Employment Agreement [Amendment] - Infonautics Inc. and Joshua Kopelman
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment To Employment Agreement (the "Amendment") is an
amendment to the Employment Agreement dated January 1, 1993 (the "Employment
Agreement") by and between Infonautics, Inc., a Pennsylvania corporation
formerly known as Infonautics Corporation (the "Company" or the "Corporation")
and Joshua Kopelman (the "Employee"). This Amendment is made as of this 17 day
of June 1999.
WHEREAS, the Board of Directors of the Company (the "Board")
has previously determined that it is in the best interests of the Company and
its shareholders to assure that the Company will have the continued dedication
of the Employee and to provide the Employee with certain compensation and
benefits that meet the expectations of Employee and are competitive with those
of employees comparably engaged at other corporations.
WHEREAS, to accomplish these objectives, the Compensation
Committee of the Board has authorized the Corporation to enter into this
Amendment.
NOW, THEREFORE, the parties hereto intending to be legally
bound, and in exchange for valuable and sufficient consideration, agree as
follows:
1. Paragraph 7 of the Employment Agreement is hereby
amended and restated in its entirety to read as follows:
"7. NON-DISCLOSURE
(a) At all times after the date
hereof, including after termination of this Agreement for any
reason, Employee shall not, except with the express prior written
consent of the President of the Corporation, directly or
indirectly:
(1) communicate, disclose or
divulge to any Person, or use for his own benefit, any
confidential knowledge or confidential information
(collectively referred to as "Information") which he may have
acquired, pursuant to his employment hereunder, concerning the
conduct and details of the business of Corporation or its
shareholders, including, but not limited to, names of
customers or prospective customers, suppliers, trade secrets,
techniques, equipment, materials, pricing, royalties, costs,
marketing methods, operations, policies, prospects and
financial condition to the extent the Information is
confidential to the Corporation. The foregoing restrictions on
disclosure and use of Information do not extend to any item of
Information which is
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(a) publicly known at the time of delivery under this
Agreement, (b) is lawfully received by Employee from a third
party without violation of any obligation of confidentiality
to the Corporation, (c) is disclosed by the Corporation to a
third party without restrictions on its disclosure, or (d)
becomes publicly known through no fault of the Employee;
(2) solicit or induce any
employee, consultant or other agent of the Corporation or any
affiliate of the Corporation (a "Corporate Employee") to leave
the employ of the Corporation or otherwise terminate their
relationship with the Corporation, without prior consultation
with, and written approval from, the President of the
Corporation. So long as Employee is in compliance with the
foregoing non-solicitation provision of this Section 7(a)(2),
such non-solicitation provision shall not apply if a Corporate
Employee initiates contact with Employee. Furthermore,
notwithstanding the non-solicitation provision of this Section
7(a)(2), the Corporation acknowledges that Employee may,
without prior consultation with or written approval from the
President of the Corporation, solicit or induce not more than
four (4) Corporate Employees (consisting of two (2) technical
people, one (1) administrative person , and one (1)
non-technical or other administrative person, but in no event
including any current officer of the Corporation) to leave the
employ of the Corporation or otherwise terminate their
relationship with the Corporation;
(3) for a period of 2 years
after termination, make or endorse any statement which
criticizes, denigrates or otherwise reflects adversely on the
Corporation.
(b) If any portion of Section 7(a) or the application
thereof is deemed invalid or unenforceable, then the other portions of
Section 7(a), and of all other terms of this Agreement, or the
application thereof shall not be affected thereby and shall be given
full force and effect without regard to the invalid or unenforceable
portions."
2. Paragraph 8 of the Employment Agreement is hereby
amended and restated in its entirety to read as follows:
"8. TERMINATION.
8.1 The Board of Directors of the Company shall have
the right, at any time upon prior written Notice of
Termination satisfying the requirements of Section
8.5(c), to terminate Employee's employment, including
termination for just cause, but any termination other
than for just cause
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shall not prejudice Employee's right to compensation
or other benefits under this Agreement. For purposes
of this Agreement, "termination for just cause" shall
mean termination for personal dishonesty, willful
misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform
stated duties, willful violation of any law, rule or
regulation affecting the Company or final
cease-and-desist order to be enforced by any
regulatory agency with jurisdiction over the Company
or any of its affiliates or material breach of any
provision of this Agreement.
8.2 In the event employment is terminated for just
cause pursuant to Section 8.1, Employee shall have no
right to compensation or other benefits for any
period after such date of termination. In the event
employment is terminated for just cause, Employee
shall have the right, at his option, to appear at the
next scheduled regular or special meeting of the
Board of Directors of the Company at which a quorum
of the Board is present so that the Board may hear
argument from the Employee or his counsel or both and
reconsider the termination and the basis of
termination. The Board shall deliver to Employee its
determination in writing within seven business days
after such meeting, failing which, Employee's
termination shall be deemed to have been revoked. If
the Board timely delivers its written determination,
this procedure shall not prejudice the rights of
either party under Section 11 (Arbitration).
8.3. Employee shall have the right, upon prior
written Notice of Termination of not less than
fifteen (15) days satisfying the requirements of
Section 8.5(c) hereof, to terminate his employment
hereunder, but in such event, Employee shall have no
right after the date of termination to compensation
or other benefits. If Employee provides a Notice of
Termination for good reason, as defined, the date of
termination shall be the date on which Notice of
Termination is given.
8.4 In the event that Employee is terminated in a
manner which violates the provisions of Section 8.1,
as determined by arbitration in accordance with
Section 11, Employee shall be entitled to
reimbursement for all reasonable costs, including
attorneys' fees, in challenging such termination.
Such reimbursement shall be in addition to all rights
which Employee is otherwise entitled under this
Agreement. Notwithstanding the above, Employee shall
be entitled to indemnification from the Company to
the full extent contemplated by the bylaws of the
Company and under any written indemnification
agreement between the parties. In addition, if
Employee serves as a director, officer or employee of
any
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affiliate of the Company, he shall be entitled to
indemnification and exculpation from liability to the
full extent permitted by applicable law, and the
Company agrees to cause all necessary provisions to
be included in, or changes made to, the Articles of
Incorporation or by-laws of such affiliates required
to accomplish the foregoing.
8.5(a). Employee may terminate his employment
hereunder for good reason. For purposes of this
Agreement, "good reason" shall mean:
(i) A failure by the Company to comply with
any material provision of this Agreement,
which failure has not been cured within ten
(10) days after written notice of such
noncompliance has been given by Employee to
the Company; or
(ii) subsequent to a change in control of
the Company and without Employee's express
written consent:
(1) the assignment to Employee of
any duties inconsistent with
Employee's positions, duties,
responsibilities and status with the
Company; or
(2) a change in Employee's
reporting responsibilities,
titles or offices as in effect
immediately prior to a change in
control of the Company; or
(3) any removal of Employee from, or
any failure to re-elect Employee to,
any of such positions, except in
connection with a termination of
employment for just cause, death,
retirement or pursuant to Section
8.1; or
(4) a reduction by the
Company in Employee's annual salary
as in effect immediately prior to a
change in control or as the same may
be increased from time to time; or
(5) the failure of the Company to
continue in effect any bonus,
benefit or compensation plan, life
insurance plan, health and accident
plan or disability plan in which
Employee is participating at the
time of a change in control of the
Company, or the taking of any action
by the Company which would adversely
affect Employee's participation in
or materially reduce Employee's
benefits under any such plans; or
(6) any substantial change in
location of the Company's office or
place where Employee is required to
render services for the Company; or
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(iii) any purported termination of
Employee's employment which is not effected
pursuant to a Notice of Termination
satisfying the requirements of paragraph (c)
hereof (and for purposes of this Agreement
no such purported termination shall be
effective).
8.5(b). For purposes of this Agreement, a "change in
control of the Company" shall mean a change in
control of a nature that would be required to be
reported in response to Item 6(e) of Regulation 14A
promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act") whether or not
the Company is then subject to such reporting
requirement; provided that, without limitation, such
a change in control shall be deemed to have occurred
if (I) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act in effect on the
date first written above), other than the Company or
any "person" who on the date hereof is a director or
officer of the Company, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the
Company representing 25% or more of the combined
voting power of the Company's then outstanding
securities, or (ii) during any period of two
consecutive years during the terms of this Agreement,
individuals who at the beginning of such period
constituted the Board of Directors of the Company
cease for any reason to constitute at least a
majority thereof, unless the election of each
director who was not a director at the beginning of
such period has been approved in advance by directors
representing at least two-thirds of the directors
then in office who were directors at the beginning of
the period.
8.5(c). Any termination of Employee's employment by
the Company or by Employee shall be communicated by
written Notice of Termination to the other party
hereto only after the expiration of any applicable
grace periods which may be set forth elsewhere in
this Agreement. For purposes of this Agreement, a
"Notice of Termination" shall mean a dated notice
which shall (i) indicate the specific termination
provision in the Agreement relied upon; (ii) set
forth in reasonable detail the facts and
circumstances claimed to provide a basis for
termination of Employee's employment under the
provisions so indicated; (iii) specify a date of
termination which shall not be less than fifteen (15)
days after such Notice of Termination is given,
except in the case of the Company's termination of
Employee's employment for just cause pursuant to
Section 8.1, in which case the Notice of Termination
may specify a termination date as of
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the date such Notice of Termination is given; and
(iv) be given in the manner specified in Section 9.
8.5(d). If Employee terminates his Employment for
good reason pursuant to Subpart (ii) of Section
8.5(a) hereof, such employment termination may
specify a termination date as of the date such Notice
of Termination is given, provided such Notice is
given in the manner specified in Section 9."
3. The Company and Employee agree that the Royalty Agreement
entered into as of January 1, 1993 between Infonautics Corporation (now known as
Infonautics, Inc.) and Joshua Kopelman (the "Royalty Agreement") is revoked in
its entirety and canceled as of the date of this Amendment. Employee
acknowledges and agrees that the Company owes him no other monies under the
terms of the Royalty Agreement.
4. In consideration of the above modifications to the
Employment Agreement and the revocation of the Royalty Agreement, the Company
paid to Employee, on April 15, 1999, the total sum of Twenty Thousand Dollars
($20,000.00), which sum represented payment of (1) Fifteen Thousand Dollars
($15,000.00) for Employee's 1998 bonus; and (b) Five Thousand Dollars
($5,000.00) as an advance on Employee's 1999 bonus, which would not otherwise be
due and payable until on or after January 1, 2000.
5. In further consideration of the modifications to the
Employment Agreement and revocation of the Royalty Agreement, the Company shall
make a payment or investment on the following terms:
(a) By June 18, 1999, the Company shall provide written notice
to Employee of the Company's election to make the payment specified in Section
5(b) below or to make the investment specified in Section 5(c) below. In the
event the Company fails to provide the notice specified in the previous
sentence, the Company shall be deemed to have provided the required notice to
make the investment specified in Section 5(c). The Company is obligated to make
only the payment specified in Section 5(b) or the investment specified in
Section 5(c), but not both. The Company shall have no obligation to make the
payment or the investment specified in this Section 5 in the event that Employee
is terminated for just cause by the Company.
(b) If the Company so elects, the Company will pay Employee a
total lump sum of One Hundred and Sixty Thousand Dollars ($160,000.00), which
sum represents payment of wages from which all required withholdings will be
made. Payment of such $160,000.00 will be made by the Company to Employee on the
following terms:
(i) If Company has under Section 5(a) provided
written notice to Employee of the Company's election to make
the payment specified in this Section 5(b) by
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June 18, 1999, then the Company shall make such payment on the earlier of (x)
the Company's receipt of at least $1 million cash as a result of equity, debt or
alternative financing, or (y) $20,000.00 on July 1, 1999, $20,000.00 on August
1, 1999, $60,000.00 on September 1, 1999, and $60,000 on October 1, 1999; or
(ii) If Company has under Section 5(a) provided
written notice to Employee of the Company's election to make
the investment specified in Section 5(c) and Newco (as defined below) has not
been formed by Employee by July 1, 1999 (or Newco's formation, existence, and
validity has not been confirmed to the Company to its reasonable satisfaction)
as provided for in Section 5(c), then the Company shall make the payment
specified in this Section 5(b) on the earlier of (x) the Company's receipt of at
least $1 million cash as a result of equity, debt or alternative financing, or
(y) $20,000.00 on August 1, 1999, $20,000.00 on September 1, 1999, $60,000.00 on
October 1, 1999, and $60,000 on November 1, 1999.
(c) If the Company so elects and subject to the provisions of
Section 5(b)(ii) above, if Employee has formed a new company by July 1, 1999 to
pursue the business plan identified to and discussed with the Board on May 27,
1999 ("Newco") and Employee has provided the Company with confirmation to its
reasonable satisfaction of the formation, existence, and validity of Newco, the
Company will invest a total sum of Two Hundred Eighty Thousand Dollars
($280,000.00) in Newco in exchange for a ten percent (10%) equity ownership
interest in Newco. The Company's investment in Newco shall be made on the
earlier of (x) the Company's receipt of at least $1 million cash as a result of
equity, debt or alternative financing, or (y) $30,000.00 on July 1, 1999,
$50,000.00 on August 1, 1999, $80,000.00 on September 1, 1999, and $120,000.00
on October 1, 1999.
6. If the Company makes the investment in Newco as provided
for in Section 5(c) above, the Company shall have the right to nominate one
person to serve on the Board of Directors (or its equivalent should Newco be a
legal entity with other than a board of directors) of Newco. Employee shall vote
to approve the Company's nominee to serve on the Board of Directors of Newco and
shall take all appropriate and required steps with Newco and its Board of
Directors to secure the approval of the Company's nominee to serve on the Board
of Directors of Newco for a minimum term of one (1) year. However, Employee
reserves the right to approve in advance the Company's nominee for the Board of
Directors of Newco, such approval not to be unreasonably withheld.
7. If Employee terminates his employment with Company prior to
July 15, 1999, Company and Employee (or Newco) shall enter into a separate
consulting agreement for the personal services of Employee to provide up to
seven (7) days of consulting to Company during each of the two (2) months (where
months consist of thirty (30) consecutive calendar days) immediately following
Employee's termination of employment with Company, up to five (5) days of
consulting to the Company during each of the next two (2) months, and up to
three
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(3) days of consulting to the Company during each of the next two (2) months.
Infonautics will pay Employee (or Newco, as the case may be) $1,000 per day for
such consulting services of Employee. Payment shall be made net thirty (30) days
upon Company's receipt of Employee's monthly invoice for such consulting
services. Both parties shall have the option to terminate (or reduce the time
commitment) for the consulting agreement any time after September 1, 1999 by
their mutual written agreement.
IN WITNESS WHEREOF, the undersigned, intending to be legally
bound, have executed this Amendment as of the date first written above.
/s/ Joshua Kopelman
JOSHUA KOPELMAN
/s/ Van Morris
Infonautics, Inc.
By: Van Morris
Title: President