WARRANT PURCHASE AGREEMENT
THIS WARRANT PURCHASE AGREEMENT is made this 9th day of August, 1999,
between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇. and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, husband and wife
(collectively, the "Seller"), and INTERACTIVE FLIGHT TECHNOLOGIES, INC., a
Delaware corporation ("IFT").
W I T N E S S E T H:
WHEREAS, Seller is the holder of a Warrant dated October 20, 1998, to
purchase 20,000 shares of the Common Stock of The Network Connection, Inc., a
Georgia corporation, with principal executive offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ("TNC") (the "Warrant");
WHEREAS, IFT has agreed to purchase the Warrant in exchange for 2,857
shares of the Class A Common Stock of IFT, par value $.01 per share (the "Common
Stock"), to be paid to Seller.
NOW THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
I. PURCHASE AND SALE OF WARRANT
A. Transaction. Seller hereby agrees to sell to IFT, and IFT agrees to
purchase from the Seller, the Warrant, in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933,
as amended (the "Securities Act").
B. Purchase Price; Form of Payment. The consideration for the Warrant to be
purchased by IFT shall be 2,857 shares of Common Stock payable to the Seller as
set forth on Schedule A attached hereto.
II. SELLER'S REPRESENTATIONS AND WARRANTIES
The Seller represents and warrants to IFT as follows:
A. The Seller is acquiring the Common Stock for Seller's own account, for
investment purposes only and not with a view towards or in connection with the
public sale or distribution thereof in violation of the Securities Act.
B. The Seller is (i) experienced in making investments of the kind
contemplated by this Agreement, (ii) capable, by reason of Seller's business and
financial experience, of evaluating the relative merits and risks of an
investment in the Common Stock, and (iii) able to afford the loss of Seller's
investment in the Common Stock.
C. The Seller understands that the Common Stock is being offered and sold
by IFT in reliance on an exemption from the registration requirements of the
Securities Act and equivalent state securities and "blue sky" laws, and that IFT
is relying upon the accuracy of, and Seller's compliance with, the Seller's
representations, warranties and covenants set forth in this Agreement to
determine the availability of such exemption and the eligibility of the Seller
to purchase the Common Stock.
D. The Seller has been furnished with or provided access to all materials
relating to the business, financial position and results of operations of IFT
and TNC, and all other materials requested by the Seller to enable Seller to
make an informed investment decision with respect to the Common Stock and the
Warrant.
E. The Seller acknowledges that Seller has been furnished with copies of
IFT's Annual Report on Form 10-KSB for the fiscal year ended October 31, 1998,
IFT's Quarterly Report on Form 10-QSB for the fiscal quarters ended January 31,
1999 and April 30, 1999, IFT's Schedule 13D dated May 11, 1999; and all other
reports and documents heretofore filed by IFT with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), since April 30, 1999
(collectively the "Commission Filings"). The Seller also acknowledges that
Seller has been furnished with copies of TNC's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1998; TNC's Quarterly Report on Form 10-QSB
for the fiscal quarter ended March 31, 1999; and all other reports and documents
heretofore filed by TNC with the Commission pursuant to the Securities Act and
the Exchange Act, since December 31, 1998.
F. The Seller acknowledges that in making his decision to acquire the
Common Stock, he has been given an opportunity to ask questions of and to
receive answers from IFT's and TNC's respective executive officers, directors
and management personnel concerning the business and affairs of IFT and TNC,
respectively.
G. The Seller understands that the Common Stock has not been approved or
disapproved by the Commission or any state securities commission and that the
foregoing authorities have not reviewed any documents or instruments in
connection with the offer and sale to it of the Common Stock and have not
confirmed or determined the adequacy or accuracy of any such documents or
instruments.
H. This Agreement has been duly and validly authorized, executed and
delivered by the Seller and is a valid and binding agreement of the Seller
enforceable against the Seller in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally.
I. Neither the Seller nor any person acting on the behalf of the Seller has
the intention of entering, or will enter into, prior to the closing, any put
option, short position or other similar instrument or position with respect to
the Common Stock and neither the Seller nor any person acting on the behalf of
the Seller will use at any time shares of Common Stock acquired pursuant to this
Agreement to settle any put option, short position or other similar instrument
or position that may have been entered into prior to the execution of this
Agreement.
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J. The Seller has good, marketable, and unencumbered title to Seller's
Warrant, free and clear of all liens, security interests, pledges, claims,
options, and rights of others. There is no restriction on the Seller's right to
transfer the Warrant to IFT pursuant to the terms of this Agreement. The Warrant
has not been modified or amended. The Warrant is a binding obligation of TNC, in
full force and effect, and is enforceable in accordance with its terms. The
Warrant has not been exercised in whole or in part.
K. Seller resides at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and
has the power to acquire the Common Stock pursuant to the terms hereof.
III. IFT'S REPRESENTATIONS AND WARRANTIES
IFT represents and warrants to and covenants and agrees with the Seller as
follows:
A. Capitalization. The authorized capital stock of IFT consists of
40,000,000 shares of Common Stock, of which 5,744,699 shares are outstanding on
the date hereof and 5,000,000 shares of Preferred Stock, of which 3,000 Series A
Preferred Shares are outstanding on the date hereof. All of the issued and
outstanding shares of Common Stock and Preferred Stock have been duly authorized
and validly issued and are fully paid and non-assessable. The Common Stock has
been duly and validly authorized, and when issued by IFT, will be duly and
validly issued, fully paid and non-assessable and will not subject the holder
thereof to personal liability by reason of being such holder.
B. Organization; Reporting IFT Status. IFT is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is duly qualified as a foreign corporation in all jurisdictions in which the
failure to so qualify would have a material adverse effect on the business,
properties, prospects, condition (financial or otherwise) or results of
operations of IFT or on the consummation of any of the transactions contemplated
by this Agreement (a "Material Adverse Effect").
C. Authority; Validity and Enforceability. IFT has the requisite corporate
power and authority to enter into this Agreement and to perform all of its
obligations. The execution, delivery and performance by IFT of this Agreement,
and the consummation by IFT of the transactions contemplated hereby has been
duly authorized by all necessary corporate action on the part of IFT. This
Agreement constitutes a valid and binding obligation of IFT enforceable against
it in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally. The Common Stock has been duly and
validly authorized for issuance by IFT and, when executed and delivered by IFT,
will be valid and binding obligations of IFT enforceable against it in
accordance with their terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally.
D. Non-contravention. The execution and delivery by IFT of the this
Agreement, the issuance of the Common Stock, and the consummation by IFT of the
other
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transactions contemplated hereby and thereby, do not and will not conflict with
or result in a breach by IFT of any of the terms or provisions of, or constitute
a default (or an event which, with notice, passage of time or both, would
constitute a default) under (i) the Certificate of Incorporation or By-laws of
IFT or (ii) except for such conflict, breach or default which would not have a
Material Adverse Effect, any indenture, mortgage, deed of trust or other
material agreement or instrument to which IFT is a party or by which its
properties or assets are bound, or any law, rule, regulation, decree, judgment
or order of any court or public or governmental authority having jurisdiction
over IFT or any of IFT's properties or assets.
E. Approvals. No authorization, approval or consent of any court or public
or governmental authority is required to be obtained by IFT for the issuance of
the Common Stock to the Sellers as contemplated by this Agreement, except such
authorizations, approvals and consents that have been obtained by IFT prior to
the date hereof.
F. Commission Filings. None of the Commission Filings contained at the time
they were filed any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
G. Absence of Certain Changes. Except as disclosed in the Commission
Filings, since October 31, 1998, there has not occurred any change, event or
development in the business, financial condition, or results of operations of
IFT constituting, and there has not existed any condition having or reasonably
likely to have, a Material Adverse Effect.
H. Securities Law Matters. Based in part on the representations and
warranties of The Sellers set forth in Article II hereof, the offer and issuance
by IFT of the Common Stock pursuant to the terms of this Agreement is exempt
from (i) the registration and prospectus delivery requirements of the Securities
Act and the rules and regulations of the Commission thereunder and (ii) the
registration and/or qualification provisions of all applicable United States
state securities and "blue sky" laws. IFT shall not directly or indirectly take,
and shall not permit any of its directors, officers or Affiliates directly or
indirectly to take, any action, so as to make unavailable the exemption from the
Securities Act registration being relied upon by IFT for the issuance to Seller
of the Common Stock as contemplated by this Agreement. No form of general
solicitation or advertising has been used or authorized by IFT or any of its
officers, directors or Affiliates in connection with the offer or sale of the
Common Stock as contemplated by this Agreement or any other agreement to which
IFT is a party.
I. Adequacy of Consideration. The Board of Directors of IFT has determined
that the consideration to be received for the Common Stock to be issued pursuant
to the terms of this Agreement is adequate in accordance with Section 153 of the
Delaware General Corporation Law.
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IV. COVENANTS AND ACKNOWLEDGMENTS.
A. Restrictive Legend. The Seller acknowledges and agrees that, upon
issuance pursuant to this Agreement, the Common Stock shall have endorsed
thereon a legend in substantially the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE, AND ARE BEING OFFERED AND SOLD PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THESE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OR SUCH OTHER LAWS.
THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13)
OF CODE SECTION 10-5-9 OF THE `GEORGIA SECURITIES ACT OF 1973,' AND MAY
NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT
UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT.
B. Filings. IFT shall make all necessary SEC and "blue sky" filings
required to be made by IFT in connection with the issuance of the Common Stock
to the Seller as required by all applicable laws, and shall provide a copy
thereof to the Seller promptly after such filing.
VI. CLOSING.
The date and time of the closing pursuant to this Agreement (the "Closing
Date") shall be August 12, 1999, at 11:00 a.m. local time or such other time as
shall be mutually agreed upon in writing at the offices of Mesirov ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
VII. CONDITIONS TO IFT'S OBLIGATIONS.
IFT's obligation to close hereunder is conditioned upon the following, any
of which may be waived by IFT:
A. The accuracy in all material respects on the Closing Date of the
representations and warranties of the Seller contained in this Agreement as if
made on the Closing Date (except for representations and warranties which, by
their express terms, speak as of and relate to a specified date, in which case
such accuracy shall be measured as of such specified date) and the performance
by the Seller in all material respects on or before the Closing Date of the
covenants and agreements of the Seller required to be performed by Seller
pursuant to this Agreement on or before the Closing Date.
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B. The absence of any law or order, ruling, judgment or writ of any court
or public or governmental authority restraining, enjoining or otherwise
prohibiting any of the transactions contemplated by this Agreement;
C. IFT's receipt of (1) a duly executed Assignment of Warrant to IFT in
form and substance satisfactory to IFT, (2) a General Release in form and
substance satisfactory to IFT, and (3) the original Warrant.
VIII. CONDITIONS TO SELLER'S OBLIGATIONS.
The Seller's obligation to close hereunder is conditioned upon the
following, any of which may be waived by the Seller:
A. Seller's receipt of one or more certificates registered in the name of
Seller evidencing the Common Stock to be acquired by the Seller, pursuant to
this Agreement.
B. The accuracy in all material respects on the Closing Date of the
representations and warranties made by IFT in this Agreement as if made on the
Closing Date (except for representations and warranties which, by their express
terms, speak as of and relate to a specified date, in which case such accuracy
shall be measured as of such specified date) and the performance by IFT in all
material respects on or before the Closing Date of all covenants and agreements
of IFT required to be performed by it pursuant to this Agreement on or before
the Closing Date.
C. There not having occurred (i) any general suspension of trading in, or
limitation on prices listed for, the Common Stock of IFT on NASDAQ, (ii) the
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States, or (iii) in the case of the foregoing existing at
the date of this Agreement, a material acceleration or worsening thereof.
D. There not having occurred any event or development, and there being in
existence no condition, having or which reasonably and forseeably would have a
Material Adverse Effect.
E. The absence of any law or order, ruling, judgment or writ of any court
or public or governmental authority restraining, enjoining or otherwise
prohibiting any of the transactions contemplated by this Agreement.
F. Seller's receipt of a duly executed Registration Rights Agreement in
form and substance satisfactory to Seller.
IX. SURVIVAL; INDEMNIFICATION.
A. The representations, warranties and covenants made by IFT and the Seller
in this Agreement, and in each instrument, agreement and certificate entered
into and delivered by either of them pursuant to this Agreement, shall survive
the Closing and the consummation of the transactions contemplated hereby for a
period of one year. In the event of a breach or violation
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of any of such representations, warranties or covenants, the party to whom such
representations, warranties or covenants have been made shall have all rights
and remedies for such breach or violation available to it under the provisions
of this Agreement or otherwise, whether at law or in equity, irrespective of any
investigation made by or on behalf of such party on or prior to the Closing
Date.
B. IFT hereby agrees to indemnify and hold harmless Seller and Seller's
executors, administrators, heirs and assigns (collectively, the "Seller
Indemnitees"), from and against any and all losses, claims, damages, judgments,
penalties, liabilities and deficiencies (collectively, "Losses"), and agrees to
reimburse Seller Indemnitees for all out-of-pocket expenses (including the
reasonable fees and expenses of legal counsel), in each case promptly as
incurred by Seller Indemnitees and to the extent arising out of or in connection
with:
1. any misrepresentation, omission of fact or breach of any of IFT's
representations or warranties contained in this Agreement, or any instrument,
agreement or certificate entered into or delivered by IFT pursuant to this
Agreement; or
2. any failure by IFT to perform in any material respect any of its
covenants, agreements, undertakings or obligations set forth in this Agreement,
or any instrument, agreement or certificate entered into or delivered by IFT
pursuant to this Agreement.
C. The Seller hereby agrees to indemnify and hold harmless IFT, its
affiliates and their respective officers, directors, partners and members
(collectively, the "IFT Indemnitees"), from and against any and all Losses, and
agrees to reimburse IFT Indemnitees for all out-of-pocket expenses (including
the reasonable fees and expenses of legal counsel), in each case promptly as
incurred by IFT Indemnitees and to the extent arising out of or in connection
with:
1. any misrepresentation, omission of fact, or breach of any of the
Seller's representations or warranties contained in this Agreement, or any
instrument, agreement or certificate entered into or delivered by the Seller
pursuant to this Agreement; or
2. any failure by the Seller to perform in any material respect any of
Seller's covenants, agreements, undertakings or obligations set forth in this
Agreement or any instrument, certificate or agreement entered into or delivered
by the Seller pursuant to this Agreement.
D. Promptly after receipt by either party hereto seeking indemnification
pursuant to this Section IX (an "Indemnified Party") of written notice of any
investigation, claim, proceeding or other action in respect of which
indemnification is being sought (each, a "Claim"), the Indemnified Party
promptly shall notify the party against whom indemnification pursuant to this
Section IX is being sought (the "Indemnifying Party") of the commencement
thereof; but the omission to so notify the Indemnifying Party shall not relieve
it from any liability that it otherwise may have to the Indemnified Party,
except to the extent that the Indemnifying Party is materially prejudiced and
forfeits substantive rights and defenses by reason of such failure. In
connection with any Claim, the Indemnifying Party shall be entitled to assume
the defense thereof. Notwithstanding the assumption of the defense of any Claim
by the Indemnifying Party, the Indemnified Party shall have the right to employ
separate legal counsel (together with appropriate local counsel) and to
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participate in the defense of such Claim, and the Indemnifying Party shall bear
the reasonable fees, out-of-pocket costs and expenses of such separate legal
counsel to the Indemnified Party if (and only if): (x) the Indemnifying Party
shall have agreed to pay such fees, out-of-pocket costs and expenses, (y) the
Indemnified Party and the Indemnifying Party reasonably shall have concluded
that representation of the Indemnified Party and the Indemnifying Party by the
same legal counsel would not be appropriate (i) due to actual or, as reasonably
determined by legal counsel to the Indemnified Party, potentially differing
interests between such parties in the conduct of the defense of such Claim, or
(ii) if there may be legal defenses available to the Indemnified Party that are
in addition to or disparate from those available to the Indemnifying Party and
which can not be presented by counsel to the Indemnifying Party, or (z) the
Indemnifying Party shall have failed to employ legal counsel reasonably
satisfactory to the Indemnified Party within a reasonable period of time after
notice of the commencement of such Claim. If the Indemnified Party employs
separate legal counsel in circumstances other than as described in clauses (x),
(y) or (z) above, the fees, costs and expenses of such legal counsel shall be
borne exclusively by the Indemnified Party. Except as provided above, the
Indemnifying Party shall not, in connection with any Claim in the same
jurisdiction, be liable for the fees and expenses of more than one firm of legal
counsel for the Indemnified Party (together with appropriate local counsel). The
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party (which consent shall not unreasonably be withheld), settle or
compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnified Party from all liabilities
with respect to such Claim or judgment.
E. In the event one party hereunder should have a claim for indemnification
that does not involve a claim or demand being asserted by a third party, the
Indemnified Party promptly shall deliver notice of such claim to the
Indemnifying Party. If the Indemnified Party disputes the claim, such dispute
shall be resolved by mutual agreement of the Indemnified Party and the
Indemnifying Party or by binding arbitration conducted in accordance with the
procedures and rules of the American Arbitration Association. Judgment upon any
award rendered by any arbitrators may be entered in any court having competent
jurisdiction thereof.
X. GOVERNING LAW: MISCELLANEOUS.
This Agreement shall be governed by and interpreted in accordance with the
laws of the Commonwealth of Pennsylvania, without regard to the conflicts of law
principles of such state. Each of the parties consents to the jurisdiction of
the federal courts whose districts encompass any part of the City of
Philadelphia or the state courts of Commonwealth of Pennsylvania sitting in the
City of Philadelphia in connection with any dispute arising under this Agreement
and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non conveniens, to the bringing of any
such proceeding in such jurisdictions. A facsimile transmission of this signed
Agreement shall be legal and binding on all parties hereto. This Agreement may
be signed in one or more counterparts, each of which shall be deemed an
original. The headings of this Agreement have been inserted for convenience of
reference only and shall not form part of, or affect the interpretation of, this
Agreement. If any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this
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Agreement or the validity or enforceability of this Agreement in any other
jurisdiction. This Agreement may be amended only by an instrument in writing
signed by the party to be charged with enforcement. This Agreement supersedes
all prior agreements and understandings among the parties hereto with respect to
the subject matter hereof.
XI. NOTICES. Except as may be otherwise provided herein, any notice or
other communication or delivery required or permitted hereunder shall be in
writing and shall be delivered personally or sent by certified mail, postage
prepaid, or by a nationally recognized overnight courier service, by facsimile
with confirmation back if followed promptly by first class mail, and shall be
deemed given when so delivered personally or by overnight courier service, or,
if mailed, three (3) days after the date of deposit in the United States mails,
as follows:
(1) if to Seller:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(2) if to IFT:
Interactive Flight Technologies, Inc.
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
Mesirov ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esquire
IFT and Seller may change their respective foregoing addresses for notices by
notice given pursuant to this Article XI.
XII. CONFIDENTIALITY. Seller and IFT agree to keep confidential and not to
disclose to or use for the benefit of any third party the terms of this
Agreement or any other information which at any time is communicated by the
other party as being confidential without the prior written approval of the
other party; provided, however, that this provision shall not apply to
information which, at the time of disclosure, is already part of the public
domain (except by breach of this Agreement) and information which is required to
be disclosed by law
9
(including, without limitation, pursuant to Item 10 of Rule 601 of Regulation
S-K under the Securities Act and the Exchange Act).
XIII. GENDER CLAUSE. Whenever used herein, the singular number shall
include the plural, the plural the singular, the use of any gender shall include
all genders, and the words "Seller" and "IFT" wherever used, shall include their
respective heirs, executors, administrators, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the date first above written.
INTERACTIVE FLIGHT TECHNOLOGIES, INC.
By:
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Name:
Title:
(SEAL)
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
(SEAL)
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▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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