SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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) March 19, 1999
Spectrum Information Technologies, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-15596 75-1940923
(State or other jurisdiction (Commission IRS Employer
of incorporation or organization) File Number) Identification No.)
P.O. Box 1006, New York, NY 10268-1006
(Address of principal executive offices)
Registrant's telephone number, including area code (914) 251-1800
(Former name or former address, if changed since last report)
Item 2 - Acquisition or Disposition of Assets
(a) Description of Transaction
On March 19, 1999, Spectrum Information Technologies, Inc. a Delaware
corporation doing business as Siti- Sites.com (the "Company" or the
"Registrant"), entered into an Investment and Business Development Agreement
(the "Investment Agreement"), a copy of which is attached as Exhibit 10.1
hereto, with Minutemeals.com, Inc., a Delaware corporation ("MM"), and Joseph
Langhan and Donald Moore (collectively, the "Individuals"). The parties entered
into the Investment Agreement to provide for the further development of a web
site known as "minutemeals.com" (the "Web Site"), a food/lifestyle web site,
which was created by the Individuals. Pursuant to the Investment Agreement, the
Individuals contributed certain assets to MM relating to the Web Site (primarily
consisting of its domain name and certain recipes and product inventory) for 80%
of the stock of MM and the Company contributed $105,000 from its capital to MM
for 20% of the stock of MM. Joseph Langhan will be the President and Chief
Executive Officer and Donald Moore will be the Executive Vice President and
Chief Operating Officer of MM. Each Individual will also be a director of MM.
The Web Site will undergo a four month testing period and launch phase.
After completion of the launch phase, the Company may elect to exercise an
option (the "Merger Option") to acquire the MM Shares owned by the Individuals
by merging a new wholly-owned subsidiary of the Company with and into MM. The
Individuals would receive up to an aggregate of 500,000 shares of the Company's
common stock, par value $0.001 ("Company Shares"), in exchange for their stock
of MM, 250,000 shares of which will be delivered upon exercise of the Merger
Option. The terms of the merger are set forth in a Merger Agreement (which has
not yet been executed), a copy of which is attached as Exhibit 2.1 hereto. If
the Company exercises the Merger Option, it will contribute an additional
$295,000 from its capital to MM (a limited portion of which may have been
contributed earlier if necessary).
If the Company does not exercise the Merger Option, 100,000 Company Shares
(in the aggregate) will be delivered to the Individuals in consideration of
their efforts and the failure to complete the term of the Investment Agreement
and the Company will transfer back to MM all stock of MM owned by the Company.
If the Company exercises the Merger Option, it will have another option
(the "Termination Option") two months later to terminate the Investment
Agreement. If the Company does not exercise the Termination Option, pursuant to
the Merger Agreement, an additional 150,000 Company Shares (in the aggregate)
will be delivered to the Individuals and the Company will make additional
contributions to MM in the approximate aggregate amount of $600,000 over the
following six month period. In addition, the Merger Agreement provides that the
Individuals will have the right to receive up to 100,000 additional Company
Shares (in the aggregate) if certain performance criteria are met after two
years of operations.
The Termination Option provides that upon exercise (1) the Individuals may
require the Company to sell all of the MM stock to the Individuals, or (2) the
Company may require the Individuals to acquire all of the MM stock, in either
event in exchange for an aggregate 100,000 Company Shares held by the
Individuals.
Pursuant to the Investment Agreement, the Individuals will have the right
under certain circumstances to share in the net proceeds of a sale or
acquisition of MM (to be paid in Company Shares) on or prior to March 19, 2004,
and will have a right of first refusal with respect to any such sale or
acquisition of MM prior to such date. The Individuals were also granted certain
rights in the event of a financing by MM and will be granted customary
"piggy-back" registration rights. Additionally, the Individuals will be entitled
to certain incentive stock or cash bonuses and/or compensation for their efforts
in evaluating new business opportunities for the Company. Conversely, the
Company will have right of first refusal on any business opportunities located
or originated by the Individuals.
The foregoing description of the Investment Agreement and the Merger
Agreement is qualified in its entirety by reference to the attached copies of
the Investment Agreement and the Merger Agreement.
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Item 7 - Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
In accordance with paragraph (4) of Item 7(a), not later than June
4, 1999, the Registrant will file financial statements of Minutemeals.com, Inc.,
on an amendment to this Current Report on Form 8-K.
(c) Exhibits.
Exhibit No. Description
2.1 Form of Merger Agreement among Spectrum Information
Technologies, Inc., Minutemeals.com, Inc., Joseph
Langhan and Donald Moore
10.1 Investment and Business Development Agreement among
Spectrum Information Technologies, Inc.,
Minutemeals.com, Inc., Joseph Langhan and Donald Moore,
dated March 19, 1999
99.1 Press release dated March 22, 1999
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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, thereto duly authorized.
Dated: April 2, 1999
SPECTRUM INFORMATION TECHNOLOGIES, INC.
By /s/ Lawrence M. Powers
Lawrence M. Powers
President, Chief Executive Officer and
Chairman of the Board of Directors
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EXHIBIT INDEX
Exhibit No. Description
2.1 Form of Merger Agreement among Spectrum Information
Technologies, Inc., Minutemeals.com, Inc., Joseph Langhan
and Donald Moore (not yet executed; held in escrow by Sills
Cummis Radin Tischman Epstein & Gross, P.A.)
10.1 Investment and Business Development Agreement among Spectrum
Information Technologies, Inc., Minutemeals.com, Inc.,
Joseph Langhan and Donald Moore, dated March 19, 1999
99.1 Press release dated March 22, 1999
Exhibit No. 2.1
Form of Merger Agreement among Spectrum Information Technologies, Inc.,
Minutemeals.com, Inc., Joseph Langhan and Donald Moore
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MERGER AGREEMENT
This Merger Agreement dated as of ____________, 1999 (this "Agreement") by
and among Spectrum Information Technologies, Inc. doing business as Siti-Sites.
com, a Delaware corporation ("SITI"), SITI-II, Inc., a Delaware corporation and
a wholly-owned subsidiary of SITI (0SITI-II"), Minutemeals.com, Inc., a Delaware
corporation ("MM"), and Joseph Langhan and Donald Moore (each an "Individual"
and, collectively, the "Individuals").
WHEREAS, SITI, MM, and the Individuals have entered into the Investment and
Business Development Agreement dated as of March 19, 1999 (the "Investment
Agreement"), pursuant to which SITI has the right to effectuate the merger of
SITI-II with and into MM upon the terms and conditions set forth herein;
WHEREAS, in connection with the Investment Agreement, SITI, the Individuals
and Sills, Cummis, Radin, Tischman, Epstein & Gross, P.A., as escrow agent (the
"Escrow Agent"), have entered into the Escrow Agreement dated March 19, 1999
(the "Escrow Agreement"), pursuant to which the Escrow Agent was holding and in
the future will hold certain items in escrow to be released in accordance with
the terms thereof, of the Investment Agreement and of this Agreement;
WHEREAS, SITI has exercised its option to effectuate such merger under the
Investment Agreement; and
WHEREAS, the Boards of Directors and shareholders of SITI, SITI-II and MM
deem such merger to be advisable and in the best interests of their respective
corporations, and such Boards of Directors and shareholders have approved such
merger upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereby agree as follows:
1. The parties shall cause SITI-II to be merged (the "Merger") with and into
MM by duly filing a certificate of merger in the form attached hereto as Exhibit
A (the "Certificate of Merger") with the Secretary of State of the State of
Delaware. The Merger shall be effected upon the terms set forth in this
Agreement and shall be effective upon the filing of the Certificate of Merger.
MM shall be the surviving corporation in the merger and shall continue its
corporate existence under the laws of the State of Delaware and the separate
corporate existence of SITI-II shall cease.
2. Following the filing of the Certificate of Merger as set forth above, the
Merger shall have the effects set forth herein and in the General Corporation
Law of the State of Delaware. Without limiting the generality of the foregoing,
and subject thereto, after such filing all the property, rights, privileges,
powers and franchises of MM and Siti-II shall vest in the surviving corporation,
and all debts, liabilities, obligations, restrictions, disabilities and duties
of MM and Siti-II shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the surviving corporation.
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3. Following the filing of the Certificate of Merger as set forth above, (i)
the Certificate of Incorporation of SITI-II shall become the Certificate of
Incorporation of the surviving corporation until amended in accordance with the
provisions thereof and applicable law, provided that following the filing of the
Certificate of Merger such Certificate of Incorporation shall be amended so that
the name of the surviving corporation shall be "Minutemeals.com, Inc.", (ii) the
By-Laws of SITI-II shall become the By-Laws of the surviving corporation until
amended in accordance with the provisions thereof and applicable law, and (iii)
the directors of SITI-II immediately prior to the effective date of the Merger,
as well as Joseph Langhan and Donald Moore (collectively, the "Individuals"),
shall be the initial directors of the surviving corporation, and the officers of
MM immediately prior to the effective date of the Merger shall be the initial
officers of the surviving corporation, each to hold office in accordance with
the Certificate of Incorporation and the By-Laws of the surviving corporation.
4. Following the filing of the Certificate of Merger as set forth above, by
virtue of the Merger and without any action on the part of SITI-II, MM, or their
respective shareholders, (i) each issued and outstanding share of common stock
of MM shall be canceled, shall be deemed to be no longer outstanding, shall not
be transferable on the books of the surviving corporation and shall, in the case
of the Individuals, be converted automatically into and represent the right to
receive 500,000 shares (250,000 in the name of each Individual) of SITI's common
stock, par value $0.001 ("SITI Shares"), subject to the terms and conditions
hereof and of the Investment Agreement, and (ii) the shares of common stock, par
value $0.001 per share, of SITI-II issued and outstanding shall be converted
into and exchangeable for, in the aggregate, 100 validly issued, fully paid and
non-assessable shares of common stock, par value $0.01, of the surviving
corporation, which shall constitute all of the issued and outstanding shares of
the surviving corporation.
5. At the effective time of the Merger, SITI shall deliver (or deliver
instructions to its transfer agent to issue and deliver) (i) 125,000 shares of
SITI's common stock, par value $0.001 ("SITI Shares"), to each Individual
(250,000 SITI Shares in total), and (ii) 125,000 SITI Shares in the name of each
Individual (250,000 SITI Shares in total) to the Escrow Agent, to be held in
escrow pursuant to the Escrow Agreement.
6. At the commencement of the Marketing Phase (as defined in the Investment
Agreement), provided that SITI has not exercised its option to terminate this
Agreement at the end of the Start-Up Phase pursuant to Section 6(a) of the
Investment Agreement, SITI and the Individuals shall each instruct the Escrow
Agent to release an additional 75,000 SITI Shares from escrow to each Individual
(150,000 additional SITI Shares in total).
7. If the gross revenues of MM from the operations of the Business (as defined
in the Investment Agreement) are at least 80% of the agreed budget formulated
pursuant to the Investment Agreement (as such budget may be amended by mutual
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consent of SITI and at least one Individual, if at least one Individual is an
executive officer of MM) during the twelve-month period commencing at the end of
the Marketing Phase, SITI and the Individuals shall each instruct the Escrow
Agent to release 50,000 SITI Shares from escrow to each Individual (100,000 SITI
Shares in total). If such test is not met, SITI and the Individuals shall each
instruct the Escrow Agent to release the remaining 100,000 SITI Shares from
escrow to SITI.
8. This Agreement (including any Schedules and Exhibits hereto) and the
Investment Agreement contain the entire understanding of the parties with
respect to the subject matter hereof. All rights and remedies of the parties
under any provision of this Agreement shall be in addition to any other rights
and remedies provided hereunder or under applicable law. No amendment or
modification of this Agreement shall be valid or binding unless made in writing
and executed by the parties. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
preceding or succeeding breach and no failure by any party to exercise any right
or privilege hereunder shall be deemed a waiver of such party's rights or
privileges hereunder or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder. All consents and
waivers shall be in writing. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York, exclusive of
conflicts of laws provisions. This Agreement shall inure to the benefit of, be
binding upon and be enforceable by and against the parties and their respective
administrators, heirs, legatees, devisees, distributees, personal and legal
representatives, executors, successors and permitted assigns. This Agreement may
be executed in two or more counterparts, each of which shall constitute an
original, but all of which when taken together shall constitute but one
Agreement.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement, or caused this Agreement to be duly executed and delivered, as of the
day and year first written above.
ATTEST: SPECTRUM INFORMATION
TECHNOLOGIES, INC.
_________________________ By:__________________________
Name:
Title:
ATTEST: SITI-II, INC.
________________________ By:__________________________
Name:
Title:
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ATTEST: MINUTEMEALS.COM, INC.
________________________ By:__________________________
Name:
Title:
WITNESS:
________________________ _____________________________
JOSEPH LANGHAN
WITNESS:
________________________ _____________________________
DONALD MOORE
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Exhibit A
CERTIFICATE OF MERGER
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Exhibit 10.1
Investment and Business Development Agreement among
Spectrum Information Technologies, Inc., Minutemeals.com, Inc.,
Joseph Langhan and Donald Moore, dated
March 19, 1999
<PAGE>
INVESTMENT AND BUSINESS DEVELOPMENT AGREEMENT
This Investment and Business Development Agreement dated as of March 19,
1999 (this "Agreement") by and among Spectrum Information Technologies, Inc.
doing business as Siti-Sites. com, a Delaware corporation ("SITI"),
Minutemeals.com, Inc., a Delaware corporation ("MM"), and Joseph Langhan and
Donald Moore (each an "Individual" and, collectively, the "Individuals").
WHEREAS, the Individuals are experienced in the development, testing and
management of an Internet
business;
WHEREAS, the parties have formed MM to develop a Business (as defined
below), including an Internet website known as "minutemeals.com" (the
"Website"); and
WHEREAS, the parties desire that the Business continue to be developed and
that SITI have an option to make MM a wholly-owned subsidiary of SITI by merging
a wholly-owned subsidiary of SITI with and into MM, all as provided herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereby agree as follows:
1. Business. The parties intend for MM to initially market through the
Internet and other marketing channels a series of products relating to the
Website. The parties expect MM to derive revenues from Website viewers who
purchase products offered on the Website, Internet retailers through affiliate
programs and from tie-ins with magazines, television channels, radio stations
and other advertisers. All of the foregoing revenue sources and services are
collectively referred to herein as the "Business". Ultimately, the business of
MM may evolve into a Web Portal or other on-line community, containing websites
relating to cooking, personal makeover, home furnishings, equipment or related
industries for active or working homemakers. The parties have prepared a budget,
a copy of which is attached hereto as Exhibit A (the "Budget"), forecasting the
revenues and expenses of the Business for the first 12 months following the date
hereof. For so long as an Individual is a senior executive of MM, the parties
shall prepare a similar budget for each subsequent 12 month period and each such
budget shall be approved by SITI and at least one Individual.
2. Capital Contributions; Escrow Items. On the date hereof (a) the
Individuals have contributed the assets listed on Schedule 1 to Exhibit B hereto
to MM in exchange for 80 shares (40 in the name of each Individual) of common
stock, par value $0.01, of MM ("MM Shares"), (b) SITI has contributed $105,000
(the "Initial Cash Contribution") to MM in exchange for 20 MM Shares, and (c)
the Individuals or Joseph Langhan, as appropriate, have executed and delivered
to the Escrow Agent to be held in escrow pursuant to the Escrow Agreement dated
the date hereof (the "Escrow Agreement"), among SITI, the Individuals and Sills,
Cummis, Radin, Tischman, Epstein & Gross, P.A., as escrow agent (the "Escrow
Agent"), (i) the Agreement of Merger in the form attached hereto as Exhibit E
(the "Merger Agreement"), and (ii) the Certificate of Merger in the form
<PAGE>
attached hereto as Exhibit F (the "Certificate of Merger"). The Initial Cash
Contribution shall be used by MM to establish a new office, engage personnel and
continue the testing, development and marketing of the Website and the Business
during the period commencing on the date hereof and ending on July 30, 1999 (the
"Launch Phase"). In the event that the Initial Cash Contribution is inadequate
for such purposes during the Launch Phase, SITI shall make additional
contributions (the "Additional Launch Period Contributions") to MM for such
purposes up to the aggregate amount set forth in the Budget. The Initial Cash
Contribution, the Additional Launch Period Contributions and all other payments
or contributions made by SITI to MM hereunder, shall be deposited into MM's bank
account.
3. The Merger; The Start-Up Phase. (a) If SITI exercises its option to
acquire the remaining MM Shares at the end of the Launch Phase pursuant to
Section 6(a) hereof, SITI shall, upon written notice to the Individuals and the
Escrow Agent (the "Merger Notice"), cause the merger (the "Merger") of SITI-II
with and into MM. The Merger Notice shall instruct the Escrow Agent to release
the Merger Agreement and the Certificate of Merger to SITI at the end of the
Launch Phase (or, if later, upon receipt of the Merger Notice). The Merger shall
be effected upon the terms set forth in the Merger Agreement and shall be
effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware. After the execution hereof and prior to the
Merger, the Individuals shall operate MM in the ordinary course, provide SITI
with continued access to all information and facilities relating to the Business
and not seek other partners in the Business.
(b) After the effective time of the Merger, SITI shall make an additional
contribution of $295,000 (less the aggregate amount of Additional Launch Period
Contributions made by SITI to MM in accordance with Section 2 hereof) to MM (the
"Subsequent Contribution") to be used during the period commencing at the end of
the Launch Phase and ending on September 30, 1999 (the "Start-Up Phase") to
continue the testing, development and marketing of the Website and the Business.
4. The Marketing Phase and Thereafter. (a) During the six month period after
the end of the Start-Up Phase (the "Marketing Phase") (provided that SITI has
exercised its option to acquire the remaining MM Shares at the end of the Launch
Phase and has not exercised its option to terminate this Agreement at the end of
the Start-Up Phase pursuant to Section 6(a) hereof), SITI shall make additional
contributions to MM of approximately $100,000 each month as set forth in the
Budget, or such other amount as the parties may agree upon in their discretion
(the "Monthly Contributions"), to be used for marketing efforts and other
business purposes.
(b) SITI's directors shall (without compensation) provide advice and
assistance regarding the Business to the Individuals during the Launch Phase,
the Start-Up Phase and the Marketing Phase. SITI shall finance the second and
subsequent years of operation of the Business, provided that revenues and income
to be derived therefrom justify such continued financial support, as determined
by SITI, in its sole judgment exercised in good faith after reasonable
consultation with the Individuals. SITI shall provide each Individual who is an
executive officer of MM at such time with 60 days' prior written notice of its
intention to discontinue its financing of MM after the end of the Start-Up
Phase.
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5. The Individuals. (a) During the two year period commencing on the date
hereof, the Individuals shall devote all necessary time and effort to the
Business to enable the results of operations of the Business to meet or exceed
the levels set forth in the Budget or in any subsequent budget. Notwithstanding
the foregoing, SITI and MM recognize that the Individuals cannot guarantee the
performance of MM and that the results of operations of MM may fail to reach or
exceed such levels despite the Individuals' efforts and time commitments. Joseph
Langhan shall be the President and Chief Executive Officer and Donald Moore
shall be the Executive Vice President and Chief Operating Officer of MM during
such two-year period. The Individuals shall be compensated for their efforts
hereunder as set forth in the Budget and each subsequent budget and herein.
During such two-year period the Individuals and SITI shall work together to
select a professional executive team who can adequately manage the Business
thereafter, with continuing guidance, but more limited time commitments by the
Individuals.
(b) SITI recognizes that each of the Individuals is independent, operates
his own consulting business and will continue to own or manage interests in
other businesses, including other Internet businesses (collectively, including
the consulting businesses, the "Other Businesses"). Each Individual shall have
the right during the term hereof and thereafter to engage in Other Businesses
whose products or activities do not compete with those of the Business or any
other business conducted by MM at such time; provided that such restriction
shall not apply after the Launch Phase if SITI does not exercise its option to
acquire the remaining MM Shares at the end of the Launch Phase pursuant to
Section 6(a) hereof or after the Start-Up Phase if SITI exercises its option to
terminate this Agreement at the end of the Start-Up Phase pursuant to Section
6(a) hereof. In addition, during the term hereof and thereafter, each Individual
shall keep confidential and not use for his own account the trade secrets,
know-how and other proprietary information and materials of the Business or any
other business conducted by MM; provided that such restriction shall not apply
after the Launch Phase if SITI does not exercise its option to acquire the
remaining MM Shares at the end of the Launch Phase pursuant to Section 6(a)
hereof or after the Start-Up Phase if SITI exercises its option to terminate
this Agreement at the end of the Start-Up Phase pursuant to Section 6(a) hereof.
In the event that SITI does not exercise its option to acquire the remaining MM
Shares at the end of the Launch Phase or exercises its option to terminate this
Agreement at the end of the Start-Up Phase pursuant to Section 6(a) hereof, SITI
shall keep confidential and not use for its own account the trade secrets,
know-how and other proprietary information and materials of the Business or any
other business conducted by MM. Further, during the term hereof and for 12
months thereafter, unless SITI does not exercise its option to acquire the
remaining MM Shares at the end of the Launch Phase or exercises its option to
terminate this Agreement at the end of the Start-Up Phase pursuant to Section
6(a) hereof, neither Individual shall solicit, employ or otherwise, engage, as
an employee, independent consultant or otherwise, any person who is an employee
of MM at such time or at the time of termination, as the case may be. The
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Individuals and SITI acknowledge and agree that (i) the covenants set forth
above are necessary for the protection of the other and that the nature and
scope of each such covenant is reasonable, and (ii) there may be no adequate
remedy at law for any breach of said covenants and SITI, MM and the Individuals
shall therefore be entitled to injunctive relief in the event of a breach or
threatened breach thereof by SITI or the Individuals, as the case may be.
6. Evaluation and Merger and Termination Option. (a) SITI shall evaluate the
progress of the Business, including the Website, at the end of the Launch Phase
and at the end of the Start-Up Phase. If SITI, in its sole judgment exercised in
good faith after reasonable consultation with the Individuals, determines at
either such time that the Business, including the Website, is not or will not be
sufficiently successful, SITI may (i) at the end of the Launch Phase, elect not
to exercise its option to acquire the remaining MM Shares and terminate this
Agreement upon written notice (the "Merger Option Termination Notice") to the
Individuals and the Escrow Agent, and (ii) at the end of the Start-Up Phase,
terminate this Agreement upon written notice (the "Termination Notice") to the
Individuals and the Escrow Agent.
(b) In the event that SITI elects not to exercise its option to acquire the
remaining MM Shares and terminate this Agreement at the end of the Launch Phase,
in consideration of the good faith efforts of the Individuals in the Launch
Phase and the failure to complete the term of this Agreement, (i) SITI shall
have no obligation to make any additional payments or contributions hereunder,
(ii) SITI shall deliver (or deliver instructions to its transfer agent to issue
and deliver) to each Individual 50,000 shares of SITI's common stock, par value
$0.001 ("SITI Shares") (100,000 SITI Shares in total), (iii) the Merger Option
Termination Notice shall instruct the Escrow Agent to release the Merger
Agreement and the Certificate of Merger to the Individuals, and (iv) SITI shall
forfeit and transfer and deliver to MM all MM Shares owned by SITI.
(c) In the event that SITI elects to terminate this Agreement at the end of
the Start-Up Phase, in consideration of the good faith efforts of the
Individuals in the Launch and Start-Up Phases and the failure to complete the
term of this Agreement, (i) SITI shall have no obligation to make any additional
payments or contributions hereunder, (ii) each Individual shall have the right
to keep all SITI Shares delivered to him prior to such date, except as provided
in clauses (iii) and (iv) below, (iii) SITI shall have the option to require
each Individual to transfer and deliver to SITI 25,000 SITI Shares (50,000
Shares in total) in exchange for the transfer and delivery by SITI to MM of all
MM Shares owned by SITI, and (iv) the Individuals, collectively, shall have the
option to require SITI to transfer and deliver to MM all MM Shares owned by SITI
in exchange for the transfer and delivery by each Individual of 25,000 SITI
Shares (50,000 Shares in total) to SITI. In addition, in the event that SITI
elects to terminate this Agreement at the end of the Start-Up Phase, the
Termination Notice shall instruct the Escrow Agent to release all 250,000
remaining SITI Shares from escrow to SITI.
(d) In support of its obligations under Sections 6(b) and (c) hereof, SITI
agrees to retain, free and clear of all liens and encumbrances, and to not
transfer or grant any right to obtain, its MM Shares until the end of the
Start-Up Phase.
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7. Representations and Warranties. MM and the Individuals make such
representations and warranties to SITI as are set forth in Exhibit B hereto.
SITI makes such representations and warranties to MM and the Individuals as are
set forth in Exhibit C hereto.
8. Successful Development. (a) SITI shall establish an incentive bonus plan
for the twelve-month period commencing at the end of the Marketing Phase (the
"Second Year") and the twelve-month period commencing at the end of the Second
Year (the "Third Year") for the Individuals (provided they remain executive
officers of MM) and other executives of MM added to their team after the end of
the Marketing Phase, in an aggregate amount for such group equal to 15% of the
gross revenues of MM in excess of 80% of the agreed budget (as such budget may
be amended by mutual consent of SITI and at least one Individual, if at least
one Individual is an executive officer of MM) for the Second Year or the Third
Year, as the case may be. The Individuals and such other executives shall have
the right to take all or any part of their portions of such bonus in SITI
Shares, priced at the weighted average, based on daily trading volume, of the
closing sale price of a Share for the first 30 trading days of the Second Year
(with respect to the bonus relating to the Second Year) or the Third Year (with
respect to the bonus relating to the Third Year). After the Third Year, such
bonus system shall revert to the standard measure then being used in all
divisions of SITI, based on revenues and/or earnings performance of the Website
and related businesses established by the Individuals. In addition, if SITI
adopts an incentive stock option plan after the date hereof for the benefit of
the senior executives of SITI, the Individuals (after the Second Year) and any
new senior executives of MM (during the term of their employment) shall be
entitled to participate therein based upon their efforts and performance each
year. SITI shall also make available to the Individuals SITI stock options or
stock grants to be issued to attract worthy executives to their team.
(b) The Individuals shall seek out and evaluate, and assist SITI in seeking
out and evaluating, new business opportunities, including new ways to expand the
Website concept, and consult with SITI regarding, and possibly participate in,
other SITI projects. The parties will maintain the confidentiality of any
proposed business opportunity or project, provided, however, that the
Individuals may disclose such proposed opportunity or project to other persons
at the end of the Review Period (as defined below) with respect thereto if SITI
has not exercised its right of first refusal with respect thereto or such right
has terminated as provided below. The Individuals shall present to SITI all new
business opportunities and other business projects they locate or originate
("Individual Opportunities"). SITI shall have 60 days (the "Review Period") in
which to evaluate any Individual Opportunity and shall have a right of first
refusal with respect thereto. SITI and the Individuals shall negotiate in good
faith on an annual basis regarding salaries and stock option incentives for
their efforts described above. Such negotiations may occur more frequently if
the nature and potential of any such opportunity or project (including any
Individual Opportunity) requires immediate stock option or other recognition to
the Individuals. The stock option incentives for any Individual Opportunity
shall (subject to any stock or stock options required to be issued to third
parties in connection with such Individual Opportunity) constitute a higher
portion, and the salaries a lower portion, of the amount received by the
Individuals. If any such opportunity or project is not an Individual
Opportunity, the stock option incentives shall constitute a lower portion, and
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the salaries a higher portion, of the amount received by the Individuals.
Notwithstanding the foregoing, if SITI and the Individuals cannot conclude their
negotiations regarding initial salaries and stock option incentives for the
efforts of the Individuals in connection with any Individual Opportunity during
the Review Period for such Individual Opportunity, SITI's right of first refusal
with respect to such Individual Opportunity shall be deemed to terminate at the
end of such Review Period.
9. Sale by SITI. (a) In the event that a Sale Transaction (as defined below)
occurs with respect to MM during the Marketing Phase or the Second Year and SITI
has not exercised its termination option pursuant to Section 6(a) hereof, (i)
SITI and the Individuals shall each instruct the Escrow Agent to release all
remaining SITI Shares from escrow to SITI, and (ii) each Individual shall have
the right to receive 25% (50% in the aggregate) of the MM Net Sale Proceeds (as
defined below) received by SITI in connection with such Sale Transaction,
promptly after the payment or delivery thereof to SITI. Each Individual shall
receive such portion of the MM Net Sale Proceeds in additional SITI Shares, to
be valued as determined below. No such amount shall be due to the Individuals
unless the MM Net Sale Proceeds are positive (as calculated for this Section
9(a)).
(b) In the event that a Sale Transaction occurs with respect to MM during
the period commencing on the end of the Second Year and ending on the fifth
anniversary of the date hereof and SITI has not exercised its termination option
pursuant to Section 6(a) hereof, (i) each Individual shall have the right to
receive 20% (40% in the aggregate) of the MM Net Sale Proceeds received by SITI
in connection with such Sale Transaction promptly after the payment or delivery
thereof. Each Individual shall receive such portion of the MM Net Sale Proceeds
in additional SITI Shares, to be valued as determined below. No such amount
shall be due to the Individuals unless the MM Net Sale Proceeds are positive (as
calculated for this Section 9(b)). If the MM Net Sale Proceeds are negative (as
calculated for this Section 9(b)), then each Individual shall promptly transfer
and deliver to SITI 75,000 SITI Shares (150,000 SITI Shares in total) previously
issued to him hereunder.
(c) In support of their obligations under Section 9(b) hereof, each
Individual agrees to retain, free and clear of all liens and encumbrances, and
to not transfer or grant any right to obtain 75,000 SITI Shares (150,000 SITI
Shares in total) until the fifth anniversary of the date hereof.
(d) The value of any SITI Shares of SITI to be transferred and delivered to
the Individuals pursuant to Section 9(b) hereof in connection with a Sale
Transaction shall be determined based upon the weighted average, based on daily
trading volume, of the closing sale price of a Share for the 30 trading days
immediately preceding the execution by SITI of final documentation relating to
such Sale Transaction.
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(e) The Individuals shall have a right of first refusal with respect to any
Sale Transaction provided that the consideration paid by the Individuals to SITI
shall equal or exceed, in the judgment of SITI's Board of Directors, the
consideration offered by third parties. In making such determination, SITI's
Board of Directors shall consider the amount, nature and timing of such
consideration, as well as the creditworthiness of the parties responsible
therefor and any other items that SITI's Board of Directors deems relevant in
the exercise of its fiduciary duties. To exercise its right of first refusal,
the Individuals shall make an offer to SITI within 30 days of its receipt from
SITI of the terms of a proposed Sale Transaction with a third party.
(f) For purposes hereof, "Excess Net Proceeds" shall mean, with respect to
any Sale Transaction, the net proceeds (after deducting reasonable out-of-pocket
expenses, customary fees and taxes), whether in the form of cash, property, the
right to receive cash or property in the future, or otherwise, received or to be
received by SITI in connection with such Sale Transaction. In addition, for
purposes hereof, "MM Net Sale Proceeds" shall mean, with respect to any Sale
Transaction, (A) the Excess Net Proceeds of such Sale Transaction, less (B) for
purposes of Sections 9(a) and (b), SITI's total cash investment in MM as of such
date (including, without limitation, the Initial Contribution, the Additional
Launch Period Contributions, the Subsequent Contribution, each Monthly
Contribution and subsequent contributions of capital), less (C) for purposes of
Section 9(b) only, an equity yield on the amount set forth in clause (B) of this
Section 9(f), at the rate of 20% per annum compounded from the date such amounts
were paid by SITI until the amount set forth in clause (B) of this Section 9(f)
has been paid in full to SITI. Further, for purposes hereof, "Sale Transaction"
shall mean (1) the acquisition of MM (or, in the event of a corporate
restructuring or reorganization by SITI, any successor to MM resulting from such
corporate restructuring or reorganization which is a majority-owned subsidiary
of SITI or any of its affiliates (the "MM Successor")) by merger, consolidation
or other business combination by any person other than SITI or any affiliate
thereof (a "Third Party"), (2) the acquisition by a Third Party of all or
substantially all of the assets of MM or the MM Successor, or (3) the
acquisition by a Third Party of more than 50% of the outstanding stock of MM or
the MM Successor.
10. Board of Directors. (a) During the Launch Phase:
(i) the Board of Directors of MM shall consist of five directors
comprised of one person nominated by SITI (the "SITI Nominee"), the Individuals
and two persons nominated by the Individuals.
(ii) A preliminary agenda shall be disseminated with the notice of
each meeting. Telephonic Board meetings may be used when necessary. A quorum at
Board meetings shall require the presence of at least a majority of the
directors, which must include the SITI Nominee and at least one Individual.
Actions of the Board shall require approval of a majority of the directors;
provided that actions with respect to the following matters must be approved by
the SITI Nominee (as part of such majority):
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(A) MM's annual budget, distributions to shareholders of MM,
employment or consulting contracts or arrangements or any business dealings with
any shareholder of MM, or any of their affiliates;
(B) borrowings, leases and guarantees of debt in any amounts over
$50,000 in annual expense or exposure;
(C) capital expenditures in excess of budgeted amounts, or other
material variations from budgeted amounts or amounts set forth in any business
plan;
(D) changes in the nature of the Business; and
(E) plans to go public, spin-off, sell, merge or otherwise
transfer, all or substantially all the assets of MM, or liquidate or dissolve
MM.
(a) After the Launch Phase:
(i) As long as each Individual remains as an executive officer of MM
(but not later than the sixth anniversary of the date hereof), the Board of
Directors of MM shall consist of five directors comprised of the Individuals and
three SITI Nominees, at least one of whom shall be the Chief Executive Officer
or Chief Financial Officer of SITI. The number of directors on Board of
Directors of MM shall be reduced by one for each Individual that is no longer
entitled to be, or no longer is, a director of MM. After the Individuals are no
longer Board members and for so long as the Individuals collectively own at
least 200,000 SITI Shares (but not later than the sixth anniversary of the date
hereof), the Individuals shall be entitled to continue to attend all Board
meetings of MM (except to the extent matters to be discussed at such Board
meetings relate to the Individuals) as observers (without any right to vote).
(ii) Board meetings shall occur as needed, but at least quarterly. A
preliminary agenda shall be disseminated with the notice of each meeting.
Telephonic Board meetings may be used when necessary. A quorum at Board meetings
shall require the presence of at least a majority of the directors, at least two
SITI Nominees and, for so long as both Individuals are directors of MM, at least
one Individual. Actions of the Board of MM shall require approval of a majority
of the directors; provided that actions with respect to the following matters
must be approved by at least one SITI Nominee who is the Chief Executive Officer
or Chief Financial Officer of SITI (as part of such majority) and shall be
preceded by review and consultation with the Individuals (provided that they are
directors/major shareholders of SITI at such time):
(A) MM's annual budget, distributions to SITI, employment or
consulting contracts or arrangements or any business dealings with SITI, any
Individual or any of their affiliates;
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(B) borrowings, leases and guarantees of debt in any amounts over
$50,000 in annual expense or exposure;
(C) capital expenditures in excess of budgeted amounts, or other
material variations from budgeted amounts or amounts set forth in any business
plan;
(D) changes in the nature of the Business; and
(E) plans to go public, spin-off, sell, merge or otherwise
transfer, all or substantially all the assets of MM, or liquidate or dissolve
MM.
11. Status of Individuals. (a) For so long as the Individuals are
senior executives of MM and/or substantial shareholders of SITI, SITI will
consult with the Individuals regarding their views on website development,
marketing strategies, and other general matters relating to SITI's business
strategy. SITI will also have appropriate respect for their diligent
investigation of corporate opportunities for SITI (with which SITI will
cooperate) that they undertake as provided herein.
(b) If SITI's board of directors desires to sell additional equity to
finance a business opportunity by means of a private placement to significant
shareholders of SITI, each Individual will be given an opportunity to invest (if
he meets the investor eligibility requirements under applicable law) on similar
terms on a pro-rata basis with other major stockholders of SITI, provided that
(i) such Individual owns at the closing of such sale at least the lesser of (A)
30% of the SITI Shares issued to such Investor as of such date under this
Agreement, or (B) 60,000 SITI Shares, and (ii) SITI has exercised its option to
acquire the remaining MM Shares at the end of the Launch Phase and has not
exercised its option to terminate this Agreement at the end of the Start-Up
Phase pursuant to Section 6(a) hereof.
(c) If SITI's Board of Directors engages in a public offering or spin-off
of the stock of MM or its successor, the Individuals (if they are still
shareholders and/or executives of SITI) shall be entitled to participate therein
proportionately on the same terms as other shareholders and/or executives, as
the case may be, of SITI. In any such case, SITI shall offer each Individual an
executive position and/or a Board seat with MM comparable to his level of
employment/service at the time, at an appropriate salary and with stock options
or grants which are proportionate to other executives or board members of MM or
its successor at the time.
(d) SITI shall grant to the Individuals customary "piggy-back" registration
rights on registrations of SITI Shares, subject to customary terms and
conditions (including, without limitation, cross-indemnifications, "stand-still"
requirements, and the right of SITI and its underwriters, in view of market and
other conditions, to reduce or eliminate the number of shares proposed to be
registered).
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12. Good Faith. The parties acknowledge that the Business is a start-up with
high risk and growth potential, and anticipate possible changes of strategy or
focus, and substantial capital needs. SITI and the Individuals foresee a
continuing requirement of good-faith, fairness and full disclosure in their
dealings with each other. They agree that such standards shall apply to all of
their dealings with each other (whether through MM, other subsidiaries of SITI,
or otherwise) and in issues of business policy. Good faith, fairness and full
disclosure obligations, and all other obligations of the parties hereunder,
shall apply hereunder subject to applicable law, including any fiduciary duties
of the parties which may apply.
13. Inventions. The Individuals agree that any trade secret, invention,
improvement, patent, patent application or writing, and any program, system or
novel technique (whether or not capable of being trademarked, copyrighted or
patented) conceived, devised, developed or otherwise obtained by them while
performing work for MM hereunder relating to the business, property, methods,
suppliers or customers of MM shall be and become the property of MM; and each
Individual agrees to give MM prompt written notice of his conception, invention,
authorship, development or acquisition of any such trade secret, invention,
improvement, patent, patent application, writing, program, system or novel
technique and to execute such instruments of transfer, assignment, conveyance or
confirmation and such other documents and to do all appropriate lawful acts (all
at MM's expense) as may be reasonably required by MM to transfer, assign,
confirm and perfect in MM all legally protectible rights in any such trade
secret, invention, improvement, patent, patent application, writing, program,
system or novel technique.
14. Legend. All SITI Shares issued to the Individuals shall bear the legend set
forth on Exhibit D hereto.
15. Survival; Indemnity. (a) All of the representations and warranties of the
parties contained in this Agreement or in any related document shall survive the
execution, delivery and performance of this Agreement and the termination of
this Agreement (notwithstanding any investigation made by or on behalf of any
party). The covenants and other agreements contained in Sections 5(b), 6, 13, 15
and 16 shall survive the execution, delivery and performance of this Agreement,
and the termination of this Agreement.
(b) The Individuals hereby agree to jointly and severally indemnify, defend
and hold harmless SITI, and its officers, directors, employees and agents from
and against any loss, liability, action, proceeding, claim, damage, demand,
cost, expense (including reasonable legal fees and expenses) or settlement
(collectively, "Losses") incurred or suffered by it relating to or arising out
of the breach of any representation, warranty, covenant or agreement of the
Individuals contained in this Agreement or in any related document, provided,
that notwithstanding the foregoing, neither Individual shall be liable for
Losses to the extent resulting from the breach of any representation or warranty
set forth in Section 2 of Exhibit B hereto by the other Individual.
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(c) SITI hereby agrees to indemnify, defend and hold harmless each
Individual from and against any Losses incurred or suffered by him relating to
or arising out of the breach of any representation, warranty, covenant or
agreement of SITI contained in this Agreement or in any related document.
16. Miscellaneous. This Agreement (including the Schedules and Exhibits hereto)
contains the entire understanding of the parties with respect to the subject
matter hereof. All rights and remedies of the parties under any provision of
this Agreement shall be in addition to any other rights and remedies provided
hereunder or under applicable law. No amendment or modification of this
Agreement shall be valid or binding unless made in writing and executed by the
parties. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any preceding or
succeeding breach and no failure by any party to exercise any right or privilege
hereunder shall be deemed a waiver of such party's rights or privileges
hereunder or shall be deemed a waiver of such party's rights to exercise the
same at any subsequent time or times hereunder. All consents and waivers shall
be in writing. This Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of New York, exclusive of conflicts of
laws provisions. This Agreement shall inure to the benefit of, be binding upon
and be enforceable by and against the parties and their respective
administrators, heirs, legatees, devisees, distributees, personal and legal
representatives, executors, successors and permitted assigns. The Individuals
shall not assign any of their rights or obligations hereunder without the
written consent of SITI. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute but one Agreement.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement, or caused this Agreement to be duly executed and delivered, as of the
day and year first written above.
ATTEST: SPECTRUM INFORMATION
TECHNOLOGIES, INC.
By:_________________________ By:_____________________________
Name: Lawrence Powers
Title: Chief Executive Officer
ATTEST: MINUTEMEALS.COM, INC.
By:________________________ By:__________________________
Name: Joseph Langhan
Title: President
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WITNESS:
___________________________ __________________________
JOSEPH LANGHAN
WITNESS:
___________________________ __________________________
DONALD MOORE
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Exhibit A
[Budget]
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Exhibit B
1. MM and the Individuals make the following representations and warranties to
SITI:
(a) MM is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The execution and delivery of
this Agreement, and any related document to be delivered by MM pursuant to this
Agreement, have been authorized by all necessary corporate action of MM, do not
violate or result in a breach of any of MM's organizing or governing documents
or any agreement to which MM is a party or is subject, or any law, judgment,
order, writ, injunction, decree, rule or regulation of any court or
administrative agency by which MM or any of its assets is bound. This Agreement,
and any related document to be delivered by MM pursuant to this Agreement, when
executed and delivered by MM, will constitute a valid and legally binding
obligation of MM, enforceable in accordance with its terms.
(b) The execution and delivery of this Agreement, and any related document
to be delivered by either Individual pursuant to this Agreement, do not violate
or result in a breach of any agreement to which either Individual is a party or
is subject, or any law, judgment, order, writ, injunction, decree, rule or
regulation of any court or administrative agency by which either Individual or
any of his assets is bound. This Agreement, and any related document to be
delivered by the Individuals pursuant to this Agreement, when executed and
delivered by each Individual, will constitute a valid and legally binding
obligation of such Individual, enforceable in accordance with its terms. The
Individuals own all of the issued and outstanding stock of MM, free and clear of
all liens and encumbrances.
(c) Schedule 1 to this Exhibit B contains a list of all assets of MM on the
date hereof, including, without limitation, all Intellectual Property (as
defined in paragraph (f) below), confidential plans, studies and budgets. MM has
good and marketable title (free and clear of all liens and encumbrances) to all
of its assets. Such assets constitute all assets which are necessary to the
Business as presently conducted.
(d) As of the date hereof, there are no oral or written agreements to which
MM is a party or by which it or its assets are bound or pursuant to which it has
rights except as set forth on Schedule 2 to this Exhibit B. There are no
defaults by MM, or, to the best knowledge of MM and the Individuals, any other
party thereto, under any such agreement. The Business has complied with and is
in compliance with all laws, rules and regulations applicable to it, except
where such failure to comply would not have a material adverse effect on the
business, operations, assets or condition (financial or otherwise) of MM. No
representation or warranty by MM or either Individual in this Agreement or in
any other document delivered or to be delivered to SITI by or on behalf of MM or
either Individual (on or prior to the date hereof) contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements contained herein and therein, in light of
the circumstances in which they were made, not misleading.
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(e) MM has delivered to SITI a balance sheet as of March 17, 1999 (the
"Balance Sheet"). The Balance Sheet has been prepared in accordance with
generally accepted accounting principles and fairly presents the financial
condition of MM as of the date thereof. Since the date thereof, there has not
been any change in the assets, liabilities, financial condition or operations of
MM from that reflected in the Balance Sheet, except changes in the ordinary
course of business that have not been, individually or in the aggregate,
materially adverse. The Budget was prepared based upon reasonable assumptions
given the operations of the Business to date, the current state of the economy
and other relevant factors.
(f) MM owns or has the right to use all patents, patent applications,
trademarks, service marks, trade names, copyrights, or other trade secrets and
processes (collectively, the "Intellectual Property") used or proposed to be
used by MM in the conduct of the Business. The Individuals do not have any
knowledge that MM's ownership, possession or other use or exploitation of any of
its Intellectual Property violates the rights of any person or entity. To the
best knowledge of MM and the Individuals, no Individual or any other person or
entity owns or has any other right in or to, or has claimed any ownership or
other right in or to, any Intellectual Property.
(g) Neither Individual is a party to any other agreement which contains
provisions relating to non-competition, non-solicitation of customers,
non-disclosure of confidential information or proprietary information,
non-inducement or non-hiring of employees or agents of another party,
work-for-hire or any other agreement or provision which, directly or indirectly,
(i) limits the freedom of such Individual to compete in any line of business in
any geographical area, (ii) limits the freedom of such Individual to use any
patent, trademark, trade name, service mark, copyright, or other item of
intellectual property, or (iii) claims ownership for any other party of
intellectual property created by such Individual (collectively, "Restrictive
Covenant Agreements").
(h) There are no actions, claims, suits, proceedings or, to the best
knowledge of MM and the Individuals, investigations, pending or, to the best
knowledge of MM and the Individuals, threatened, against MM or its properties,
or against either Individual before any court, governmental agency, arbitration
board or other tribunal.
(i) The Website is Year 2000 Compliant (as defined below) and will not be
adversely affected with respect to functionality, interoperability, performance
or volume capacity by virtue of the arrival of the year 2000. For purposes of
this Agreement, "Year 2000 Compliant" means that the Website (i) will accurately
receive, record, store, provide, recognize and process all date and time data
from, during, into and between the twentieth and twenty-first centuries, the
years 1999 and 2000 and all leap years; (ii) will accurately perform all
date-dependent calculations and operations (including, without limitation,
mathematical operations, sorting, comparing and reporting) from, during, into
and between the twentieth and twenty-first centuries, the years 1999 and 2000
and all leap years; and (iii) will not malfunction, cease to function or provide
invalid or incorrect results as a result of (x) the change of years from 1999 to
2000 or from 2000 to 2001, (y) date data, including date data which represents
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or references different centuries, different dates during 1999 and 2000, or more
than one century or (z) the occurrence of any particular date; in each case
without human intervention, other than original data entry; provided in each
case, that all applications, hardware and other systems used in conjunction with
such system or item which are not owned or licensed by the Company correctly
exchange date data with or provide data to the Website.
2. Each Individual makes the following additional representations and
warranties to SITI:
Such Individual is capable of evaluating the merits and risks of an
investment in SITI; such Individual is acquiring his SITI Shares for investment
for his own account, not as a nominee or agent, and not with the view to, or for
resale in connection with, any distribution thereof; such Individual understands
that his SITI Shares have not been, and will not be, registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any applicable
state securities laws and that the SITI Shares may not be sold without such
registration or an exemption therefrom; such Individual is not relying on SITI,
its representatives or agents, or on any representation or warranty contained
herein or in any other document delivered by SITI in connection herewith, with
respect to the tax consequences of this Agreement; and such Individual has had,
prior to the date hereof, the opportunity to ask questions of, and receive
answers and additional information from, SITI concerning SITI's business,
management and financial affairs.
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Exhibit C
SITI makes the following representations and warranties to the Individuals:
(a) SITI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The execution and delivery of
this Agreement, and any related document to be delivered by SITI pursuant to
this Agreement, have been authorized by all necessary corporate action of SITI,
do not violate or result in a breach of any of SITI's organizing or governing
documents or any agreement to which SITI is a party or is subject, or any law,
judgment, order, writ, injunction, decree, rule or regulation of any court or
administrative agency by which SITI or any of its assets is bound. This
Agreement, and any related document to be delivered by SITI pursuant to this
Agreement, when executed and delivered by SITI, will constitute a valid and
legally binding obligation of SITI, enforceable in accordance with its terms.
(b) The audited consolidated financial statements of SITI contained in
SITI's Annual Report on Form 10-K for the year ended March 31, 1998 and the
unaudited consolidated interim financial statements of SITI for the fiscal
quarter ended December 31, 1998 contained in SITI's Quarterly Report on Form
10-Q for the quarter then ended, including the notes relating thereto, have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto, or in the
case of the unaudited interim financial statements, as may be permitted by the
Securities and Exchange Commission on Form 10-Q under the Securities Exchange
Act of 1934, as amended). Said financial statements and related notes fairly
present (subject, in the case of interim financial statements, to year-end audit
and adjustments) the consolidated financial position and the results of
operations and cash flow of SITI as of the respective dates thereof and for the
periods indicated. Since December 31, 1998, there has not been any change in the
business condition of SITI, except changes in the ordinary course of business
which have not been, in the aggregate, materially adverse.
(c) The SITI Shares to be issued to the Individuals hereunder and under the
Merger Agreement, upon issuance and release from escrow, if applicable, will be
duly authorized and validly issued, full paid and non-assessable and will be
free of all liens and encumbrances.
(d) Assuming the truth and accuracy of the Individual's representations in
Exhibit B hereto, the sale of the SITI Shares to be issued to the Individuals
hereunder and under the Merger Agreement constitutes a transaction exempt from
the registration requirements of Section 5 of the Securities Act.
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Exhibit D
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE
SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE AGREEMENT COVERING THE
PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE OWNER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
CORPORATION.
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Exhibit E
[Merger Agreement]
19
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Exhibit F
[Certificate of Merger]
20
Exhibit No. 99.1
Press Release Dated March 22, 1999
<PAGE>
SPECTRUM INFORMATION TECHNOLOGIES, INC.
now doing business as
SITI-SITES. COM
Contact: For Media and Invstors: Jon M. Gerber, Vice-President
Siti-Sites.com
Tel (914)251-1800
Spectrum / Siti-Sites.com Announces Development Agreement with Minutemeals.com
NEW YORK, NY, March 22/PRNewswire/-- Spectrum Information Technologies,
Inc. doing business as Siti-Sites.com (OTC BB: SITI) reported today that it had
entered into a business development agreement for a new food/lifestyle web site,
primarily directed at working women, "minutemeals.com", currently in its launch
(testing) phase. The agreement provides for a four month testing period after
which SITI may elect to exercise its option, and acquire minutemeals.com as a
wholly owned subsidiary. The ultimate merger will result in 500,000 shares of
SITI being issued to the two owners of minutemeals.com (raising SITI's
capitalization to nearly 10 million shares) and continued financing by SITI of
the business.
In describing the proposed acquisition, Lawrence M. Powers, Chairman/CEO of
SITI, said, "The food business, which generates some $500 billion in annual
revenues, represents a growth opportunity for a web site focused on a specific
need - - minutemeals.com will help busy people prepare complete meals at home in
twenty minutes or less. The web site will be free, with constantly changing
recipes, along with other time-saving, food and cooking information. The site
will generate revenue from advertising and the sale of cooking equipment and
ingredients. Its experienced developers are in discussions with several
manufacturers to sell their products, and with respected food magazines and
other media sources, for reciprocal advertising arrangements."
The new web site (test location--www.minutemeals.com) has been created and
developed by Joe Langhan and Don Moore. Langhan was one of the creators, and the
original head of Production at the Food Network. Don Moore, Langhan's long time
partner, is a well-known web site developer in New York City.
While at the Food Network, Langhan developed its two most successful shows:
"Emeril Live" with Emeril Lagasse, and "Cooking Live" with Sara Moulton. Langhan
and Moore also conceived and created "foodtv.com", the Food Network's highly
successful web site. Langhan left the network in November 1997 by which time the
"foodtv.com" site was ranked among the 25 most visited Entertainment and
Information sites on the Internet (as compiled by Media Metrix).
Spectrum/Siti-Sites.com Announces Development Agreement with Minutemeals.com 1
<PAGE>
Langhan and Moore said today, "Minutemeals.com helps busy people overcome
the greatest obstacle to feeding their families --- time. Now, working women and
parents can quickly make delicious meals to enjoy with their families around the
home dinner table. Behind our easy-to-use web site, we have assembled some of
the best culinary talent in the country to help busy people make home meals in
twenty minutes ---from the shopping bag to the table."
"The new site will appeal immediately to the large community of those who
have to shop and cook meals for themselves and their families, but do not have
the time. We think people are becoming frustrated by alternatives like fast
food, junk food and re-heated take-out. These alternatives tend to be unhealthy,
expensive, and can never taste like a freshly cooked meal. Minutemeals.com is
trying to solve the problem of 'menu fatigue'."
Minutemeals.com will provide complete menus, recipes and shopping lists
from expert recipe creators and cooks. Every recipe will be tested to meet
minutemeals.com rigorous time and taste standards. The web site, engineered by
Moore, will include weekly menus with audio, photos (and later video), step by
step instructions, shopping lists, equipment lists and nutritional data.
"Visitors will soon be able to select a week of menus, create a consolidated
shopping list and ultimately, through a series of marketing alliances, have the
ingredients waiting for them or delivered to their home", said Moore.
SITI's Powers said that, "Minutemeals.com fits into our vision of the
Internet, where people will visit and shop at content-rich, practical web sites.
This business is the type of real-world web site that we intend to develop in
several other fields, with Langhan and Moore's creativity and expert help, as
key executives in our organization."
If SITI's acquisition option is exercised after the test phase, shares
resulting from the merger will be released to Langhan and Moore as they reach
operating goals. Langhan will be CEO and President, and Moore will be COO and
Executive Vice President of the new minutemeals.com subsidiary of SITI. Other
conditions, which protect the respective parties at various stages of the site's
development, are included in the agreement.
This press release contains statements that are "forward looking",
including those concerning SITI's new management and business direction since
their investment in December 1998. There can be no assurance that the Company
can successfully implement their projects or enter into marketing and other
alliances. There are many risks associated with these projects including the
Company's ability to select and establish appealing web sites and to attract and
retain skilled managerial and technical staff for these web sites, the
sufficiency of the Company's capitalization, and its ability to raise additional
capital as it becomes necessary, together with competition from other web site
developers and sources of capital entering the same market segments as SITI.
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Spectrum/Siti-Sites.com Announces Development Agreement with Minutemeals.com 2
