder in conducting the defense of such
action, in which case the counsel for the holder shall be entitled to conduct
the defense at the expense of the Company to the extent reasonably determined
by such counsel to be necessary to protect the interests of the holder. The
Company shall not be liable to indemnify any person for any settlement of any
such action effected without the Company's consent, which shall not be
unreasonably withheld.
(b) Indemnification of Company. At such time as the Company registers
any of the Registrable Securities under the Act, the holder will indemnify
and hold harmless the Company, each of its directors, each of its officers
who have signed the registration statement, each underwriter of the shares so
registered (including any broker or dealer through whom such of the shares
may be sold) and each person, if any, who controls the Company within the
meaning of Section 15 of the Act from and against any and all losses, claims,
damages, expenses or liabilities, joint or several, to which they or any of
them may become subject under the Act or under any other statute or at common
law or otherwise, and, except as hereinafter provided, will reimburse the
Company and each such director, officer, underwriter or controlling person
for any legal or other expenses reasonably incurred by them or any of them in
connection with investigating or defending any actions whether or not
resulting in any liability, insofar as such losses, claims, damages,
expenses, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement, in any preliminary or amended preliminary prospectus
or in the prospectus (or in the registration statement or prospectus as from
time to time amended or supplemented) or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, but only insofar as any such statement or omission was made in
reliance upon and in conformity with information furnished in writing to the
Company in connection therewith by the holder expressly for use therein.
Promptly after receipt of notice of the commencement of any action in respect
of which indemnity may be sought against the holder, the Company will notify
the holder in writing of the commencement thereof, and the holder shall,
subject to the provisions hereinafter stated, assume the defense of such
action (including the employment of counsel, who shall be counsel reasonably
satisfactory to the Company) and the payment of expenses insofar as such
action shall relate to the alleged liability in respect of which indemnity
may be sought against the holder. The Company and
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<PAGE>
each such director, officer, underwriter or controlling person shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof but the fees and expenses of such counsel shall not be at the
expense of the holder unless (i) the employment of such counsel has been
specifically authorized by the holder, or (ii) the Company has reasonably
determined that there may be a conflict between the positions of the holder and
the Company in conducting the defense of such action, in which case the counsel
for the Company shall be entitled to conduct the defense at the expense of the
holder to the extent reasonably determined by such counsel to be necessary to
protect the interests of the Company. The holder shall not be liable to
indemnify any person for any settlement of any such action effected without the
holder's consent, which shall not be unreasonably withheld.
9. Registration Expenses
(a) All expenses incident to the Company's performance of or compliance
with this Warrant, including without limitation:
(1) all registration, filing and listing fees;
(2) the Company's printing, messenger, telephone and delivery
expenses;
(3) fees and expenses of counsel for the Company;
(4) fees and expenses of all independent certified public accountants
of the Company (including the expenses of any special audit necessary to satisfy
the requirements of the Securities Act); and
(5) fees and expenses associated with any NASD filing required to be
made in connection with the Registration Statement.
(all such expenses being herein called "Registration Expenses"); shall be borne
by the Company, regardless of whether the Registration Statement becomes
effective.
10. No Impairment. The Company will not, by amendment of its Articles of
Organization or through any reorganization, transfer of assets, consolidation,
merger, dissolution, or any other similar voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of the Warrant against impairment due to such
event. Without limiting the generality of the foregoing, the Company (a) will
not increase the par value of any shares of stock receivable on the exercise of
the Warrants above the amount payable therefor on such exercise and (b) will
take all action that may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable shares of stock, free
from all taxes, liens and charges
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with respect to the issue thereof, on the exercise of all of the Warrants from
time to time outstanding.
11. Certificate as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of the Warrants, the Company at its expense will promptly cause its
principal financial or accounting officer to compute such adjustment or
readjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment or readjustment, the Purchase Price
resulting therefrom and the increase or decrease, if any, in the number of
shares purchasable at such price upon exercise of the Warrant, and showing in
detail the facts and computation upon which such adjustment or readjustment in
based. The Company will forthwith mail a copy of each such certificate to each
registered holder of this Warrant, and will, on the written request at any time
of the holder of this Warrant, furnish to such holder a like certificate setting
forth the Purchase Price at the time in effect and showing how it was
calculated.
12. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend on, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of the
Company to or consolidation or merger of the Company with or into any
other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be mailed to the
registered holder of this Warrant a notice specifying (i) the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or Other Securities) shall be entitled to
exchange their shares of Common Stock (or Other Securities) for securities or
other property deliverable on such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up, and (iii) the amount and character of any stock or other securities,
or rights or options with respect thereto, proposed to be issued or granted, the
date of such proposed issue or grant and the persons or class of persons to whom
such proposed issue or grant is to be offered or made. Such notice shall also
state that the action in question or the record date is subject to the
12
<PAGE>
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), or a favorable vote of stockholders if either is
required. Such notice shall be mailed at least 7 days prior to the date
specified in such notice on which any such action is to be taken or the record
date, whichever is earlier.
12. Reservation of Stock, etc., Issuable on Exercise of Warrants. The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of the Warrant, all shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of the Warrant.
13. Transfer of Warrant; Restrictions on Transfer. This Warrant and all
shares of Common Stock (or Other Securities) from time to time issuable on the
exercise of the Warrant (a) shall be subject to any applicable terms and
restrictions of other agreements between the Company and the holder and (b) may
not be sold, offered for sale, transferred, pledged or hypothecated in the
absence of an effective registration statement under the Securities Act and
applicable state securities laws or an opinion of counsel reasonably
satisfactory to the Company that such registration is not required.
14. Register of Warrants; Transfers.
(a) The Company will maintain a register containing the names and
addresses of the registered holders of this Warrant. Any registered holder may
change its, his or her address as shown on the warrant register by written
notice to the Company requesting such change.
(b) Without the prior written consent of the Company, which shall not
be unreasonably withheld, this Warrant shall not be transferable by the
registered holder except to bona fide directors, officers, partners shareholders
or principal employees of the holder, and shall not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise). This
Warrant shall be exercisable only by the registered holder and shall not be
subject to execution, attachment or similar process. Any attempted transfer,
assignment, pledge, hypothecation or other disposition of this Warrant or of any
rights granted hereunder contrary to the provisions of this Paragraph, or the
levy of any attachment or similar process upon this Warrant or such rights,
shall be null and void.
(c) Until any transfer of this Warrant is made in the warrant
register, the Company may treat the registered holder of this Warrant as the
absolute owner hereof for all purposes; provided, however, that if and when this
Warrant is properly assigned in blank, the Company may (but shall not be
obligated to) treat the bearer hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.
13
<PAGE>
15. Exchange of Warrants. This Warrant is exchangeable, upon the
surrender hereof by the holder hereof at the office or agency of the Company
referred to in Section 14, for one or more new Warrants of like tenor
representing in the aggregate the right to subscribe for and purchase the number
of shares of Common Stock which may be subscribed for and purchased hereunder,
each of such new Warrants to represent the right to subscribe for and purchase
such number of shares as shall be designated by said holder hereof at the time
of such surrender.
16. Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant or, in the case of any such mutilation, on surrender and
cancellation of such Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
17. Remedies. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
18. Closing of Books. The Company will at no time close its transfer
books against the transfer of any Warrant or of any shares of Common Stock
issued or issuable upon the exercise of any Warrant in any manner which
interferes with the timely exercise of this Warrant, unless so required by law.
19. No Rights or Liabilities as a Stockholder. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a stockholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Common Stock, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Purchase Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
20. Notices, etc. All notices and other communications from the Company
to the registered holder of this Warrant shall be mailed in writing by
hand-delivery, first class registered or certified mail, postage prepaid, telex
or telecopies, at such address as may have been furnished to the Company in
writing by such holder or at the address shown on such holder's Warrant.
21. Miscellaneous. This Warrant and any terms hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of the Commonwealth of Massachusetts, without reference to
its conflicts of law provisions. The headings in this Warrant are for purpose
of reference only, and shall not limit or otherwise affect any of the terms
hereof. This Warrant is being executed as an instrument under seal. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
14
<PAGE>
Dated: March 24, 1997 MEDIA LOGIC, INC.
By: /s/ William E. Davis
____________________________________
William E. Davis, Jr.
Chief Executive Officer and
President
Attest:
By: /s/ Paul M. O'Brien
_________________________________
Title: C.F.O.
______________________________
15
<PAGE>
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
MEDIA LOGIC, INC.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder, ____________
shares of Common Stock of MEDIA LOGIC, INC. and hereby makes payment of
$_____________ therefor in cash, and requests that the certificates for such
shares be issued in the name of, and delivered to _______________________ whose
address is ________________________.
Dated: ________________ ____________________________________
(Signature must conform to name
of holder as specified on the
face of the Warrant)
____________________________________
____________________________________
(Address)
<PAGE>
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For values received, the undersigned hereby sells, assigns and transfers
unto ___________________ the right represented by the within Warrant to purchase
___________ shares of Common Stock of MEDIA LOGIC, INC. to which the within
Warrant relates, and appoints _____________________ Attorney to transfer such
right on the books of MEDIA LOGIC, INC. with full power of substitution in the
premises.
Dated: ________________ ____________________________________
(Signature must conform
to name of holder as specified
on the face of the Warrant)
____________________________________
____________________________________
(Address)
Signed in the presence of:
______________________________
<PAGE>
EXHIBIT 99.3
AMENDMENT TO COMMON STOCK PURCHASE WARRANT
This AMENDMENT to Common Stock Purchase Warrant (the "Amendment") is made
as of the 30th day of September, 1997, by and between MEDIA LOGIC, INC., a
Massachusetts corporation (the "Company"), and DIGITAL MEDIA & COMMUNICATIONS
LIMITED PARTNERSHIP (the "Holder").
WHEREAS the Company issued a Common Stock Purchase Warrant dated March 24,
1997 (the "Warrant") to the Holder for the right to purchase 410,870 shares of
the Common Stock of the Company;
WHEREAS, the Company and the Holder desire to amend the Warrant to reflect
certain changes in the terms of the Warrant as agreed by them.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Holder agree
as follows:
1. All capitalized terms used herein and not otherwise defined herein shall
have the same meanings herein as in the Warrant.
2. Section (j) of the definitions section of the Warrant is hereby deleted in
its entirety and replaced with the following:
(j) The term "Filing Penalty Commencement Date" means the sixth (6th)
business day after the filing of the Registration Statement with the
Securities and Exchange Commission (the "Commission").
3. The follow section is added to the definitions section of the Warrant:
(a) The term "Effectiveness Penalty Commencement Date" means the
fifth (5th) day after the Commission notifies the Company of the
Commission's willingness to declare the Registration Statement
effective.
4. Section (6) of the Warrant is hereby deleted in its entirety and replaced
with the following:
"6. Registration Statement: Timing of Filing, Effectiveness and Period of
Usability.
Subject to the provisions of Section 7 hereof, the holders of the Warrant
Shares representing a majority of such securities (assuming the exercise of all
of the then outstanding Warrants) shall have the right (a "Demand"), on one
occasion only, exercisable by written notice to the Company, to have the Company
prepare and file with the Commission a Registration Statement on Form S-3 or, if
the Company is not then eligible to use Form S-3, on Form S-1, registering
resales of the Registrable Securities by the holders from time to time through
the automated quotation system of
<PAGE>
the American Stock Exchange or the facilities of any national securities
exchange or the Nasdaq National Market if the Common Stock is then listed or
quoted thereon and in privately-negotiated transactions. The Company shall use
its best efforts (i) to file a Registration Statement with the Commission no
later than the sixth (6th) business day following the Company's receipt, in
writing, of the Demand, and (ii) to effect as soon as practicable thereafter,
the registration of the Registrable Securities under the Securities Act.
If (i) the Registration Statement is not filed with the Commission on or
before the Filing Penalty Commencement Date, (ii) the Registration Statement is
not declared effective by the Commission on or before the Effectiveness Penalty
Commencement Date, or (iii) if at any time after the Registration Statement is
declared effective, but prior to the Expiration Date, the Warrant Shares may not
be sold pursuant to the Registration Statement for more than 30 days during any
12-month period (whether because the Registration Statement is no longer
effective, there is a material misstatement or omission in the Registration
Statement, or otherwise) (any such period in excess of such 30 days is
hereinafter referred to as an "Unavailability Period"), the Company will have
the obligation to pay penalty payments (the "Penalty Payments") at the rate of
$200 per 5,000 Warrant Shares per month following the Filing Penalty
Commencement Date or the Effectiveness Penalty Commencement Date, or following
the commencement of the Unavailability Period, as the case may be, until the
Registration Statement is filed, declared effective or may be used following an
Unavailability Period, as the case may be. The first Penalty Payment shall be
payable on the earlier to occur of the 30th calendar day following the Filing
Penalty Commencement Date or the Effectiveness Penalty Commencement Date, or
following the commencement of the Unavailability Period, as the case may be, or
the date the Registration Statement is filed, declared effective or may be used
following an Unavailability Period, as the case may be. Subsequent Penalty
Payments shall be payable on each 30-day anniversary of the Filing Penalty
Commencement Date or the Effectiveness Penalty Commencement Date or following
the commencement of the Unavailability Period, as the case may be, except if the
Registration Statement shall be filed or declared effective prior thereto or may
be used following an Unavailability Period, as the case may be, in which case
the subsequent Penalty Payment shall be made concurrently with such
effectiveness or date on which the Registration Statement may be used. Any date
on which a Penalty Payment is required to be paid is referred to herein as a
"Penalty Payment Date." Penalty Payments shall be paid to the holders of record
of the Warrants on each Penalty Payment Date. With respect to Warrants which
have been exercised for Shares prior to a Penalty Payment Date, the Penalty
Payment with respect to such exercised Warrants shall be paid to the holders on
such Penalty Payment Date of the Warrants Shares. The Company shall have the
option to pay Penalty Payments in respect of the first two Penalty Payment Dates
either in cash or in shares of Common Stock which shall be registered pursuant
to the Registration Statement (the "Penalty Shares") together with the Warrant
Shares, and Penalty Payments with respect to all subsequent Penalty Payment
Dates shall be paid by the Company solely in cash. The Penalty Payment shall
accrue and be prorated for partial months, assuming a 360-day year of twelve
30-day months. The number of Penalty Shares to be issued in payment of any
Penalty Payment shall be determined by dividing the amount of such Penalty
Payment by the average price of the Common Stock over the five (5) trading days
preceding the applicable Penalty Payment Date.
The Company will use its best efforts (i) to keep the Registration
Statement continuously effective and usable for resale of Registrable Securities
until the Expiration Date or such shorter
2
<PAGE>
period which will terminate when all Warrant Shares and Penalty Shares have
ceased to be Registrable Securities, and (ii) to file with the Securities and
Exchange Commission on a timely basis all reports, notices and otherwise as the
Company may be required to file under the Securities Exchange Act of 1934, as
amended."
5. Section 20 of the Warrant is hereby deleted in its entirety and replaced
with the following:
"20. Notices, etc. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a
party may designate by notice hereunder, and shall be either (i) delivered
by hand, (ii) made by telex, telecopy or facsimile transmission, (iii) sent
by overnight courier, or (iv) sent by registered or certified mail, return
receipt requested, postage prepaid.
If to the Company:
Media Logic, Inc.
310 South Street
Plainville, Massachusetts 02762
Attention: President
Telephone: (508) 695-2006
Facsimile: (508) 695-8593
With a copy to:
Richard R. Kelly, Esquire
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Telephone: (617) 542-6000
Facsimile: (617) 542-2241
If to the registered holder of this Warrant:
Such address as may have been furnished to the Company in writing by
such holder or at the address shown on such holder's Warrant.
All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the
delivery thereof to the receiving party at the address of such party set
forth above, (ii) if made by telex, telecopy or facsimile transmission, at
the time that receipt thereof has been acknowledged by electronic
confirmation or otherwise, (iii) if sent by overnight courier, on the next
business day following the day such notice is delivered to the courier
service, or (iv) if sent by registered or certified mail, on the 5th
business day following the day such mailing is made."
3
<PAGE>
6. Except as modified by this Amendment, the Warrant shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the
date first above written.
MEDIA LOGIC, INC.
/s/ Paul O'Brien By: /s/ William E. Davis
- --------------------------------- ---------------------------------
Attest
DIGITAL MEDIA & COMMUNICATIONS
LIMITED PARTNERSHIP
/s/ By: /s/
- --------------------------------- ---------------------------------
Attest
4
<PAGE>
Exhibit 99.4
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY NOT BE SOLD,
OFFERED FOR SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS SECURITY UNDER SAID ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.
Right to Purchase 240,000
Shares of Common Stock
of Media Logic, Inc.
MEDIA LOGIC, INC.
Common Stock Purchase Warrant
MEDIA LOGIC, INC., a Massachusetts corporation (the "Company"), hereby
certifies that, for value received, ACFS LIMITED PARTNERSHIP, or its successors
or registered assigns, is entitled, subject to the terms set forth below, to
purchase from the Company at any time or from time to time before 5:00 p.m.,
Boston time, on the Expiration Date (as hereinafter defined), that number of
fully paid and non-assessable shares of Common Stock of the Company as shall be
equal to the Warrant Number (as hereinafter defined), at an initial purchase
price per share of $3.00 (the "Purchase Price"). The Warrant Number and the
Purchase Price are subject to adjustment as provided in this Warrant.
As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:
(a) The term "Company" shall include Media Logic, Inc., and any
corporation that shall succeed to or assume the obligations of Media
Logic, Inc. hereunder.
1
<PAGE>
(b) The term "Common Stock" means the Company's common stock,
$.01 par value per share and any other securities into which or for
which any of such securities may be converted or exchanged pursuant to
a plan of recapitalization, reorganization, merger, sale of assets or
otherwise.
(c) The term "Other Securities" refers to any stock (other than
Common Stock) and other securities of the Company or any other person
(corporate or otherwise) which the holder of the Warrant at any time
shall be entitled to receive, or shall have received, on the exercise
of the Warrant, in lieu of or in addition to Common Stock, or which at
any time shall be issuable or shall have been issued in exchange for
or in replacement of Common Stock or Other Securities pursuant to
Section 4 or otherwise.
(d) The term "Expiration Date" means September 22, 2001.
(e) The term "Warrant Number" shall mean, subject to adjustment
pursuant to Sections 3, 4 or 5 hereof, two hundred forty thousand
(240,000) shares of Common Stock.
(f) The term "Penalty Shares" is defined in Section 6.
(g) The term "Warrant Shares" refers to any shares of Common
Stock issuable upon the exercise of the Warrants.
(h) The term "Registrable Securities" refers to the Warrant
Shares and the Penalty Shares; provided that Warrant Shares and
Penalty Shares cease to be Registrable Securities when they have been
effectively registered under Section 5 of the Securities Act of 1933,
as amended (the "Securities Act") and disposed of in accordance with
any Registration Statement.
(i) The term "Registration Statement" means any registration
statement under the Securities Act of the Company which, in accordance
with Section 6 hereof, covers any of the Registrable Securities
pursuant to the provisions of the Warrant.
(j) The term "Penalty Commencement Date" means the earlier of
(i) the fifth day after the Securities and Exchange Commission the
"Commission") notifies the Company of the Commission's willingness to
declare the Registration Statement effective, or (ii) the first
business day after the 180th calendar day after the date of the
Warrant.
2
<PAGE>
1. Exercise of Warrant.
(a) Method of Exercise. This Warrant may be exercised in full or
in part at any time or from time to time until the Expiration Date by
the holder hereof by surrender of this Warrant and the subscription
form annexed hereto (duly executed) by such holder, to the Company at
its principal office, accompanied by payment, in cash or by certified
or official bank check payable to the order of the Company in the
amount obtained by multiplying (a) the number of shares of Common
Stock designated by the holder in the subscription form by (b) the
Purchase Price then in effect. In addition to the method of payment
set forth above and in lieu of any cash payment required thereunder,
the holder may at any time and from time to time until the Expiration
Date exercise the Warrant in full or in part by surrendering the
Warrant in the manner specified above in exchange for a number of
shares of Common Stock equal to the product of (x) the number of
shares as to which the Warrant is being exercised multiplied by (y) a
fraction, the numerator of which is the Fair Market Value (as defined
below) of one share of Common Stock less the Purchase Price and the
denominator of which is such Fair Market Value of one share of Common
Stock.
(b) Partial Exercise. On any partial exercise, the Company at
its expense will forthwith issue and deliver to or upon the order of
the holder hereof a new Warrant or Warrants of like tenor, in the name
of the holder hereof or as such holder (upon payment by such holder of
any applicable transfer taxes) may request, providing in the aggregate
on the face or faces thereof for the number of shares of Common Stock
for which such Warrant or Warrants may still be exercised.
(c) Definition. Fair Market Value of a share of Common Stock
as of a particular date (the "Determination Date") shall mean the Fair
Market Value of a share of the Company's Common Stock. Fair Market
Value of a share of Common Stock as of a Determination Date shall
mean:
(i) If the Company's Common Stock is traded on an exchange or is
quoted on the Nasdaq National Market ("Nasdaq"), then the closing or
last sale price, respectively, reported for the last business day (on
which a sale in the Common Stock was made) immediately preceding the
Determination Date.
(ii) If the Company's Common Stock is not traded on an exchange
or on Nasdaq but is traded in the over-the-counter market, then the
mean of the closing bid and asked prices reported for the last
business day (on which a sale in the Common Stock was made)
immediately preceding the Determination Date.
3
<PAGE>
2. Delivery of Stock Certificates, etc., on Exercise. As soon as
practicable after the exercise of this Warrant, and in any event within 15
(fifteen) days thereafter, the Company at its expense (including the payment by
it of any applicable issue or stamp taxes) will cause to be issued in the name
of and delivered to the holder hereof, or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct, a certificate or
certificates for the number of fully paid and nonassessable shares of Common
Stock (or Other Securities) to which such holder shall be entitled on such
exercise, in such denominations as may be requested by such holder, plus, in
lieu of any fractional share to which such holder would otherwise be entitled,
cash equal to such fraction multiplied by the then Fair Market Value of one full
share, together with any other stock or other securities and property (including
cash, where applicable) to which such holder is entitled upon such exercise
pursuant to Section 1 or otherwise. The Company agrees that the shares so
purchased shall be deemed to be issued to the holder hereof as the record owner
of the shares as of the close of business on the date on which this Warrant
shall have been delivered to the Company and payment made for such shares as
aforesaid.
3. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc. In case at any time or from time to time, the holders of
Common Stock (or Other Securities) shall have received, or (on or after the
record date fixed for the determination of shareholders eligible to receive)
shall have become entitled to receive, without payment therefor,
(a) other or additional stock or other securities or property (other
than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of earnings
or earned surplus of the Company), or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate rearrangement
other than additional shares of Common Stock (or Other Securities) issued
as a stock dividend or in a stock-split (adjustments in respect of which
are provided for in Section 5), then and in each such case the holder of
this Warrant, on the exercise hereof as provided in Section 1, shall be
entitled to receive the amount of stock and other securities and property
(including cash in the cases referred to in subdivisions (b) and (c) of
this Section 3) which such holder would hold on the date of such exercise
if on the date hereof he had been the holder of record of the number of
shares of Common Stock called for on the face of this Warrant and had
thereafter, during the period from the date hereof to and including the
date of such exercise, retained such shares and all such other or
additional stock and other securities and property (including cash in the
cases referred to in subdivisions (b) and (c) of this Section 3) receivable
by him as aforesaid during such period, giving effect to all adjustments
called for during such period by Sections 4 and 5.
4
<PAGE>
4. Adjustment for Reorganization, Consolidation, Merger, etc.
4.1 Reorganization. In case at any time or from time to time, the
Company shall (a) effect a reorganization, (b) consolidate with or merge into
any other person, or (c) transfer all or substantially all of its properties or
assets to any other person under any plan or arrangement contemplating the
dissolution of the Company, then, in each such case, the holder of this Warrant,
on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and property
(including cash) to which such holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be, if such
holder had so exercised this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in Sections 3 and 5.
4.2 Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, where
applicable) receivable by the holder of this Warrant after the effective date of
such dissolution pursuant to this Section 4 to the holder of a bank or trust
company having its principal office in Boston, Massachusetts as trustee for the
holder or holders of the Warrants.
4.3 Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 4, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any such stock or other securities, including, in the
case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant.
5. Adjustment for Extraordinary Events. In the event that the Company
shall (i) issue additional shares of the Common Stock as a dividend or other
distribution on outstanding Common Stock, (ii) subdivide or reclassify its
outstanding shares of Common Stock, or (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Purchase Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect.
5
<PAGE>
The Purchase Price, as so adjusted, shall be readjusted in the same manner upon
the happening of any successive event or events described herein in this Section
5. The holder of this Warrant shall thereafter, on the exercise hereof as
provided in Section 1, be entitled to receive that number of shares of Common
Stock determined by multiplying the number of shares of Common Stock which would
be issuable on such exercise as of immediately prior to such issuance by a
fraction of which (i) the numerator is the Purchase Price in effect immediately
prior to such issuance and (ii) the denominator is the Purchase Price in effect
on the date of such exercise.
6. Registration Statement: Timing of Filing, Effectiveness and Period
of Usability
Subject to the provisions of Section 7 hereof, the Company shall
prepare and file with the Commission a Registration Statement on Form S-3 or,
if the Company is not then eligible to use Form S-3, on Form S-1, registering
resales of the Registrable Securities by the holders from time to time
through the automated quotation system of the American Stock Exchange or the
facilities of any national securities exchange or the Nasdaq National Market
if the Common Stock is then listed or quoted thereon and in
privately-negotiated transactions. The Registration Statement shall register
all of the Registrable Securities. The Company will use its best efforts to
cause the Registration Statement to be declared effective by the Commission
by September 22, 1997 (the first business day beginning 180 days following
the date of this Warrant).
If the Registration Statement is not declared effective by the
Commission on or before the Penalty Commencement Date, or if at any time after
the Registration Statement is declared effective, but prior to the Expiration
Date, the Warrant Shares may not be sold pursuant to the Registration Statement
for more than 30 days during any 12-month period (whether because the
Registration Statement is no longer effective, there is a material misstatement
or omission in the Registration Statement, or otherwise) (any such period in
excess of such 30 days is hereinafter referred to as an "Unavailability
Period"), the Company will have the obligation to pay penalty payments (the
"Penalty Payments") at the rate of $200 per 5,000 Warrant Shares per month
following the Penalty Commencement Date or following the commencement of the
Unavailability Period, as the case may be, until the Registration Statement is
declared effective or may be used following an Unavailability Period. The first
Penalty Payment shall be payable on the earlier to occur of the 30th calendar
day following the Penalty Commencement Date or following the commencement of the
Unavailability Period, as the case may be, or the date the Registration
Statement is declared effective or may be used following an Unavailability
Period. Subsequent Penalty Payments shall be payable on each 30-day anniversary
of the Penalty Commencement Date or following the commencement of the
Unavailability Period, as the case may be, except if the Registration Statement
shall be declared effective prior thereto or may be used following an
Unavailability Period, in which case the subsequent Penalty Payment shall be
made concurrently with such effectiveness or date on which the Registration
Statement may be used.. Any date on which a Penalty Payment is required to be
paid is referred to herein as a "Penalty Payment Date." Penalty Payments shall
be paid to the holders of record of the Warrants on each Penalty Payment Date.
With respect to Warrants which have been exercised for Shares prior to a Penalty
Payment Date, the Penalty Payment with respect to such exercised Warrants shall
be paid to the holders on
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<PAGE>
such Penalty Payment Date of the Warrants Shares. The Company shall have the
option to pay Penalty Payments in respect of the first two Penalty Payment Dates
either in cash or in shares of Common Stock which shall be registered pursuant
to the Registration Statement (the "Penalty Shares") together with the Warrant
Shares, and Penalty Payments with respect to all subsequent Penalty Payment
Dates shall be paid by the Company solely in cash. The Penalty Payment shall
accrue and be prorated for partial months, assuming a 360-day year of twelve
30-day months. The number of Penalty Shares to be issued in payment of any
Penalty Payment shall be determined by dividing the amount of such Penalty
Payment by the average price of the Common Stock over the five (5) trading days
preceding the applicable Penalty Payment Date.
The Company will use its best efforts (i) to keep the Registration
Statement continuously effective and usable for resale of Registrable Securities
until the Expiration Date or such shorter period which will terminate when all
Warrant Shares and Penalty Shares have ceased to be Registrable Securities, and
(ii) to file with the Securities and Exchange Commission on a timely basis all
reports, notices and otherwise as the Company may be required to file under the
Securities Exchange Act of 1934, as amended.
7. Registration Procedures
In connection with the Company's obligation to file a Registration
Statement as provided in Section 6 hereof, the Company will as expeditiously as
possible:
(a) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement, and such supplements to
the Prospectus, as may be required by the rules, regulations or instructions
applicable to the registration form utilized by the Company or by the Securities
Act or rules and regulations thereunder for shelf registration or otherwise
necessary to keep the Registration Statement effective for the applicable period
and cause the Prospectus as so supplemented to be filed pursuant to Rule 424
under the Securities Act; and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the methods of
disposition by the sellers thereof set forth in such Registration Statement or
supplement to the Prospectus;
(b) notify the holders of Registrable Securities promptly, and
confirm such advice in writing,
(1) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the Registration
Statement or any post-effective amendment, when the same has become effective,
(2) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose, and
7
<PAGE>
(3) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose;
(c) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(d) furnish, without charge, to each holder of Registrable
Securities, at least one conformed copy of the Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
all documents incorporated therein by reference and all exhibits (including
those incorporated by reference);
(e) deliver to Purchaser and each holder of Registrable Securities
without charge, as many copies of the Prospectus (including each preliminary
prospectus) and any amendment or supplement thereto as such Persons may
reasonably request; the Company consents to the use of the Prospectus or any
amendment or supplement thereto by each holder of Registrable Securities in
connection with the offering and sale of the Registrable Securities covered by
the Prospectus or any amendment or supplement thereto;
(f) use its reasonable efforts to cause the Registrable Securities
covered by the Registration Statement to be registered with or approved by such
governmental agencies or authorities as may be necessary to enable the holders
thereof to consummate the disposition of such Registrable Securities in such
jurisdictions as the holders may reasonably specify in response to inquiries to
be made by the Company, provided that the Company will not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service of
process in any such jurisdiction where it is not then so subject;
(g) if any event shall occur as a result of which it is necessary to
amend or supplement the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it is
delivered by a holder, promptly prepare a supplement or post-effective amendment
to the Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so that,
as thereafter delivered to the holders of the Registrable Securities, the
Prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading;
(h) if at any time an event of the kind described in Section 10(g)
shall occur, notify the holders of Registrable Securities that the use of the
Prospectus must be discontinued (the Company will not declare any such
"black-out" periods in excess of twenty business days during any twelve month
period, unless otherwise required by law); and
8
<PAGE>
(i) on or prior to the date the Registration Statement is declared
effective by the Commission, cause all of the Warrant Shares and Penalty Shares
to be listed for trading on the American Stock Exchange or on any other national
securities exchange on which the Company's Common Stock is then listed.
Each holder of Registrable Securities as to which any registration is being
effected agrees, as a condition to the registration obligations with respect to
such holder provided herein, to furnish to the Company such information
regarding the distribution of such Registrable Securities as the Company may
from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company
described in this paragraph 7(i), such holder will forthwith discontinue
disposition of Registrable Securities until such holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 7(h) hereof,
or until it is advised in writing by the Company (which notice the Company shall
give as promptly as possible), that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings which are
incorporated by reference in the Prospectus, and, if so directed by the Company,
such holder will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such holder's possession, of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice.
8. Indemnification
(a) Indemnification of Holder. At such time as the Company registers any
of the Registrable Securities under the Act, the Company will indemnify and hold
harmless the holder, each of its directors, officers, partners, employees and
each person, if any, who controls the holder within the meaning of Section 15 of
the Act from and against any and all losses, claims, damages, expenses or
liabilities, to which it becomes subject under the Act or under any other
statute or at common law or otherwise, and, except as hereinafter provided, will
reimburse the holder for any legal or other expenses reasonably incurred by it
in connection with investigating or defending any actions whether or not
resulting in any liability, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the registration
statement, in any preliminary or amended preliminary prospectus or in the
prospectus (or the registration statement or prospectus as from time to time
amended or supplemented by the Company) or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, or any violation by the Company of any rule or regulation
promulgated under the Act applicable to the Company and relating to action or
inaction required of the Company in connection with such registration, unless
such untrue statement or omission was made in such registration statement,
preliminary or amended, preliminary prospectus or prospectus in reliance upon
and in conformity with information furnished in writing to the Company in
connection therewith by the holder expressly for use therein. Promptly after
receipt by the holder of notice of the commencement
9
<PAGE>
of any action in respect of which indemnity may be sought against the Company,
the holder will notify the Company in writing of the commencement thereof, and,
subject to the provisions hereinafter stated, the Company shall assume the
defense of such action (including the employment of counsel, who shall be
counsel reasonably satisfactory to the holder), and the payment of expenses
insofar as such action shall relate to any alleged liability in respect of which
indemnity may be sought against the Company. The registered holder shall have
the right to employ separate counsel in any such action and to participate in
the defense thereof but the fees and expenses of such counsel shall not be at
the expense of the Company unless (i) the employment of such counsel has been
specifically authorized by the Company, or (ii) the holder has reasonably
determined that there may be a conflict between the positions of the Company and
the holder in conducting the defense of such action, in which case the counsel
for the holder shall be entitled to conduct the defense at the expense of the
Company to the extent reasonably determined by such counsel to be necessary to
protect the interests of the holder. The Company shall not be liable to
indemnify any person for any settlement of any such action effected without the
Company's consent, which shall not be unreasonably withheld.
(b) Indemnification of Company. At such time as the Company registers any
of the Registrable Securities under the Act, the holder will indemnify and hold
harmless the Company, each of its directors, each of its officers who have
signed the registration statement, each underwriter of the shares so registered
(including any broker or dealer through whom such of the shares may be sold) and
each person, if any, who controls the Company within the meaning of Section 15
of the Act from and against any and all losses, claims, damages, expenses or
liabilities, joint or several, to which they or any of them may become subject
under the Act or under any other statute or at common law or otherwise, and,
except as hereinafter provided, will reimburse the Company and each such
director, officer, underwriter or controlling person for any legal or other
expenses reasonably incurred by them or any of them in connection with
investigating or defending any actions whether or not resulting in any
liability, insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement, in any
preliminary or amended preliminary prospectus or in the prospectus (or in the
registration statement or prospectus as from time to time amended or
supplemented) or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, but only insofar as any
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company in connection therewith by the
holder expressly for use therein. Promptly after receipt of notice of the
commencement of any action in respect of which indemnity may be sought against
the holder, the Company will notify the holder in writing of the commencement
thereof, and the holder shall, subject to the provisions hereinafter stated,
assume the defense of such action (including the employment of counsel, who
shall be counsel reasonably satisfactory to the Company) and the payment of
expenses insofar as such action shall relate to the alleged liability in respect
of which indemnity may be sought against the holder. The Company and
10
<PAGE>
each such director, officer, underwriter or controlling person shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof but the fees and expenses of such counsel shall not be at the
expense of the holder unless (i) the employment of such counsel has been
specifically authorized by the holder, or (ii) the Company has reasonably
determined that there may be a conflict between the positions of the holder and
the Company in conducting the defense of such action, in which case the counsel
for the Company shall be entitled to conduct the defense at the expense of the
holder to the extent reasonably determined by such counsel to be necessary to
protect the interests of the Company. The holder shall not be liable to
indemnify any person for any settlement of any such action effected without the
holder's consent, which shall not be unreasonably withheld.
9. Registration Expenses
(a) All expenses incident to the Company's performance of or compliance
with this Warrant, including without limitation:
(1) all registration, filing and listing fees;
(2) the Company's printing, messenger, telephone and delivery
expenses;
(3) fees and expenses of counsel for the Company;
(4) fees and expenses of all independent certified public accountants
of the Company (including the expenses of any special audit necessary to satisfy
the requirements of the Securities Act); and
(5) fees and expenses associated with any NASD filing required to be
made in connection with the Registration Statement.
(all such expenses being herein called "Registration Expenses"); shall be borne
by the Company, regardless of whether the Registration Statement becomes
effective.
10. No Impairment. The Company will not, by amendment of its Articles of
Organization or through any reorganization, transfer of assets, consolidation,
merger, dissolution, or any other similar voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of the Warrant against impairment due to such
event. Without limiting the generality of the foregoing, the Company (a) will
not increase the par value of any shares of stock receivable on the exercise of
the Warrants above the amount payable therefor on such exercise and (b) will
take all action that may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable shares of stock, free
from all taxes, liens and charges
11
<PAGE>
with respect to the issue thereof, on the exercise of all of the Warrants from
time to time outstanding.
11. Certificate as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of the Warrants, the Company at its expense will promptly cause its
principal financial or accounting officer to compute such adjustment or
readjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment or readjustment, the Purchase Price
resulting therefrom and the increase or decrease, if any, in the number of
shares purchasable at such price upon exercise of the Warrant, and showing in
detail the facts and computation upon which such adjustment or readjustment in
based. The Company will forthwith mail a copy of each such certificate to each
registered holder of this Warrant, and will, on the written request at any time
of the holder of this Warrant, furnish to such holder a like certificate setting
forth the Purchase Price at the time in effect and showing how it was
calculated.
12. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof
who are entitled to receive any dividend on, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of the
Company to or consolidation or merger of the Company with or into any
other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be mailed to the
registered holder of this Warrant a notice specifying (i) the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or Other Securities) shall be entitled to
exchange their shares of Common Stock (or Other Securities) for securities or
other property deliverable on such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up, and (iii) the amount and character of any stock or other securities,
or rights or options with respect thereto, proposed to be issued or granted, the
date of such proposed issue or grant and the persons or class of persons to whom
such proposed issue or grant is to be offered or made. Such notice shall also
state that the action in question or the record date is subject to the
12
<PAGE>
effectiveness of a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), or a favorable vote of stockholders if either is
required. Such notice shall be mailed at least 7 days prior to the date
specified in such notice on which any such action is to be taken or the record
date, whichever is earlier.
12. Reservation of Stock, etc., Issuable on Exercise of Warrants. The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of the Warrant, all shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of the Warrant.
13. Transfer of Warrant; Restrictions on Transfer. This Warrant and all
shares of Common Stock (or Other Securities) from time to time issuable on the
exercise of the Warrant (a) shall be subject to any applicable terms and
restrictions of other agreements between the Company and the holder and (b) may
not be sold, offered for sale, transferred, pledged or hypothecated in the
absence of an effective registration statement under the Securities Act and
applicable state securities laws or an opinion of counsel reasonably
satisfactory to the Company that such registration is not required.
14. Register of Warrants; Transfers.
(a) The Company will maintain a register containing the names and
addresses of the registered holders of this Warrant. Any registered holder may
change its, his or her address as shown on the warrant register by written
notice to the Company requesting such change.
(b) Without the prior written consent of the Company, which shall not
be unreasonably withheld, this Warrant shall not be transferable by the
registered holder except to bona fide directors, officers, partners shareholders
or principal employees of the holder, and shall not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise). This
Warrant shall be exercisable only by the registered holder and shall not be
subject to execution, attachment or similar process. Any attempted transfer,
assignment, pledge, hypothecation or other disposition of this Warrant or of any
rights granted hereunder contrary to the provisions of this Paragraph, or the
levy of any attachment or similar process upon this Warrant or such rights,
shall be null and void.
(c) Until any transfer of this Warrant is made in the warrant
register, the Company may treat the registered holder of this Warrant as the
absolute owner hereof for all purposes; provided, however, that if and when this
Warrant is properly assigned in blank, the Company may (but shall not be
obligated to) treat the bearer hereof as the absolute owner hereof for all
purposes, notwithstanding any notice to the contrary.
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<PAGE>
15. Exchange of Warrants. This Warrant is exchangeable, upon the
surrender hereof by the holder hereof at the office or agency of the Company
referred to in Section 14, for one or more new Warrants of like tenor
representing in the aggregate the right to subscribe for and purchase the number
of shares of Common Stock which may be subscribed for and purchased hereunder,
each of such new Warrants to represent the right to subscribe for and purchase
such number of shares as shall be designated by said holder hereof at the time
of such surrender.
16. Replacement of Warrants. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant or, in the case of any such mutilation, on surrender and
cancellation of such Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
17. Remedies. The Company stipulates that the remedies at law of the
holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
18. Closing of Books. The Company will at no time close its transfer
books against the transfer of any Warrant or of any shares of Common Stock
issued or issuable upon the exercise of any Warrant in any manner which
interferes with the timely exercise of this Warrant, unless so required by law.
19. No Rights or Liabilities as a Stockholder. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a stockholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Common Stock, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Purchase Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
20. Notices, etc. All notices and other communications from the Company
to the registered holder of this Warrant shall be mailed in writing by
hand-delivery, first class registered or certified mail, postage prepaid, telex
or telecopies, at such address as may have been furnished to the Company in
writing by such holder or at the address shown on such holder's Warrant.
21. Miscellaneous. This Warrant and any terms hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of the Commonwealth of Massachusetts, without reference to
its conflicts of law provisions. The headings in this Warrant are for purpose
of reference only, and shall not limit or otherwise affect any of the terms
hereof. This Warrant is being executed as an instrument under seal. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
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<PAGE>
Dated: March 24, 1997 MEDIA LOGIC, INC.
By: /s/ William E. Davis
__________________________________
William E. Davis, Jr.
Chief Executive Officer and
President
Attest:
By: /s/ Paul M. O'Brien
____________________________
Title: C.F.O.
__________________________
15
<PAGE>
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
MEDIA LOGIC, INC.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder, ____________
shares of Common Stock of MEDIA LOGIC, INC. and hereby makes payment of
$_____________ therefor in cash, and requests that the certificates for such
shares be issued in the name of, and delivered to _______________________ whose
address is__________________________.
Dated:_______________ __________________________________
(Signature must conform to name
of holder as specified on the
face of the Warrant)
__________________________________
__________________________________
(Address)
<PAGE>
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For values received, the undersigned hereby sells, assigns and transfers
unto ___________________ the right represented by the within Warrant to purchase
___________ shares of Common Stock of MEDIA LOGIC, INC. to which the within
Warrant relates, and appoints _____________________ Attorney to transfer such
right on the books of MEDIA LOGIC, INC. with full power of substitution in the
premises.
Dated:_______________ __________________________________
(Signature must conform to name
of holder as specified on the
face of the Warrant)
__________________________________
__________________________________
(Address)
Signed in the presence of:
___________________________________
<PAGE>
EXHIBIT 99.5
AMENDMENT TO COMMON STOCK PURCHASE WARRANT
This AMENDMENT to Common Stock Purchase Warrant (the "Amendment") is made
as of the 30th day of September, 1997, by and between MEDIA LOGIC, INC., a
Massachusetts corporation (the "Company"), and ACFS LIMITED PARTNERSHIP (the
"Holder").
WHEREAS the Company issued a Common Stock Purchase Warrant dated March 24,
1997 (the "Warrant") to the Holder for the right to purchase 240,000 shares of
the Common Stock of the Company;
WHEREAS, the Company and the Holder desire to amend the Warrant to reflect
certain changes in the terms of the Warrant as agreed by them.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Holder agree
as follows:
1. All capitalized terms used herein and not otherwise defined herein shall
have the same meanings herein as in the Warrant.
2. Section (j) of the definitions section of the Warrant is hereby deleted in
its entirety and replaced with the following:
(j) The term "Filing Penalty Commencement Date" means the sixth (6th)
business day after the filing of the Registration Statement with the
Securities and Exchange Commission (the "Commission").
3. The follow section is added to the definitions section of the Warrant:
(a) The term "Effectiveness Penalty Commencement Date" means the
fifth (5th) day after the Commission notifies the Company of the
Commission's willingness to declare the Registration Statement
effective.
4. Section (6) of the Warrant is hereby deleted in its entirety and replaced
with the following:
"6. Registration Statement: Timing of Filing, Effectiveness and Period of
Usability.
Subject to the provisions of Section 7 hereof, the holders of the Warrant
Shares representing a majority of such securities (assuming the exercise of all
of the then outstanding Warrants) shall have the right (a "Demand"), on one
occasion only, exercisable by written notice to the Company, to have the Company
prepare and file with the Commission a Registration Statement on Form S-3 or, if
the Company is not then eligible to use Form S-3, on Form S-1, registering
resales of the Registrable Securities by the holders from time to time through
the automated quotation system of the American Stock Exchange or the facilities
of any national securities exchange or the Nasdaq
<PAGE>
National Market if the Common Stock is then listed or quoted thereon and in
privately-negotiated transactions. The Company shall use its best efforts (i)
to file a Registration Statement with the Commission no later than the sixth
(6th) business day following the Company's receipt, in writing, of the Demand,
and (ii) to effect as soon as practicable thereafter, the registration of the
Registrable Securities under the Securities Act.
If (i) the Registration Statement is not filed with the Commission on or
before the Filing Penalty Commencement Date, (ii) the Registration Statement is
not declared effective by the Commission on or before the Effectiveness Penalty
Commencement Date, or (iii) if at any time after the Registration Statement is
declared effective, but prior to the Expiration Date, the Warrant Shares may not
be sold pursuant to the Registration Statement for more than 30 days during any
12-month period (whether because the Registration Statement is no longer
effective, there is a material misstatement or omission in the Registration
Statement, or otherwise) (any such period in excess of such 30 days is
hereinafter referred to as an "Unavailability Period"), the Company will have
the obligation to pay penalty payments (the "Penalty Payments") at the rate of
$200 per 5,000 Warrant Shares per month following the Filing Penalty
Commencement Date or the Effectiveness Penalty Commencement Date, or following
the commencement of the Unavailability Period, as the case may be, until the
Registration Statement is filed, declared effective or may be used following an
Unavailability Period, as the case may be. The first Penalty Payment shall be
payable on the earlier to occur of the 30th calendar day following the Filing
Penalty Commencement Date or the Effectiveness Penalty Commencement Date, or
following the commencement of the Unavailability Period, as the case may be, or
the date the Registration Statement is filed, declared effective or may be used
following an Unavailability Period, as the case may be. Subsequent Penalty
Payments shall be payable on each 30-day anniversary of the Filing Penalty
Commencement Date or the Effectiveness Penalty Commencement Date or following
the commencement of the Unavailability Period, as the case may be, except if the
Registration Statement shall be filed or declared effective prior thereto or may
be used following an Unavailability Period, as the case may be, in which case
the subsequent Penalty Payment shall be made concurrently with such
effectiveness or date on which the Registration Statement may be used. Any date
on which a Penalty Payment is required to be paid is referred to herein as a
"Penalty Payment Date." Penalty Payments shall be paid to the holders of record
of the Warrants on each Penalty Payment Date. With respect to Warrants which
have been exercised for Shares prior to a Penalty Payment Date, the Penalty
Payment with respect to such exercised Warrants shall be paid to the holders on
such Penalty Payment Date of the Warrants Shares. The Company shall have the
option to pay Penalty Payments in respect of the first two Penalty Payment Dates
either in cash or in shares of Common Stock which shall be registered pursuant
to the Registration Statement (the "Penalty Shares") together with the Warrant
Shares, and Penalty Payments with respect to all subsequent Penalty Payment
Dates shall be paid by the Company solely in cash. The Penalty Payment shall
accrue and be prorated for partial months, assuming a 360-day year of twelve
30-day months. The number of Penalty Shares to be issued in payment of any
Penalty Payment shall be determined by dividing the amount of such Penalty
Payment by the average price of the Common Stock over the five (5) trading days
preceding the applicable Penalty Payment Date.
The Company will use its best efforts (i) to keep the Registration
Statement continuously effective and usable for resale of Registrable Securities
until the Expiration Date or such shorter period which will terminate when all
Warrant Shares and Penalty Shares have ceased to be
2
<PAGE>
Registrable Securities, and (ii) to file with the Securities and Exchange
Commission on a timely basis all reports, notices and otherwise as the Company
may be required to file under the Securities Exchange Act of 1934, as amended."
5. Section 20 of the Warrant is hereby deleted in its entirety and replaced
with the following:
"20. Notices, etc. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a
party may designate by notice hereunder, and shall be either (i) delivered
by hand, (ii) made by telex, telecopy or facsimile transmission, (iii) sent
by overnight courier, or (iv) sent by registered or certified mail, return
receipt requested, postage prepaid.
If to the Company:
Media Logic, Inc.
310 South Street
Plainville, Massachusetts 02762
Attention: President
Telephone: (508) 695-2006
Facsimile: (508) 695-8593
With a copy to:
Richard R. Kelly, Esquire
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
Telephone: (617) 542-6000
Facsimile: (617) 542-2241
If to the registered holder of this Warrant:
Such address as may have been furnished to the Company in writing by
such holder or at the address shown on such holder's Warrant.
All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the
delivery thereof to the receiving party at the address of such party set
forth above, (ii) if made by telex, telecopy or facsimile transmission, at
the time that receipt thereof has been acknowledged by electronic
confirmation or otherwise, (iii) if sent by overnight courier, on the next
business day following the day such notice is delivered to the courier
service, or (iv) if sent by registered or certified mail, on the 5th
business day following the day such mailing is made."
6. Except as modified by this Amendment, the Warrant shall remain in full
force and effect.
3
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the
date first above written.
MEDIA LOGIC, INC.
/s/ Paul O'Brien By: /s/ William E. Davis
- --------------------------------- ---------------------------------
Attest
ACFS LIMITED PARTNERSHIP
/s/ By: /s/
- --------------------------------- ---------------------------------
Attest
4
<PAGE>
EXHIBIT 99.7
MEDIA LOGIC, INC.
AND
ADAR EQUITIES LLC
WARRANT AGREEMENT
Dated as of March 25, 1997
<PAGE>
WARRANT AGREEMENT, dated as of March 25, 1997 by and between MEDIA LOGIC,
INC., a Massachusetts corporation (the "Company"), and ADAR EQUITIES LLC (the
"ADAR").
The Company proposes to issue to ADAR 900,000 warrants as hereinafter
described (the "Warrants") to purchase shares (the "Shares") of common stock
of the Company, $.01 par value per share ("Common Stock"), each Warrant
entitling the holder ("Holder") thereof to purchase one share of Common Stock.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
1. Issuance of Warrants; Form of Warrant. On March 24, 1997, the Company
shall issue, sell and deliver the Warrants to ADAR or its bona fide officers,
principals or affiliates. The form of the Warrant and of the form of Election
to Purchase to be attached thereto shall be substantially as set forth on
Exhibit A attached hereto. The Warrants shall be executed on behalf of the
Company by the manual or facsimile signature of the present or any future
Chairman or Co-Chairman, President or any Vice President of the Company,
under its corporate seal, affixed or in facsimile, and attested by the manual
or facsimile signature of the present or any future Secretary or Assistant
Secretary of the Company.
2. Registration. The Warrants shall be numbered and shall be registered
in a Warrant register (the "Warrant Register"). The Company shall be entitled
to treat the registered holder of any Warrant on the Warrant Register as the
owner in fact thereof for all purposes and shall not be bound to recognize
any equitable or other claim to or interest in such Warrant on the part of
any other person, and shall not be liable for any registration or transfer of
Warrants which are registered or are to be registered in the name of a
fiduciary or the nominee of a fiduciary unless made with the actual knowledge
that a fiduciary or nominee is committing a breach of trust in requesting
such registration or transfer, or with such knowledge of such facts that its
participation therein amounts to bad faith. The Warrants shall be registered
initially in the name of ADAR Equities LLC in such denominations are ADAR may
request in writing to the Company; provided, however, that ADAR may designate
that all or a portion of the Warrants be issued in varying amounts directly
to its bona fide officers or principals and not to itself. Such designation
will only be made by ADAR if it determines that such issuances would not
violate the interpretation of the Board of Governors of the National
Association of Securities Dealers, Inc. (the "NASD"), relating to the review
of corporate financing arrangements.
<PAGE>
3. Transfer of Warrants. The Holder of a Warrant Certificate, by its
acceptance thereof, acknowledges that the Warrants are "restricted
securities" which have not been registered under the Securities Act of 1933,
as amended (the "Securities Act"), and represents that the Warrants are being
acquired as an investment and not with a view to the distribution thereof and
will not transfer such Warrants, except to bona fide officers, directors,
shareholders, principals, employees or registered representatives of the
Holder upon written request to the Company delivered in accordance with
Section 12 hereof and upon delivery of the Warrant Certificate duly endorsed
by the Holder or by his duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment or authority to
transfer. In all cases of transfer by an attorney, the original power of
attorney, duly approved, or an official copy thereof, duly certified, shall
be deposited with the Company. In case of transfer by executors,
administrators, guardians or other legal representatives, duly authenticated
evidence of their authority shall be produced, and may be required to be
deposited with the Company in its discretion. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the persons
entitled thereto. The Warrants may be exchanged at the option of the Holder
thereof for other Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of shares
of Common Stock upon surrender to the Company or its duly authorized agent.
The Company may require payment of a sum sufficient to cover all taxes and
other governmental charges that may be imposed in connection with any
voluntary transfer, exchange or other disposition of the Warrants.
Notwithstanding the foregoing, the Company shall have no obligation to cause
Warrants to be transferred on its books to any person, if such transfer would
violate the Securities Act or applicable state securities laws.
4. Exercise of Warrants; Term of Warrants.
(a) Exercise of Warrants. Each Warrant entitles the registered owner
thereof to purchase one Share at a purchase price equal to $3.00 (the
"Exercise Price"). Subject to the provisions of this Agreement, each Holder
shall have the right, which may be exercised as set forth in such Warrants,
to purchase from the Company (and the Company shall issue and sell to such
Holder) the number of fully paid and nonassessable shares (rounded up to
the nearest full share) specified in such Warrants, upon surrender to the
Company, or its duly authorized agent, of such Warrants, with the form of
Election to Purchase attached thereto duly completed and signed, with
signatures guaranteed by a member firm of a national securities exchange, a
commercial bank (not a savings
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<PAGE>
bank or savings and loan association) or trust company located in the
United States or a member of the NASD and upon payment to the Company of
the Exercise Price for the number of Shares in respect of which such
Warrants are then exercised. Payment of such Exercise Price may be made in
cash or by certified check or official bank check payable to the order of
the Company. No adjustment shall be made for any dividends on any Shares
issuable upon exercise of a Warrant. Upon each surrender of Warrants and
payment of the Exercise Price as aforesaid, the Company shall issue and
cause to be delivered with all reasonable dispatch to or upon the written
order of the Holder of such Warrants and in such name or names as such
holder may designate, a certificate or certificates for the number of full
Shares so purchased upon the exercise of such Warrants. Such certificate or
certificates shall be deemed to have been issued and any person so
designated to be named therein shall be deemed to have become a holder of
record of such Shares as of the date of the surrender of Warrants and
payment of the Exercise Price as aforesaid; provided, however, that if, at
the date of surrender of Warrants and payment of such Exercise Price, the
transfer books for the Common Stock or other class of securities issuable
upon the exercise of such Warrants shall be closed, the certificates for
the Shares shall be issuable as of the date on which such books shall next
be opened and until such date the Company shall next be opened and until
such date the Company shall be under no duty to deliver any certificate for
such Shares; provided, further, however, that the transfer books of record,
unless otherwise required by law, shall not be closed at any one time for a
period longer than twenty (20) days. The rights of purchase represented by
the Warrants shall be exercisable, at the election of the Holder(s)
thereof, either in full or from time to time in part and, in the event that
any Warrant is exercised in respect of less than all of the Shares issuable
upon such exercise, a new Warrant or Warrants will be issued for the
remaining number of Shares specified in the Warrant so surrendered.
(b) Term of Warrants. The Warrants granted pursuant to this Agreement
shall be exercisable from September 24, 1997 to March 24, 2002.
5. Payment of Taxes. The Company will pay all documentary stamp taxes, if
any, attributable to the issuance of Shares upon the exercise of Warrants;
provided, however, that the Company shall not be required to pay any tax or
taxes which may be payable in respect of any transfer involved in the issue
or delivery of any certificates for Shares in a name other than that
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<PAGE>
of the Holder of Warrants in respect of which such Shares are issued.
6. Mutilated or Missing Warrants. In case any of the Warrants shall
be mutilated, lost, stolen or destroyed, the Company shall issue and deliver
in exchange and substitution for and upon cancellation of the mutilated
Warrant, or in lieu of and substitution for the Warrant lost, stolen or
destroyed, a new Warrant of like tenor and representing an equivalent right
or interest, but only upon receipt of evidence reasonably satisfactory to the
Company of such mutilation, loss, theft or destruction of such Warrant and
indemnity, if requested, reasonably satisfactory to the Company. An applicant
for such substitute Warrants shall also comply with such other reasonable
regulations and pay such other reasonable charges and expenses as the Company
may prescribe.
7. Reservation of Shares, etc. There have been reserved, and the
Company shall at all times keep reserved, out of the authorized and unissued
Common Stock of the Company, a number of shares of Common Stock sufficient to
provide for the exercise of the rights of purchase represented by the
outstanding Warrants. American Stock Transfer & Trust Co., transfer agent for
the Common Stock (the "Transfer Agent"), and every subsequent transfer agent,
if any, for the Company's securities issuable upon the exercise of the
Warrants will be irrevocably authorized and directed at all times to reserve
such number of authorized and unissued shares as shall be required for such
purpose. The Company will keep a copy of this Agreement on file with the
Transfer Agent and with every subsequent transfer agent for any shares of the
Company's securities issuable upon the exercise of the Warrants. The Company
will supply the Transfer Agent or any subsequent transfer agent with duly
executed certificates for such purpose. All Warrants surrendered in the
exercise of the rights thereby evidenced shall be canceled, and such canceled
Warrants shall constitute sufficient evidence of the number of Shares that
have been issued upon the exercise of such Warrants.
8. Reserved.
9. Reserved.
10. Registration Rights.
(a) Demand Registration Rights. The Company covenants and agrees
with ADAR and any other or subsequent Holders of the Registrable Securities
(as defined in paragraph (f) of this Section 10) that, subject to the
availability of audited financial statements which would comply with
Regulation S-X under the Securities Act, upon written request of the then
Holder(s) of at least a majority of the Warrants or the Registrable
Securities, or both, which were originally issued to ADAR or its
-4-
<PAGE>
designees, made at any time within the period commencing one year and ending
five years after the Closing Date, the Company will file as promptly as
practicable and, in any event, within 60 days after receipt of such written
request, at its expense (other than the fees of counsel and sales commissions
for such Holders), no more than once, a post-effective amendment (the
"Amendment") to a registration statement, or a new registration statement
which shall be on Form S-3 if the Company is then eligible to use Form S-3,
or a Regulation A Offering Statement (an "Offering Statement") under the
Securities Act, registering or qualifying the Registrable Securities for
sale. Within fifteen (15) days after receiving any such notice, the Company
shall give notice to the other Holders of the Registrable Securities advising
that the Company is proceeding with such Amendment, registration statement or
Offering Statement and offering to include therein the Registrable Securities
of such Holders. The Company shall not be obligated to any such other Holder
unless such other Holder shall accept such offer by notice in writing to the
Company within ten (10) days thereafter. The Company will use its best
efforts, through its officers, directors, auditors and counsel in all matters
necessary or advisable, to file and cause to become effective such Amendment,
registration statement or Offering Statement as promptly as practicable and
for a period of nine months thereafter to reflect in the Amendment,
registration statement or Offering Statement financial statements which are
prepared in accordance with Section 10(a)(3) of the Securities Act and any
facts or events arising that, individually, or in the aggregate, represent a
fundamental and/or material change in the information set forth in the
Amendment, registration statement or Offering Statement to enable any Holders
of the Warrants to either sell such Warrants or to exercise such Warrants and
sell Shares, or to enable any holders of Shares to sell such Shares, during
said nine-month period. If any registration pursuant to this paragraph (a) is
an underwritten offering, the Holders of a majority of the Registrable
Securities to be included in such registration shall be entitled to select
the underwriter or managing underwriter (in the case of a syndicated
offering) of such offering, subject to the Company's approval which shall not
be unreasonably withheld.
(b) Piggyback Registration Rights. The Company covenants and agrees
with ADAR and any other Holders or subsequent Holders of the Registrable
Securities that if, at any time within the period commencing one year and
ending five years after the Closing Date, it proposes to file a registration
statement or Offering Statement with respect to any class of equity or
equity-related security (other than in connection with an offering to the
Company's employees or in connection with an acquisition, merger or similar
transaction) under the Securities Act in a primary registration on behalf of
the Company and/or in a secondary registration on behalf of holders of such
securities and the registration form or Offering Statement to be used may be
-5-
<PAGE>
used for registration of the Registrable Securities, the Company will give
prompt written notice (which, in the case of a registration statement or
notification pursuant to the exercise of demand registration rights other
than those provided in Section 10(a) of this Agreement, shall be within ten
(10) business days after the Company's receipt of notice of such exercise
and, in any event, shall be at least 30 days prior to such filing) to the
Holders of Registrable Securities (regardless of whether some of the Holders
shall have theretofore availed themselves of the right provided in Section
10(a) of this Agreement) at the addresses appearing on the records of the
Company of its intention to file a registration statement or Offering
Statement and will offer to include in such registration statement or
Offering Statement all but not less than 40% of the Registrable Securities
and limited, in the case of a Regulation A offering, to the amount of the
available exemption, subject to paragraphs (i) and (ii) of this paragraph
(b), such number of Registrable Securities with respect to which the Company
has received written requests for inclusion therein within ten (10) days
after the giving of notice by the Company. All registrations requested
pursuant to this paragraph (b) are referred to herein as "Piggyback
Registrations". All Piggyback Registrations pursuant to this paragraph (b)
will be made solely at the Company's expense. This paragraph is not
applicable to a registration statement filed by the Company with the
Commission on Forms S-4 or S-8 or any successor forms.
(i) Priority on Primary Registrations. If a Piggyback
Registration includes an underwritten primary registration on behalf of such
Company and the underwriter(s) for such offering determines in good faith
and advises the Company in writing that in its/their opinion the number of
Registrable Securities requested to be included in such registration exceeds
the number that can be sold in such offering without materially adversely
affecting the distribution of such securities by the Company, the Company
will include in such registration (a) first, such number of securities that
the Company proposes to sell such that 40% of the Registrable Securities
requested to be included in such registration are included in the
registration and (b) second, securities of the holders of other securities
requesting registration.
(ii) Priority on Secondary Registrations. If a Piggyback
Registration consists only of an underwritten secondary registration on
behalf of holders of securities of the Company (other than pursuant to
Section 10(a)), and the underwriter(s) for such offering advises the Company
in writing that in its/their opinion the number of Registrable Securities
requested to be included in such registration
-6-
<PAGE>
exceeds the number which can be sold in such offering without materially
adversely affecting the distribution of such securities by the Company, the
Company will include in such registration (A) first, the securities
requested to be included therein by the holders requesting such
registration and the Registrable Securities requested to be included in
such registration, pro rata among all such holders on the basis of the
number of shares requested to be included by each such holder, provided,
however, the Company will use its best efforts to include not less than 40%
of the Registrable Securities, and (B) second, other securities requested
to be included in such registration.
Notwithstanding the foregoing, if any such underwriter shall
determine in good faith and advise the Company in writing that the
distribution of the Registrable Securities 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 Holders of such Registrable Securities shall delay their
offering and sale for such period ending on the earliest of (1) 90 days
following the effective date of the Company's registration statement, (2) the
day upon which the underwriting syndicate, if any, for such offering shall
have been disbanded or, (3) such date as the Company, managing underwriter
and Holders of Registrable Securities shall otherwise agree. In the event of
such delay, the Company shall file such supplements, post-effective
amendments and take any such other steps as may be necessary to permit such
Holders to make their proposed offering and sale for a period of 120 days
immediately following the end of such period of delay. If any part
disapproves of the terms of any such underwriting, it may elect to withdraw
therefrom by written notice to the Company, the underwriter, and ADAR.
Notwithstanding the foregoing, the Company shall not be required to file a
registration statement to include Shares pursuant to Sections 10(a) or 10(b)
if independent counsel, reasonably satisfactory to counsel for the Company
and counsel for ADAR, renders an opinion to the Company that the Shares
proposed to be disposed of may be transferred pursuant to the provisions of
Rule 144 under the Securities Act or otherwise without registration under the
Securities Act.
(c) Other Registration Rights. In addition to the rights above
provided, the Company will cooperate with the then Holders of the Registrable
Securities in preparing and signing any registration statement or Offering
Statement, in addition to the registration statements and Offering Statements
discussed above, required in order to sell or transfer the Registrable
Securities and will supply all information required therefor, but such
additional registration statement or Offering Statement, shall be at the then
Holders' cost and expense; provided, however, that if the Company elects to
register or qualify
-7-
<PAGE>
additional shares of Common Stock, the cost and expense of such registration
statement or Offering Statement will be pro rated between the Company and the
Holders of the Registrable Securities according to the aggregate sales price
of the securities being issued. Notwithstanding the foregoing, the Company
will not be required to file a registration statement or Offering Statement
pursuant to this paragraph (c), (i) at a time when the audited financial
statements required to be included therein are not available, which time
shall be limited to the period commencing 45 days after the end of the
Company's last fiscal year and ending 90 days after the end of such fiscal
year, (ii) within 90 days after completion of a public offering by the
Company of any of its Common Stock or equity-related securities or (iii) if
it would adversely impact the Company in its capital raising plans or
otherwise (in which latter case filing may be delayed no longer than 120
days).
(d) Action to be Taken by the Company. In connection with the
registration of Registrable Securities in accordance with paragraphs (a), (b)
or (c) of this Section 10, the Company agrees to:
(i) Bear the expense of any registration or qualification under
paragraphs (a) or (b) of this Section 10, including, but not limited to,
legal, accounting and printing fees; provided, however, that in no event
shall the Company be obligated to pay (A) any fees and disbursements of
special counsel for Holders of Registrable Securities, or (B) any
underwriters' discount or commission in respect of such Registrable
Securities, (C) any stock transfer taxes attributable to the sale of the
Registrable Securities, or (D) upon the exercise of any demand
registration right provided for in paragraph (a) of this Section 10, the
cost of any liability or similar insurance required by an underwriter,
to the extent that such costs are attributable solely to the offering of
such Registrable Securities, payment of which shall, in each case, be
the sole responsibility of the Holders of the Registrable Securities.
(ii) Use its best efforts to register or qualify the Registrable
Securities for offer or sale under state securities or Blue Sky laws of
such jurisdictions in which ADAR or such Holders shall reasonably
request, provided, however, that no qualification shall be required in
any jurisdiction where, as a result thereof, the Company would be
subject to service of general process or to taxation as a foreign
corporation doing business in such jurisdiction to which it is not then
subject, and to do any and all other acts and things which may be
necessary or advisable to enable the holders to consummate the proposed
sale, transfer
-8-
<PAGE>
or other disposition of such securities in any jurisdiction; and
(iii) Enter into a cross-indemnity agreement, in customary form,
with each underwriter, if any, and each holder of securities included in
such Amendment, registration statement or Offering Statement.
(e) Action to be Taken by the Holders. In connection with the
registration of Registrable Securities in accordance with paragraphs (a), (b)
or (c) of this Section 10, the Company's obligation shall be conditioned as
to each such public offering upon a timely receipt by the Company in writing
of:
(i) Information as to the terms of such public offering furnished
by or on behalf of each Holder intending to make a public offering of
his, her or its Registrable Securities; and
(ii) Such other information as the Company may reasonably require
from such Holders, or any underwriter for any of them, for inclusion in
such registration statement or Notification on Form 1-A.
(f) For purposes of this Section 10, (i) the term "Holder" shall include
holders of Shares, and (ii) the term "Registrable Securities" shall mean the
Shares, if issued.
11. Notices to Holders.
(a) Nothing contained in this Agreement or in any of the Warrants shall
be construed as conferring upon the Holders thereof the right to vote or to
receive dividends or to consent or to receive notice as shareholders in
respect of the meetings of shareholders or the election of directors of the
Company or any other matter, or any rights whatsoever as shareholders of the
Company; provided, however, that in the event that a meeting of shareholders
shall be called to consider and take action on a proposal for the voluntary
dissolution of the Company, other than in connection with a consolidation,
merger or sale of all, or substantially all, of its property, assets,
business and good will as an entirety, then and in that event the Company
shall cause a notice thereof to be sent by first-class mail, postage prepaid,
at least twenty (20) days prior to the date fixed as a record date or the
date of closing the transfer books in relation to such meeting, to each
registered Holder of Warrants at such Holder's address appearing on the
Warrant Register; but failure to mail or to receive such notice or any defect
therein or in the mailing thereof shall not affect the validity of any action
taken in connection with such voluntary dissolution.
-9-
<PAGE>
(b) In the event the Company intends to make any distribution on its
Common Stock (or other securities which may be issuable in lieu thereof upon
the exercise of Warrants), including, without limitation, any such
distribution to be made in connection with a consolidation or merger in which
the Company is the continuing corporation, or to issue subscription rights or
warrants to holders of its Common Stock, the Company shall cause a notice of
its intention to make such distribution to be sent by first-class mail,
postage prepaid, at least twenty (20) days prior to the date fixed as a
record date or the date of closing the transfer books in relation to such
distribution, to each registered Holder of Warrants at such Holder's address
appearing on the Warrant Register, but failure to mail or to receive such
notice or any defect therein or in the mailing thereof shall not affect the
validity of any action taken in connection with such distribution.
12. Notices. Any notice pursuant to this Agreement to be given or made
by the Holder of any Warrant and/or the holder of any Share to or on the
Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed as follows or to such other address as the Company
may designate by notice given in accordance with this Section 12, to the
Holders of Warrants and/or the holders of Shares:
MEDIA LOGIC, INC.
310 South Street
Plainville, MA 02762
Attention: Chief Financial Officer
Notices or demands authorized by this Agreement to be given or made by
the Company to or on the Holder of any Warrant and/or the holder of any Share
shall be sufficiently given or made (except as otherwise provided in this
Agreement) if sent by first-class mail, postage prepaid, addressed to such
Holder or such holder of Shares at the address of such Holder or such holder
of Shares as shown on the Warrant Register or the books of the Company, as
the case may be.
13. Governing Law. This Agreement and each Warrant issued hereunder
shall be governed by and construed in accordance with the substantive laws of
the State of New York. The Company hereby agrees to accept service of process
by notice given to it pursuant to the provisions of Section 12.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original;
but such counterparts together shall constitute but one and the same
instrument.
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day, month and year first above written.
MEDIA LOGIC, INC.
By: /s/ William E. Davis, Jr.
-------------------------------
Name: William E. Davis, Jr.
Title: Chief Executive Officer
ADAR EQUITIES LLC
By: /s/ (Illegible)
--------------------------------
Name:
Title:
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<PAGE>
EXHIBIT A
No.______ 900,000 Warrants
MEDIA LOGIC, INC.
Warrant Certificate
THIS CERTIFIES THAT for value received ADAR Equities LLC, or registered
assigns, is the owner of the number of Warrants set forth above, each of
which entitles the owner thereof to purchase one fully paid and nonassessable
share of common stock, $.001 par value (the "Common Stock"), of MEDIA LOGIC,
INC., a Massachusetts corporation (the "Company"), at the purchase price
equal to the Exercise Price, as defined in the Warrant Agreement, dated as of
March 25, 1997 (the "Warrant Agreement"), between the Company and ADAR
Equities LLC, upon presentation and surrender of this Warrant Certificate
with the Form of Election to Purchase duly executed. The number of Warrants
evidenced by this Warrant Certificate (and the number of shares which may be
purchased upon exercise thereof, rounded up to the nearest full share) set
forth above, and the Exercise Price per share set forth above, are the number
and Exercise Price as of the date of original issuance of the Warrants, based
on the shares of Common Stock of the Company as constituted at such date.
This Warrant Certificate is subject to, and entitled to the benefits of,
all of the terms, provisions and conditions of the Warrant Agreement, which
Warrant Agreement is hereby incorporated herein by reference and made a part
hereof and to which Warrant Agreement reference is hereby made for a full
description of the rights, limitations of rights, duties and immunities
hereunder of the Company and the holders of the Warrant Certificates. Copies
of the Warrant Agreement are on file at the principal office of the Company.
This Warrant Certificate, with or without other Warrant Certificates,
upon surrender at the principal office of the Company, may be exchanged for
another Warrant Certificate or Warrant Certificates of like tenor and date
evidencing Warrants entitling the holder to purchase a like aggregate number
of shares of Common Stock as the Warrants evidenced by the Warrant
Certificate or Warrant Certificates surrendered entitled such holder to
purchase. If this Warrant Certificate shall be exercised in part, the holder
hereof shall be entitled to receive upon surrender hereof another Warrant
Certificate or Warrant Certificates for the number of whole Warrants not
exercised.
No holder of this Warrant Certificate shall be entitled to vote, receive
dividends, subscription rights or be deemed the holder of Common Stock or any
other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained in the Warrant
Agreement or
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<PAGE>
herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action (whether upon
any recapitalization, issue of stock, reclassification of stock, change of
par value or change of stock to no par value, consolidation, merger,
conveyance, or otherwise) or, except as provided in the Warrant Agreement, to
receive notice of meetings, until the Warrant or Warrants evidenced by this
Warrant Certificate shall have been exercised and the Shares shall have
become deliverable as provided in the Warrant Agreement.
If this Warrant shall be surrendered for exercise within any period
during which the transfer books for the Company's Common Stock or other class
of stock purchasable upon the exercise of this Warrant are closed for any
purpose, the Company shall not be required to make delivery of certificates
for shares purchasable upon such exercise until the date of the reopening of
said transfer books, provided, however, that such books shall not be closed
for longer than a 20-day period.
IN WITNESS WHEREOF, THE COMPANY has caused the signature (or facsimile
signature) of its President and its Secretary or Assistant Secretary to be
printed hereon and its corporate seal (or facsimile) to be printed hereon.
Dated: March 25, 1997
MEDIA LOGIC, INC.
By: /s/ William E. Davis, Jr.
------------------------------
Name: William E. Davis, Jr.
Title: Chief Executive Officer
Attest:
By: /s/
----------------------------
Name:
Title:
-2-
<PAGE>
FORM OF
ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer
the Warrant Certificates.)
FOR VALUE RECEIVED _____________________ hereby sells, assigns and
transfers unto this Warrant Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
______________________, to transfer the within Warrant Certificate on the
books of the within-named Company, with full power of substitution.
Dated: ________________________, _______
___________________________________
Signature
Signature Guaranteed:
NOTICE
The signature of the foregoing Assignment must correspond to the name as
written upon the face of this Warrant Certificate in every particular,
without alteration or enlargement or any change whatsoever.
-3-
<PAGE>
FORM OF
ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Warrant Certificate).
TO: MEDIA LOGIC, INC.
CC: ROCHON CAPITAL GROUP, LTD.
1000 Fourth Street, Suite 775
San Rafael, California 94901
Attn: Phillip Neiman
Fax: (415) 459-6555
The undersigned hereby irrevocably elects to exercise Warrants
represented by this Warrant Certificate to purchase _____ shares of Common
Stock issuable upon the exercise of such Warrants and requests that
certificates for such shares be issued in the name of:
(Please insert social security, tax identification or other
identifying number)
_____________________________
_____________________________
_____________________________
(Please print name and address)
If such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, a new Warrant Certificate for the balance remaining of
such Warrants shall be registered in the name of and delivered to:
Please insert social security, tax identification or other identifying number
_____________________________
_____________________________
_____________________________
(Please print name and address)
Dated: ________________________, _______
___________________________________
Signature
(Signature must conform in all respects
to name of holder as specified on the
face of this Warrant Certificate)
Signature Guaranteed:
-1-
<PAGE>
EXHIBIT 99.8
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of the date of
acceptance set forth below, is entered into by and between MEDIA LOGIC, INC.,
a Massachusetts corporation ("Company"), and the undersigned (the "Buyer").
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in accordance with and in reliance upon the exemption from
securities registration afforded, inter alia, by Rule 506 under Regulation D
("Regulation D" as promulgated by the United States Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"1933 Act"), and/or Section 4(2) of the 1933 Act; and
WHEREAS, the Buyer wishes to purchase, upon the terms and subject to
the conditions of this Agreement, 7% Convertible Debentures (the
"Debentures"), of the Company which will be convertible into shares of Common
Stock, $.01 par value per share of the Company (the "Common Stock"), upon the
terms and subject to the conditions of such Debentures (the Common Stock and
the Debentures are sometimes referred to herein as the "Securities"), and
subject to acceptance of this Agreement by the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
a. Purchase. The undersigned hereby agrees to initially purchase
from the Company, the Debentures of the Company, in the principal amount set
forth on the signature page of this Agreement, out of a total offering of
$750,000 in Debentures, and having the terms and conditions and being in the
form attached hereto as Annex I. The purchase price for the Debentures shall
be as set forth on the signature page hereto and shall be payable in United
States Dollars.
b. Form of Payment. The Buyer shall pay the purchase price for
the Debentures by delivering immediately available good funds in United
States Dollars as set forth in Section 1(c). Promptly following payment by
the Buyer to the Escrow Agent of the purchase price of the Debentures, the
Company shall deliver the Debentures duly executed on behalf of the Company
to the Escrow Agent. By signing this Agreement, the Buyer and the Company,
and subject to acceptance by the Escrow Agent, each agrees to all of the
terms and conditions of, and becomes a party to, the Joint Escrow
Instructions attached hereto as Annex II, all of the provisions of which are
incorporated herein by this reference as if set forth in full.
<PAGE>
c. Method of Payment. Payment into escrow of the purchase price
for the Debentures shall be made by wire transfer of funds to Krieger &
Prager, Esqs. (the "Escrow Agent") in accordance with the following
instructions:
Bank of New York
350 Fifth Avenue
New York, New York 10001
ABA# 021000018
For credit to the account of Krieger & Prager, Esqs.
Account No.: 637-1657450
Not later than 1:00 p.m., New York time, on the date which is one (1) New
York Stock Exchange trading day after the Company shall have accepted this
Agreement and returned a signed counterpart of this Agreement to the Escrow
Agent by facsimile, the Buyer shall deposit with the Escrow Agent the
aggregate purchase price for the Debentures, in currently available funds.
Time is of the essence with respect to such payment, and failure by the Buyer
to make such payment, shall allow the Company to cancel this Agreement.
d. Rejection of Subscription. Notwithstanding anything herein to
the contrary, the Company reserves the right to reject in its sole discretion
this subscription for the Debentures in whole or in part at any time prior to
the Closing Date (as defined below). In the event of such rejection, the
Buyer's subscription payment will be returned to the Buyer and this Agreement
will have no force or effect. If the Buyer's subscription is not so
rejected, on the Closing Date funds shall be released to the Company and the
certificates representing the Debentures shall be released to the Buyer.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and agrees with,
the Company as follows:
a. Without limiting Buyer's right to sell the Common Stock
pursuant to the Registration Statement, the Buyer is purchasing the
Debentures and will be acquiring the shares of Common Stock issuable upon
conversion of the Debenture (the "Conversion Shares") in the ordinary course
of its business and for its own account for investment only and not with a
view towards the public sale or distribution thereof and not with a view to
or for sale in connection with any distribution thereof or any arrangement or
understanding with any other persons regarding the distribution or purchase
of such Debentures or the Conversion Shares;
b. The Buyer is (i) an "accredited investor" as that term is
defined in Rule 501 of the General Rules and Regulations under the 1933 Act
by reason of Rule 501(a)(3), (ii) experienced in making investments of the
kind described in this Agreement and the related
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<PAGE>
documents, (iii) able, by reason of the business and financial experience of
its officers (if an entity) and professional advisors (who are not affiliated
with or compensated in any way by the Company or any of its affiliates or
selling agents), to protect its own interests in connection with the
transactions described in this Agreement, and the related documents, and (iv)
able to afford the entire loss of its investment in the Securities;
c. All subsequent offers and sales of the Debentures and the
Conversion Shares by the Buyer shall be made pursuant to registration of the
Shares under the 1933 Act or pursuant to an exemption from registration;
d. The Buyer understands that the Debentures are being offered and
sold, and the Conversion Shares are being offered, to it in reliance on
specific exemptions from the registration requirements of United States
federal and state securities laws and that the Company is relying upon the
truth and accuracy of, and the Buyer's compliance with, the representations,
warranties, agreements, acknowledgements and understandings of the Buyer set
forth herein in order to determine the availability of such exemptions and
the eligibility of the Buyer to acquire the Debentures and to receive an
offer of the Conversion Shares;
e. The Buyer and its advisors, if any, have been furnished with
all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Debenture and the
offer of the Shares which have been requested by the Buyer, including Annex
III hereto. The Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and have received complete and
satisfactory answers to any such inquiries. Without limiting the generality
of the foregoing, the Buyer has also had the opportunity to obtain and to
review the Company's (1) Annual Report on Form 10-K for the fiscal year ended
March 31, 1997, (2) Amendment No. 1 to Form 10-K on Form 10-K/A, (3)
Quarterly Reports on Form 10-Q dated September 30, 1996, December 31, 1996
and June 30, 1997 and (4) Proxy Statement dated August 11, 1997
(collectively, the "Company's SEC Documents").
f. The Buyer, taking into account the personnel and resources it
can practically bring to bear on the purchase of the Debentures, is
knowledgeable, sophisticated and experienced in making, and is qualified to
make, decisions with respect to making an investment decision like that
involved in the purchase of the Debentures and the Buyer understands that its
investment in the Securities involves a high degree of risk;
g. The Buyer understands that no United States federal or state
agency or any other government or governmental agency has passed on or made
any recommendation or endorsement of the Securities;
h. The Buyer has full right, power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly and validly authorized, executed and delivered on
behalf of the Buyer and is a valid and binding agreement of the Buyer
enforceable in accordance with its terms, subject as to enforceability to
general principles of equity (regardless of whether such enforcement is
considered in a proceeding
3
<PAGE>
at law or in equity) and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally.
i. Neither the Buyer, nor any affiliate of the Buyer, has any
present intention of entering into, any put option, short position, or other
similar position with respect to the Debentures or the Conversion Shares.
j. Notwithstanding the provisions hereof or of the Debentures, in
no event (except with respect to any event of mandatory conversion of the
Debentures) shall the holder be entitled to convert any Debenture to the
extent after such conversion, the sum of (1) the number of shares of Common
Stock beneficially owned by the Buyer and its affiliates (other than shares
of Common Stock which may be deemed beneficially owned through the ownership
of the unconverted portion of the Debenture), and (2) the number of shares of
Common Stock issuable upon the conversion of the Debenture with respect to
which the determination of this proviso is being made, would result in
beneficial ownership by the Buyer and its affiliates of more than 4.99% of
the outstanding shares of Common Stock. For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in
accordance with Section 13 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
k. The Buyer acknowledges that the Company will characterize the
Debentures as preferred stock of the Company for federal income tax purposes,
and that, pursuant to Section 385(c) of the Internal Revenue Code of 1986, as
amended, this characterization is binding on all holders. Any holder
treating the Debentures in a manner inconsistent with such characterization
must disclose the inconsistent treatment on such holder's tax return. This
characterization, however, is not binding on the Internal Revenue Service,
and neither the Company nor the holder is excused from any interest or
penalties resulting from improper characterization.
3. COMPANY REPRESENTATIONS, WARRANTIES, ETC.
The Company represents and warrants to the Buyer that:
a. Concerning the Shares. There are no preemptive rights of any
stockholder of the Company, as such, to acquire the Common Stock.
b. Reporting Company Status. The Company is a corporation duly
organized, validly existing and in good standing under the laws of The
Commonwealth of Massachusetts. The Company has registered its Common Stock
pursuant to Section 12 of the Exchange Act, and the Common Stock is listed
and traded on the American Stock Exchange ("AMEX"). Except for the letter
from AMEX to the Company dated October 15, 1997, a copy of which is attached
hereto as Annex VI, the Company has received no notice, either oral or
written, with respect to the continued eligibility of the Common Stock for
such listing.
4
<PAGE>
c. Authorized Shares. The Company has sufficient authorized and
unissued shares of Common Stock as may be reasonably necessary to effect the
conversion of the Debentures. The Conversion Shares have been duly
authorized and, when issued upon conversion of, or as interest on, the
Debentures, will be duly and validly issued, fully paid and non-assessable
and will not subject the holder thereof to personal liability by reason of
being such holder.
d. Securities Purchase Agreement; Registration Rights Agreement
and Stock. This Agreement and the Registration Rights Agreement, the form of
which is attached hereto as Annex IV (the "Registration Rights Agreement"),
and the transactions contemplated thereby, have been duly and validly
authorized by the Company, this Agreement has been duly executed and
delivered by the Company and this Agreement is, and the Registration Rights
Agreement, when executed and delivered by the Company, will be, valid and
binding agreements of the Company enforceable in accordance with their
respective terms, subject as to enforceability to general principles of
equity (regardless of whether such enforcement is considered in a proceeding
at law or in equity) and to bankruptcy, insolvency, moratorium, and other
similar laws affecting the enforcement of creditors' rights generally; and
the Debentures will be duly and validly authorized and, when executed and
delivered on behalf of the Company in accordance with this Agreement, will be
a valid and binding obligation of the Company in accordance with their terms,
subject to general principles of equity (regardless of whether such
enforcement is considered in a proceeding at law or in equity) and to
bankruptcy, insolvency, moratorium, or other similar laws affecting the
enforcement of creditors' rights generally.
e. Non-contravention. The execution and delivery of this
Agreement and the Registration Rights Agreement by the Company, the issuance
of the Securities, and the consummation by the Company of the other
transactions contemplated by this Agreement, the Registration Rights
Agreement, and the Debentures do not and will not conflict with or result in
a breach by the Company of any of the terms or provisions of, or constitute a
default under (i) the restated articles of organization or by-laws of the
Company, (ii) any indenture, mortgage, deed of trust, or other material
agreement or instrument to which the Company is a party or by which it or any
of its properties or assets are bound, including any listing agreement for
the Common Stock except as herein set forth, (iii) to its knowledge, any
existing applicable law, rule, or regulation or any applicable decree,
judgment, or (iv) to its knowledge, any order of any court, United States
federal or state regulatory body, administrative agency, or other
governmental body having jurisdiction over the Company or any of its
properties or assets, except such conflict, breach or default which would not
have a material adverse effect on the transactions contemplated herein.
f. Approvals. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the stockholders of the Company is required to be
obtained by the Company for the issuance and sale of the Securities to the
Buyer as contemplated by this Agreement, except such authorizations,
approvals and consents that have been obtained and the approval or waiver
contemplated by Section 4(g) hereof.
g. SEC Filings. None of the SEC Filings with the Securities and
Exchange Commission since the filing of the 10-K on March 31, 1997 contained,
at the time they were filed,
5
<PAGE>
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements made
therein in light of the circumstances under which they were made, not
misleading. The Company has since October 27, 1996 timely filed all
requisite forms, reports and exhibits thereto with the Securities and
Exchange Commission.
h. Absence of Certain Changes. Since January 1, 1997, there has
been no material adverse change and no material adverse development in the
business, properties, operations, financial condition, or results of
operations of the Company, except as disclosed in the documents referred to
in Section 2(e) hereof.
i. Full Disclosure. There is no fact known to the Company (other
than general economic conditions known to the public generally) or as
disclosed in the documents referred to in Section 2(e), that has not been
disclosed in writing to the Buyer that (i) would reasonably be expected to
have a material adverse effect on the business or financial condition of the
Company or (ii) would reasonably be expected to materially and adversely
affect the ability of the Company to perform its obligations pursuant to this
Agreement.
j. Absence of Litigation. Except as set forth in Annex III hereto
and in the documents referred to in Section 2(e), which the Buyer has
reviewed, there is no action, suit, proceeding, inquiry or investigation
before or by any court, public board or body pending or, to the knowledge of
the Company, threatened against or affecting the Company, wherein an
unfavorable decision, ruling or finding would have a material adverse effect
on the business or financial condition of the Company or the transactions
contemplated by this Agreement or any of the documents contemplated hereby or
which would adversely affect the validity or enforceability of, or the
authority or ability of the Company to perform its obligations under, this
Agreement or any of such other documents.
k. Absence of Events of Default. Except as set forth in Section
3(e), no Event of Default, as defined in the respective agreement to which
the Company is a party, and no event which, with the giving of notice or the
passage of time or both, would become an Event of Default (as so defined),
has occurred and is continuing, which would have a material adverse effect on
the Company's financial condition or results of operations.
l. Prior Issues. Except as set forth in Annex III,
during the twelve (12) months preceding the date hereof, the Company has not
issued any convertible securities. The presently outstanding unconverted
principal amount of each such issuance as at September 30, 1997 are set forth
in Annex III.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. The Buyer acknowledges that (1) the
Debentures have not been and are not being registered under the provisions of
the 1933 Act and, except as provided in the Registration Rights Agreement,
the Conversion Shares have not been and are not being registered under the
1933 Act, and may not be sold or otherwise transferred without a legal
opinion satisfactory in form, scope and substance to the Company, to the
effect that the Securities
6
<PAGE>
to be sold or transferred may be sold or transferred pursuant to an exemption
from such registration; (2) any sale of the Securities made in reliance on
Rule 144 promulgated under the 1933 Act may be made only in accordance with
the terms of said Rule and further, if said Rule is not applicable, any
resale of such Securities under circumstances in which the seller, or the
person through whom the sale is made, may be deemed to be an underwriter, as
that term is used in the 1933 Act, may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (3) neither the Company nor any other person is under any
obligation to register the Securities (other than pursuant to the
Registration Rights Agreement) under the 1933 Act or to comply with the terms
and conditions of any exemption thereunder.
b. Restrictive Legend. The Buyer acknowledges and agrees that the
Debentures, and, until such time as the Conversion Shares have been
registered under the 1933 Act as contemplated by the Registration Rights
Agreement and sold in accordance with an effective registration statement,
the shares of Common Stock issued to the holder upon conversion of the
Debentures shall bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of the
Debentures and such shares):
THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD
OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER
EVIDENCE ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS
NOT REQUIRED.
c. Registration Rights Agreement. The parties hereto agree to
enter into the Registration Rights Agreement, in substantially the form
attached hereto as Annex IV, on or before the Closing Date.
d. Filings. The Company undertakes and agrees to make all
necessary filings in connection with the sale of the Debentures to the Buyer
under any United States laws and regulations, or by any domestic securities
exchange or trading market, and to provide a copy thereof to the Buyer
promptly after such filing.
e. Reporting Status. So long as the Buyer beneficially owns any
of the Debentures, the Company shall file all reports required to be filed
with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, and the
Company shall not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would permit such termination.
f. Use of Proceeds. The Company will use the proceeds from the
sale of the Debentures (excluding amounts paid by the Company for legal fees
and finder's fees in connection with the sale of the Debentures) for internal
working capital purposes, and shall not, directly or
7
<PAGE>
indirectly, use such proceeds for any loan to or investment in any other
corporation, partnership enterprise or other person.
g. AMEX Approval or Waiver. The Company shall use its best
efforts to obtain the approval of, or a waiver from AMEX with respect to the
requirements of Section 713(a) of the AMEX Listing Standards and Requirements
(the "20% Rule") in connection with the issuance of the Conversion Shares.
If such approval or waiver is obtained, then, if required in connection
therewith, the Company shall promptly commence the mailing to shareholders
contemplated by the AMEX Listing Standards and Requirements. If, however,
such approval or waiver is not obtained within twenty (20) days after the
date (the "20% Date") the Company would, if it were to convert the Debentures
then sought to be converted by a Buyer, exceed the 20% Rule, the Company
shall take all practical steps necessary to obtain shareholder approval (the
"Shareholder Approval") for such issuances, including, but not limited to,
calling a regular or special meeting of shareholders of the Company.
Notwithstanding anything herein to the contrary, if the Company fails to
obtain (i) the approval of, or a waiver from AMEX with respect to the 20%
Rule in connection with the issuance of the Conversion Shares and (ii)
Shareholder Approval within 60 days after the 20% Date, the Company shall
redeem the Debentures in accordance with Section 12(B) of the Debentures.
h. Available Shares. The Company shall have at all times
authorized and reserved for issuance, free from preemptive rights, shares of
Common Stock sufficient to yield the number of shares of Common Stock
issuable at conversion as may be required to satisfy the conversion rights of
the Buyer pursuant to the terms and conditions of the Debentures.
5. TRANSFER AGENT INSTRUCTIONS.
a. Promptly following the delivery by the Buyer of the aggregate
purchase price for the Debentures in accordance with Section 1(c) hereof, the
Company will irrevocably instruct its transfer agent to issue Common Stock
from time to time upon conversion of the Debentures in such amounts as
specified from time to time by the Company to the transfer agent, bearing the
restrictive legend specified in Section 4(b) of this Agreement prior to
registration of the Conversion Shares under the 1933 Act, registered in the
name of the Buyer or its nominee and in such denominations to be specified by
the Buyer in connection with each conversion of the Debentures. The Company
warrants that no instruction other than such instructions referred to in this
Section 5 and stop transfer instructions to give effect to Section 4(a)
hereof prior to registration and sale of the Conversion Shares under the 1933
Act will be given by the Company to the transfer agent and that the
Conversion Shares shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement, the
Registration Rights Agreement, and applicable law. Nothing in this Section
shall affect in any way the Buyer's obligations and agreement to comply with
all applicable securities laws upon resale of the Securities including,
without limitation, the prospectus delivery requirements of the 1933 Act. If
the Buyer provides the Company with an opinion of counsel reasonably
satisfactory to the Company that registration of a
8
<PAGE>
resale by the Buyer of any of the Securities in accordance with clause (1) of
Section 4(a) of this Agreement is not required under the 1933 Act, the
Company shall (except as provided in clause (2) of Section 4(a) of this
Agreement) permit the transfer of the Securities and, in the case of the
Conversion Shares, promptly instruct the Company's transfer agent to issue
one or more certificates for Common Stock without legend in such name and in
such denominations as requested by the Buyer.
b. The Company will permit the Buyer to exercise its right to
convert the Debentures by telecopying an executed and completed Notice of
Conversion to the Company and delivering within three (3) business days
thereafter, the original Notice of Conversion and the Debentures representing
the Conversion Shares to the Company by express courier, with a copy to the
transfer agent. Each date on which a Notice of Conversion is telecopied to
and received by the Company in accordance with the provisions hereof shall be
deemed a Conversion Date. The Company will transmit the certificates
representing the Conversion Shares issuable upon conversion of any Debenture
(together with the Debentures representing the Conversion Shares not so
converted) to the Buyer via express courier, by electronic transfer or
otherwise, within five (5) business days after receipt by the Company of the
original Notice of Conversion and the Debenture representing the Shares to be
converted (the "Delivery Date").
c. The Company understands that a delay in the issuance of the
Shares of Common Stock beyond the Delivery Date could result in economic loss
to the Buyer. As compensation to the Buyer for such loss, the Company agrees
to pay late payments to the Buyer for late issuance of Shares upon Conversion
in accordance with the following schedule (where "No. Business Days Late" is
defined as the number of business days beyond five (5) business days from
Delivery Date:
Late Payment For Each
$10,000 of Debenture
No. Business Days Late Principal Amount Being Converted
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
If the No. of Business Days Late shall exceed 10, the late payment for each
$10,000 of Debenture principal amount being converted shall increase at the
rate of $150 per day after such tenth day.
If such shares of Common Stock are not delivered within five business days
after the Delivery Date, the Buyer will be entitled to revoke the relevant
Notice of Conversion by delivering a notice
9
<PAGE>
to such effect to the Company whereupon the Company and the Buyer shall each
be restored to their respective positions immediately prior to delivery of
such Notice of Conversion.
d. In lieu of delivering physical certificates representing the
Common Stock issuable upon conversion, provided the Company's transfer agent
is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer program, upon request of the Buyer and its compliance
with the provisions contained in this paragraph, so long as the certificates
therefor do not bear a legend and the Buyer thereof is not obligated to
return such certificate for the placement of a legend thereon, the Company
shall use its best efforts to cause its transfer agent to electronically
transmit the Common Stock issuable upon conversion to the Buyer by crediting
the account of Buyer's Prime Broker with DTC through its Deposit Withdrawal
Agent Commission system.
6. DELIVERY INSTRUCTIONS.
The Debentures shall be delivered by the Company to the Escrow Agent
pursuant to Section 1(b) hereof, on a delivery against payment basis on the
Closing Date.
7. CLOSING DATE.
The date and time of the issuance and sale of the Debentures (the
"Closing Date") shall occur no later than 12:00 Noon, New York time on the
first NYSE trading day after the fulfillment or waiver of all closing
conditions pursuant to Sections 8 and 9, or such other mutually agreed to
time. The closing shall occur on such date at the offices of the Escrow
Agent. Notwithstanding anything to the contrary contained herein, the Escrow
Agent will be authorized to release the funds representing the Purchase Price
for the Debentures, and the Debentures only upon satisfaction of the
conditions set forth in Section 8 hereof.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to sell the
Debentures on the Closing Date is subject to the following conditions, any of
which may be waived by the Company:
a. Delivery by the Buyer to the Escrow Agent of good funds as
payment in full of an amount equal to the purchase price for the Debentures
in accordance with Section 1(c) hereof;
b. The accuracy on the Closing Date of the representations and
warranties of the Buyer contained in this Agreement as if made on the Closing
Date and the performance by the Buyer on or before the Closing Date of all
covenants and agreements of the Buyer required to be performed on or before
the Closing Date;
c. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.
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<PAGE>
9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the
Debentures on the Closing Date is conditioned upon:
a. Acceptance by Buyer of an Agreement for the sale of Debentures,
as indicated by execution of this Agreement;
b. Delivery by the Company to the Escrow Agent of the Debenture in
accordance with this Agreement;
c. The accuracy in all material respects on the Closing Date of
the representations and warranties of the Company contained in this Agreement
as if made on the Closing Date and the performance by the Company on or
before the Closing Date of all covenants and agreements of the Company
required to be performed on or before the Closing Date and reasonably
satisfactory to the Buyer.
d. Delivery by the Company to the Escrow Agent of an opinion of
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., substantially in the
form attached hereto as Annex V.
10. LOCK-UP
a. The Company covenants and agrees that it will not enter into
any subsequent or further offer or sale of Common Stock (whether of the same
class of Common Stock or otherwise) or securities convertible into shares of
Common Stock with any third party until the expiration of a period of one
hundred thirty five (135) days from the Effective Date (as defined in the
Registration Rights Agreement).
b. Notwithstanding anything herein to the contrary, the provisions
of Section 10(a) will not apply to (i) the issuance of any securities in
connection with a merger, consolidation, sale of assets, disposition of a
business, product or license by the Company, strategic alliance, public
offering of any securities issued at the then current market price or upon
the exercise of options, (ii) the exchange of the capital stock of the
Company for assets, stock or other joint venture interests, (iii) any
securities issued pursuant to any employee or director stock option plan or
(iv) the issuance of $1,500,000 of Common Stock contemplated by the Placement
Agent Agreement, dated as of October, 1997, among the Company, First Granite
Securities, Inc. and Boston Group L.P. Any action contemplated by Sections
10(b)(i), 10(b)(ii) or 10(b)(iii), however, is subject to the condition that
registration rights, if any, in connection with such action shall not require
or permit a Registration Statement in respect of such stock to be filed prior
to thirty (30) days after the Effective Date.
11. GOVERNING LAW; MISCELLANEOUS.
This Agreement shall be governed by and interpreted in accordance
with the laws of the State of New York. Each of the parties consents to the
jurisdiction of the federal courts whose
11
<PAGE>
districts encompass any part of the City of New York or the state courts of
the State of New York sitting in the City of New York in connection with any
dispute arising under this Agreement and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on forum non
conveniens, to the bringing of any such proceeding in such jurisdictions. A
facsimile transmission of this signed Agreement shall be legal and binding on
all parties hereto. This Agreement may be signed in one or more
counterparts, each of which shall be deemed an original. The headings of
this Agreement are for convenience of reference and shall not form part of,
or affect the interpretation of, this Agreement. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or
enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction. This Agreement
may be amended only by an instrument in writing signed by the party to be
charged with enforcement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
12. NOTICES. Any notice required or permitted hereunder shall be
given in writing (unless otherwise specified herein) and shall be deemed
effectively given, (i) on the date delivered, (a) by personal delivery, or
(b) if advance copy is given by fax, (ii) seven business days mailing by
international express courier, with postage and fees prepaid, addressed to
each of the other parties thereunto entitled at the following addresses, or
at such other addresses as a party may designate by ten days advance written
notice to each of the other parties hereto.
COMPANY: MEDIA LOGIC, INC.
310 South Street
Plainville, MA 02762
Attention: Chief Executive Officer
Telecopier No.: (508) 695-8593
with a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Attention: Richard R. Kelly, Esq.
Telecopier No.: (617) 542-2241
BUYER: The address set forth on the signature page of this Agreement.
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<PAGE>
ESCROW AGENT: Krieger & Prager, Esqs.
319 Fifth Avenue
New York, New York 10016
Attention: Samuel Krieger, Esq.
Telecopier No. (212) 213-2077
13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
Company's and the Buyer's representations and warranties shall survive the
execution and delivery hereof of this Agreement and the delivery of the
Debentures.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
Buyer or one of its officers thereunto duly authorized as of the date set
forth below.
AGGREGATE INITIAL PURCHASE PRICE OF SUCH DEBENTURE: $750,000.00
SIGNATURES FOR ENTITIES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities
Purchase Agreement to be duly executed on its behalf this 29th day of
October, 1997.
___________________________________
Address Printed Name of Subscriber
By: /s/ (Illegible)
--------------------------------
Telecopier No. ____________________ (Signature of Authorized Person)
General Attorneys
-----------------------------------
Printed Name and Title
Panama
- --------------------------------
Jurisdiction of Incorporation
or Organization
This Agreement has been accepted as of the date set forth below.
MEDIA LOGIC, INC.
By: /s/ William E. Davis, Jr.
---------------------------
William E. Davis, Jr.
Chief Executive Officer
Date: October 29, 1997
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<PAGE>
ANNEX I FORM OF DEBENTURE
ANNEX II JOINT ESCROW INSTRUCTIONS
ANNEX III COMPANY DISCLOSURE MATERIALS
ANNEX IV REGISTRATION RIGHTS AGREEMENT
ANNEX V OPINION OF COUNSEL
ANNEX VI AMEX LETTER
<PAGE>
ANNEX I
FORM OF DEBENTURE
NEITHER THIS DEBENTURE NOR THE COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS DEBENTURE HAVE BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") OR THE SECURITIES COMMISSION OF ANY STATE UNDER
ANY STATE SECURITIES LAW. THE SECURITIES ARE RESTRICTED AND MAY NOT
BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED UNLESS THE SECURITIES ARE
REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR ARE
PERMITTED UNDER THE ACT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS.
No.______________ US $______________
MEDIA LOGIC, INC.
7% CONVERTIBLE DEBENTURE DUE OCTOBER_____, 2000
THIS DEBENTURE is one of a duly authorized issue of $750,000 in
Debentures of MEDIA LOGIC, INC., a corporation duly organized and existing
under the laws of The Commonwealth of Massachusetts (the "Company")
designated as its 7% Convertible Debenture Due October ___, 2000.
FOR VALUE RECEIVED, the Company promises to pay to
_______________________, the registered holder hereof (the "Holder"), the
principal sum of ____________________ 00/100 (US $________________) Dollars
on October ______, 2000 (the "Maturity Date") and to pay interest on the
principal sum outstanding from time to time in arrears upon conversion as
provided herein on October _____, 2000 at the rate of 7% per annum accruing
from the date of initial issuance (the "Issuance Date"). Accrual of interest
shall commence on the first such business day to occur after the date hereof
until payment in full of the principal sum has been made or duly provided
for. Subject to the provisions of Section 4 below, the principal of, and
interest on, this Debenture are payable at the option of the Company, in
shares of Common Stock, $.01 par value per share, of the Company ("Common
Stock"), or in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts,
at the address last appearing on the Debenture Register of the Company as
designated in writing by the Holder from time to time. The Company will pay
the principal of and interest upon this Debenture on the Maturity Date, less
any amounts required by law to be deducted, to the registered holder of this
Debenture as of the tenth day prior to the Maturity Date and addressed to
such holder as the last address
<PAGE>
appearing on the Debenture Register. The forwarding of such check shall
constitute a payment of principal and interest hereunder and shall satisfy
and discharge the liability for principal and interest on this Debenture to
the extent of the sum represented by such check plus any amounts so deducted.
The Company has issued this Debenture pursuant to a Securities
Purchase Agreement between the Company and the Buyer named therein (the
"Securities Purchase Agreement"). Capitalized terms used herein and not
defined herein shall have the meanings assigned thereto in the Securities
Purchase Agreement.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Ten Thousand
Dollars (US $10,000) and integral multiples thereof. The Debentures are
exchangeable for an equal aggregate principal amount of Debentures of
different authorized denominations, as requested by the Holders surrendering
the same. No service charge will be made for such registration or transfer
or exchange.
2. The Company shall be entitled to withhold from all payments of
principal of, and interest on, this Debenture any amounts required to be
withheld under the applicable provisions of the United States income tax laws
or other applicable laws at the time of such payments, and Holder shall
execute and deliver all required documentation in connection therewith.
3. This Debenture has been issued subject to investment
representations of the original purchaser hereof and may be transferred or
exchanged only in compliance with the Securities Act of 1933, as amended (the
"Act"), and other applicable state and foreign securities laws. In the event
of any proposed transfer of this Debenture, the Company may require, prior to
issuance of a new Debenture in the name of such other person, that it receive
reasonable transfer documentation including opinions that the issuance of the
Debenture in such other name does not and will not cause a violation of the
Act or any applicable state or foreign securities laws. Prior to due
presentment for transfer of this Debenture, the Company and any agent of the
Company may treat the person in whose name this Debenture is duly registered
on the Company's Debenture Register as the owner hereof for the purpose of
receiving payment as herein provided and for all other purposes, whether or
not this Debenture be overdue, and neither the Company nor any such agent
shall be affected by notice to the contrary.
4. A. Subject to Section 4(B), the Holder of this Debenture is
entitled, at its option, to convert at any time commencing seventy five (75)
days after the Issuance Date (the "Conversion Time") the principal amount of
this Debenture, provided that the principal amount is at least US $10,000
(unless if at the time of such election to convert the aggregate principal
amount of all Debentures registered to the Holder is less than Ten Thousand
Dollars (US $10,000), then the whole amount thereof) into shares of Common
Stock of the Company at a conversion price (the "Conversion Rate") for each
share of Common Stock equal to the lesser of (a) 120% of the Market Price on
the Issuance Date, and (b) 80% of the Market Price on the Conversion Date (as
defined below). For purposes of this Section 4, the Market Price shall be
2
<PAGE>
the average closing bid price of the Common Stock on the five (5) trading
days immediately preceding the Issuance Date or Conversion Date, as may be
applicable, on the American Stock Exchange ("AMEX") or, if the Common Stock
is not then listed on AMEX or any other national securities exchange, the
Market Price shall be the average closing bid price of the Common Stock on
the five (5) trading days immediately preceding the Issuance Date or
Conversion Date, as may be applicable, as reported by the National
Association of Securities Dealers, Inc. or the closing bid price in the
over-the-counter market on such date. Conversion shall be effectuated by
surrendering the Debentures to be converted to the Company with the form of
conversion notice attached hereto as Exhibit A, executed by the Holder of the
Debenture evidencing such Holder's intention to convert this Debenture or a
specified portion (as above provided) hereof, and accompanied, if required by
the Company, by proper assignment hereof in blank. Interest accrued or
accruing from the date of issuance to the date of conversion shall, at the
option of the Company, be paid in cash or Common Stock upon conversion at the
Conversion Rate. No fractional shares or scrip representing fractions of
shares will be issued on conversion, but the number of shares issuable shall
be rounded to the nearest whole share. The date on which notice of
conversion is given (the "Conversion Date") shall be deemed to be the date on
which the Holder has delivered this Debenture, with the conversion notice
duly executed, to the Company or, the date set forth in such facsimile
delivery of the notice of conversion if the Debenture is received by the
Company within three (3) business days therefrom. Facsimile delivery of the
conversion notice shall be accepted by the Company at telephone number
(508-695-8593); ATTN: Chief Financial Officer. Certificates representing
Common Stock upon conversion will be delivered within five (5) business days
from the date the notice of conversion with the original Debenture is
delivered to the Company.
B. The Company shall have the right to require, by written
notice to the Holder of this Debenture at least ten (10) days prior to the
Maturity Date, that the Holder of this Debenture exercise its right of
conversion with respect to all or that portion of the principal amount and
interest outstanding on the Maturity Date.
5. No provision of this Debenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, and interest on, this Debenture at the time, place, and rate,
and in the coin or currency, herein prescribed. This Debenture and all other
Debentures now or hereafter issued of similar terms are direct obligations of
the Company.
6. No recourse shall be had for the payment of the principal of,
or the interest on, this Debenture, or for any claim based hereon, or
otherwise in respect hereof, against any incorporator, shareholder, officer
or director, as such, past, present or future, of the Company or any
successor corporation, whether by virtue of any constitution, statute or rule
of law, or by the enforcement of any assessment or penalty or otherwise, all
such liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.
7. If the Company merges or consolidates with another corporation
or sells or transfers all or substantially all of its assets to another
person and the holders of the Common Stock are entitled to receive stock,
securities or property in respect of or in exchange for
3
<PAGE>
Common Stock, then as a condition of such merger, consolidation, sale or
transfer, the Company and any such successor, purchaser or transferee agree
that this Debenture may thereafter be converted on the terms and subject to
the conditions set forth above into the kind and amount of stock, securities
or property receivable upon such merger, consolidation, sale or transfer by a
holder of the number of shares of Common Stock into which this Debenture
might have been converted immediately before such merger, consolidation, sale
or transfer, subject to adjustments which shall be as nearly equivalent as
may be practicable. In the event of any proposed merger, consolidation or
sale or transfer of all or substantially all of the assets of the Company (a
"Sale"), the Holder hereof shall have the right to convert by delivering a
Notice of Conversion to the Company within fifteen (15) days of receipt of
notice of such Sale from the Company. In the event the Holder hereof shall
elect not to convert, the Company may prepay all outstanding principal and
accrued interest on this Debenture, less all amounts required by law to be
deducted, upon which tender of payment all rights to conversion hereunder
shall terminate.
8. The Holder of the Debenture, by acceptance hereof, agrees that
this Debenture is being acquired for investment and that such Holder will not
offer, sell or otherwise dispose of this Debenture or the shares of Common
Stock issuable upon conversion thereof except under circumstances which will
not result in a violation of the Act or any applicable state Blue Sky or
foreign laws or similar laws relating to the sale of securities.
9. This Debenture shall be governed by and construed in
accordance with the laws of the State of New York. Each of the parties
consents to the jurisdiction of the federal courts whose districts encompass
any part of the City of New York or the state courts of the State of New York
sitting in the City of New York in connection with any dispute arising under
this Agreement and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non coveniens, to the
bringing of any such proceeding in such jurisdictions.
10. The following shall constitute an "Event of Default":
a. The Company shall default in the payment of principal or
interest on this Debenture and such default shall remain
unremedied for five (5) business days after the Company
has been notified of the default in writing by a Holder;
or
b. Any of the representations or warranties made by the
Company herein, in the Securities Purchase Agreement or
in any other Agreement executed by the Company in connection
therewith, or in any certificate or financial or other
written statements furnished by the Company in connection
with the execution and delivery of this Debenture or the
Securities Purchase Agreement shall be false or misleading
in any material respect at the time made; or
4
<PAGE>
c: The Company fails to issue shares of Common Stock to the
Holder or to cause its Transfer Agent to issue shares of
Common Stock upon exercise by the Holder of the conversion
rights of the Holder in accordance with the terms of this
Debenture, fails to transfer or to cause its Transfer Agent
to transfer any certificate for shares of Common Stock
issued to the Holder upon conversion of this Debenture and
when required by this Debenture or the Registration
Rights Agreement, or fails to remove any restrictive
legend or to cause its Transfer Agent to transfer any
certificate or any shares of Common Stock issued to the
Holder upon conversion of this Debenture as and when
required by this Debenture, the Securities Purchase
Agreement or the Registration Rights Agreement and any
such failure shall continue uncured for five (5) business
days after the Company has been notified of such failure
in writing by Holder;
d. The Company shall fail to perform or observe, in any
material respect, any other covenant, term, provision,
condition, agreement or obligation of the Company under
this Debenture and such failure shall continue uncured
for a period of thirty (30) days after written notice to
the Company from the Holder of such failure; or
e. The Company shall (1) admit in writing its inability to
pay its debts generally as they mature; (2) make an
assignment for the benefit of creditors or commence
proceedings for its dissolution; or (3) apply for or
consent to the appointment of a trustee, liquidator or
receiver for its or for a substantial part of its
property or business; or
f. A trustee, liquidator or receiver shall be appointed for
the Company or for a substantial part of its property or
business without its consent and shall not be discharged
within sixty (60) days after such appointment; or
g. Any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency
shall assume custody or control of the whole or any
substantial portion of the properties or assets of the
Company and shall not be dismissed within sixty (60) days
thereafter; or
h. Any money judgment, writ or warrant of attachment, or
similar process in excess of One Million ($1,000,000)
Dollars in the aggregate shall be entered or filed
against the Company or any of its properties or other
assets and shall remain unpaid, unvacated, unbonded or
unstayed for a period of sixty (60) days; or
i. Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors shall
be instituted by or against the Company and, if
instituted against the Company, shall not be dismissed
within sixty (60) days after
5
<PAGE>
such institution or the Company shall by any action or
answer approve of, consent to, or acquiesce in any such
proceedings or admit the material allegations of, or
default in answering a petition filed in any such
proceeding; or
j. The Company shall have its Common Stock suspended or
delisted from an exchange or over-the-counter market from
trading for in excess of five (5) trading days.
Then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the holders of at least
50% in principal amount of outstanding Debentures (which waiver shall not be
deemed to be a waiver of any subsequent default) at the option of the Holder
and in the Holder's sole discretion, the Holder may consider this Debenture
immediately due and payable, without presentment, demand, protest or notice
of any kinds, all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and
the Holder may immediately enforce any and all of the Holder's rights and
remedies provided herein or any other rights or remedies afforded by law.
11. Nothing contained in this Debenture shall be construed as
conferring upon the Holder the right to vote or to receive dividends or to
consent or receive notice as a shareholder in respect of any meeting of
shareholders or any rights whatsoever as a shareholder of the Company, unless
and to the extent converted in accordance with the terms hereof.
12. A. If the Registration Statement covering the Conversion
Shares is not effective within 180 days of the Issuance Date (the "Final
Registration Date") (except as provided by the last sentence of Section 2(a)
of the Registration Rights Agreement), the Company shall redeem this
Debenture by paying to the Holder in cash an amount equal to the gross
proceeds which the Holder would have realized had this Debenture (and accrued
but unpaid interest thereon, if any) been converted on the Final Registration
Date (with the Conversion Date being the Final Registration Date) and all the
shares of Common Stock into which this Debenture was converted were sold on
the Final Registration Date at the Market Price on such date.
B. If (x) the Company fails to obtain the approval of, or a waiver
from AMEX with respect to the 20% Rule in connection with the issuance of the
Conversion Shares and (y) the Company does not receive Shareholder Approval
within sixty (60) days after the 20% Date (such 60th day, the "Final 20%
Approval Date"), the Company shall redeem this Debenture by paying to the
Holder in cash an amount equal to the gross proceeds which the Holder would
have received had this Debenture (and accrued but unpaid interest thereon, if
any) been converted on the Final 20% Approval Date (with the Conversion Date
being the Final 20% Approval Date) and all of the shares of Common Stock into
which this Debenture was converted were sold on the Final 20% Approval Date
at the Market Price on such date.
6
<PAGE>
C. If the Company shall be required to redeem the Debentures
pursuant to Section 12(A) or 12(B), the Company shall send notice (the
"Redemption Notice") to the Holder at such Holder's address and telecopier
number as the same shall appear on the books of the Company and the Company
shall redeem the Debentures five (5) business days following the date on
which the Company provides the Redemption Notice (the "Redemption Date").
The Redemption Notice shall state that (i) the Debentures will be redeemed on
the Redemption Date, (ii) the redemption price, (iii) the place which
certificates for Debentures must be surrendered to collect the redemption
price, (iv) interest on the Debentures shall cease to accrue at the close of
business on the day prior to the Redemption Date and (v) the section of the
Debenture pursuant to which the Debentures are being redeemed.
Notwithstanding anything herein to the contrary, if after delivering the
Redemption Notice the Company does not redeem the Debentures on the
Redemption Date, the Company shall have no further right to redeem the
Debentures pursuant to Section 12(A) or 12(B) hereof.
13. Any provision of the Debentures may be amended or waived if the
Company shall obtain the written agreement thereto of the Holder or Holders
of at least 50% of the principal amount of the Debentures at the time
outstanding, except that, without the written agreement of the Holder or
Holders of all of the Debentures at the time outstanding, no such amendment
or waiver shall (i) change the maturity of any Debenture or change the
principal of, or rate of interest with respect to any Debenture, (ii) change
the percentage of the unpaid principal amount of the Debentures required with
respect to any amendment or waiver or (iii) change the Conversion Rate or
Conversion Time.
14. The Company will characterize the Debentures as preferred stock
of the Company for federal income tax purposes. Pursuant to Section 385(c)
of the Internal Revenue Code of 1986, as amended, this characterization is
binding on all Holders. A Holder treating the Debenture in a manner
inconsistent with such characterization must disclose the inconsistent
treatment on such Holder's tax return. This characterization, however, is
not binding on the Internal Revenue Service, and neither the Company nor any
Holder is excused from any interest or penalties resulting from improper
characterization.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by an officer thereunto duly authorized.
Dated: October_____, 1997
MEDIA LOGIC, INC.
By:_____________________________
Name: William E. Davis
Title: Chief Executive Officer
7
<PAGE>
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $ ______________
of the principal amount of the above Debenture No. ___ into shares of
Common Stock of MEDIA LOGIC, INC., (the "Company") according to the conditions
hereof, as of the date written below. In converting the Debenture No.
______________, the undersigned hereby confirms and acknowledges that the
shares of Common Stock are being acquired solely for the account of the
undersigned and not a nominee for any other party, and that the undersigned
will not offer, sell or otherwise dispose of any such shares of Common Stock,
except under circumstances that will not result in a violation of the
Securities Act of 1933, as amended.
Date of Conversion*
___________________________________________________________________
Applicable Conversion Price
___________________________________________________________
Signature
____________________________________________________________________________
[Name]
Address:
____________________________________________________________________________
_____________________________________________________________________________
* This original Debenture and Notice of Conversion must be received by the
Company by the third business date following the Date of Conversion.
8
<PAGE>
ANNEX II
JOINT ESCROW INSTRUCTIONS
Dated as of the date of the
Securities Purchase Agreement to
Which These Joint Escrow
Instructions Are Attached
Krieger & Prager, Esqs.
319 Fifth Avenue
New York, New York 10016
Attention: Samuel M. Krieger, Esq.
Dear Mr. Krieger:
As escrow agent for both Media Logic, Inc., a Massachusetts
corporation (the "Company"), and the Buyer (the "Buyer") of $750,000
principal amount of 7% Convertible Debentures due October 2000 of the Company
(the "7% Convertible Debentures"), who is named in the Securities Purchase
Agreement between the Company and the Buyer to which a copy of these Joint
Escrow Instructions is attached as Annex II (the "Agreement"), you
(hereafter, the "Escrow Agent") are hereby authorized and directed to hold
the documents, and the funds (such funds, together with any interest thereon,
the "Escrow Funds") delivered to the Escrow Agent pursuant to the terms of
the Agreement in accordance with the following instructions:
1. The Escrow Agent shall, as promptly as feasible, notify the
Company of receipt of $750,000 representing the purchase price for the 7%
Convertible Debentures (the "Purchase Price") from the Buyer, and notify the
Buyer (or such agent as the Buyer may designate in writing) of receipt of the
7% Convertible Debentures being purchased for such Purchase Price. As
promptly as feasible upon receipt of notice (whether oral or in written form)
from the Company and the Buyer that the respective conditions precedent to
the purchase and sale have been satisfied (which notice shall not be
unreasonably withheld), the Escrow Agent shall, after reduction by the
amounts referred to in the next succeeding sentence of this paragraph,
release the Escrow Funds to or upon the order of the Company, and shall
release the 7% Convertible Debentures to the Buyer. After receipt of such
notice, amounts equal to (i) 10% of the Purchase Price, as aggregate fees due
to First Granite Securities, Inc. shall be released to or upon the Order of
the Escrow Agent, and (ii) one half of 1% of the Purchase Price as escrow
fees to the Escrow Agent shall be released to or upon the order of the Escrow
Agent. If such 7% Convertible Debenture is not deposited with the Escrow
Agent within ten (10) days after receipt by the Company of notice of receipt
by the Escrow Agent of the funds from the Buyer, the Escrow
<PAGE>
Agent shall notify the Buyer and Buyer shall be entitled to cancel the
purchase and demand repayment of the funds. If such funds are not deposited
with the Escrow Agent within ten (10) days after receipt by the Buyer of
notice of receipt by the Escrow Agent of the 7% Convertible Debenture from
the Company, the Escrow Agent shall notify the Company and the Company shall
be entitled to cancel the purchase and demand return of the 7% Convertible
Debenture. If the Company or the Buyer notifies the Escrow Agent that on the
Closing Date (as such term is defined in the Agreement) the conditions
precedent to the obligations of the Company or the Buyer, as the case may be,
under the Agreement were not satisfied or waived, then the Escrow Agent shall
return the Escrow Funds to the Buyer and shall return the 7% Convertible
Debenture to the Company. Prior to return of the Escrow Funds to the Buyer,
the Buyer shall furnish such tax reporting or other information as shall be
appropriate for the Escrow Agent to comply with applicable United States
laws. The Escrow Agent shall deposit all funds received hereunder in the
Escrow Agent's attorney escrow account at The Bank of New York.
2. The Escrow Agent's duties hereunder may be altered, amended,
modified or revoked only by a writing signed by the Company, the Buyer and
the Escrow Agent.
3. The Escrow Agent shall be obligated only for the performance of
such duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by the Escrow Agent to be genuine and to have been signed or
presented by the proper party or parties. The Escrow Agent shall not be
personally liable for any act the Escrow Agent may do or omit to do hereunder
as the Escrow Agent while acting in good faith, and any act done or omitted
by the Escrow Agent pursuant to the advice of the Escrow Agent's
attorneys-at-law shall be conclusive evidence of such good faith.
4. The Escrow Agent is hereby expressly authorized to disregard
any and all warnings given by any of the parties hereto or by any other
person or corporation, excepting only orders or process of courts of law and
is hereby expressly authorized to comply with and obey orders, judgments or
decrees of any court. In case the Escrow Agent obeys or complies with any
such order, judgment or decree, the Escrow Agent shall not be liable to any
of the parties hereto or to any other person, firm or corporation by reason
of such decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
5. The Escrow Agent shall not be liable in any respect on account
of the identity, authorities or rights of the parties executing or delivering
or purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.
6. The Escrow Agent shall be entitled to employ such legal counsel
and other experts as the Escrow Agent may deem necessary properly to advise
the Escrow Agent in connection with the Escrow Agent's duties hereunder, may
rely upon the advice of such counsel, and may pay such counsel reasonable
compensation therefor. The Escrow Agent has acted as legal counsel for the
Buyer, and may continue to act as legal counsel for the Buyer, from time to
time, notwithstanding its duties as Escrow Agent hereunder. The Company
consents to the Escrow Agent acting in such capacity as legal counsel for the
Buyer and waives any claim that
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such representation represents a conflict of interest on the part of the
Escrow Agent. The Company understands that the Buyer and the Escrow Agent are
relying explicitly on the foregoing provision in entering into these Joint
Escrow Instructions.
7. The Escrow Agent's responsibilities as Escrow Agent hereunder
shall terminate if the Escrow Agent shall resign by written notice to the
Company and the Buyer. In the event of any such resignation, the Buyer and
the Company shall appoint a successor Escrow Agent.
8. If the Escrow Agent reasonably requires other or further
instruments in connection with these Joint Escrow Instructions or obligations
in respect hereto, the necessary parties hereto shall join in furnishing such
instruments.
9. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
documents or Escrow Funds held by the Escrow Agent hereunder, the Escrow
Agent is authorized and directed in the Escrow Agent's sole discretion (1) to
retain in the Escrow Agent's possession without liability to anyone all or
any part of said documents or Escrow Funds until such disputes shall have
been settled either by mutual written agreement of the parties concerned or
by a final order, decree or judgment of a court of competent jurisdiction
after the time for appeal has expired and no appeal has been perfected, but
the Escrow Agent shall be under no duty whatsoever to institute or defend any
such proceedings or (2) to deliver the Escrow Funds and any other property
and documents held by the Escrow Agent hereunder to a state or federal court
having competent subject matter jurisdiction and located in the State and
City of New York in accordance with the applicable procedure therefor.
10. The Company and the Buyer agree jointly and severally to
indemnify and hold harmless the Escrow Agent from any and all claims,
liabilities, costs or expenses in any way arising from or relating to the
duties or performance of the Escrow Agent hereunder other than any such
claim, liability, cost or expense to the extent the same shall (a) have been
tax obligations in connection with the Escrow Agent's fee hereunder, or (b)
have been determined by final, unappealable judgment of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct
of the Escrow Agent, or (c) be a liability, or arise from liability, to
either the Company or the Buyer.
11. Any notice required or permitted hereunder shall be given in
the manner set forth in Section 12 of the Agreement, the terms of which are
incorporated herein by reference.
12. By signing these Joint Escrow Instructions, the Escrow Agent
becomes a party hereto only for the purpose of these Joint Escrow
Instructions; the Escrow Agent does not become a party to the Agreement. The
Company and the Buyer have become parties hereto by their execution and
delivery of the Agreement, as provided therein.
13. This instrument shall be binding upon and inure to the benefit
of the parties hereto, and their respective successors and permitted assigns
and shall be governed by the laws of the State of New York without giving
effect to principles governing the conflicts of laws. A
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facsimile transmission of these instructions signed by the Escrow Agent shall
be legal and binding on all parties hereto.
14. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings provided in the Agreement.
15. The rights and obligations of any party hereto are not
assignable without the written consent of the other parties hereto. These
Joint Escrow Instructions constitute the entire agreement among the parties
with respect to the subject matter hereof.
ACCEPTED BY ESCROW AGENT:
KRIEGER & PRAGER
By:_____________________________________
Date:___________________________________
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ANNEX III
COMPANY DISCLOSURE
Pending Litigation
On or about January 16, 1996, Media Logic, Inc. and its subsidiary
MediaLogic ADL, Inc. (collectively, "Media Logic") commenced an action
against Christian P. Marlowe and Marlowe Engineering Company (collectively,
"Marlowe") seeking (a) a declaration of the rights of Media Logic under
certain technology transfer and consulting agreements, and (b) damages for
Marlowe's breach of those Agreements. On June 5, 1996, Marlowe answered the
complaint and counterclaimed, asserting claims for breach of contract,
misrepresentation, promissory estoppel, violation of the implied covenant of
good faith and fair dealing, M.G.L. c. 93A, and declaratory judgment. On
June 11, 1996, Marlowe amended the counterclaim to include a defamation count
relating to a press release issued by Media Logic concerning the litigation.
In August 1996, Media Logic moved to dismiss the counterclaims. The Court
denied Media Logic's motion in November 1996. Currently, the parties are
engaged in pre-trial discovery.
Convertible Securities Issuances
$3,530,000 aggregate principal amount of 7% Convertible Subordinated
Debentures Due 2000 issued on March 24, 1997. The unconverted principal
amount of such Debentures at September 30, 1997 was $1,518,608.00
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of October ___, 1997
(this "Agreement"), is made by and between MEDIA LOGIC, INC., a Massachusetts
corporation (the "Company"), and the entity named on the signature page
hereto (the "Initial Investor").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of the
Securities Purchase Agreement, dated as of October 27, 1997, between the
Initial Investor and the Company (the "Securities Purchase Agreement"), the
Company has agreed to issue and sell to the Initial Investor one or more 7%
Convertible Debentures of the Company, in an aggregate principal amount not
exceeding $750,000 (collectively, the "Debentures"), which Debentures will be
convertible into shares of the common stock, $.01 par value (the "Common
Stock"), of the Company (the "Conversion Shares") upon the terms and subject
to the conditions of such Debentures; and
WHEREAS, to induce the Initial Investor to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the
rules and regulations thereunder, or any similar successor statute
(collectively, the "Securities Act"), with respect to the Conversion Shares;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Investor" means the Initial Investor and any permitted
transferee or assignee who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.
(ii) "Register," "Registered," and "Registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415
under the Securities Act or any successor rule providing for offering
securities on a continuous basis ("Rule 415"), and the declaration or
ordering of effectiveness of such Registration Statement by the United States
Securities and Exchange Commission (the "SEC").
(iii) "Registrable Securities" means the Conversion Shares.
<PAGE>
(iv) "Registration Statement" means a registration statement of
the Company under the Securities Act.
(v) "Potential Material Event" means any of the following: (a)
the possession by the Company of material information not ripe for disclosure
in a Registration Statement, which shall be evidenced by determination in
good faith by the Board of Directors of the Company that disclosure of such
information in the Registration Statement would be detrimental to the
business and affairs of the Company; or (b) any material engagement or
activity by the Company which would, in the good faith determination of the
Board of Directors of the Company, be adversely affected by disclosure in a
Registration Statement at such time, which determination shall be accompanied
by a good faith determination by the Board of Directors of the Company that
the Registration Statement would be materially misleading absent the
inclusion of such information.
(b) Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the Securities
Purchase Agreement.
2. Registration.
(a) Mandatory Registration. The Company shall prepare and file
with the SEC, no later than thirty (30) days following the Closing Date under
the Securities Purchase Agreement, either a Registration Statement on Form
S-3 registering for resale by the Investor a sufficient number of shares of
Common Stock for the Initial Investors (or such lesser number as may be
required by the SEC, but in no event less than the number of shares into
which the Debentures would be convertible) or an amendment to any pending
Company Registration Statement on Form S-3, and the Company shall use its
best efforts to have the Registration Statement declared effective no later
than 90 days after the Closing Date. If at any time the number of shares of
Common Stock into which the Debentures may be converted exceeds the aggregate
number of shares of Common Stock then registered, the Company shall, within
fifteen (15) business days after receipt of a written notice from any
Investor, either (i) amend the Registration Statement filed by the Company
pursuant to the preceding sentence, if such Registration Statement has not
been declared effective by the SEC at that time, to register all shares of
Common Stock into which the Debentures may be converted, or (ii) if such
Registration Statement has been declared effective by the SEC at that time,
file with the SEC an additional Registration Statement on Form S-3 to
register the shares of Common Stock into which the Debentures may be
converted that exceed the aggregate number of shares of Common Stock already
registered.
(b) Payments by the Company if Filing Delayed. If the
Registration Statement covering the Registrable Securities required to be
filed by the Company pursuant to Section 2(a) hereof is not filed with the
SEC within thirty (30) days following the Closing Date (the "Required Filing
Date"), then the Company will make payments to the Initial Investor in such
amounts and at such times as shall be determined pursuant to this Section
2(b). The amount to be paid by the Company to the Initial Investor shall be
equal to one percent (1%) of the purchase price paid by the Initial Investor
for all Debentures then purchased and outstanding pursuant to the Securities
Purchase Agreement per month from the Required Filing Date to the first
Computation Date and each Computation Date thereafter until the Registration
Statement is filed with the SEC
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(the "First Periodic Amount"). The full First Periodic Amount shall be paid
by the Company in immediately available funds within five (5) business days
after each Computation Date. Notwithstanding the foregoing, the amounts
payable by the Company pursuant to this provision shall not be payable to the
extent any delay in the filing of the Registration Statement occurs because
of an act of, or a failure to act or to act timely by the Initial Investor or
its counsel, or in the event all of the Registrable Securities may be sold
pursuant to an exemption under the Securities Act. As used in this Section
2(b) "Computation Date" means the date which is thirty (30) days after the
Required Filing Date, and, if the Registration Statement required to be filed
by the Company pursuant to Section 2(a) is not then filed, (30) days after
the previous Computation Date (pro rated for partial periods) until such
Registration Statement is so filed.
(c) Payments by the Company if Effectiveness Delayed. If the
Registration Statement covering the Registrable Securities required to be
filed by the Company pursuant to Section 2(a) hereof is not effective by
ninety (90) days following the Closing Date (the "Required Effective Date")
(except as provided by the last sentence of Section 2(a)), then the Company
will make payments to the Initial Investor in such amounts and at such times
as shall be determined pursuant to this Section 2(c). The amount to be paid
by the Company to the Initial Investor shall be equal to one half of one
percent of the purchase price paid by the Initial Investor for all Debentures
then purchased and outstanding pursuant to the Securities Purchase Agreement
per week from the Required Effective Date to the first Computation Date and
each Computation Date thereafter until the Registration Statement is declared
effective by the SEC (the "Periodic Amount"). The full Periodic Amount shall
be paid by the Company in immediately available funds within five (5)
business days after each Computation Date. Notwithstanding the foregoing,
the amounts payable by the Company pursuant to this provision shall not be
payable to the extent any delay in the effectiveness of the Registration
Statement occurs because of an act of, or a failure to act or to act timely
by the Initial Investor or its counsel, or in the event all of the
Registrable Securities may be sold pursuant to Rule 144 or another available
exemption under the Securities Act. As used in this Section 2(c)
"Computation Date" means the date which is thirty (30) days after the
Required Effective Date (except as provided by the last sentence of section
2(a)), and, if the Registration Statement required to be filed by the Company
pursuant to Section 2(a) is not then effective, (30) days after the previous
Computation Date (pro rated for partial periods) until such Registration
Statement is so declared effective.
(d) Redemption. In accordance with the terms of the Debentures,
if the Registration Statement covering the Registrable Securities required to
be filed by the Company pursuant to Section 2(a) hereof is not effective
within one hundred eighty (180) days of the Closing Date (the "Final
Registration Date") (except as provided by the last sentence of Section
2(a)), in addition to paying the amount payable under Section 2(c) hereof,
the Company shall redeem the Debentures for the Redemption Amount (as
defined) on the Final Registration Date. For purposes of this Section 2(d),
"Redemption Amount" means the amount equal to the gross proceeds which the
Investor would have realized had all of the Investor's Debentures (and
accrued but unpaid interest thereon, if any) been converted on the Final
Registration Date and all of the shares of Common Stock into which such
Debentures were converted were sold on the Final Registration Date at the
Market Price (as defined in the Debenture) on such date.
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3. Obligations of the Company. In connection with the
registration of the Registrable Securities, the Company shall do each of the
following:
(a) Prepare promptly, and file with the SEC by thirty (30) days
after the Closing Date, a Registration Statement with respect to not less
than the number of Registrable Securities provided in Section 2(a), above,
and thereafter use its reasonable best efforts to cause each Registration
Statement relating to Registrable Securities to become effective within
ninety (90) days of the Closing Date, and keep the Registration Statement
effective at all times until the earliest (the "Registration Period") of (i)
the date that is two years after the Closing Date (ii) the date when the
Investors may sell all Registrable Securities under Rule 144 or (iii) the
date the Investors no longer own any of the Registrable Securities, which
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any 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, in light of the circumstances in
which they were made, not misleading;
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and
the prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during
the Registration Period, and, during the Registration Period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of
in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in the Registration Statement;
(c) The Company shall permit a single firm of counsel designated
by the Initial Investors and reasonably satisfactory to the Company to review
the Registration Statement and all amendments and supplements thereto at a
reasonable period of time prior to their filing with the SEC, and not file
any document in a form to which such counsel reasonably objects in written
notice to the Company given within three (3) business days of such counsel's
receipt of the Registration Statement or any amendment or supplement thereto;
(d) Furnish to each Investor whose Registrable Securities are
included in the Registration Statement and its legal counsel identified to
the Company, (i) promptly after the same is prepared and publicly
distributed, filed with the SEC, or received by the Company, one (1) copy of
the Registration Statement, each preliminary prospectus and prospectus, and
each amendment or supplement thereto, and (ii) such number of copies of a
prospectus, and all amendments and supplements thereto and such other
documents, as such Investor may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Investor;
(e) As promptly as practicable after becoming aware of such
event, notify each Investor of the happening of any event of which the
Company has knowledge, as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make statements therein in light of the circumstances under
which they were made, not
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misleading, and use its best efforts promptly to prepare a supplement or
amendment to the Registration Statement or other appropriate filing with the
SEC to correct such untrue statement or omission, and deliver a number of
copies of such supplement or amendment to each Investor as such Investor may
reasonably request;
(f) As promptly as practicable after becoming aware of such
event, notify each Investor who holds Registrable Securities being sold (or,
in the event of an underwritten offering, the managing underwriters) of the
issuance by the SEC of a notice of effectiveness or any stop order or other
suspension of the effectiveness of the Registration Statement at the earliest
possible time;
(g) Use its reasonable efforts to cause the Registrable
Securities to be listed for trading on the American Stock Exchange (or on any
other national securities exchange on which the Company's Common Stock is
then listed).
(h) Provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of
the Registration Statement;
(i) Cooperate with the Investors who hold Registrable Securities
being offered to facilitate the timely preparation and delivery of
certificates for the Registrable Securities to be offered pursuant to the
Registration Statement and enable such certificates for the Registrable
Securities to be in such denominations or amounts as the case may be, as the
Investors may reasonably request, and, within three (3) business days after a
Registration Statement which includes Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause legal
counsel selected by the Company to deliver, to the transfer agent for the
Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) an appropriate
instruction and opinion of such counsel; and
(j) Take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities pursuant
to the Registration Statement.
4. Obligations of the Investors. In connection with the
registration of the Registrable Securities, the Investors shall have the
following obligations:
(a) It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor
shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
the Registrable Securities held by it, as shall be reasonably required to
effect the registration of such Registrable Securities and shall execute such
documents in connection with such registration as the Company may from time
to time reasonably request. At least five (5) days prior to the first
anticipated filing date of the Registration Statement, the Company shall
notify each Investor of the information the Company requires from each such
Investor (the "Requested Information") if such Investor elects to have any of
such Investor's Registrable Securities included in the Registration
Statement. If at least two (2) business days prior to the filing date the
Company has not received
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<PAGE>
the Requested Information from an Investor (a "Non-Responsive Investor"),
then the Company may file the Registration Statement without including
Registrable Securities of such Non-Responsive Investor;
(b) Each Investor by such Investor's acceptance of the
Registrable Securities agrees to cooperate with the Company and to take such
actions and execute such documents as reasonably requested by the Company in
connection with the preparation and filing of the Registration Statement
hereunder, unless such Investor has notified the Company in writing of such
Investor's election to exclude all of such Investor's Registrable Securities
from the Registration Statement; and
(c) Each Investor agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section
3(e) or 3(f), above, such Investor will immediately discontinue disposition
of Registrable Securities pursuant to the Registration Statement covering
such Registrable Securities until such Investor's receipt of the copies of
the supplemented or amended prospectus contemplated by Section 3(e) or 3(f)
or until it is advised in writing by the Company (which notice the Company
shall give as promptly as possible), that the use of the prospectus may be
resumed, and, if so directed by the Company, such Investor shall deliver to
the Company or destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice. Notwithstanding the foregoing, if at any time or from time to time
after the date of effectiveness of the Registration Statement, the Company
notifies the Investors in writing of the existence of a Potential Material
Event, the Investors shall not offer or sell any Registrable Securities, or
engage in any transaction involving or relating to the Registrable
Securities, from the time of the giving notice with respect to a Potential
Material Event until such Investor received written notice from the Company
that such Potential Material Event either has been disclosed to the public or
no longer constitutes a Potential Material Event; provided, however, that the
Company may not so suspend the right to such holders of Registrable
Securities for more than two twenty (20) day periods in the aggregate during
any 12-month period ("Suspension Period") with at least a ten (10) business
day interval between such periods, during the periods the Registration
Statement is required to be in effect.
5. Expenses of Registration. All reasonable expenses, other
than underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 3, but
including, without limitation, all registration, listing, and qualifications
fees, printers and accounting fees, and the fees and disbursements of counsel
for the Company, shall be borne by the Company; provided, however, that the
fees and disbursements of the Investors' counsel referred to in Section 3(c)
hereof shall be borne by the Investors.
6. Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, if any, of such Investor,
each person, if any, who controls any Investor within
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the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act (each, an "Indemnified Person" or "Indemnified Party"), against any
losses, claims, damages, liabilities or expenses (joint or several) incurred
(collectively, "Claims") to which any of them may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations in the Registration Statement, or any post-effective amendment
thereof, or any prospectus included therein: (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any post-effective amendment thereof or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in the
final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission or
alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading or (iii) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation under the Securities Act, the
Exchange Act or any state securities law (the matters in the foregoing
clauses (i) through (iii) being, collectively, "Violations"). Subject to
clause (b) of this Section 6, the Company shall reimburse the Investors,
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a) shall not (I) apply to a Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of any Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, (II) be
available to the extent such Claim is based on a failure of the Investor to
deliver or cause to be delivered the prospectus made available by the
Company; (III) apply to a Claim arising out of or based upon an untrue
statement or alleged untrue statement or omission or alleged omission in the
prospectus, if such untrue statement or alleged untrue statement, omission or
alleged omission was corrected in an amendment or supplement to the
prospectus and if, having previously been furnished with copies of the
prospectus as so amended or supplemented, such Investor thereafter failed to
deliver such prospectus as so amended or supplemented, prior to or
concurrently with the sale of the Registrable Security to the person
asserting such Claim and (IV) apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld. Each Investor
shall indemnify and hold harmless the Company and its officers, directors and
agents and any person who controls the Company within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act against any claims
arising out of or based upon a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company, by or on
behalf of such Investor, expressly for use in connection with the preparation
of the Registration Statement, subject to such limitations and conditions as
are applicable to the Indemnification provided by the Company to this Section
6. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall
survive the transfer of the Registrable Securities by the Investors pursuant
to Section 9.
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(b) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement of any
action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against
any indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly
noticed, to assume control of the defense thereof with counsel mutually
satisfactory to the indemnifying party and the Indemnified Person or the
Indemnified Party, as the case may be. In case any such action is brought
against any Indemnified Person or Indemnified Party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, assume the defense
thereof, subject to the provisions herein stated and after notice from the
indemnifying party to such Indemnified Person or Indemnified Party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such Indemnified Person or Indemnified Party under this Section 6
for any legal or other reasonable out-of-pocket expenses subsequently
incurred by such Indemnified Person or Indemnified Party in connection with
the defense thereof other than reasonable costs of investigation, unless the
indemnifying party shall not pursue the action of its final conclusion. The
Indemnified Person or Indemnified Party shall have the right to employ
separate counsel in any such action and to participate in the defense
thereof, but the fees and reasonable out-of-pocket expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying
party has assumed the defense of the action with counsel reasonably
satisfactory to the Indemnified Person or Indemnified Party. The failure to
deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action shall not relieve such indemnifying party
of any liability to the Indemnified Person or Indemnified Party under this
Section 6, except to the extent that the indemnifying party is prejudiced by
such failure in its ability to defend such action. The indemnification
required by this Section 6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and payable.
7. Contribution. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which
it would otherwise be liable under Section 6 to the fullest extent permitted
by law; provided, however, that (a) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6; (b) no seller of
Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
such fraudulent misrepresentation; and (c) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities.
8. Reports under Exchange Act. With a view to making available
to the Investors the benefits of Rule 144 promulgated under the Securities
Act or any other similar rule or
8
<PAGE>
regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration ("Rule 144"),
the Company agrees to use its best efforts to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(c) furnish to each Investor so long as such Investor owns
Registrable Securities which continue to be "restricted securities" within
the meaning of Rule 144(a)(3) under the Securities Act, promptly upon
request, (i) a written statement by the Company that it has complied with the
reporting requirements of Rule 144, the Securities Act and the Exchange Act,
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed with the SEC by the Company and
(iii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration.
9. Assignment of the Registration Rights. The rights to have
the Company register Registrable Securities pursuant to this Agreement shall
be automatically assigned by the Investors to any transferee of the
Registrable Securities (or all or any portion of any Debenture of the Company
which is convertible into such securities) only if: (a) the Investor agrees
in writing with the transferee or assignee to assign such rights, and a copy
of such agreement is furnished to the Company within a reasonable time after
such assignment, (b) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (i) the name and
address of such transferee or assignee and (ii) the securities with respect
to which such registration rights are being transferred or assigned, (c)
immediately following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under the
Securities Act and applicable state securities laws, and (d) at or before the
time the Company received the written notice contemplated by clause (b) of
this sentence the transferee or assignee agrees in writing with the Company
to be bound by all of the provisions contained herein. In the event of any
delay in filing or effectiveness of the Registration Statement as a result of
such assignment, the Company shall not be liable for any damages arising from
such delay, or the payments set forth in Section 2(c) hereof.
10. Amendment of Registration Rights. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors
who hold a majority interest of the Registrable Securities. Any amendment or
waiver effected in accordance with this Section 10 shall be binding upon each
Investor and the Company.
11. Miscellaneous.
(a) Persons deemed to be Holders of Registrable Securities. A
person or entity is deemed to be a holder of Registrable Securities whenever
such person or entity owns of record such Registrable Securities. If the
Company receives conflicting instructions, notices or
9
<PAGE>
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.
(b) Notices. Notices required or permitted to be given
hereunder shall be in writing and shall be deemed to be sufficiently given
when personally delivered (by hand, by courier, by telephone line facsimile
transmission, receipt confirmed, or other means) or sent by certified mail,
return receipt requested, properly addressed and with proper postage pre-paid
(i) if to the Company, MEDIA LOGIC, INC., 310 South Street, Plainville, MA
02761, ATTN: Chief Executive Officer, with a copy to Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston, MA 02111,
ATTN: Richard R. Kelly Esq.; (ii) if to the Initial Investor, at the address
set forth under its name in the Securities Purchase Agreement, with a copy to
Samuel Krieger, Esq., Krieger & Prager, 319 Fifth Avenue, Third Floor, New
York, NY 10016 and (iii) if to any other Investor, at such address as such
Investor shall have provided in writing to the Company, or at such other
address as each such party furnishes by notice given in accordance with this
Section 11(b), and shall be effective, when personally delivered, upon
receipt and, when so sent by certified mail, four (4) calendar days after
deposit with the United states Postal Service.
(c) No Waivers. Failure of any party to exercise any right
or remedy under this Agreement or otherwise, or delay by a party in
exercising such right or remedy, shall not operate as a waiver thereof.
(d) Governing Law, Etc. This Agreement shall be governed by
and interpreted in accordance with the laws of the State of New York. Each
of the parties consents to the jurisdiction of the federal courts whose
districts encompass any part of the City of New York or the state courts of
the State of New York sitting in the City of New York in connection with any
dispute arising under this Agreement and hereby waives, to the maximum extent
permitted by law, any objection, including any objection based on forum non
coveniens, to the bringing of any such proceeding in such jurisdictions. A
facsimile transmission of this signed Agreement shall be legal and binding on
all parties hereto. This Agreement may be signed in one or more
counterparts, each of which shall be deemed an original. The headings of
this Agreement are for convenience of reference and shall not form part of,
or affect the interpretation of, this Agreement. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or
enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction. This Agreement
may be amended only by an instrument in writing signed by the party to be
charged with enforcement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
(e) Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof.
10
<PAGE>
(f) Successors and Assigns. Subject to the requirements of
Section 9 hereof, this Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties hereto.
(g) Construction. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the
context may require.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning thereof.
(i) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same agreement. This Agreement, once executed
by a party, may be delivered to the other party hereto by telephone line
facsimile transmission of a copy of this Agreement bearing the signature of
the party so delivering this Agreement.
(j) Consequential Damages. Neither party shall be liable
for consequential damages.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
MEDIA LOGIC, INC.
By: /s/ William E. Davis, Jr.
-------------------------------
Name: William E. Davis, Jr.
Title: Chief Executive Officer
F.T.S. WORLDWIDE CORP.
By: /s/ (Illegible)
-------------------------------
Name:
Title: General Attorneys
12
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ANNEX V
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
701 Pennsylvania Avenue, N.W. Telephone: 617/542-6000
Washington, D.C. 20004 Fax: 617/542-2241
Telephone: 202/434-7300 www.Mintz.com
Fax: 202/434-7400
Direct Dial Number
October____, 1997
First Granite Securities, Inc.
c/o Krieger & Prager
319 Fifth Avenue
New York, NY 100016
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 2(b)(ii) of the
Placement Agency Agreement, dated October , 1997 (the "Placement Agency
Agreement"), by and between Media Logic, Inc. (the "Company") and you (the
"Placement Agent"), and Section 9(d) of the Securities Purchase Agreement,
dated as of October , 1997 (the "Securities Purchase Agreement"), by and
between the Company and the Buyer (as defined therein) relating to the
offering by the Company of an aggregate principal amount of $750,000 of its
7% Convertible Debentures Due 2000 (the "Debentures"). Capitalized terms
used herein and not otherwise defined shall have the respective meanings
ascribed to such terms in the Placement Agency Agreement.
We have acted as counsel for the Company in connection with
the offering of the Debentures and in connection with the execution and
delivery of the Placement Agency Agreement, the Securities Purchase Agreement
and the Registration Rights Agreement, dated as of October , 1997 (the
"Registration Rights Agreement" and, collectively with the Placement Agency
Agreement and the Securities Purchase Agreement, the "Agreements"), by and
between the Company and the Initial Investor (as defined therein). We have
examined the Company's Restated Articles of Organization and By-laws, as
amended, to date, and such records of the corporate proceedings of the
Company as we have deemed material. We have made such inquiry of the officers
of the Company and have examined such other Company records, documents,
agreements and instruments of the Company made available to us and
certificates of officers of the Company and of public officials and have
examined such questions of law as we have deemed necessary for the purposes
of this opinion. In rendering this opinion, we have relied, as to all
questions of fact material to this opinion, upon certificates of public
officials and officers of the Company, and representations and warranties of
the Company contained in the Securities Purchase Agreement and the Placement
Agency Agreement and any certificates required thereby. Any reference herein
to "our knowledge" or any derivation thereof shall mean knowledge of the
particular attorneys in this
<PAGE>
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
First Granite Securities, Inc.
October____, 1997
Page 2
firm who have performed services for the Company on behalf of this firm
without any independent investigation except as otherwise described above.
We have assumed, without independently verifying such assumptions,
the genuineness of the signatures on all of the documents examined by us, the
authenticity of all documents furnished for our examination as originals, and
the conformity to original documents of all documents furnished to us as
copies, including documents transmitted by telecopy.
For purposes of this opinion, we have assumed that you have all
requisite power and authority and have taken all necessary action to effect
the transactions mentioned above, and we have assumed that you have complied
with all applicable federal or state laws and regulations in connection with
the offering of the Debentures to the Purchaser and the execution and
delivery of the Agreements.
The opinions hereinafter expressed are qualified (a) to the extent
that the validity or enforceability of any agreement or instrument or of any
right granted thereunder may be subject to or affected by any applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally, (b) by
legal and equitable limitations on the availability of specific performance
as a remedy and the discretion of the court in awarding equitable relief and
(c) insofar as indemnification or contribution for liabilities arising under
the Securities Act of 1933, as amended, may be deemed to be against public
policy or otherwise limited by applicable laws. We do not express any opinion
with respect to the state securities or "blue sky laws" of any state or
foreign jurisdiction.
Based upon the foregoing and subject to the penultimate paragraph of
this letter, we are of the opinion that:
1. The Company has been duly organized and is validly existing as
a corporation in good standing under the laws of the Commonwealth of
Massachusetts. The Company is duly qualified to transact business and is in
good standing in all jurisdictions where the Company owns or leases property,
maintains employees or conducts business, except for jurisdictions in which
the failure to so qualify would not have a material adverse effect on the
Company. The Company has all requisite corporate power and authority to own
its properties and conduct its business as currently conducted.
2. The authorized capital stock of the Company consists of
20,000,000 shares of common stock, $.01 par value per share (the "Common
Stock").
3. The Common Stock is registered pursuant to Section 12(b) or
Section 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the Company has timely
<PAGE>
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
First Granite Securities, Inc.
October____, 1997
Page 3
filed all material required to be filed pursuant to Sections 13(a) or 15(d)
of the Exchange Act for a period of at least 12 months preceding the date
hereof.
4. When issued, executed, delivered and sold by the Company in
accordance with the Securities Purchase Agreement, the Debentures will have
been duly and validly issued, executed and delivered and will constitute
valid and binding obligations of the Company enforceable against the Company
in accordance with their terms and entitled to the benefits provided in the
Agreements, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
and contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity). The
Conversion Shares have been duly authorized and reserved for issuance upon
conversion of the Debentures and, when issued and delivered upon such
conversion in accordance with the Form of Debenture, will by fully paid and
non-assessable.
5. The Company has the requisite corporate power and authority to
enter into the Agreements and to sell and deliver the Debentures and the
Conversion Shares as described in the Agreements. Each of the Agreements has
been duly and validly authorized by all necessary corporate action by the
Company and to our knowledge, no approval of any governmental or other body
is required for the execution and delivery of each of the Agreements by the
Company or the consummation of the transactions contemplated thereby. Each
of the Agreements has been duly and validly executed and delivered by and on
behalf of the Company and is a valid and binding agreement of the Company,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law), and except as to compliance with federal, state, and
foreign securities laws, as to which no opinion is expressed.
6. To the best of our knowledge, after due inquiry, the execution,
delivery and performance of the Agreements by the Company and the performance
of its obligations thereunder do not and will not constitute a breach or
violation of any of the terms and provisions of, or constitute a default
under or conflict with or violate any provision of (i) the Company's Restated
Articles of Organization or By-laws, (ii) any indenture, mortgage, deed of
trust, material agreement or other instrument to which the Company is a party
or by which is or any of its property is bound, (iii) any applicable statute
or regulation, or (iv) any judgment, decree or order of any court or
governmental body having jurisdiction over the Company or any of its
property, except as to defaults, violations or breaches which individually or
in the aggregate would not have a material adverse effect on the Company.
<PAGE>
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
First Granite Securities, Inc.
October____, 1997
Page 4
7. The issuance of the Common Stock upon conversion of the
Debentures in accordance with the terms and conditions of the Agreements will
not violate the applicable listing agreement between the Company and any
securities exchange or market on which the Company's securities are listed.
8. The Company complies with the eligibility requirements for the
use of Form S-3 under the Securities Act of 1933, as amended.
9. Except as described in Annex III to the Securities Purchase
Agreement, to our knowledge, after due inquiry, there is no pending or
threatened litigation, investigation or other proceeding against the Company
which would, insofar as can reasonably be foreseen, individually or in the
aggregate, have a material adverse effect on the Company.
This opinion is given as of the date hereof. We assume no
obligation to update or supplement this opinion to reflect any facts or
circumstances which may hereafter come to our attention including changes in
law which may occur hereafter. Our opinions above are limited to the laws of
the Commonwealth of Massachusetts, and the federal law of the United States
of America and we express no opinion with respect to the laws of any other
jurisdiction. We note that the Agreements state that they are governed by
the law of the State of New York, and for purposes of the opinions set forth
in paragraph 5 above, we have assumed, with your consent, that the law of the
State of New York is identical to the law of the Commonwealth of
Massachusetts. Furthermore, we express or imply no opinion with respect to
compliance with anti-fraud statutes, rules or regulations of applicable state
or federal law. This letter is furnished to you as the Placement Agent in
connection with the closing of the issuance of the Debentures and is solely
for your benefit and the benefit of the Purchaser of the Debentures, such
Purchaser who may rely upon this letter as though it were addressed directly
to such Purchaser; this letter may not be relied upon by any other person or
for any other purpose.
Very truly yours,
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
<PAGE>
ANNEX VI
[AMEX Letterhead]
October 15, 1997
Mr. William E. Davis, Jr.
President and Chief Executive Officer
Media Logic, Inc.
310 South Street
P.O. Box 2258
Plainville, MA 02762
Dear Mr. Davis:
As we recently discussed, Media Logic, Inc. has fallen below certain of the
Exchange's continued listing guidelines and as a result we are reviewing its
listing eligibility. This review process allows a company to meet with us to
present information in support of continued listing and we look forward to
our meeting which has been scheduled for November 6, 1997 at 2:00 p.m.
The Exchange has adopted certain guidelines and procedures which assist in
this process and these are set forth in Part 10 of our Company Guide. The
guidelines which are most relevant in this situation are found in Section
1003.
Specifically, the Company has incurred net losses in each of its last three
fiscal years ended March 31, 1997 and in the first three months ended June
30, 1997 of its current fiscal year. Such losses were accompanied by net
operating cash outflows. At June 30, 1997, the Company's shareholders' equity
amounted to $3.0 million.
As a result, the Company has fallen below the continued listing guideline
triggered by equity below $4 million if the company had losses in three of
its four most recent fiscal years.
In its report on the Company's March 31, 1997 financial statements, the
Company's auditor discusses the Company's recurring losses from operations
and certain other issues and explains that there is substantial doubt about
the Company's ability to continue as a going concern. In that regard, the
Company disclosed in its June 30, 1997 Form 10-Q that if it is unable to
increase revenues significantly and/or secure additional financing, it could
be forced to curtail or discontinue its operations.
<PAGE>
Mr. William E. Davis, Jr.
October 15, 1997
Page 2
In view of the foregoing, it appears that the Company's financial condition
is impaired, raising questions about whether it will be able to continue
operations or meet its obligations as they mature.
The Exchange is also concerned that the Company has not yet paid its 1997
annual listing fee.
If you would like to make a written submission, please send five copies to
Carol C. Hoover a week ahead of the meeting. Please feel free to call me or
Mrs. Hoover at 212-306-1424 if you have any questions.
Very truly yours,
/s/ Michael S. Emen
------------------
UPS NEXT DAY AIR
<PAGE>
EXHIBIT 99.9
NEITHER THIS DEBENTURE NOR THE COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS DEBENTURE HAVE BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") OR THE SECURITIES COMMISSION OF ANY STATE UNDER
ANY STATE SECURITIES LAW. THE SECURITIES ARE RESTRICTED AND MAY NOT
BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED UNLESS THE SECURITIES ARE
REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR ARE
PERMITTED UNDER THE ACT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS.
No. 1 US $750,000.00
MEDIA LOGIC, INC.
7% CONVERTIBLE DEBENTURE DUE OCTOBER 29, 2000
THIS DEBENTURE is one of a duly authorized issue of $750,000 in Debentures
of MEDIA LOGIC, INC., a corporation duly organized and existing under the laws
of The Commonwealth of Massachusetts (the "Company") designated as its 7%
Convertible Debenture Due October 29, 2000.
FOR VALUE RECEIVED, the Company promises to pay to F.T.S. Worldwide Corp.,
the registered holder hereof (the "Holder"), the principal sum of Seven Hundred
Fifty Thousand and 00/100 (US $750,000.00) Dollars on October 29, 2000 (the
"Maturity Date") and to pay interest on the principal sum outstanding from time
to time in arrears upon conversion as provided herein on October 29, 2000 at the
rate of 7% per annum accruing from the date of initial issuance (the "Issuance
Date"). Accrual of interest shall commence on the first such business day to
occur after the date hereof until payment in full of the principal sum has been
made or duly provided for. Subject to the provisions of Section 4 below, the
principal of, and interest on, this Debenture are payable at the option of the
Company, in shares of Common Stock, $.01 par value per share, of the Company
("Common Stock"), or in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and private debts,
at the address last appearing on the Debenture Register of the Company as
designated in writing by the Holder from time to time. The Company will pay the
principal of and interest upon this Debenture on the Maturity Date, less any
amounts required by law to be deducted, to the registered holder of this
Debenture as of the tenth day prior to the Maturity Date and addressed to such
holder as the last address appearing on the Debenture Register. The forwarding
of such check shall constitute a payment of principal and interest hereunder and
shall satisfy and discharge the liability for principal and interest on this
Debenture to the extent of the sum represented by such check plus any amounts so
deducted.
The Company has issued this Debenture pursuant to a Securities Purchase
Agreement between the Company and the Buyer named therein (the "Securities
Purchase Agreement"). Capitalized terms used herein and not defined herein
shall have the meanings assigned thereto in the Securities Purchase Agreement.
<PAGE>
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Ten Thousand Dollars
(US $10,000) and integral multiples thereof. The Debentures are exchangeable
for an equal aggregate principal amount of Debentures of different authorized
denominations, as requested by the Holders surrendering the same. No service
charge will be made for such registration or transfer or exchange.
2. The Company shall be entitled to withhold from all payments of
principal of, and interest on, this Debenture any amounts required to be
withheld under the applicable provisions of the United States income tax laws or
other applicable laws at the time of such payments, and Holder shall execute and
deliver all required documentation in connection therewith.
3. This Debenture has been issued subject to investment representations
of the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "Act"), and other
applicable state and foreign securities laws. In the event of any proposed
transfer of this Debenture, the Company may require, prior to issuance of a new
Debenture in the name of such other person, that it receive reasonable transfer
documentation including opinions that the issuance of the Debenture in such
other name does not and will not cause a violation of the Act or any applicable
state or foreign securities laws. Prior to due presentment for transfer of
this Debenture, the Company and any agent of the Company may treat the person in
whose name this Debenture is duly registered on the Company's Debenture Register
as the owner hereof for the purpose of receiving payment as herein provided and
for all other purposes, whether or not this Debenture be overdue, and neither
the Company nor any such agent shall be affected by notice to the contrary.
4. A. Subject to Section 4(B), the Holder of this Debenture is
entitled, at its option, to convert at any time commencing seventy five (75)
days after the Issuance Date (the "Conversion Time") the principal amount of
this Debenture, provided that the principal amount is at least US $10,000
(unless if at the time of such election to convert the aggregate principal
amount of all Debentures registered to the Holder is less than Ten Thousand
Dollars (US $10,000), then the whole amount thereof) into shares of Common Stock
of the Company at a conversion price (the "Conversion Rate") for each share of
Common Stock equal to the lesser of (a) 120% of the Market Price on the Issuance
Date, and (b) 80% of the Market Price on the Conversion Date (as defined below).
For purposes of this Section 4, the Market Price shall be the average closing
bid price of the Common Stock on the five (5) trading days immediately preceding
the Issuance Date or Conversion Date, as may be applicable, on the American
Stock Exchange ("AMEX") or, if the Common Stock is not then listed on AMEX or
any other national securities exchange, the Market Price shall be the average
closing bid price of the Common Stock on the five (5) trading days immediately
preceding the Issuance Date or Conversion Date, as may be applicable, as
reported by the National Association of Securities Dealers, Inc. or the closing
bid price in the over-the-counter market on such date. Conversion shall be
effectuated by surrendering the Debentures to be converted to the Company with
the form of conversion notice attached hereto as Exhibit A, executed by the
Holder of the Debenture evidencing such Holder's intention to convert this
Debenture or a specified portion (as above provided) hereof, and accompanied, if
required by the Company, by proper assignment hereof in blank. Interest accrued
or accruing from the date of issuance to the date of conversion shall, at the
option of the Company, be paid in cash or Common Stock upon conversion at the
Conversion Rate. No fractional shares or scrip representing fractions of shares
will be issued on conversion, but the number of shares issuable shall be rounded
to the
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<PAGE>
nearest whole share. The date on which notice of conversion is given (the
"Conversion Date") shall be deemed to be the date on which the Holder has
delivered this Debenture, with the conversion notice duly executed, to the
Company or, the date set forth in such facsimile delivery of the notice of
conversion if the Debenture is received by the Company within three (3) business
days therefrom. Facsimile delivery of the conversion notice shall be accepted
by the Company at telephone number (508-695-8593); ATTN: Chief Financial
Officer. Certificates representing Common Stock upon conversion will be
delivered within five (5) business days from the date the notice of conversion
with the original Debenture is delivered to the Company.
B. The Company shall have the right to require, by written notice to
the Holder of this Debenture at least ten (10) days prior to the Maturity Date,
that the Holder of this Debenture exercise its right of conversion with respect
to all or that portion of the principal amount and interest outstanding on the
Maturity Date.
5. No provision of this Debenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of, and
interest on, this Debenture at the time, place, and rate, and in the coin or
currency, herein prescribed. This Debenture and all other Debentures now or
hereafter issued of similar terms are direct obligations of the Company.
6. No recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
7. If the Company merges or consolidates with another corporation or
sells or transfers all or substantially all of its assets to another person and
the holders of the Common Stock are entitled to receive stock, securities or
property in respect of or in exchange for Common Stock, then as a condition of
such merger, consolidation, sale or transfer, the Company and any such
successor, purchaser or transferee agree that the Debenture may thereafter be
converted on the terms and subject to the conditions set forth above into the
kind and amount of stock, securities or property receivable upon such merger,
consolidation, sale or transfer by a holder of the number of shares of Common
Stock into which this Debenture might have been converted immediately before
such merger, consolidation, sale or transfer, subject to adjustments which shall
be as nearly equivalent as may be practicable. In the event of any proposed
merger, consolidation or sale or transfer of all or substantially all of the
assets of the Company (a "Sale"), the Holder hereof shall have the right to
convert by delivering a Notice of Conversion to the Company within fifteen (15)
days of receipt of notice of such Sale from the Company. In the event the
Holder hereof shall elect not to convert, the Company may prepay all outstanding
principal and accrued interest on this Debenture, less all amounts required by
law to be deducted, upon which tender of payment all rights to conversion
hereunder shall terminate.
8. The Holder of the Debenture, by acceptance hereof, agrees that this
Debenture is being acquired for investment and that such Holder will not offer,
sell or otherwise dispose of this Debenture or the shares of Common Stock
issuable upon conversion thereof except under circumstances which will not
result in a violation of the Act or any applicable state Blue Sky or foreign
laws or similar laws relating to the sale of securities.
9. This Debenture shall be governed by and construed in accordance
with the laws of the
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<PAGE>
State of New York. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the City of New York or the
state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on forum non coveniens, to the bringing of any such proceeding in such
jurisdictions.
10. The following shall constitute an "Event of Default":
a. The Company shall default in the payment of principal or interest
on this Debenture and such default shall remain unremedied for
five (5) business days after the Company has been notified of the
default in writing by a Holder; or
b. Any of the representations or warranties made by the Company
herein, in the Securities Purchase Agreement or in any other
Agreement executed by the Company in connection therewith, or in
any certificate or financial or other written statements
furnished by the Company in connection with the execution and
delivery of this Debenture or the Securities Purchase Agreement
shall be false or misleading in any material respect at the time
made; or
c: The Company fails to issue shares of Common Stock to the Holder
or to cause its Transfer Agent to issue shares of Common Stock
upon exercise by the Holder of the conversion rights of the
Holder in accordance with the terms of this Debenture, fails to
transfer or to cause its Transfer Agent to transfer any
certificate for shares of Common Stock issued to the Holder upon
conversion of this Debenture and when required by this Debenture
or the Registration Rights Agreement, or fails to remove any
restrictive legend or to cause its Transfer Agent to transfer any
certificate or any shares of Common Stock issued to the Holder
upon conversion of this Debenture as and when required by this
Debenture, the Securities Purchase Agreement or the Registration
Rights Agreement and any such failure shall continue uncured for
five (5) business days after the Company has been notified of
such failure in writing by Holder;
d. The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture and
such failure shall continue uncured for a period of thirty (30)
days after written notice to the Company from the Holder of such
failure; or
e. The Company shall (1) admit in writing its inability to pay its
debts generally as they mature; (2) make an assignment for the
benefit of creditors or commence proceedings for its dissolution;
or (3) apply for or consent to the appointment of a trustee,
liquidator or receiver for its or for a substantial part of its
property or business; or
f. A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within sixty (60)
days after such appointment; or
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g. Any governmental agency or any court of competent jurisdiction at
the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties
or assets of the Company and shall not be dismissed within sixty
(60) days thereafter; or
h. Any money judgment, writ or warrant of attachment, or similar
process in excess of One Million ($1,000,000) Dollars in the
aggregate shall be entered or filed against the Company or any of
its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of sixty (60) days;
or
i. Bankruptcy, reorganization, insolvency or liquidation proceedings
or other proceedings for relief under any bankruptcy law or any
law for the relief of debtors shall be instituted by or against
the Company and, if instituted against the Company, shall not be
dismissed within sixty (60) days after such institution or the
Company shall by any action or answer approve of, consent to, or
acquiesce in any such proceedings or admit the material
allegations of, or default in answering a petition filed in any
such proceeding; or
j. The Company shall have its Common Stock suspended or delisted
from an exchange or over-the-counter market from trading for in
excess of five (5) trading days.
Then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the holders of at least
50% in principal amount of outstanding Debentures (which waiver shall not be
deemed to be a waiver of any subsequent default) at the option of the Holder and
in the Holder's sole discretion, the Holder may consider this Debenture
immediately due and payable, without presentment, demand, protest or notice of
any kinds, all of which are hereby expressly waived, anything herein or in any
note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately enforce any and all of the Holder's rights and remedies
provided herein or any other rights or remedies afforded by law.
11. Nothing contained in this Debenture shall be construed as conferring
upon the Holder the right to vote or to receive dividends or to consent or
receive notice as a shareholder in respect of any meeting of shareholders or any
rights whatsoever as a shareholder of the Company, unless and to the extent
converted in accordance with the terms hereof.
12. A. If the Registration Statement covering the Conversion Shares is
not effective within 180 days of the Issuance Date (the "Final Registration
Date") (except as provided by the last sentence of Section 2(a) of the
Registration Rights Agreement), the Company shall redeem this Debenture by
paying to the Holder in cash an amount equal to the gross proceeds which the
Holder would have realized had this Debenture (and accrued but unpaid interest
thereon, if any) been converted on the Final Registration Date (with the
Conversion Date being the Final Registration Date) and all the shares of Common
Stock into which this Debenture was converted were sold on the Final
Registration Date at the Market Price on such date.
B. If (x) the Company fails to obtain the approval of, or a waiver from
AMEX with
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respect to the 20% Rule in connection with the issuance of the Conversion Shares
and (y) the Company does not receive Shareholder Approval within sixty (60) days
after the 20% Date (such 60th day, the "Final 20% Approval Date"), the Company
shall redeem this Debenture by paying to the Holder in cash an amount equal to
the gross proceeds which the Holder would have received had this Debenture (and
accrued but unpaid interest thereon, if any) been converted on the Final 20%
Approval Date (with the Conversion Date being the Final 20% Approval Date) and
all of the shares of Common Stock into which this Debenture was converted were
sold on the Final 20% Approval Date at the Market Price on such date.
C. If the Company shall be required to redeem the Debentures pursuant to
Section 12(A) or 12(B), the Company shall send notice (the "Redemption Notice")
to the Holder at such Holder's address and telecopier number as the same shall
appear on the books of the Company and the Company shall redeem the Debentures
five (5) business days following the date on which the Company provides the
Redemption Notice (the "Redemption Date"). The Redemption Notice shall state
that (i) the Debentures will be redeemed on the Redemption Date, (ii) the
redemption price, (iii) the place which certificates for Debentures must be
surrendered to collect the redemption price, (iv) interest on the Debentures
shall cease to accrue at the close of business on the day prior to the
Redemption Date and (v) the section of the Debenture pursuant to which the
Debentures are being redeemed. Notwithstanding anything herein to the contrary,
if after delivering the Redemption Notice the Company does not redeem the
Debentures on the Redemption Date, the Company shall have no further right to
redeem the Debentures pursuant to Section 12(A) or 12(B) hereof.
13. Any provision of the Debentures may be amended or waived if the
Company shall obtain the written agreement thereto of the Holder or Holders of
at least 50% of the principal amount of the Debentures at the time outstanding,
except that, without the written agreement of the Holder or Holders of all of
the Debentures at the time outstanding, no such amendment or waiver shall (i)
change the maturity of any Debenture or change the principal of, or rate of
interest with respect to any Debenture, (ii) change the percentage of the unpaid
principal amount of the Debentures required with respect to any amendment or
waiver or (iii) change the Conversion Rate or Conversion Time.
14. The Company will characterize the Debentures as preferred stock of the
Company for federal income tax purposes. Pursuant to Section 385(c) of the
Internal Revenue Code of 1986, as amended, this characterization is binding on
all Holders. A Holder treating the Debenture in a manner inconsistent with such
characterization must disclose the inconsistent treatment on such Holder's tax
return. This characterization, however, is not binding on the Internal Revenue
Service, and neither the Company nor any Holder is excused from any interest or
penalties resulting from improper characterization.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: October 29, 1997 MEDIA LOGIC, INC.
By: /s/ William E. Davis
---------------------------
Name: William E. Davis
Title: Chief Executive Officer
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EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $ ________________ of
the principal
amount of the above Debenture No. 1 into shares of Common Stock of MEDIA LOGIC,
INC., (the "Company") according to the conditions hereof, as of the date written
below. In converting the Debenture No. 1, the undersigned hereby confirms and
acknowledges that the shares of Common Stock are being acquired solely for the
account of the undersigned and not a nominee for any other party, and that the
undersigned will not offer, sell or otherwise dispose of any such shares of
Common Stock, except under circumstances that will not result in a violation of
the Securities Act of 1933, as amended.
Date of Conversion* ____________________________________________________________
Applicable Conversion Price ____________________________________________________
Signature ______________________________________________________________________
[Name]
Address: _______________________________________________________________________
________________________________________________________________________________
* This original Debenture and Notice of Conversion must be received by the
Company by the third business date following the Date of Conversion.
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EXHIBIT 99.10
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of October 29, 1997
(this "Agreement"), is made by and between MEDIA LOGIC, INC., a Massachusetts
corporation (the "Company"), and the entity named on the signature page hereto
(the "Initial Investor").
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of the
Securities Purchase Agreement, dated as of October 29, 1997, between the Initial
Investor and the Company (the "Securities Purchase Agreement"), the Company has
agreed to issue and sell to the Initial Investor one or more 7% Convertible
Debentures of the Company, in an aggregate principal amount not exceeding
$750,000 (collectively, the "Debentures"), which Debentures will be convertible
into shares of the common stock, $.01 par value (the "Common Stock"), of the
Company (the "Conversion Shares") upon the terms and subject to the conditions
of such Debentures; and
WHEREAS, to induce the Initial Investor to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), with respect to the Conversion Shares;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have the
following meanings:
(i) "Investor" means the Initial Investor and any permitted
transferee or assignee who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.
(ii) "Register," "Registered," and "Registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities
Act and pursuant to Rule 415 under the Securities Act or any successor rule
providing for offering securities on a continuous basis ("Rule 415"), and the
declaration or ordering of effectiveness of such Registration Statement by the
United States Securities and Exchange Commission (the "SEC").
(iii) "Registrable Securities" means the Conversion Shares.
(iv) "Registration Statement" means a registration statement of the
Company under the Securities Act.
(v) "Potential Material Event" means any of the following: (a) the
possession by the Company of material information not ripe for disclosure in a
Registration Statement, which shall be evidenced by determination in good faith
by the Board of Directors of the Company that disclosure of such information in
the Registration Statement would be detrimental to the business
<PAGE>
and affairs of the Company; or (b) any material engagement or activity by the
Company which would, in the good faith determination of the Board of Directors
of the Company, be adversely affected by disclosure in a Registration Statement
at such time, which determination shall be accompanied by a good faith
determination by the Board of Directors of the Company that the Registration
Statement would be materially misleading absent the inclusion of such
information.
(b) Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities Purchase
Agreement.
2. Registration.
(a) Mandatory Registration. The Company shall prepare and file with
the SEC, no later than thirty (30) days following the Closing Date under the
Securities Purchase Agreement, either a Registration Statement on Form S-3
registering for resale by the Investor a sufficient number of shares of Common
Stock for the Initial Investors (or such lesser number as may be required by the
SEC, but in no event less than the number of shares into which the Debentures
would be convertible) or an amendment to any pending Company Registration
Statement on Form S-3, and the Company shall use its best efforts to have the
Registration Statement declared effective no later than 90 days after the
Closing Date. If at any time the number of shares of Common Stock into which the
Debentures may be converted exceeds the aggregate number of shares of Common
Stock then registered, the Company shall, within fifteen (15) business days
after receipt of a written notice from any Investor, either (i) amend the
Registration Statement filed by the Company pursuant to the preceding sentence,
if such Registration Statement has not been declared effective by the SEC at
that time, to register all shares of Common Stock into which the Debentures may
be converted, or (ii) if such Registration Statement has been declared effective
by the SEC at that time, file with the SEC an additional Registration Statement
on Form S-3 to register the shares of Common Stock into which the Debentures may
be converted that exceed the aggregate number of shares of Common Stock already
registered.
(b) Payments by the Company if Filing Delayed. If the Registration
Statement covering the Registrable Securities required to be filed by the
Company pursuant to Section 2(a) hereof is not filed with the SEC within thirty
(30) days following the Closing Date (the "Required Filing Date"), then the
Company will make payments to the Initial Investor in such amounts and at such
times as shall be determined pursuant to this Section 2(b). The amount to be
paid by the Company to the Initial Investor shall be equal to one percent (1%)
of the purchase price paid by the Initial Investor for all Debentures then
purchased and outstanding pursuant to the Securities Purchase Agreement per
month from the Required Filing Date to the first Computation Date and each
Computation Date thereafter until the Registration Statement is filed with the
SEC (the "First Periodic Amount"). The full First Periodic Amount shall be paid
by the Company in immediately available funds within five (5) business days
after each Computation Date. Notwithstanding the foregoing, the amounts payable
by the Company pursuant to this provision shall not be payable to the extent any
delay in the filing of the Registration Statement occurs because of an act of,
or a failure to act or to act timely by the Initial Investor or its counsel, or
in the event all of the Registrable Securities may be sold pursuant to an
exemption under the Securities Act. As used in this Section 2(b) "Computation
Date" means the date which is thirty (30) days after the Required Filing Date,
and, if the Registration Statement required to be filed by the Company pursuant
to Section 2(a) is not then filed, (30) days after the previous Computation Date
(pro rated for partial periods) until such Registration Statement is so filed.
(c) Payments by the Company if Effectiveness Delayed. If the
Registration Statement covering the Registrable Securities required to be filed
by the Company pursuant to Section 2(a) hereof is not effective by ninety (90)
days following the Closing Date (the "Required
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Effective Date") (except as provided by the last sentence of Section 2(a)), then
the Company will make payments to the Initial Investor in such amounts and at
such times as shall be determined pursuant to this Section 2(c). The amount to
be paid by the Company to the Initial Investor shall be equal to one half of one
percent of the purchase price paid by the Initial Investor for all Debentures
then purchased and outstanding pursuant to the Securities Purchase Agreement per
week from the Required Effective Date to the first Computation Date and each
Computation Date thereafter until the Registration Statement is declared
effective by the SEC (the "Periodic Amount"). The full Periodic Amount shall be
paid by the Company in immediately available funds within five (5) business days
after each Computation Date. Notwithstanding the foregoing, the amounts payable
by the Company pursuant to this provision shall not be payable to the extent any
delay in the effectiveness of the Registration Statement occurs because of an
act of, or a failure to act or to act timely by the Initial Investor or its
counsel, or in the event all of the Registrable Securities may be sold pursuant
to Rule 144 or another available exemption under the Securities Act. As used in
this Section 2(c) "Computation Date" means the date which is thirty (30) days
after the Required Effective Date (except as provided by the last sentence of
section 2(a)), and, if the Registration Statement required to be filed by the
Company pursuant to Section 2(a) is not then effective, (30) days after the
previous Computation Date (pro rated for partial periods) until such
Registration Statement is so declared effective.
(d) Redemption. In accordance with the terms of the Debentures, if
the Registration Statement covering the Registrable Securities required to be
filed by the Company pursuant to Section 2(a) hereof is not effective within one
hundred eighty (180) days of the Closing Date (the "Final Registration Date")
(except as provided by the last sentence of Section 2(a)), in addition to paying
the amount payable under Section 2(c) hereof, the Company shall redeem the
Debentures for the Redemption Amount (as defined) on the Final Registration
Date. For purposes of this Section 2(d) , "Redemption Amount" means the amount
equal to the gross proceeds which the Investor would have realized had all of
the Investor's Debentures (and accrued but unpaid interest thereon, if any) been
converted on the Final Registration Date and all of the shares of Common Stock
into which such Debentures were converted were sold on the Final Registration
Date at the Market Price (as defined in the Debenture) on such date.
3. Obligations of the Company. In connection with the registration
of the Registrable Securities, the Company shall do each of the following:
(a) Prepare promptly, and file with the SEC by thirty (30) days after
the Closing Date, a Registration Statement with respect to not less than the
number of Registrable Securities provided in Section 2(a), above, and thereafter
use its reasonable best efforts to cause each Registration Statement relating to
Registrable Securities to become effective within ninety (90) days of the
Closing Date, and keep the Registration Statement effective at all times until
the earliest (the "Registration Period") of (i) the date that is two years after
the Closing Date (ii) the date when the Investors may sell all Registrable
Securities under Rule 144 or (iii) the date the Investors no longer own any of
the Registrable Securities, which Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) shall not
contain any 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, in
light of the circumstances in which they were made, not misleading;
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period, and, during the Registration Period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the
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Company covered by the Registration Statement until such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof as set forth in the
Registration Statement;
(c) The Company shall permit a single firm of counsel designated by
the Initial Investors and reasonably satisfactory to the Company to review the
Registration Statement and all amendments and supplements thereto at a
reasonable period of time prior to their filing with the SEC, and not file any
document in a form to which such counsel reasonably objects in written notice to
the Company given within three (3) business days of such counsel's receipt of
the Registration Statement or any amendment or supplement thereto;
(d) Furnish to each Investor whose Registrable Securities are
included in the Registration Statement and its legal counsel identified to the
Company, (i) promptly after the same is prepared and publicly distributed, filed
with the SEC, or received by the Company, one (1) copy of the Registration
Statement, each preliminary prospectus and prospectus, and each amendment or
supplement thereto, and (ii) such number of copies of a prospectus, and all
amendments and supplements thereto and such other documents, as such Investor
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Investor;
(e) As promptly as practicable after becoming aware of such event,
notify each Investor of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make statements therein in light of the circumstances under which they were
made, not misleading, and use its best efforts promptly to prepare a supplement
or amendment to the Registration Statement or other appropriate filing with the
SEC to correct such untrue statement or omission, and deliver a number of copies
of such supplement or amendment to each Investor as such Investor may reasonably
request;
(f) As promptly as practicable after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold (or, in the
event of an underwritten offering, the managing underwriters) of the issuance by
the SEC of a notice of effectiveness or any stop order or other suspension of
the effectiveness of the Registration Statement at the earliest possible time;
(g) Use its reasonable efforts to cause the Registrable Securities
to be listed for trading on the American Stock Exchange (or on any other
national securities exchange on which the Company's Common Stock is then
listed).
(h) Provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement;
(i) Cooperate with the Investors who hold Registrable Securities
being offered to facilitate the timely preparation and delivery of certificates
for the Registrable Securities to be offered pursuant to the Registration
Statement and enable such certificates for the Registrable Securities to be in
such denominations or amounts as the case may be, as the Investors may
reasonably request, and, within three (3) business days after a Registration
Statement which includes Registrable Securities is ordered effective by the SEC,
the Company shall deliver, and shall cause legal counsel selected by the Company
to deliver, to the transfer agent for the Registrable Securities (with copies to
the Investors whose Registrable Securities are included in such Registration
Statement) an appropriate instruction and opinion of such counsel; and
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(j) Take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities pursuant to
the Registration Statement.
4. Obligations of the Investors. In connection with the
registration of the Registrable Securities, the Investors shall have the
following obligations:
(a) It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may from time to time
reasonably request. At least five (5) days prior to the first anticipated
filing date of the Registration Statement, the Company shall notify each
Investor of the information the Company requires from each such Investor (the
"Requested Information") if such Investor elects to have any of such Investor's
Registrable Securities included in the Registration Statement. If at least two
(2) business days prior to the filing date the Company has not received the
Requested Information from an Investor (a "Non-Responsive Investor"), then the
Company may file the Registration Statement without including Registrable
Securities of such Non-Responsive Investor;
(b) Each Investor by such Investor's acceptance of the Registrable
Securities agrees to cooperate with the Company and to take such actions and
execute such documents as reasonably requested by the Company in connection with
the preparation and filing of the Registration Statement hereunder, unless such
Investor has notified the Company in writing of such Investor's election to
exclude all of such Investor's Registrable Securities from the Registration
Statement; and
(c) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(e) or
3(f), above, such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(e) or 3(f) or until
it is advised in writing by the Company (which notice the Company shall give as
promptly as possible), that the use of the prospectus may be resumed, and, if so
directed by the Company, such Investor shall deliver to the Company or destroy
(and deliver to the Company a certificate of destruction) all copies in such
Investor's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. Notwithstanding the foregoing, if
at any time or from time to time after the date of effectiveness of the
Registration Statement, the Company notifies the Investors in writing of the
existence of a Potential Material Event, the Investors shall not offer or sell
any Registrable Securities, or engage in any transaction involving or relating
to the Registrable Securities, from the time of the giving notice with respect
to a Potential Material Event until such Investor received written notice from
the Company that such Potential Material Event either has been disclosed to the
public or no longer constitutes a Potential Material Event; provided, however,
that the Company may not so suspend the right to such holders of Registrable
Securities for more than two twenty (20) day periods in the aggregate during any
12-month period ("Suspension Period") with at least a ten (10) business day
interval between such periods, during the periods the Registration Statement is
required to be in effect.
5. Expenses of Registration. All reasonable expenses, other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 3, but including,
without limitation, all registration, listing, and
5
<PAGE>
qualifications fees, printers and accounting fees, and the fees and
disbursements of counsel for the Company, shall be borne by the Company;
provided, however, that the fees and disbursements of the Investors' counsel
referred to in Section 3(c) hereof shall be borne by the Investors.
6. Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, if any, of such Investor,
each person, if any, who controls any Investor within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act (each, an "Indemnified
Person" or "Indemnified Party"), against any losses, claims, damages,
liabilities or expenses (joint or several) incurred (collectively, "Claims") to
which any of them may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations in the Registration
Statement, or any post-effective amendment thereof, or any prospectus included
therein: (i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any post-effective amendment thereof
or the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(ii) any untrue statement or alleged untrue statement of a material fact
contained in the final prospectus (as amended or supplemented, if the Company
files any amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation under the Securities Act, the Exchange
Act or any state securities law (the matters in the foregoing clauses (i)
through (iii) being, collectively, "Violations"). Subject to clause (b) of this
Section 6, the Company shall reimburse the Investors, promptly as such expenses
are incurred and are due and payable, for any legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any such
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a) shall not (I) apply to
a Claim arising out of or based upon a Violation which occurs in reliance upon
and in conformity with information furnished in writing to the Company by or on
behalf of any Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto, (II) be available to the extent such Claim is based on a
failure of the Investor to deliver or cause to be delivered the prospectus made
available by the Company; (III) apply to a Claim arising out of or based upon an
untrue statement or alleged untrue statement or omission or alleged omission in
the prospectus, if such untrue statement or alleged untrue statement, omission
or alleged omission was corrected in an amendment or supplement to the
prospectus and if, having previously been furnished with copies of the
prospectus as so amended or supplemented, such Investor thereafter failed to
deliver such prospectus as so amended or supplemented, prior to or concurrently
with the sale of the Registrable Security to the person asserting such Claim and
(IV) apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld. Each Investor shall indemnify and hold harmless
the Company and its officers, directors and agents and any person who controls
the Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act against any claims arising out of or based upon a Violation
which occurs in reliance upon and in conformity with information furnished in
writing to the Company, by or on behalf of such Investor, expressly for use in
connection with the preparation of the Registration Statement, subject to such
limitations and conditions as are applicable to the Indemnification provided by
the Company to this Section 6.
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Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section
9.
(b) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be. In case any such action is brought against any Indemnified Person
or Indemnified Party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such Indemnified Person or
Indemnified Party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such Indemnified Person or Indemnified
Party under this Section 6 for any legal or other reasonable out-of-pocket
expenses subsequently incurred by such Indemnified Person or Indemnified Party
in connection with the defense thereof other than reasonable costs of
investigation, unless the indemnifying party shall not pursue the action of its
final conclusion. The Indemnified Person or Indemnified Party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and reasonable out-of-pocket expenses of such
counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the Indemnified Person or Indemnified Party. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced by such failure
in its ability to defend such action. The indemnification required by this
Section 6 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as such expense, loss, damage or
liability is incurred and is due and payable.
7. Contribution. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 6 to the fullest extent permitted by
law; provided, however, that (a) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6; (b) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any seller
of Registrable Securities who was not guilty of such fraudulent
misrepresentation; and (c) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
8. Reports under Exchange Act. With a view to making available to
the Investors the benefits of Rule 144 promulgated under the Securities Act or
any other similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to use its best efforts to:
(a) make and keep public information available, as those terms are
understood
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and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to each Investor so long as such Investor owns
Registrable Securities which continue to be "restricted securities" within the
meaning of Rule 144(a)(3) under the Securities Act, promptly upon request, (i) a
written statement by the Company that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy
of the most recent annual or quarterly report of the Company and such other
reports and documents so filed with the SEC by the Company and (iii) such other
information as may be reasonably requested to permit the Investors to sell such
securities pursuant to Rule 144 without registration.
9. Assignment of the Registration Rights. The rights to have the
Company register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to any transferee of the Registrable
Securities (or all or any portion of any Debenture of the Company which is
convertible into such securities) only if: (a) the Investor agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after such
assignment, (b) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (i) the name and address of such
transferee or assignee and (ii) the securities with respect to which such
registration rights are being transferred or assigned, (c) immediately following
such transfer or assignment the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act and applicable
state securities laws, and (d) at or before the time the Company received the
written notice contemplated by clause (b) of this sentence the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
contained herein. In the event of any delay in filing or effectiveness of the
Registration Statement as a result of such assignment, the Company shall not be
liable for any damages arising from such delay, or the payments set forth in
Section 2(c) hereof.
10. Amendment of Registration Rights. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors who
hold a majority interest of the Registrable Securities. Any amendment or waiver
effected in accordance with this Section 10 shall be binding upon each Investor
and the Company.
11. Miscellaneous.
(a) Persons deemed to be Holders of Registrable Securities. A person
or entity is deemed to be a holder of Registrable Securities whenever such
person or entity owns of record such Registrable Securities. If the Company
receives conflicting instructions, notices or elections from two or more persons
or entities with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.
(b) Notices. Notices required or permitted to be given hereunder
shall be in writing and shall be deemed to be sufficiently given when personally
delivered (by hand, by courier, by telephone line facsimile transmission,
receipt confirmed, or other means) or sent by certified mail, return receipt
requested, properly addressed and with proper postage pre-paid (i) if to the
Company, MEDIA LOGIC, INC., 310 South Street, Plainville, MA 02761, ATTN: Chief
Executive Officer, with a copy to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
P.C., One Financial Center, Boston, MA 02111, ATTN: Richard R. Kelly Esq.; (ii)
if to the Initial Investor,
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at the address set forth under its name in the Securities Purchase Agreement,
with a copy to Samuel Krieger, Esq., Krieger & Prager, 319 Fifth Avenue, Third
Floor, New York, NY 10016 and (iii) if to any other Investor, at such address as
such Investor shall have provided in writing to the Company, or at such other
address as each such party furnishes by notice given in accordance with this
Section 11(b), and shall be effective, when personally delivered, upon receipt
and, when so sent by certified mail, four (4) calendar days after deposit with
the United states Postal Service.
(c) No Waivers. Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
(d) Governing Law, Etc. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York. Each of the
parties consents to the jurisdiction of the federal courts whose districts
encompass any part of the City of New York or the state courts of the State of
New York sitting in the City of New York in connection with any dispute arising
under this Agreement and hereby waives, to the maximum extent permitted by law,
any objection, including any objection based on forum non coveniens, to the
bringing of any such proceeding in such jurisdictions. A facsimile transmission
of this signed Agreement shall be legal and binding on all parties hereto. This
Agreement may be signed in one or more counterparts, each of which shall be
deemed an original. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement. If any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction. This Agreement may
be amended only by an instrument in writing signed by the party to be charged
with enforcement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.
(e) Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof.
(f) Successors and Assigns. Subject to the requirements of Section 9
hereof, this Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto.
(g) Construction. All pronouns and any variations thereof refer to
the masculine, feminine or neuter, singular or plural, as the context may
require.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning thereof.
(i) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. This Agreement, once executed by a
party, may be delivered to the other party hereto by telephone line facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.
(j) Consequential Damages. Neither party shall be liable for
consequential damages.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
MEDIA LOGIC, INC.
By: /s/ William E. Davis, Jr.
-----------------------------
Name: William E. Davis, Jr.
Title: Chief Executive Officer
F.T.S. WORLDWIDE CORP.
By: /s/ (Illegible)
-----------------------------
Name:
Title: General Attorneys
11
