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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
(AMENDMENT NO.1)
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: July 23, 1998
UNITED LEISURE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 0-6106 13-2652243
(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) I.D. No.)
Incorporation)
18081 MAGNOLIA AVENUE, FOUNTAIN VALLEY, CA 92708
(Address of Principal Executive Offices) (Zip Code)
714/378-8761
(Registrant's Telephone Number,
Including Area Code)
N/A
(Former name or former address, if changed from last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 23, 1998, United Leisure Corporation (the "Company") and its
wholly-owned subsidiary, United Internet Technologies, Inc. (formerly known as
United Leisure Interactive, Inc.) ("UIT") entered into an Asset Purchase
Agreement dated as of June 30, 1998 (the "Purchase Agreement"), with Genisys
Reservations Systems, Inc., a New Jersey corporation ("Genisys"), and Netcruise
Interactive, Inc. ("Netcruise"), a wholly-owned subsidiary of Genisys, pursuant
to which UIT transferred to Netcruise all of UIT's right, title and interest in
and to (i) an exclusive, world-wide and perpetual license from UIT with respect
to travel-related applications of certain interactive technology, (ii) certain
related intellectual property, and (iii) certain tangible assets to be used in
connection with the exploitation of the licensed technology.
In consideration for the receipt thereof, Genisys issued to UIT (i)
2,000,000 shares of its Common Stock, (ii) a warrant to purchase up to 800,000
shares of Genisys Common Stock at $2.50 per share if the total pretax profits of
Netcruise ("Total Pretax Profits") for the years 1999, 2000, and 2001 equal or
exceed $5,000,000 and (iii) a warrant to purchase up to 800,000 shares of Common
Stock at $6.00 per share if Total Pretax Profits for the years 1999, 2000, and
2001 equal or exceed $10,000,000.
For a period of three years, Harry Shuster will serve as Chairman, and
Brian Shuster will serve as President, of Netcruise. In addition, both Harry
Shuster and Brian Shuster will serve on the Board of Directors of Genisys for
the same period. Harry Shuster is Chairman of the Board, President, Chief
Executive officer and a director of the Company and Brian Shuster is Executive
Vice President, Secretary and a director of the Company. Brian Shuster is the
son of Harry Shuster. Pursuant to the Purchase Agreement, Brian Shuster was
issued warrants to purchase Genisys Common Stock on the same terms as the
warrants issued to UIT, except that each of the two warrants issued to Brian
Shuster represents the right to purchase up to 200,000 shares of Genisys Common
Stock.
Netcruise also assumed UIT's lease at 1990 Westwood Boulevard, Penthouse,
Los Angeles, California.
The Company agreed not to enter into any facet of the travel industry in
competition with Genisys or Netcruise.
Subsequent to the date of the transaction described above, Genisys informed
the Company and UIT of the following. Genisys was notified by The Nasdaq Stock
Market, Inc. ("Nasdaq") that the issuance of the 2,000,000 shares of Genisys
Common Stock and the Warrants to UIT caused Genisys to be inadvertently in
violation of a certain Nasdaq Marketplace Rule (the "Nasdaq Rule"), because the
issuance of the 2,000,000 shares of Genisys Common Stock and the
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Warrants amounted to more than 20% of the issued and outstanding shares of
Genisys and the issuance thereof was not approved by Genisys' stockholders as
required by the Nasdaq Rule. Genisys has been informed that Nasdaq intends to
delist Genisys' Common Stock as a result of its noncompliance with the Nasdaq
Rule, unless Genisys takes curative action acceptable to Nasdaq. Pending the
full implementation of the proposed curative action described below, Genisys has
appealed Nasdaq's determination. A hearing on the proposed delisting is
pending.
As a result of the Nasdaq notification, UIT, Genisys and certain of
Genisys' principal stockholders have entered into an agreement dated October 28,
1998 (the "Agreement") for the purpose of restructuring their transaction, and
Genisys is in the process of calling a meeting of its stockholders to seek the
stockholder approval required by the Nasdaq Rule. Under the terms of the
Agreement, UIT is returning to Genisys (i) 1,100,000 shares of Genisys Common
Stock (retaining 900,000 shares of Genisys Common Stock (the "Retained Shares"))
and (ii) the Warrants. Genisys will promptly issue to UIT 1,100,000 shares of
Genisys Convertible Series B Preferred Stock, par value $.0001 per share (the
"Genisys Preferred Shares"), which, among other things, are automatically
convertible into 1,100,000 shares of Genisys Common Stock upon Genisys'
obtaining stockholder approval as required by the Nasdaq Rule. In addition,
upon obtaining the requisite stockholder approval, Genisys will reissue the
Warrants to UIT.
Among other things, the Genisys Preferred Shares carry a mandatory dividend
of $275,000, payable on September 30, 1999, and mandatory quarterly dividends of
$68,750, commencing with the quarter ending December 31, 1999. No dividend is
payable if the Genisys stockholders approve the issuance of the 1,100,000 shares
of Genisys Common Stock and the Warrants to UIT, and the Genisys Preferred
Shares have been converted into 1,100,000 shares of Genisys Common Stock, prior
to June 30, 1999. The Genisys Preferred Shares are non-voting, unless voting is
required by New Jersey law. The Genisys Preferred Shares also carry a mandatory
liquidation preference of $2,750,000 plus all accrued and unpaid dividends.
UIT has agreed not vote the Retained Shares and may not vote the Genisys
Preferred Shares at the Genisys stockholders' meeting. Certain principal
stockholders of Genisys have agreed to vote their shares of Genisys Common Stock
in favor of the issuance of the 1,100,000 shares of Genisys Common Stock and the
Warrants.
If, for any reason, the 1,100,000 shares of Genisys Common Stock and the
Warrants are not issued to UIT on or before June 30, 1999, then, in addition to
any and all rights and remedies available to UIT, UIT at its option, may appoint
up to four members of the Board of Directors of Genisys.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
2.1 Asset Purchase Agreement, dated as of June 30, 1998, by and among
United Leisure Corporation, a Delaware corporation; United Leisure Interactive,
Inc., a Delaware corporation; Genisys Reservations Systems, Inc., a New Jersey
corporation; and Netcruise Interactive, Inc., a New Jersey corporation
(previously filed with the Company's Current Report on Form 8-K dated July 23,
1998).
2.2. Agreement dated October 27, 1998, by and among United Internet
Technologies, Inc., Genisys Reservation Systems, Inc., Warren D. Bagatelle, Loeb
Holding Corporation, Loeb Partners Corp., HSB Capital, David W. Sass, Mark A.
Kenny, John H. Wasko, Joan E. Wasko, Lawrence E. Burk and S. Charles Tabak.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized.
UNITED LEISURE CORPORATION
Dated: November 4, 1998 By /s/ Harry Shuster
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Harry Shuster,
Chief Executive Officer
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AGREEMENT EXHIBIT 2.2
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Final 10/27/98
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1. Initial Transaction. Reference is made to that certain Asset Purchase
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Agreement dated as of June 30, 1998, pursuant to which United Internet
Technologies, Inc. (formerly known as United Leisure Interactive, Inc. and
hereafter referred to as "United") sold certain assets to Netcruise Interactive,
Inc. ("Netcruise"), in consideration of, among other things, (i) 2,000,000
shares (the "Shares") of the Common shares (the "Common Stock") of Genisys
Reservation Systems, Inc. ("Genisys"), and (ii) two warrants (the "Warrants")
each entitling the holder to purchase 800,000 shares of Common Stock.
2. Curative Action and Reason Therefor. Genisys has advised United that
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(i) the foregoing matter has caused Genisys to be in inadvertent violation of
Nasdaq Marketplace Rule 4310 (c)(25)(H) (the "Rule"), because the issuance of
the Shares and the Warrants was not approved by Genisys' shareholders as
required by the Rule; and (ii) Nasdaq has informed Genisys that it will delist
the Common Stock absent the undersigned parties taking curative action (the
"Curative Action") acceptable to Nasdaq. Accordingly, Genisys and United, by
this Agreement, have, subject to the execution of this Agreement by all
individuals and entities reflected on the signature page hereto, agreed to take
the following Curative Action:
(a) Subject to compliance by Genisys with the provisions of Section 2 (b)
below, United will return (the "Return") to Genisys (i) 1,100,000 of the Shares
for cancellation (the remaining Shares are hereinafter referred to as the
"Retained Shares"), and (ii) the Warrants.
(b) Simultaneously with the Return, Genisys will duly and validly
authorize, issue and deliver (the "Delivery") to United 1,100,000 Preferred
shares of Genisys having the following rights, preferences, privileges and
restrictions (the "United Preferred Shares"): (i) a par value of $.0001 per
United Preferred Share; (ii) no voting rights except (A) as required by law, and
(B) that the rights, preferences, privileges and restrictions of the United
Preferred Shares shall not be amended, modified or affected without the prior
written consent of the holders thereof; (iii) the following dividend rights
(with all dividends to accrue pro rata on a daily basis from the first day of
the period with respect to which they are payable): (A) one mandatory dividend
at the total annual rate of $275,000 (accruing from October 1, 1998), payable on
September 30, 1999, (B) mandatory dividends at the total quarterly rate of
$68,750 (accruing from the first day of the relevant calendar quarter), payable
on the last day of each calendar quarter commencing with the calendar quarter
ending December 31, 1999, and (C) additional mandatory dividends computed at the
rate of 10% per annum on the amount of any dividends not paid when due (accruing
from and after such relevant due dates), payable as and when (and to the full
extent of) funds become legally available for such
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purpose (all of the foregoing being referred to as the "Dividend Payment
Rights"); (iv) a mandatory liquidation preference equal to the sum of $2,750,000
plus all accrued and unpaid dividends in respect of the Dividend Payment Rights,
but not to exceed the maximum permitted by New Jersey Law, payable upon any
liquidation or dissolution of Genisys (the "Liquidation Preference"); (v) first
seniority rights for the United Preferred Shares over all other classes and
series of Genisys' capital stock in respect of dividends or other distributions
on or with respect to any shares of Genisys' capital stock, including without
limitation amounts payable upon any dissolution or liquidation of Genisys (and,
in furtherance and not by way of limitation of the foregoing, a prohibition on
Genisys paying any dividend or making any other distribution on or with respect
to or redeeming or purchasing any shares of its capital stock, other than the
United Preferred Shares, while any of the United Preferred Shares are
outstanding); (vi) automatic, mandatory conversion of the United Preferred
Shares into an equal number of shares of Common Stock (with full anti-dilution
protection), immediately prior to the consummation of any merger, consolidation,
reorganization or sale of all or substantially all of the assets of or any
similar transaction involving Genisys or any of its subsidiaries except that
Genisys can sell its travel related business, provided that such business
represents less than 30% of the assets of Genisys on a consolidated basis; and
(vii) automatic, mandatory conversion of the United Preferred Shares into an
equal number of shares of Common Stock (with full anti-dilution protection) upon
Genisys obtaining the requisite approval of its shareholders (other than the
holders of the United Preferred Shares and the holders of the Retained Shares)
to the Transaction as contemplated by Section 4 below, hereinafter the
"Requisite Approval"), with all accrued and unpaid dividends in respect of the
Dividend Payment Rights to be immediately due and payable by Genisys to the
holders of the United Preferred Shares whether or not such dividends are
otherwise yet payable (unless the Requisite Approval has been obtained and the
United Preferred Shares have been converted, as aforesaid, on or before June 30,
1999, in which event no such dividends shall be due or payable). For purposes of
this Agreement, the term "full anti-dilution protection" shall be applied in the
same manner as the anti-dilution provisions are to be applied in the Warrants.
The Delivery shall, in form and substance, be satisfactory to United.
3. Return of Warrants. If the Requisite Approval is obtained, Genisys
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will immediately redeliver the Warrants to United.
4. Shareholders Meeting. Genisys will, in accordance with all applicable
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legal and Nasdaq requirements, call a meeting (the "Shareholders Meeting") of
all of the holders of its voting capital stock to consider and approve the
issuance of 1,100,000 Shares and the Warrants, as well as any other matters that
may properly come before the Shareholders Meeting.
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At the Shareholders Meeting, each of the undersigned shareholders of
Genisys agrees to vote all of its, his or her shares of Genisys' capital stock
(whether owned of record and/or beneficially), and Genisys agrees to use its
best efforts to cause all of Genisys' other shareholders to vote all of their
shares of Genisys capital stock, in favor of the issuance of the 1,100,000
Shares and the Warrants.
If, for any reason whatsoever, the aforesaid 1,100,000 Shares and the
Warrants are not issued to Netcruise on or before June 30, 1999, then, in
addition to any and all other rights and remedies available to United, at
United's option, up to four (4) members of the Board of Directors of Genisys
("Board"), which members shall be selected by United, shall forthwith resign
and, concurrently therewith, all of the remaining members of the Board shall
elect those persons chosen by United to replace them. By their signatures
below, those shareholders of Genisys who are also members of the Board agree to
take such action as to carry out the terms of this provision.
5. Attorneys Fees and Other Expenses. Genisys will bear all of its own
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expenses (including, without limitation, attorneys' fees and expenses) in
connection with this Agreement, the subject matter hereof and the consummation
of the transactions contemplated hereby. Genisys shall also be responsible, and
shall promptly reimburse United upon demand, for all expenses (including,
without limitation, attorneys' fees and expenses) incurred by United and its
affiliates in connection with this Agreement, the subject matter hereof and the
consummation of the transactions contemplated hereby (including, without
limitation, such thereof as may be incurred by such persons in connection with
complying with any SEC reporting requirements attendant to the foregoing); and,
in furtherance and not by way of limitation of the foregoing, Genisys shall,
simultaneously with the execution hereof by United, deliver to United the sum of
$5,000 as an advance to be used against such expenses (any unused portion
thereof to be refunded by United to Genisys following the completion of the
Shareholders Meeting).
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IN WITNESS WHEREOF, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, each of the undersigned has
executed and delivered this Agreement as of the 28th day of October, 1998.
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UNITED INTERNET TECHNOLOGIES, GENISYS RESERVATION SYSTEMS, INC.
INC.
By /s/ Harry Shuster By /s/ Lawrence E. Burk
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PRINCIPAL GENISYS SHAREHOLDERS:
/s/ Warren D. Bagatelle /s/ Mark A. Kenny
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WARREN D. BAGATELLE MARK A. KENNY
/s/ Warren D. Bagatelle,Mg.Dir /s/ John H. Wasko
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LOEB HOLDING CORPORATION JOHN H. WASKO
/s/ Warren D. Bagatelle,Mg.Dir /s/ Joan W. Wasko
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LOEB PARTNERS CORP. JOAN E. WASKO
/s/ Warren D.Bagatelle,Partner /s/ Lawrence E. Burk
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HSB CAPITAL LAWRENCE E. BURK
/s/ David W. Sass /s/ S. Charles Tabak
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DAVID W. SASS S. CHARLES TABAK
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