AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT
THIS AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT
is made this 10th day of May, 1999 by and between THE NETWORK
CONNECTION, INC., a Georgia corporation (the "Company"), and
INTERACTIVE FLIGHT TECHNOLOGIES, INC., a Delaware corporation
("IFT").
WHEREAS, the Company and The Shaar Fund Ltd. ("Shaar")
entered into a Registration Rights Agreement dated October 23,
1998 (the "Registration Rights Agreement");
WHEREAS, the Company issued to Shaar 1,500 shares of
Series B 8% Convertible Preferred Stock (the "Series B Stock")
pursuant to that certain Securities Purchase Agreement between
the Company and Shaar dated October 23, 1998;
WHEREAS, on the date hereof Shaar sold the Series B
Stock to IFT, and in connection with such sale, assigned its
rights under the Registration Rights Agreement to IFT;
WHEREAS, the Company issued to IFT 800 shares of Series
C 8% Convertible Preferred Stock (the "Series C Stock") on the
date hereof, pursuant to that certain Securities Purchase
Agreement dated on the date hereof;
WHEREAS, the Company, as Maker, and IFT, as Payee, are
parties to that certain Secured Promissory Note, dated January
26, 1999, as amended by the Allonge to Secured Promissory Note
dated January 29, 1999, the Second Allonge to Secured Promissory
Note dated March 19, 1999, the Third Allonge to Secured
Promissory Note dated March 24, 1999, and the Fourth Allonge to
Secured Promissory Note dated the date hereof (collectively, the
"Note"), which is convertible into shares of Series C Stock;
WHEREAS, the parties desire that any shares of Common
Stock issuable upon conversion of the Series C Stock be
registrable pursuant to the terms of the Registration Rights
Agreement;
WHEREAS, the parties desire to have IFT waive certain
defaults of the Company which have occurred under the
Registration Rights Agreement; and
WHEREAS, the Company and IFT wish to confirm and modify
IFT's registration rights under the Registration Rights Agreement
and to amend the Registration Rights Agreement, as described
below, by entering into this Amendment No. 1.
NOW, THEREFORE, for and in consideration of the
premises contained herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound hereby, the
parties agree and amend the Registration Rights Agreement as
follows:
1. The definition of the term "Registrable
Securities" contained in subparagraph 1(a) of the Registration
Rights Agreement be and it hereby is amended to include in
addition to the securities originally within such definition,
from and after the date hereof, (i) any and all shares of Common
Stock issued pursuant to the conversion of the Series C Stock, or
issued in lieu of cash dividend payments thereon, and (ii) any
and all shares of Common Stock issued pursuant to the exercise of
any of the Additional Warrants (as such term is defined in the
Note) that were issued by the Company to IFT on March 24, 1999 in
accordance with the Note. The Company's obligations under the
Registration Rights Agreement shall henceforth apply to any and
all such shares described in the foregoing sentence.
2. Subparagraph 2(a) of the Registration Rights
Agreement be and it hereby is amended to read as follows:
(a) Filing and Effectiveness of Registration
Statement. The Company shall prepare and file
with the Commission by not later than fifteen
(15) business days after the date hereof, a
Registration Statement relating to the offer
and sale of the Registrable Securities and
shall use its best efforts to cause the
Commission to declare such Registration
Statement effective under the Securities Act as
promptly as practicable but not later than 120
calendar days after such date. Such
registration statement shall assume a
conversion price of One Dollar Fifty Cents
($1.50) per share. The Company shall not
include any other securities in the
Registration Statement relating to the offer
and sale of the Registrable Securities. The
Company shall notify IFT by written notice that
such Registration Statement has been declared
effective by the Commission within 48 hours of
such declaration by the Commission.
3. Subparagraph 2(b) of the Registration Rights
Agreement be and it hereby is amended to read as follows:
(b) Registration Default. If the Registration Statement
covering the Registrable Securities or the Additional Registrable
Securities (as defined in Section 2(d) hereof) required to be
filed by the Company pursuant to Section 2(a) or 2(d) hereof, as
the case may be, is not (i) filed with the Commission within the
time required by the terms of this Agreement or (ii) declared
effective by the Commission within the time required by the terms
of this Agreement (either of which, without duplication, an
"Initial Date"), then the Company shall make the payments to IFT
as provided in the next sentence as liquidated damages and not as
a penalty. The amount to be paid by the Company to IFT shall be
determined as of each Computation Date (as defined below), and
such amount shall be equal to 2% (the "Liquidated Damage Rate")
of the Stated Value per share of all shares of Series B
Preferred Stock and all shares of Series C Preferred Stock
outstanding from the Initial Date to the first Computation Date
and for each Computation Date thereafter, calculated on a pro
rata basis to the date on which the Registration Statement is
filed with (in the event of an Initial Date pursuant to (b) (i)
above) or declared effective by (in the event of an Initial Date
pursuant to (b) (ii) above) the Commission (the "Periodic
Amount"); provided, however, that if any Liquidated Damages are
payable, then the Liquidated Damages shall not be less than Forty
Thousand Dollars ($40,000). The full Periodic Amount shall be
paid by the Company to IFT by wire transfer of immediately
available funds within three days after each Computation Date.
As used in this Section 2(b), "Computation Date" means the date
which is 30 days after the Initial Date and, if the Registration
Statement required to be filed by the Company pursuant to Section
2(a) has not theretofore been declared effective by the
Commission, each date which is 30 days after the previous
Computation Date until such Registration Statement is so declared
effective. Notwithstanding the above, if the Registration
Statement covering the Registrable Securities or the Additional
Registrable Securities (as defined in Section 2(d) hereof)
required to be filed by the Company pursuant to Section 2(a) or
(2d) hereof, as the case may be, is not filed with the Commission
within the time required by the terms of this Agreement, the
Company shall be in default of this Registration Rights
Agreement, as amended.
4. IFT hereby waives, to the fullest extent permitted by law,
all breaches, failures, defaults, and events of defaults of the
Company on and as of the date of this Amendment No. 1 under the
Registration Rights Agreement. This waiver is limited strictly
as written and shall not require or imply any other or further
waivers of any future such breaches, failures, defaults, or
events of default of the Company, and therefore, IFT reserves all
of its rights to insist on strict compliance by the Company with
the terms of the Registration Rights Agreement as hereby amended
from and after the date hereof.
5. The Company hereby acknowledges IFT as the holder
of all rights under the Registration Rights Agreement, as
hereby amended.
6. This Amendment No. 1 is executed, and shall be
considered, as an amendment to the Registration Rights
Agreement, and shall form a part thereof, and the provisions
of the Registration Rights Agreement as amended by this
Amendment No. 1, are hereby ratified and confirmed in all
respects.
7. This Amendment No. 1 may be executed in any number
of counterparts, each of which shall be deemed an original,
and all of which taken together shall constitute but one and
the same instrument. This Amendment No. 1 shall become
binding only when each party hereto has executed and
delivered to the other party one or more counterparts.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Amendment No. 1 to Registration Rights Agreement as
of the date first above written.
THE NETWORK CONNECTION, INC.
By: _______________________________
INTERACTIVE FLIGHT
TECHNOLOGIES, INC.
By:_________________________________
