Sample Business Contracts


Marvinco LLC Agreement - Infonautics Inc. and Marvin I. Weinberger



February 12, 1998



Marvin I. Weinberger 
Chairman and Chief Executive Officer 
Infonautics, Inc. 
West Valley Corporate Center 
900 West Valley Road
Wayne, PA 19087

     Re:  Formation of Marvinco
          ---------------------

Dear Marvin:

The purpose of this letter is to confirm the understandings that were reached
between the board of directors of Infonautics, Inc. and you on Tuesday, December
16, 1997 as subsequently amended by the parties.  In addition to these
understandings, we also wanted to reiterate that we look forward to a spirit of
cooperation and a good faith exploration of potential synergies between
Infonautics and Marvinco on an on-going basis, which we hope will help establish
the leadership and success of both companies within our industry.

(a)  After extensive review, the board of directors of Infonautics has concluded
     that it is not in the company's best interest to pursue the Electric
     Schoolhouse project at this time.  You have formed an entity named
     "Marvinco, LLC" which will pursue the Electric Schoolhouse project.  In
     return for the equity interest described in (b) below, Infonautics will
     transfer to Marvinco its rights in certain trademarks, trademark
     applications, domain names, and tangible Electric Schoolhouse materials as
     set out below in this paragraph (a).  In addition, Marvinco and Infonautics
     will share on a nonexclusive basis all concepts, ideas, etc. contained
     within or represented by those Electric Schoolhouse materials as set out
     below in this paragraph (a).  Finally, you have also requested certain
     other rights to non-Electric Schoolhouse Innovation Factory materials and
     concepts/ideas, and we are willing to proceed as follows in this paragraph
     (a) with respect to those.  Therefore, it being understood that Infonautics
     makes no representation or warranty of any nature in respect of any
     intellectual property rights, we agree to the following:

          -    Infonautics will assign to Marvinco the "Electric Schoolhouse"
               trademark, trademark application and eschoolhouse.com domain
               name.  The final legal clearance for Marvinco to use the
               "Electric 

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               Schoolhouse" trademark will be Marvinco's responsibility.

          -    Infonautics will assign to Marvinco all tangible Electric
               Schoolhouse materials (business plans, slide shows, demos,
               business model spreadsheets, mock ups and the like) that are
               specified on the attached Exhibit A (which the parties agree is,
               as of the date of this letter, in a preliminary form, with any
               subsequent revisions to such exhibit to be agreed to in good
               faith in writing by the parties).  It is understood that all
               tangible and intangible Electric Schoolhouse materials and
               concepts/ideas that either you personally or Marvinco have paid
               for (or for which you personally or Marvinco are obligated to
               reimburse Infonautics) (for example, market research, business
               plans) and developed (or had developed) after November 1, 1997
               are owned by you personally and/or Marvinco.  Such tangible and
               intangible Electric Schoolhouse materials and concepts/ideas
               owned by you and/or Marvinco are those specified on the attached
               Exhibit A-1 (which the parties agree is, as of the date of this
               letter, in a preliminary form, with any subsequent revisions to
               such exhibit to be agreed to in good faith in writing by the
               parties).

          -    Infonautics will assign the "Innovation Factory" trademark,
               trademark application and innovationfactory.com domain name to
               Marvinco.  The final legal clearance for Marvinco to use the
               "Innovation Factory" trademark will be Marvinco's responsibility.

          -    Infonautics and Marvinco agree that all concepts, ideas, etc.
               contained within or represented by the Electric Schoolhouse
               materials will be shared on a non-exclusive basis equally between
               Marvinco and Infonautics.  This means, for example, that Marvinco
               would be free independently to pursue and exploit any concepts,
               ideas, etc. contained within or represented by the Electric
               Schoolhouse materials and Infonautics would likewise be free
               independently to do the same, each without any restriction or
               obligation to the other.  The Electric Schoolhouse concepts/ideas
               owned by you and/or Marvinco as specified in Exhibit A-1 will not
               be available for use by Infonautics unless (i) such
               concepts/ideas are represented in or are obvious from any of the
               other concepts, ideas, etc. contained within or represented by
               the Electric Schoolhouse materials specified in Exhibit A or (ii)
               are otherwise available to Infonautics through means other than
               reference to or reliance upon the Electric Schoolhouse materials
               or concepts/ideas specified in Exhibit A-1.

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          -    Infonautics will, at Marvinco's request, license the "Datatomics"
               trademark to Marvinco on a non-exclusive basis either (i) in
               connection with a license to Marvinco to use certain "Datatomics"
               products or services of Infonautics or (ii) in connection with
               Marvinco's use of other products or services subject to
               Infonautics' prior approval not to be unreasonably withheld.  In
               connection with any such trademark license, Infonautics will
               also, at Marvinco's request, provide to Marvinco a dedicated
               portion of the domain name datatomics.com (for example,
               eschoolhouse.datatomics.com or www.datatomics.com/eschoolhouse)
               for Marvinco's use.

          -    Marvinco has expressed an interest in calling the version of
               Electric Library included in the Electric Schoolhouse offerings
               "Homework Helper."  Infonautics' agreement specified in Exhibit
               A-2 expressly permits Infonautics to authorize others to use the
               Homework Helper mark solely in connection with an online service
               such as Electric Library (and any special software used with such
               service).  Infonautics cannot under the agreement authorize
               others to use the Homework Helper mark for any other purpose. 
               Infonautics therefore will, at Marvinco's request, license the
               Homework Helper mark to Marvinco on a non-exclusive and perpetual
               basis for Marvinco to identify the version of Electric Library
               that Infonautics will supply to Marvinco under the remarketing
               agreement pursuant to paragraph (e) below.  Infonautics cannot
               authorize Marvinco to use the Homework Helper mark to identify
               any other service or product, except the version of Electric
               Library that it might offer as part of Electric Schoolhouse. 
               Infonautics cannot assign the Homework Helper mark to Marvinco
               because Infonautics has other contractual commitments for that
               mark's use.

          -    Marvinco has also expressed an interest in acquiring the domain
               name homeworkhelper.com or acquiring rights to use that domain
               name.  Because the homeworkhelper.com domain name complements our
               Homework Helper trademark, Infonautics cannot assign the domain
               name to Marvinco.  However, in connection with a "Homework
               Helper" trademark license referenced above Infonautics will, at
               Marvinco's request, provide to Marvinco a dedicated portion of
               the domain name homeworkhelper.com (for example,
               eschoolhouse.homeworkhelper.com or
               www.homeworkhelper.com/eschoolhouse) for Marvinco's use.

          -    Marvinco has also expressed an interest in having Infonautics
               provide a link on its Homework Helper web site to the Electric
               Schoolhouse web site.  Upon Marvinco's request to Infonautics to 


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               include a link to the Electric Schoolhouse web site from the
               Homework Helper web site, Infonautics will entertain such a
               request in its good faith and reasonable discretion, and the
               decision whether or not to include such a link will be made
               solely by Infonautics.

          -    Infonautics will, at Marvinco's request, license the "I-Space
               Navigator" trademark to Marvinco on a non-exclusive basis either
               (i) in connection with a license to Marvinco to use certain
               "I-Space Navigator" products or services of Infonautics or (ii)
               in connection with Marvinco's use of other products or services
               subject to Infonautics' prior approval not to be unreasonably
               withheld.  It is understood, however, that Infonautics will only
               be able to license the "I-Space Navigator" trademark to Marvinco
               beginning October 1, 1998 if by that date a pending proposal we
               have with another company that contemplates the use of this mark
               is not agreed to in a contract or letter of intent.  Subject to
               the same October 1, 1998 caveat as in the previous sentence, in
               connection with any such "I-Space Navigator" trademark license
               Infonautics will also, at Marvinco's request, provide to Marvinco
               a dedicated portion of the domain name ispacenav.com (for
               example, eschoolhouse.ispacenav.com or
               www.ispacenav.com/eschoolhouse) for Marvinco's use or a dedicated
               portion of the domain name ispacenavigator.com.

          -    Infonautics and Marvinco agree that all non-Electric Schoolhouse
               Innovation Factory materials and concepts/ideas (for example,
               Student.com, Reading.com, and Cosmic Teacher) will be shared on a
               non-exclusive basis between Marvinco and Infonautics so that each
               party will be free independently to pursue and exploit these
               materials and concept/ideas, each without any restriction or
               obligation to the other.  Infonautics agrees to make all such
               materials and concepts/ideas available to Marvinco on a
               non-exclusive licensed basis subject to the following:

               First, the non-Electric Schoolhouse Innovation Factory materials
               and concepts/ideas subject to this provision are those specified
               on the attached Exhibit B.

               Second, in order to avoid inadvertent trademark conflicts between
               Marvinco and Infonautics for any non-Electric Schoolhouse
               Innovation Factory trademarks, Infonautics will, at Marvinco's
               request, license those trademarks to Marvinco on a non-exclusive
               basis on the same terms as set out above for "Datatomics."  If
               Infonautics owns the domain name corresponding to a licensed 


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               mark it will, at Marvinco's request, provide to Marvinco a
               dedicated portion of the domain name for Marvinco's use.

               Third, any program code covered by this provision will be
               licensed to Marvinco at its request on a non-exclusive basis
               under a standard, reasonable software license agreement.

     All trademark licenses from Infonautics to Marvinco shall be subject to
     Infonautics' right to control the quality and nature of its licensed marks,
     and all such quality control rights shall be exercised by Infonautics in
     good faith according to the customary and reasonable standards for such
     provisions found in trademark licenses.

(b)  On an equity basis, it is expected that Infonautics will initially own 10%
     of Marvinco and you personally will own 90%, it being understood that you
     may have more than 90% of the voting power.  Infonautics' interest will not
     be diluted through any purchase of additional interests in Marvinco by you
     personally, until the earlier of (i) the first anniversary of the Effective
     Date (as defined in paragraph (h) below) or (ii) such time as Marvinco
     completes it first round of significant funding from third parties in the
     amount of at least $3,000,000 exclusively from such third parties.  It is
     understood that Infonautics' interest may be diluted during this period,
     along with your interest personally being diluted, by purchase of equity in
     Marvinco by third parties (subject to the terms of the previous sentence),
     issuance of interests in acquisitions and issuance of interests to
     employees of or vendors to Marvinco.  In addition, until Marvinco is a
     public company, Infonautics' will have a right to maintain its pro-rata
     equity interest through purchase of additional equity in Marvinco on the
     same terms offered in subsequent financings; provided, however, that such
     right shall terminate upon the expiration of the remarketing agreement
     pursuant to paragraph (e) below due to Infonautics.

(c)  All expenses of any nature incurred by Infonautics after November 1, 1997
     in connection with pursuing the Electric Schoolhouse project (except for
     routine, non-travel expenses, such as office supplies incurred or to be
     incurred while Marvinco is still located in Infonautics facilities, and
     rent which has commenced as of January 1, 1998) will be the sole
     responsibility of Marvinco, and Infonautics will be reimbursed for all such
     expenses incurred through the Effective Date, and such reimbursement
     payment by Marvinco shall be made to Infonautics by July 31, 1998 (as such
     date may be extended one day at a time for each day after January 30, 1998
     until the Effective Date).  The parties will use their respective good
     faith, best efforts promptly to identify all expenses subject to
     reimbursement under this paragraph, and in any event by no later than the
     Effective Date.  In addition, Infonautics had previously advanced you
     $25,000, which loan will be repaid in full by July 31, 1998 (as such date
     may be extended one day at a time for each day after January 30, 1998 until
     the Effective Date).  

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     All reimbursements and repayments to Infonautics by Marvinco shall be in
     cash, unless otherwise agreed to in advance by Infonautics.  All
     Marvinco-based or Marvinco-initiated Electric Schoolhouse expenses of any
     nature, regardless of when incurred, shall be the sole responsibility of
     Marvinco.

(d)  Marvinco will enter into a services agreement with Infonautics pursuant to
     which Infonautics will provide ordinary and necessary services to Marvinco
     through April 30, 1998 at Infonautics' cost.  This will include use of up
     to 1,500 square feet of space at Infonautics.  Amounts due under the
     services agreement will be billed each month, and payable within 15 days
     after receipt of such invoice.  On the Effective Date, the persons listed
     on Exhibit B-1 will resign as employees of Infonautics (all without
     receiving any severance pay) and become employees of Marvinco; however,
     Infonautics will reimburse Marvinco on a monthly basis for the costs of
     your administrative assistant's (specified on Exhibit B-1) salary and
     benefits through December 31, 1998.  Infonautics will also use its best
     efforts as part of the severance agreement to provide benefits to employees
     of Marvinco through April 30, 1998, to the extent Infonautics is permitted
     to do so, and Marvinco will reimburse the associated costs.  Unfortunately,
     because of software license restrictions, Marvinco will not be entitled to
     use Infonautics' Lotus Notes system.  However, Infonautics will permit
     Marvinco to use the portion of the general contacts data base consisting
     solely of general company contact information (and not any other company
     information such as customer or customer prospect data bases that we may
     have now or develop later) upon execution by Marvinco of a confidentiality
     agreement acceptable to Infonautics.  Infonautics will supply such general
     contacts data base in the format(s) reasonably requested by Marvinco (for
     example, in printed form or on disk).  Infonautics will also permit you
     and, in accordance with the terms of Exhibit B-1, those persons listed in
     that exhibit to keep without charge the primary personal computers now used
     by them in the office.

(e)  Marvinco will have the right to distribute Electric Library, as set forth
     in the attached remarketing agreement at Exhibit C.

(f)  The royalty agreement dated January 1, 1993 between Infonautics and you,
     and the employment agreement dated as of the same date between Infonautics
     and you, will both be terminated in their entirety upon issuance to you by
     Infonautics of 125,000 shares of Class A common stock.  Within thirty days
     after issuance of such shares, Infonautics will (contingent upon receipt of
     waivers of any piggyback registration rights) file a selling shareholder
     registration statement on Form S-3 covering the resale of such shares, and
     use its best efforts to have such registration statement become effective
     and stay effective until the shares may be sold under Rule 144.  In
     addition, Infonautics will continue your salary through December 31, 1998,
     and use its best efforts to make available to you your current health and
     disability insurance through such date if and only if 

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     Infonautics is permitted to do so under applicable law and the terms of
     such benefit plans.  If Infonautics is not permitted to provide you with
     such health insurance coverage during this one-year period, it will pay you
     an amount equal to your COBRA cost during this one-year period.  Subject to
     any applicable restrictions, Infonautics will use its best efforts to
     transfer to you the $3,000,000 life insurance policy it currently holds and
     change the beneficiary under that policy from Infonautics to a beneficiary
     you designate.

     Finally, you have two incentive stock option (ISO) grants made to you by
     Infonautics: 150,000 shares at $11.50/share dated February 29, 1996 (the
     "February 1996 Grant") and 100,000 shares at $1.875/share dated May 29,
     1997 (the "May 1997 Grant").  You have requested that we look into whether
     the existing 90 day window within which you must exercise these options
     following the date on which you no longer are considered an employee of
     Infonautics may be extended.  The company will agree to proceed as follows:

          (i) With respect to the February 1996 Grant, the company will agree to
          amend this grant to extend the termination and exercise period through
          December 31, 1998.  In addition, Infonautics will accelerate vesting
          of this grant so that until December 31, 1998 you would be able to
          exercise up to one-half (or 75,000) of the shares at $11.50/share.  It
          is understood that as a result of this amendment the February Grant
          will be treated as non-qualified stock option for tax purposes, which
          will result in your having a taxable event upon exercise of the
          option.
     
          (ii) With respect to the May 1997 Grant, the grant will remain an ISO
          grant and the company will accelerate its vesting so that you will be
          able to exercise up to one-half (or 50,000) of the shares at
          $1.875/share.  You will have 90 days following the Effective Date
          (upon which you will no longer be an employee of the company) to make
          the exercise of these shares.  If you so request, Infonautics will
          agree to loan you the money required to exercise your option under the
          May 1997 Grant, subject to any applicable restrictions on the company.
          The terms of such a loan will be subject to a final loan agreement
          between you and Infonautics, but will at a minimum contain the
          following terms: you will repay the loan to the company over three
          years in equal quarterly installments at a market interest rate for a
          loan of this kind; the company will take the exercised shares as
          collateral for the loan; the company will have a full recourse loan
          right to recover the remaining principal from you in the event of a
          default under the loan; should you sell any of the exercised shares,
          the proceeds from such a sale or sales would first go towards paying
          off the loan; the loan receivable would be freely assignable by
          Infonautics; and the loan would be structured so that effectively no
          cash will leave the company.

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(g)  Upon the Effective Date, you will resign from all positions you have with
     Infonautics and its subsidiaries (except as a director of Infonautics,
     Inc.).  In addition, the parties will agree not to disparage each other in
     any manner whatsoever in the future.

(h)  The parties understand the completion of this transaction is subject in all
     respects to receipt by the board of directors of Infonautics of a fairness
     opinion in respect of all or certain aspects of the transaction in form and
     substance satisfactory to the board of directors of Infonautics.  It is the
     parties' intention to have this transaction (including the completion and
     approval of the fairness opinion) completed no later than Friday, March 6,
     1998, but failure to complete this transaction by such date will not affect
     the parties' obligations hereunder; such date of completion shall be
     referred to as the "Effective Date" in this letter.  The parties will use
     their respective good faith, best efforts promptly to complete their
     respective obligations under this agreement by no later than Friday, March
     6, 1998 (except as may be otherwise specified in this letter or required by
     applicable laws or regulations).

(i)  The parties agree that the press release attached as Exhibit D hereto will
     be distributed through the usual Infonautics press release channels by no
     later than the date of signing of this letter by both parties.  Until the
     Effective Date, no public disclosure of any nature whatsoever will be made
     by any party in respect of this transaction except for the press release
     and as may otherwise be required by law.

                               *          *          *

If the above correctly sets forth our entire understanding in this regard,
kindly execute the enclosed copy of this letter in the space provided and return
it to me as soon as possible.

Very truly yours,

/s/ Gerard J. Lewis, Jr.

Gerard J. Lewis, Jr.
Vice President and General Counsel


ACKNOWLEDGED AND 
AGREED TO:


/s/ Marvin I. Weinberger


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Marvin I. Weinberger

Date:  February 12, 1998

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