EXHIBIT 99.1
[FORM OF DEBENTURE]
NEITHER THE DEBENTURES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES
INTO WHICH THEY MAY BE CONVERTED ("DEBENTURE SHARES") HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAWS. THE DEBENTURES HAVE BEEN, AND ANY DEBENTURE SHARES UPON
ISSUANCE WILL HAVE BEEN, ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF EITHER AN EFFECTIVE REGISTRATION
STATEMENT FOR THESE DEBENTURES OR DEBENTURE SHARES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT. ANY SUCH TRANSFER MAY ALSO BE SUBJECT TO APPLICABLE
STATE SECURITIES LAWS. THESE DEBENTURES AND ANY DEBENTURE SHARES ISSUED ARE
SUBJECT TO CERTAIN REGISTRATION RIGHTS AS SET FORTH IN A REGISTRATION RIGHTS
AGREEMENT, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.
$ ____________ No. _____
MEDIA LOGIC, INC.
March 24, 1997
7% Convertible Subordinated Debenture Due 2000
Due March 24, 2000
MEDIA LOGIC, INC., a Massachusetts corporation (the "Company"), for value
received, promises to pay to _________________________________________________
_____________ or registered assigns on March 24, 2000, based on a principal
amount of ________________ Dollars ($ _______), shares of Common Stock of the
Company at the then-current conversion price, unless sooner prepaid or converted
into shares of Common Stock of the Company, together with accrued and unpaid
interest from the date of issue hereof.
The Company promises to pay interest on the principal amount of this
Debenture at the rate per annum of $700 per $10,000 Debenture (equal to seven
percent of the aggregate principal amount of a $10,000 Debenture). Interest
is payable only in accordance with applicable law and only upon conversion or
redemption of the Debentures and is payable either in shares (the "Interest
Shares") of Common Stock of the Company, par value $.01 per share (the
"Common Stock"), at the average Market Price of the Common Stock over the
five trading-day period preceding the Conversion Date of the Debenture or in
cash, at the option of the Company. Interest on the Debentures will accrue
from the date of issuance. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
The Debentures will mature on March 24, 2000 and shall automatically
convert on such date into Conversion Shares at the then-current Conversion
Price.
The Company has issued this Debenture under a Subscription Agreement
between the Company and the Purchaser named therein (the "Subscription
Agreement"). Capitalized terms herein are used as defined in the
Subscription Agreement unless otherwise defined herein. The terms of the
Debentures include those stated in the Subscription Agreement, which are
incorporated herein by reference. The Debentures are subject to all such
terms, and the Holder is referred to the Subscription Agreement for a
statement of them.
The Debentures are general unsecured obligations of the Company limited
to $4,000,000 aggregate principal amount plus interest and penalty payments.
This Debenture may be converted into shares of Common Stock of the
Company as provided in Section 9 of the Subscription Agreement. The
Debenture is subordinated to all Senior Indebtedness of the Company.
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 the Holder is excused
from any interest or penalties resulting from improper characterization.
The Company will furnish to any Holder upon written request and without
charge a copy of the Subscription Agreement. It also will furnish the text
of this Debenture in larger type. Requests may be made to Media Logic, Inc.,
310 South Street, Plainville, Massachusetts 02762, Attention: President.
This Debenture shall be governed and construed in accordance with the
laws of the State of New York.
EXECUTED as an instrument under seal this 24th day of March, 1997.
MEDIA LOGIC, INC.
By:
---------------------------
William E. Davis, Jr.
Chief Executive Office and
President
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