MEDIA LOGIC, INC.
AND
ROCHON CAPITAL GROUP, LTD.
WARRANT AGREEMENT
Dated as of October 29, 1997
WARRANT AGREEMENT (the "Agreement"), dated as of October 29, 1997 by and
between MEDIA LOGIC, INC., a Massachusetts corporation (the "Company"), and
ROCHON CAPITAL GROUP, LTD., a California corporation (the "Placement Agent").
The Company proposes to issue to the Placement Agent the warrants as
hereinafter described (the "Warrants") to purchase 200,000 shares of common
stock of the Company, $.01 par value per share ("Common Stock"), subject to
adjustment as provided in Section 8 hereof (such number of shares, as
adjusted, being hereinafter referred to as the "Shares"), each Warrant
entitling the holder ("Holder") thereof to purchase one share of Common
Stock. All capitalized terms used herein and not otherwise defined herein
shall have the same meanings as assigned thereto in that certain Placement
Agency Agreement, dated as of March 17, 1997, by and between the Company and
the Placement Agent.
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 November 20, 1997 (the
"Issue Date") the Company shall issue, sell and deliver the Warrants to the
Placement Agent or its bona fide officers or principals. 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 the Placement Agent in such denominations as the
Placement Agent may request in writing to the Company; provided, however,
that the Placement Agent 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 the Placement Agent
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
1
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.
(a) Term of Warrants; Exercise of Warrants. Each Warrant entitles the
registered owner thereof to purchase one Share at a purchase price equal to
$2.00 per Share (as adjusted from time to time pursuant to the provisions
hereof, the "Exercise Price"). The Exercise Price and the Shares issuable
upon exercise of Warrants are subject to adjustment upon the occurrence of
certain events, pursuant to the provisions of Section 8 of this Agreement.
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 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, as adjusted in accordance with the provisions of Section 8 of
this Agreement, 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
2
payment of the Exercise Price as aforesaid, the Company shall issue and cause
to be delivered with all reasonable dispatch (and in no event more than five
business days from the date of each such surrender and payment) 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 such 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 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) Exercise by Surrender of Warrant. In addition to the method of
payment set forth in subsection (a) above and in lieu of any cash payment
required thereunder, the Holder of the Warrants shall have the right at any
time and from time to time to exercise the Warrants in full or in part by
surrendering the Warrant in the manner specified in the Warrant in exchange
for the number of Shares equal to the product of (x) the number of shares as
to which the Warrants are being exercised multiplied by (y) a fraction, the
numerator of which is the Market Price (as defined below) of the Shares less
the Exercise Price and the denominator of which is such Market Price. Solely
for the purposes of this paragraph, Market Price shall be the highest closing
price of the Common Stock as determined over the five (5) trading-day period
preceding the date on which the Election to Purchase is sent to the Company.
Upon each surrender of Warrants, the Company shall issue and cause to be
delivered with all reasonable dispatch (and in no event more than three
business days from the date of each such surrender) 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
due such Holder as calculated pursuant to the foregoing formula. 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
3
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.
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 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. Adjustments of Exercise Price and Number of Shares. The Exercise Price
and the number and kind of securities issuable upon exercise of each Warrant
shall be subject to adjustment from time to time upon the happening of
certain events, as follows:
(a) In case the Company shall (i) declare a dividend on its Common Stock
in shares of Common Stock or make a distribution in shares of Common Stock,
(ii) subdivide its outstanding shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock or (iv) issue
4
by reclassification of its shares of Common Stock other securities of the
Company (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation),
the number of Shares purchasable upon exercise of each Warrant immediately
prior thereto shall be adjusted so that the Holder of each Warrant shall be
entitled to receive the kind and number of Shares or other securities of the
Company which he would have owned or have been entitled to receive after the
happening of any of the events described above, had such Warrant been
exercised immediately prior to the happening of such event or any record date
with respect thereto. An adjustment made pursuant to this paragraph (a) shall
become effective immediately after the effective date of such event
retroactive to immediately after the record date, if any, for such event.
(b) In case the Company shall issue rights, options or warrants to all
holders of its shares of Common Stock, without any charge to such holders,
entitling them (for a period expiring within 45 days after the record date
mentioned below in this paragraph (b)) to subscribe for or to purchase shares
of Common Stock at a price per share that is lower at the record date
mentioned below than the then current market price per share of Common Stock
(as defined in paragraph (d) below), the number of Shares thereafter
purchasable upon exercise of each Warrant shall be determined by multiplying
the number of Shares theretofore purchasable upon exercise of each Warrant by
a fraction, of which the numerator shall be the number of shares of Common
Stock outstanding on such record date plus the number of additional shares of
Common Stock offered for subscription or purchase, and of which the
denominator shall be the number of shares of Common Stock outstanding on such
record date plus the number of shares which the aggregate offering price of
the total number of shares of Common Stock so offered would purchase at the
then current market price per share of Common Stock. Such adjustment shall be
made whenever such rights, options or warrants are issued, and shall become
effective retroactively to immediately after the record date for the
determination of shareholders entitled to receive such rights, options or
warrants.
(c) In case the Company shall distribute to all holders of its shares of
Common Stock shares of stock other than Common Stock or evidences of its
indebtedness or assets (excluding cash dividends payable out of consolidated
earnings or retained earnings and dividends or distributions referred to in
paragraph (a) above) or rights, options or warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase
shares of Common Stock (excluding those referred to in paragraph (b) above),
then in each case the number of Shares thereafter issuable upon the exercise
of each Warrant shall be determined by multiplying the number of Shares
theretofore issuable upon the exercise of each Warrant, by a fraction, of
which the numerator shall be the current market price per share of Common
Stock (as defined in paragraph (d) below) on the record date mentioned below
in this paragraph (c), and of which the denominator shall be the current
market price per share of Common Stock on such record date, less the then
fair value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be conclusive) of the portion of the
5
shares of stock other than Common Stock or assets or evidences of
indebtedness so distributed or of such subscription rights, options or
warrants, or of such convertible or exchangeable securities applicable to one
share of Common Stock. Such adjustment shall be made whenever any such
distribution is made, and shall become effective on the date of distribution
retroactive to immediately after the record date for the determination of
shareholders entitled to receive such distribution.
(d) For the purpose of any computation under paragraphs (b) and (c) of
this Section 8, the current market price per share of Common Stock at any
date (the "Current Market Price") shall be the average of the daily closing
bid prices for the five (5) consecutive trading days before the date of such
computation. The closing price for each day shall be the last reported sale
price or, in case no such reported sale takes place on such day, the average
of the closing bid and asked prices for such day, in either case on the
principal national securities exchange on which the shares are listed or
admitted to trading, or if they are not listed or admitted to trading on any
national securities exchange, but are traded in the over-the-counter market,
the closing sale price of the Common Stock or, in case no sale is publicly
reported, the average of the representative closing bid and asked quotations
for the Common Stock on the Nasdaq system or any comparable system, or if the
Common Stock is not listed on the Nasdaq system or a comparable system, the
closing sale price of the Common Stock or, in case no sale is publicly
reported, the average of the closing bid and asked prices as furnished by two
members of the NASD selected from time to time by the Company for that
purpose.
(e) No adjustment in the number of Shares purchasable hereunder shall be
required unless such adjustment would require an increase or decrease of at
least one percent (1%) in the number of Shares purchasable upon the exercise
of each Warrant; provided, however, that any adjustments which by reason of
this paragraph (e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment but not later than three
years after the happening of the specified event or events. All calculations
shall be made to the nearest one thousandth of a share.
(f) Whenever the number of Shares purchasable upon the exercise of each
Warrant is adjusted, as herein provided, the Exercise Price shall be adjusted
by multiplying the Exercise Price in effect immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of
Shares purchasable upon the exercise of each Warrant immediately prior to
such adjustment, and of which the denominator shall be the number of Shares
so purchasable immediately thereafter.
6
(g) For the purpose of this Section 8, the term "shares of Common Stock"
shall mean (i) the class of stock designated as the Common Stock of the
Company at the date of this Agreement or (ii) any other class of stock
resulting from successive changes or reclassifications of such shares
consisting solely of changes in par value, or from no par value to par value,
or from par value to no par value. In the event that at any time, as a result
of an adjustment made pursuant to paragraph (a) above, the Holders shall
become entitled to purchase any shares of capital stock of the Company other
than shares of Common Stock, thereafter the number of such other shares so
purchasable upon exercise of each Warrant and the Exercise Price of such
shares shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to
the Shares contained in paragraphs (a) through (f) inclusive, and paragraphs
(h) through (m), inclusive, of this Section 8, and the provisions of Sections
4, 5, 7 and 10, with respect to the Shares, shall apply on like terms to any
such other shares.
(h) Upon the expiration of any rights, options, warrants or conversion
rights or exchange privileges, if any thereof shall not have been exercised,
the Exercise Price and the number of shares of Common Stock purchasable upon
the exercise of each Warrant shall, upon such expiration, be readjusted and
shall thereafter be such as it would have been had it originally been
adjusted (or had the original adjustment not been required, as the case may
be) as if (i) the only shares of Common Stock so issued were the shares of
Common Stock, if any, actually issued or sold upon the exercise of such
rights, options, warrants or conversion rights or exchange privileges and
(ii) such shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise plus the
aggregate consideration, if any, actually received by the Company for the
issuance, sale or grant of all of such rights, options, warrants or
conversion rights or exchange privileges whether or not exercised; provided,
however, that no such readjustment shall have the effect of decreasing the
number of shares issuable upon the exercise of each Warrant or increasing the
Exercise Price by an amount in excess of the amount of the adjustment
initially made in respect of the issuance, sale or grant of such rights,
options, warrants or conversion rights or exchange privileges.
(i) The Company may, at its option at any time during the term of the
Warrants, reduce the then current Exercise Price to any amount deemed
appropriate by the Board of Directors of the Company.
7
(j) Whenever the number of Shares issuable upon the exercise of each
Warrant or the Exercise Price of such Shares is adjusted, as herein provided,
the Company shall promptly mail by first class mail, postage prepaid, to each
Holder, notice of such adjustment or adjustments. The Company shall retain a
firm of independent public accountants (who may be the regular accountants
employed by the Company) to make any computation required by this Section 8
and shall cause such accountants to prepare a certificate setting forth the
number of Shares issuable upon the exercise of each Warrant and the Exercise
Price of such Shares after such adjustment, setting forth a brief statement
of the facts requiring such adjustment and setting forth the computation by
which such adjustment was made. Such certificate shall be conclusive as to
the correctness of such adjustment and each Holder shall have the right to
inspect such certificate during reasonable business hours.
(k) Except as provided in this Section 8, no adjustment in respect of any
dividends shall be made during the term of a Warrant or upon the exercise of
a Warrant.
(l) In case of any consolidation of the Company with or merger of the
Company with or into another corporation or in case of any sale or conveyance
to another corporation of the property of the Company as an entirety or
substantially as an entirety, the Company or such successor or purchasing
corporation (or an affiliate of such successor or purchasing corporation), as
the case may be, agrees that each Holder shall have the right thereafter upon
payment of the Exercise Price in effect immediately prior to such action to
purchase upon exercise of each Warrant the kind and amount of shares and
other securities and property (including cash) which he would have owned or
have been entitled to receive after the happening of such consolidation,
merger, sale or conveyance had such Warrant been exercised immediately prior
to such action except as may be necessary to account for such a transaction
as a "pooling of interests," in which case the Warrant may be exchanged for
or converted into a warrant to purchase common stock of the surviving
corporation on economically equivalent terms. The provisions of this
paragraph (l) shall similarly apply to successive consolidations, mergers,
sales or conveyances.
(m) Notwithstanding any adjustment in the Exercise Price or the number or
kind of shares purchasable upon the exercise of the Warrants pursuant to this
Agreement, certificates for Warrants issued prior or subsequent to such
adjustment may continue to express the same price and number and kind of
Shares as are initially issuable pursuant to this Agreement.
9. Reserved.
8
10. Registration Rights.
(a) Demand Registration Rights. The Company covenants and agrees with the
Placement Agent 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 the Placement Agent or
its designees, made at any time within the period commencing on the Issue
Date and ending five years after the Issue 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
1 0(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
the Placement Agent and any other Holders or subsequent Holders of the
Registrable Securities that if, at any time within the period commencing on
the Issue Date and ending five years after the Issue Date, it proposes to
file a registration statement or Offering Statement with respect to any class
of equity or equity-related security under the
9
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 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 20% 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 Form 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, the securities
that the Company proposes to sell and (B) second, the Registrable
Securities requested to be included in such registration, apportioned pro
rata among the Holders of Registrable Securities, provided, however, the
Company will use its best efforts to include not less than 20% of the
Registrable Securities, and (C) third, 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 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
10
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 20% 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 party disapproves of the terms of
any such underwriting, it may elect to withdraw therefrom by written
notice to the Company, the underwriter, and the Placement Agent.
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 the Placement Agent, 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 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,
11
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 either of which case filing may be delayed no longer than 90
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 expenses 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 the Placement Agent 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 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:
12
(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.
(g) The Company hereby agrees to file a registration statement
registering for resale all of the Shares as soon as practicable after the
Issue Date, and further agrees that such registration will occur without
further notice on the part of the Company and without further action on the
part of the original Holder of the Warrants.
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.
(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
13
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.
[Signatures appear on the following page]
14
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
ROCHON CAPITAL GROUP, LTD.
By: /s/ Phillip L. Neiman
-------------------------------
Name: Phillip L. Neiman
Title: President
15
EXHIBIT A
No. 1
200,000 Warrants
MEDIA LOGIC, INC.
Warrant Certificate
THIS CERTIFIES THAT for value received Rochon Capital Group, Ltd., 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, $.01 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 October 29, 1997 (the "Warrant Agreement"), between
the Company and Rochon Capital Group, Ltd., 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. As provided in the Warrant Agreement, the
Exercise Price and the number or kind of shares which may be purchased upon
the exercise of the Warrants evidenced by this Warrant Certificate are, upon
the happening of certain events, subject to modification and adjustment.
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
1
anything contained in the Warrant Agreement or 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: October 29, 1997
MEDIA LOGIC, INC.
By:
-------------------------------
Name: William E. Davis, Jr.
Title: Chief Executive Officer
Attest:
By:
---------------------
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