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.
(Name of Registrant as Specified in its Charter)
OCEAN CASTLE PARTNERS LLC
(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:
***
<PAGE>
Preliminary Copies
CONSENT STATEMENT
OF
OCEAN CASTLE PARTNERS LLC
The Belgravia
Suite 120
1811 Chestnut Street
Philadelphia, PA 19103
August ___, 1998
This Consent Statement (the "Consent Statement") is furnished to you by
Ocean Castle Partners LLC ("Ocean Partners") in connection with its solicitation
of written consents ("Consents") from 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"), to take action in lieu of the holding of
an annual meeting of stockholders.
Specifically, Ocean Partners is asking 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, and Stephen
Schachman (collectively, the "Ocean Nominees") to fill three of the
vacancies on the Board created by the removal of the Designated
Incumbents.
The principal objective of the Consent Solicitation 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
Designated Incumbents expended over $1,363,995 of the Company's resources
enriching themselves. It is time to stop this gravy train. See "REASONS FOR THE
SOLICITATION." If elected, the Ocean Nominees will constitute all of the members
of Company's Board of Directors. However, there could be two vacancies on the
Board which would be filled at a later time by the Ocean Nominees, if elected.
Ocean Partners urges you to execute your Consent approving the proposed
corporate actions by marking, signing and dating the enclosed Consent, and by
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promptly mailing it in the enclosed envelope. The proposed corporate actions may
be taken only if the holders 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 at the close of business on ________________, 1998, which is the record
date for the solicitation (the "Record Date"), submit to Ocean Partners a
Consent to such actions. This Consent Statement and the related Consent form are
first being furnished to all holders of record of Common Stock on the Record
Date, on or about August ____, 1998.
Because a consent to an action is effective only if Consents executed by
the holders of a majority of the outstanding shares of Common Stock are
delivered to the Company, your failure to execute a Consent will have the same
effect as voting against the proposals.
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.
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."
YOUR CONSENT IS IMPORTANT. PLEASE MARK, SIGN AND DATE THE ENCLOSED CONSENT
FORM AND MAIL IT IN THE ENCLOSED ENVELOPE PROMPTLY.
On the Record Date, 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
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. Based on this information,
on the Record Date, the Ocean Group beneficially owned Common Stock representing
approximately 33.8% of the voting power of the Company. See "VOTING SECURITIES
OUTSTANDING."
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
to Ocean Partners, so that Ocean Partners will be aware of all instructions
given and can attempt to ensure that such instructions are followed.
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If you have any questions about executing your 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
REASONS FOR THE SOLICITATION
The principal objective of the 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 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 it 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.
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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.
[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
PROTECT YOUR INVESTMENT, SIGN AND RETURN
THE ENCLOSED CONSENT FORM TODAY
THE PROGRAM OF THE OCEAN GROUP
If elected, the Ocean Nominees will hold three seats on the Board, which
would constitute a majority of the Board of Directors of the Company and
constitute a quorum pursuant to the Company's Bylaws. 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.
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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.
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 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 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 - be elected to fill three of 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 Consent
Statement.
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,
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<PAGE>
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.
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.
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<PAGE>
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 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 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.
The election of the Ocean Nominees requires the approval of the holders on
the 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 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 PROPOSAL 2.
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. The vote of the holders of Common Stock entitled to cast a majority of
the votes entitled to be cast by holders of the outstanding shares of Common
Stock is necessary to approve Ocean Partners' proposals to remove the Designated
Incumbents and to elect the Ocean Nominees to the Board.
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As of August __, 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 August __, 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
NAME AND ADDRESS OF COMMON STOCK (2) COMMON STOCK OF TOTAL(3)
BENEFICIAL OWNER (1) NUMBER PERCENT NUMBER OF PERCENT VOTING
OF SHARES OF CLASS SHARES OF CLASS POWER
<S> <C> <C> <C> <C>
Ocean Castle Partners, LLC
1811 Chestnut Street
Philadelphia, PA 19103 2,231,111 59.8% 52,000 * 33.8%
Charles T. Condy -- -- -- -- --
Stephen Schachman -- -- -- -- --
</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.
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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
NAME AND ADDRESS OF COMMON STOCK(2) COMMON STOCK OF 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
NAME AND ADDRESS OF COMMON STOCK(2) COMMON STOCK OF
BENEFICIAL OWNER(1) TOTAL(3)
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.
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(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.
GENERAL INFORMATION ABOUT SOLICITATION OF CONSENTS
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 Certificate of
Incorporation and Bylaws do not provide for cumulative voting.
Ocean Partners believes that the Company's 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.
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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 Certificate of Incorporation does not prohibit the use
of written consents.
The 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 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 this solicitation. Only the holders of record of Common Stock on
the 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 Record
Date of a majority of the shares of Common Stock then outstanding and those
Consents are presented 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 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 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 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
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Nominees have consented to all of the actions for which Consents are being
solicited with respect to all such shares. 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 Record Date are required to adopt the
proposals to which this solicitation relates.
Solicitations of Consents
Solicitations of Consents will be made by Ocean Partners and its employees.
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
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.
Revocation of Consents
An executed Consent form 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 form 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
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determine if and when the actions described herein have received the approval of
a majority of the shares of Common Stock outstanding on the Record Date.
Special Instructions
If you wish to consent to one or more of the actions proposed in this
Consent Statement and were a record holder of Common Stock on the Record Date,
please mark the appropriate "CONSENT" box or boxes on the accompanying consent
form 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 this Consent
Statement and were a record holder of Common Stock on the Record Date, you may
mark the appropriate "Consent Withheld" or "Abstains" box on the accompanying
Consent form, and sign, date and mail the form in the enclosed envelope. In
addition, by not returning a Consent form, a holder of Common Stock will be
deemed not to have consented to any of the proposals.
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 "ABSTAINS" 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 incumbent director or the election of any Ocean Nominee
whose name is written in the appropriate space on the consent form.
If the holders on the 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 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.
IMPORTANT
OCEAN PARTNERS RECOMMENDS THAT YOU CONSENT TO THE REMOVAL OF THE DESIGNATED
INCUMBENTS NAMED HEREIN AND THE ELECTION OF THE OCEAN NOMINEES.
YOUR CONSENT IS IMPORTANT. PLEASE MARK, SIGN AND DATE THE ENCLOSED CONSENT
FORM AND MAIL IT IN THE ENCLOSED ENVELOPE PROMPTLY.
FAILURE TO RETURN YOUR CONSENT HAS THE SAME EFFECT AS A VOTE TO RETAIN THE
CURRENT DIRECTORS.
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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.
IF YOU HAVE ANY QUESTIONS REGARDING THIS CONSENT STATEMENT OR THE EXECUTION
OF YOUR 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
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PRELIMINARY COPIES
CONSENT OF STOCKHOLDER OF INTERACTIVE FLIGHT TECHNOLOGIES, INC.
TO ACTION WITHOUT A MEETING
THIS CONSENT IS SOLICITED BY OCEAN CASTLE PARTNERS LLC.
August ___, 1998
Unless otherwise indicated below, the undersigned, a stockholder on
_____________, 1998, (the "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 INC. 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 and Stephen Schachman.
[ ] 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.
2
<PAGE>
OCEAN CASTLE PARTNERS LLC.
The Belgravia
Suite 120
1811 Chestnut Street
Philadelphia, PA 19103
August ___, 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 ___, 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 mail it 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,
