Document:

Prepared by MERRILL CORPORATION

Exhibit

10.52

 

PROMISSORY NOTE

 

 

	

  Borrower:

  	

   

  	

  Fresh Choice, Inc.

  	

  Lender:

  	

  Mid-Peninsula Bank

  
	

   

  	

   

  	

  485 Cochrane Circle

  	

   

  	

  420 Cowper Street

  
	

   

  	

   

  	

  Morgan Hill, CA 95037

  	

   

  	

  Palo Alto, CA  94301

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  

	

  Principal Amount: 

  $2,000,000.00

  	

   

  	

  Initial Rate:  6.00%

  	

   

  	

  Date of Note: 

  October 5, 2001

  
	

   

  	

   

  	

   

  	

   

  	

   

  

PROMISE TO PAY. Fresh Choice, Inc. ("Borrower"),

promises to pay to Mid-Peninsula Bank, a California corporation

("Lender"), or order, in lawful money of the United States of

America, the principal amount of Two Million Dollars ($2,000,000.00) or so much

as may be outstanding, together with interest on the unpaid outstanding

principal balance of each advance. 

Interest shall be calculated from the date of each advance until

repayment of each advance.  This Note is

the Note as defined in the Revolving Loan Agreement, dated as of October 5,

2001, between Borrower and Lender (“Loan Agreement”).  Capitalized terms used but not defined herein are defined in such

Revolving Loan Agreement.

 

PAYMENT:  Borrower will pay this loan in one payment

of all outstanding principal plus all accrued unpaid interest on October 5,

2002.  In addition, Borrower will pay

regular monthly payments of accrued unpaid interest beginning November 1, 2001,

and all subsequent interest payments are due on the same day

of each month after that. 

The annual interest rate for this Note is computed on a 365/360 basis;

that is, by applying the ratio of the annual interest rate over a year of 360

days, multiplied by the outstanding principal balance, multiplied by the actual

number of days the principal balance is outstanding.  Borrower will pay Lender at Lender’s address shown above or at

such other place as Lender may designate in writing.  Unless otherwise agreed or required by applicable law, payments

will be applied first to accrued unpaid interest, then to principal, and any

remaining amount to any unpaid collection costs and late charges.

 

VARIABLE

INTEREST RATE.  The

interest rate on this Note is subject to change from time to time based on

changes in an independent index which is the "Prime Rate" as

published in the Western Edition of the Wall Street Journal (the

"Index"). The Index is not necessarily the lowest rate charged by

Lender on its loans. If the Index becomes unavailable during the term of this

loan, Lender may designate a substitute index after notice to Borrower. Lender

will tell Borrower the current Index rate upon Borrower's request. Borrower

understands that Lender may make loans based on other rates as well. The

interest rate change will not occur more often than once each day. The Index

currently is 5.5%. The Interest rate to be applied to the unpaid principal

balance of this Note will be at a rate of 0.500 percentage points over the

Index, resulting in an initial rate of 6.00%.  NOTICE: Under no circumstances will the

interest rate on this Note be more than the maximum rate allowed by applicable

law, if any.

 

PREPAYMENT.  Borrower agrees that all loan fees and other

prepaid finance charges are earned fully as of the date of the loan and will

not be subject to refund upon early payment (whether voluntary or as a result

of default), except as otherwise required by law. Except for the foregoing,

Borrower may pay without penalty all or a portion of the amount owed earlier

than it is due.

 

LATE

CHARGE.  If a payment

is 10 days or more late, Borrower will be charged 5.000% of the unpaid portion

of the regularly scheduled payment.

 

DEFAULT.  Borrower will be in default (“Event of

Default”) if any of the following happens: (a) Borrower fails to make any payment

when due, and such failure continues uncured for five days (b) An Event of

Default occurs under the Loan Agreement.

LENDER'S

RIGHTS.  Upon the

occurrence of an Event of Default, Lender may, so long as such Event of Default

has not been waived, declare the entire unpaid principal balance on this Note

and all accrued unpaid interest immediately due, without notice, and then

Borrower will pay that amount. Upon Borrower's failure to pay all amounts

declared due pursuant to this section, including failure to pay upon final

maturity, Lender, at its option, may also, if permitted under applicable law,

increase the variable interest rate on this Note to 2.500 percentage points

over the Index. Borrower shall also pay all attorneys fees and expenses as

required under the terms of the Loan Agreement. This Note has been delivered to

Lender and accepted by Lender in the State of California. If there is a

lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of

the state or federal courts located in Santa Clara County or San Francisco

County in the State of California. This Note shall be governed by and construed

in accordance with the laws of the State of California.

 

COLLATERAL.

This Note is secured by the collateral as described in that

certain Pledge Agreement dated October 5, 2001.

 

LINE

OF CREDIT.  This Note

evidences a revolving line of credit. 

Advances under this Note, as well as directions for payment from

Borrower's accounts, may be requested orally or in writing by Borrower or by an

authorized person.  Lender may, but need

not, require that all oral requests be confirmed in writing. All

communications, instructions, or directions by telephone or otherwise to Lender

are to be directed to Lender's office shown above.  The following party or parties are authorized to request advances

under the line of credit until Lender receives from Borrower at Lender's

address shown above written notice of revocation of their authority: David E.

Pertl, Sr. Vice President and CFO; and Everett F. Jefferson, CEO and Director.  Borrower agrees to be liable for all sums

either: (a) advanced in accordance with the instructions of an authorized

person or (b) credited to any of Borrower's accounts with Lender. The unpaid

principal balance owing on this Note at any time may be evidenced by

endorsements on this Note or by Lender's internal records, including daily

computer print-outs. Lender will have no obligation to advance funds under this

Note while an Event of Default exists under the terms of this Note or the Loan

Agreement.

 

GENERAL

PROVISIONS.  Lender

may delay or forgo enforcing any of its rights or remedies under this Note

without losing them. Borrower and any other person who signs, guarantees or

endorses this Note, to the extent allowed by law, waive any applicable statute

of limitations, presentment, demand for payment, protest and notice of

dishonor. Upon any change in the terms of this Note, and unless otherwise

expressly stated in writing, no party who signs this Note, whether as maker,

guarantor, accommodation maker or endorser, shall be released from liability.

All such parties agree that Lender may renew or extend (repeatedly and for any

length of time) this loan, or release any party or guarantor or collateral; or

impair, fail to realize upon or perfect Lender's security interest in the

collateral; and take any other action deemed necessary by Lender without the

consent of or notice to anyone.

 

REVOLVING

LOAN AGREEMENT. In addition to the terms and conditions

contained in this Note it is to be

further subject to the terms and conditions contained

in the Loan Agreement.

 

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND

UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST

RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES

RECEIPT OF A COMPLETED COPY OF THE NOTE.

 

BORROWER:

 

FRESH CHOICE, INC., a

Delaware corporation

 

 

	

  By: /S/ David E.

  Pertl

  
	

  Name: David E. Pertl

  
	

  Title: Senior Vice

  President and CFOEXHIBIT 4.2

      THE  SECURITIES  AND  THE  SECURITIES  ISSUABLE  UPON  EXERCISE  OF  THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), AND THEY MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED,  ASSIGNED
OR  TRANSFERRED  EXCEPT (i) PURSUANT TO A REGISTRATION  STATEMENT  UNDER THE ACT
WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE  SECURITIES,  OR
(ii) PURSUANT TO A SPECIFIC  EXEMPTION FROM REGISTRATION  UNDER THE ACT BUT ONLY
UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE
COMPANY,  OR  OTHER  COUNSEL  REASONABLY  ACCEPTABLE  TO THE  COMPANY,  THAT THE
PROPOSED DISPOSITION IS CONSISTENT WITH ALL APPLICABLE  PROVISIONS OF THE ACT AS
WELL AS ANY APPLICABLE "BLUE SKY" OR SIMILAR STATE SECURITIES LAW.

                                October 18, 2001

LOG ON AMERICA, INC.
COMMON STOCK PURCHASE WARRANT

The Transferability of this Warrant is
Restricted as Provided in Section 3

W - ___                      Warrants to Purchase 300,000 Shares of Common Stock

      For good and valuable consideration,  the receipt and sufficiency of which
is hereby  acknowledged  by Log On America,  Inc., a Delaware  corporation  (the
"Company"),  Ken Cornell is hereby granted the right to purchase, at the initial
exercise  price of $.50 per share (the  "Initial  Exercise  Price")  (subject to
adjustment as provided herein) (the "Purchase Price"), at any time commencing on
the date  hereof  until  5:00 p.m.,  New York City time,  for a term of five (5)
years  thereafter,  300,000  shares of common stock of the Company,  $.00001 par
value per share (the "Shares").

      This Common  Stock  Purchase  Warrant  (each,  a  "Warrant")  is initially
exercisable  at a price of $.50 per Share,  payable in cash or by  certified  or
official bank check in New York Clearing House funds,  subject to adjustments as
provided in Section 5 hereof.  Upon surrender of this Warrant,  with the annexed
Subscription Form duly executed, together with payment of the Purchase Price (as
hereinafter defined) for the Shares purchased at the offices of the Company, the
registered  holder of this Warrant (the "Holder") shall be entitled to receive a
certificate or certificates for the Shares so purchased.
<PAGE>

      1. Exercise of Warrant.

            (a) The purchase rights  represented by this Warrant are exercisable
at the  option  of the  Holder,  in whole or in part  (but not as to  fractional
Shares underlying this Warrant),  during any period in which this Warrant may be
exercised as set forth  above.  In the case of the purchase of less than all the
Shares  purchasable  under this  Warrant,  the Company shall cancel this Warrant
upon the  surrender  hereof and shall  execute and deliver a new Warrant of like
tenor for the balance of the Shares purchasable hereunder.

            (b) At any time during the term,  the Holder  may, at its  election,
exchange  this  Warrant,  in whole or in part (a "Warrant  Exchange"),  into the
number  of  Shares   determined  in  accordance  with  this  paragraph  1(b)  by
surrendering this Warrant at the principal office of the Company, accompanied by
a notice  stating the  Holder's  intent to effect such  exchange,  the number of
Shares to be  exchanged  and the date on which  the  Holder  requests  that such
Warrant  Exchange occur (the "Notice of Exchange").  The Warrant  Exchange shall
take place on the date  specified  in the Notice of Exchange  or, if later,  the
date the Notice of Exchange is received by the Company  (the  "Exchange  Date").
Certificates  for the  Shares  issuable  upon  such  Warrant  Exchange  and,  if
applicable,  a new  Warrant of like tenor  evidencing  the balance of the Shares
remaining  subject to this Warrant,  shall be issued as of the Exchange Date and
delivered to the Holder  within five (5) business  days  following  the Exchange
Date. In connection with any Warrant Exchange,  this Warrant shall represent the
right to  subscribe  for and acquire  the number of Shares  (rounded to the next
highest  integer)  equal to (i) the number of Shares  specified by the Holder in
its Notice of Exchange (the "Total Number") less (ii) the number of Shares equal
to the quotient obtained by dividing (a) the product of the Total Number and the
then existing  exercise price by (b) the closing price ("Closing  Price") on the
trading date immediately preceding the Exchange Date of a share of the Company's
Common Stock as reported on NASDAQ or other national securities exchange. In the
event the Company's Common Stock is not traded on any such exchange, the Closing
Price  shall be the price  per  share  for the last sale of Common  Stock by the
Company prior to the Notice of Exchange.

      2. Issuance of Certificates.

            Upon  the  exercise  of this  Warrant  and  payment  in full for the
Shares, the issuance of certificates for Shares underlying this Warrant shall be
made  forthwith  (and in any event  within five (5)  business  days  thereafter)
without charge to the Holder, including,  without limitation,  any tax which may
be payable  in respect of the  issuance  thereof,  and such  certificates  shall
(subject to the  provisions of Section 3 hereof) be issued in the name of, or in
such  names as may be  directed  by, the  Holder;  provided,  however,  that the
Company  shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such certificates in a
name other than that of the Holder,  or its affiliates or loan  participants and
the Company shall not be required to issue or deliver such  certificates  unless
or until the person or persons  requesting the issuance  thereof shall have paid
to the  Company  the  amount  of  such  tax or  shall  have  established  to the
satisfaction of the Company that such tax has

                                        2
<PAGE>

been paid. The  certificates  representing  the Shares  underlying  this Warrant
shall be executed on behalf of the Company by the manual or facsimile  signature
of the  present  or any  future  Chairman,  Vice  Chairman,  President  or  Vice
President and Secretary or Assistant Secretary of the Company.

      3. Restriction on Transfer; Registration Under the Securities Act of 1933,
as amended.

      3.1  Restriction  on  Transfer.  (a) Neither  this  Warrant nor any Shares
issuable upon exercise  hereof has been  registered  under the Securities Act of
1933, as amended (the "Act"), and none of such securities may be offered,  sold,
pledged,  hypothecated,  assigned  or  transferred  except  (i)  pursuant  to  a
registration  statement under the Act which has become  effective and is current
with respect to such  securities or (ii) pursuant to a specific  exemption  from
registration  under the Act but only upon a Holder hereof first having  obtained
the  written  opinion of counsel to the  Company,  or other  counsel  reasonably
acceptable to the Company,  that the proposed disposition is consistent with all
applicable provisions of the Act as well as any applicable "Blue Sky" or similar
state securities law. Upon exercise,  in part or in whole, of this Warrant, each
certificate issued  representing the Shares underlying this Warrant shall bear a
legend to the foregoing effect.

            (b) Notwithstanding  anything contained herein to the contrary, this
Warrant and the Shares may be assigned in compliance with Section 3.1(a).

      3.2 Piggyback Registration.

                  (i) If, at any time during the five-year period  commencing on
the date hereof,  the Company  proposes to register any of its securities  under
the  Securities  Act (other than in connection  with the merger,  acquisition or
exchange  offer on Form S-4 or pursuant to Form S-8 or successor  forms) it will
give written notice by regular mail and  registered or certified  mail, at least
thirty (30) days prior to the filing of each such registration statement, to the
Holder of its  intention to do so. Upon the written  request of the Holder given
within ten (10) days after  receipt of any such  notice of its desire to include
any Shares in such proposed registration statement, the Company shall afford the
Holder  the  opportunity  to  have  any  such  Shares   registered   under  such
registration statement.

                  (ii) Notwithstanding the provisions of this Section 3.2(b) the
Company  shall  have the right at any time  after it shall  have  given  written
notice  pursuant  to this  Section  3.3(b)  (irrespective  of  whether a written
request for inclusion of any such securities  shall have been made) to elect not
to file any such proposed registration  statement, or to withdraw the same after
the filing but prior to the effective date thereof.

      3.3 Certain Covenants with Respect to Registration. In connection with any
registration  under  Sections 3.2 hereof,  the Company  covenants  and agrees as
follows:

                                        3
<PAGE>

            (a) The Company shall use its best efforts to cause any registration
statement  to be declared  effective at the earliest  possible  time,  and shall
furnish  the  Holder  desiring  to  sell  Warrant   Securities  such  number  of
prospectuses as shall be reasonably required.

            (b) The Company shall pay all costs  (excluding fees and expenses of
Holder's counsel and any underwriting or selling commissions or other charges of
any  broker-dealer  acting  on  behalf  of the  Holder),  fees and  expenses  in
connection with all  registration  statements filed pursuant to Sections 3.2 and
3.3 hereof  including,  without  limitation,  the Company's legal and accounting
fees, printing expenses, blue sky fees and expenses.

            (c) The Company will take all necessary action which may be required
in qualifying or registering the Shares or (the "Warrant  Securities")  included
in a  registration  statement for offering and sale under the securities or blue
sky laws of such states as reasonably are requested by the Holder, provided that
the Company  shall not be  obligated to qualify as a foreign  corporation  to do
business under the laws of any such jurisdiction.

            (d) The Company shall indemnify the Holder of the Warrant Securities
to be sold pursuant to any registration  statement and each person,  if any, who
controls the Holder within the meaning of Section 15 of the Act or Section 20(a)
of the Securities Exchange Act of 1934, as amended ("Exchange Act"), against all
loss, claim,  damage,  expense or liability  (including all expenses  reasonably
incurred in investigating,  preparing or defending against any claim whatsoever)
to which any of them may become  subject  under the Act, the Exchange Act or any
other statute, common law or otherwise,  arising out of or based upon any untrue
statement  or alleged  untrue  statement  of a material  fact  contained in such
registration statement executed by the Company or based upon written information
furnished  by the  Company  filed in any  jurisdiction  in order to qualify  the
Warrant  Securities  under  the  securities  laws  thereof  or  filed  with  the
Securities and Exchange  Commission  (the  "Commission"),  any state  securities
commission or agency, the National Association of Securities Dealers,  Inc., The
Nasdaq Stock Market, Inc. or any securities exchange, or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statements  contained therein not misleading,  unless such statement
or omission was made in reliance upon and in conformity with written information
furnished to the Company by the Holder  expressly  for use in such  registration
statement,  any amendment or supplement thereto or any application,  as the case
may be. If any action is brought against the Holder or any controlling person of
the Holder in respect  of which  indemnity  may be sought  against  the  Company
pursuant to this Section  3.4(d),  the Holder or such  controlling  person shall
within  thirty  (30) days after the  receipt  thereby of a summons or  complaint
notify the Company in writing of the  institution of such action and the Company
shall assume the defense of such action, including the employment and payment of
reasonable  fees and  expenses of counsel  (which  counsel  shall be  reasonably
satisfactory to the Holder or such controlling  person), but the failure to give
such notice shall not affect such indemnified  person's right to indemnification
hereunder  except to the extent  that the  Company's  defense of such action was
materially  adversely  affected thereby.  The Holder or such controlling  person
shall  have the right to employ its own  counsel in any such case,  but the fees
and  expenses  of such  counsel  shall be at the  expense  of the Holder or such
controlling person

                                        4
<PAGE>

unless the  employment of such counsel shall have been  authorized in writing by
the Company in connection with the defense of such action, the Company shall not
have  employed  counsel to have  charge of the  defense  of such  action or such
indemnified  party or parties shall have reasonably  concluded that there may be
defenses available to it or them which are different from or additional to those
available to the Company (in which case the Company  shall not have the right to
direct  the  defense  of such  action  on  behalf  of the  indemnified  party or
parties),  in any of which  events  the fees and  expenses  of not more than one
additional firm of attorneys for the Holder and/or such controlling person shall
be borne by the Company.  Except as expressly provided in the previous sentence,
in the event that the Company shall not  previously  have assumed the defense of
any such action or claim,  the  Company  shall not  thereafter  be liable to the
Holder or such controlling  person in investigating,  preparing or defending any
such action or claim.  The Company  agrees  promptly to notify the Holder of the
commencement of any litigation or proceedings  against the Company or any of its
officers,  directors or controlling persons in connection with the resale of the
Warrant  Securities  or in  connection  with such  registration  statement.  The
Company further agrees that upon demand by an indemnified person, at any time or
from time to time, it will promptly  reimburse such  indemnified  person for any
loss, claim, damage,  liability, cost or expense actually and reasonably paid by
the  indemnified  person as to which the  Company  has  indemnified  such person
pursuant  hereto.  Notwithstanding  the  foregoing  provisions  of this  Section
3.4(d),  any such payment or reimbursement  by the Company of fees,  expenses or
disbursements  incurred by an  indemnified  person in any  proceeding in which a
final  judgment by a court of competent  jurisdiction  (after all appeals or the
expiration of time to appeal) is entered against the Holder or such  indemnified
person as a direct result of the Holder's or such person's  gross  negligence or
willful misfeasance will be promptly repaid to the Company.

            (e) The Holder of the Warrant  Securities  to be sold  pursuant to a
registration statement, and its successors and assigns, shall severally, and not
jointly,  indemnify the Company,  its officers and directors and each person, if
any,  who  controls  the Company  within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim, damage or expense or
liability   (including  all  expenses   reasonably  incurred  in  investigating,
preparing or defending  against any claim  whatsoever)  to which they may become
subject under the Act, the Exchange Act or otherwise,  arising from  information
furnished  in  writing  by or on  behalf of the  Holder,  or its  successors  or
assigns,  for specific  inclusion  in such  registration  statement.  The Holder
further  agrees that upon demand by an indemnified  person,  at any time or from
time to time, it will promptly  reimburse such indemnified  person for any loss,
claim,  damage,  liability,  cost or expense actually and reasonably paid by the
indemnified  person as to which the Holder has indemnified  such person pursuant
hereto.  Notwithstanding  the foregoing  provisions of this Section 3.3(e),  any
such payment or reimbursement  by the Holder of fees,  expenses or disbursements
incurred by an indemnified person in any proceeding in which a final judgment by
a court of competent  jurisdiction  (after all appeals or the expiration of time
to appeal) is entered against the Company or such indemnified person as a direct
result of the Company or such person's gross  negligence or willful  misfeasance
will be promptly repaid to the Holder.

                                        5
<PAGE>

            (f)  Nothing  contained  in this  Agreement  shall be  construed  as
requiring the Holder to exercise its Warrant prior to the initial  filing of any
registration statement or the effectiveness thereof.

            (g) The Company  shall  furnish to the Holder  participating  in the
offering and to each underwriter, if any, a signed counterpart, addressed to the
Holder or  underwriter,  if any,  of (i) an opinion  of counsel to the  Company,
dated  the  effective  date  of  such  registration   statement  (and,  if  such
registration includes an underwritten public offering, an opinion dated the date
of the closing  under the  underwriting  agreement),  and (ii) a "cold  comfort"
letter dated the effective  date of such  registration  statement  (and, if such
registration  includes an underwritten public offering,  a letter dated the date
of the  closing  under the  underwriting  agreement)  signed by the  independent
public auditors who have issued a report on the Company's  financial  statements
included in such registration statement, in each case covering substantially the
same matters with respect to such  registration  statement  (and the  prospectus
included therein) and, in the case of such accountants'  letter, with respect to
events subsequent to the date of such financial  statements,  as are customarily
covered in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities.

      4. Price.

      4.1 Initial and Adjusted  Exercise Price. The Initial Exercise Price shall
be $.50 per Share.  The adjusted  exercise  price shall be the price which shall
result from time to time from any and all  adjustments  of the Initial  Exercise
Price in accordance with the provisions of Section 4.3 and Section 5 hereof.

      4.2  Purchase  Price.  The term  "Purchase  Price"  herein  shall mean the
Initial  Exercise  Price or the  adjusted  exercise  price,  depending  upon the
context.

      5. Adjustments of Purchase Price and Number of Shares.

            The Purchase Price in effect at any time and the number of shares of
Common Stock  purchasable  upon the exercise of this Warrant shall be subject to
adjustment  from time to time upon the happening of certain  events  hereinafter
described.

            (a) In case the  Company  shall  (i)  declare a  dividend  or make a
distribution  on its  outstanding  shares  of  Common  Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding  shares of Common Stock into
a greater  number of shares,  or (iii)  combine or  reclassify  its  outstanding
shares of Common Stock into a smaller number of shares,  or (iv) the outstanding
shares of Common  Stock of the Company are at any time changed into or exchanged
for a different  number or kind of shares or other security of the Company or of
another corporation through reorganization,  merger, consolidation,  liquidation
or  recapitalization,  then  appropriate  adjustments  in the  number  of shares
subject to this Warrant  shall be made and the  Purchase  Price in effect at the
time of the record date for such  dividend or  distribution  or of the effective
date of such subdivision, combination, reclassification, reorganization, merger,

                                        6
<PAGE>

consolidation, liquidation or recapitalization shall be proportionately adjusted
so that the Holder of this  Warrant  shall be entitled to receive the  aggregate
number and kind of securities  which, if this Warrant had been exercised by such
Holder  immediately  prior to such date,  it would have owned upon such exercise
and been  entitled to receive  upon such  dividend,  distribution,  subdivision,
combination,    reclassification,    reorganization,    merger,   consolidation,
liquidation or  recapitalization.  Such  adjustment  shall be made  successively
whenever any event listed  above shall  occur.  The issuance of a cash  dividend
paid out of current  earnings  shall not trigger any  adjustment in the Purchase
Price or in the number and kind of  security  purchasable  upon the  exercise of
this Warrant.

            (b)  In  case  the  Company  shall  hereafter   distribute   without
consideration to all holders of its Common Stock evidence of its indebtedness or
assets (excluding cash dividends or distributions and dividends or distributions
referred to in Section 5(a)), or subscription  rights or warrants,  then in each
such  case the  Purchase  Price in  effect  thereafter  shall be  determined  by
multiplying  the  Purchase  Price in  effect  immediately  prior  thereto,  by a
fraction,  the  numerator of which shall be the total number of shares of Common
Stock then outstanding  multiplied by the current Purchase Price,  less the fair
market value (as determined by the Company's Board of Directors) of said assets,
or evidence of  indebtedness  so distributed or of such rights or warrants,  and
the  denominator  of which shall be the total  number of shares of Common  Stock
outstanding  multiplied by the current Purchase Price.  Such adjustment shall be
made  whenever  any  such  distribution  is  made  and  shall  become  effective
immediately after the record date for the determination of stockholders entitled
to receive such distribution.

            (c) Whenever the Purchase Price payable upon exercise of the Warrant
is adjusted  pursuant to Sections  5(a) or 5(b),  the number of shares of Common
Stock purchasable upon exercise of this Warrant shall simultaneously be adjusted
by  multiplying  the number of shares of Common Stock  issuable upon exercise of
this Warrant by the Purchase Price in effect on the date hereof and dividing the
product so obtained by the Purchase Price, as adjusted.

            (d)  For  purposes  of  any  computation  respecting   consideration
received pursuant to Sections 5(c), the following shall apply:

                  (i) in the case of the  issuance of shares of Common Stock for
            cash, the consideration  shall be the amount of such cash,  provided
            that in no case  shall any  deduction  be made for any  commissions,
            discounts  or  other  expenses  incurred  by  the  Company  for  any
            underwriting of the issue or otherwise in connection therewith;

                  (ii) in the case of the issuance of shares of Common Stock for
            a   consideration   in  whole  or  in  part  other  than  cash,  the
            consideration  other than cash shall be deemed to be the fair market
            value  thereof as determined in good faith by the Board of Directors
            of the Company  (irrespective of the accounting  treatment thereof),
            whose determination shall be conclusive; and

                                        7
<PAGE>

                  (iii) in the case of the  issuance of  securities  convertible
            into or  exchangeable  for  shares of Common  Stock,  the  aggregate
            consideration   received   therefor   shall  be  deemed  to  be  the
            consideration  received  by the  Company  for the  issuance  of such
            securities plus the additional minimum consideration,  if any, to be
            received by the Company upon the conversion or exchange thereof (the
            consideration  in each case to be  determined  in the same manner as
            provided in clauses (i) and (ii) of this Section 5 (g).

            (e) No adjustment in the Purchase Price shall be required (i) in the
event of the sale of the Company's securities in a future bona fide underwritten
public  offering;  or (ii) unless such  adjustment  would require an increase or
decrease of at least one cent ($0.01) in such price; provided, however, that any
adjustments  which by reason of this  Section  5(e) are not  required to be made
shall be carried  forward and taken into  account in any  subsequent  adjustment
required to be made hereunder.  All  calculations  under this Section 5 shall be
made to the nearest cent or to the nearest one-hundredth of a share, as the case
may be. Anything in this Section 5 to the contrary notwithstanding,  the Company
shall be  entitled,  but shall not be  required,  to make  such  changes  in the
Purchase  Price,  in addition to those  required by this  Section 5, as it shall
determine, in its sole discretion, to be advisable in order that any dividend or
distribution in shares of Common Stock, or any subdivision,  reclassification or
combination  of Common Stock,  hereafter made by the Company shall not result in
any federal  income tax  liability to the holders of Common Stock or  securities
convertible into Common Stock.

      6. Merger or Consolidation.

            In case of any  consolidation  of the Company with, or merger of the
Company with, or merger of the Company into,  another  corporation (other than a
consolidation or merger which does not result in any  reclassification or change
of the outstanding Common Stock of the Company),  the corporation formed by such
consolidation  or merger shall execute and deliver to the Holder a  supplemental
warrant  agreement  providing  that the Holder  shall have the right  thereafter
(until the  expiration  of such  Warrant)  to  receive,  upon  exercise  of this
Warrant,  the kind and  amount  of shares  of stock  and  other  securities  and
property  receivable upon such consolidation or merger by a holder of the number
of shares of Common Stock of the Company for which this Warrant  might have been
exercised immediately prior to such consolidation, merger, sale or transfer. The
above  provisions  of  this  Section  6  shall  similarly  apply  to  successive
consolidations or mergers.

      7. Exchange and Replacement of Warrant.

            This Warrant is  exchangeable  without  expense,  upon the surrender
hereof by the registered Holder at the principal executive office of the Company
for one or more  new  Warrants  of  like  tenor  and  date  representing  in the
aggregate  the right to purchase  the same  number of Shares as are  purchasable
hereunder in such  denominations  as shall be designated by the Holder hereof at
the time of such surrender.

                                        8
<PAGE>

            Upon receipt by the Company of evidence  reasonably  satisfactory to
it of the loss, theft,  destruction or mutilation of this Warrant,  and, in case
of loss, theft or destruction,  of indemnity or security reasonably satisfactory
to it, and  reimbursement to the Company of all reasonable  expenses  incidental
thereto, and upon surrender and cancellation of this Warrant, if mutilated,  the
Company  will make and  deliver a new  Warrant  of like  tenor,  in lieu of this
Warrant.

      8. Elimination of Fractional Interests.

            The Company shall not be required to issue certificates representing
fractions of Shares on the exercise of this Warrant, nor shall it be required to
issue scrip or pay cash in lieu of fractional interests,  it being the intent of
the parties that all fractional interests shall be eliminated.

      9. Reservation of Securities.

            The Company shall at all times reserve and keep available out of its
authorized common stock, solely for the purpose of issuance upon the exercise of
this  Warrant,  such  number of Shares as shall be  issuable  upon the  exercise
hereof. The Company covenants and agrees that, upon exercise of this Warrant and
payment of the Purchase Price therefor,  or as provided in Section 5, all Shares
issuable upon such  exercise  shall be duly and validly  issued,  fully paid and
nonassessable.  The Shares  issuable  upon the exercise of this Warrant shall be
free and clear of all liens and encumbrances.

      10. Notices to Warrant Holders.

            Nothing  contained in this Warrant  shall be construed as conferring
upon the Holder hereof the right to vote or to consent or to receive notice as a
stockholder  in respect of any  meetings  of  stockholders  for the  election of
directors  or  any  other  matter,  or as  having  any  rights  whatsoever  as a
stockholder of the Company.

      11. Successors.

            All  the  covenants,  agreements,   representations  and  warranties
contained in this  Warrant  shall bind the parties  hereto and their  respective
heirs, executors, administrators, distributees, successors and assigns.

      12. Headings.

            The   headings  in  this   Warrant  are  inserted  for  purposes  of
convenience only and shall have no substantive effect.

                                        9

<PAGE>

      13. Law Governing.

            This  Warrant  is  delivered  in the  State of New York and shall be
construed  and  enforced in  accordance  with,  and governed by, the laws of the
State of New York, without giving effect to conflicts of law principles.

            IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
in its  corporate  name by,  and such  signature  to be  attested  to by, a duly
authorized officer and has caused its corporate seal to be affixed hereto on the
date first above written.

                                              Log On America, Inc.

                                              By:_______________________________

                                       10
<PAGE>

                                SUBSCRIPTION FORM

(To be Executed by the Registered Holder
in order to Exercise the Warrant)

            The undersigned  hereby  irrevocably elects to exercise the right to
purchase  ______  Shares  represented  by  this  Warrant  in  accordance  to the
conditions  hereof and  herewith  makes  payment of the  Purchase  Price of such
Shares in full.

                              __________________________________________________
                                                  Signature

                              __________________________________________________
                                                   Address

                              __________________________________________________
                              Social Security Number or Taxpayer's Fed. I.D. No.

Dated:_____________

Identification Number ________________

                                       11
<PAGE>

                               FORM OF ASSIGNMENT

(To be executed by the registered  holder if such holder desires to transfer the
attached Warrant).

      FOR VALUE RECEIVED,  _______________________  hereby sells,  assigns,  and
transfers  unto  __________  a Warrant to purchase  __________  shares of Common
Stock,  $_____ par value, of Log On America,  Inc., a Delaware  corporation (the
"Company"),  and does hereby irrevocably constitute and appoint ________________
attorney to transfer  such Warrant on the books of the Company,  with full power
of substitution.

DATED: _________________________

                                           _____________________________________
                                           Signature

                                           _____________________________________
                                           Print Name

                                       12

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