SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Interactive Flight Technologies, Inc.
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(Name of Registrant as Specified in its Charter)
OCEAN CASTLE PARTNERS LLC
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box)
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: 1/
- ------------------------
1/ Set forth the amount on which the filing fee is calculated and state
how it was determined
4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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Preliminary Copies
JOINT PROXY AND CONSENT STATEMENT
OF
OCEAN CASTLE PARTNERS LLC
IN OPPOSITION
TO THE BOARD OF DIRECTORS
----------------------
INTERACTIVE FLIGHT TECHNOLOGIES, INC.
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September 30, 1998 Annual Meeting of Stockholders
and
Consent to Remove and Replace Directors
To Fellow Stockholders of Interactive Flight Technologies, Inc.
This Joint Proxy and Consent Statement (the "Joint Proxy and Consent
Statement") is furnished to the holders of Class A Common Stock, par value $0.01
per share (the "Class A Common Stock") and Class B Common Stock, par value $0.01
per share (the "Class B Common Stock" and, together with the Class A Common
Stock, the "Common Stock"), of Interactive Flight Technologies, Inc., a Delaware
corporation (the "Company"), by Ocean Castle Partners LLC ("Ocean Partners") in
connection with its solicitation of proxies for use at the Annual Meeting of
Stockholders of the Company scheduled to be held on September 30, 1998, or the
time and place designated by the Board of Directors of the Company and at any
and all adjournments or postponements thereof (the "Annual Meeting") and in
connection with its solicitation of written consents ("Consents") to remove the
current directors of the Company and to replace them with the persons specified
herein. This Joint Proxy and Consent Statement, together with the [COLOR] proxy
card (the "[COLOR] Proxy Card") and the [COLOR] consent card (the "[COLOR]
Consent Card") is first being mailed or distributed to stockholders on or about
September ___, 1998.
THE PROXY AND CONSENT SOLICITATIONS
The principal objective of the Proxy and Consent Solicitations is to elect
directors who will place a greater emphasis on the enhancement of shareholder
value. At the end of fiscal 1997, the Company had net assets of only $37,234,343
after losing over $70,000,000 since 1995 in a failed attempt to exploit the
Company's technology. In fiscal 1997, when the Company lost more than
$51,000,000, the management of the Company expended over $1,363,995 of the
Company's resources enriching themselves. It is time to stop this gravy train.
See "REASONS FOR THE SOLICITATIONS." If elected, the nominees of Ocean Partners
will constitute all of the members of Company's Board of Directors.
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Consent Solicitation
Ocean Partners is soliciting holders of the Common Stock to give Consent
with respect to the following proposed corporate actions:
(1) The removal, without cause, of Michail Itkis, Thomas M. Metzler, John
W. Alderfer, Ira S. Levine and Gary E. Hirth (collectively, the
"Designated Incumbents") as members of the Board of Directors of the
Company (the "Board"); and
(2) The election of Irwin L. Gross, Charles T. Condy, Stephen Schachman,
M. Moshe Porat and James W. Fox (collectively, the "Ocean Nominees")
to fill all of the vacancies on the Board created by the removal of
the Designated Incumbents, all without a meeting of stockholders (the
"Consent Solicitation"). For further information concerning the
Consent Solicitation, see "Consent Procedure" at page ______.
Proxy Solicitation
In addition, Ocean Partners is soliciting proxies (the "Proxy
Solicitation") for use at the Annual Meeting of the Company:
(1) To approve the election of the Ocean Nominees to the Board of the
Company;
(2) To approve the proposal to amend the Company's Amended and Restated
Certificate of Incorporation to divide the Board into three classes;
(3) To vote against the proposal to amend the Company's Amended and
Restated Certificate of Incorporation to effect a reverse stock split
of the Company's outstanding shares of Class A and Class B Common
Stock, on the basis of one new share for every five outstanding
shares;
(4) To vote against the proposal to amend the Company's Amended and
Restated Certificate of Incorporation to change the name of the
Company to "IFT Holdings, Inc.";
(5) To approve the appointment by the Board of KPMG Peat Marwick LLP,
certified public accountants, as independent auditors of the Company
for the fiscal year ending October 31, 1998; and
(6) To transact such other business as may properly come before the
meeting and any and all adjournments thereof.
At the Annual Meeting, management proposes to elect five directors, approve
a classified Board (the "Classified Board"), to reverse stock split the
outstanding shares of Common Stock; one for five (the "Reverse Stock Split"); to
change the Company's name to "IFT Holdings, Inc." (the "Name Change"); and to
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approve the appointment by the Board of KPMG Peat Marwick LLP as independent
auditors for the fiscal year ending October 31, 1998. Ocean Partners opposes the
Designated Incumbents and favors the Ocean Nominees; favors the Classified
Board, is against the Reverse Stock Split; is against the Name Change; and
favors the appointment of KPMG Peat Marwick, LLP.
Ocean Partners will vote:
FOR the Ocean Nominees; FOR the Classified Board; AGAINST the Reverse Stock
Split; AGAINST the Name Change; and FOR the appointment of KPMG Peat Marwick,
LLP.
Directors shall be elected by a plurality of the votes cast at the Annual
Meeting. The affirmative vote of the holders of a majority of the votes
represented in person or by proxy at the Annual Meeting is required to approve
the appointment of KPMG Peat Marwick, LLP. The Classified Board, the Reverse
Stock Split and the Name Change can be effected only by amending the Company's
Amended and Restated Certificate of Incorporation which requires the affirmative
vote of the holders of Common Stock entitled to cast a majority of the total
votes entitled to be cast by the outstanding shares of Common Stock.
In reliance upon Rule 14a-5(c) of the Securities and Exchange Act of 1934,
as amended (the "Exchange Act"), reference is made to management's proxy
statement for a full description of management's proposals, as well as
information with respect to the record date, the number of shares of Common
Stock eligible to vote at the Annual Meeting, the quorum, the securities
ownership of the Company, information about the Company's officers and
directors, including compensation, information about the appointment of KPMG
Peat Marwick, LLP as independent auditors and the date by which stockholders
must submit proposals for inclusion to the next annual meeting.
Record Dates and Votes Required
Consent Solicitation. Stockholders of record on September __, 1998 (the
"Consent Record Date") are entitled to act by written consent by marking, dating
and signing the enclosed [COLOR] Consent Card and returning it to Ocean
Partners. YOUR CONSENT IS IMPORTANT. PLEASE MARK, SIGN AND DATE THE ENCLOSED
CONSENT CARD AND MAIL IN THE ENCLOSED ENVELOPE PROMPTLY. The Consents solicited
by Ocean Partners will only be effective when delivered to the Company within
sixty days of the earliest dated Consent so delivered. On September __, 1998,
Ocean Partners delivered the first such Consent which was dated the same date.
The proposed actions with respect to the Company can be taken at any time
prior to such sixty days as soon as signed Consents are received from the
holders of Common Stock entitled to cast a majority (more than 50%) of the votes
entitled to be cast by holders of the outstanding shares of Common Stock of the
Company and are delivered to the Company. See "Consent Procedure."
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The Company has announced that the Annual Meeting will be held on September
30, 1998. Should Ocean Partners receive unrevoked Consents representing at least
a majority of the votes entitled to be cast by the holders of the outstanding
shares of Common Stock prior to the Company's Annual Meeting, Ocean Partners
intends to deliver the Consents to the Company and have the Ocean Nominees named
in the [COLOR] Consent Card be the directors of the Company and therefore not
have an Annual Meeting to elect directors.
Proxy Solicitation. Ocean Partners is also soliciting your proxy for the
Annual Meeting should the Consent Solicitation not be successfully concluded by
that time. The Company has set the record date for determining the stockholders
entitled to receive notice of and to vote at the Annual Meeting as of the close
of business on August 5, 1998 (the "Proxy Record Date"). You can grant Ocean
Partners your proxy for use at the Annual Meeting by marking, signing and dating
the [COLOR] Proxy Card and returning it to Ocean Partners' solicitor, MacKenzie
Partners, Inc.
At the Annual Meeting, nominees for director receiving the highest number
of votes cast at the Annual Meeting will be elected to the Board. The
appointment of KPMG Peat Marwick, LLP requires the affirmative vote of holders
of a majority of the votes entitled to be cast by holders of the outstanding
Common Stock of the Company present in person or represented by proxy at the
Annual Meeting and actions with respect to the Classified Board, the Reverse
Stock Split and the Name Change will require the affirmative vote of the holders
of Common Stock entitled to cast a majority of the total votes entitled to be
cast by the outstanding shares of Common Stock.
How to Vote
Enclosed with this Proxy and Consent Statement are two cards: a [COLOR]
Proxy Card and a [COLOR] Consent Card. It is important that you sign, date and
return both cards so that your vote will count both in the Consent Solicitation
and, if necessary, at the Annual Meeting.
BE SURE TO SIGN AND DATE BOTH THE [COLOR] PROXY CARD AND [COLOR] CONSENT
CARD. IT IS IMPORTANT THAT YOUR SHARES BE VOTED IN BOTH THE CONSENT SOLICITATION
AND THE PROXY SOLICITATION.
OCEAN PARTNERS URGES YOU TO SUPPORT IT IN ITS ATTEMPT TO REPLACE THE
DESIGNATED INCUMBENTS. PLEASE SIGN, DATE AND MAIL TO MACKENZIE PARTNERS, INC.
BOTH THE FULLY COMPLETED [COLOR] PROXY CARD AND [COLOR] CONSENT CARD.
Consents must be executed by a record holder of Common Stock. Consequently,
if your shares of Common Stock are held in the name of a brokerage firm, bank
nominee or other institution, only that entity can execute a Consent with
respect to your shares. Accordingly, please contact the person responsible for
your account and give instructions for a Consent to be signed representing your
shares. Ocean Partners urges you to confirm in writing your instructions to the
person responsible for your account and to provide a copy of those instructions
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to Ocean Partners, so that Ocean Partners will be aware of all instructions
given and can attempt to ensure that such instructions are followed.
If you have any questions about executing your Proxy or Consent, or require
assistance, please contact:
MacKenzie Partners, Inc.
156 Fifth Avenue, PH3
New York, New York 10010
Tel.: (212) 929-5500 (Call Collect)
or Call Toll Free (800) 322-2885
OCEAN PARTNERS
Ocean Partners is a recently formed Delaware limited liability company,
which is deemed to beneficially own 33.8% of the total votes entitled to be cast
by holders of Common Stock of the Company. Ocean Partners' address is the
Belgravia, Suite 120, 1811 Chestnut Street, Philadelphia, Pennsylvania 19103.
Irwin L. Gross is the president and sole member of Ocean Partners. Irwin L.
Gross and Ocean Partners are sometimes hereinafter referred to as the "Ocean
Group." See "PROPOSED ELECTION OF DIRECTORS AND INFORMATION ABOUT NOMINEES."
On the Proxy and Consent Record Dates, the Ocean Group beneficially owned
an aggregate of 52,000 shares of Class A Common Stock and 2,231,111 shares of
Class B Common Stock. Pursuant to publicly available information concerning the
Company, on August 5, 1998, there were 17,199,437 shares of Class A Common Stock
and 3,733,334 shares of Class B Common Stock outstanding. Based on this
information, on the Proxy and Consent Record Dates, the Ocean Group beneficially
owned Common Stock representing approximately 33.8% of the voting power of the
Company. See "VOTING SECURITIES OUTSTANDING."
REASONS FOR THE SOLICITATIONS
The principal objective of the Joint Proxy and Consent Solicitation is to
seek a sufficient number of votes to remove the Designated Incumbents and to
elect to the Board of Directors of the Company persons whose sole focus will be
to enhance shareholder value. Ocean Partners has reviewed the history and
performance of the current management of the Company and believes that the
Designated Incumbents have totally failed to perform responsibly and effectively
and should be removed immediately. Ocean Partners has reached this conclusion
based on a review of a variety of factors including the market price for the
Company's stock, its operating performance, management's cash compensation
packages, grants of options, severance packages, repricing of options and other
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factors. It is clearly time for a change. The Designated Incumbents do not
deserve to continue in office. We are asking you to make a choice between a
failed past and the potential of a successful future. We believe that Ocean
Partners is the only choice.
Ocean Partners will turn off the wasteful cash spigot. Ocean Partners will
promptly evaluate the prospects for the current business and consider, among
other things, disposal of the current operations. Ocean Partners will also
develop a strategic plan which will enable it to employ the Company's assets in
a fashion that will benefit all shareholders.
A review of the history of the Company shows a bleak picture. When the
Designated Incumbents took control over two years ago, they were granted an
opportunity to control the destiny of the Company. Ocean Partners believes that
the Designated Incumbents have had more than a sufficient period of time within
which to demonstrate that they could successfully manage and grow the Company.
The Designated Incumbents' record is clear. They have not achieved anything.
Ocean Partners has reviewed a variety of factors and has concluded that the
Designated Incumbents do not deserve to continue to control and manage the
Company. The factors include the following:
1. The market price of the Class A Common Stock of the Company has moved
down from a high of $16.125 in May, 1996 to a price of $.781 on August 11, 1998.
The August 11, 1998 price is an 85.8% reduction from its initial price of $5.50
on March 7, 1995 and a 95.2% reduction from the high of $16.125 in May, 1996. At
the same time, the S&P 500 has doubled in value since the Company's initial
public offering. The Company's market capitalization has dropped from
$279,000,000 in May of 1996 to $13,100,000 in August of 1998.
2. The Company's current book value is $2.44 per share while the shares of
Class A Common Stock are trading at less than 40% of book value, which is a
strong indication that the market place does not have confidence in management's
ability to grow the Company.
3. The current management has paid itself salaries, which in light of the
Company's performance, are in our opinion excessive. In 1997, the three top
executives earned an aggregate salary of $791,995. In addition, for the fiscal
year ended October 31, 1997, current management paid itself bonuses in excess of
$572,000.
4. Members of current management have also issued themselves approximately
277,000 options to purchase Class A Common Stock of the Company and then on two
occasions repriced those options, from an exercise price in excess of $8.00 per
share, to $8.00 per share and then $.875 per share in February, 1998. This
latest round of repricing was authorized in fiscal year 1997 when the Company
lost more than $51,000,000.
[INSERT CHARTS]
[GRAPHIC]
In the printed version of the document, a graph appears which depicts the
following plot points:
Interactive Flight Technologies
Historical Performance Review
1997 1996 1995
Salary Total $791,995 $202,779 $125,000
Bonus Total $572,104 $0 $0
Options Total 250,000 550,000 15,000
Interactive Flight Technologies
Historical Performance Review
Earnings ($51,022,312) ($19,266,901) ($5,___,___)
Interactive Flight Technologies
Class A Stock Trading Range
Trading Range
Time Period High Low
3/7/95* 4/30/95 $5.500 $4.500
5/1/95 7/31/95 $6.250 $4.875
8/1/95 10/31/95 $10.625 $5.000
11/1/95 1/31/96 $12.250 $7.500
2/1/96 4/30/96 $12.750 $9.250
5/1/96 7/31/96 $16.125 $8.375
8/1/96 10/31/96 $15.750 $9.000
11/1/96 1/31/97 $13.000 $7.625
2/1/97 4/30/97 $8.625 $3.313
5/1/97 7/31/97 $7.375 $3.313
8/1/97 10/31/97 $3.625 $1.000
11/1/97 1/31/98 $1.531 $0.906
2/1/98 4/30/98 $1.219 $0.875
5/1/98 7/31/98 $1.156 $0.813
8/1/98 8/11/98 $1.031 $0.781
8/11/98 $0.781 $0.781
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PROTECT YOUR INVESTMENT, SIGN AND RETURN
THE ENCLOSED PROXY AND CONSENT CARDS TODAY
THE PROGRAM OF THE OCEAN GROUP
If elected, the Ocean Nominees will hold all of the seats on the Board.
What will the Ocean Group do if it obtains control of the Company's Board? The
Ocean Group will evaluate the now current business or businesses with a view of
looking for ways to reduce the Company's outstanding potential liabilities and
will evaluate how to create value by way of sale, licensing or merger of the
existing business. The Ocean Group will utilize the balance of the Company's
assets to seek acquisitions or engage investment bankers or other financial
professionals to help chart a new direction. We believe that once the Designated
Incumbents are removed, we should aggressively seek transactions which are
appropriate for the Company and which will enhance shareholder value. The Ocean
Group has not identified any specific merger partners and has considered
possible alternatives for the future of the Company in a preliminary way only.
In the course of their business activities, however, the members of the Ocean
Group constantly review investment opportunities and in connection with this
process have several companies which might be attractive strategic partners for
the Company. Additional analysis would be required to determine whether any of
these companies are a fit with the Company.
The Ocean Group will consider acquisition candidates based on the following
criteria: balance sheet quality, positive earnings, and strong growth potential.
The Ocean Group believes that there are many opportunities to acquire or be
acquired by private companies and public companies that meet these criteria. As
of April 30, 1998, the Company's total assets were $49,554,683 of which cash and
cash equivalents were $40,706,887. These assets can be employed in a fashion to
benefit all of the Company's shareholders. To date, Ocean Group has not
identified any potential acquisitions or mergers that would be attractive for
the Company. One thing is certain however; improvement is critical. The
Company's book value on August 11, 1998 was $2.44 per share and its Class A
Common Stock was trading at $0.781. The Ocean Group will seek transactions that
will benefit all of the stockholders of the Company. We are tired of seeing
current management reap all of the benefits from the Company.
SUMMARY OF THE PROPOSALS
Consent Solicitation
Ocean Partners is soliciting stockholders of the Company to consent to the
removal of the Designated Incumbents and to the election of the Ocean Nominees
to fill the vacancies created by such removal.
The purpose of this proposal is to permit the replacement of the Company's
management prior to the September 30, 1998 Annual Meeting. If the Ocean Nominees
are elected pursuant to the Consent Solicitation, Ocean Partners does not intend
to hold the Annual Meeting for the election of the directors.
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Proxy Solicitation
Ocean partners is seeking approval by the Company's stockholders of the
following actions:
Proposal 1: Election of Directors. To elect each of Irwin L. Gross, Charles
T. Condy, Stephen Schachman, M. Moshe Porat and James W. Fox as a director of
the Company, to serve until the next annual meeting of stockholders of the
Company, and until their respective successors are duly elected and qualified.
Proposal 2: Staggered Board. To approve the proposal to amend the Company's
Amended and Restated Certificate of Incorporation to divide the Board of
Directors into three classes.
Proposal 3: Reverse Stock Split. To vote against the proposal to amend the
Company's Amended and Restated Certificate of Incorporation to effect a reverse
stock split of the Company's outstanding shares of Class A and Class B Common
Stock, on the basis of one new share for every five outstanding shares.
Proposal 4: Name Change. To vote against the proposal to amend the
Company's Amended and Restated Certificate of Incorporation to change the name
of the Company to "IFT Holdings, Inc."
Proposal 5: Independent Auditors. To approve the appointment by the Board
of Directors of KPMG Peat Marwick LLP, certified public accountants, as
independent auditors of the Company for the fiscal year ending October 31, 1998.
CONSENT SOLICITATION
Proposed Removal of the Company's Directors
The removal of the Designated Incumbents from the Board requires the
approval of the holders of Common Stock entitled on the Consent Record Date to
cast a majority of the votes entitled to be cast by the holders of the
outstanding shares of Common Stock. Ocean Partners, which is entitled to cast
approximately 33.8% of the votes entitled to be cast by the outstanding Common
Stock, has executed Consent forms consenting to the removal of such directors.
OCEAN PARTNERS RECOMMENDS THAT YOU CONSENT TO THE REMOVAL OF THESE DIRECTORS
FROM THE BOARD BY CONSENTING TO CONSENT PROPOSAL 1.
Proposed Election of Directors and Information about Nominees
Ocean Partners proposes that the Ocean Nominees - Irwin L. Gross, Charles
T. Condy and Stephen Schachman, M. Moshe Porat and James W. Fox- be elected to
fill the vacancies created by the removal of the Designated Incumbents from the
Board. The Ocean Nominees have expressed their willingness to serve on the Board
if elected and have provided the information set forth below for inclusion in
this Joint Proxy and Consent Statement.
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IRWIN L. GROSS, age 54, a founder of ICC Technologies, Inc., a publicly
held company listed on NASDAQ National Market, which is currently engaged in
Internet related technology, was the chairman and a director since the Company's
inception in May 1984. Since 1988, ICC has been engaged in the design,
manufacturing and marketing of innovative climate control systems. Mr. Gross
retired from that company in July, 1998 to pursue an array of investment
strategies. In addition, Mr. Gross had served as the chief executive officer of
Engelhard/ICC, a joint venture between ICC and Englehard which was the successor
to ICC's business and which ICC Technologies, Inc. from its formation in
February, 1994 to its restructuring in February, 1998, was a fifty percent (50%)
partner with Engelhard Corporation. In February 1998, Engelhard/ICC was
restructured. In April, 1998, ICC acquired by merger Rare Medium, Inc. which is
an Internet service provider. Mr. Gross was also a founder of Interdigital
Company (AMEX) and served as a director and executive vice president until April
1984. Mr. Gross has served as a consultant to, investor in and director of,
numerous publicly held and private companies. Mr. Gross also serves on the board
of directors of several charitable organizations. Mr. Gross has a Bachelor of
Science degree in Accounting from Temple University and a Juris Doctor degree
from Villanova University.
CHARLES T. CONDY, age 58, had been a director of ICC Technologies, Inc.
since June 1996. Mr. Condy is the founder, chairman and chief executive officer
of Next Century Restaurants, Inc., a private company which is the owner of Aqua,
and Charles of Nob Hill, both of which are in San Francisco. He is founder and
has been chairman and chief executive officer of Proven Alternatives, Inc., a
privately held international energy management company, since 1991. Mr. Condy
was chairman and chief executive officer of California Energy Company, Inc., a
geothermal energy company which he founded in 1971, and which became the largest
geothermal energy company in the world. Prior to founding California Energy
Company, Mr. Condy was executive vice president-Western region of John Nuveen
and Company, members of the New York Stock Exchange. In the public policy area,
Mr. Condy helped found and has served as board member of the Business Council
for a Sustainable Energy Future and the Coalition for Energy Efficiency and
Renewable Technologies. Mr. Condy currently advises the U.S. Department of
Energy, the U.S. Agency for International Development, and the U.S. Asian
Environmental Partnership on energy efficiency technology transfer and related
funding to developing economies.
STEPHEN SCHACHMAN, age 54, is presently a private consultant and is the
owner of his own consulting firm, Public Affairs Management, located in the
suburban Philadelphia area. From 1992 to 1995 has was an executive officer and
consultant to Penn Fuel Gas Company, a supplier of natural gas products. Prior
thereto, he was an attorney with the Philadelphia law firm of Dilworth, Paxson,
Kalish & Kaufman. Mr. Schachman was also executive vice president of Bell
Atlantic Mobile System and prior thereto president of the Philadelphia Gas
Works, the largest municipally owned gas company in the United States. Mr.
Schachman has a Bachelor of Arts degree from the University of Pennsylvania and
a Juris Doctor degree from the Georgetown University Law School.
M. MOSHE PORAT, age 51, is currently the Dean of the School of Business and
Management at Temple University. He is the Chairholder of the Joseph E. Boettner
Professorship in Risk Management and Insurance. From 1988 to 1996 he was
Chairman of the Risk Management, Insurance and Actuarial Science Department at
Temple University. He received his undergraduate
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degree in economics and statistics (with distinction) from Tel Aviv
University. His M.B.A. (Magna Cum Laude) is from the Recanati Graduate School of
Management at Tel Aviv University. He completed his doctoral work at Temple
University. Prior to his academic work, Dr. Porat served as deputy general
manager of a large international insurance brokerage firm and insurance
companies as an economic and financial consultant. Dr. Porat has authored
several monographs on captive insurance companies and their use in risk
management, has published numerous articles on captive insurance companies, self
insurance and other financial and risk topics, has served as an expert witness
and has won several awards. Dr. Porat holds the CPCU professional designation
and is a member of ARIA (American Risk and Insurance Association), IIS
(International Insurance Society), RIMS (Risk and Insurance Management Society)
and Society of CPCU.
JAMES W. FOX, age 48, is presently the Managing Partner of First Lawrence
Capital Corp., located in New York City, and is responsible for the firm's
management and the growth of its mergers and acquisitions advisory and principal
investment activities. From 1989 to 1996, Mr. Fox was a director with national
practice development and management responsibility with Coopers & Lybrand in New
York, with primary responsibility for mergers and acquisitions activities. He
has held senior mergers and acquisitions positions with General Foods Corp.,
Arthur Young and W.R. Grace Co. Mr. Fox has a Bachelor of Arts degree in
Mathematics and History from Amherst College and an M.B.A. in Finance from the
University of Pennsylvania's Wharton School.
The election of the Ocean Nominees requires the approval of the holders on
the Consent Record Date of Common Stock entitled to cast a majority of the votes
entitled to be cast by the holders of the outstanding shares of Common Stock.
Ocean Partners, as beneficial owner of approximately 33.8% of the votes entitled
to be cast by the holders of the outstanding Common Stock on the Consent Record
Date, has executed Consent forms consenting to the election of the Ocean
Nominees. OCEAN PARTNERS RECOMMENDS THAT YOU CONSENT TO THE ELECTION OF THE
OCEAN NOMINEES TO THE BOARD BY CONSENTING TO CONSENT PROPOSAL 2.
PROXY SOLICITATION
Proposal 1: Election of Directors
Ocean Partners requests that you vote for the election of the Ocean
Nominees - Irwin L . Gross, Charles T. Condy, Stephen Schachman, M. Moshe Porat
and James W. Fox.
Five directors are to be elected at the Annual Meeting, each to hold office
until the 1999 Annual Meeting of Stockholders and thereafter until his/her
successor is elected and qualified. Ocean Partners proposes to nominate and
elect five directors.
Vote Required
Directors are elected by a plurality of the votes cast at the Annual
Meeting. Accordingly, the nominees receiving the highest number of votes from
holders of shares of the Common Stock
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represented and voting at the Annual Meeting will be elected to serve on
the Board. Abstentions and broker non-votes will have no effect on the election
of directors.
OCEAN PARTNERS URGES YOU TO VOTE "FOR" THE OCEAN NOMINEES.
Proposal 2: Authorization of a classified Board of Directors
Ocean Partners is asking for your support to approve the proposal which
would amend the Amended and Restated Certificate of Incorporation of the Company
to create a Classified Board. Management's proxy statement contains more
information about the Classified Board and why management proposes it.
Vote Required
The affirmative vote of the holders of a majority of outstanding shares of
Common Stock entitled to vote at the Annual Meeting is required to approve the
Classified Board.
OCEAN PARTNERS RECOMMENDS A VOTE "FOR" THE CLASSIFIED BOARD.
Proposal 3: The Reverse Stock Split
Management has proposed to reverse stock split the Common Stock one for
five (for every five shares you presently hold, you will hold one share). The
Ocean Group believes that it is premature to rely on management's position that
the Reverse Stock Split is necessary to alleviate the Company's concern about
its continued NASDAQ listing. Ocean Partners is not supporting the proposal and
would wait until its program is in place before revisiting this proposal.
Management's proxy statement contains more information about the Reverse Stock
Split and why management proposes it.
Vote Required
The affirmative vote of the holders of a majority of outstanding shares of
Common Stock entitled to vote at the Annual Meeting is required to approve the
Reverse Stock Split
OCEAN PARTNERS RECOMMENDS A VOTE "AGAINST" THE REVERSE STOCK SPLIT.
Proposal 4: Name Change
Management has proposed to change the Company's name to "IFT Holdings,
Inc." Management's proxy statement contains more information about the name
change and why management proposes it. Due to the Ocean Group's position that it
will reevaluate all of the Company's business operations, the Ocean Group would
not change the name of the Company until such evaluation has been completed.
Vote Required
11
<PAGE>
The affirmative vote of the holders of a majority of outstanding shares of
Common Stock entitled to vote at the Annual Meeting is required to approve the
Name Change.
OCEAN PARTNERS RECOMMENDS A VOTE "AGAINST" THE NAME CHANGE.
Proposal 5: Approval of Appointment of Independent Auditors
Management has proposed and Ocean Partners favors the appointment of KPMG
Peat Marwick, LLP as the Company's independent auditors. More information about
this proposal is provided in management's proxy statement.
Vote Required
The affirmative vote of the holders of a majority of the votes represented
in person or by proxy and cast at the Annual Meeting is required to approve this
proposal.
OCEAN PARTNERS RECOMMENDS A VOTE "FOR" THE APPOINTMENT OF KPMG PEAT
MARWICK, LLP.
Proxy Agreement and Voting Agreement
Pursuant to an agreement dated August 13, 1998 (the "Proxy Agreement"),
Ocean Partners entered into an arrangement with Yuri Itkis, Donald H. Goldman
and Boris Itkis, whereby Ocean Partners has been granted an irrevocable proxy
("Ocean Proxies") to vote all of the shares of Common Stock beneficially owned
by Messrs. Yuri Itkis, Goldman and Boris Itkis. The Proxy Agreement also
provides for consulting agreements between Ocean Partners and Messrs. Yuri Itkis
and Donald Goldman, whereby, among other things, Ocean Partners, upon the
election of the Ocean Nominees which will constitute a majority of the Board of
Directors of the Company, will pay Yuri Itkis and Donald Goldman each, $200,000
a year for 5 years, for services in connection with current or future business
strategies of the Company.
By virtue of its status as the holder of the Ocean Proxies, Ocean Partners
may be deemed to beneficially own all of the Common Stock owned by Messrs. Yuri
Itkis, Donald Goldman and Boris Itkis as set forth below under "VOTING
SECURITIES OUTSTANDING." Irwin L. Gross also beneficially owns 52,000 shares of
Class A Common Stock.
On August 11, 1998, Mr. Gross entered into an agreement (the "Voting
Agreement") with Steven Fieldman and Lance Fieldman, whereby Messrs. Fieldman
and Fieldman agreed to continue to vote the shares of Class B Common Stock and
Class A Common Stock beneficially owned by them in proportion to the vote of
other stockholders on matters submitted to stockholders. Messrs. Fieldman and
Fieldman have previously agreed, pursuant to their severance agreements with the
Company, to vote all shares on all matters in proportion to the vote of the
Company's other stockholders. The Voting Agreement provides that if the Ocean
Nominees constitute a majority of the Board of Directors of the Company, Irwin
Gross will use his best efforts to cause the Company to enter into a consulting
agreement with Steven Fieldman pursuant to which he would be engaged
12
<PAGE>
to advise the Company, at $55,000 a year for 1 year, concerning current or
future business strategies of the Company.
None of the Ocean Nominees, or any of their associates, is a party, or has
material interest, adverse to the Company or any of its subsidiaries in any
material proceedings. None of the Ocean Nominees, or any of their associates,
has been awarded, earned or been paid any form of compensation for services
rendered to the Company and its subsidiaries. Each of the Ocean Nominees will,
however, receive director's fees upon his election as a director of the Company
in accordance with the Company's current practice.
Except as set forth in this Joint Proxy and Consent Statement, none of the
Ocean Nominees has had a material direct or indirect interest in any
transactions since January 1, 1996, or has any such interest in any currently
proposed transaction or series of similar transactions to which the Company or
any subsidiary, is or is to be a party, in which the amount involved exceeds
sixty thousand dollars.
Litigation
On August 25,1998, Mr. Gross caused a complaint (the "Complaint") to be
filed on his behalf in the Court of Chancery of the State of Delaware in and for
New Castle County (the "Court") against the Company seeking an order pursuant to
Section 211(c) of the Delaware General Corporation Law to schedule an annual
meeting for the election of directors of the Company since the Company had not
had an annual meeting in more than thirteen months since its last annual
meeting. Mr. Gross and the Company are currently negotiating a stipulation and
order as to when the annual meeting should take place.
On August 31,1998, the Company filed a complaint against Ocean Partners
(the "Company Complaint") in the Court alleging, among other things, that the
Proxy Agreement is invalid, is in violation of certain stockholders agreements
and resulted in an automatic conversion of the Class B Common Stock subject to
the Proxy Agreement. Ocean Partners believes such complaint to be without merit
and intends to defend the Company Complaint vigorously.
VOTING SECURITIES OUTSTANDING
Based solely on publicly available information concerning the Company, on
July 15, 1998, there were 17,324,237 shares of Class A Common Stock and
3,733,334 shares of Class B Common Stock outstanding. Each share of Class A
Common Stock entitles its recordholder to one vote. Each share of Class B Common
Stock entitles its record-holder to six (6) votes. Except as otherwise required
by law, the holders of Class B Common Stock vote together with the Class A
Common Stock as a single class upon any matter submitted to the stockholders for
a vote.
As of September __, 1998, members of the Ocean Group beneficially owned an
aggregate of 52,000 shares of Class A Common Stock and 2,231,111 shares of Class
B Common Stock, representing approximately 33.8% of the voting power of the
outstanding Common Stock, based on the number of outstanding shares set forth in
the preceding paragraph. Based on that number, as of
13
<PAGE>
September __, 1998, members of the Ocean Group beneficially owned shares of
Common Stock as set forth below in the table. It is important to note that, as
required by applicable securities laws, the number (and percentage) of shares of
Common Stock disclosed in the tables below as beneficially owned includes the
shares of Common Stock which may be acquired upon the exercise within sixty (60)
days of options owned by such stockholder.
<TABLE>
<CAPTION>
CLASS B CLASS A PERCENT OF
NAME AND ADDRESS OF COMMON STOCK (2) COMMON STOCK TOTAL(3)
BENEFICIAL OWNER (1)
NUMBER OF PERCENT NUMBER OF PERCENT VOTING
SHARES OF CLASS SHARES OF CLASS POWER
<S> <C> <C> <C> <C> <C>
Ocean Castle Partners, LLC
1811 Chestnut Street 2,231,111 59.8% 52,000 * 33.8%
Philadelphia, PA 19103
Charles T. Condy --- --- --- --- ---
Stephen Schachman --- --- --- --- ---
M. Moshe Porat --- --- --- --- ---
James W. Fox --- --- --- --- ---
</TABLE>
- -------------------
* Less than 1%.
(1) Unless otherwise noted, all persons named in the table have sole voting and
investment power with respect to all shares of Common Stock beneficially
owned by them, subject to the Proxy Agreement between Ocean Partners, Yuri
Itkis, Donald H. Goldman and Boris Itkis and are subject to the Stock
Escrow Agreement. The Ocean Group only has voting power with respect to the
shares of Common Stock subject to the Proxy Agreement; it does not have
investment power with respect to such shares.
(2) Shares of Class B Common Stock convert on a share-for-share basis into
shares of Class A Common Stock automatically upon their transfer to any
person other than another holder of Class B Common Stock. Of the 3,733,334
shares of Class B Common Stock outstanding, 3,200,000 shares are held in
escrow (the "Stock Escrow Agreement") and will be released to the holders
only if the Company meets certain earnings or market price criteria. If the
conditions are not met by January 31, 1999, such shares will be canceled
and contributed to the Company's capital. Of the escrow shares, 1,250,000
shares will be released from escrow, on a pro rata basis if, and only if,
the Company's pretax income amounts to at least $10,100,000 for fiscal 1998
or the closing bid price of the Company's Class A Common Stock is in excess
of $20.00 for a 30-day period in the 18-month period subsequent to 18
months after the Company's public offering. The remaining 1,950,000 escrow
shares will be released from escrow if, and only if, the Company's pretax
income amounts to at least $14,500,000 for fiscal 1998 or the closing bid
price of the Company's Class A Common Stock is in excess of $28.00 for a
30-day period in the 18-month period subsequent to 18 months after the
Company's public offering. If none of the Class B shares are released from
escrow, the voting rights in the Company would be significantly changed.
(3) Based on 3,733,334 shares of Class B Common Stock outstanding, each of
which has six (6) votes per shares, and 17,324,237 shares of Class A Common
Stock outstanding, except that shares underlying options and warrants to
purchase Class A Common Stock exercisable within sixty (60) days are deemed
to be outstanding for purposes of calculating the percentage owned by the
holder(s) of such options and warrants.
14
<PAGE>
To the knowledge of Ocean Partners, based on a review of publicly available
information concerning the Company, the persons (other than the Ocean Group) who
beneficially own more than five percent (5%) of the outstanding Common Stock are
as follows:
<TABLE>
<CAPTION>
CLASS B CLASS A PERCENT OF
NAME AND ADDRESS OF COMMON STOCK (2) COMMON STOCK TOTAL(3)
BENEFICIAL OWNER (1)
NUMBER OF PERCENT NUMBER OF PERCENT VOTING
SHARES OF CLASS SHARES OF CLASS POWER
<S> <C> <C> <C> <C> <C>
Michael Itkis 888,889(4) 23.8% 541,575(4)(5) 3.1% 14.8%
Steven M. Fieldman 453,333(6)(7) 12.1% 355,000(5)(6)(7) 2.0% 7.7%(7)
</TABLE>
Based solely on publicity available information concerning the Company, the
following table sets forth the beneficial ownership of the Common Stock, as of
July 15, 1998, held by each of the then directors and executive officers and
directors and executive officers as a group.
<TABLE>
<CAPTION>
CLASS B CLASS A PERCENT OF
NAME AND ADDRESS OF COMMON STOCK (2) COMMON STOCK TOTAL(3)
BENEFICIAL OWNER (1)
NUMBER OF PERCENT NUMBER OF PERCENT VOTING
SHARES OF CLASS SHARES OF CLASS POWER
<S> <C> <C> <C> <C> <C>
Michail Itkis 888,889(4) 23.8% 541,575(4)(5) 3.1% 14.8%
Thomas M. Metzler --- --- 236,191(5) 1.4% *
John W. Alderfer --- --- 104,963(5) * *
Frank Gomer --- --- 14,500(5) * *
All current executive
officers and directors of the
Company as a group (4 persons) 888,889 23.8% 897,229(5) 5.2% 15.7
</TABLE>
- -------------
* Less than 1%.
(1) Except as otherwise indicated below, the address of each beneficial owner
is c/o Interactive Flight Technologies, Inc., 4041 N. Central Avenue,
Phoenix, Arizona 85012. Based on the most recent public information about
the Company, Steven M. Fieldman's address is 700 Manhattan Avenue,
Manhattan Beach, California 90266, (ii) Donald H. Goldman's address is 331
W. Broadway, Long Beach, New York 11561, (iii) Yuri Itkis's address is 2620
S. Highland Dr., Las Vegas, Nevada 89109, and (iv) Boris Itkis's address is
2620 S. Highland Dr., Las Vegas, Nevada 89109. Unless otherwise noted,
Ocean Partners believe that all persons named in the table have sole voting
and investment power with respect to all shares of Common Stock
beneficially owned by them, subject to the Stockholders' Agreement.
15
<PAGE>
(2) Shares of Class B Common Stock convert on a share-for-share basis into
shares of Class A Common Stock automatically upon their transfer to any
person other than another holder of Class B Common Stock. Of the 3,733,334
shares of Class B Common Stock outstanding, 3,200,000 shares are held in
escrow and will be released to the holders only if the Company meets
certain earnings or market price criteria. If the conditions are not met by
January 31, 1999, such shares will be canceled and contributed to the
Company's capital. Of the escrow shares, 1,250,000 shares will be released
from escrow, on a pro rata basis if, and only if, the Company's pretax
income amounts to at least $10,100,000 for fiscal 1998 or the closing bid
price of the Company's Class A common stock is in excess of $20.00 for a
3-day period in the 18-month period subsequent to 18 months after the
Company's public offering. The remaining 1,950,000 escrow shares will be
released from escrow if, and only if, the Company's pretax income amounts
to at least $14,500,000 for fiscal 1998 or the closing bid price of the
Company's Class A Common Stock is in excess of $28.00 for a 30-day period
in the 18-month period subsequent to 18 months after the Company's public
offering. If none of the Class B shares are released from escrow, the
voting rights in the Company would be significantly changed.
(3) Based on 3,733,334 shares of Class B Common Stock outstanding, each of
which has six votes per share, and 17,324,237 shares of Class A Common
Stock outstanding, except that shares underlying options and warrants to
purchase Class A Common Stock exercisable within 60 days are deemed to be
outstanding for purposes of calculating the percentage owned by the
holder(s) of such options and warrants.
(4) Excludes shares owned by Yuri Itkis and Boris Itkis, Michail Itkis' father
and brother, respectively, as to which shares Michail Itkis disclaims
beneficial ownership.
(5) Includes shares issuable upon exercise of options exercisable within 60
days as follows: Michail Itkis -- 390,000 shares; Yuri Itkis -- 90,000
shares; Donald H. Goldman -- 25,000 shares; Steven M. Fieldman -- 355,000
shares; Thomas M. Metzler -- 166,667 shares; John W. Alderfer - 58,333
shares; Frank Gomer - 14,500 shares; and all current executive officers and
directors of the Company as a group - 629,500.
(6) Excludes shares owned by Lance Fieldman, Steven Fieldman's son, as to which
shares Steven Fieldman disclaims beneficial ownership.
(7) Steven Fieldman has agreed to vote all shares on all matters in proportion
to the vote of the Company's other stockholders. Steven Fieldman and Lance
Fieldman have entered into an agreement on August 11, 1998, with Irwin L.
Gross, whereby they both agreed to continue to vote all shares on all
matters in proportion to the vote of the Company's other stockholders.
CONSENT PROCEDURE
Removal and Replacement of Directors
Section 141(k) of the Delaware General Corporation Law states that, unless
the directors have staggered terms or the corporation has cumulative voting, any
number of directors may be removed, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors. The
Company's directors do not have staggered terms and the Company's Amended and
Restated Certificate of Incorporation and Bylaws do not provide for cumulative
voting.
Ocean Partners believes that the Company's Amended and Restated Certificate
of Incorporation does not prohibit stockholders from acting by written consent
to remove directors and to elect directors to fill vacancies resulting from
removal of directors by stockholders.
16
<PAGE>
Consent Procedure; Effectiveness; Record Date
Section 228 of the Delaware General Corporation Law states that, unless
otherwise provided in a corporation's certificate of incorporation, any action
that may be taken at any annual or special meeting of stockholders, may be taken
without a meeting, without prior notice and without a vote, if consents in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted, and those consents are
delivered to the corporation by delivery to its registered office in Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the books in which proceedings of meetings of stockholders are
recorded. The Company's Amended and Restated Certificate of Incorporation does
not prohibit the use of written consents.
The Consent Record Date is _____________, 1998, which is the date on which
a Consent of Ocean Partners was delivered to the Company. Under Section 213(b)
of the Delaware General Corporation Law, the Consent Record Date is the first
date a signed Consent is delivered to the Company, unless the Board has
previously fixed a record date. To Ocean Partners knowledge, the Board has not
previously fixed a record date for the Consents. Only the holders of record of
Common Stock on the Consent Record Date may execute Consents.
The corporate actions proposed herein will be adopted when properly
completed, unrevoked Consents are signed by the holders of record on the Consent
Record Date of a majority of votes entitled to be cast by the holders of the
outstanding shares of Common Stock and those Consents are delivered to the
Company. However, all Consents will expire, unless so delivered, on the date
sixty (60) days after the first Consent is delivered to the Company, which was
done on the Consent Record Date. Ocean Partners plans to present the results of
a successful solicitation with respect to the corporate actions proposed herein
to the Company as soon as possible.
If the corporate actions described herein are taken pursuant to the consent
procedure, Ocean Partners will cause the Company, pursuant to Section 228(d) of
the Delaware General Corporation Law and Section 7 of Article 1 of the Company's
Bylaws, to give prompt notice thereof to those stockholders who have not
executed Consents to the actions taken.
Voting Rights
The unrevoked signed Consents from the holders of record on the Consent
Record Date of at least a majority of the votes entitled to be cast by the
holders of the outstanding shares of Common Stock are necessary to effect the
removal of the Designated Incumbents and the election of the Ocean Nominees.
As of the Consent Record Date, Ocean Partners and the Ocean Nominees
beneficially owned Common Stock representing approximately 33.8% of the total
voting power of the Common Stock. See "PROPOSED ELECTION OF DIRECTORS AND
INFORMATION ABOUT NOMINEES" and "VOTING SECURITIES OUTSTANDING." Ocean Partners
and the Ocean Nominees have consented to all of the actions for which Consents
are being solicited with respect to all such shares.
17
<PAGE>
Accordingly, the unrevoked Consents of other stockholders beneficially owning
Common Stock entitled to cast approximately 16.3% of the total votes entitled to
be cast by the holders of outstanding shares of Common Stock on the Consent
Record Date are required to adopt the proposals to which the Consent
Solicitation relates.
Revocation of Consents
An executed Consent Card may be revoked at any time before expiration by
signing, dating, and delivering a written revocation before the time that the
action authorized by the executed Consent becomes effective. A revocation may be
in any written form validly signed by the record holder as long as it clearly
states that the Consent previously given is no longer effective. The delivery of
a subsequently dated Consent Card which is properly completed will constitute a
revocation of any earlier Consent. The revocation may be delivered either to
Ocean Partners c/o MacKenzie Partners, Inc. at 156 Fifth Avenue, PH3, New York,
New York 10010 or to the Company at 4041 N. Central Avenue, Suite 2000, Phoenix,
Arizona 85012.
Although a revocation delivered only to the Company will be effective,
Ocean Partners requests that if a revocation is delivered to the Company, a
photostatic copy of the revocation also be delivered to Ocean Partners c/o
MacKenzie Partners, Inc. at the address set forth in the preceding paragraph, so
that the Ocean Group will be aware of all revocations and can more accurately
determine if and when the actions described herein have received the approval of
a majority of the shares of Common Stock outstanding on the Consent Record Date.
Special Instructions
If you wish to consent to one or more of the actions proposed in the
Consent Solicitation and were a record holder of Common Stock on the Consent
Record Date, please mark the appropriate "CONSENT" box or boxes on the
accompanying Consent Card and sign, date and mail it promptly to the Ocean
Partners in the enclosed envelope.
If you do not wish to Consent to an action proposed in the Consent
Solicitation and were a record holder of Common Stock on the Consent Record
Date, you may mark the appropriate "Consent Withheld" or "Abstain" box on the
accompanying Consent Card, and sign, date and mail the card in the enclosed
envelope.
When the stockholder whose Consent is solicited specifies a choice with
respect to any matter identified therein, the Consent shall be given in
accordance with the specifications so made. If the stockholder has failed to
check a box marked "CONSENT," "CONSENT WITHHELD" or "ABSTAIN" for a proposal,
such stockholder shall be deemed to have Consented to the actions described in
that proposal, except that such stockholder will not be deemed to have Consented
to the removal of any Designated Incumbent or the election of any Ocean Nominee
whose name is written in the appropriate space on the Consent Card.
If the holders on the Consent Record Date of Common Stock entitled to cast
a majority of the votes entitled to be cast by the holders of the outstanding
Common Stock Consent to the
18
<PAGE>
removal of the Designated Incumbents from the Board but do not approve the
election of all of the Ocean Nominees, then the Consents would be effective to
remove the Designated Incumbents from the present Board. In such event,
vacancies will exist on the Board; however, under Delaware law and under the
Company's Bylaws, the remaining directors, if any, would have the power to fill
such vacancies created as a result of such removal. The election of the Ocean
Nominees as directors, if consented to, will only be effective to the extent
vacancies exist as a result of the removal of other directors by stockholders.
PROXY PROCEDURE
Record Date
The Board of the Company has set the record date (the "Proxy Record Date")
for the Annual Meeting at the close of business as August 5, 1998. Pursuant to
publicly available information concerning the Company, on August 5, 1998, there
were 17,199,437 shares of Class A Common Stock and 3,733,334 shares of Class B
Common Stock outstanding. Each shares of Class A Common Stock outstanding and
the Proxy Record Date is entitled to one vote. Each share of Class B Common
Stock outstanding and the Proxy Record Date is entitled to six votes.
Cummulative voting is the election of directors of the Company is not permitted.
Even if you are not sure as to your eligibility to vote at the Annual Meeting,
we urge you to complete the enclosed [COLOR] Proxy Card so that your shares will
be voted if eligible.
The persons named in the accompanying [COLOR] Proxy Card will vote properly
executed and duly returned proxies in favor of the election of the Ocean
Nominees and in favor of proposals two through five unless marked to the
contrary.
Revocation
Any stockholders who has given a proxy with respect to the Company may
revoke it at any time before it is exercised by voting in person at the Annual
Meeting, by filing with the Secretary of the Company a written notice of
revocation prior to the voting of such proxy, or by submitting a later dated
proxy at any time before the vote is taken. Accordingly, you may revoke any
proxy you have previously given the Board of the Company by signing and dating
the enclosed [COLOR] Proxy Card and returning it as indicated herein. The proxy
contained in the enclosed [COLOR] Proxy Card may also be revoked in the manner
described above.
A later dated Consent will not revoke an earlier dated proxy.
Voting Rights
At the Annual Meeting, nominees for director receiving the highest number
of votes cast by holders of shares of Common Stock represented and voting at the
Annual Meeting will be elected to the Board. The affirmative vote of a majority
of the votes cast at the Annual Meeting is required to approve the appointment
of KPMG Peat Marwick, LLP. Ocean Partners understands that action with respect
to the other proposals described above requires the affirmative vote of
19
<PAGE>
holders of Common Stock entitled to cast a majority of the total votes required
to be cast by the outstanding Common Stock at the Annual Meeting.
Solicitation of Proxies and Consents
Solicitation of Proxies and Consents will be made by Ocean Partners and its
employees. Proxies and Consents will be solicited by mail, telephone or
telecopier and in person. No such persons will receive any additional
compensation for such solicitation.
In addition, Ocean Partners has retained MacKenzie Partners, Inc., to
assist in the solicitation, to which it will pay a fee of at least $___________
and has agreed to reimburse it for its reasonable expenses. Ocean Partners has
additionally agreed to indemnify Mackenzie Partners, Inc. under certain
circumstances.
Brokers, custodians, nominees and fiduciaries will be requested to forward
solicitation material to beneficial owners of the Common Stock. Ocean Partners
and its affiliates will reimburse brokers, custodians, nominees and fiduciaries
for their reasonable expenses for sending solicitation material to the
beneficial owners of Common Stock.
Subject to the following paragraph, the cost of solicitation will be borne
initially by Ocean Partners and its affiliates in a manner to be determined. The
anticipated cost of the solicitation is estimated to be approximately
$____________.
Ocean Partners will seek reimbursement of the costs of this solicitation of
proxies and Consents to the extent legally permissible. The question of the
Company's reimbursement of such solicitation expenses will not be submitted to a
vote of stockholders unless such submission is required by law.
IMPORTANT
YOUR VOTE IS IMPORTANT. PLEASE MARK, SIGN AND DATE BOTH THE ENCLOSED
[COLOR] PROXY CARD AND THE [COLOR] CONSENT CARD AND MAIL THEM IN THE ENCLOSED
ENVELOPE PROMPTLY.
IF YOU HAVE ALREADY SIGNED THE PROXY CARD SENT TO YOU BY THE BOARD OF
DIRECTORS OF THE COMPANY, YOU CAN REVOKE SUCH PROXY BY SIGNING AND DATING THE
ENCLOSED [COLOR] PROXY CARD AND RETURNING THE CARD TO OCEAN PARTNERS. ONLY YOUR
LATEST DATED PROXY WILL COUNT AT THE ANNUAL MEETING.
If your shares of Common Stock are held in the name of a brokerage firm,
bank nominee or other institution, only it can sign a Consent with respect to
your shares. Accordingly, please contact the person responsible for your account
and give instructions for a Consent to be signed representing your shares.
20
<PAGE>
IF YOU HAVE ANY QUESTIONS REGARDING THIS JOINT PROXY AND CONSENT STATEMENT
OR THE EXECUTION OF YOUR PROXY OR CONSENT, PLEASE CONTACT:
MacKenzie Partners, Inc.
156 Fifth Avenue, PH3
New York, New York 10010
Tel.: (212) 929-5500 (Call Collect)
or Call Toll Free (800) 322-2885
21
<PAGE>
PRELIMINARY COPIES
CONSENT OF STOCKHOLDER OF INTERACTIVE FLIGHT TECHNOLOGIES, INC.
TO ACTION WITHOUT A MEETING
THIS CONSENT IS SOLICITED BY OCEAN CASTLE PARTNERS LLC
September ___, 1998
Unless otherwise indicated below, the undersigned, a stockholder on
_____________, 1998, (the "Consent Record Date") of Interactive Flight
Technologies, Inc., a Delaware corporation (the "Company"), hereby consents,
pursuant to Section 228 of the General Corporation Law of the State of Delaware,
with respect to all shares of Class A Common Stock, par value $0.01 per share
(the "Class A Common Stock") and Class B Common Stock, par value of $0.01 per
share (the "Class B Common Stock" and, together with the Class A Common Stock,
the "Common Stock"), held by the undersigned, to each of the following actions
without a meeting, without prior notice and without a vote:
OCEAN PARTNERS LLC STRONGLY RECOMMENDS THAT YOU CONSENT TO BOTH OF THE
FOLLOWING RESOLUTIONS.
1. RESOLVED THAT: the following persons are hereby removed as directors of the
Company: Michail Itkis, Thomas M. Metzler, John W. Alderfer, Ira S. Levine
and Gary E. Hirth.
[ ] CONSENT [ ] CONSENT WITHHELD[ ] ABSTAIN
INSTRUCTIONS: To Consent, Withhold Consent or Abstain from consenting to
the removal of all of the above-named directors, check the appropriate box
above. If you wish to consent to the removal of certain of the above-named
directors, but not all of them, check the "consent" box above and write the
name of each person you do not wish removed in the following space:
- --------------------------------------------------------------------------------
If no box is marked above with respect to this Proposal, the undersigned
will be deemed to consent to such Proposal, except that the undersigned
will not be deemed to consent to the removal of any incumbent director
whose name is written in the space provided above.
<PAGE>
2. RESOLVED THAT: the following persons are hereby elected as directors of the
Company, to fill the vacancies on the Board of Directors created by such
removals: Irwin L. Gross, Charles T. Condy, Stephen Schachman, M. Moshe
Porat and James W. Fox.
[ ] CONSENT [ ] CONSENT WITHHELD[ ] ABSTAIN
INSTRUCTIONS: To Consent, Withhold Consent or Abstain from consenting to the
election of all of the above-named directors, check the appropriate box above.
If you wish to consent to the election of certain of the above-named directors,
but not all of them, check the "consent" box above and write the name of each
person you do not wish elected in the following space:
- -----------------------------------------------------------------------
If no box is marked above with respect to this Proposal, the undersigned will be
deemed to consent to such Proposal, except that the undersigned will not be
deemed to consent to the election of any candidate whose name is written in the
space provided above.
PLEASE DATE, SIGN AND MAIL THE CONSENT PROMPTLY, USING THE ENCLOSED ENVELOPE.
Dated: ___________________________, 1998
-------------------------------------
(Signature)
-------------------------------------
(Title or authority, if applicable)
-------------------------------------
(Signature if held jointly)
Please sign exactly as name appears on this Consent. If shares are registered in
more than one name, the signatures of all such persons are required. A
corporation should sign in its full corporate name by a duly authorized officer,
stating his/her title. Trustees, guardians, executors and administrators should
sign in their official capacity, giving their full title as such. If a
partnership, please sign in the partnership name by authorized person. This
Consent shall vote all shares to which the signatory is entitled.
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PRELIMINARY COPIES
INTERACTIVE FLIGHT TECHNOLOGIES, INC.
SOLICITED ON BEHALF OF OCEAN CASTLE PARTNERS, LLC
IN OPPOSITION TO THE BOARD OF DIRECTORS
The undersigned hereby appoints Irwin L. Gross and Charles T. Condy (with
full power to act without the other and with power to appoint his substitute) as
the undersigned's proxies to vote all shares of Common Stock of the undersigned
in INTERACTIVE FLIGHT TECHNOLOGIES, INC., a Delaware corporation (the
"Company"), which the undersigned would be entitled to vote at the Annual
Meeting of Stockholders of the Company to be held at the Holiday Inn-Midtown,
located at 4321 Central Avenue, Phoenix, Arizona, on September 30, 1998, at
10:00 a.m., local time, and at any and all adjournments or postponements
thereof, in the manner indicated below and on the reverse side hereof.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders to be held on September 30, 1998 and the Proxy Statement of the
Company, each dated August 10, 1998, the Company's Annual Report for the fiscal
year ended October 31, 1997, and the Joint Proxy and Consent Statement of Ocean
Castle Partners, LLC dated September ___, 1998.
The undersigned hereby revokes any proxy to vote shares of Class A Common
Stock and/or Class B Common Stock of the Company heretofore given by the
undersigned.
Please complete, sign on the reverse side and return promptly in the
enclosed envelope.
THE SHARES OF CLASS A COMMON STOCK AND/OR CLASS B COMMON STOCK REPRESENTED
BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS SET FORTH BELOW
AND ON THE REVERSE SIDE HEREOF. IN THE ABSENCE OF ANY INSTRUCTIONS, SUCH SHARES
WILL BE VOTED "FOR" THE ELECTION OF ALL NOMINEES LISTED IN PROPOSAL 1 AND "FOR"
THE APPROVAL OF PROPOSALS 2 AND 5 AND "AGAINST" PROPOSALS 3 AND 4.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below (except as marked to the contrary
below)
[ ] WITHHOLD AUTHORITY to vote below:
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
- --------------------------------------------------------------------------------
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Nominees: Irwin L. Gross and Charles T. Condy, Class 3; Stephen Schachman and M.
Moshe Porat, Class 2; James W. Fox, Class 1.
2. Proposal to amend the Company's Amended and Restated Certificate of
Incorporation to divide the Board of Directors into three classes, as
described more fully in the Joint Proxy and Consent Statement accompanying
this Proxy.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to amend the Company's Amended and Restated Certificate of
Incorporation so as to effect a one-for-five reverse stock split of the
Company's outstanding shares of Class A and Class B Common Stock, as
described more fully in the Joint Proxy and Consent Statement accompanying
this Proxy.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal to amend the Company's Amended and Restated Certificate of
Incorporation to change the Company's name to "IFT Holdings, Inc."
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Proposal to approve the Board of Directors' appointment of KPMG Peat
Marwick LLP, certified public accountants, as independent auditors of the
Company for the fiscal year ending October 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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6. In their discretion such other business as may properly come before the
meeting and any and all adjournments and postponements thereof.
Dated
Signature
Signatures, if held jointly
Title (if applicable)
Please date and sign exactly as names appears on the proxy card,
and promptly return in the enclosed envelope. When signing as
guardian, executor, administrator, attorney, trustee, custodian,
or in any other similar capacity, please give full title. If a
corporation, sign in full corporate name by president or other
authorized officer, giving title, and affix corporate seal. If a
partnership, sign in partnership name by authorized person. In
the case of joint ownership, each joint owner must sign.
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<PAGE>
OCEAN CASTLE PARTNERS LLC
The Belgravia
Suite 120
1811 Chestnut Street
Philadelphia, PA 19103
September ___, 1998
Dear Interactive Flight Technologies, Inc. Stockholder:
We are writing to solicit your support to replace all of the Company's five
directors and to replace them with the nominees of Ocean Castle Partners, LLC
("Ocean Partners") because we believe that the election of our nominees will
produce improved value for all stockholders. Ocean Partners is a newly formed
Delaware limited liability company that, through its affiliates, beneficially
owns 52,000 shares of the Company's Class A Common Stock and 2,231,111 shares of
the Company's Class B Common Stock, which together represent approximately 33.8%
of the Company's voting power. Principals of Ocean Partners and the Ocean
Nominees have served on numerous boards of directors of publicly held companies.
We believe that the current board has failed to translate what was once a
vision for the future into profits for stockholders in the market.
The market price of the Company's Class A Common Stock through the date on
which we announced that we might seek control (August 25, 1998) has languished
at levels of around $0.781 a share, down 85.8% from the market on the day of the
Company's initial public offering and down 95.2% from the trading high in May of
1996. In our opinion, the stock continues to be significantly undervalued by the
market.
We believe that the new Board could adopt a program to enhance shareholder
value without undermining the Company's financial or operating health by
pursuing an aggressive approach to turning the Company around, including looking
for new strategic partners.
We are hopeful that once you have had an opportunity to consider our
proposal, you will execute the enclosed written consent and proxy and mail them
promptly in the enclosed envelope to: MacKenzie Partners, Inc., 156 Fifth
Avenue, PH3, New York, New York 10010.
If you require any further information or have any questions, please call
us directly at (215) 972-8191 or call MacKenzie Partners, Inc. Toll Free at
(800) 322-2885.
We appreciate your prompt consideration of this important matter.
Very truly yours,
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