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PLAYORENA INC.
150 VANDERBILT MOTOR PARKWAY, SUITE 311
HAUPPAUGE, NEW YORK 11788
INFORMATION STATEMENT PURSUANT TO SECTION 14(F) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND SEC RULE 14F-1
NOTICE OF CHANGE IN THE
MAJORITY OF THE BOARD OF DIRECTORS
SEPTEMBER 7, 1999
This Information Statement is being furnished to all holders of record at
the close of business on August 17, 1999 of the common stock, par value $.001
per share ("Common Stock") of Playorena Inc., a New York corporation
("Playorena" or the "Company") in accordance with the requirements of Section
14(f) of the Securities Exchange Act of 1934 (the "Exchange Act") and Securities
and Exchange Commission ("SEC") Rule 14f-1.
NO VOTE OR OTHER ACTION BY THE COMPANY'S SHAREHOLDERS IS REQUIRED IN
RESPONSE TO THIS INFORMATION STATEMENT. PROXIES ARE NOT BEING SOLICITED.
INTRODUCTION
The Company anticipates that on or about September 17, 1999, the
transactions contemplated by the Merger Agreement discussed below will be
completed and the Board of Directors of the Company (the "Board") will be
reconstituted and fixed at three directors. Effective as of the closing of the
transactions pursuant to the Merger Agreement, two of the current members of the
Board of Directors of the Company, Robert Rubin and Alfred Romano, will resign
as directors, and the remaining director, Lawrence Kaplan, will elect Michael
Brent and Harold Kestenbaum to fill the vacancies created thereby. Immediately
thereafter, Lawrence Kaplan will resign as a director of the Company and Michael
Brent and Harold Kestenbaum intend to elect Derek Brent to fill the vacancy
created thereby. The new directors will not begin their term until consummation
of the Merger after the expiration of the ten day period beginning on the later
of the date of the filing of this Information Statement with the SEC pursuant to
Rule 14f-1 or the date of mailing of this Information Statement to the Company's
shareholders.
Because of the change in the composition of the Board and the Merger
described below, there will be a change in control of the Company on the date
the new directors referred to above take office.
As of August 17, 1999, the Company had 9,988,018 shares of Common Stock
issued and outstanding, the Company's only class of voting securities that would
be entitled to vote for directors at a shareholders meeting if one were to be
held, each share being entitled to one vote.
Please read this Information Statement carefully. It describes the terms of
the Merger Agreement and contains certain biographical and other information
concerning the executive officers and directors after the Merger. Additional
information about the Merger and the business of the Company is contained in the
Company's current annual and quarterly reports on file with the SEC, as well as
a definitive Proxy Statement filed with the SEC on August 20, 1999 (the "Proxy
Statement"). All Company filings, and exhibits thereto, may be inspected without
charge at the public reference section of the SEC at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549.
THE MERGER AGREEMENT
The Company intends to acquire the business of Global Travel Network, LLC,
a limited liability company organized under the laws of the state of Delaware
("Global"). Global is a nationwide travel agency which offers franchises
throughout the world. A wholly-owned subsidiary of the Company will merge with
and into Global in exchange for shares of Common Stock of the Company, with
Global as the
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surviving corporation (the "Merger"). Following the Merger, Global will be a
wholly-owned subsidiary of the Company.
The Merger will be completed pursuant to the Agreement and Plan of Merger,
dated as of July 27, 1999, by and among the Company, a subsidiary of the
Company, Global and the members of Global ("Merger Agreement"), pursuant to
which the Company's wholly-owned subsidiary formed for such purposes will merge
into Global in a tax free reorganization within the meaning of Sections 351
and/or 368 of the Internal Revenue Code of 1986, as amended. Members of Global
will exchange their membership interests in Global for an aggregate of 4,725,000
shares of Common Stock of the Company, representing approximately 94.5% of the
outstanding common stock of the Company.
The consummation of the Merger is contingent upon each share of Common
Stock issued and outstanding, without any action on the part of any holder
thereof, being converted into .027533 of a share of Common Stock (the "Reverse
Stock Split"). Shareholders holding shares of Common Stock in an amount not
divisible by .027533 will receive, in lieu thereof, one full additional share.
The Reverse Stock Split would apply to all shares of the Company's Common Stock
outstanding on the date immediately prior to the closing of the Merger, but will
not be effective until the consummation of the Merger. Giving effect to the
consummation of the Merger, the holders of Common Stock will collectively own
approximately 5.5% of the outstanding voting securities of the Company on a
diluted basis. The principal purpose of the Reverse Stock Split is to fulfill
the provisions and requirements of the Merger Agreement, which provides that the
Company's currently outstanding Common Stock be reduced to approximately 275,000
shares of Common Stock.
Assuming the Reverse Stock Split is approved by the shareholders,
shareholders will be required to exchange their stock certificates for new
certificates representing the shares of Common Stock giving effect to the
Reverse Stock Split. The new stock certificates will also reflect a prior
one-for-twenty reverse stock split approved by the shareholders at a special
meeting held on February 7, 1997, and effected as of July 31, 1998. Shareholders
will be furnished with the necessary materials and instructions for the
surrender and exchange of stock certificates at the appropriate time by the
Company's transfer agent. Shareholders will not be required to pay a transfer or
other fee in connection with the exchange of certificates. SHAREHOLDERS SHOULD
NOT SUBMIT ANY CERTIFICATES UNTIL REQUESTED TO DO SO.
See "Certain Relationships and Related Transactions" below for certain
obligations being undertaken by certain officers, members and affiliates of the
Company in connection with the Merger.
CHANGE IN CONTROL OF THE COMPANY
Giving effect to the Merger and the Reverse Stock Split, the Company's
current shareholders will own, on a fully diluted basis, approximately 5.5%, and
the shareholders of Global shall own 94.5%, of the outstanding voting securities
of the Company. The current shareholders of the Company shall own an aggregate
of approximately 275,000 shares of Common Stock and the Global members shall own
an aggregate of approximately 4,725,000 shares of Common Stock.
EXECUTIVE COMPENSATION
The summary compensation table is omitted because no compensation for
services in all capacities to the Company was awarded, earned by or paid to the
President of the Company for the fiscal years ended November 30, 1998, 1997 or
1996, and no other executive officer of the Company received salary and bonus in
excess of $100,000 during the fiscal years ended November 30, 1998, 1997 or
1996.
No director of the Company received any remuneration from the Company as
such. Directors do not currently receive fees or other remuneration from the
Company.
PRINCIPAL SHAREHOLDERS AND HOLDINGS OF MANAGEMENT
The following table sets forth certain information as of August 17, 1999,
regarding (i) each person known by the Company to be the beneficial owner of
more than 5% of the outstanding shares of Common
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Stock, (ii) each current director, nominee and executive officer of the Company,
(iii) all current officers and directors as a group, and (iv) all proposed
directors and officers of the Company after giving effect to the Merger and the
Reverse Stock Split.
<TABLE>
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AMOUNT AND NATURE
NAME & ADDRESS OF OF BENEFICIAL PERCENTAGE
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP OF CLASS
- --------------- -------------------------------- ----------------- ----------
<S> <C> <C> <C>
Common Stock Lawrence Kaplan (1) 2,426,459 24.29%
150 Vanderbilt Motor Parkway
Suite 311
Hauppauge, New York 11788
Common Stock Andrew Kaplan (2) 2,389,583 23.92%
150 Vanderbilt Motor Parkway
Suite 311
Hauppauge, New York 11788
Common Stock Robert Rubin (1) 3,241,355 32.45%
25 Highland Boulevard
Dix Hills, New York 11746
Common Stock Alfred Romano (1) 138,668 1.38%
4 Wagon Wheel Lane
Dix Hills, New York 11746
Common Stock Michael Y. Brent (3) 3,402,000 68.04%
1530 Palisade Avenue
Fort Lee, New Jersey 07024
Common Stock Harold Kestenbaum (3) -- --
585 Stewart Avenue
Garden City, New York 11530
Common Stock Derek Brent (3) -- --
1530 Palisade Avenue
Fort Lee, New Jersey 07024
Common Stock Liberty Travel, Inc. (4) 472,500 9.45%
69 Spring Street
Ramsey, New Jersey 07446
Common Stock Townmoor Investments (4) 340,200 6.8%
c/o Duncan Bloom Associates
5718 Tanglewood Drive
Bethesda, Maryland 20817
All Directors and Executive Officers as group 5,806,482 58.13%
Prior to Merger and Reverse Stock Split (3 persons)
All Directors and Executive Officers as group 3,402,000 68.04%
After Merger and Reverse Stock Split (3 persons)
</TABLE>
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(1) Current directors and officers prior to the Merger and Reverse Stock Split
and without giving effect to the Merger or the Reverse Stock Split
(2) 5% Beneficial Owner Prior to the Merger and Reverse Stock Split and without
giving effect to the Merger or the Reverse Stock Split
(3) Directors, Officers and 5% shareholders following the Merger and Reverse
Stock Split and after giving effect to the Merger and the Reverse Stock
Split
(4) 5% shareholders following the Merger and Reverse Stock Split and after
giving effect to the Merger and the Reverse Stock Split
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Giving effect to the consummation of the Merger and the Reverse Stock
Split, the current shareholders of the Company will collectively own
approximately 5.5%, and the shareholders of Global shall own 94.5%, of the
outstanding voting securities of the Company, on a diluted basis. Concurrent
with the closing of the Merger, the incumbent officers and directors of the
Company will be replaced by the officers and directors of Global.
DIRECTORS AND EXECUTIVE OFFICERS
The Company anticipates that on or about September 17, 1999, the
transactions contemplated by the Merger Agreement discussed below will be
completed and the Board of Directors of the Company (the "Board") will be
reconstituted and fixed at three directors. Effective as of the closing of the
transactions pursuant to the Merger Agreement, two of the current members of the
Board of Directors of the Company, Robert Rubin and Alfred Romano, will resign
as directors, and the remaining director, Lawrence Kaplan, will elect Michael
Brent and Harold Kestenbaum to fill the vacancies created thereby. Immediately
thereafter, Lawrence Kaplan will resign as a director of the Company and Michael
Brent and Harold Kestenbaum intend to elect Derek Brent to fill the vacancy
created thereby. The following table sets forth information regarding the
Company's current executive officers and directors and the proposed executive
officers and directors of the Company after the Merger. If any proposed director
listed in the table below should become unavailable for any reason, the
directors of the Board will vote for any substitute nominee or nominees who may
be selected by Global prior to the closing of the Merger.
CURRENT EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
<S> <C> <C>
NAME AGE POSITION
- -------------------- ----------- ------------------------------------
Lawrence E. Kaplan 55 Director and President
Robert Rubin 58 Director and Chairman of the Board
Alfred Romano 60 Director and Secretary
</TABLE>
Robert M. Rubin. Mr. Rubin has served as director of the Company and as
Chairman of Board of the Company since July 1998. Mr. Rubin has also served as
the Chairman of the Board Directors of American United Global, Inc. ("AUGI")
since May 1991, and was its Chief Executive Officer from May 1991 to January 1,
1994. Between October, 1990 and January 1, 1994, Mr. Rubin served as the
Chairman of the Board and Chief Executive Officer of AUGI and its subsidiaries;
from January 1, 1994 to January 19, 1996, he served only as Chairman of the
Board of AUGI and its subsidiaries. From January 19, 1996, Mr. Rubin has served
as Chairman of the Board and President and Chief Executive Officer of AUGI. Mr.
Rubin is Chairman of the Board, Chief Executive Officer and a stockholder of ERD
Waste Technology, Inc. ("ERD"), a diversified waste management public company
specializing in the management and disposal of municipal solid waste, industrial
and commercial non-hazardous waste and hazardous waste. In September 1997, ERD
filed for protection under the provisions of Chapter 11 of the federal
bankruptcy act. Mr. Rubin is a former director and Vice Chairman, and currently
a minority stockholder, of American Complex Care, Incorporated ("ACC"), a public
company formerly engaged in providing on-site health care services, including
intradermal infusion therapies. In April 1995, ACC's operating subsidiaries made
assignments of their assets for the benefit of creditors without resort to
bankruptcy proceedings. Mr. Rubin is also the Chairman of the Board of Western
Power & Equipment Corp. ("Western"). AUGI owns approximately 56.6% of the
outstanding common stock of Western. Mr. Rubin is also a director and a minority
stockholder of Response USA, Inc., a public company engaged in the sale and
distribution of personal emergency response systems; Diplomat Corporation, a
public company engaged in the manufacture and distribution of baby products; and
Medi-Merg, Inc., a Canadian management company for hospital emergency rooms and
out-patient facilities.
Lawrence E. Kaplan. Mr. Kaplan has served as director of the Company since
August 1998. Mr. Kaplan is a registered representative officer, director and
sole stockholder of G-V Capital Corp., an NASD-registered broker/dealer. Mr.
Kaplan has served as a director of AUGI since February 1993. He is also a
director of Morlex, Inc., a blank check company which is seeking merger
opportunities. He is also
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an officer and director of Osteoimplant Technology, a manufacturer of orthopedic
devices and total joint implants.
Alfred Romano. Alfred Romano has been the President, director and sole
shareholder of Pope Liquors, Inc. since 1964. Pope Liquors operates a store
engaged in the retail sale of alcoholic beverages.
PROPOSED EXECUTIVE OFFICERS AND DIRECTORS AFTER THE MERGER
<TABLE>
<S> <C> <C>
NAME AGE POSITION
- ------------------- ----------- -------------------------------------------------
Michael Y. Brent 57 Director, President and Chief Executive Officer
Harold Kestenbaum 49 Director
Derek Brent 28 Director and Vice President
</TABLE>
Michael Y. Brent. Since November 1, 1994, Mr. Brent has served as President
and Chief Executive of Global. From July, 1989 through November, 1994 Mr. Brent
was the Chief Operating Officer of Global.
Harold Kestenbaum. Mr. Kestenbaum has served as an outside director of
Global since March, 1994. Mr. Kestenbaum has been a practicing attorney in the
State of New York since 1976.
Derek Brent. Since 1997, Mr. Brent has served as a Vice President and
Director of Global. From 1994 through 1997, Mr. Brent served as assistant
controller of Global. Mr. Brent is a licensed certified public accountant in the
State of New Jersey.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act, as amended, requires the Company's
officers, directors and persons who beneficially own more than 10% of the
Company's Common Stock to file reports of ownership and changes in ownership
with the SEC. These reporting persons also are required to furnish the Company
with copies of all Section 16(a) forms they file. Messrs. Andrew Kaplan,
Lawrence Kaplan, Rubin and Romano did not comply with certain requirements of
Section 16(a) in connection with their respective acquisition of shares in
August, 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Lawrence Kaplan and Robert Rubin, each a principal shareholder and director
of the Company, upon consummation of the Merger and as an accommodation to the
Company, will execute and deliver an Assumption and Indemnification Agreement
pursuant to which each such individual will agree, jointly and severally for a
period of up to two years from the Closing, to indemnify and hold harmless the
Company for all claims and liabilities with respect to (i) virtually all
pre-existing payables and liabilities of the Company prior to the consummation
of the Merger (which liabilities they will assume), (ii) any breach of a
representation or warranty of the Company (respecting matters no more than five
years old) in any document respecting the Merger and (ii) any default by the
Company with respect to its obligations pursuant to the Merger prior to the
consummation of the Merger.
On August 1, 1998, after giving effect to a previously approved one-for-20
reverse stock split which was effective July 31, 1998, Robert Rubin, Lawrence
Kaplan, Alfred Romano (members of the Company's Board of Directors) and Andrew
Kaplan, a principal shareholder of the Company, purchased 3,049,944, 2,330,303,
138,113 and 2,335,417, shares of Common Stock of the Company, respectively, for
a purchase price equal to the amounts owed for the cancellation of all
indebtedness (and interest thereon) and for all previous services rendered. On
July 13, 1999, Robert Rubin and Lawrence Kaplan purchased 55,245 and 41,434
shares of Common Stock of the Company, respectively, in exchange for certain
cash contributions made by each of them to the Company.
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On July 27, 1999, Lawrence Kaplan and Robert Rubin, along with Andrew
Kaplan, a principal shareholder, signed a Voting Agreement with Global, pursuant
to which they agreed to vote all their shares of Company Common Stock in favor
of the proposals set forth in the Proxy Statement. As a result, the approval of
the proposals contained therein is essentially assured.
PLAYORENA INC.
Dated: September 7, 1999
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