<PAGE>
 
                                                                 EXHIBIT 10 (gg)

                    FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
                    ---------------------------------------

This First Amendment To Employment Agreement ("Amendment") is entered into as of
November 11, 1996 by and between INFORMATION RESOURCES, INC. ("Information
Resources") and RANDALL S. SMITH (the "Employee") for the purpose of amending
that certain Employment Agreement entered into by and between the parties hereto
as of August 22, 1996 (the "Employment Agreement").

In consideration of the mutual promises and obligations set forth below,
Information Resources and the Employee hereby agree to amend the Employment
Agreement as follows:

     1. Section 4.0 of Article IV of the Employment Agreement shall be amended
     by adding an additional paragraph, said paragraph to read in its entirety
     as follows:

          "Information Resources may choose to cause the payments described
          above to be made pursuant to a term life insurance policy on the life
          of Employee, with a death benefit and payment schedule equivalent to
          the twelve (12) monthly Base Salary payments described above, and the
          payment of such death benefit shall be in lieu of and in full
          satisfaction of Information Resources' obligation to continue to pay
          Employee's Base Salary subsequent to his death as described in this
          Section 4.0.  Employee shall be the owner of and shall pay the annual
          premiums on such policy, provided that Information Resources shall
          increase Employee's Base Salary by an amount that will, after tax
          deductions, equal the amount of said premium (as such premium amount
          may change from time to time), such increased amount to be paid in a
          lump sum upon Information Resources' receiving from Employee a paid
          receipt (or canceled check) evidencing payment of the annual premium.
          Employee agrees to cooperate with Information Resources in applying
          for and obtaining the above-described term life insurance policy.
          Information Resources reserves the right to terminate this alternative
          method of payment and will so notify Employee of such termination,
          whereupon Information Resources will reassume the direct payment
          obligation described in the preceding paragraph."

IN WITNESS WHEREOF, Information Resources and the Employee have caused this
Amendment to be executed as of the date first written above.

                                    INFORMATION RESOURCES, INC.

/s/ Randall S. Smith                By: /s/ Gary S. Newman
--------------------------              ------------------------
EMPLOYEE
                                    Title: EVP - H.R.
                                           --------------------

 

<PAGE>

                                                                  Exhibit 10(gg)
 
                             EMPLOYMENT AGREEMENT

                                by and between


                          INFORMATION RESOURCES, INC.


                                      and


                               RANDALL S. SMITH


<PAGE>
 
                              EMPLOYMENT AGREEMENT
                              --------------------

     THIS AGREEMENT ("Agreement") is made as of the 22nd day of August, 1996
(the "Effective Date") by and between INFORMATION RESOURCES, INC., a Delaware
corporation ("Information Resources" or "IRI"), and RANDALL S. SMITH (the
"Employee").

     WHEREAS, Information Resources has employed the Employee in an executive
capacity since 1981 and desires to continue to employ the Employee in an
executive capacity on the terms and subject to the conditions set forth in this
Agreement; and

     WHEREAS, the Employee desires to accept such employment with Information
Resources on the terms and subject to the conditions set forth in this
Agreement;

     NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants of Information Resources and the Employee set forth in this Agreement
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by Information Resources and the Employee, the
parties hereto agree as follows:

                                   ARTICLE I
                                   ---------

                                  Employment
                                  -----------

          1.0  Employment.  Information Resources agrees to employ the Employee,
and the Employee agrees to serve Information Resources on a full-time basis in
an executive capacity, according to the terms and subject to the conditions
hereinafter set forth, for the period 

<PAGE>
 
commencing on the date hereof and ending with the effective date of termination
of employment as provided in ARTICLE VI (the "Employment Period").

          1.1  Employment Duties. During the Employment Period, the Employee
shall devote his best efforts and all of his normal business time and attention
(excluding permitted vacation, holidays, personal and sick leave, and reasonable
time devoted to civic and charitable activities) to the business of Information
Resources and its affiliated companies, and to serve as President, Operations
Group and International Information Services Group of Information Resources or
to serve as such other officer or senior executive employee of Information
Resources or any of its affiliated companies as the Chief Executive Officer
and/or the Board of Directors (or the appropriate committee thereof) of IRI may
from time to time stipulate. As an officer or other senior executive of
Information Resources, the Employee shall have all the responsibilities and
authority normally incident to the office he holds as provided in the by-laws of
Information Resources or otherwise, subject to the authority and
responsibilities of the Board of Directors and its committees, and he shall have
such additional duties, not inconsistent with the responsibilities of his
office, as the Board of Directors, its committees or the Chief Executive Officer
of IRI shall prescribe. The Employee may, with the express written approval of
the Information Resources Board of Directors, serve and receive compensation as
a director of any other company affiliated with Information Resources or any
other company that, in the opinion of the Board of Directors, does not compete
with Information Resources.

          1.2  Place of Employment.  In connection with his employment with
<PAGE>
 
Information Resources, the Employee shall be based at the principal offices of
Information Resources in the Chicago metropolitan area.  The Employee may be
required to perform ordinary business travel consistent with the
responsibilities of his office. Information Resources agrees that the Employee
shall not be required to relocate his principal place of business outside the
Chicago metropolitan area during the Employment Period.

                                  ARTICLE II
                                  ----------

                                 Compensation
                                 ------------

          Information Resources agrees to compensate the Employee for the
services rendered by him during the Employment Period as follows:

          2.0  Base Salary.  During the Employment Period,  Information
Resources shall pay the Employee a salary at an initial rate of Two Hundred
Eighty-Six Thousand Dollars ($286,000.00) per year subject to review by the
Compensation Committee of the Board of Directors for possible increase on the
same basis and at the same intervals as applicable for other senior officers of
Information Resources ("Base Salary"), it being understood that (a) increases in
the Base Salary shall be commensurate with the Employee's position, duties and
responsibilities and in conformity with IRI's policies and practices as applied
to other senior officers of IRI and (b) the Base Salary as increased from time
to time shall not decrease during the term of this Agreement unless and only to
the extent that the Compensation Committee of the Board of Directors (or its
successor) authorizes such a decrease as part of a broadly applied salary
reduction program applied in the same fashion to other senior officers in
addition to Employee.  

<PAGE>
 
The Base Salary shall be payable in accordance with the practice followed by
Information Resources with respect to its other senior officers. Information
Resources shall not be required to pay the Employee his Base Salary for the
portion of any Disability Period with respect to which the Employee receives
disability benefit payments according to the provisions of Information
Resources' disability plans applicable to the Employee, except to the extent
provided in Article III hereof.

          2.1  Bonus or Incentive Compensation.  Information Resources shall
award the Employee, in respect of each calendar year during the term hereof
(including 1996) bonus or incentive compensation as provided under any present
or future incentive compensation plan of Information Resources as applied to
other senior officers of Information Resources. Information Resources shall not
be required to pay the Employee bonus or incentive compensation for the portion
of any Disability Period with respect to which the Employee receives disability
benefit payments according to the provisions of Information Resources'
disability plans applicable to the Employee.

          2.2  Employee Benefit Plans.  For purposes of this Agreement, the
meaning of the terms "employee benefit" and "employee benefits" shall exclude
any salary or bonus or incentive compensation, but shall include benefits under
health and welfare plans, life insurance, disability and retirement plans, 
401 (k) plans, holidays, personal leave, sick leave and vacation allowances. The
Employee shall participate during the Employment Period in all employee benefit
plans generally applicable to senior officers of Information Resources, as those
plans may
<PAGE>
 
be in effect from time to time, and shall continue that participation after his
retirement on a basis comparable to that upon which other senior officers of
Information Resources may continue participation following their retirement.
During the Employment Period, the Employee shall be entitled to all other
employee benefits generally provided to senior officers of Information Resources
in accordance with then prevailing practice concerning such employee benefits.
The Employee shall be eligible for paid vacation at the rate of four (4) weeks
per year during 1996 and ratably for each year of service thereafter.

                                  ARTICLE III
                                  -----------

                                  Disability
                                  ----------

          3.0  Disability.  In the event of any illness or disability of the
Employee of a nature, degree, or effect such that, within the Employment Period,
the Employee becomes unable to perform his duties under this Agreement on a
full-time basis and such that Information Resources believes (as reasonably
determined by the Chief Executive Officer of Information Resources or the Board
of Directors or appropriate committee thereof) on the basis of the facts
available that the Employee will be unable to perform his duties under the terms
of this Agreement on a full-time basis for a consecutive period of 180 days or
more (the "Disability Period"), the following provisions shall apply, it being
understood that prior to any such determination the Employee shall continue to
be paid his full Base Salary and shall continue participating in any Information
Resources bonus or incentive compensation plans.

          3.1  Acting or Successor Officer.  During any Disability Period, the
Chief 
<PAGE>
 
Executive Officer of Information Resources (or the Board of Directors or
appropriate committee thereof) may appoint an acting or successor member or
officer to each position or office then held by the Employee.

          3.2  Disability Benefit Plans.  During any Disability Period, the
Employee shall be entitled to receive disability benefit payments according to
the provisions of Information Resources' disability plans for salaried
employees, if any, and the Employee shall continue to be an employee of IRI for
purposes of continued vesting and exercise of stock options (but not for
purposes of participation in incentive or bonus plans) and shall continue to
participate in all employee benefit plans for which he is eligible pursuant to
this Agreement or otherwise. In addition to the disability benefit payments
under said plans, during the first 180 days of any such Disability Period the
Employee shall be entitled to receive, at normal payroll dates, supplemental
disability payments directly from Information Resources in the amount necessary
for the total of such supplemental disability payments and disability benefit
plan payments to equal, on an annual basis, 100% of the Base Salary in effect at
the beginning of the Disability Period. In the event the Disability Period
continues beyond such 180 day period, Employee shall then receive, for the
remaining duration of the Disability Period, in addition to the disability
benefit payments under the provisions of IRI's disability plan(s),  supplemental
disability payments directly from Information Resources at a rate equal to one-
third (33.3%) of his Base Salary in effect at the beginning of the Disability
Period, such supplemental disability payments to be adjusted on an annual basis
by the applicable percentage increase (or decrease) in the consumer price index
(All 

<PAGE>
 
Urban Consumers) as published by the US Department of Labor, or any successor
index thereto.

          3.3  Termination of Disability. If and when, in the reasonable
judgment of the Board of Directors, after the commencement of a Disability
Period the Employee regains his ability to perform his duties hereunder on a
full-time basis, such Disability Period and Information Resources' obligation to
make supplemental disability payments pursuant to Section 3.2 hereof shall
cease. The Employee shall, immediately thereafter, resume being paid his Base
Salary under the same terms as he was being paid at the commencement of the
Disability Period and resume participating in any Information Resources bonus or
incentive compensation plans, with no cost-of-living or other adjustment of the
Base Salary if the length of the Disability Period is less than 24 months. If
the Disability Period continues for 24 months or more, the Employee's Base
Salary will be adjusted upon his resumption of duties by the applicable
percentage increase (or decrease), during the Disability Period, in the consumer
price index (All Urban Consumers) as published by the US Department of Labor, or
any successor index thereto. The Board of Directors shall consider the
Employee's redesignation to the particular positions and offices held by him
prior to the Disability Period, but the Board of Directors shall be under no
obligation with respect thereto.

                                  ARTICLE IV
                                  ----------

                             Supplemental Benefits
                             ---------------------

          4.0  Supplemental Benefits.  In addition to any other employee
benefits to 
<PAGE>
 
which the Employee, his spouse or his estate may be entitled, in the event of
the Employee's death during the term of this Agreement, Information Resources
shall continue to pay Employee's monthly Base Salary to his spouse, or his
estate if there is no living spouse, for a period of twelve (12) months
commencing on the first day of the month following the month of the Employee's
death.

                                   ARTICLE V
                                   ---------

                                 Stock Options
                                --------------

          5.0   Stock Option Grants. Except as provided in Sections 5.1, 5.2,
5.3, 6.3 and 6.4 of this Agreement, nothing in this Agreement shall alter the
terms which govern any options previously granted to the Employee pursuant to
the Information Resources Executive Stock Option Plan or any other option plan
under which Employee receives or has received options to acquire Information
Resources, Inc. common stock (the "Plan").

          5.1  Acceleration and Expiration/Cancellation. Notwithstanding any
provisions of the Plan (or any option granted pursuant to the Plan or any Stock
Option Agreement) to the contrary, in the event of any "Change of Control"
(defined as any merger, consolidation or reorganization in which Information
Resources is a merging, consolidating or reorganizing party and pursuant to
which neither Information Resources nor any entity controlled by it is the
surviving entity; or as the acquisition of beneficial ownership of, or power to
vote, forty percent (40%) or more of the outstanding voting securities of
Information Resources by any

<PAGE>
 
     acquiror (or group of acquirors acting in concert) within any period of 90
     consecutive days) which occurs after the second anniversary of the
     effective date of this Agreement, then the Employee (or his estate) shall
     be entitled to immediately exercise in full any unexercised options (vested
     or unvested) granted pursuant to the Plan prior to the Change of Control
     (other than expired options) then held by the Employee (or his estate). For
     purposes of this Agreement, an unexercised option "expires" at the end of a
     specified period of time after the date of grant (currently 10 years from
     such date of grant) in compliance with applicable law and as specified in
     the Stock Option Agreement under which the grant is made. Unvested options
     held by Employee shall not be canceled by action of the Executive Stock
     Option Plan Committee (or its successor) and no cancellation of unvested
     options shall occur other than in accordance with Section 5.2 (c) below.

          5.2  Stock Option Vesting and Exercise Following Termination.
     Notwithstanding any provisions of the Plan (or any option granted pursuant
     to the Plan or any Stock Option Agreement) to the contrary, upon
     termination of employment hereunder, Employee (or his estate) shall have
     the following vesting and exercise rights with respect to the stock options
     held at the date of such termination (including but not limited to those
     options which vest as a consequence of the termination of employment, which
     options shall be deemed to be vested as of the date of such termination):

          a. In the event of Employee's death during the Employment Period, all
          unvested options will immediately vest and all options will be
          exercisable by his estate for the period
<PAGE>
 
          ending at the earlier of the expiration date of the options or 24
          months from the date of death.

          b. In the event that Employee's employment hereunder is terminated by
          Information Resources without cause or by Employee for "Good Reason,"
          vested stock options will be exercisable for the period ending at the
          earlier of the expiration date of the options or 24 months from the
          date of termination of employment. In the event that such termination
          is effective prior to the second anniversary of the Effective Date,
          all unvested options held by Employee at such termination date will
          continue to vest according to the vesting schedule set forth in the
          applicable Stock Option Agreement for such options (but will vest
          immediately upon the death of Employee) and, upon such vesting, shall
          be exercisable by Employee (or his estate) for the period ending 24
          months after the date of such vesting. In the event that such
          termination is effective at or subsequent to the second anniversary of
          the Effective Date, the unvested options held by Employee at such
          termination date will vest immediately upon such termination date and
          be exercisable by Employee (or his estate) for the period ending at
          the earlier of the expiration date of the options or 24 months after
          the date of such termination of employment.

          c. In the event that Employee's employment hereunder is terminated for
          any reason other than as set forth in subsections (a) and (b) above,
          all options which are vested as of the effective date of such
          termination will be exercisable by Employee (or his estate) for the
          period ending at the earlier of the expiration date of the options or
          13 months from the
<PAGE>
 
          date of termination of employment, and stock options which are
          unvested as of the effective date of termination of employment will be
          canceled as of that date.

          5.3  1995 Stock Option Grant. It is hereby acknowledged and agreed
     that Employee was granted 80,000 options under IRI's Executive Stock Option
     Plan on May 24, 1995, which shall vest in accordance with the following
     schedule:

          a. one-half (50%) on May 24, 1996

          b. three-quarters (75%) on May 24, 1997

          c. 100% on May 24, 1998

This option grant will be further evidenced by a separate Stock Option Agreement
containing the terms and conditions under said Plan.

                                  ARTICLE VI

                              Term of Employment
                              ------------------

          6.0  Term of Employment.  The employment of the Employee pursuant to
     this Agreement shall commence on the date hereof and shall automatically
     continue thereafter until terminated in accordance with this Agreement.

          6.1  Termination Without Cause.  Either party to this Agreement may
     terminate the employment of the Employee pursuant to this Agreement,
     without cause, by giving prior written notice to the other party specifying
     a termination date no earlier than 60 days and no later than 90 days
     following the delivery of such notice (a "Section 6.1
<PAGE>
 
     Notice").

          6.2  Termination by the Employee for Good Reason. Except as otherwise
     provided in this Section 6.2, at any time prior to the Employee's receipt
     of a Section 6.1 Notice or the termination of the Employee's employment by
     Information Resources for "Cause," the Employee may give notice to
     terminate his employment for "Good Reason" by delivering a written notice
     of termination to Information Resources specifying the "Good Reason"
     (described in subsections (a) through (d) of this Section 6.2) for the
     termination and further specifying the effective date of termination which
     shall be no earlier than thirty (30) days and no later than sixty (60) days
     after Information Resources' receipt of such written notice of termination
     (a "Section 6.2 Notice"). A Section 6.2 Notice will not be effective unless
     received by Information Resources within 30 days after the occurrence of
     the event specified by the Employee as being the "Good Reason" for
     termination. Information Resources shall have 30 days after receiving any
     Section 6.2 Notice within which to initiate corrective or remedial action,
     and if such action is timely initiated then upon the completion of such
     corrective or remedial action the Section 6.2 Notice will be deemed
     withdrawn; provided, however, that the Section 6.2 Notice shall not be
     deemed withdrawn if the events specified by the Employee as being the "Good
     Reason" for termination were repeated, intentional and directed at the
     Employee individually. For the purpose of this Agreement, the Employee
     shall have "Good Reason" to terminate his employment hereunder if, but only
     if:
<PAGE>
 
          (a)  without the express written consent of the Employee, he is
     assigned any duties inconsistent with Article I or his positions, duties,
     responsibilities and status with Information Resources immediately prior to
     a change in his reporting relationships, duties, responsibilities, title or
     offices, except in connection with (1) his reassignment by the Chief
     Executive Officer and/or the Board of Directors (or the appropriate
     committee thereof) of Information Resources to a comparable position, in
     conformity with the provisions of Section 1.2 hereof, with a comparable
     level of duties and responsibilities and with the same salary, same
     eligibility for bonus/incentive compensation and same grade level, or (2)
     the commencement or continuation of a Disability Period; or he is removed
     from or not re-elected to any of those positions except in connection with
     such reassignment or the commencement or continuation of a Disability
     Period;

          (b)  a reduction is made by Information Resources in the Employee's
     Base Salary, except as provided for in Section 2.0 hereof;

          (c)  Information Resources fails to continue in effect any benefit,
     bonus or compensation plan, stock ownership plan, stock purchase plan,
     stock option plan, life insurance plan, health-and-accident plan or
     disability plan (other than those plans which expire by their express
     terms) in which the Employee is participating, other than as part of a
     reduction or change generally applicable to other senior officers of
     Information Resources, except that in no case shall the benefits available
     to Employee under Article III be reduced; or
<PAGE>
 
          (d)  Information Resources fails to obtain from any successor entity
     to Information Resources an agreement to perform this Agreement to the
     extent and in the manner required to be performed by Information Resources.

          6.3  Consequences of Termination Without Cause or for Good Reason. In
     the event Information Resources terminates the employment of Employee
     without cause pursuant to Section 6.1, or the Employee terminates his
     employment for "Good Reason" pursuant to Section 6.2 hereof, the Employee
     shall receive, for each of the twelve (12) months following any such
     termination of employment, his monthly Base Salary at the rate in effect
     immediately prior to the giving of the Section 6.1 Notice or Section 6.2
     Notice. In addition, Employee shall receive the cash equivalent of such
     Base Salary multiplied by the average percentage of base salary awarded as
     a bonus (in cash or otherwise) to the other Executive Officers of
     Information Resources who remained full-time employees in good standing
     through the date on which the relevant bonus, if any, was paid for the year
     in which such termination of Employee's employment occurs, prorated for the
     portion of the relevant calendar year prior to the effective date of
     termination and payable at the same time as the bonus payment for such year
     is made to the other Executive Officers. By way of illustrative example,
     assume a termination by Employee for "Good Reason" on June 30 of a year in
     which Employee's Base Salary is $300,000 and the average percent of base
     salary awarded as a bonus to Executive Officers for that year is 20%,
     Employee shall receive a bonus payment of $30,000, payable at the
<PAGE>
 
     same time as that year's bonus is paid to the other Executive Officers
     (typically in March or April of the following year). In addition to the
     foregoing, upon such termination, Information Resources agrees to
     compensate the Employee for the amount of any premiums for COBRA insurance
     coverage for the Employee and his spouse and dependent children for a
     period from the date of his termination until the earlier of (a) the first
     anniversary of such date or (b) the date he becomes eligible for similar
     benefits under a health insurance plan at a subsequent employer. During the
     12 month period following termination of employment hereunder, Employee
     agrees to make himself available, at the reasonable request of Information
     Resources, for up to sixty (60) hours of work on behalf of Information
     Resources, at the headquarters of Information Resources or by telephone or
     by such methods or under such circumstances as shall be mutually determined
     and agreed by Employee and Information Resources.

          6.4  Termination For Cause.  In the event of "Cause," Information
     Resources shall have the right to terminate the employment of the Employee
     pursuant to this Agreement without prior written notice, except as provided
     in this Section 6.4. "Cause" shall be deemed to exist under the following
     circumstances:

     (a)  if the Employee refuses or fails or neglects to perform his
obligations under this Agreement and the Employee fails to rectify such
deficiency within thirty (30) days, after receiving written notice from the
Board of Directors of Information Resources, for any reason other than factors
that, if continued, would reasonably give rise to the
<PAGE>
 
determination or continuation of a Disability Period;

     (b)  if the Employee has developed or pursued interests substantially
adverse or substantially inconsistent with the material fulfillment of his
obligations hereunder to Information Resources, and fails to cease such conduct
within ten (10) days after receiving written notice from the Board of Directors
of Information Resources;

     (c)  if the Employee engages in illegal or other wrongful conduct which is
materially detrimental to the business or reputation of Information Resources;
or

     (d)  if the Employee engages in any conduct or activity prohibited by
Section 8.0 or 8.1 of this Agreement.

No notice of termination under this Section 6.4 will be effective unless
delivered by IRI to Employee within 60 days following the date on which the
Chief Executive Officer or the Chairman of the Board of Directors first becomes
aware of the nature and significance of the event specified as "Cause" for
termination. In the event of termination of the Employee's employment in
accordance with this Section 6.4, Information Resources shall have no further
liability in respect of the Employee's employment; provided, however, that
Information Resources shall (a) pay the Employee the value of any accrued salary
or other compensation due the Employee on the date of termination and (b)
Employee shall retain the rights set forth in Section 5.2 hereof.

          6.5  Termination Upon Death of Employee.  The employment of the
     Employee under this
<PAGE>
 
     Agreement shall automatically terminate upon the death of the Employee.

                                  ARTICLE VII

                            Covenant Not To Compete
                            -----------------------

          7.0  Covenant Not To Compete.  The Employee shall not, without the
     prior express written consent of Information Resources, directly or
     indirectly, for himself or for any other person or entity, individually,
     jointly or as a partner, stockholder (except as a holder of not more than
     five percent (5%) of the outstanding shares of a publicly-held
     corporation), employee, agent, consultant or otherwise:

     (a)  during the Employment Period, and for a period of two (2) consecutive
years immediately thereafter, work or perform any service for the Dun &
Bradstreet Corporation or the A.C. Nielsen Company, Efficient Market Services,
Inc., Cornerstone Technologies, Inc. or any parent, subsidiary, affiliate or
successor of any of the foregoing;

     (b)  during the Employment Period, and for a period of two (2) consecutive
years immediately thereafter, induce, attempt to induce, or participate in or
facilitate the inducing of or attempting to induce, any employee, officer,
director, consultant, sales representative or agent of Information Resources (or
any of its subsidiaries or affiliates) to terminate or alter his or her business
relationship with Information Resources (or any of its subsidiaries or
affiliates) or to breach any agreement or obligation he or she has with or to
Information Resources (or any of its subsidiaries or affiliates) or to perform
work or services for the Employee or for a competitor of Information Resources
described in Section 7.0(a), or hire any such person within six months of
<PAGE>
 
the termination of such business relationship; or

     (c) during the Employment Period, and for a period of one (1) year
immediately thereafter, attempt in any manner to persuade any customer or
supplier of Information Resources (or any of its subsidiaries or affiliates) to
cease or reduce the amount of business which such customer or supplier engages
in or contemplates engaging in with Information Resources (or any of its
subsidiaries or affiliates), regardless of whether the relationship between such
customer or supplier and Information Resources (or its subsidiary or affiliate)
was originally established in whole or in part through Employee's efforts.

The Employee acknowledges that the restrictions set forth in this Article VII
are (a) reasonable and necessary for the protection of Information Resources'
interests and (b) are entered into by the Employee in exchange for adequate
consideration granted to him in connection with this Agreement. In the event
that any provision of this Section 7.0 is found by a court of competent
jurisdiction to be unreasonable or unenforceable, the parties agree that such
provision shall be enforceable against the Employee to the greatest extent that
would be found to be reasonable and enforceable.

                                 ARTICLE VIII
                                 ------------
                    Confidentiality; Ideas and Improvements
                    ---------------------------------------

          8.0 Confidentiality. Information Resources is engaged in various lines
and methods of doing business, and utilizes processes, programs, data, software
and techniques

<PAGE>
 
which consist of or involve confidential business information. Such information
has been or will be available to and used by the Employee during the course of
his employment as well as confidential client information including data
disclosing the identity of clients of Information Resources, their particular
needs, methods, data and other similar information. The Employee agrees that so
long as such information is confidential in fact and is not readily
ascertainable by third parties through lawful means, the Employee will not,
during the Employment Period and for a period of five consecutive years
immediately thereafter, disclose or use such confidential information, either
directly or indirectly for the benefit of any person or entity other than
Information Resources. The Employee agrees to return all programs, manuals,
documents, records, and other information relating to the business of
Information Resources, including materials prepared by the Employee, to
Information Resources immediately upon the termination of employment hereunder.

          8.1 Ideas and Improvements. The Employee agrees to promptly disclose
to Information Resources all ideas, designs, improvements, creations and
inventions, whether or not patentable or subject to other legal protection,
which have significant relationship to the business of Information Resources or
any affiliates of Information Resources, and which were developed or created by
the Employee at any place or time during the Employment Period (collectively,
"Ideas and Creations"). The Employee further agrees to take all steps necessary
to execute and deliver to Information Resources copyright or patent rights on
all matters suitable for such protection, and to execute and deliver to
Information Resources all documents which may be

<PAGE>
 
required to assign to Information Resources such copyright or patent rights, and
to otherwise cooperate to the extent within the Employee's control to ensure
Information Resources' use and enjoyment of such Ideas and Creations, provided
that there is no obligation to assign an invention for which no equipment,
supplies, facility, or trade secret information of Information Resources was
used and which was developed entirely on the Employee's own time, unless (a) the
invention relates to the business of Information Resources or to Information
Resources' actual or demonstrably anticipated research or development, or (b)
the invention results from any work performed by the Employee for Information
Resources.

                                  ARTICLE IX
                                  ----------

                           Miscellaneous Provisions
                           ------------------------

          9.0 Legal Remedies. The Employee hereby acknowledges that Information
Resources would suffer irreparable injury if the provisions of Sections 7.0, 8.0
or 8.1 above were breached and that Information Resources' remedies at law would
be inadequate in the event of such breach. Accordingly, the Employee hereby
agrees that any such breach or threatened breach may, in addition to any other
available remedies, be preliminarily enjoined by Information Resources without
bond. In the event of litigation under this Agreement, each side shall pay its
own attorneys' fees and expenses, except that if the Employee is enjoined either
preliminarily or permanently, after an evidentiary hearing, then the Employee
shall pay the

<PAGE>
 
attorneys' fees and expenses of Information Resources in connection with that
evidentiary hearing and, if such evidentiary hearing results in a court refusing
a preliminary or permanent injunction, then Information Resources shall pay the
Employee's attorneys' fees and expenses in connection with such hearing.
Sections 7.0, 8.0 and 8.1 shall survive, and shall continue in effect,
notwithstanding any termination of this Agreement.

          9.1 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the Employee and Information Resources and each of
their respective heirs, personal representatives, permitted assigns, and
successors in interest, including, in the case of Information Resources, any
company with which Information Resources may be merged or consolidated or to
which all or substantially all of Information Resources' assets may be
transferred. Except as otherwise provided above, this Agreement shall not be
assignable by Information Resources or the Employee without the express written
consent of the other party.

          9.2 Governing Law. This Agreement shall be construed and enforced in
accordance with the law of the State of Illinois.

          9.3 Notices. All notices required or permitted hereunder shall be
given in writing, either delivered personally or by registered or certified
mail, addressed to Information Resources at its principal office to the
attention of the Corporate Secretary, or to the Employee either at his residence
address shown on the employment records of Information Resources or in care of
the principal office of Information Resources, as appropriate. Notice delivered
personally

<PAGE>
 
shall be deemed effectively given as of the time of personal delivery, and
notice given by mail shall be deemed effectively given as of two days after the
date of such mailing.

          9.4 Entire Agreement; Amendments; Headings. This Agreement embodies
the entire agreement of Information Resources and the Employee with respect to
the subject matter hereof. No amendment or modification of the terms of this
Agreement shall be effective unless reduced to a written instrument executed by
Information Resources and the Employee. The headings of sections in this
Agreement are for convenience only.

     IN WITNESS WHEREOF, Information Resources and the Employee have caused this
Agreement to be duly executed as of the date first above written.

                                       INFORMATION RESOURCES, INC.

/s/ Randall S. Smith                   By: /s/ Gian M. Fulgoni 
---------------------                      --------------------------

EMPLOYEE                               

                                       Its: CEO                      
                                            ------------------------- 

Final As Executed

<PAGE>

                    FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
                    ---------------------------------------

This First Amendment To Employment Agreement ("Amendment") is entered into as of
November 11, 1996 by and between INFORMATION RESOURCES, INC. ("Information
Resources") and RANDALL S. SMITH (the "Employee") for the purpose of amending
that certain Employment Agreement entered into by and between the parties hereto
as of August 22, 1996 (the "Employment Agreement").

In consideration of the mutual promises and obligations set forth below,
Information Resources and the Employee hereby agree to amend the Employment
Agreement as follows:

     1. Section 4.0 of Article IV of the Employment Agreement shall be amended
     by adding an additional paragraph, said paragraph to read in its entirety
     as follows:

          "Information Resources may choose to cause the payments described
          above to be made pursuant to a term life insurance policy on the life
          of Employee, with a death benefit and payment schedule equivalent to
          the twelve (12) monthly Base Salary payments described above, and the
          payment of such death benefit shall be in lieu of and in full
          satisfaction of Information Resources' obligation to continue to pay
          Employee's Base Salary subsequent to his death as described in this
          Section 4.0.  Employee shall be the owner of and shall pay the annual
          premiums on such policy, provided that Information Resources shall
          increase Employee's Base Salary by an amount that will, after tax
          deductions, equal the amount of said premium (as such premium amount
          may change from time to time), such increased amount to be paid in a
          lump sum upon Information Resources' receiving from Employee a paid
          receipt (or canceled check) evidencing payment of the annual premium.
          Employee agrees to cooperate with Information Resources in applying
          for and obtaining the above-described term life insurance policy.
          Information Resources reserves the right to terminate this alternative
          method of payment and will so notify Employee of such termination,
          whereupon Information Resources will reassume the direct payment
          obligation described in the preceding paragraph."

IN WITNESS WHEREOF, Information Resources and the Employee have caused this
Amendment to be executed as of the date first written above.

                                    INFORMATION RESOURCES, INC.

/s/ Randall S. Smith                By: /s/ Gary S. Newman
--------------------------              ------------------------
EMPLOYEE
                                    Title: EVP - H.R.
                                           --------------------