SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.
Date of Report (Date of earliest event reported) October 28, 1998
GENISYS RESERVATION SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
New Jersey
(State or Other Jurisdiction of Incorporation)
1-12689 22-2719541
(Commission File Number) (I.R.S. Employer Identification No.)
2401 Morris Avenue, Union, New Jersey 07083
(Address of principal executive offices) (Zip Code)
(908) 810-8767
(Registrant's telephone number, including area code)
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ITEM 5. Other Events
On June 30, 1998 NetCruise (a wholly owned subsidiary of
the Company) acquired assets and a technology license from UIT
in consideration of 2,000,000 shares of the Company's Common
Stock and two warrants ("Warrants"), each entitling the holder
to purchase 800,000 shares of the Common Stock of the Company.
One warrant is exercisable for 800,000 shares at $2.50 per
share and may be exercised between April 1, 2002 and June 30,
2002, but only if NetCruise achieves profits equal to or
exceeding $5,000,000 for the years 1999, 2000 and 2001. The
other Warrant is exercisable for 800,000 shares at $6.00 per
share and may be exercised between April 1, 2002 and June 30,
2002, but only if NetCruise achieves profits equal to or
exceeding $10,000,000 for the years 1999, 2000 and 2001. The
Company has been advised that the issuance of such securities
has caused the Company to inadvertently be in violation of a
Nasdaq MarketPlace Rule because the issuance of the shares and
Warrants amounted to more than 20% of the issued and
outstanding shares of the Company and were not approved by
Shareholders as required by such Rule. Nasdaq has advised the
Company that the Company's Common Stock will be delisted unless
the Company obtains Shareholder approval for these issuance to
the extent that they violate the Rule. The Company and UIT
have restructured the transaction by UIT returning to the
Company 1,100,000 shares of Common Stock (retaining 900,000
shares) and the Warrants. The Company will issue to UIT
1,100,000 shares of Convertible Series B Preferred Stock (the
"Series B Preferred Stock"), which Series B Preferred Stock is
automatically convertible into 1,100,000 shares of the
Company's Common Stock upon Shareholder approval of the
issuance of the 1,100,000 shares of Common Stock and the
Warrants. The Series B Preferred Stock carries a mandatory
dividend of $275,000, payable on September 30, 1999 and a
mandatory quarterly dividend at the rate of $68,750 commencing
with the quarter ended December 31, 1999. No dividend will be
payable if the Shareholders approve the issuance of the Common
Stock and Warrants prior to the time that the dividend is
payable.
As a result of the transaction the Company acquired the
Travel Web site called "Netcruise" and the license for "Parallel
Addressing Video Technology" for all travel related
applications, along with all of the software, computer systems
and intellectual properties related to the travel business.
The Company formed NetCruise as a wholly owned subsidiary for
the purpose of operating an Internet travel agency featuring
the technology obtained through this acquisition. Harry
Shuster has been appointed Chairman and Brian Shuster the
President of NetCruise. Pursuant to the acquisition agreement,
Mr. Brian Shuster will receive $5,000 per month for his
services as a consultant to the Company. In addition, Messrs.
Harry Shuster and Brian Shuster have been serving as directors
of the Company since the transaction closed and both have been
nominated for election as directors of the Company.
ITEM 7. Financial Statements and Exhibits.
(c) Exhibits
1. Copy of Agreement.
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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 hereunto duly
authorized.
Genisys Reservation Systems, Inc.
(Registrant)
By:___________________________
John Wasko, Treasurer
DATED: October 28, 1998
AGREEMENT
1. Initial Transaction. Reference is made to that certain
Asset Purchase 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 Reasons Therefor. Genisys has advised
United that (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) 11100,000 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 $.000l 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 purpose
(all of the foregoing being referred to as the "Dividend
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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 will immediately redeliver the Warrants to United.
4. Shareholders Meeting. Genisys will, in accordance with all
applicable 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 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
day of October, 1998.
UNITED INTERNET TECHNOLOGIES, GENISYS RESERVATION SYSTEMS,
INC. INC.
BY:_____________________ BY:__________________
PRINCIPAL GENISYS SHAREHOLDERS:
_______________ ___________________
WARREN D. BAGATELLE MARK A. KENNY
_______________ ___________________
LOEB HOLDING CORPORATION JOHN H. WASKO
_______________ ___________________
LOEB PARTNERS CORP. JOAN E. WASKO
_______________ ___________________
HSB CAPITAL LAWRENCE E. BURK
_______________ ___________________
DAVID W. SASS S. CHARLES TABAK
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