-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Oiv0ZOoy5SCJSoEIwzi1poErCLtmWhQGu8ctHSvPvbFs0/cFm31Oldw2sLBZLdM1 jtjJ+LoJyZP4T8LhBHfpeg== 0000944209-96-000314.txt : 19960917 0000944209-96-000314.hdr.sgml : 19960917 ACCESSION NUMBER: 0000944209-96-000314 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960731 FILED AS OF DATE: 19960916 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERACTIVE FLIGHT TECHNOLOGIES INC CENTRAL INDEX KEY: 0000932021 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS MANUFACTURING INDUSTRIES [3990] IRS NUMBER: 113197148 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-25668 FILM NUMBER: 96630796 BUSINESS ADDRESS: STREET 1: 3070 W POST RD CITY: LAS VEGAS STATE: NV ZIP: 89118 BUSINESS PHONE: 7028968900 MAIL ADDRESS: STREET 1: 3070 W POST RD CITY: LAS VEGAS STATE: NV ZIP: 89118 10QSB 1 QUARTERLY REPORT U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB ------------- [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended July 31, 1996 [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to _______ Commission File No. 0-25668 INTERACTIVE FLIGHT TECHNOLOGIES, INC. (Exact Name of Small Business Issuer as Specified in Its Charter) DELAWARE 11-319748 (State or Other Jurisdiction of (I.R.S. Employer Incorporation of organization) Identification Number) 4041 NORTH CENTRAL AVENUE SUITE 2000 PHOENIX, ARIZONA 85012 (Address of Principal Executive Offices) (602) 200-8900 (Issuer's Telephone Number, Including Area Code) 3070 WEST POST ROAD LAS VEGAS, NEVADA 89118 (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ --- State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. Class Outstanding at August 31, 1996 ----- ------------------------------ Class A Common Stock, $.01 par value 8,063,329 shares Class B Common Stock, $.01 par value 3,960,000 shares Transitional Small Business Disclosure Format Yes ___ No X --- INTERACTIVE FLIGHT TECHNOLOGIES, INC. INDEX TO FORM 10-QSB
PAGE ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets as at July 31, 1996 and 1995 (unaudited)....................................... 3 Statement of Operations for the Three and Nine Months ended July 31, 1996 and 1995 (unaudited)... 4 Statement of Cash Flows for the Nine Months ended July 31, 1996 and 1995 (unaudited).......... 5 Notes to Financial Statements.......................... 6 Item 2. Results of Operations......................... 7 PART II. OTHER INFORMATION Item 1. Legal Proceedings............................. 11 Item 5. Other Information............................. 11 Item 6. Exhibits and Reports on Form 8-K.............. 11 SIGNATURES............................................. 12
Page 2 of 14 PART I. FINANCIAL INFORMATION Item 1: Financial Statements INTERACTIVE FLIGHT TECHNOLOGIES, INC. BALANCE SHEET UNAUDITED
July 31, July 31, 1996 1995 ----------- ----------- ASSETS ------ Current Assets: Cash and cash equivalents 22,684,009 7,765,454 Accounts receivable 1,860,115 - Inventory 1,983,442 1,964,932 Prepaid expenses and other current assets 336,180 341,089 ----------- ----------- Total current assets 26,863,746 10,071,475 Machinery and equipment net of accumulated depreciation of $334,585 and $32,564 1,770,223 461,858 Deferred costs of securities registration - - Deposits 385,611 155,449 ----------- ----------- TOTAL 29,019,580 10,688,782 =========== =========== LIABILITIES ----------- Current Liabilities: Accounts payable 1,568,790 739,400 Accrued expenses 249,702 76,170 ----------- ----------- Total current liabilities 1,818,492 815,570 Commitments/Contingencies (Note B) STOCKHOLDERS' EQUITY (NOTE A) ----------------------------- Preferred stock, par value $0.01 per share, 5,000,000 shares authorized, none issued - - Class B common stock, six votes per share, par value $0.01 per share, 3,960,000 shares authorized, issued and outstanding including 3,200,000 shares placed in escrow 39,600 40,000 Class A common stock, one vote per share, par value $0.01 per share, 40,000,000 shares authorized, 8,046,610 issued and outstanding 80,466 32,200 Capital in excess of par value 40,395,426 14,230,432 Accumulated Deficit (13,314,404) (4,429,420) ----------- ----------- Total stockholders' equity 27,201,088 9,873,212 ----------- ----------- TOTAL 29,019,580 10,688,782 =========== ===========
Page 3 of 14 INTERACTIVE FLIGHT TECHNOLOGIES, INC. STATEMENT OF OPERATIONS UNAUDITED
Nine Months Three Months Ended July 31, Ended July 31, ------------------------ ------------------------ 1996 1995 1996 1995 ---------- ---------- ---------- ---------- REVENUES Sales 2,813,754 - 1,200,378 - Video service fees 107,081 - 52,052 - ---------- ---------- ---------- ---------- Total 2,920,835 - 1,252,430 - COSTS AND EXPENSES Cost of goods sold 2,870,961 - 1,132,958 - Research and development expenses 2,910,603 1,836,607 1,248,602 837,263 Marketing and administrative expenses 5,051,234 1,571,485 2,477,616 762,957 Interest and amortization of debt issue costs - 851,218 - - ---------- ---------- ---------- ---------- Total 10,832,798 4,259,310 4,859,176 1,600,220 OTHER INCOME Interest income 331,116 232,172 255,980 144,347 ---------- ---------- ---------- ---------- NET LOSS 7,580,847 4,027,138 3,350,766 1,455,873 ========== ========== ========== ========== Net loss per share of common stock $ (1.42) $ (1.64) $ (0.43) $ (0.36) ========== ========== ========== ========== Weighted average shares outstanding 5,325,487 2,448,205 7,866,028 4,020,000 ========== ========== ========== ==========
Page 4 of 14 INTERACTIVE FLIGHT TECHNOLOGIES, INC. STATEMENT OF CASH FLOWS UNAUDITED
Nine Months Ended July 31, ------------------------- 1996 1995 ----------- ---------- Cash Flows From Operating Activities: Net loss (7,580,847) (4,027,138) Adjustment to reconcile net loss to net cash used in operating activities: Depreciation 264,488 30,598 Amortization of Debt Discount and Deferred Costs Financing - 741,168 Changes in operating assets and liabilities: Increase in accounts receivable (1,825,202) - (Increase)/decrease in inventory 62,782 (1,964,932) Decrease in deferred costs 270,147 - Increase in prepaid expenses (155,386) (323,515) Increase in accounts payable 983,093 739,400 Increase/(decrease) in accrued expenses 89,668 (37,861) ----------- ---------- Net cash used in operating activities (7,891,256) (4,842,280) Cash flows from investing activities: Capital expenditure (397,539) (482,546) Increase in deposits (276,639) (140,551) ----------- ---------- Net cash used in investing activities (674,178) (623,097) Cash flows from financing activities: Net proceeds from issuance of common stock 26,212,861 13,824,634 Proceeds from bridge notes - (2,025,000) ----------- ---------- Net cash provided by financing activities 26,212,861 11,799,634 Net increase in cash 17,647,427 6,334,257 Cash - beginning of period 5,036,582 1,431,197 ----------- ---------- Cash - end of period 22,684,009 7,765,454 =========== ==========
Page 5 of 14 INTERACTIVE FLIGHT TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS The financial statements of Interactive Flight Technologies, Inc. included herein have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for Form 10-QSB and reflect all adjustments (consisting of normal recurring accruals) and disclosures which, in the opinion of management, are necessary for a fair statement of results for the interim period presented. It is suggested that these financial statement be read in conjunction with the financial statements and notes thereto for the fiscal year ended October 31, 1995, included in the Company's Annual Report on Form 10-KSB and amendment No. 1 to the Annual Report on Form 10-KSB/A for the fiscal year ended October 31, 1995. The results of operations for the nine months ended July 31, 1996 are not necessarily indicative of the results to be expected for the entire fiscal year. NOTE A - CLASS A WARRANT EXERCISE OFFER: The Company filed a registration statement with the SEC with respect to an Exercise Offer on April 12, 1996 pursuant to which the Company offered the holders of the Company's Class A Redeemable Stock Purchase Warrants who exercise their Class A Warrants pursuant to the Exercise Offer, (i) to issue an extra 1/2 Class B Redeemable Stock Purchase Warrant (in addition to the securities currently underlying the Class A Warrants) for each Class A Warrant so exercised and (ii) to reduce the exercise price of Class A Warrants to $5.75 per share (from $7.00 per share) for each Class A Warrant exercised. The Company completed its exercise offer on May 17, 1996 and received net proceeds of approximately $25,223,000 net of the underwriter's commissions and expenses of approximately $1,600,000. The Company called all of its outstanding Redeemable Class A Warrants for redemption on July 25, 1996 at a price of $.05 per Warrant. There were 114,680 Class A Warrants outstanding at the time of the call. On July 25, 1996, 96,422 Class A Warrants had been exercised for a share of Class A Common Stock at a price of $7.00 per share. The Company received approximately $635,000 net of expenses of approximately $40,000. NOTE B - COMMITMENTS/CONTINGENCIES The Company is a defendant in an action entitled Andrew Maxon v. Interactive Flight Technologies, Inc. brought in the United States District Court for the Eastern District of New York. The action was filed in February 1995 by an individual who performed certain services for the Company and with whom the Company had been engaged in negotiations to become an officer of the Company. The plaintiff claims breach of an alleged contract and wrongful discharge and is seeking damages of approximately $250,000 plus options to purchase 25,000 shares of the Company's stock. The Company believes that the claims are without merit and intends to defend them vigorously. Page 6 of 14 ITEM 2: RESULTS OF OPERATIONS GENERAL Interactive Flight Technologies, Inc. (the "Company") is engaged in the development, manufacture, installation and operation of a computer-based network in-flight entertainment network (the "Entertainment Network"), which provides aircraft passengers the opportunity to view movies, to purchase goods and services, to play computer games and, in certain cases where permitted by applicable law, to gamble through a high-resolution video touch screen. The Company entered into its first airline contract (the "Alitalia Contract") with Alitalia Airlines S.p.S. ("Alitalia") in 1995, and Alitalia accepted the contract following early completion of a trial period on February 1, 1996. The Alitalia Contract provides for the delivery of The Entertainment Network for installation on five MD-11 aircraft and the operation of The Entertainment Network on those aircraft over a period of approximately eight years. However, the Alitalia Contract does not presently provide for, and is not expected to provide for, passenger use of The Entertainment Network gambling features. In February 1996, an agreement was also signed with Debonair (the "Debonair Contract") to install and operate The Entertainment Network (including video casino style gambling) on Debonair's entire fleet, which consists of six RJ-146 aircraft. In July 1996, an agreement was signed with Swissair (the "Swissair Contract") to install and operate the second generation of The Entertainment Network (the "IFEN-2") on Swissair's entire [LONGHAUL] fleet, which consists of sixteen MD-11 aircraft and five 747's. Subject to the execution of an agreement with Interkantonale Landeslotterie ("ILL"), the operator of the Swiss lottery based in Zurich, Switzerland, the IFEN-2 systems installed on Swissair aircraft will allow passengers to participate in various Swiss lottery games, but are not expected to allow use of the traditional casino style gaming features such as slots or poker. However, under current U.S. law, these lottery games cannot be operated on flights which depart or land in the United States. In the event that no agreement is reached with ILL, either Swissair or the Company may terminate the Swissair agreement. Under the Swissair Contract, the Company will receive an aggregate of approximately $72 Million for the IFEN-2 hardware, plus the costs of installation and certain upgrades. The Company will also be reimbursed for its projected costs in connection with maintaining and operating the systems. However, the hardware purchase price and the operating expenses are payable only out of net revenues received from passenger participation in the aforementioned lottery games. Further, the Company may receive such amounts only after Swissair is first reimbursed from the net lottery revenues for certain expenses incurred in connection with the installation and operation of the IFEN-2 systems. Any amounts remaining after payment of the Company's operating costs and the IFEN-2 purchase price will be paid over to ILL. The Company will also receive a percentage of revenues and commissions from advertising and shopping services available on the installed IFEN-2 systems. In August 1996, a nonbinding letter of intent was signed with PetrolAir S.A. ("Petrol") to install The Entertainment Network (including video casino style gambling) on two PetrolAir aircraft. There can be no assurance that the Company will successfully negotiate definitive agreements with PetrolAir. Revenues during the first nine months ended July 31, 1996 were $2,920,835, comprised of sales revenue of $2,813,756 for Entertainment Networks delivered under the Alitalia Contract. Revenues also included $107,081 of Video service fees. Page 7 of 14 The Company incurred a net loss of $3,350,766 during the quarter ended July 31, 1996, an increase of $1,894,893 (or 130%) from a net loss of $1,455,873 for the quarter ended July 31, 1995. The Company incurred a net loss of $7,580,847 during the nine months ended July 31, 1996, an increase of $3,553,709 (or 88%) from a net loss of $4,027,138 for the nine months ended July 31, 1995. The increased losses were due to increasing of staff and building of facilities to fulfill the Company's requirements under the Alitalia Contract, the Debonair Contract, the Swissair Contract and other contracts under negotiation, and also were due to increased professional, administrative fees and research and development expenses. The Company expects to continue to incur losses for the foreseeable future. At July 31, 1996, the Company's accumulated deficit was $13,314,404. Costs of goods sold were $2,870,961 (98% of sales) and $1,132,958 (90% of sales), respectively, for the nine month and three month periods ended July 31, 1996. Although the Company hopes to reduce the cost of goods sold as a percentage of sales for future periods, these percentages are likely to remain high over the next few quarters since the Company's business plan is to derive a substantial portion of its revenues from future passenger use of The Entertainment Network. Research and development expenses during the quarter ended July 31, 1996 were $1,248,602, an increase of $411,339 (or 49%) from $837,263 during the quarter ended July 31, 1995. Research and development expenses during the nine months ended July 31, 1996 were $2,910,603, an increase of $1,073,996 (or 59%) from $1,836,607 during the nine months ended July 31, 1995. These increases reflect expenses incurred in the continuing development of The Entertainment Network. The Company anticipates that research and development expenses will increase during the remainder of fiscal 1996. Marketing and administrative expenses during the quarter ended July 31, 1996 were $2,477,616, an increase of $1,714,659 (or 225%) from $762,957 for the quarter ended July 31, 1995. Marketing and administrative expenses during the nine months ended July 31, 1996 were $5,051,234, an increase of $3,479,749 or (221%) from $1,571,485 for the nine months ended July 31, 1995. These increases were primarily due to substantially increased marketing activities (such as attendance at trade shows and travel relating to sales to airlines), increased sales commissions and increased administrative staff and related expenses. The Company incurred no interest expense during the quarter and the nine months ended July 31, 1996, as compared to interest expense of $0 and $851,218, respectively, for the three months and nine months ended July 31, 1995. The elimination of interest expense was due to the repayment by the Company in February 1995 of the remaining indebtedness under its 1994 $3,100,000 bridge financing. The Company received interest income of $255,980 during the quarter ended July 31, 1996, an increase of $111,633 (or 77%) from interest income of $144,347 for the quarter ended July 31, 1995. The Company received interest income of $331,116 during the nine months ended July 31, 1996, an increase of $98,944 (or 43%) from interest income of $232,172 for the nine months ended July 31, 1995. This interest income arose principally out of short term investments of working capital, and the increase was primarily attributable to increased funds available for such investments as a consequence of the Company's Class A Warrant Exercise Offer in May 1996 and the subsequent redemption of remaining Class A Warrants in July 1996. The Company relocated its principal executive offices and its design and assembly facilities to Phoenix, Arizona and, in connection with this move, executed three separate three-year leases for office and industrial space in Phoenix during the current quarter. Under these leases, the Company occupies 24,781 sq. ft., 17,524 sq. ft. and 15,591 sq. ft., respectively (or an aggregate of approximately 57,900 square feet), in exchange for monthly rents of $31,952, $23,453 and Page 8 of 14 $8,677, respectively (or an aggregate of approximately $64,000). LIQUIDITY AND CAPITAL RESOURCES At July 31, 1996 the Company had working capital of approximately $25.0 Million and has incurred losses since that date. The Company increased its working capital in May 1996 from the proceeds of its Class A Warrant Exercise Offer, its third financing, from which the Company received proceeds (net of expenses of $1.6 Million) of approximately $25.2 Million. The Company further increased its working capital in July 1996 from Class A Warrant exercises (prompted by the Company's notice of redemption of the remaining Class A Warrants), from which the Company received proceeds of approximately $635,000 (net of expenses of approximately $40,000). The Company expects that losses will continue for the foreseeable future and, as a result, unless funds are received from additional financing, working capital is expected to decrease again following the initial increase attributable to receipt of proceeds from the aforementioned Exercise Offer. The Company's principal sources of funds to date have been through debt and equity financing. At August 29, 1996, the Company's only material capital commitments were purchase orders of approximately $14.0 Million relating primarily to inventory purchases. The Company's revenues have been generated, and are anticipated to be generated in the future, from sales, installation and servicing of The Entertainment Network aboard commercial and charter aircraft. The contracts the Company has executed and is currently negotiating generally provide for the Company to install The Entertainment Network on an aircraft and to be paid for the equipment and for its installation and maintenance out of revenue generated by passenger use of the installed network on the aircraft. As a result, the Company must expend significant capital amounts for the assembly, installation and maintenance of The Entertainment Network on each aircraft, but revenue as payment for the system will be received, if at all, only as a result of the use of the system over a potentially significant period of time. Moreover, the Company may also enter into commitments to purchase equipment necessary for additional installations, even in the absence of a purchase commitment from an airline, if such action is determined to be necessary or desirable to pursue business opportunities. The Company also expects its cash requirements to increase in future periods due to higher expenses associated with increased sales and marketing activities and financing of inventory purchases, installations and accounts receivable. As a consequence, the Company will need additional financing to perform under its existing contracts (i.e., the Alitalia Contract, the Debonair Contract and the Swissair Contract) in addition to any future contracts that it may enter into, including those it is currently negotiating. Although the Company has been in discussions with a number of external sources of capital to raise portions of the funds needed, there can be no assurances that such funds will be available in the near future when it will be needed for the contracts involved. Without additional funding from external capital sources or from exercise of the Company's outstanding warrants, the Company will not have sufficient cash to complete all of its existing and pending contracts. Moreover, although the Company's model of being paid out of revenues from the operation of The Entertainment Network provides it with substantial potential upside if such revenues are high, it also subjects the Company to substantial risk if passengers fail to make sufficient use of The Entertainment Network. The Company intends to use a substantial portion of its cash resources to fund its plan of operations, which includes the following elements, for approximately the next 12 months: . Completing the development of The Entertainment Network, including reconfiguring hardware components to meet the requirements of the FAA and airlines with which the Company has contracts, and developing certain software interfaces. . Performing under the Debonair Contract, including manufacturing, assembling and Page 9 of 14 delivering the balance of The Entertainment Network for the six RJ-146 aircraft. . Performing under the Swissair Contract, including manufacturing, assembling and delivering The Entertainment Network for sixteen MD-11 and five 747 aircraft. . Finalizing and performing under a contract (if executed) with PetrolAir to install The Entertainment Network on PetrolAir's two aircraft. . Marketing The Entertainment Network to additional airlines, primarily to international carriers, and performing under any contracts which the Company may execute with such airlines. . Updating and enhancing the programming software initially included in The Entertainment Network and developing or acquiring from third parties new programming software. Because the technology incorporated in The Entertainment Network is rapidly developing, the Company will also continue to develop hardware and software enhancements to meet market and customer demand. The foregoing represents the Company's current plan of operation for the next 12 months. Future events, including changes in technological, economic, regulatory or competitive conditions or the results of the Company's sales and marketing activities, may require changes in the Company's plans. FORWARD-LOOKING INFORMATION Except for historical information contained herein, the matters discussed in this Quarterly Report on Form 10-QSB are forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in such forward-looking statements. Such risks and uncertainties include, without limitation, the failure of passenger use of The Entertainment Network to generate sufficient revenues, the failure to execute definitive agreements with ILL (and, consequently, Swissair) and/or PetrolAir on favorable terms or at all, the failure of the Company to receive sufficient financing to perform its obligations under its existing and contemplated agreements, the impact of competition and downward pricing pressures, the effect of changing economic conditions, risks in technology development, the risks involved in currency fluctuations, and the other risks and uncertainties detailed from Registration Statement on Form SB-2 dated March 7, 1995, the Company's Annual Report on Form 10-KSB and amendment No. 1 to the Annual Report on Form 10-KSB/A for the fiscal year ended October 31, 1995. Page 10 of 14 PART II. OTHER INFORMATION ITEM 1: LEGAL PROCEEDINGS Reference is made to the information set forth under "Legal Proceedings" in the Company's Annual Report on Form 10-KSB and amendment No. 1 to the Annual Report on Form 10-KSB/A for the fiscal year ended October 31, 1995. ITEM 5: OTHER INFORMATION During the quarter, the Company entered into commitments to issue an aggregate of 275,000 of its Class B Warrants to Banner Aerospace, Inc. ("Banner") and Leonard Toboroff ("Toboroff"), with Banner to receive 187,500 Class B Warrants and Toboroff to receive 87,500 Class B Warrants. The Company also issued to Banner and Toboroff an aggregate of 165,000 of its newly- designated Class C Warrants and 165,000 of its newly-designated Class D Warrants, with 112,500 of each such class being issued to Banner and 52,500 of each such class being issued to Toboroff. Each Class C Warrant entitles the holder thereof to purchase one share of Class A Common Stock for an exercise price of $11.00, and each Class D Warrant entitles the holder thereof to purchase one share of Class A Common Stock for an exercise price of $14.00. Banner and Toboroff received the Class C and Class D Warrants, and the commitment to issue the Class B Warrants, in exchange for certain services rendered to the Company in connection with the Company's proposals to Swissair, leading up to the execution of the Swissair Agreement. ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS 3.2* - Amended and Restated Certificate of Incorporation of the Registrant 3.3* - Certificate of Amendment of Amended and Restated Certificate of Incorporation of Registrant 3.4* - By-laws of the Registrant 4.5 - Form of Class C Warrant 4.6 - Form of Class D Warrant 27 - Financial Data Schedules ___________________ * Incorporated by Reference from the Registrant's Registration Statement on Form SB-2, Registration No. 33-86928. (B) REPORTS ON FORM 8-K The Company did not file any reports on Form 8-K during the quarter ending July 31, 1996. Page 11 of 14 SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: September 14, 1996 INTERACTIVE FLIGHT TECHNOLOGIES, INC. By: /s/ Michail Itkis ---------------------------------- Michail Itkis Chief Executive Officer By: /s/ Robert J. Aten ---------------------------------- Robert J. Aten Chief Financial Officer Page 12 of 14 INDEX OF EXHIBITS
Exhibit No. Description Page No. - ----------- ----------- -------- 3.2 Amended and Restated Certificate of * Incorporation of the Registrant 3.3 Certificate of Amendment of Amended and * Restated Certificate of Incorporation of Registrant 3.4 By-laws of the Registrant * 4.5 Form of Class C Warrant 14 4.6 Form of Class D Warrant 32 27 Financial Data Schedule 50
___________________________ * Incorporated by Reference from the Registrant's Registration Statement on Form SB-2, Registration No. 33-86928. Page 13 of 14 EX-4.5 2 FORM OF CLASS C WARRANT EXHIBIT 4.5 ----------- No. __ ________ Class C Warrants THE WARRANTS REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR REGISTERED NOR QUALIFIED UNDER ANY STATE SECURITIES LAWS. SUCH WARRANTS MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS QUALIFIED AND REGISTERED UNDER APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO INTERACTIVE FLIGHT TECHNOLOGIES, INC., SUCH QUALIFICATION AND REGISTRATION IS NOT REQUIRED. NO TRANSFER OF ANY SUCH WARRANT SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. VOID AFTER MARCH 6, 2000 CLASS C WARRANTS FOR PURCHASE OF CLASS A COMMON STOCK This certifies that FOR VALUE RECEIVED ____________________ or registered assigns (the "REGISTERED HOLDER") is the owner of the number of Class C Warrants specified above. Each Class C Warrant represented hereby initially entitles the Registered Holder to purchase, subject to the terms and conditions set forth in this Warrant Certificate, one fully paid and nonassessable share of Class A Common Stock, $.01 par value ("CLASS A COMMON STOCK"), of Interactive Flight Technologies, Inc., a Delaware corporation (the "COMPANY"), at any time prior to or on the Expiration Date (as hereinafter defined), upon the presentation and surrender of this Warrant Certificate with a duly completed and executed Subscription Form in the form attached hereto as Exhibit A, at the corporate --------- office the Company, accompanied by payment of Eleven Dollars ($11.00) (the "PURCHASE PRICE") in lawful money of the United States of America in cash or by official bank or certified check made payable to "Interactive Flight Technologies, Inc." The Purchase Price and the number of shares of Common Stock subject to purchase upon the exercise of the Warrants are subject to modification or adjustment as set forth herein. The term "EXPIRATION DATE" shall mean 5:00 P.M. (New York time) on March 6, 2000. If such date shall in the State of New York be a holiday or a day on which banks are authorized to close, then the Expiration Date shall mean 5:00 P.M. (New York time) the next following day which in the State of New York is not a holiday or a day on which banks are authorized to close. SECTION 1. DEFINITIONS. As used herein, the following terms shall have the ----------- following meanings, unless the context shall otherwise require: (a) "COMMON STOCK" shall mean stock of the Company of any class, whether now or hereafter authorized, which has the right to participate in the distribution of earnings and assets of the Company without limit as to amount or percentage, which at the date hereof consists of the Company's Class A Common Stock, $.01 par value, and the Company's Class B Common Stock, $.01 par value. (b) "CORPORATE OFFICE" shall mean the office of the Company at which, at any particular time, its principal business shall be administered, which office is currently located at 3070 West Post Road, Las Vegas, Nevada 89118. (c) "EXERCISE DATE" shall mean, as to any Warrant, the date on which the Company shall have received both (a) this Warrant Certificate with the Subscription Form attached hereto as Exhibit A hereto executed by the Registered --------- Holder hereof, or his attorney duly authorized in writing, and indicating that the Registered Holder is thereby exercising such Warrant, and (b) payment in cash, or by official bank or certified check made payable to the Company, of an amount in lawful money of the United States of America equal to the applicable Purchase Price. (d) "PURCHASE PRICE" shall mean the purchase price to be paid upon exercise of each Class C Warrant in accordance with the terms hereof, which price shall be Eleven Dollars ($11.00), subject to adjustment from time to time pursuant to the provisions of Section hereof. (e) "REGISTERED HOLDER" shall mean, as to any Warrant and as of any particular date, the person in whose name the Warrant Certificate representing such Warrant shall be registered on that date on the books maintained by the Company pursuant to Section 4. (f) "WARRANTS" shall mean the Class C Warrants represented hereby and all other Class C Warrants issued by the Company. (g) "WARRANT CERTIFICATE" shall mean any certificate (including this certificate) representing Class C Warrants. SECTION 2. EXERCISE. -------- (a) Each Warrant evidenced hereby may be exercised by the Registered Holder hereof at any time on or prior to the Expiration Date, upon the terms and subject to the conditions set forth herein. A Warrant shall be deemed to have been exercised immediately prior to the close of business on the Exercise Date and the person entitled to receive the securities deliverable upon such exercise shall be treated for all purposes as the holder of those securities upon the exercise of the Warrant as of the close of business on the Exercise Date. Promptly following, and in any event within ten (10) business -2- days after the Exercise Date, the Company shall cause to be issued and delivered to the person or persons entitled to receive the same, a certificate or certificates for the securities deliverable upon such exercise (plus a Warrant Certificate for any remaining unexercised Warrants of the Registered Holder), subject to first receiving clearance of checks received in payment of the Purchase Price pursuant to such Warrants. (b) Upon the exercise of the Warrants represented hereby, if the Company so requests, Holder shall certify to the Company that it is not exercising such Warrants with a view to distribute the Class A Common Stock received pursuant to such exercise in violation of the Securities Act of 1933, as amended (the "SECURITIES ACT"). SECTION 3. RESERVATION OF SHARES; LISTING; PAYMENT OF TAXES; ETC. ----------------------------------------------------- (a) The Company covenants that it will at all times reserve and keep available out of its authorized Class A Common Stock, solely for the purpose of issue upon exercise of Warrants, such number of shares of Class A Common Stock as shall then be issuable upon the exercise of all outstanding Warrants. The Company covenants that all shares of Class A Common Stock which shall be issuable upon exercise of the Warrants shall, at the time of delivery, be duly and validly issued, fully paid, nonassessable and free from all taxes, liens and charges with respect to the issue thereof, (other than those which the Company shall promptly pay or discharge) and that upon issuance such shares shall be listed on each national securities exchange, on which the other shares of outstanding Class A Common Stock of the Company are then listed or shall be eligible for inclusion in the Nasdaq National Market or the Nasdaq SmallCap Market if the other shares of outstanding Class A Common Stock of the Company are so included. (b) In the event that this Warrant Certificate represents Class C Warrants which have been transferred by an initial holder of Class C Warrants, the Company shall not be obligated to deliver any securities pursuant to the exercise of the Class C Warrants represented hereby unless a registration statement under the Securities Act with respect to such securities is effective, or an exemption from such registration is available to the Company. The Company covenants that if any securities to be reserved for the purpose of exercise of Warrants hereunder require registration with, or approval of, any governmental authority under any federal securities law before such securities may be validly issued or delivered upon such exercise, then the Company will in good faith and as expeditiously as reasonably possible, endeavor to secure such registration or approval. The Company will use reasonable efforts to obtain appropriate approvals or registrations under state "blue sky" securities laws. However, in the event that this Warrant Certificate represents Class C Warrants which have been transferred by an initial holder of Class C Warrants, the Warrants represented hereby may not be exercised by, or shares of Class A Common Stock issued to, the Registered Holder hereof in any state in which such exercise would be unlawful. (c) The Company shall pay all documentary, stamp or similar taxes and other governmental charges that may be imposed with respect to the issuance of -3- Warrants, or the issuance or delivery of any shares of Class A Common Stock upon exercise of the Warrants; provided, however, that if the shares of Class A Common Stock are to be delivered in a name other than the name of the Registered Holder hereof, then no such delivery shall be made unless the person requesting the same has paid to the Company the amount of transfer taxes or charges incident thereto, if any. SECTION 4. EXCHANGE AND REGISTRATION OF TRANSFER. ------------------------------------- (a) This Warrant Certificate may be exchanged for other Warrant Certificates representing an equal aggregate number of Warrants or, subject to the restrictions set forth on Page 1 hereof, may be transferred in whole or in part. To effect such an exchange, this Warrant Certificate shall be surrendered to the Company at its Corporate Office, and upon satisfaction of the terms and provisions hereof, the Company shall execute, issue and deliver in exchange therefor the Warrant Certificate or Certificates which the Registered Holder hereof shall be entitled to receive. (b) The Company shall keep at its office books in which, subject to such reasonable regulations as it may prescribe, it shall register Warrant Certificates and the transfer thereof. Subject to the restrictions set forth on Page 1 hereof, upon due presentment for registration of transfer of any Warrant Certificate at such office, the Company shall execute, issue and deliver to the transferee or transferees a new Warrant Certificate or Certificates representing an equal aggregate number of Warrants. (c) With respect to all Warrant Certificates presented for registration or transfer, or for exchange or exercise, the Subscription Form and/or the Assignment Form (as applicable) attached hereto as Exhibit A and Exhibit B, --------- --------- respectively, shall be duly endorsed or shall be accompanied by a written instrument or instruments of transfer and/or subscription, in form satisfactory to the Company, duly executed by the Registered Holder or his attorney-in-fact duly authorized in writing. (d) A service charge may be imposed by the Company for any exchange or registration of transfer of Warrant Certificates. In addition, the Company may require payment by such holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. (e) All Warrant Certificates surrendered for exercise or for exchange in case of mutilated Warrant Certificates shall be promptly cancelled by the Company and thereafter retained by the Company until the Expiration Date. (f) Prior to due presentment for registration of transfer thereof, the Company may deem and treat the Registered Holder of any Warrant Certificate as the absolute owner thereof and of each Warrant represented thereby (notwithstanding any notations of ownership or writing thereon made by anyone other than a duly authorized officer of the Company) for all purposes and shall not be affected by any notice to the contrary. -4- SECTION 5. LOSS OR MUTILATION. Upon receipt by the Company of evidence ------------------ satisfactory to it of the ownership of and loss, theft, destruction or mutilation of this Warrant Certificate and (in case of loss, theft or destruction) of indemnity satisfactory to the Company, and (in the case of mutilation) upon surrender and cancellation hereof, the Company shall execute and deliver to the Registered Holder in lieu thereof a new Warrant Certificate of like tenor representing an equal aggregate number of Class C Warrants. Applicants for a substitute Warrant Certificate shall comply with such other reasonable regulations and pay such other reasonable charges as the Company may prescribe. SECTION 6. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES OF CLASS A ------------------------------------------------------------ COMMON STOCK OR WARRANTS. - ------------------------ (a) Subject to the exceptions referred to in Section 6(g) below, in the event the Company shall, at any time or from time to time after the date hereof, sell any shares of Common Stock for a consideration per share less than the Market Price of the Class A Common Stock (as defined below) on the date of the sale or issue any shares of Common Stock as a stock dividend to the holders of Common Stock, or subdivide or combine the outstanding shares of Common Stock into a greater or lesser number of shares (any such sale, issuance, subdivision or combination being herein called a "CHANGE OF SHARES"), then, and thereafter upon each further Change of Shares, the Purchase Price in effect immediately prior to such Change of Shares shall be changed to a price (including any applicable fraction of a cent) determined by multiplying the Purchase Price in effect immediately prior thereto by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares and the number of shares of Class A Common Stock which the aggregate consideration received (determined as provided in subsection 6(f)(F) below) for the issuance of such additional shares would purchase at the Market Price and the denominator of which shall be the sum of the number of shares of Common Stock outstanding immediately after the issuance of such additional shares. Such adjustment shall be made successively whenever such an issuance is made. "MARKET PRICE", as of any date, shall mean (i) the average closing bid price, for the thirty (30) consecutive business days immediately preceding such date, of the Class A Common Stock as reported by Nasdaq, if the Class A Common Stock is traded on the Nasdaq SmallCap Market, or (ii) the last reported sale price, for the thirty (30) consecutive business days immediately preceding such date, of the Class A Common Stock as reported by the primary exchange on which the Class A Common Stock is traded, if the Class A Common Stock is traded, on a national securities exchange, or by Nasdaq, if the Class A Common Stock is traded on the Nasdaq National Market. Upon each adjustment of the Purchase Price pursuant to this Section 6, the total number of shares of Class A Common Stock purchasable upon the exercise of each Class C Warrant shall (subject to the provisions contained in Section 6(b) hereof) be -5- such number of shares (calculated to the nearest tenth) purchasable at the Purchase Price in effect immediately prior to such adjustment multiplied by a fraction, the numerator of which shall be the Purchase Price in effect immediately prior to such adjustment and the denominator of which shall be the Purchase Price in effect immediately after such adjustment. (b) The Company may elect, upon any adjustment of the Purchase Price hereunder, to adjust the number of Class C Warrants outstanding, in lieu of the adjustment in the number of shares of Class A Common Stock purchasable upon the exercise of each Warrant as hereinabove provided, so that each Class C Warrant outstanding after such adjustment shall represent the right to purchase one share of Class A Common Stock. Each Warrant held of record prior to such adjustment of the number of Warrants shall become that number of Warrants (calculated to the nearest tenth) determined by multiplying the number one by a fraction, the numerator of which shall be the Purchase Price in effect immediately prior to such adjustment and the denominator of which shall be the Purchase Price in effect immediately after such adjustment. Upon each adjustment of the number of Warrants pursuant to this Section 6, the Company shall, as promptly as practicable, cause to be distributed to each Registered Holder of Warrant Certificates on the date of such adjustment Warrant Certificates evidencing, subject to Section 8 hereof, the number of additional Warrants to which such Registered Holder shall be entitled as a result of such adjustment or, at the option of the Company, cause to be distributed to such Registered Holder in substitution and replacement for the Warrant Certificates held by him prior to the date of adjustment (and upon surrender thereof, if required by the Company) new Warrant Certificates evidencing the number of Warrants to which such Holder shall be entitled after such adjustment. (c) In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock, or in case of any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any reclassification, capital reorganization or other change of outstanding shares of Common Stock), or in case of any sale or conveyance to another corporation of the property of the Company as, or substantially as, an entirety (other than a sale/leaseback, mortgage or other financing transaction), the Company shall cause effective provision to be made so that each holder of a Warrant then outstanding shall have the right thereafter, by exercising such Warrant, to purchase the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock that might have been purchased upon exercise of such Warrant immediately prior to such reclassification, capital reorganization or other change, consolidation, merger, sale or conveyance. Any such provision shall include provision for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 6. The Company shall not effect any such consolidation, merger or sale without the written consent of Registered Holders of a majority of the Warrants then outstanding, unless prior to or simultaneously with the consummation thereof the successor (if other than the Company) resulting from such -6- consolidation or merger or the corporation purchasing assets or other appropriate corporation or entity shall assume, by written instrument executed and delivered to the Company, the obligation to deliver to the holder of each Warrant such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holders may be entitled to purchase and the other obligations of the Company under this Agreement. The foregoing provisions shall similarly apply to successive reclassifications, capital reorganizations and other changes of outstanding shares of Common Stock and to successive consolidations, mergers, sales or conveyances. (d) Irrespective of any adjustments or changes in the Purchase Price or the number of shares of Class A Common Stock purchasable upon exercise of the Warrants, the Warrant Certificates theretofore and thereafter issued shall, unless the Company shall exercise its option to issue new Warrant Certificates pursuant to Section 7 hereof, continue to express the Purchase Price per share, the number of shares purchasable thereunder and the Redemption Price therefor as the Purchase Price per share, and the number of shares purchasable and the Redemption Price therefor were expressed in the Warrant Certificates when the same were originally issued. (e) After each adjustment of the Purchase Price pursuant to this Section 6, the Company will promptly prepare a certificate signed by the Chairman or President, and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, of the Company setting forth: (i) the Purchase Price as so adjusted, (ii) the number of shares of Class A Common Stock purchasable upon exercise of each Warrant after such adjustment and, if the Company shall have elected to adjust the number of Warrants, the number of Warrants to which the Registered Holder of each Warrant shall then be entitled, and the adjustment in Redemption Price resulting therefrom, and (iii) a brief statement of the facts accounting for such adjustment. The Company will promptly cause a brief summary thereof to be sent by ordinary first class mail to each Registered Holder of Warrants at his last address as it shall appear on the registry books of the Company. No failure to mail such notice nor any defect therein or in the mailing thereof shall affect the validity thereof except as to the holder to whom the Company failed to mail such notice, or except as to the holder whose notice was defective. The affidavit of the Secretary or an Assistant Secretary of the Company that such notice has been mailed shall, in the absence of fraud, be prima facie evidence of the facts stated therein. (f) For purposes of Section 6(a) and 6(b) hereof, the following provisions (A) to (F) shall also be applicable: (A) The number of shares of Common Stock outstanding at any given time shall include shares of Common Stock owned or held by or for the account of the Company and the sale or issuance of such treasury shares or the distribution of any such treasury shares shall not be considered a Change of Shares for purposes of said sections. -7- (B) No adjustment of the Purchase Price shall be made unless such adjustment would require an increase or decrease of at least $.10 in the Purchase Price; provided that any adjustments which by reason of this clause (B) are not required to be made shall be carried forward and shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment(s) so carried forward, shall require an increase or decrease of at least $.10 in the Purchase Price then in effect hereunder. (C) In case of (1) the sale by the Company for cash (or as a component of a unit being sold for cash) of any rights or warrants to subscribe for or purchase, or any options for the purchase of, Common Stock or any securities convertible into or exchangeable for Common Stock without the payment of any further consideration other than cash, if any (such securities convertible, exercisable or exchangeable into Common Stock being herein called "CONVERTIBLE SECURITIES"), or (2) the issuance by the Company, without the receipt by the Company of any consideration therefor, of any rights or warrants to subscribe for or purchase, or any options for the purchase of, Common Stock or Convertible Securities, in each case, if (and only if) the consideration payable to the Company upon the exercise of such rights, warrants or options shall consist of cash, whether or not such rights, warrants or options, or the right to convert or exchange such Convertible Securities, are immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such rights, warrants or options or upon the conversion or exchange of such Convertible Securities (determined by dividing (x) the minimum aggregate consideration payable to the Company upon the exercise of such rights, warrants or options, plus the consideration, if any, received by the Company for the issuance or sale of such rights, warrants or options, plus, in the case of such Convertible Securities, the minimum aggregate amount of additional consideration, other than such Convertible Securities, payable upon the conversion or exchange thereof, by (y) the total maximum number of shares of Common Stock issuable upon the exercise of such rights, warrants or options or upon the conversion or exchange of such Convertible Securities issuable upon the exercise of such rights, warrants or options) is less than the Market Price of the Class A Common Stock on the date of the issuance or sale of such rights, warrants or options, then the total maximum number of shares of Common Stock issuable upon the exercise of such rights, warrants or options or upon the conversion or exchange of such Convertible Securities (as of the date of the issuance or sale of such rights, warrants or options) shall be deemed to be outstanding shares of Common Stock for purposes of Sections 6(a) and 6(b) hereof and shall be deemed to have been sold for cash in an amount equal to such price per share. -8- (D) In case of the sale by the Company for cash of any Convertible Securities, whether or not the right of conversion or exchange thereunder is immediately exercisable, and the price per share for which Common Stock is issuable upon the conversion or exchange of such Convertible Securities (determined by dividing (x) the total amount of consideration received by the Company for the sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, other than such Convertible Securities, payable upon the conversion or exchange thereof, by (y) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of such Convertible Securities) is less than the Market Price of the Class A Common Stock on the date of the sale of such Convertible Securities, then the total maximum number of shares of Common Stock issuable upon the conversion or exchange of such Convertible Securities (as of the date of the sale of such Convertible Securities) shall be deemed to be outstanding shares of Common Stock for purposes of Sections 6(a) and 6(b) hereof and shall be deemed to have been sold for cash in an amount equal to such price per share. (E) In case the Company shall modify the rights of conversion, exchange or exercise of any of the securities referred to in (C) or (D) above or any other securities of the Company convertible, exchangeable or exercisable for shares of Common Stock, for any reason other than an event that would require adjustment to prevent dilution, so that the consideration per share received by the Company after such modification is less than the Market Price on the date prior to such modification, the Purchase Price to be in effect after such modification shall be determined by multiplying the Purchase Price in effect immediately prior to such event by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding on the date prior to the modification plus the number of shares of Common Stock which the aggregate consideration receivable by the Company for the securities affected by the modification would purchase at the Market Price and of which the denominator shall be the number of shares of Common Stock outstanding on such date plus the number of shares of Common Stock to be issued upon conversion, exchange or exercise of the modified securities at the modified rate. Such adjustment shall become effective as of the date upon which such modification shall take effect. On the expiration of any such right, warrant or option or the termination of any such right to convert or exchange any such Convertible Securities referred to in Paragraph (C) or (D) above, the Purchase Price then in effect hereunder shall forthwith be readjusted to such Purchase Price as would have obtained (a) had the adjustments made upon the issuance or sale of such rights, warrants, options or Convertible Securities been made upon the basis of the issuance of only the number of shares of Common Stock theretofore actually delivered (and the total consideration received therefor) upon the exercise -9- of such rights, warrants or options or upon the conversion or exchange of such Convertible Securities and (b) had adjustments been made on the basis of the Purchase Price as adjusted under clause (a) for all transactions (which would have affected such adjusted Purchase Price) made after the issuance or sale of such rights, warrants, options or Convertible Securities. (F) In case of the sale for cash of any shares of Common Stock, any Convertible Securities, any rights or warrants to subscribe for or purchase, or any options for the purchase of, Common Stock or Convertible Securities, the consideration received by the Company therefore shall be deemed to be the gross sales price therefor without deducting therefrom any expense paid or incurred by the Company or any underwriting discounts or commissions or concessions paid or allowed by the Company in connection therewith. (g) No adjustment to the Purchase Price of the Warrants or to the number of shares of Class A Common Stock purchasable upon the exercise of each Warrant will be made, however, (i) upon the exercise of any of the options presently outstanding under the Company's Stock Option Plan (the "PLAN") for officers, directors and certain other key personnel of and consultants to the Company; or (ii) upon the issuance or exercise of any other securities which may hereafter be granted or exercised under the Plan or under any other employee benefit plan of the Company; or (iii) upon the sale or exercise of the Warrants, including without limitation the sale or exercise of any of the Warrants comprising the Unit Purchase Option or upon the sale or exercise of the Unit Purchase Option; or (iv) upon the sale of any shares of Class A Common Stock or Convertible Securities in a firm commitment underwritten public offering, including, without limitation, shares sold upon the exercise of any overallotment option granted to the underwriters in connection with such offering; or (v) upon the issuance or sale of Class A Common Stock or Convertible Securities upon the exercise of any rights or warrants to subscribe for or purchase, or any options for the purchase of, Class A Common Stock or Convertible Securities, whether or not such rights, warrants or options were outstanding on the date of the original sale of the Warrants or were thereafter issued or sold; or -10- (vi) upon the issuance or sale of Class A Common Stock upon conversion or exchange of any Convertible Securities, whether or not any adjustment in the Purchase Price was made or required to be made upon the issuance or sale of such Convertible Securities and whether or not such Convertible Securities were outstanding on the date of the original sale of the Warrants or were thereafter issued or sold. (h) As used in this Section 6, the term "COMMON STOCK" shall mean and include the Company's Common Stock authorized on the date hereof and shall also include any capital stock of any class of the Company thereafter authorized which shall not be limited to a fixed sum or percentage in respect of the rights of the holders thereof to participate in dividends and in the distribution of assets upon the voluntary liquidation, dissolution or winding up of the Company; provided, however, that the shares issuable upon exercise of the Warrants shall include only shares of such class designated in the Company's Certificate of Incorporation as Class A Common Stock on the date hereof or (i) in the case of any reclassification, change, consolidation, merger, sale or conveyance of the character referred to in Section 6(c) hereof, the stock, securities or property provided for in such section or (ii) in the case of any reclassification or change in the outstanding shares of Common Stock issuable upon exercise of the Warrants as a result of a subdivision or combination or consisting of a change in par value, or from par value to no par value, or from no par value to par value, such shares of Common Stock as so reclassified or changed. (i) Any determination as to whether an adjustment in the Purchase Price in effect hereunder is required pursuant to Section 6, or as to the amount of any such adjustment, if required, shall be binding upon the holders of the Warrants and the Company if made in good faith by the Board of Directors of the Company. (j) If and whenever the Company shall grant to the holders of Common Stock, as such, rights or warrants to subscribe for or to purchase, or any options for the purchase of, Common Stock or securities convertible into or exchangeable for or carrying a right, warrant or option to purchase Common Stock, the Company shall concurrently therewith grant to each Registered Holder as of the record date for such transaction of the Warrants then outstanding, the rights, warrants or options to which each Registered Holder would have been entitled if, on the record date used to determine the stockholders entitled to the rights, warrants or options being granted by the Company, the Registered Holder were the holder of record of the number of whole shares of Class A Common Stock then issuable upon exercise of his Warrants. Such grant by the Company to the holders of the Warrants shall be in lieu of any adjustment which otherwise might be called for pursuant to this Section 6. SECTION 7. ISSUANCE OF WARRANT CERTIFICATES. From time to time, up to the -------------------------------- Expiration Date, the Company shall execute and deliver Warrant Certificates in required whole number denominations to the persons entitled thereto in connection with any transfer or exchange permitted under this Agreement; provided that no Warrant Certificates shall be issued except (i) this Warrant Certificate and those issued -11- concurrently herewith, (ii) those issued on or after the date hereof upon the exercise of fewer than all Warrants represented by any Warrant Certificate, to evidence any unexercised Warrants held by the exercising Registered Holder, (iii) those issued upon any transfer or exchange pursuant to Section 4, (iv) those issued in replacement of lost, stolen, destroyed or mutilated Warrant Certificates pursuant to Section 5 and (v) at the option of the Company, in such form as may be approved by the its Board of Directors, to reflect any adjustment or change in the Purchase Price, the number of shares of Common Stock purchasable upon exercise of the Warrants made pursuant to Section 6 hereof. SECTION 8. FRACTIONAL WARRANTS AND FRACTIONAL SHARES. ----------------------------------------- (a) If the number of shares of Class A Common Stock purchasable upon the exercise of each Warrant is adjusted pursuant to Section 6 hereof, the Company nevertheless shall not be required to issue fractions of shares, upon exercise of the Warrants or otherwise, or to distribute certificates that evidence fractional shares. With respect to any fraction of a share called for upon the exercise of any Warrant, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current market value of such fractional share, determined as follows: (1) If the Class A Common Stock is listed on a national securities exchange or admitted to unlisted trading privileges on such exchange or is traded on the Nasdaq National Market, the current market value shall be the last reported sale price of the Class A Common Stock on such exchange or market on the last business day prior to the date of exercise of such Warrant or if no such sale is made on such day, the average of the closing bid and asked prices for such day on such exchange or market; or (2) If the Class A Common Stock is not listed or admitted to unlisted trading privileges on a national securities exchange or is not traded on the Nasdaq National Market, the current market value shall be the mean of the last reported bid and asked prices reported by the Nasdaq SmallCap Market or, if not traded thereon, by the National Quotation Bureau, Inc. on the last business day prior to the date of the exercise of such Warrant; or (3) If the Class A Common Stock is not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, the current market value shall be an amount determined in such reasonable manner as may be prescribed by the Board of Directors of the Company. SECTION 9. RESTRICTIVE LEGEND. ------------------ (a) Except as otherwise provided in this Section 9, each certificate for Class A Common Stock initially issued upon the exercise of any Warrant, and each certificate for -12- Class A Common Stock issued to any subsequent transferee of any such certificate, shall be stamped or otherwise imprinted with a legend in substantially the following form: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR REGISTERED NOR QUALIFIED UNDER ANY STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS QUALIFIED AND REGISTERED UNDER APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO INTERACTIVE FLIGHT TECHNOLOGIES, INC., SUCH QUALIFICATION AND REGISTRATION IS NOT REQUIRED. NO TRANSFER OF ANY SUCH SHARE SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED." (b) Except as otherwise provided in this Section 9, each Warrant Certificate shall be stamped or otherwise imprinted with a legend in substantially the following form: "THE WARRANTS REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR REGISTERED NOR QUALIFIED UNDER ANY STATE SECURITIES LAWS. SUCH WARRANTS MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS QUALIFIED AND REGISTERED UNDER APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS, IN THE WRITTEN OPINION OF COUNSEL SATISFACTORY TO INTERACTIVE FLIGHT TECHNOLOGIES, INC., SUCH QUALIFICATION AND REGISTRATION IS NOT REQUIRED. NO TRANSFER OF ANY SUCH WARRANT SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED." (c) The legend requirements of Sections 9(a) and 9(b) above shall terminate as to any particular Warrant or share of Class A Common Stock (i) when and so long as such security shall have been effectively registered under the Securities Act and disposed of pursuant thereto or (ii) when Company shall have received an opinion of counsel reasonably satisfactory to it that such shares may be sold to the public without registration thereof under the Securities Act. Whenever the legend requirements imposed by this Section 9 shall terminate as to any share of Class A Common Stock purchased pursuant to a Warrant represented hereby, as hereinabove provided, the holder hereof shall be entitled to receive from Company, at Company's expense, a new certificate representing such Class A Common Stock not bearing the restrictive legend set forth in paragraph 9(a). SECTION 10. WARRANT HOLDERS NOT DEEMED STOCKHOLDERS. No holder of Warrants --------------------------------------- shall, as such, be entitled to vote or to receive dividends or be deemed the -13- holder of Class A Common Stock that may at any time be issuable upon exercise of such Warrants for any purpose whatsoever, nor shall anything contained herein be construed to confer upon the holder of Warrants, 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 or reclassification of stock, change of par value or change of stock to no par value, consolidation, merger or conveyance or otherwise), or to receive notice of meetings, or to receive dividends or subscription rights, until such holder shall have exercised such Warrants and been issued shares of Class A Common Stock in accordance with the provisions hereof. SECTION 11. RIGHTS OF ACTION. All rights of action with respect to the ---------------- Warrants are vested in the Registered Holders of the Warrants, and any Registered Holder of a Warrant, without consent of the holder of any other Warrant, may, in his own behalf and for his own benefit, enforce against the Company his right to exercise his Warrants for the purchase of shares of Class A Common Stock in the manner provided in this Warrant Certificate. SECTION 12. AGREEMENT OF WARRANT HOLDERS. Every holder of a Warrant, by ---------------------------- his acceptance thereof, consents and agrees with the Company and every other holder of a Warrant that: (a) The Warrants are transferable only on the registry books of the Company by the Registered Holder thereof in person or by his attorney duly authorized in writing and only if the Warrant Certificates representing such Warrants are surrendered at the office of the Company, duly endorsed or accompanied by a proper instrument of transfer satisfactory to the Company in its sole discretion, together with payment of any applicable transfer taxes; and (b) The Company may deem and treat the person in whose name the Warrant Certificate is registered as the holder and as the absolute, true and lawful owner of the Warrants represented thereby for all purposes, and the Company shall not be affected by any notice or knowledge to the contrary, except as otherwise expressly provided in Section 5 hereof. SECTION 13. MODIFICATION OF WARRANTS. This Agreement may be modified, ------------------------ supplemented or altered in any respect only with the consent in writing of the Registered Holders of Warrants representing not less than 50% of the Class C Warrants then outstanding; provided, that no change in the number or nature of -------- the securities purchasable upon the exercise of any Warrant, or the Purchase Price therefor, or the acceleration of the Expiration Date, shall be made without the consent in writing of the Registered Holder of the Warrant Certificate representing such Warrant, other than such changes as are specifically prescribed by this Agreement as originally executed or are made in compliance with applicable law. -14- SECTION 14. NOTICES. All notices, requests, consents and other ------- communications hereunder shall be in writing and shall be deemed to have been made when delivered or mailed first class registered or certified mail, postage prepaid as follows: if to the Registered Holder of a Warrant Certificate, at the address of such holder as shown on the registry books maintained by the Company; if to the Company, at 3070 West Post Road, Las Vegas, Nevada 89118, attention: Michail Itkis, Chief Executive Officer, or at such other address as may have been furnished to the Registered Holders in writing by the Company. SECTION 15. GOVERNING LAW. This Agreement shall be governed by and ------------- construed in accordance with the laws of the State of New York, without reference to principles of conflict of laws. IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed, manually or in facsimile, by two of its officers thereunto duly authorized. Interactive Flight Technologies, Inc. Dated: July 20, 1996 By: ___________________________ Michail Itkis Chief Executive Officer By: ___________________________ Robert Aten Chief Financial Officer Exhibit A --------- SUBSCRIPTION FORM To Be Executed by the Registered Holder in Order to Exercise Warrants The undersigned Registered Holder hereby irrevocably elects to exercise ___________ Class C Warrants represented by the enclosed Warrant Certificate, and to purchase the securities issuable upon the exercise of such Class C Warrants, and requests that certificates for such securities shall be issued in the name of PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER ______________________________ ______________________________ ______________________________ ______________________________ [please print or type name and address] and be delivered to ______________________________ ______________________________ ______________________________ ______________________________ [please print or type name and address] and if such number of Class C Warrants shall not be all the Class C Warrants evidenced by the enclosed Warrant Certificate, that a new Warrant Certificate for the balance of such Class C Warrants be registered in the name of, and delivered to, the Registered Holder at the address stated below. A-1 Dated: ____________________ X _____________________________ ________________________________ ________________________________ Address ________________________________ Taxpayer Identification Number ________________________________ Signature Guaranteed ________________________________ THE SIGNATURE TO THIS SUBSCRIPTION FORM MUST CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THE ENCLOSED WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A MEMBER OF THE MEDALLION STAMP PROGRAM. A-2 Exhibit B --------- ASSIGNMENT To Be Executed by the Registered Holder in Order to Assign Warrants FOR VALUE RECEIVED, _______________________ hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF TRANSFEREE ______________________________ ______________________________ ______________________________ ______________________________ [please print or type name and address] ______________ of the Class C Warrants represented by the enclosed Warrant Certificate, and hereby irrevocably constitutes and appoints ___________ ___________________________ Attorney to transfer the enclosed Warrant Certificate on the books of the Company, with full power of substitution in the premises. Dated: ____________________ X _____________________________ Signature Guaranteed ________________________________ THE SIGNATURE TO THIS ASSIGNMENT FORM MUST CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THE ENCLOSED WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A MEMBER OF THE MEDALLION STAMP PROGRAM. B-1 EX-4.6 3 FORM OF CLASS D WARRANT EXHIBIT 4.6 ----------- No. __ ________ Class D Warrants THE WARRANTS REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR REGISTERED NOR QUALIFIED UNDER ANY STATE SECURITIES LAWS. SUCH WARRANTS MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS QUALIFIED AND REGISTERED UNDER APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO INTERACTIVE FLIGHT TECHNOLOGIES, INC., SUCH QUALIFICATION AND REGISTRATION IS NOT REQUIRED. NO TRANSFER OF ANY SUCH WARRANT SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. VOID AFTER MARCH 6, 2000 CLASS D WARRANTS FOR PURCHASE OF CLASS A COMMON STOCK This certifies that FOR VALUE RECEIVED ____________________ or registered assigns (the "REGISTERED HOLDER") is the owner of the number of Class D Warrants specified above. Each Class D Warrant represented hereby initially entitles the Registered Holder to purchase, subject to the terms and conditions set forth in this Warrant Certificate, one fully paid and nonassessable share of Class A Common Stock, $.01 par value ("CLASS A COMMON STOCK"), of Interactive Flight Technologies, Inc., a Delaware corporation (the "COMPANY"), at any time prior to or on the Expiration Date (as hereinafter defined), upon the presentation and surrender of this Warrant Certificate with a duly completed and executed Subscription Form in the form attached hereto as Exhibit A, at the corporate --------- office the Company, accompanied by payment of Fourteen Dollars ($14.00) (the "PURCHASE PRICE") in lawful money of the United States of America in cash or by official bank or certified check made payable to "Interactive Flight Technologies, Inc." The Purchase Price and the number of shares of Common Stock subject to purchase upon the exercise of the Warrants are subject to modification or adjustment as set forth herein. The term "EXPIRATION DATE" shall mean 5:00 P.M. (New York time) on March 6, 2000. If such date shall in the State of New York be a holiday or a day on which banks are authorized to close, then the Expiration Date shall mean 5:00 P.M. (New York time) the next following day which in the State of New York is not a holiday or a day on which banks are authorized to close. SECTION 1. DEFINITIONS. As used herein, the following terms shall have ----------- the following meanings, unless the context shall otherwise require: (a) "COMMON STOCK" shall mean stock of the Company of any class, whether now or hereafter authorized, which has the right to participate in the distribution of earnings and assets of the Company without limit as to amount or percentage, which at the date hereof consists of the Company's Class A Common Stock, $.01 par value, and the Company's Class B Common Stock, $.01 par value. (b) "CORPORATE OFFICE" shall mean the office of the Company at which, at any particular time, its principal business shall be administered, which office is currently located at 3070 West Post Road, Las Vegas, Nevada 89118. (c) "EXERCISE DATE" shall mean, as to any Warrant, the date on which the Company shall have received both (a) this Warrant Certificate with the Subscription Form attached hereto as Exhibit A hereto executed by the Registered --------- Holder hereof, or his attorney duly authorized in writing, and indicating that the Registered Holder is thereby exercising such Warrant, and (b) payment in cash, or by official bank or certified check made payable to the Company, of an amount in lawful money of the United States of America equal to the applicable Purchase Price. (d) "PURCHASE PRICE" shall mean the purchase price to be paid upon exercise of each Class D Warrant in accordance with the terms hereof, which price shall be Fourteen Dollars ($14.00), subject to adjustment from time to time pursuant to the provisions of Section 6 hereof. (e) "REGISTERED HOLDER" shall mean, as to any Warrant and as of any particular date, the person in whose name the Warrant Certificate representing such Warrant shall be registered on that date on the books maintained by the Company pursuant to Section 4. (f) "WARRANTS" shall mean the Class D Warrants represented hereby and all other Class D Warrants issued by the Company. (g) "WARRANT CERTIFICATE" shall mean any certificate (including this certificate) representing Class D Warrants. SECTION 2. EXERCISE. -------- (a) Each Warrant evidenced hereby may be exercised by the Registered Holder hereof at any time on or prior to the Expiration Date, upon the terms and subject to the conditions set forth herein. A Warrant shall be deemed to have been exercised immediately prior to the close of business on the Exercise Date and the person entitled to receive the securities deliverable upon such exercise shall be treated for all purposes as the holder of those securities upon the exercise of the Warrant as of the close of business on the Exercise Date. Promptly following, and in any event within ten (10) business -2- days after the Exercise Date, the Company shall cause to be issued and delivered to the person or persons entitled to receive the same, a certificate or certificates for the securities deliverable upon such exercise (plus a Warrant Certificate for any remaining unexercised Warrants of the Registered Holder), subject to first receiving clearance of checks received in payment of the Purchase Price pursuant to such Warrants. (b) Upon the exercise of the Warrants represented hereby, if the Company so requests, Holder shall certify to the Company that it is not exercising such Warrants with a view to distribute the Class A Common Stock received pursuant to such exercise in violation of the Securities Act of 1933, as amended (the "SECURITIES ACT"). SECTION 3. RESERVATION OF SHARES; LISTING; PAYMENT OF TAXES; ETC. ----------------------------------------------------- (a) The Company covenants that it will at all times reserve and keep available out of its authorized Class A Common Stock, solely for the purpose of issue upon exercise of Warrants, such number of shares of Class A Common Stock as shall then be issuable upon the exercise of all outstanding Warrants. The Company covenants that all shares of Class A Common Stock which shall be issuable upon exercise of the Warrants shall, at the time of delivery, be duly and validly issued, fully paid, nonassessable and free from all taxes, liens and charges with respect to the issue thereof, (other than those which the Company shall promptly pay or discharge) and that upon issuance such shares shall be listed on each national securities exchange, on which the other shares of outstanding Class A Common Stock of the Company are then listed or shall be eligible for inclusion in the Nasdaq National Market or the Nasdaq SmallCap Market if the other shares of outstanding Class A Common Stock of the Company are so included. (b) In the event that this Warrant Certificate represents Class D Warrants which have been transferred by an initial holder of Class D Warrants, the Company shall not be obligated to deliver any securities pursuant to the exercise of the Class D Warrants represented hereby unless a registration statement under the Securities Act with respect to such securities is effective, or an exemption from such registration is available to the Company. The Company covenants that if any securities to be reserved for the purpose of exercise of Warrants hereunder require registration with, or approval of, any governmental authority under any federal securities law before such securities may be validly issued or delivered upon such exercise, then the Company will in good faith and as expeditiously as reasonably possible, endeavor to secure such registration or approval. The Company will use reasonable efforts to obtain appropriate approvals or registrations under state "blue sky" securities laws. However, in the event that this Warrant Certificate represents Class D Warrants which have been transferred by an initial holder of Class D Warrants, the Warrants represented hereby may not be exercised by, or shares of Class A Common Stock issued to, the Registered Holder hereof in any state in which such exercise would be unlawful. (c) The Company shall pay all documentary, stamp or similar taxes and other governmental charges that may be imposed with respect to the issuance of -3- Warrants, or the issuance or delivery of any shares of Class A Common Stock upon exercise of the Warrants; provided, however, that if the shares of Class A Common Stock are to be delivered in a name other than the name of the Registered Holder hereof, then no such delivery shall be made unless the person requesting the same has paid to the Company the amount of transfer taxes or charges incident thereto, if any. SECTION 4. EXCHANGE AND REGISTRATION OF TRANSFER. ------------------------------------- (a) This Warrant Certificate may be exchanged for other Warrant Certificates representing an equal aggregate number of Warrants or, subject to the restrictions set forth on Page 1 hereof, may be transferred in whole or in part. To effect such an exchange, this Warrant Certificate shall be surrendered to the Company at its Corporate Office, and upon satisfaction of the terms and provisions hereof, the Company shall execute, issue and deliver in exchange therefor the Warrant Certificate or Certificates which the Registered Holder hereof shall be entitled to receive. (b) The Company shall keep at its office books in which, subject to such reasonable regulations as it may prescribe, it shall register Warrant Certificates and the transfer thereof. Subject to the restrictions set forth on Page 1 hereof, upon due presentment for registration of transfer of any Warrant Certificate at such office, the Company shall execute, issue and deliver to the transferee or transferees a new Warrant Certificate or Certificates representing an equal aggregate number of Warrants. (c) With respect to all Warrant Certificates presented for registration or transfer, or for exchange or exercise, the Subscription Form and/or the Assignment Form (as applicable) attached hereto as Exhibit A and Exhibit B, --------- --------- respectively, shall be duly endorsed or shall be accompanied by a written instrument or instruments of transfer and/or subscription, in form satisfactory to the Company, duly executed by the Registered Holder or his attorney-in-fact duly authorized in writing. (d) A service charge may be imposed by the Company for any exchange or registration of transfer of Warrant Certificates. In addition, the Company may require payment by such holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. (e) All Warrant Certificates surrendered for exercise or for exchange in case of mutilated Warrant Certificates shall be promptly cancelled by the Company and thereafter retained by the Company until the Expiration Date. (f) Prior to due presentment for registration of transfer thereof, the Company may deem and treat the Registered Holder of any Warrant Certificate as the absolute owner thereof and of each Warrant represented thereby (notwithstanding any notations of ownership or writing thereon made by anyone other than a duly authorized officer of the Company) for all purposes and shall not be affected by any notice to the contrary. -4- SECTION 5. LOSS OR MUTILATION. Upon receipt by the Company of evidence ------------------ satisfactory to it of the ownership of and loss, theft, destruction or mutilation of this Warrant Certificate and (in case of loss, theft or destruction) of indemnity satisfactory to the Company, and (in the case of mutilation) upon surrender and cancellation hereof, the Company shall execute and deliver to the Registered Holder in lieu thereof a new Warrant Certificate of like tenor representing an equal aggregate number of Class D Warrants. Applicants for a substitute Warrant Certificate shall comply with such other reasonable regulations and pay such other reasonable charges as the Company may prescribe. SECTION 6. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES OF CLASS A ------------------------------------------------------------ COMMON STOCK OR WARRANTS. - ------------------------ (a) Subject to the exceptions referred to in Section 6(g) below, in the event the Company shall, at any time or from time to time after the date hereof, sell any shares of Common Stock for a consideration per share less than the Market Price of the Class A Common Stock (as defined below) on the date of the sale or issue any shares of Common Stock as a stock dividend to the holders of Common Stock, or subdivide or combine the outstanding shares of Common Stock into a greater or lesser number of shares (any such sale, issuance, subdivision or combination being herein called a "CHANGE OF SHARES"), then, and thereafter upon each further Change of Shares, the Purchase Price in effect immediately prior to such Change of Shares shall be changed to a price (including any applicable fraction of a cent) determined by multiplying the Purchase Price in effect immediately prior thereto by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares and the number of shares of Class A Common Stock which the aggregate consideration received (determined as provided in subsection 6(f)(F) below) for the issuance of such additional shares would purchase at the Market Price and the denominator of which shall be the sum of the number of shares of Common Stock outstanding immediately after the issuance of such additional shares. Such adjustment shall be made successively whenever such an issuance is made. "MARKET PRICE", as of any date, shall mean (i) the average closing bid price, for the thirty (30) consecutive business days immediately preceding such date, of the Class A Common Stock as reported by Nasdaq, if the Class A Common Stock is traded on the Nasdaq SmallCap Market, or (ii) the last reported sale price, for the thirty (30) consecutive business days immediately preceding such date, of the Class A Common Stock as reported by the primary exchange on which the Class A Common Stock is traded, if the Class A Common Stock is traded, on a national securities exchange, or by Nasdaq, if the Class A Common Stock is traded on the Nasdaq National Market. Upon each adjustment of the Purchase Price pursuant to this Section , the total number of shares of Class A Common Stock purchasable upon the exercise of each Class D Warrant shall (subject to the provisions contained in Section 6(b) hereof) be -5- such number of shares (calculated to the nearest tenth) purchasable at the Purchase Price in effect immediately prior to such adjustment multiplied by a fraction, the numerator of which shall be the Purchase Price in effect immediately prior to such adjustment and the denominator of which shall be the Purchase Price in effect immediately after such adjustment. (b) The Company may elect, upon any adjustment of the Purchase Price hereunder, to adjust the number of Class D Warrants outstanding, in lieu of the adjustment in the number of shares of Class A Common Stock purchasable upon the exercise of each Warrant as hereinabove provided, so that each Class D Warrant outstanding after such adjustment shall represent the right to purchase one share of Class A Common Stock. Each Warrant held of record prior to such adjustment of the number of Warrants shall become that number of Warrants (calculated to the nearest tenth) determined by multiplying the number one by a fraction, the numerator of which shall be the Purchase Price in effect immediately prior to such adjustment and the denominator of which shall be the Purchase Price in effect immediately after such adjustment. Upon each adjustment of the number of Warrants pursuant to this Section 6, the Company shall, as promptly as practicable, cause to be distributed to each Registered Holder of Warrant Certificates on the date of such adjustment Warrant Certificates evidencing, subject to Section 8 hereof, the number of additional Warrants to which such Registered Holder shall be entitled as a result of such adjustment or, at the option of the Company, cause to be distributed to such Registered Holder in substitution and replacement for the Warrant Certificates held by him prior to the date of adjustment (and upon surrender thereof, if required by the Company) new Warrant Certificates evidencing the number of Warrants to which such Holder shall be entitled after such adjustment. (c) In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock, or in case of any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any reclassification, capital reorganization or other change of outstanding shares of Common Stock), or in case of any sale or conveyance to another corporation of the property of the Company as, or substantially as, an entirety (other than a sale/leaseback, mortgage or other financing transaction), the Company shall cause effective provision to be made so that each holder of a Warrant then outstanding shall have the right thereafter, by exercising such Warrant, to purchase the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock that might have been purchased upon exercise of such Warrant immediately prior to such reclassification, capital reorganization or other change, consolidation, merger, sale or conveyance. Any such provision shall include provision for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 6. The Company shall not effect any such consolidation, merger or sale without the written consent of Registered Holders of a majority of the Warrants then outstanding, unless prior to or simultaneously with the consummation thereof the successor (if other than the Company) resulting from such -6- consolidation or merger or the corporation purchasing assets or other appropriate corporation or entity shall assume, by written instrument executed and delivered to the Company, the obligation to deliver to the holder of each Warrant such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holders may be entitled to purchase and the other obligations of the Company under this Agreement. The foregoing provisions shall similarly apply to successive reclassifications, capital reorganizations and other changes of outstanding shares of Common Stock and to successive consolidations, mergers, sales or conveyances. (d) Irrespective of any adjustments or changes in the Purchase Price or the number of shares of Class A Common Stock purchasable upon exercise of the Warrants, the Warrant Certificates theretofore and thereafter issued shall, unless the Company shall exercise its option to issue new Warrant Certificates pursuant to Section 7 hereof, continue to express the Purchase Price per share, the number of shares purchasable thereunder and the Redemption Price therefor as the Purchase Price per share, and the number of shares purchasable and the Redemption Price therefor were expressed in the Warrant Certificates when the same were originally issued. (e) After each adjustment of the Purchase Price pursuant to this Section 6, the Company will promptly prepare a certificate signed by the Chairman or President, and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, of the Company setting forth: (i) the Purchase Price as so adjusted, (ii) the number of shares of Class A Common Stock purchasable upon exercise of each Warrant after such adjustment and, if the Company shall have elected to adjust the number of Warrants, the number of Warrants to which the Registered Holder of each Warrant shall then be entitled, and the adjustment in Redemption Price resulting therefrom, and (iii) a brief statement of the facts accounting for such adjustment. The Company will promptly cause a brief summary thereof to be sent by ordinary first class mail to each Registered Holder of Warrants at his last address as it shall appear on the registry books of the Company. No failure to mail such notice nor any defect therein or in the mailing thereof shall affect the validity thereof except as to the holder to whom the Company failed to mail such notice, or except as to the holder whose notice was defective. The affidavit of the Secretary or an Assistant Secretary of the Company that such notice has been mailed shall, in the absence of fraud, be prima facie evidence of the facts stated therein. (f) For purposes of Section 6(a) and 6(b) hereof, the following provisions (A) to (F) shall also be applicable: (A) The number of shares of Common Stock outstanding at any given time shall include shares of Common Stock owned or held by or for the account of the Company and the sale or issuance of such treasury shares or the distribution of any such treasury shares shall not be considered a Change of Shares for purposes of said sections. -7- (B) No adjustment of the Purchase Price shall be made unless such adjustment would require an increase or decrease of at least $.10 in the Purchase Price; provided that any adjustments which by reason of this clause (B) are not required to be made shall be carried forward and shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment(s) so carried forward, shall require an increase or decrease of at least $.10 in the Purchase Price then in effect hereunder. (C) In case of (1) the sale by the Company for cash (or as a component of a unit being sold for cash) of any rights or warrants to subscribe for or purchase, or any options for the purchase of, Common Stock or any securities convertible into or exchangeable for Common Stock without the payment of any further consideration other than cash, if any (such securities convertible, exercisable or exchangeable into Common Stock being herein called "CONVERTIBLE SECURITIES"), or (2) the issuance by the Company, without the receipt by the Company of any consideration therefor, of any rights or warrants to subscribe for or purchase, or any options for the purchase of, Common Stock or Convertible Securities, in each case, if (and only if) the consideration payable to the Company upon the exercise of such rights, warrants or options shall consist of cash, whether or not such rights, warrants or options, or the right to convert or exchange such Convertible Securities, are immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such rights, warrants or options or upon the conversion or exchange of such Convertible Securities (determined by dividing (x) the minimum aggregate consideration payable to the Company upon the exercise of such rights, warrants or options, plus the consideration, if any, received by the Company for the issuance or sale of such rights, warrants or options, plus, in the case of such Convertible Securities, the minimum aggregate amount of additional consideration, other than such Convertible Securities, payable upon the conversion or exchange thereof, by (y) the total maximum number of shares of Common Stock issuable upon the exercise of such rights, warrants or options or upon the conversion or exchange of such Convertible Securities issuable upon the exercise of such rights, warrants or options) is less than the Market Price of the Class A Common Stock on the date of the issuance or sale of such rights, warrants or options, then the total maximum number of shares of Common Stock issuable upon the exercise of such rights, warrants or options or upon the conversion or exchange of such Convertible Securities (as of the date of the issuance or sale of such rights, warrants or options) shall be deemed to be outstanding shares of Common Stock for purposes of Sections 6(a) and 6(b) hereof and shall be deemed to have been sold for cash in an amount equal to such price per share. -8- (D) In case of the sale by the Company for cash of any Convertible Securities, whether or not the right of conversion or exchange thereunder is immediately exercisable, and the price per share for which Common Stock is issuable upon the conversion or exchange of such Convertible Securities (determined by dividing (x) the total amount of consideration received by the Company for the sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, other than such Convertible Securities, payable upon the conversion or exchange thereof, by (y) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of such Convertible Securities) is less than the Market Price of the Class A Common Stock on the date of the sale of such Convertible Securities, then the total maximum number of shares of Common Stock issuable upon the conversion or exchange of such Convertible Securities (as of the date of the sale of such Convertible Securities) shall be deemed to be outstanding shares of Common Stock for purposes of Sections 6(a) and 6(b) hereof and shall be deemed to have been sold for cash in an amount equal to such price per share. (E) In case the Company shall modify the rights of conversion, exchange or exercise of any of the securities referred to in (C) or (D) above or any other securities of the Company convertible, exchangeable or exercisable for shares of Common Stock, for any reason other than an event that would require adjustment to prevent dilution, so that the consideration per share received by the Company after such modification is less than the Market Price on the date prior to such modification, the Purchase Price to be in effect after such modification shall be determined by multiplying the Purchase Price in effect immediately prior to such event by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding on the date prior to the modification plus the number of shares of Common Stock which the aggregate consideration receivable by the Company for the securities affected by the modification would purchase at the Market Price and of which the denominator shall be the number of shares of Common Stock outstanding on such date plus the number of shares of Common Stock to be issued upon conversion, exchange or exercise of the modified securities at the modified rate. Such adjustment shall become effective as of the date upon which such modification shall take effect. On the expiration of any such right, warrant or option or the termination of any such right to convert or exchange any such Convertible Securities referred to in Paragraph (C) or (D) above, the Purchase Price then in effect hereunder shall forthwith be readjusted to such Purchase Price as would have obtained (a) had the adjustments made upon the issuance or sale of such rights, warrants, options or Convertible Securities been made upon the basis of the issuance of only the number of shares of Common Stock theretofore actually delivered (and the total consideration received therefor) upon the exercise -9- of such rights, warrants or options or upon the conversion or exchange of such Convertible Securities and (b) had adjustments been made on the basis of the Purchase Price as adjusted under clause (a) for all transactions (which would have affected such adjusted Purchase Price) made after the issuance or sale of such rights, warrants, options or Convertible Securities. (F) In case of the sale for cash of any shares of Common Stock, any Convertible Securities, any rights or warrants to subscribe for or purchase, or any options for the purchase of, Common Stock or Convertible Securities, the consideration received by the Company therefore shall be deemed to be the gross sales price therefor without deducting therefrom any expense paid or incurred by the Company or any underwriting discounts or commissions or concessions paid or allowed by the Company in connection therewith. (g) No adjustment to the Purchase Price of the Warrants or to the number of shares of Class A Common Stock purchasable upon the exercise of each Warrant will be made, however, (i) upon the exercise of any of the options presently outstanding under the Company's Stock Option Plan (the "PLAN") for officers, directors and certain other key personnel of and consultants to the Company; or (ii) upon the issuance or exercise of any other securities which may hereafter be granted or exercised under the Plan or under any other employee benefit plan of the Company; or (iii) upon the sale or exercise of the Warrants, including without limitation the sale or exercise of any of the Warrants comprising the Unit Purchase Option or upon the sale or exercise of the Unit Purchase Option; or (iv) upon the sale of any shares of Class A Common Stock or Convertible Securities in a firm commitment underwritten public offering, including, without limitation, shares sold upon the exercise of any overallotment option granted to the underwriters in connection with such offering; or (v) upon the issuance or sale of Class A Common Stock or Convertible Securities upon the exercise of any rights or warrants to subscribe for or purchase, or any options for the purchase of, Class A Common Stock or Convertible Securities, whether or not such rights, warrants or options were outstanding on the date of the original sale of the Warrants or were thereafter issued or sold; or -10- (vi) upon the issuance or sale of Class A Common Stock upon conversion or exchange of any Convertible Securities, whether or not any adjustment in the Purchase Price was made or required to be made upon the issuance or sale of such Convertible Securities and whether or not such Convertible Securities were outstanding on the date of the original sale of the Warrants or were thereafter issued or sold. (h) As used in this Section 6, the term "COMMON STOCK" shall mean and include the Company's Common Stock authorized on the date hereof and shall also include any capital stock of any class of the Company thereafter authorized which shall not be limited to a fixed sum or percentage in respect of the rights of the holders thereof to participate in dividends and in the distribution of assets upon the voluntary liquidation, dissolution or winding up of the Company; provided, however, that the shares issuable upon exercise of the Warrants shall include only shares of such class designated in the Company's Certificate of Incorporation as Class A Common Stock on the date hereof or (i) in the case of any reclassification, change, consolidation, merger, sale or conveyance of the character referred to in Section 6(c) hereof, the stock, securities or property provided for in such section or (ii) in the case of any reclassification or change in the outstanding shares of Common Stock issuable upon exercise of the Warrants as a result of a subdivision or combination or consisting of a change in par value, or from par value to no par value, or from no par value to par value, such shares of Common Stock as so reclassified or changed. (i) Any determination as to whether an adjustment in the Purchase Price in effect hereunder is required pursuant to Section 6, or as to the amount of any such adjustment, if required, shall be binding upon the holders of the Warrants and the Company if made in good faith by the Board of Directors of the Company. (j) If and whenever the Company shall grant to the holders of Common Stock, as such, rights or warrants to subscribe for or to purchase, or any options for the purchase of, Common Stock or securities convertible into or exchangeable for or carrying a right, warrant or option to purchase Common Stock, the Company shall concurrently therewith grant to each Registered Holder as of the record date for such transaction of the Warrants then outstanding, the rights, warrants or options to which each Registered Holder would have been entitled if, on the record date used to determine the stockholders entitled to the rights, warrants or options being granted by the Company, the Registered Holder were the holder of record of the number of whole shares of Class A Common Stock then issuable upon exercise of his Warrants. Such grant by the Company to the holders of the Warrants shall be in lieu of any adjustment which otherwise might be called for pursuant to this Section 6. SECTION 7. ISSUANCE OF WARRANT CERTIFICATES. From time to time, up to the -------------------------------- Expiration Date, the Company shall execute and deliver Warrant Certificates in required whole number denominations to the persons entitled thereto in connection with any transfer or exchange permitted under this Agreement; provided that no Warrant Certificates shall be issued except (i) this Warrant Certificate and those issued -11- concurrently herewith, (ii) those issued on or after the date hereof upon the exercise of fewer than all Warrants represented by any Warrant Certificate, to evidence any unexercised Warrants held by the exercising Registered Holder, (iii) those issued upon any transfer or exchange pursuant to Section 4, (iv) those issued in replacement of lost, stolen, destroyed or mutilated Warrant Certificates pursuant to Section 5 and (v) at the option of the Company, in such form as may be approved by the its Board of Directors, to reflect any adjustment or change in the Purchase Price, the number of shares of Common Stock purchasable upon exercise of the Warrants made pursuant to Section 6 hereof. SECTION 8. FRACTIONAL WARRANTS AND FRACTIONAL SHARES. ----------------------------------------- (a) If the number of shares of Class A Common Stock purchasable upon the exercise of each Warrant is adjusted pursuant to Section 6 hereof, the Company nevertheless shall not be required to issue fractions of shares, upon exercise of the Warrants or otherwise, or to distribute certificates that evidence fractional shares. With respect to any fraction of a share called for upon the exercise of any Warrant, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current market value of such fractional share, determined as follows: (1) If the Class A Common Stock is listed on a national securities exchange or admitted to unlisted trading privileges on such exchange or is traded on the Nasdaq National Market, the current market value shall be the last reported sale price of the Class A Common Stock on such exchange or market on the last business day prior to the date of exercise of such Warrant or if no such sale is made on such day, the average of the closing bid and asked prices for such day on such exchange or market; or (2) If the Class A Common Stock is not listed or admitted to unlisted trading privileges on a national securities exchange or is not traded on the Nasdaq National Market, the current market value shall be the mean of the last reported bid and asked prices reported by the Nasdaq SmallCap Market or, if not traded thereon, by the National Quotation Bureau, Inc. on the last business day prior to the date of the exercise of such Warrant; or (3) If the Class A Common Stock is not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, the current market value shall be an amount determined in such reasonable manner as may be prescribed by the Board of Directors of the Company. SECTION 9. RESTRICTIVE LEGEND. ------------------ (a) Except as otherwise provided in this Section 9, each certificate for Class A Common Stock initially issued upon the exercise of any Warrant, and each certificate for -12- Class A Common Stock issued to any subsequent transferee of any such certificate, shall be stamped or otherwise imprinted with a legend in substantially the following form: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR REGISTERED NOR QUALIFIED UNDER ANY STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS QUALIFIED AND REGISTERED UNDER APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO INTERACTIVE FLIGHT TECHNOLOGIES, INC., SUCH QUALIFICATION AND REGISTRATION IS NOT REQUIRED. NO TRANSFER OF ANY SUCH SHARE SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED." (b) Except as otherwise provided in this Section 9, each Warrant Certificate shall be stamped or otherwise imprinted with a legend in substantially the following form: "THE WARRANTS REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR REGISTERED NOR QUALIFIED UNDER ANY STATE SECURITIES LAWS. SUCH WARRANTS MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS QUALIFIED AND REGISTERED UNDER APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS, IN THE WRITTEN OPINION OF COUNSEL SATISFACTORY TO INTERACTIVE FLIGHT TECHNOLOGIES, INC., SUCH QUALIFICATION AND REGISTRATION IS NOT REQUIRED. NO TRANSFER OF ANY SUCH WARRANT SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED." (c) The legend requirements of Sections 9(a) and 9(b) above shall terminate as to any particular Warrant or share of Class A Common Stock (i) when and so long as such security shall have been effectively registered under the Securities Act and disposed of pursuant thereto or (ii) when Company shall have received an opinion of counsel reasonably satisfactory to it that such shares may be sold to the public without registration thereof under the Securities Act. Whenever the legend requirements imposed by this Section 9 shall terminate as to any share of Class A Common Stock purchased pursuant to a Warrant represented hereby, as hereinabove provided, the holder hereof shall be entitled to receive from Company, at Company's expense, a new certificate representing such Class A Common Stock not bearing the restrictive legend set forth in paragraph 9(a). SECTION 10. WARRANT HOLDERS NOT DEEMED STOCKHOLDERS. No holder of Warrants --------------------------------------- shall, as such, be entitled to vote or to receive dividends or be deemed the -13- holder of Class A Common Stock that may at any time be issuable upon exercise of such Warrants for any purpose whatsoever, nor shall anything contained herein be construed to confer upon the holder of Warrants, 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 or reclassification of stock, change of par value or change of stock to no par value, consolidation, merger or conveyance or otherwise), or to receive notice of meetings, or to receive dividends or subscription rights, until such holder shall have exercised such Warrants and been issued shares of Class A Common Stock in accordance with the provisions hereof. SECTION 11. RIGHTS OF ACTION. All rights of action with respect to the ---------------- Warrants are vested in the Registered Holders of the Warrants, and any Registered Holder of a Warrant, without consent of the holder of any other Warrant, may, in his own behalf and for his own benefit, enforce against the Company his right to exercise his Warrants for the purchase of shares of Class A Common Stock in the manner provided in this Warrant Certificate. SECTION 12. AGREEMENT OF WARRANT HOLDERS. Every holder of a Warrant, by ---------------------------- his acceptance thereof, consents and agrees with the Company and every other holder of a Warrant that: (a) The Warrants are transferable only on the registry books of the Company by the Registered Holder thereof in person or by his attorney duly authorized in writing and only if the Warrant Certificates representing such Warrants are surrendered at the office of the Company, duly endorsed or accompanied by a proper instrument of transfer satisfactory to the Company in its sole discretion, together with payment of any applicable transfer taxes; and (b) The Company may deem and treat the person in whose name the Warrant Certificate is registered as the holder and as the absolute, true and lawful owner of the Warrants represented thereby for all purposes, and the Company shall not be affected by any notice or knowledge to the contrary, except as otherwise expressly provided in Section 5 hereof. SECTION 13. MODIFICATION OF WARRANTS. This Agreement may be modified, ------------------------ supplemented or altered in any respect only with the consent in writing of the Registered Holders of Warrants representing not less than 50% of the Class D Warrants then outstanding; provided, that no change in the number or nature of -------- the securities purchasable upon the exercise of any Warrant, or the Purchase Price therefor, or the acceleration of the Expiration Date, shall be made without the consent in writing of the Registered Holder of the Warrant Certificate representing such Warrant, other than such changes as are specifically prescribed by this Agreement as originally executed or are made in compliance with applicable law. -14- SECTION 14. NOTICES. All notices, requests, consents and other ------- communications hereunder shall be in writing and shall be deemed to have been made when delivered or mailed first class registered or certified mail, postage prepaid as follows: if to the Registered Holder of a Warrant Certificate, at the address of such holder as shown on the registry books maintained by the Company; if to the Company, at 3070 West Post Road, Las Vegas, Nevada 89118, attention: Michail Itkis, Chief Executive Officer, or at such other address as may have been furnished to the Registered Holders in writing by the Company. SECTION 15. GOVERNING LAW. This Agreement shall be governed by and ------------- construed in accordance with the laws of the State of New York, without reference to principles of conflict of laws. IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed, manually or in facsimile, by two of its officers thereunto duly authorized. Interactive Flight Technologies, Inc. Dated: July 20, 1996 By: ___________________________ Michail Itkis Chief Executive Officer By: ___________________________ Robert Aten Chief Financial Officer -15- Exhibit A --------- SUBSCRIPTION FORM To Be Executed by the Registered Holder in Order to Exercise Warrants The undersigned Registered Holder hereby irrevocably elects to exercise ___________ Class D Warrants represented by the enclosed Warrant Certificate, and to purchase the securities issuable upon the exercise of such Class D Warrants, and requests that certificates for such securities shall be issued in the name of PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER ______________________________ ______________________________ ______________________________ ______________________________ [please print or type name and address] and be delivered to ______________________________ ______________________________ ______________________________ ______________________________ [please print or type name and address] and if such number of Class D Warrants shall not be all the Class D Warrants evidenced by the enclosed Warrant Certificate, that a new Warrant Certificate for the balance of such Class D Warrants be registered in the name of, and delivered to, the Registered Holder at the address stated below. A-1 Dated: ____________________ X _____________________________ ________________________________ ________________________________ Address ________________________________ Taxpayer Identification Number ________________________________ Signature Guaranteed ________________________________ THE SIGNATURE TO THIS SUBSCRIPTION FORM MUST CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THE ENCLOSED WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A MEMBER OF THE MEDALLION STAMP PROGRAM. A-2 Exhibit B --------- ASSIGNMENT To Be Executed by the Registered Holder in Order to Assign Warrants FOR VALUE RECEIVED, _______________________ hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF TRANSFEREE ______________________________ ______________________________ ______________________________ ______________________________ [please print or type name and address] ______________ of the Class D Warrants represented by the enclosed Warrant Certificate, and hereby irrevocably constitutes and appoints ___________ ___________________________ Attorney to transfer the enclosed Warrant Certificate on the books of the Company, with full power of substitution in the premises. Dated: ____________________ X _____________________________ Signature Guaranteed ________________________________ THE SIGNATURE TO THIS ASSIGNMENT FORM MUST CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THE ENCLOSED WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A MEMBER OF THE MEDALLION STAMP PROGRAM. B-1 EX-27 4 FINANCIAL DATA SCHEDULE - ARTICLE 5
5 9-MOS 3-MOS OCT-31-1996 OCT-31-1996 NOV-01-1995 MAY-01-1996 JUL-31-1996 JUL-31-1996 2,684,009 7,765,454 0 0 1,860,115 0 0 0 1,983,442 1,964,932 26,863,747 10,071,475 1,770,223 461,858 334,585 32,564 29,019,580 10,688,782 1,818,492 815,570 0 0 0 0 0 0 120,066 72,200 0 0 29,019,580 10,688,782 2,813,756 1,200,378 2,920,835 1,252,430 2,870,961 1,132,958 10,832,798 4,859,176 0 0 0 0 0 0 (7,580,847) (3,350,766) 0 0 0 0 0 0 0 0 0 0 (7,580,847) (3,350,763) (1.42) (0.43) (1.42) (0.43)
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