EMPLOYMENT SEVERANCE AGREEMENT
THIS AGREEMENT, dated as of November 24, 1997, is by and between
INFONAUTICS CORPORATION, a Pennsylvania corporation, which is a subsidiary of
INFONAUTICS, INC. (INFONAUTICS, INC. and INFONAUTICS CORPORATION being
collectively referred to in this Agreement as "Corporation"), and XXXXXX X.
XXXXX, XX., an individual residing at 000 Xxxxxxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxxxxxx 00000 ("Employee"). In consideration of the mutual promises
contained herein, and specifically the Corporation's promise to pay Employee
a lump-sum severance payment in accordance with the terms of this Agreement
in the event Employee's employment is terminated without Cause (as defined
below), which the Corporation had not previously agreed to do, Corporation
and Employee, both intending to be legally bound, agree as follows:
1. Employment
The Corporation employs Employee as Vice President &
General Counsel of the Corporation, and Employee hereby accepts such
employment on the terms set forth in this Agreement.
2. Base Compensation
In consideration of the services rendered by Employee to
the Corporation hereunder, the Corporation shall pay to Employee a base
salary at the annual rate of $95,000 (ninety-five thousand dollars), payable
semi-monthly or as otherwise agreed by the Corporation and Employee.
Employee's performance and salary will be subject to periodic review.
3. Expenses
The Corporation shall reimburse Employee for all ordinary
and necessary expenses reasonably incurred by him in carrying out his duties
hereunder, upon presentation to the Corporation by Employee, from time to
time, of an itemized account of such expenses together with such receipts and
forms as are required pursuant to the Corporation's normal policies and
practices.
4. Duties
During the term of his employment hereunder, Employee shall
perform duties as customarily performed by a General Counsel subject to the
discretion and control of the President of the Corporation. Employee shall
devote his full time, energy, skill and best efforts to promote the business
and affairs of the Corporation. Except as may otherwise be provided herein,
Employee agrees that during his employment hereunder he will not be employed
by, participate or engage in or be a part of in any manner, directly or
indirectly, in the affairs of any other business enterprise or occupation
without approval of the Corporation's Board of Directors.
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5. At-will Employment
(a) Employee's employment hereunder shall be "at will" and
either party shall have the right to terminate this Agreement at any time,
pursuant to the following terms and conditions:
(i) Termination by Employee. Employee shall have the
right to terminate his employment hereunder by providing thirty (30)
days' prior written notice to the President of the Corporation. Upon
the effectiveness of such notice, this Agreement shall terminate except
for the provisions that expressly survive termination.
(ii) Termination by Corporation. The Corporation
shall have the right to terminate Employee's employment by the
Corporation at any time, with or without Cause.
(A) With Cause. In the event Corporation
terminates Employee's employment for "Cause," this Agreement
shall terminate except for the provisions which expressly
survive termination, and Employee shall vacate the offices of
the Corporation. For purposes of this Agreement, "Cause" shall
mean (a) dishonesty, misconduct, conviction of a crime
involving moral turpitude, use of alcohol or drugs in such a
manner or to an extent that job performance is impaired, drug
abuse, violation of a rule of professional conduct,
misappropriation of funds, disparagement of the Corporation
(or its management or employees), or (b) failure of Employee
to perform or observe any of the terms or provisions of this
Agreement or to comply fully with the lawful directives of the
Board of Directors of the Corporation or any other proper
cause determined in good faith by the Board of Directors of
the Corporation; provided, however, that Employee's conduct
shall not constitute "Cause" within the meaning of (b) above
unless and until (i) the Corporation shall have provided
Employee with notice setting forth with specificity (A) the
conduct deemed to constitute such "Cause," (B) reasonable
action that would remedy the objectionable conduct, and (C) a
reasonable time (not less than 15 days) within which Employee
may take such remedial action, and (ii) Employee shall not
have taken such specified remedial action within such
specified reasonable time.
(B) Without Cause. In the event Corporation
terminates Employee's employment without Cause, 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 Employee's annual base salary (gross salary less any
applicable withholdings) as of the termination date.
Notwithstanding the foregoing, payments to be provided
pursuant to this Section shall in all respects be conditioned
upon (i) the prior receipt by the Corporation from Employee of
a
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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 and (ii) continued compliance by Employee with the
provisions of this Agreement that expressly survive
termination.
(b) Excess Parachute Payments. 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 of
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
Corporation 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 Paragraph 5(a) shall be made as follows:
(i) All determinations to be made under this
Paragraph 5(b) 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 business 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
5(b). Within five business 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
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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.
(iii) All of the fees and expenses of the
Accounting Firm in performing the determinations referred to in Paragraphs
5(b)(i) and 5(b)(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 Paragraphs 5(b)(i) and 5(b) (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 5(b) shall
only apply if payments under this Agreement are subject to Section 280G at
the time of the Change of Control.
(c) This Agreement and all of Employee's rights hereunder
shall terminate upon the death of Employee, and neither Employee nor his
estate shall have any further rights hereunder, except for any unpaid
compensation, unpaid benefits (including but not limited to unpaid vacation,
if any) and expense reimbursements through the date of death and except to
the extent otherwise provided in any applicable welfare or benefit plan of
the Corporation in which Employee is a participant at the date of death.
(d) Following termination of this Agreement, neither the
Corporation nor Employee shall direct any disparaging statements against the
other party.
6. Benefits; Vacation
The Corporation shall provide and Employee shall be
entitled to participate in all benefit plans and programs generally available
to the officers of the Corporation upon their adoption and implementation. It
is the Corporation's intention, but not its obligation, to adopt and make
available to Employee a stock option or similar plan or plans relating to the
Corporation or an affiliate of Corporation, all on such terms and with such
conditions and restrictions as may be determined by the Board of Directors of
the Corporation in its sole discretion. Employee shall be entitled to
vacation in accordance with the Corporation's policies, to be scheduled after
consultation with and as approved by the President of the Corporation.
7. Notices
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All notices and other communication which are required or
permitted hereunder shall be given in writing and either delivered by hand or
mailed by certified mail, return receipt requested, postage prepaid, as
follows or to such other address as a party may specify in a written notice
given hereunder:
(a) If to Employee, to:
Xxxxxx X. Xxxxx, Xx.
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
with a required copy to:
Xxxxx Xxxxxxx, Esquire
Xxxx Xxxxx Xxxx & XxXxxx LLP
2500 One Liberty Place
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
(b) If to the Corporation, to:
Xxxxxx X. Xxxx
Infonautics Corporation
000 Xxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxx, XX 00000
with a required copy to:
Xxxxx X. Xxxx, Esquire
Xxxxxx, Xxxxx & Xxxxxxx LLP
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
A notice shall be effective upon receipt, or if delivery is refused, an the
third business day after the attempted delivery.
8. Miscellaneous
(a) This Agreement shall be binding upon, inure to the
benefit of, and be enforceable by the successors and assigns of Corporation
and the heirs, estate, personal representatives and beneficiaries of
Employee. The rights, obligations and duties of the Employee hereunder shall
be personal and are not assignable or delegable by him in any manner
whatsoever.
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(b) This Agreement constitutes the entire understanding of
the parties with respect to the subject matter hereof, supersedes all prior
discussions, promises, and representations between the parties, and shall not
be modified, terminated or any provisions waived orally, including this
clause.
(c) No failure to exercise, delay in exercising, or single
or partial exercise of any right, power or remedy hereunder shall preclude
any other or further exercise of the same or any other right, power or remedy.
(d) The headings of the paragraphs of this Agreement have
been inserted for convenience of reference only and shall not constitute a
part of this Agreement.
(e) This Agreement shall be construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania, notwithstanding
choice of law principles, applicable to contracts made and to be performed
solely therein, and each party consents to the exclusive jurisdiction and
venue of the state and Federal courts of Pennsylvania to resolve any disputes
between the parties.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the date first written above.
INFONAUTICS CORPORATION EMPLOYEE:
By: /s/ Xxxxxx X. Xxxx /s/ Xxxxxx X. Xxxxx, Xx.
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Name: Xxxxxx X. Xxxx Xxxxxx X. Xxxxx, Xx.
Title: Vice President - Finance
and Administration
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