THE NETWORK CONNECTION, INC.
NOTICE OF CHANGE IN MAJORITY OF DIRECTORS
WITHOUT SHAREHOLDER VOTE ON MAY 15, 1999
To the Shareholders of
THE NETWORK CONNECTION, INC.:
NOTICE IS HEREBY GIVEN that pursuant to the terms of that
certain Asset Purchase and Sale Agreement, dated April 30, 1999
(the "Agreement"), by and between The Network Connection, Inc.
(the "Company") and Interactive Flight Technologies, Inc.
("IFT"), upon consummation of the Agreement certain persons will
be designated as members of the Board of Directors of the
Company, without election by the stockholders of the Company at a
duly called meeting of Company stockholders, which designees will
constitute a majority of the members of the Company's Board of
Directors. The Agreement is intended to be consummated on
May 15, 1999 (the "Closing Date").
Upon consummation of the Agreement, the Company will issue
to IFT a combination of shares of common stock, $.001 par value
(the "Common Stock"), and shares of a newly created Series D
Convertible Preferred Stock (the "Preferred Stock") which at the
time of closing, assuming conversion of the Preferred Stock to
Common Stock, will equal 60% of the shares of Common Stock to be
outstanding on the Closing Date. In consideration for the
issuance of such shares to IFT, the Company will obtain
$5,000,000 in cash and all of IFT's assets related to its
interactive entertainment device business, along with certain
liabilities related to the assets transferred. At the present
time IFT owns no voting securities of the Company.
Following consummation of the Agreement, the Company's Board
of Directors will be constituted as follows: Irwin L. Gross,
Wilbur Riner, Sr., Morris C. Aaron and Dr. Frank E. Gomer. Only
Mr. Riner is presently a member of the Company's Board of
Directors, allowing new Board members Messrs. Gross, Aaron and
Gomer (the "New Directors") to constitute a majority of the
Company's Board of Directors. In addition, following the Closing
Date IFT will have the right to designate two additional persons
to the Board of Directors and the Company will have the right to
designate one additional person to the Board of Directors, none
of which additional designees will be employees of either the
Company or IFT.
SECURITY OWNERSHIP OF THE NEW DIRECTORS
At the close of business on April 30, 1999, there were
outstanding 5,278,737 shares of Common Stock, which constituted
all of the issued and outstanding voting securities of the
Company.
None of the New Directors owns any shares of Common Stock.
However, all of the New Directors are directors and/or members of
senior management of IFT. In addition to the shares of Common
Stock and Preferred Stock to be acquired by IFT on the Closing
Date, IFT currently also owns: (i) 1,500 shares of the Company's
Series B 8% Convertible Preferred Stock ("Series B Preferred
Stock"), all of which Series B Preferred Stock held by IFT is
convertible into a maximum of 820,000 shares of Common Stock
absent shareholder approval of an increase in that number and
(ii) 800 shares of the Company's Series C 8% Convertible
Preferred Stock ("Series C Preferred Stock"), all of which Series
C Preferred Stock held by to IFT is convertible into a maximum of
1,055,745 shares of Common Stock absent shareholder approval an
increase in that number.
Upon consummation of the Agreement, each of the New
Directors shall also become an executive officer of the Company:
Mr. Gross shall become Chairman of the Board of the Company, and
Messrs. Aaron and Gomer shall each become an Executive Vice
President of the Company. Although each of the New Directors is
expected to receive compensation from the Company in
consideration for their performance of executive officer duties,
the terms of that compensation have as yet not been determined.
BACKGROUND INFORMATION CONCERNING NEW DIRECTORS
The following table sets forth information with respect to
the New Directors as of April 30, 1999:
IRWIN L. GROSS, 55, is the Chief Executive Officer and
Chairman of the Board of Directors of IFT. He is a founder of
ICC Technologies, Inc., a publicly held company listed on the
NASDAQ National Market, which is currently engaged in internet
related technology, and was the chairman and a director since
ICC'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. Mr. Gross
currently is a shareholder in ICC. In addition, Mr. Gross had
served as the chief executive office of Engelhard/ICC, a joint
venture between ICC and Engelhard 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%) parent 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.
MORRIS C. AARON, 34, is a Vice President and Chief Financial
Officer of IFT. Mr. Aaron joined IFT in September 1998. Before
joining IFT, from January 1996 to September 1998, he was Chief
Financial Officer and Treasurer of Employee Solutions, Inc., a
professional employer organization. Prior to his joining Employee
Solutions, Inc., Mr. Aaron was a Senior Manager with Arthur
Andersen LLC.
DR. FRANK E. GOMER, 51, , is presently the President of the
Interactive Entertainment Division of Interactive Flight
Technologies (IFT). He formerly was the Vice President of
Engineering and Operations at IFT. Prior to joining IFT in 1997,
Dr. Gomer was responsible for all electronic display systems
developed and manufactured by Honeywell Air Transport Systems
Division. From 1986 to 1997, he held a series of senior
engineering and program management positions within Honeywell.
Dr. Gomer has a Bachelor of Arts degree from Colgate University
and a Doctor of Philosophy degree from Washington University in
St. Louis.
Compensation of Directors
Directors who are employees of the Company receive no
remuneration for their service as directors of the Company.
Pursuant to the Company's 1995 Stock Option Plan for Non-Employee
Directors (the "Formula Plan"), directors who are not employees
of the Company receive for their services, on the date first
elected as a member of the Board and on each anniversary
thereafter if they continue to serve on the Board of Directors,
an automatically granted option to acquire 1,000 shares of the
Company's common stock at its fair market value on the date of
grant; such options become exercisable in two equal annual
installments if the individual continues at that time to serve as
a director, and once exercisable remain so until the fifth
anniversary of the date of grant. The Company reimburses
directors for travel and lodging expenses, if any, in connection
with attendance at Board meetings. To the extent that any of the
New Directors do not become employees of the Company, they will
be entitled to receive options under the Formula Plan.
We hope this information concerning the change of control of
the Company, and a change in the composition of the Company's
Board of Directors, is informative.
Wilbur Riner, Sr.,
President
