SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
[X ] Preliminary Information Statement
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[ ] Definitive Information Statement
DIVOT GOLF CORPORATION
(Name of small business issuer as specified in its charter)
Delaware 56-1781650
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
927 Lincoln Road, Suite 200 Miami Beach, FL 33139
(Address of principal executive offices)
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(305) 538-2727
(Issuer's telephone number)
----------------
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<PAGE>
INFORMATION STATEMENT OF DIVOT GOLF CORPORATION
927 Lincoln Road, Suite 200, Miami Beach, FL 33139
I. NOTICE OF ACTIONS TAKEN BY WRITTEN CONSENT OF SHAREHOLDERS
This Information Statement is being furnished on behalf of the board of
directors of Divot Golf Corporation, a Delaware corporation with principal
offices at 927 Lincoln Road, Suite 200, Miami Beach, FL 33139 (the "Company").
The Company's telephone number is (305) 538-2727.
This Information Statement is being provided to inform all
nonconsenting shareholders of the corporate actions that were approved by the
holders of a majority of the Company's capital stock. On March 1, 2000, holders
of 50.16% of the Company's 29,770,309 then-outstanding shares of common stock
(14,933,336 shares), par value $0.001 ("Common Stock"), gave written consent to
several corporate actions. Pursuant to Section 228 of the Delaware General
Corporation Law. This written consent was obtained in lieu of a shareholders
meeting.
The actions taken by means of the written consent consisted of the
following: (a) The shareholders authorized the Company to amend its Articles of
Incorporation by changing the Company's name to "OrbitTravel.com Corporation";
(b) The shareholders approved the appointment of Ernst & Young L.L.P., and BDO
Siedman LLC Certified Public Accountants, as the auditors for the ensuing year;
(c) The shareholders approved, adopted and ratified the settlement agreements
set forth and described in the Company's 1999 annual report on Form 10-KSB; and
(d) The shareholders approved, adopted and ratified the Executive Employment
Agreements executed between the Company and Joseph R. Cellura, David A.
Noosinow, and Douglas R. Dollinger.
For more information on each of the actions approved by the
shareholders, see "Actions Taken Pursuant to the Written Consent" below. These
actions were approved by holders of a majority of the Common Stock outstanding
on March 1, 2000 and their written consent shall be effective once proper notice
of these actions has been delivered to all nonconsenting shareholders.
The Company is sending this Information Statement to all shareholders
of record as of March 1, 2000 ("Record Shareholders") and we will begin mailing
these materials on April 3, 2000. The effective date for these corporate actions
will be April 20, 2000.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US
A PROXY.
II. ACTIONS TAKEN PURSUANT TO THE WRITTEN CONSENT
A. Approval of Change of Name. On March 1, 2000, a majority of the
Company's shareholders consented to an amendment to the Company's
Articles of Incorporation changing the Company's name to
OrbitTravel.com Corporation. Of the 29,770,309 shares issued and
outstanding on that date, shareholders owning 14,933,336 shares, or
50.16% of the outstanding Common Stock, voted to approve this name
change. On March 21, 2000, the Company filed an Amendment to its
Certificate of Incorporation which changed the name of the Company to
"OrbitTravel.com Corporation." On the same date, the company filed an
Amendment to the Certificate of Incorporation of its wholly-owned
subsidiary, "OrbitTravel.com, Inc.", which changed its name to
"OrbitMedia.com, Inc.". The Company's name change will be effective
April 20, 2000. FOLLOWING THE EFFECTIVE DATE OF THE NAME CHANGE, THE
COMPANY WILL NO LONGER REFER TO ITSELF AS "DIVOT GOLF CORPORATION."
B. Approval of Auditors. By unanimous resolution effective March 1, 2000,
the Company's shareholders approved the appointment of Ernst & Young
L.L.P., and BDO Siedman LLC Certified Public Accountants, as the
auditors for the ensuing year. Of the 29,770,309 shares issued and
outstanding on that date, shareholders owning 14,933,336 shares, or
50.16% of the outstanding Common Stock, voted to approve this
appointment. This appointment will be effective April 20, 2000.
<PAGE>
C. Approval of Settlement Agreements: By unanimous resolution effective
March 1, 2000, the Company's shareholders approved, adopted, and
ratified the settlement agreements set forth and described in the
Company's 1999 annual report on Form 10-KSB. Of the 29,770,309 shares
issued and outstanding on that date, shareholders owning 14,933,336
shares, or 50.16% of the outstanding Common Stock, voted to approve
these settlement agreements. This approval will be effective April 20,
2000. Copies of the approved settlement agreements are appended to the
Company's Form 10-KSB, and are described in the Form 10-KSB as follows:
On October 22, 1998, Robert Hochstein filed a complaint in federal
court against us, Mr. Cellura and other entities controlled by Mr.
Cellura alleging that we violated various federal and state securities
laws. On February 16, 2000, we and Mr. Hochstein executed a settlement
pursuant to which we agreed to pay $150,000 and to issue 850,000 shares
of our common stock (of which we had already issued 400,000 shares) in
settlement of this dispute. We issued 450,000 shares to Mr. Hochstein
on February 25, 2000. We paid him $100,000 on February 17, 2000 and
have agreed to pay the additional $50,000 by June 16, 2000. If we fail
to pay the $50,000 when due or the remaining 450,000 shares of our
common stock are not freely tradeable by the terms of the settlement
agreement, we have agreed that a judgment for $575,000 may be entered
into against us, Mr. Cellura and other entities controlled by Mr.
Cellura. If the price of our common stock falls below 30 cents per
share for two trading days before March 18, 2000, we have agreed to
repurchase up to 400,000 shares of our common stock which Mr. Hochstein
has not liquidated prior to that date for 30 cents per share. Prior to
March 18, 2000, the common stock traded at a price less than $0.30 per
share for two trading days.
In January and May of 1999, a group of our former stockholders and
employees and stockholders and employees of various companies that we
acquired in April 1998, which formerly were controlled by Mr. Cellura,
our chief executive officer, filed three lawsuits in the United States
District Court for the Southern District of New York against us, these
various acquired corporations, Mr. Cellura and several of our other
executive officers and stockholders. The complaints alleged, among
other things, that (1) we had failed to issue an aggregate of 15.0
million shares of our common stock (such number of shares is prior to
the effect of a 15-for-1 reverse stock split effected with regard to
our common stock on June 2, 1998), (2) we and our officers committed
fraud in the issuance of securities, and (3) various breaches of
contract. The parties to the lawsuit entered into a settlement
agreement as of June 29, 1999 pursuant to which the plaintiffs agreed
to release the defendants from all of the claims in the lawsuits in
exchange for: (1) a note payable in the amount of $225,000; (2) the
issuance of 7.65 million shares of our common stock; and (3) the
assignment by Mr. Cellura of all of his rights, title or interest to
the profits generated from a few parcels of land in the World Golf
Village. Mr. Cellura assigned these rights to the plaintiffs on June
24, 1999. In August 1999, we instructed our transfer agent to issue
these shares, which were ultimately issued on February 29, 2000. As of
March 13, 2000, we have not repaid any amounts due under the $225,000
note payable. This note payable currently matures on March 31, 2000. We
cannot assure you that we will have sufficient funds available to repay
the note payable upon maturity or that we would be able to extend the
maturity date of the note payable. If we are not able to repay the note
payable according to its terms, we cannot assure you that the
plaintiffs will not seek court action to enforce the terms of the
settlement agreement. We would incur substantial expenses if we must
defend any additional actions in connection with these lawsuits.
In June 1999, Joseph R. Cellura, our chief executive officer,
threatened to file a lawsuit against us alleging, among other things,
that: (1) Mr. Cellura suffered substantial monetary loss in the defense
of the lawsuits we refer to in the previous paragraph; (2) Mr. Cellura
suffered real and substantial damage to his personal character as a
result of the filing of these lawsuits; (3) we failed to issue to Mr.
Cellura and other stockholders in various companies controlled by him
an aggregate of 20.0 million shares of our common stock and 5.0 million
options to purchase shares of our common stock (such number of shares
is prior to the effect of a 15-for-1 reverse stock split effected with
regard to our common stock on June 2, 1998); and (4) we failed to
indemnify Mr. Cellura as required by our indemnity agreement with him
in connection with these lawsuits. We and Mr. Cellura agreed to enter
into a settlement agreement, effective as of June 29, 1999, pursuant to
which Mr. Cellura agreed to release us from these claims in exchange
for: (1) a note payable in the amount of $250,000; and (2) the issuance
of approximately 27.34 million shares of our common stock. As of
February 16, 2000, we have repaid $64,000 due under the $250,000 note
payable. This note payable currently matures on April 30, 2000. We
<PAGE>
cannot assure you that we will have sufficient funds available to repay
the remaining amounts outstanding under the note payable upon maturity
or that we would be able to extend the maturity date of the note
payable. If we are not able to repay the note payable according to its
terms, we cannot assure you that Mr. Cellura will not seek court action
to enforce the terms of the settlement agreement. We would incur
substantial expenses if we must defend any such court action.
Kirk Scoggins, a holder of our convertible preferred stock, paid
$97,915 on our behalf during 1998 to satisfy some of our payroll
obligations to employees. In full satisfaction of the amounts we owe to
Mr. Scoggins and other litigation threatened by Mr. Scoggins, we
entered into a settlement agreement with Mr. Scoggins as of January 31,
2000 pursuant to which we have agreed to issue to Mr. Scoggins
approximately 4.5 million shares of our common stock and deliver to Mr.
Scoggins specific items of personal property owned by us and by Mr.
Cellura.
Clifford F. Bagnall, one of our former directors and a current
executive officer, had threatened to file a lawsuit against us alleging
that we owe Mr. Bagnall amounts due under his employment contract in
force while he was an executive officer and that (1) Mr. Bagnall
suffered substantial monetary loss in the defense of the May 1999
lawsuits by the former stockholders of various companies formerly
controlled by Mr. Cellura; (2) Mr. Bagnall suffered real and
substantial damage to his personal character as a result of the filing
of the lawsuits; and (3) we failed to indemnify Mr. Bagnall as required
by our indemnity agreement with him in connection with these lawsuits.
We and Mr. Bagnall agreed to enter into a settlement agreement,
effective as of January 31, 2000, pursuant to which Mr. Bagnall agreed
to release us from this claim in exchange for: (1) a note payable in
the amount of $100,000; and (2) the issuance of 5.3 million shares of
our common stock. As of March 13, 2000, we have not repaid any amounts
due under the $100,000 note payable. This note payable currently
matures on May 15, 2000. We cannot assure you that we will have
sufficient funds available to repay the note payable upon maturity or
that we would be able to extend the maturity date of the note payable.
If we are not able to repay the note payable according to its terms, we
cannot assure you that Mr. Bagnall will not seek court action to
enforce the terms of the settlement agreement. We would incur
substantial expenses if we must defend any such court action.
Kenneth Craig, one of our former directors and executive officers, had
threatened to file a lawsuit against us alleging that we owe Mr. Craig
amounts due under his employment contract in force while he was an
executive officer. We and Mr. Craig agreed to enter into a separation
agreement, effective as of September 1, 1999, pursuant to which Mr.
Craig agreed to release us from this claim in exchange for: (1) a note
payable in the amount of $75,000; and (2) the issuance of 3.5 million
shares of our common stock. As of March 13, 2000, we have not repaid
any amounts due under the $75,000 note payable. This note payable
currently matures on June 30, 2000. We cannot assure you that we will
have sufficient funds available to repay the note payable upon maturity
or that we would be able to extend the maturity date of the note
payable. If we are not able to repay the note payable according to its
terms, we cannot assure you that Mr. Craig will not seek court action
to enforce the terms of the settlement agreement. We would incur
substantial expenses if we must defend any such court action.
D. Approval of Employment Agreements. By unanimous resolution
effective March 1, 2000, the Company's shareholders approved, adopted,
and ratified the Executive Employment Agreements executed between the
Company and Joseph R. Cellura, David A. Noosinow, and Douglas R.
Dollinger. Of the 29,770,309 shares issued and outstanding on that
date, shareholders owning 14,933,336 shares, or 50.16% of the
outstanding Common Stock, voted to approve these Employment
Agreements. This approval will be effective April 20, 2000. Mr.
Dollinger, a shareholder as of the record date, abstained from
consenting to the approval of his employment agreement. Copies of the
approved Employment Agreements are appended to the Company's Form
10-KSB, and the material terms of those agreements are described in
the Form 10-KSB as follows:
We have entered into employment agreements with our executive
management, including a seven-year employment agreement with Mr.
Cellura that was effective as of June 24, 1999. Under our agreement
with Mr. Cellura, we have agreed to pay him an annual base salary of at
least $250,000. We have also agreed to reimburse Mr. Cellura
approximately $9,000 per month to enable Mr. Cellura to maintain an
office and residence in New York City. In addition to these amounts, we
have agreed to pay Mr. Cellura an annual performance/incentive bonus on
the following terms:
<PAGE>
Our Fiscal Year Revenue Mr. Cellura's Bonus
$0 to $2.0 million ................................. 5% of base salary
$2.0 million to $5.0 million .......................15% of base salary
$5.0 million to $10.0 million ..................... 30% of base salary
$10.0 million or greater .......................... 50% of base salary
In addition to these revenue-based bonuses, we have agreed to pay Mr.
Cellura, Mr. Noosinow and Mr. Dollinger an aggregate bonus, to share
ratably with each other, equal to two percent of the gross proceeds
that we receive in connection with public and private equity and debt
offerings. We have also agreed to pay Mr. Cellura, Mr. Noosinow and
Mr. Dollinger an aggregate bonus, to share ratably with each other in
the event a third party acquires us, equal to five percent of the
purchase price.
The employment agreement with Mr. Cellura also provides for the
issuance of 5.0 million options to purchase shares of our common stock
upon our adoption of a new stock option plan, all of which will be
immediately exercisable. Mr. Cellura's employment agreement provides
anti-dilution protection to Mr. Cellura such that in the event we ever
issue any additional shares at a price less than the exercise price
then in effect for the options granted to Mr. Cellura, the exercise
price of his options will be proportionately reduced. In addition to
requiring us to record compensation expense each time the exercise
price of his options is reduced, this provision could have the effect
of discouraging us from undertaking various financing transactions in
the future that may otherwise be in your best interest.
If we terminate Mr. Cellura's employment agreement without cause at any
time during the term of his seven-year employment agreement, we are
required to fulfill the following severance obligations:
(1) we must continue to reimburse Mr. Cellura after termination of his
employment for approximately $9,000 per month to enable
Mr. Cellura to maintain an office and residence in New York City for
the balance of the term of the agreement;
(2) in the event Mr. Cellura continues after termination of his
employment to hold options, warrants or other securities
convertible into our common stock, the exercise prices of such
securities will be proportionately reduced if we issue common
stock at a price lower than the exercise price then in effect for
his convertible securities;
(3) we must pay Mr. Cellura a lump sum equal to the sum of the present
value of 100% of his base salary for the balance of the term of the
employment agreement;
(4) we must pay Mr. Cellura an additional lump sum equal to $1.25 million;
(5) we must execute a UCC-1 financing statement on behalf of Mr. Cellura
enabling him to record a lien against our assets to secure payment of
the $1.25 million severance payment;
In addition, regardless of whether or not we have previously terminated
Mr. Cellura's employment, if upon expiration of Mr. Cellura's
seven-year employment term, we elect not to offer Mr. Cellura an
additional five-year employment contract, we must pay him an additional
lump sum of $900,000.
We may only avoid these severance obligations if we terminate Mr.
Cellura's employment for cause. In order for us to terminate Mr.
Cellura's employment for cause, we must follow the procedures set forth
in his employment agreement. We would be required to give Mr. Cellura
90 days' prior written notice of his termination for cause. Mr. Cellura
would have 90 additional days to elect whether or not to object to his
termination. If Mr. Cellura objects, our board would be required to
convene a special meeting within 30 days, at which Mr. Cellura would
have the right to attend, to review his objection and determine whether
or not sufficient evidence exists to terminate Mr. Cellura's employment
for cause. Mr. Cellura may again object to our board's determination by
filing a request for arbitration of this matter within 30 days of the
board's determination. The arbitration would be required to take place
within 60 days of notice of the request. If Mr. Cellura objects to
termination of his employment for cause, Mr. Cellura would remain in
his position as our chief executive officer, and continue to receive
<PAGE>
amounts due to him under the employment agreement, until the matter has
been finally determined. This process could take up to 10 months. Even
if we are successful in terminating Mr. Cellura's employment for cause,
if upon expiration of Mr. Cellura's seven-year employment term, we
elect not to offer Mr. Cellura an additional five-year employment
contract, we must pay him an additional lump sum of $900,000.
In addition to our employment agreement with Mr. Cellura, we have
entered into employment agreements with each of our other executive
officers. We have filed each of these agreements as an exhibit to this
Annual Report on Form 10-KSB. Our agreements with Messrs. Noosinow and
Dollinger are substantially similar to our agreement with Mr. Cellura
except as follows: (1) Mr. Noosinow's base salary is at least $225,000
and his severance payment upon termination without cause would be
$900,000; and (2) Mr. Dollinger's base salary is at least $180,000 and
his severance payment upon termination without cause would be $900,000.
III. PRINCIPAL SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 1, 2000, the number and percentage
of shares of the Company's common stock owned beneficially, by class and on a
combined basis, by (i) each current director, (ii) each executive officer, (iii)
all executive officers and directors as a group, and (iv) each person who is
known by us to own beneficially more than 5% of our common stock. Except as
otherwise indicated, the beneficial owners listed in the table have sole voting
and investment powers with respect to the shares.
<TABLE>
<CAPTION>
Percentage of
Shareholder Shares Owned Beneficial Ownership
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<S> <C> <C>
SIRHC Holdings 5,133,333 17.24%
Kirk Scoggins 2,200,000 7.39%
Leon Leavitt 2,000,000 6.72%
Douglas R. Dollinger1 2,500,000 8.40%
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Totals 14,933,336 39.75%
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</TABLE>
1. Mr. Dollinger, General Counsel and Director of the company and a
shareholder as of the record date, abstained from consenting to the
approval of his employment agreement. Therefore, a total of 12,433,336
shares voted to approve Mr. Dollinger's employment agreement, an amount
which falls below the majority. We expect to ask our shareholders to
approve Mr. Dollinger's employment agreement at the next annual meeting of
shareholders.
