Investment And Business Development Agreement

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


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


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 pa ...