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) December 11, 1998
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.)
2700 Westchester Avenue, Purchase, New York 10577
(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 1 - Changes in Control of Registrant
On December 11, 1998 (the "Closing Date"), Spectrum Information
Technologies, Inc. (the "Registrant") entered into a Stock Purchase Agreement
with Powers & Co. pursuant to which Powers & Co. purchased 3,000,000 shares of
Registrant's common stock par value $.001 (the "Common Stock") and an option
(the "Option") to acquire an additional 1,800,000 shares of Common Stock at an
exercise price of $0.15 per share. Powers & Co. paid cash consideration of
$600,000 at the closing. The source of the consideration was from the personal
funds of Lawrence M. Powers, the principal of Powers & Co., except for $100,000
from the personal funds of Maurice W. Schonfeld, a new director described below.
Immediately preceding the transaction, Registrant had approximately
1,668,698 shares of Common Stock issued and outstanding and 801,706 shares of
convertible Class A Stock issued and outstanding. The Class A Stock
automatically converts to Common Stock on March 31, 1999. Upon completion of the
transaction, Powers & Co. acquired approximately 64.2% of the issued and
outstanding Common Stock, and approximately 55% of the aggregate shares of
outstanding stock, including Common Stock and Class A Stock.
In connection with the transaction, Registrant's directors as of the
Closing Date appointed Lawrence M. Powers Chief Executive Officer and a director
of the Registrant, and Registrant's prior directors thereafter resigned. The
Board filled two vacancies by appointing Mr. Schonfeld and Jon M. Gerber as
directors of the Registrant, and Mr. Powers was elected Chairman by the new
board. Mr. Gerber was elected Vice-President, Secretary-Treasurer. Registrant's
previous officers as of the Closing Date also resigned in connection with the
transaction, which resignations were deemed terminations without just cause
under their employment contracts. These officers entered into settlement
agreements as to such contracts with the Registrant, that became effective at
closing of the transaction.
In a subsequent transaction entered into on December 12, 1998, the
Registrant entered into a stock purchase agreement with Robert Ingenito pursuant
to which Mr. Ingenito purchased 500,000 shares of Registrant's Common Stock and
an option to acquire an additional 300,000 shares of Common Stock at an exercise
price of $0.15 per share, bringing the total new equity investment in the
Registrant to $700,000. Mr. Ingenito paid cash consideration of $100,000 at the
closing, the source of which was his own personal funds. Concurrently, Powers &
Co. assigned as a gift 200,000 shares of its Common Stock and an option to
acquire 80,000 shares of Common Stock, which represents a portion of the Option,
to Mr. Gerber, who is a second cousin of Mr. Powers. Messrs. Schonfeld, Ingenito
and Gerber are entering investment agreements similar to the investment
agreement between Registrant and Powers & Co. which is included as Exhibit B to
Exhibit 10.1 hereto.
The Registrant is planning to change its corporate name to Siti-Sites.com,
inc. but its stock symbol will remain "SITI". The name change is subject to
shareholder approval and will be presented at the next meeting of the
Registrant's shareholders, which is to be scheduled within the next several
months. Shareholders owning approximately two-thirds of the issued and
outstanding shares of Common Stock have expressed approval of the name change as
being in the best interest of the Registrant and its shareholders. The
Registrant also plans to change its legal address, which it will announce
shortly, as new management conserves assets and changes the strategic direction
of the Registrant.
A copy of the Stock Purchase Agreement and press release are attached as
exhibits and are incorporated by reference herein.
Item 7 - Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit No. Description
10.1 The Stock Purchase Agreement between Powers &
Co. and Spectrum Information Technologies, Inc.
dated December 11, 1998.
99.1 Press release dated December 14, 1998.
99.2 Press release dated December 17, 1998.
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: December 17, 1998
SPECTRUM INFORMATION TECHNOLOGIES, INC.
By /s/ Lawrence M. Powers
Lawrence M. Powers
President, Chief Executive Officer and
Chairman of the Board of Directors
EXHIBIT INDEX
Exhibit No. Description
10.1 The Stock Purchase Agreement between Powers &
Co. and Spectrum Information Technologies, Inc.
dated December 11, 1998.
99.1 Press release dated December 14, 1998.
99.2 Press release dated December 17, 1998.
Exhibit No. 10.1
The Stock Purchase Agreement between Powers & Co.
and Spectrum Information Technologies, Inc. dated December 11, 1998.
Powers & Co.
Investments
December 11, 1998
Spectrum Information Technologies, Inc.
2700 Westchester Avenue
Purchase, NY 10577
Re: Stock Purchase Agreement
Gentlemen:
The following sets forth the terms and conditions of a purchase of
securities in Spectrum Information Technologies, Inc. (the "Company") by the
undersigned, to be completed concurrently with the execution of this Agreement:
1. Stock Purchase. Powers & Company ( "Powers") shall purchase 3,000,000
shares of common stock par value $.001 of the Company (the "Common Stock"), and
an option to acquire 1,800,000 additional shares of such Common Stock (the
"Option"), for a total purchase price of $600,000, payable by bank or certified
check upon the execution of this Agreement. The terms and provisions of the
Option are set forth in Exhibit A annexed hereto. The parties hereto have
further entered the Investor's Representation Letter attached hereto as Exhibit
B.
2. Representations and Warranties of the Company. These representations and
warranties shall survive for twelve (12) months following the date of this
Agreement. In consideration of the purchase described above and the remaining
terms hereof, the Company represents and warrants that to its knowledge:
a. Stock Ownership. Upon issuance, the Common Stock and the
shares underlying the Option will be duly authorized and validly issued, fully
paid and non-assessable. The Option shall be enforceable in accordance with its
terms.
b. Title. Following consummation of the transaction, the Company
warrants title to the Common Stock and Option and covenants and agrees at its
expense to defend Powers's right, title and ownership of the Common Stock
whether issued on the date hereof or upon exercise of the Option) against
the claims and demands of all persons whomsoever.
c. Company's Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware, and has all necessary powers to carry on its business as now
operated by it.
d. Authorization to Convey Stock. The Company has full power and
authority to enter into this Agreement and the Option and, the Company hasfull
power and authority to sell, convey, assign and transfer the Common Stock and
Option to Powers and otherwise consummate the transaction contemplated by this
Agreement; this Agreement constitutes the valid and binding obligations of the
Company enforceable in accordance with its terms, neither the execution and
delivery of this Agreement and the Option, nor the consummation of the
transaction contemplated herein in the manner herein provided, will violate any
agreement to which the Company is a party or by which the Company is bound, or
any law, order, decree or judgment applicable to the Company; and, excepting the
need for closing in accordance with the Stock Purchase Agreement, no
authorization, approval or consent of any third party is required for the lawful
execution, delivery and performance of this Agreement and the Option by the
Company.
e. All the reports filed by the Company under the Securities
Exchange Act of 1934, from March 31, 1997 through the date of this Agreement
are true and correct in all material respects, comply in all material
respects with the federal securities laws, are complete and up-to-date as of
the date reported in all material respects, and neither contain any untrue
statement of a material fact, nor omit to state any material fact
necessary, in the light of the circumstances under which the statements
are made, to make the statements therein not misleading.
f. The cash flow requirements schedule annexed hereto as Exhibit C
is, which is based on estimates made in good faith as of the date hereof, is
true and correct, contains a list of all liabilities to be paid or provided for
by the Company through the date hereof, and the cash sources and means for
paying such liabilities. There are no other claims, liabilities or obligations
(contingent or otherwise) of the Company, except as set forth in this Agreement,
existing option agreements as set forth in a schedule hereto, a closing balance
sheet (which presents estimates made in good faith of the assets and liabilities
of the Company as of the date hereof) or a supplementary disclosure list
approved by the undersigned, such schedule, balance sheet and list are contained
in Exhibit D annexed hereto. Except as set forth in Exhibit D, there are no
outstanding options, warrants, subscription or other rights or arrangements
relating to, or with respect to, any equity interest in the Company. There are
currently: (i) 1,629,295 shares of Common Stock outstanding; (ii) 37,980 shares
of the Company's Class A Convertible Preferred Stock issued and outstanding;
(iii) 2,955,191 shares of the Company's pre-reorganization common stock
outstanding that have not yet been submitted to the Company's transfer agent for
conversion in accordance with the 75 to 1 stock split (which will yield 39,403
shares of Common Stock if and when converted); and (iv) 762,303 shares of the
Company's Class A Convertible Preferred Stock issued to the trustee for the
Class Action lawsuit pending instructions for distribution to members of the
class.
g. The Company has disclosed two threatened claims to Powers
alleging collectively $28,000 in damages and has provided documentation
regarding such claims to Powers. Other than such claims and as disclosed in the
Company's filings with the SEC, there are no litigations or investigations
pending or threatened against the Company by or in any court or administrative
agency, and all term and provisions of its Third Amended Plan of Reorganization
that was substantially consummated on March 31, 1997 have been performed by the
Company in accordance therewith, including without limitation, the payment of
all administrative costs relating thereto through the date of this Agreement.
Except as may be included in Exhibit C, there are no unpaid claims for legal or
accounting fees or other professional fees or costs.
h. All written statements, documents, schedules, and agreements
furnished to the undersigned, in connection with this Agreement are true,
complete, correct and up-to-date as of the date furnished in all material
respects, and neither contain any untrue statement of a material fact, nor omit
to state any material fact necessary, in the light of the circumstances under
which the statements are made, to make the statements therein not misleading.
i. The Board of Directors of the Company (the "Board") has
reviewed the transaction contemplated by this Agreement and a certified copy of
its minutes and resolutions approving the transaction have been provided to
Powers.
j. The Company is in compliance in all material respects with
all material legal requirements applicable to it, its business and its assets.
3. Covenants of the Company. The Company agrees to fulfill the following
covenants as soon as possible after the date hereof:
a. The share and Option certificates purchased by the undersigned
which consist of shares duly authorized and unissued shall be delivered, as
provided in Exhibit A.
b. Concurrently with the execution of this Agreement, settlement
agreements, providing for partial payment of severance benefits in full
settlement thereof, with former employees that are resigning in accordance with
this Agreement that have heretofore been approved by the Company in the form of
Exhibit E, shall be performed as provided therein. As part of such settlements,
the Company shall enter option agreements in the form of the agreement annexed
hereto as Exhibit F with each of the identified former employees representing an
option to purchase an aggregate of 300,000 shares of Common Stock distributed
among such former employees, and shall use its best efforts to register such
option issuances pursuant to a Registration Statement on Form S-8 (if available)
as soon as possible after the date hereof, but agrees that it shall file the
Registration Statement within fifteen (15) days from the date of this Agreement.
c. Implementation of the removal of the Company's current offices
in Purchase, NY shall be completed, with appropriate storage of records,
communication arrangements and other matters to conserve expenses, also
completed, with reasonable compensation payments to former employees for their
interim assistance if necessary through December 31, 1998, recognizing their
other responsibilities. Existing storage areas in White Plains, NY and Texas
will remain in an "as-is" condition.
d. After review and approval of the contemplated transaction,
Donald J. Amoruso shall resign as a director and the remaining members of the
Board of Directors shall appoint Lawrence M. Powers as a director of the
Company. Thereafter, Sheldon Buckler, George Bugliarello and Robert Dalziel
shall resign. Lawrence M. Powers shall then appoint Reese Schonfeld and Jon M.
Gerber as directors. Concurrently, all corporate officers shall resign, which
shall be deemed a termination without just cause as defined in the employment
contracts pursuant
to which the officers were employed. Such steps shall be promptly
undertaken and all announcements and filings in connection therewith shall be
jointly prepared with the undersigned. The Company shall prepare and file a
current report on Form 8-K disclosing the transaction contemplated by this
Agreement and including this Agreement as an exhibit thereto.
e. Any other acts, filings or activities necessary or reasonably
appropriate to preserve and protect the assets and standing of the Company shall
be undertaken in a cooperative manner with the undersigned as soon as possible
4. Representations and Warranties of Powers. These representations and
warranties shall survive for twelve (12) months following the date of this
Agreement and are statements regarding current intention and not guarantees of
future performance. In consideration of such purchase and the remaining terms
hereof, Powers, to its knowledge, represents and warrants as follows:
a. Powers intends to cause the Company to implement a business
strategy related to Internet marketing and believes that it has access to
managerial, technical and, as needed, resources necessary to implement such a
strategy following consummation of the transaction herein contemplated.
b. Powers has no present intention to cause the Company to file
for bankruptcy under any applicable federal or state laws.
c. Powers intends to cause the Company to continue to make
all of its required filings pursuant to the Securities Exchange Act of
1934 and other applicable securities laws.
d. Powers has reviewed Section 3.2 of the Company's
Certificate of Incorporation and in his good faith belief, Lawrence M. Powers,
Reese Schonfeld and Jon M. Gerber are qualified to serve as directors of the
Company as set forth in such section.
5. Release. Powers hereby releases and discharges the Company's present
and former directors and officers, and their agents, attorneys, administrators,
successors and assigns (hereinafter referred to as the "Releasees") from all
actions, causes of action, accounts, agreements, bonds, bills, covenants,
contracts, controversies, claims, damages, demands, debts, dues, extents,
executions, judgments, liabilities, obligations, promises, predicate acts,
reckonings, specialties, suits, sums of money, trespasses and variances
whatsoever, in law, admiralty or equity (collectively, "Claims"), which, against
any of them, Powers, its owners, employees, agents, attorneys, administrators,
successors and assigns (hereinafter referred to as the "Releasors") ever had or
now has or have, for, upon or by reason of any matter, cause or thing whatsoever
from the beginning of the world to the day of the date of this Agreement;
provided, however, that such release does not extend to nor in any way release
the Company's obligations to Powers under this Agreement. Powers shall not cause
any of the Releasors to commence an action on his behalf with respect to any
matters covered by this release.
6. Modification, Discharge, Termination. Neither this Agreement nor any
provisions hereof shall be modified, discharged, or terminated except by an
instrument in writing signed by the party against whom any waiver, change,
discharge, or termination is sought.
7. Notices. Any notice, demand, or other communication that any party
hereto may be required, or may elect, to give to anyone interested hereunder
shall be sufficiently given if (a) deposited, postage prepaid, registered or
certified, return receipt requested, addressed to such address as may be given
herein; or (b) delivered personally at such address.
8. Successors and Assigns. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the parties' benefit and the
benefit of the parties' successors, legal representatives, and assigns.
9. Entire Agreement. This Agreement and its Exhibits hereto contains the
entire agreement of the parties, and there are no representations, covenants, or
other agreements except as stated or referred to herein.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, both substantive and
remedial.
11. Severability. If any provision of this Agreement shall be held to be
void or unenforceable under the laws of any place governing its construction or
enforcement, this Agreement shall not be voidable as a result thereof, but shall
be construed to be otherwise in force with the same effect as though such
provisions were omitted.
12. Section Headings. The section headings contained herein are for
reference purpose only and shall not in any way affect the meaning or
interpretation of this Agreement.
If the foregoing accurately reflects our agreement, please so indicate in
the appropriate space
below.
SPECTRUM INFORMATION POWERS & CO.
TECHNOLOGIES, INC.
_______________________________ ________________________________
By: Donald J. Amoruso By: Lawrence M. Powers
Its: Chief Executive Officer Its: Owner
Date: Date:
EXHIBIT A
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT is made as of this 11th day of December, 1998,
by and between Spectrum Information Technologies, Inc. a Delaware Corporation
("Spectrum") and Powers & Co. (the "Optionee").
WHEREAS, Spectrum and Optionee have entered into a Stock Purchase Agreement
dated December 11, 1998 providing for the sale to Optionee of shares of common
stock of this corporation and the stock option described herein at an agreed
overall cash purchase price of $600,000 which has been duly paid.
NOW, THEREFORE, in consideration of the payment described, the mutual
covenants hereinafter set forth and for other good and valuable consideration,
the parties hereto agree as follows:
1. GRANT OF OPTION. Spectrum hereby grants to the Optionee the right and
option (hereafter called the "Option"), to purchase all or any part of an
aggregate of 1,800,000 shares of Spectrum common stock, par value $0.001 per
share, on the terms and conditions set forth herein. This grant is made pursuant
to a resolution of the Company's Board of Directors duly adopted at its meeting
on December 10, 1998.
2. EXERCISE PRICE AND EXPIRATION. The exercise price and the expiration
dates as to the share underlying this Option shall be as follows:
Number of Share Exercise Price Expiration Date
1,800,000 $0.15 per share December 11, 2003
3. DURATION. The Option granted hereby shall become exercisable upon
issuance of this Agreement and shall remain exercisable at the stated price
through the expiration date set forth above. To facilitate partial transfer,
exercise or sale, this Option may be subdivided into options in smaller
denominations upon Optionee's request in writing from time to time.
4. LIMITATION ON DISPOSITION. The Option and underlying shares of common
stock have not been registered under the Securities Act of 1933 (the "Act") or
under applicable state securities laws and, therefore, cannot be sold, assigned,
or otherwise transferred unless they are subsequently registered under the Act
and under applicable state securities laws or an exemption from such
registration is then available. Optionee hereby agrees that it will not sell,
assign, or transfer the Option and underlying shares following exercise unless
they are registered under the Act and under applicable state securities laws or
an exemption from such registration is then available, according to a legal
opinion reasonably acceptable to the Company.
4. MANNER OF EXERCISE OF OPTION. This Option may be exercised, subject to
the terms and conditions contained herein, by delivering written notice to the
Chief Executive Officer or President or Chief Accounting Officer of Spectrum, at
its principal office no less than three days in advance of the proposed exercise
date. Such notice shall specify the number of shares of common stock with
respect to which the Option is being exercised and the effective date of the
proposed exercise and shall be signed by the Optionee. The notice shall be
accompanied by a certified check or cash in the amount of the aggregate option
exercise price for such number of shares. In no event shall stock be issued or
certificates be delivered until full payment shall have been received by
Spectrum as to such exercise or partial exercise, nor shall Optionee have any
right or status as a shareholder of such underlying shares prior to such
exercise. Certificates for shares of common stock purchased upon the exercise of
the Option shall be delivered to the Optionee as soon as practicable following
the effective date on which the Option is exercised.
5. ADUSTMENT ON RECAPITALIZATION, MERGER OR REORGANIZATION. If the
outstanding shares of the common stock of Spectrum are subdivided, consolidated,
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities of Spectrum through reorganization, merger,
recapitalization, reclassification, capital adjustment or otherwise, or if
Spectrum shall issue common stock as a dividend or upon a stock split, then the
number of shares subject to the unexercised portion of this Option shall be
appropriately adjusted by the Board of Directors. Any such adjustment on
outstanding Options shall be made without change in the total exercise price
applicable to the unexercised portion of the Option. If, in the event of a
merger or consolidation, Spectrum is not the surviving corporation, and the
event that the Agreement of Merger or Consolidation does not provide for the
substitution of a new Option for this Option, or for the assumption of this
Option by the surviving corporation, or in the event of the dissolution or
liquidation of Spectrum, the Optionee shall have the right immediately prior to
the effective date of such merger, consolidation, dissolution or liquidation, to
exercise this Option in whole or in part, provided, however, that this Option
shall not be exercisable in whole or in part later than the date noted in
paragraph 2 above. Any adjustments made pursuant to this section shall be made
by the Board of Directors of Spectrum, whose good faith determination in
compliance with Delaware law, as to what adjustment shall be made and the extent
thereof, shall be final, binding and conclusive. In computing any adjustment
hereunder, any fractional share which might otherwise become subject to an
Option shall be eliminated.
SPECTRUM INFORMATION TECHNOLOGIES, INC
By:__________________________________________
Donald Amoruso, Chairman, CEO & President
OPTIONEE
___________________________________________
Powers & Co.
Lawrence M. Powers, Owner
EXHIBIT B
Powers & Co.
Investments
Spectrum Information Technologies, Inc.
2700 Westchester Avenue
Purchase, New York 10577
Gentlemen:
Powers & Co. ("Powers") agreed to purchase 3,000,000 shares of common
stock, $0.001 par value per share, (the "Common Stock") and an option (the
"Option") to purchase an additional 1,800,000 shares of Common Stock of Spectrum
Information Technologies, Inc. (the "Company") pursuant to the Stock Purchase
Agreement to which this letter agreement (this "Agreement") is attached and made
a part thereof . The transfer of the Common Stock and Option shall close in
accordance with the Purchase Agreement (the "Closing"). Powers further sets
forth statements upon which the Company or its affiliates may rely to determine
the suitability of the Powers to acquire the Common Stock and Option.
1. Representations, Warranties and Agreements of Powers. In connection with
Powers's acquisition of the Common Stock and the Option, Powers hereby makes the
following representations, warranties, and agreements and confirms the following
understandings:
a. Investment Purpose. Powers is acquiring the Common Stock and
Option for its own account and for investment purposes only and not with a view
to, or for resale in connection with, any distribution thereof as that term is
defined under the Securities Act of 1933, as amended (the "Act").
b. Review and Evaluation of Information Regarding the Company.
Powers and its representatives have received documents and information regarding
the Company during their due diligence, including a copy of the Company's Third
Amended Disclosure Statement (the "Disclosure Statement") with respect to the
Third Amended Plan of Reorganization (the "Plan"), and the Company's Amended and
Restated Certificate of Incorporation and By-laws as included in the Disclosure
Statement. Powers and its representatives have received and reviewed a copy of
the Company's Annual Report on Form 10-K for the fiscal year ended March 31,
1998 and Quarterly Report on Form 10-Q for the quarter ended September 30, 1998.
Powers acknowledges that Powers has reviewed the above-referenced
documents, Powers further acknowledges that Powers and its representatives have
had the opportunity to ask the Company's management questions about the
Company's business and financial condition and that Powers has obtained such
information as requested to the extent deemed necessary by Powers to permit
Powers to fully evaluate the merits and risks of an investment in the Company.
Further, Powers has consulted with such other of its investment and/or
accounting and/or legal and/or tax advisors as Powers has deemed necessary and
appropriate in making the decision to acquire the Common Stock and the Option.
c. Powers's Financial Experience. Powers is a sophisticated
investor and is sufficiently experienced in financial and business matters to be
capable of evaluating the merits and risks of Powers's investment in the
Company.
d. Suitability of Investment. Powers has evaluated the merits and
risks of Powers's proposed investment in the Company, including those risks
particular to Powers's situation, and has determined that this investment is
suitable for Powers. Powers has adequate financial resources for an investment
of this character, and at this time Powers could bear a complete loss of its
investment.
e. Unregistered Offering. Powers understands that the Common Stock
and Option are not being registered, on the basis that this issuance is exempt
from registration under the Ac, and the rules and regulations promulgated
thereunder, as a "transaction by an issuer not involving any public offering,"
and under such other exemptions as may be available, and that reliance on such
exemption is predicated, in part, on Powers's representations and warranties
contained in this Agreement.
f. Limitations on Disposition. The Common Stock and Option have
not been registered under the Act or under applicable state securities laws and,
therefore, cannot be sold, assigned, or otherwise transferred unless
subsequently registered under the Act and under applicable state securities laws
or an exemption from such registration is then available. Powers hereby agrees
that Powers will not sell, assign, or transfer the Common Stock and Option
unless it is registered under the Act and under applicable state securities laws
or an exemption from such registration is then available, according to a legal
opinion reasonably satisfactory to the Company. Powers represents that Powers
can afford to hold the Common Stock and Option for an indefinite period of time.
g. Absence of Official Evaluation. Powers understands that no
federal or state agency has made any finding or determination as to the fairness
of the terms of an investment in the Company, nor any recommendation or
endorsement of the Common Stock or Option offered hereby.
h. Residence. Powers is a sole proprietorship organized under the
laws of the State of New Jersey.
i. Non-reliance. Powers is not relying on the Company, or its
affiliates, or any representation contained herein or in the documents referred
to herein with respect to the personal tax consequences of its investment in the
Company.
j. Prohibition on Cancellation, Termination, Revocation,
Transferability and Assignment of the Agreement. Powers hereby acknowledges and
agrees that, except as may be specifically provided herein or by applicable law,
Powers is not entitled to cancel, terminate, or revoke this Agreement, and this
Agreement shall survive any assignment of the Common Stock or Option. Subject to
its rights of disposition as set forth in subparagraph f., Powers further agrees
that Powers may not transfer or assign the rights under this Agreement.
k. Authority to Enter into Agreement. Powers has the full right,
power, and authority to execute and deliver this Agreement and perform its
obligations hereunder.
l. Obligation. This Agreement constitutes a valid and legally
binding obligation of Powers and neither the execution of this Agreement, nor
the consummation of the transactions contemplated hereby, will constitute a
violation of the laws of its jurisdiction or organizing documents.
m. Approvals Required. No approval, authorization, consent, order
or other action of, or filing with, any person, firm or corporation or any
court, administrative agency or other governmental authority is required in
connection with the execution and delivery of this Agreement by Powers or the
consummation of the transactions described herein other than filings with the
Securities and Exchange Commission. Powers agrees to timely make such
notifications, and covenants and agrees to use its best efforts to assist the
Company in timely making all required, necessary and proper or advisable filing
or notifications under applicable law.
4. Restrictive Legend. Each certificate representing the Common Stock shall
be stamped or otherwise imprinted with a legend in the following form (in
addition to any legend required under applicable state securities laws):
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.
5. Survival of Representations, Warranties, Covenants and Agreements. The
representations, warranties, covenants and agreements contained herein shall
survive the Company's delivery of the Common Stock and Option and acceptance by
the Company of Powers's agreement to acquire the Common Stock and Option.
If the foregoing accurately reflects our agreement, please so indicate in
the appropriate space below.
SPECTRUM INFORMATION POWERS & CO.
TECHNOLOGIES, INC.
_______________________________ ________________________________
By: Donald J. Amoruso By: Lawrence M. Powers
Its: Chief Executive Officer Its: Owner
Date: Date:
EXHIBIT C
Spectrum Information Technologies, Inc.
Estimated Cash Flow Requirements Schedule
Approximate Projected Total
Description Date Disbursements Deposits Cash Balance
G/L Beginning Balance 12/11/98 933,663
Payroll 12/15/98 (48,905) 884,758
Accounts receivable 12/11/98 45,966 930,724
Open accounts payable 12/11/98 (162,099) 768,625
Unclaimed bankruptcy funds 33,628 802,253
Termination of lease agreements; misc. (31,000) 771,253
accruals
Employee wind down expense (60,174) 711,079
Pmt of legal fees pursuant to indemnity (100,000) 611,079
claim settlement
Remaining Balance 611,079
- --------------------------------------------------------------------------------------------------------------
Severance Payments Schedule
Description Disbursements Amount
Aggregate severance obligation 1,306,958
Severance payments to two officers (125,000)
during 11/98
Partial severance payments to terminated (559,826)
employees
Unpaid balance of severance obligations 622,132
- --------------------------------------------------------------------------------------------------------------
-1-
EXHIBIT D
Spectrum Information Technologies,
Inc.
Stock Option Schedule
12/11/98
1996 Stock Incentive Plan
- ----------------------------------------------------------------------------------------------------------------------
Employee Option
Total Grant Exercise Termination Expiration
Employee Granted date price date date
Amoruso, Donald J. 23,437 08/15/97 $2.1500 12/11/98 08/15/07
Drabkin, Mikhail 10,224 08/15/97 $2.1500 11/15/98 02/13/99
du Fosse, Richard 21,867 08/15/97 $2.1500 12/11/98 03/11/99
Graham, Christopher 14,875 08/15/97 $2.1500 12/11/98 08/15/07
Graham, Christopher 1,500 10/29/97 $1.6900 12/11/98 10/29/07
Hintze, Barry 14,625 08/15/97 $2.1500 12/11/98 03/11/99
Marino, Salvatore 10,800 08/15/97 $2.1500 12/11/98 03/11/99
Marino, Salvatore 3,000 10/29/97 $1.6900 12/11/98 03/11/99
Alberga, Felicia 375 08/15/97 $2.1500 10/30/98 01/28/99
Bohrman, Diana 375 08/15/97 $2.1500 10/30/98 01/28/99
Corrigan, Gregg 1,875 08/15/97 $2.1500 10/30/98 01/28/99
George, Donna 750 08/15/97 $2.1500 10/30/98 01/28/99
Kessler, Kent 1,875 08/15/97 $2.1500 10/30/98 01/28/99
McFadden, Liz 225 08/15/97 $2.1500 10/30/98 01/28/99
Migliorini, Andy 1,000 08/15/97 $2.1500 12/11/98 03/11/99
Migliorini, Andy 3,000 05/02/98 $1.3125 12/11/98 03/11/99
Moore, Jim 1,500 06/08/98 $0.7500 11/30/98 02/28/99
Panepinto, Carlo 375 08/15/97 $2.1500 10/30/98 01/28/99
Ramos, Chris 3,000 08/15/97 $2.1500 11/30/98 02/28/99
Ramos, Chris 1,500 05/02/98 $1.3125 11/30/98 02/28/99
Tantillo, Toni Ann 2,500 08/15/97 $2.1500 12/11/98 03/11/99
Wraight, Chris 2,500 02/27/98 $1.5000 11/15/98 02/13/99
-------------
subtotal 121,178
Director
Buckler, Sheldon 11,359 08/15/97 $2.1500 12/11/98 12/11/00
Bugliarello, George 11,359 08/15/97 $2.1500 12/11/98 12/11/00
Dalzeil, Robert 11,359 08/15/97 $2.1500 12/11/98 12/11/00
total 155,255
=============
1998 Consultant Stock Incentive Plan
- ----------------------------------------------------------------------------------------------------------------------
Option
Total Grant Exercise Expiration
Consultant Granted date price date
Martin Mand 10,000 10/14/97 $2.1500 10/14/07
Bruce Judson 30,000 08/03/98 $0.8750 08/03/08
Eric Enge 1,000 08/01/98 $0.8750 08/01/08
total 41,000
=============
-2-
-3-
EXHIBIT D
Spectrum Information Technologies,
Inc.
Stock Option Schedule
12/11
1992 Stock Incentive Plan
- ---------------------------------------------------------------------------------------------------------------------
Employee Option
Total Grant Exercise Termination Expiration
Employee Granted date price date date
D. Amoruso 6,667 12/31/94 $84.38 12/11/98 12/31/99
D. Amoruso 6,667 12/31/94 $168.75 12/11/98 12/31/99
D. Amoruso 6,667 12/31/94 $337.50 12/11/98 12/31/99
C. Graham 1,333 07/11/94 $225.00 12/11/98 07/11/04
A. Migliorini 2,667 09/03/92 $225.00 12/11/98 09/03/03
A. Migliorini 67 07/29/92 $140.63 12/11/98 06/29/02
A. Migliorini 1,333 08/21/92 $84.38 12/11/98 08/20/02
subtotal 25,401
-------------
Director
S. Buckler 667 01/01/95 $131.25 12/11/98 12/31/04
G. Bugliarello 667 01/01/95 $131.25 12/11/98 12/31/04
R. Daziel 667 01/01/95 $131.25 12/11/98 12/31/04
subtotal 2,001
-------------
Former employee, director, consultant
A. Panico 227 08/21/92 $84.38 01/31/96 01/31/01
A. Panico 4,000 08/21/92 $84.38 01/31/96 01/31/01
B. Forte' 67 09/03/93 $225.00 07/31/95 07/31/00
C. Keller 37 04/24/92 $324.75 01/25/95 01/25/00
D. G. Miller 667 07/05/94 $145.31 Ex-director 07/05/04
E. Maskaly 1,000 08/21/92 $84.38 12/30/94 12/30/99
E. Maskaly 67 06/30/92 $140.63 12/30/94 12/30/99
E. Maskaly 2,667 03/15/94 $225.00 12/30/94 12/30/99
G. Corrigan 267 09/03/93 $225.00 10/30/98 09/03/03
G. Petruzzelli 667 08/21/92 $84.38 12/31/95 12/31/00
G. Petruzzelli 667 09/03/93 $225.00 12/31/95 12/31/00
G. Smith 667 07/05/94 $145.31 12/31/94 12/31/99
J. Isdro 13 11/09/93 $225.00 01/25/95 01/25/00
J. Marchione 2,667 05/25/94 $152.25 03/17/95 03/17/00
J. Pignatore 667 09/03/93 $225.00 02/09/95 02/09/00
J. Podbielak 267 09/03/93 $225.00 12/23/94 12/23/99
K. Bachand 727 09/03/93 $225.00 12/31/94 12/31/99
K. Kiernan 133 10/29/93 $225.00 10/01/95 10/01/00
L. Zlatkovich 133 09/03/93 $225.00 12/31/94 12/31/99
N. Biondi 667 09/03/93 $225.00 Ex-director 09/03/03
RB&A 2,222 01/01/95 $75.00 Consultant 12/31/99
subtotal 18,496
-------------
total 45,898
=============
-4-
EXHIBIT D
Spectrum Information Technologies, Inc,
Supplimentary Disclosure List
12/11/98
Estimated
Anticipated liabilities Amount
- -------------------------------------------------------------------
Bell Atlantic ISDN Line (agreement with Chris) 1,387.00
Bell Atlantic T1 Line (agreement with TAT) 3,054.94
Xerox Copier 1,144.85
Consolidated Health Plan Services 3,000.00
Telephone - Boston 250.00
Telephone - New York 2,000.00
Skytel 208.45
Pacific Bell 252.42
Protection Plus Security 1,948.50
Oce Copier (pickup) 450.00
Public Storage - Dallas 89.00
Board Meeting (2) 3,000.00
Navisite 13,000.00
California lease agreement 925.00
Total 30,710.16
===============
-5-
EXHIBIT D
Spectrum Information Technologies, Inc.
Pre-Close Estimated Balance Sheet
December 11, 1998
Pre-Close
12/11/98
---------------
ASSETS
Cash, unrestricted 884,758.26
Trade accounts receivable 20,000
Inventory 53,767
Inventory reserves (53,767)
0
---------------
Prepaid expenses 103,170
Other 2,603
Total current assets 1,010,531
---------------
Property, Plant and Equipment:
Machinery and equipment 425,676
Furniture, fixtures and leasehold improvements 25,513
---------------
451,189
Less: Accumulated depreciation and amortization (243,875)
---------------
207,314
---------------
Total Assets 1,217,845
===============
LIABILITIES
Accounts payable:
Trade 113,194
Accrued expenses 204,175
Reserve for litigation 300,000
Reserve for claims 25,000
---------------
Total current liabilities 642,368
---------------
Total liabilities 642,368
---------------
Shareholders' Equity
Prefered stock 800
Common stock 1,657
Additional paid-in capital 72,348,511
Retained earnings - prior period (70,758,529)
Net Income (loss) (633,406)
Retained earnings - end of period (71,391,935)
---------------
-6-
---------------
959,033
---------------
Less: Treasury stock, at cost (383,556)
Comprehensive Income 0
Total shareholders' equity 575,477
---------------
Total liabilities and shareholders' equity 1,217,845
===============
-7-
EXHIBIT E
SETTLEMENT AGREEMENT
This Settlement Agreement (the "Agreement") is made as of the 11th day of
December 1998, among [Former Officer] ("Former Officer") and Spectrum
Information Technologies, Inc. (the "Company").
WHEREAS, Former Officer and Company have entered into an Employment
Agreement, as amended (the "Employment Agreement"), pursuant to which Company
may have incurred, and may in the future incur, certain obligations to Former
Officer;
WHEREAS, the Employment Agreement provides for the employment of Former
Officer by Company and provides that Former Officer is entitled to certain
benefits in the event that Former Officer is terminated without just cause;
WHERAS, in connection with the Stock Purchase Agreement of even date hereof
between the Company and Powers & Co., Former Officer is deemed to have been
terminated without cause under the Employment Agreement, and the Company is
obligated, but has insufficient assets, to pay its entire obligations associated
with such termination; and, the Company desires to pay Former Officer and Former
Officer desires to accept a partial severance payment pursuant the terms and
conditions of this Agreement in full settlement of such obligations.
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto hereby agree as follows:
I. MUTUAL RELEASE AND WAIVER
Former Officer agrees to release, remise, acquit and discharge the Company,
its officers, agents, employees, guarantors, consultants, independent
contractors, attorneys, advisers, successors and assigns (the "Spectrum Group"),
jointly and severally, from any and all claims, known or unknown, which Former
Officer, his heirs, successors, or assigns have, or may now or in the future
have, against any member of the Spectrum Group and any and all liability which
any member of the Spectrum Group has, or may now or in the future have to Former
Officer, whether denominated claims, demands, causes of action, obligations,
damages or liabilities, arising from any and all bases, including but not
limited to any claims under any policy, agreement, arrangement or practice of or
with any member of the Spectrum Group or any federal, state, or local law or
regulation, relating to any matter, cause or thing whatsoever from the beginning
of the world to the date of this Agreement; but excluding any claims for (i)
indemnification pursuant to Former Officer's Employment Agreement and the
Company's Certificate of Incorporation or By-laws, (ii) the performance by the
Company of its obligations pursuant to the Stock Purchase Agreement, including
those related to stock options and those set forth herein, and (iii) any
benefits that have accrued pursuant to the Company's employee benefit plans,
including its 401K plan. These releases specifically include, but are not
limited to, claims under the Civil Rights Act of 1964, as amended by the Civil
Rights Act of 1991, and any other federal or state civil rights claims,
including claims of age discrimination and other rights and claims arising under
the Age Discrimination in Employment Act and the Older Workers Benefit
Protection Act. This release is for any relief, no matter how denominated,
including, but not limited to, wages, back pay, front pay, benefits,
compensatory damages or punitive damages. Former Officer further agrees that he
will not file or permit to be filed on his behalf any such claim.
The Spectrum Group agrees to release, remise, acquit and discharge Former
Officer and his heirs, successors and assigns (the "Former Officer Group"),
jointly and severally, from any and all claims, known or unknown, which the
Spectrum Group has, or may now or in the future have, against any member of the
Former Officer Group and any and all liability which any member of the Former
Officer Group has, or may now or in the future have to the Spectrum Group,
whether denominated claims, demands, causes of action, obligations, damages or
liabilities, arising from any and all bases, including but not limited to any
claims under any policy, agreement, or arrangement or any federal, state, or
local law or regulation, relating to any matter, cause or thing whatsoever from
the beginning of the world to the date of this mutual release and waiver; but
excluding any claims for the performance by the Former Officer of his
obligations pursuant to the Stock Purchase Agreement, including those
set forth herein. This release is for any relief, no matter how
denominated. The Spectrum Group further agrees that it will not file or permit
to be filed on its behalf any such claim.
II. Identified Consideration
On the date hereof, the Company shall pay to Former Officer a cash payment
of [ ] less applicable withholding taxes and other deductions required by law
and issue to Former Officer an option to purchase [ ] shares of the Company's
common stock substantially in the form of Exhibit F to the Stock Purchase
Agreement. Further, the Company and Former Officer each acknowledge that they
have entered into this Agreement in consideration for the mutual release
evidenced hereby and other good and valuable consideration.
The Company has purchased Directors' and Officers' six year run-off
insurance coverage for the benefit of the Company's former directors and
officers, including Former Officer. The Company agrees that it will not cancel
or impair in any way any of the former directors' and officers', including
Former Officer's, entitlement to such insurance coverage.
The Company is duly authorized to enter this Agreement pursuant to a
resolution of the Company's Board of Directors duly adopted at its meeting on
December 10, 1998.
III. No Admission
No party hereto admits any liability of any sort to any other party and
nothing herein is intended to, or shall be deemed to, constitute an admission of
liability of any kind by any party. Neither Former Officer nor the Spectrum
Group shall make any statements of any kind regarding the other party that could
reasonably be interpreted as derogatory or disparaging.
IV. Third-Party Beneficiary Rights
The parties hereto agree that the terms of this Agreement shall inure to
the benefit of and shall be enforceable by each member of the Spectrum Group and
the Former Officer Group, each of whom is intended to be a third-party
beneficiary hereof, and its respective successors and assigns.
V. General Provisions
(a) This Agreement constitutes the entire understanding of Former Officer
and the Company with respect to the subject matter hereof, and supersedes all
prior understandings, written or oral, except as expressly provided herein. The
terms of this Agreement may be changed, modified or discharged only by an
instrument in writing signed by the parties hereto. A failure of a party to
insist on strict compliance with any provision of this Agreement shall not be
deemed a waiver of such provision or any other provision hereof. In the event
that any provision of this Agreement is determined to be so broad as to be
unenforceable, such provision shall be interpreted to be only so broad as is
enforceable.
(b) This Agreement shall be construed, enforced and interpreted in
accordance with and governed by the laws of the State of New York without
reference to the principles and conflicts of law. The courts of New York shall
have jurisdiction to entertain any action arising hereunder.
(c) Former Officer acknowledges that he has been given more than 21 days to
consider this agreement and eight days to revoke his agreement hereto.
VI. Knowing and Voluntary Waiver
Former Officer and the Company each agree and acknowledge that they have
read this Agreement, have consulted with an attorney of his or its choosing with
respect hereto and completely understands the terms and consequences hereof and
that the execution of this Agreement is his or its knowing, free and voluntary
act.
VII. Survival
Notwithstanding anything to the contrary contained herein, Former Officer's
obligations regarding ownership of employee developments, confidentiality and
return of materials as set forth in the Company's Policy Statement on
Confidential Information and Work Product shall survive the execution and
delivery of this Agreement.
______________________________________
Former Officer
SPECTRUM INFORMATION TECHNOLOGIES, INC.
______________________________________
By: Donald J. Amoruso, Chief Executive Officer
EXHIBIT F
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT is made as of this 11th day of December, 1998,
by and between Spectrum Information Technologies, Inc. a Delaware Corporation
("Spectrum") and [ ] (the "Optionee").
WHEREAS, Spectrum and Optionee have entered into a Settlement Agreement
dated December 11, 1998 providing for the settlement of certain obligations of
the Company to Optionee in exchange for good and valuable consideration,
including the issuance of the option to purchase common stock of Spectrum as
described herein.
NOW, THEREFORE, in consideration of the payment described, the mutual
covenants hereinafter set forth and for other good and valuable consideration,
the parties hereto agree as follows:
1. GRANT OF OPTION. Spectrum hereby grants to the Optionee the right and
option (hereafter called the "Option"), to purchase all or any part of an
aggregate of [ ] shares of Spectrum common stock, par value $0.001 per share, on
the terms and conditions set forth herein. This grant is made pursuant to a
resolution of the Company's Board of Directors duly adopted at its meeting on
December 10, 1998.
2. EXERCISE PRICE AND EXPIRATION. The exercise price and the expiration
dates of this Option shall be as follows:
Number of Shares Exercise Price Expiration Date
[ ] $0.35 per share December 11, 2003
3. DURATION. The Option granted hereby shall become exercisable upon
issuance of this Agreement and shall remain exercisable at the stated price
through the expiration date set forth above. To facilitate partial transfer,
exercise or sale, this Option may be subdivided into options in smaller
denominations upon Optionee's request in writing from time to time.
4. NO RESTRICTION: REGISTRATION. This Option and the underlying shares
detailed above are free of any restrictions on transfer by any means, or on
exercise or sale by Optionee or transferee, except for any restrictions under
applicable securities law. The Company shall use its best efforts to register
such option issuances pursuant to a Registration Statement on Form S-8 (if
available) as soon as possible after the date hereof, but agrees that it shall
file the Registration Statement within fifteen (15) days from the date of this
Agreement. All underlying shares to this Option have been previously authorized,
are unissued, and are set aside for the purpose of issuance upon exercise
hereof, in whole or in part, at any time or from time to time. Optionee hereby
agrees that it will not sell, assign, or transfer the Option and underlying
shares following exercise unless they are registered under the Act and under
applicable state securities laws or an exemption from such registration is then
available, according to a legal opinion reasonably acceptable to the Company.
5. MANNER OF EXERCISE OF OPTION. This Option may be exercised, subject to
the terms and conditions contained herein, by delivering written notice to the
Chief Executive
Officer or President or Chief Accounting Officer of Spectrum, at its
principal office no less than three days in advance of the proposed exercise
date. Such notice shall specify the number of shares of common stock with
respect to which the Option is being exercised and the effective date of the
proposed exercise and shall be signed by the Optionee. The notice shall be
accompanied by a certified check or cash in the amount of the aggregate option
exercise price for such number of shares. In no event shall stock be issued or
certificates be delivered until full payment shall have been received by
Spectrum as to such exercise or partial exercise, nor shall Optionee have any
right or status as a shareholder of such underlying shares prior to such
exercise. Certificates for shares of common stock purchased upon the exercise of
the Option shall be issued in the name of Optionee and delivered to the Optionee
as soon as practicable following the effective date on which the Option is
exercised.
6. ADUSTMENT ON RECAPITALIZATION, MERGER OR REORGANIZATION. If the
outstanding shares of the common stock of Spectrum are subdivided, consolidated,
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities of Spectrum through reorganization, merger,
recapitalization, reclassification, capital adjustment or otherwise, or if
Spectrum shall issue common stock as a dividend or upon a stock split, then the
number of shares subject to the unexercised portion of this Option shall be
appropriately adjusted by the Board of Directors. Any such adjustment on
outstanding Options shall be made without change in the total exercise price
applicable to the unexercised portion of the Option. If, in the event of a
merger or consolidation, Spectrum is not the surviving corporation, and the
event that the Agreement of Merger or Consolidation does not provide for the
substitution of a new option for this Option, or for the assumption of this
Option by the surviving corporation, or in the event of the dissolution or
liquidation of Spectrum, the Optionee shall have the right immediately prior to
the effective date of such merger, consolidation, dissolution or liquidation, to
exercise this Option in whole or in part, provided, however, that this Option
shall not be exercisable in whole or in part later than the date noted in
paragraph 2 above. Any adjustments made pursuant to this section shall be made
by the Board of Directors of Spectrum, whose good faith determination in
compliance with Delaware law, as to what adjustment shall be made and the extent
thereof, shall be final, binding and conclusive. In computing any adjustment
hereunder, any fractional share which might otherwise become subject to an
Option shall be eliminated.
SPECTRUM INFORMATION TECHNOLOGIES, INC
By:__________________________________________
Donald Amoruso, Chairman, CEO & President
OPTIONEE
___________________________________________
[Name]
Exhibit No. 99.1
Press release dated December 14, 1998.
For Immediate Release
SPECTRUM
INFORMATION TECHNOLOGIES, INC.
CONTACT: For Media Only: Investors:
Michael Freitag Spectrum Information Technologies, Inc.
Kekst & Company Investor Relations
(212) 593-2655 Tel: (914) 251-1800 ext. 182
Spectrum Information Technologies
Raises Capital;
Names New CEO and Board of Directors
PURCHASE, NY - December 14, 1998. Spectrum Information Technologies, Inc.
(OTC BB: SITI) reported today that Powers & Co., a private investment
organization, has invested $600,000 in the company. In exchange, Spectrum issued
to Powers & Co. 3,000,000 shares of common stock and an option pursuant to which
Powers & Co. may purchase an additional 1,800,000 shares for an additional
$270,000, or $0.15 per share. Spectrum's stock closed at $0.125 per share on
Friday.
In connection with the investment, Spectrum elected Lawrence M. Powers
Chief Executive Officer and Chairman of Spectrum's Board of Directors. Mr.
Powers is the principal of Powers & Co. and was Chairman and Chief Executive
Officer of Spartech Corporation (NYSE: SEH) from 1984 - 1992. At Spartech, Mr.
Powers raised significant capital and led a consolidation in the plastics
processing industry, building revenues from $25 million to $200 million during
his tenure. In connection with the appointment of Mr. Powers, the company's
existing directors resigned from the Board in favor of a new slate of directors
consisting of Reese Schonfeld and Jon M. Gerber. Spectrum's existing officers
also resigned.
Mr. Powers indicated that he intends to implement a strategy related to
Internet marketing and the Board expects to appoint new officers and additional
Board members. Mr. Powers also stated that the new management is currently
considering several alternatives. Spectrum's FastLane Web acceleration service
will continue to be available for a limited time, while the new management
assesses it.
Spectrum's departing Board issued the following statement, "We are pleased
that Powers & Co. has invested in Spectrum, and appointed distinguished board
members. We wish Larry and his new team success going forward."
Mr. Powers is a private investor, educated at Washington University, Yale
Law School and various senior management programs at Harvard Business School. As
a New York securities lawyer, he handled many public offerings and acquisitions.
* more*
Spectrum Information Technologies, Inc.
Page 2
Reese Schonfeld, a new director and investor, has been in the broadcast and
cable news business for over thirty years. He helped found CNN (the Cable News
Network) and was its first Chief Executive. He developed several other news
channels and programs and, in 1992, helped develop the TV Food Network. Mr.
Schonfeld served as president of this network. He was educated at Dartmouth
College, and at Columbia University where he received an M.A. degree and
graduated from its law school.
Jon M. Gerber is a management consultant, with an engineering background in
high-tech components and computer systems. From 1987 through 1994, he was an
on-site management consultant with many large companies where he focused on
improving operations. He has a B.A. in chemistry from Missouri University and
received his M.B.A. in finance from the University of Wisconsin. He presently
conducts his own investment broker/management business in New York.
The new Board is also planning to appoint Robert Ingenito a director, who
will become an additional investor. Mr. Ingenito has for over 25 years been a
key figure in developing the list industry and direct marketing business, using
databases and programs for Intranet and Internet applications. He founded
several companies in these fields, and now owns and manages Access
Communications Systems, a specialized transactional mail company, and Access
Direct Mail Systems, a high volume direct-mail company.
Earlier this year, Spectrum launched FastLane, an on-line Web acceleration
service, and, as previously announced, has been attempting to raise capital to
market the service. In Spectrum's recently filed quarterly report on Form 10-Q
for the period ended September 30, 1998, Spectrum stated that it intended to
seek protection under Chapter 11 of the U.S. Bankruptcy code if it did not
locate capital.
This press release contains statements that are "forward-looking,"
including those concerning the Company's new management and intended business
direction. There can be no assurance that Spectrum's new management team can
successfully implement an Internet marketing strategy. There are many risks
associated with this strategy, including the Company's ability to attract and
retain skilled managerial and technical staff, its low capitalization and its
ability to raise additional capital if necessary.
* * *
Exhibit No. 99.2
Press release dated December 17, 1998.
SPECTRUM
INFORMATION TECHNOLOGIES, INC.
CONTACT: For Media Only: Investors:
Jon M. Gerber Spectrum Information Technologies, Inc.
Spectrum Information Investor Relations
Technologies, Inc. Tel: (914) 251-1800 ext. 182
Tel: (914) 251-1800 ext. 112
Spectrum Will Change Name to
Siti-Sites.com;
Announces Additional Investment
PURCHASE, NY - December 17, 1998. Spectrum Information Technologies, Inc.
(OTC BB: SITI) reported today that it intends to change its corporate name to
Siti-Sites.com, inc. as it changes its direction to Internet marketing. Formal
approval for the name change will be obtained in the next few months, as holders
of two-thirds of the Company's common stock have indicated prior approval.
Lawrence M. Powers, Spectrum's newly appointed Chairman and Chief Executive
Officer, stated, "Siti-Sites.com is an appropriate name for our new strategy
focusing on Internet marketing." Mr. Powers became the Company's CEO in
connection with a $700,000 total equity investment which he led with a 70%
participation. In an announcement earlier this week, Spectrum named a new Board
of Directors and two new corporate officers, and stated that the new management
team is currently considering several marketing projects. Mr. Powers said today
that, "Siti-Sites.com plans to develop a business structure that utilizes
database and direct marketing technologies, applying them to Internet businesses
to drive revenues."
The Company also announced that Robert Ingenito had become a participant
with Mr. Powers, investing $100,000 in the Company, and has joined its Board of
Directors. The Company sold to Mr. Ingenito 500,000 shares of common stock and
an option pursuant to which he may purchase an additional 300,000 shares for
$0.15 per share, a then participation equivalent to a new director-investor,
Reese Schonfeld, described in the earlier announcement.
Mr. Powers stated, "Bob Ingenito is also a successful entrepreneur. We are
fortunate to have him invest in the Company and join our Board."
Mr. Ingenito has for over 25 years been a key figure in developing the list
industry and direct marketing business, using databases and programs for
Intranet and Internet applications. He founded several companies in these
fields, and he was president and a director of Acxiom Corp. (NYSE: ACXM), now a
$700 million database company, at its inception in the 1980s as CCX Network. Mr.
Ingenito now owns and manages Access Communications Systems, a specialized
transactional mail company, and Access Direct Systems, a high volume direct-mail
company, with total revenues over $35 million. Mr. Powers was also a CCX Network
director when Mr. Ingenito was president, and has been a consultant in its
initial public offering.
* more *
Siti-Sites.com
December 17, 1998
Page 2
This press release contains statements that are "forward-looking,"
including those concerning the Company's new management and intended business
direction. There can be no assurance that Spectrum's new management team can
successfully implement an Internet marketing strategy. There are many risks
associated with this strategy, including the Company's ability to attract and
retain skilled managerial and technical staff, its low capitalization and its
ability to raise additional capital if necessary.
* * *