-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ES0cqX+jZhfCcgww5ymaryD4CFE2DYsIopxIrgIi++JX2sfYu77XrWkuCE9Q02s0 fp0cLFmpz9ANATgfYZMdxA== 0001047469-97-006115.txt : 19971127 0001047469-97-006115.hdr.sgml : 19971127 ACCESSION NUMBER: 0001047469-97-006115 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19971126 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDIA LOGIC INC CENTRAL INDEX KEY: 0000815185 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 042772354 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-41041 FILM NUMBER: 97728545 BUSINESS ADDRESS: STREET 1: 310 SOUTH ST STREET 2: P O BOX 2258 CITY: PLAINVILLE STATE: MA ZIP: 02762 BUSINESS PHONE: 5086952006 MAIL ADDRESS: STREET 1: 310 SOUTH ST STREET 2: P O BOX 2258 CITY: PLAINVILLE STATE: MA ZIP: 02762 S-3 1 S-3 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. [ ] 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. 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. 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. 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 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 3 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. 4 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 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 6 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 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 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.
Shares Owned Prior Shares Owned to Offering (1) Number of After Offering (2) ------------------ Shares Being ------------------ Selling Stockholder Number Percent Offered Number Percent - -------------------- --------- ------- ------------ ------- ------- 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 --
_____________ (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 (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 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 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 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 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 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 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) 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. EX-23.1 2 EX-23.1 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 EX-99.1 3 EX-99.1 EXHIBIT 99.1 MEDIA LOGIC, INC. --------------------- 1,000,000 shares of Common Stock --------------------- STOCK PURCHASE AGREEMENT Dated as of September 25, 1995 --------------------- 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 (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- EX-99.2 4 EX-99.2 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. 1 (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. 2 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 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 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 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 6 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 (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 (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 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 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 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 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 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 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 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) 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: ______________________________ EX-99.3 5 EXHIBIT 99.3 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 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 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 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 EX-99.4 6 EXHIBIT 99.4 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 (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 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 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 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 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 6 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 (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 (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 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 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 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 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 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 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 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) 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: ___________________________________ EX-99.5 7 EXHIBIT 99.5 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 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 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 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 EX-99.7 8 EXHIBIT 99.7 EXHIBIT 99.7 MEDIA LOGIC, INC. AND ADAR EQUITIES LLC WARRANT AGREEMENT Dated as of March 25, 1997 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. 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 -2- 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 -3- 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- 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- 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- 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- 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- 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- (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- 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: -11- 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 -1- 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- 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- 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- EX-99.8 9 EXHIBIT 99.8 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. 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 2 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 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 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 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 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 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 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 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. 10 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 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. 12 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 13 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 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 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 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 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 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 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 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 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 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 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 2 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 3 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:___________________________________ 4 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 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. (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 2 (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. 3 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 4 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 5 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 6 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. 7 (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 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 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 (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] 11 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 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 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 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. 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. 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. 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 EX-99.9 10 EXHIBIT 99.9 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. 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 2 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 3 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 4 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 5 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. 6 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 7 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. 8 EX-99.10 11 EXHIBIT 99.10 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 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 2 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 3 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 4 (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 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. 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. (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 7 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, 8 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. 9 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 10 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 -----END PRIVACY-ENHANCED MESSAGE-----