Employment Agreement [Amendment No. 1] - Infonautics Inc. and Van Morris
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This Amendment No. 1 (the "Amendment") to Employment Agreement dated
September 5, 1995 (the "Employment Agreement") by and between Infonautics,
Inc., a Pennsylvania corporation formerly known as Infonautics Corporation
(the "Corporation"), and Van Morris ("Employee") is made as of the 4th day of
November, 1996.
WHEREAS, the Board of Directors of the Corporation (the "Board") has
previously determined that it is in the best interests of the Corporation and
its shareholders to assure that the Corporation will have the continued
dedication of the Employee and to provide the Employee with compensation and
benefits that meet the expectations of Employee and are competitive with
those of employees at comparable levels 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, agree
as follows:
1. The first paragraph of Paragraph 3 of the Employment Agreement is
hereby amended and restated in its entirety to read as follows:
"The Corporation will grant to Employee the right and
option to purchase all or any part of 76,000 Shares on terms
and conditions set forth in a 1995 Incentive Stock Option
Agreement between Infonautics Corporation and Van Morris
dated September 5, 1995, subject to amendments to provide
for accelerated vesting upon change of control and upon
Employee's termination without Cause. Notwithstanding the
previous two sentences, if the accelerated vesting of the
option would make a change of control ineligible for pooling
of interest accounting treatment under APB No. 16 and, but
for such accelerated vesting provision, the change of
control would otherwise qualify for such treatment, the
Employee shall receive a replacement or substitute stock
option issued by the surviving or acquiring corporation."
2. Paragraph 6 of the Employment Agreement is hereby amended and
restated in its entirety to read as follows:
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"6. Severance
(a) If the Corporation terminates this Agreement and
Employee's employment after September 18, 1995 without Cause,
then the Corporation shall pay to the Employee in a lump sum in
cash within 30 days of the date of such termination an amount
equal to the greater of (i) the amount determined by
multiplying (A) the ratio determined by dividing the number of
days remaining on such date until April 29, 1997 by 365 by (B)
Employee's annual salary as determined on such termination date
and (ii) Employee's annual salary as determined on such
termination date. Payments to be provided hereunder shall in
all respects be conditioned upon (i) the prior receipt by the
Corporation from Employee of a general release of all claims of
any nature whatsoever which Employee had, has or may have
against the Corporation and related parties relating to his
employment by the Corporation (other than his entitlement under
any employee benefit plan or program sponsored by the
Corporation in which he participated and under which he has
accrued a benefit) or the termination thereof, such release to
be in form and substance reasonably satisfactory to counsel for
the Corporation, and (ii) continued compliance by Employee with
the provisions of this Agreement that expressly survive
termination.
(b) Notwithstanding anything in this Agreement to the
contrary, if it shall be determined that any payment or
distribution by the Corporation to or for the benefit of
Employee pursuant to the terms of this Agreement or otherwise
(a "Payment") would constitute an "excess parachute payment"
within the meaning of Section 280G of the Internal Revenue Code
of 1986, as amended (the "Code"), as a result of a "Change in
Control" of the Corporation as defined in Section 11 of the
Corporation's 1996 Equity Compensation Plan and that it would
be economically advantageous to the Company to reduce the
Payment to avoid or reduce the taxation of excess parachute
payments under Section 4999 of the Code, the aggregate present
value of the amounts payable or distributable to or for the
benefit of Employee pursuant to this Agreement (such payments
or distributions pursuant to this Agreement are hereinafter
referred to as "Agreement Payments") shall be reduced (but not
below zero) to the Reduced Amount. The "Reduced Amount" shall
be an amount expressed in present value which maximizes the
aggregate present value of Agreement Payments without causing
any Payment to be subject to taxation under Section 4999 of the
Code. For purposes of this Paragraph 5, present value shall be
determined in accordance with Section 280G(d)(4) of the Code.
The calculations under this Paragraph 6 shall be made as follows:
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(i) All determinations to be made under this
Paragraph 6 shall be made by the Corporation's independent
public accounting firm (the "Accounting Firm"), which firm
shall provide its determinations and any supporting
calculations to the Corporation and Employee within 10
days of the event that gives rise to the "excess parachute
payment." Any such determination by the Accounting Firm
shall be binding upon the Corporation and Employee.
Employee shall in his sole discretion determine which and
how much of the Agreement Payments shall be eliminated or
reduced consistent with the requirements of this Paragraph
6(b). Within five days after Employee's determination, the
Corporation shall pay (or cause to be paid) or distribute
(or cause to be distributed) to or for the benefit of
Employee such amounts as are then due to Employee under
this Agreement.
(ii) As a result of the uncertainty in the
application of Section 280G of the Code at the time of the
initial determination by the Accounting Firm hereunder, it
is possible that Agreement Payments will have been made by
the Corporation which should not have been made
("Overpayment") or that additional Agreement Payments
which have not been made by the Corporation could have
been made ("Underpayment"), in each case, consistent with
the calculations required to be made hereunder. Within
two years after the event that gives rise to the "excess
parachute payment," the Accounting Firm shall review the
determination made by it pursuant to the preceding
paragraph. If the Accounting Firm determines that an
Overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to Employee which
Employee shall repay to the Corporation, together with
interest at the applicable Federal rate provided for in
Section 7872(f)(2) of the Code (the "Federal Rate");
provided, however, that no amount shall be payable by
Employee to the Corporation if and to the extent such
payment would not reduce the amount which is subject to
taxation under Section 4999 of the Code. In the event
that the Accounting Firm determines that an Underpayment
has occurred, any such Underpayment shall be promptly paid
by the Corporation to or for the benefit of Employee,
together with interest at the Federal Rate.
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(iii) All of the fees and expenses of the
Accounting Firm in performing the determinations referred
to in subsections (i) and (ii) above shall be borne solely
by the Corporation. The Corporation agrees to indemnify
and hold harmless the Accounting Firm from any and all
claims, damages and expenses resulting from or relating to
its determinations pursuant to subsections (i) and (ii)
above, except for claims, damages or expenses resulting
from the gross negligence or willful misconduct of the
Accounting Firm.
(iv) The limitations of this Paragraph 6(b) shall
only apply if payments under this Agreement are subject to
Section 280G at the time of the Change of Control.
(c) Any payment provided for in Paragraph 6(a) above
shall end upon Employee's obtaining other employment or
full-time consulting work (defined as at least 30 hours per
week) of any kind and shall be in full satisfaction of all
claims for wages Employee may have against the Corporation as a
result of such termination of this Agreement and his employment.
3. All references to "this Agreement" in the Employment Agreement shall
refer to the Employment Agreement as amended by this Amendment.
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IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Amendment as of the date first above written.
INFONAUTICS, INC.
By: /s/ Ronald A. Berg
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Name:
Title:
/s/ Van Morris
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Van Morris
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