SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT ("Agreement") is made by and between ▇▇▇▇▇ ▇.
▇▇▇▇▇ ("▇▇▇▇▇"), together with each and every dependent, heir, agent, executor,
legal representative, successor and assign of ▇▇▇▇▇, and ImageMax, Inc., a
Pennsylvania corporation ("Parent"), and its subsidiaries (the Parent and its
subsidiaries are collectively referred to as the "Company"), together with each
and every of their predecessors, successors (by merger or otherwise), assigns,
parents, subsidiaries, affiliates, divisions, directors, officers, employees,
attorneys, accountants and agents, whether past, present or former.
WHEREAS, ▇▇▇▇▇ and the Company have agreed that he should resign his
employment with the Company; and
WHEREAS, ▇▇▇▇▇ and the Parent, on its own behalf and on behalf of each
Company, desire to set forth herein their entire understanding and agreement
regarding such resignation.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, each of ▇▇▇▇▇ and the Parent, on its own behalf and on behalf of each
Company, acting of his and its own free will, and intending to be legally and
irrevocably bound hereby, agree as follows:
1. Resignation. ▇▇▇▇▇ hereby resigns all employment, Board of Director and
other positions with the Company, effective on April 30, 1999. Except as
otherwise set forth herein, the Employment Agreement between the Parent and
▇▇▇▇▇ dated August 18, 1997 (the "Employment Agreement"), and the Term of the
Employment Agreement (as that term is used therein), shall terminate as of April
30, 1999.
2. Payments.
(a) Severance. The Company agrees to pay ▇▇▇▇▇ the sum of One Hundred
Thirty Thousand Dollars ($130,000), subject to all applicable federal, state and
local tax (the "Severance Payment"), to be paid by check in 24 equal payments
commencing on May 1, 1999 and continuing on the first and fifteenth days of each
calendar month thereafter until April 30, 2000, when the last payment will be
due. Notwithstanding the foregoing, any unpaid portion of the severance payment
shall be paid to ▇▇▇▇▇ by the Parent or the Successor Entity (as defined below),
as the case may be, upon the completion of a Change of Control or Sale of the
Parent (each as defined below).
(b) Expense Reimbursement. The Company agrees to reimburse ▇▇▇▇▇ in
accordance with its existing business practices for his reasonable business
expenses related to the Company on or prior to April 30, 1999 which have not yet
been reimbursed (the "Non-Reimbursed Expenses"). Within thirty (30) days of the
execution hereof, ▇▇▇▇▇ agrees to submit to the chief accounting officer of the
Company the appropriate expense reports reflecting such expenses. Once such
reports are processed, the Company will promptly reimburse ▇▇▇▇▇ for the
Non-Reimbursed Expenses.
(c) Change of Control. In addition to the Severance Payment, upon the
completion of a Sale of the Parent or a Change of Control (each as defined
below) prior to December 31, 2000, the Parent or the successor to all or
substantially all of the Parent's assets, capital stock or business (the
"Successor Entity"), as the case may be, shall pay to ▇▇▇▇▇ by check the sum of
Three Hundred Twenty-Five Thousand Dollars ($325,000), subject to all applicable
federal, state and local tax. For purposes of this Agreement: (i) a "Change of
Control" means the sale, transfer, assignment or other disposition (including by
merger or consolidation) by stockholders of the Parent, in one transaction or a
series of related transactions, of more than fifty percent (50%) of the voting
power represented by the then outstanding stock of the Parent to one or more
Persons, other than (A) any such sales, transfers, assignments or other
dispositions by such stockholders to their respective Affiliates or (B) any such
transaction effected primarily to reincorporate the Parent in another
jurisdiction; (ii) "Affiliate" means, with respect to any stockholder of the
Parent, (W) any Person directly or indirectly controlling, controlled by or
under common control with such stockholder, (X) any Person owning or controlling
ten percent (10%) or more of the outstanding voting securities of such
stockholder, (Y) any officer, director or general partner of such stockholder,
or (Z) any Person who is an officer, director, general partner, trustee or
holder of ten percent (10%) or more of the outstanding voting securities of any
Person described in clauses (W) through (Y) of this sentence; (iii) "Person"
means an individual, partnership, corporation, joint venture, association,
trust, unincorporated association, other entity or association; and (iv) "Sale
of the Parent" means a sale, transfer, assignment or other disposition
(including by merger or consolidation) of all of the outstanding stock of the
Parent, or of all or substantially all of the assets of the Parent, or a
liquidation or dissolution of the Parent; provided, however, that a "Sale of the
Parent" shall not include the consummation of a public offering of common stock
of the Parent pursuant to a registration statement or any transaction effected
primarily to reincorporate the Parent in another jurisdiction. The potential
acquisition of preferred stock and warrants by ▇▇▇▇▇▇ ▇▇▇▇▇ Corp. contemplated
in that certain Letter of Intent dated March 11, 1999 by and between ▇▇▇▇▇▇
▇▇▇▇▇ Corp. and the Company shall not be considered a Change of Control or Sale
of the Company for the purposes of this Agreement.
(d) Consulting Arrangement. The Company may retain ▇▇▇▇▇ as a consultant
for assistance in certain operations of the Company. The Company shall pay ▇▇▇▇▇
for such consulting services, and ▇▇▇▇▇ hereby agrees to accept, as compensation
a per diem rate of five-hundred dollars ($500). Such accrued consulting fees
shall; (i) be payable in cash upon closing of any transaction or financing that
does not meet the definition above of a "change of control transaction" on or
before December 31, 2000; or (ii) if said transaction qualifies as a change of
control transaction, such accrued fees shall be credited against the payment due
▇▇▇▇▇ in 2 (c) above. In addition, the
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Company shall reimburse ▇▇▇▇▇ for reasonable travel expenses incurred in
connection with the performance of such consulting services, to the extent
consistent with the Company's general expense reimbursement policy as may be in
effect from time to time. Either ▇▇▇▇▇ or the Company may terminate such
consulting arrangement at any time by the giving of notice to the other party,
at which time no further amounts (except accrued consulting fees and
reimbursable expenses) shall be payable to ▇▇▇▇▇.
3. Benefits Continuation. For the period May 1, 1999 to April 30, 2000, the
Company will provide ▇▇▇▇▇ and his family full coverage under the Company group
medical plan subject to the requirements of the medical plan, and any other
Company employee benefits ▇▇▇▇▇ is eligible for on the date hereof. ▇▇▇▇▇ agrees
to pay directly or to the Company for the medical coverage an amount equal to
any required employee contribution to the medical plan premium. ▇▇▇▇▇'▇
statutory rights under COBRA to continue participation in the Company's group
medical coverage for a period of up to eighteen (18) months, at his own cost,
shall begin on May 1, 2000. The Company's obligation to continue medical
coverage will cease if ▇▇▇▇▇ becomes eligible to participate in a comparable
medical plan with a new employer. In that case, ▇▇▇▇▇ agrees to immediately
provide written notification of that fact to the Vice President of Human
Resources of the Company and the (acting) Chief Executive Officer of the
Company. If the Company is unable to continue medical coverage under its group
medical plan as required by this paragraph 3 due to requirements of such plan,
the Company shall pay to ▇▇▇▇▇ an amount equal to the cost of premiums which the
Company would have incurred had it not been prohibited from providing such
coverage.
4. Return of Company Property. ▇▇▇▇▇ agrees to return to the Company,
within five (5) business days of the execution of this Agreement, all Company
property in his possession or control. ▇▇▇▇▇ further agrees that he will not
make, retain or remove any copies of any of the foregoing.
5. Mutual Release of Claims. ▇▇▇▇▇ hereby completely remises, releases,
relinquishes, waives and forever discharges the Company, together with each and
every of their predecessors, successors (by merger or otherwise), assigns,
parents, subsidiaries, affiliates, divisions, directors, officers, employees,
attorneys, accountants and agents, whether past, present or former of and from
all manner of actions, causes of action, suits, debts, dues, accounts, bonds,
covenants, contracts, agreements, judgments, claims, liabilities and demands
whatsoever, in law or in equity, known or unknown, in tort, contract, by
statute, negligence (whether by contribution or indemnification) or any other
basis for relief, compensatory, punitive or other damages, expenses (including
attorneys' fees), reimbursements or costs of any kind which ▇▇▇▇▇ ever had, now
has or may have, for or by reason of any cause, matter or thing whatsoever,
arising out of or in any way related to the Company or his employment with the
Company, his membership on any Board of Directors of the Company or the
termination of that employment or membership; provided, however, that nothing
contained herein shall release the Company from its obligations under this
Agreement, the Parent's registration rights obligations arising out of the
Shareholders'
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Agreement dated as of November 19, 1996, as amended (the "Shareholders'
Agreement"), and the Company's obligations to indemnify ▇▇▇▇▇ from acts and
omissions as a director and officer of the Company to the fullest extent
permissible by law. ▇▇▇▇▇ agrees that he has executed this Release on his own
behalf, and also on behalf of his dependents, heirs, agents, executors, legal
representatives, successors and assigns. This Release includes, but is not
limited to, a release of any rights or claims he may have for, or pursuant to,
the Pennsylvania Wage Payment and Collection Law or any other state or local
wage payment statute, the Age Discrimination in Employment Act (ADEA), Title VII
of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act
(ADA), the Employee Retirement Income Security Act of 1974, as amended, (ERISA),
any other federal, state or local laws or regulations prohibiting employment
discrimination, breach of any express or implied contract, wrongful termination
or any other tort claims, including claims for attorneys' fees, whether based on
common law or otherwise. ▇▇▇▇▇ understands, however, that by signing this
Release, he does not waive rights to: (a) any claims arising under any
applicable worker's compensation laws; (b) any claims which the law states may
not be waived; or (c) his vested rights, if any, under the Company's 401(k)
plan, in effect as of the date of this Agreement.
The Parent, on its own behalf and on behalf of each Company, hereby
completely remises, releases, relinquishes, waives and forever discharges ▇▇▇▇▇
and his dependents, heirs, agents, executors, legal representatives, successors
and assigns, of and from all manner of actions, causes of action, suits, debts,
dues, accounts, bonds, covenants, contracts, agreements, judgments, claims,
liabilities and demands whatsoever, in law or equity, known or unknown, in tort,
contract, by statute, negligence (whether by contribution or indemnification) or
any other basis for relief, compensatory, punitive or other damages, expenses
(including attorney's fees), reimbursements or costs of any kind which the
Company ever had, now has or may have, for or by reason of any cause, matter or
thing whatsoever, arising out of or in any way related to the Company or his
employment with the Company, his membership on any Boards of Directors of the
Company or the termination of that employment and membership; provided however,
that nothing contained herein shall release ▇▇▇▇▇ from: (i) his obligations
under this Agreement; (ii) his obligations under Sections 6 (confidentiality), 7
(ownership of proprietary information) and 20 (specific performance) of the
Employment Agreement; and (iii) his obligations under Section 8
(non-competition) of the Employment Agreement (as amended and restated in
paragraph 6 of this Agreement). The Parent agrees that it has executed this
Release on its own behalf and on behalf of each Company, and also on behalf of
each and every of their predecessors, successors (by merger or otherwise),
assigns, parents, subsidiaries, affiliates, divisions, directors, officers,
employees, attorneys, accountants and agents, whether past, present or former.
6. Amendment and Restatement of Covenant Not to Compete in Employment
Agreement. Section 8 of the Employment Agreement is hereby amended and restated
as follows:
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"8. Covenant Not to Compete. The Employee shall not, until April 30, 2000
(the "Restricted Period"), do any of the following directly or indirectly
without the prior written consent of the Parent:
(a) compete with the Company or any of its respective affiliates or
subsidiaries, or any of their respective successors or assigns, whether now
existing or hereafter created or acquired (collectively, the "Related
Companies"), in any document management business conducted during the Term or,
as of April 30, 1999, contemplated to be conducted (as has been determined by
the Board) or in any other business conducted by the Company in which the
Employee is or has been actively engaged (the "Restricted Business") within any
geographic area located within the United States of America, its possessions or
territories (the "Restricted Area");
(b) become interested (whether as owner, stockholder, lender, partner,
co-venturer, director, officer, employee, agent, consultant or otherwise) in any
person, firm, corporation, association or other entity that competes, with the
Related Companies in the Restricted Business within the Restricted Area; if such
interest would constitute a violation of Section 8(a) hereof; provided, however,
that nothing contained in this Section 8(b) shall prohibit Employee from owning,
as a passive investor, not more than five percent (5%) of the outstanding
securities of any class of any publicly-traded securities of any publicly held
company listed on a well-recognized national securities exchange or on an
interdealer quotation system of the National Association of Securities Dealers,
Inc.
(c) influence or attempt to influence any supplier, customer or
potential customer of the Company or any of the Related Companies to terminate
or modify any written or oral agreement or course of dealing with the Company or
the Related Companies; or
(d) influence or attempt to influence any person (other than a family
member) to either (i) terminate or modify his employment, consulting, agency,
distributorship or other arrangement with the Company or any of the Related
Companies, or (ii) employ or retain, or arrange to have any other person or
entity employ or retain, any person who has been employed or retained by the
Company or any of the Related Companies as an employee, consultant, agent or
distributor of the Company or the Related Companies at any time during the one
year period immediately preceding April 30, 1999.
7. Non-Defamation. Each party agrees not to intentionally defame the other
with respect to matters arising prior to the date of the execution of this
Agreement.
8. Arbitration of Disputes Under this Agreement. The parties agree that any
and all disputes arising out of the performance or breach of this Agreement or
any promise or covenant herein shall be resolved by submission to final and
binding arbitration by a panel of three arbitrators in Philadelphia,
Pennsylvania, under, and in accordance with, the Individual
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Employment Rules and Procedures of the American Arbitration Association. In any
such proceeding, the prevailing party shall be entitled to an award of
reasonable attorneys' fees, cost and expenses.
9. Governing Law; Enforcement. This Agreement shall be governed by and
construed and enforced under the laws of the Commonwealth of Pennsylvania. All
remedies at law and equity shall be available for the enforcement of this
Agreement incorporated by reference herein. This Agreement may be pleaded as a
full bar to the enforcement of any claim in any way related to or arising out of
▇▇▇▇▇'▇ employment or other positions with the Company and/or the termination
thereof.
10. Review and Counsel. ▇▇▇▇▇ understands that he may take up to twenty-one
(21) days to consider this Agreement, its benefits, and its consequences. He
acknowledges that he has been advised that he should seek the advice of an
attorney before signing this Agreement, and that has had an adequate opportunity
to do so. ▇▇▇▇▇ also understands that he will have seven (7) days after signing
this Agreement to revoke it and that it will not become effective and
enforceable until this revocation period has expired. ▇▇▇▇▇ further understands
that the Company is not obligated under this Agreement until at least 10 days
after receipt by the Company of the fully executed original of this Agreement.
11. Contractual Effect. The parties understand and acknowledge that the
terms of this Agreement are contractual and not a mere recital. Consequently,
they expressly consent that this Agreement shall be given full force and effect
according to each and all of its express terms and provisions, and that it shall
be binding upon the respective parties as well as their dependents, heirs,
executors, legal representatives, successors and assigns.
12. Notices. All notices, requests, payments, acknowledgments and other
communications hereunder to a party shall be in writing and shall be deemed to
have been duly given when delivered by hand, deposited with a recognized
overnight courier for next day delivery or telecopied to such party at his or
its address set forth below or such other address as such party may specify by
notice to the other party hereto.
If to ▇▇▇▇▇, to:
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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If to the Company, to:
ImageMax, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chairman
13. Entire Agreement; Etc. This Agreement represents the entire
understanding of the parties hereto with reference to the subject matters hereof
and supersedes any and all other oral or written agreements heretofore or
contemporaneously made.
14. Headings. The descriptive headings of the Paragraphs of this Agreement
are inserted for convenience only, do not constitute a part of this Agreement
and shall not affect in any way the meaning or interpretation of this Agreement.
15. Counterparts and Facsimile Signatures. This Agreement may be delivered
by telecopied signatures and executed in several counterparts, each of which
shall be deemed to be an original, and all of which together shall be deemed to
be one and the same instrument.
[blank to end of page]
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16. Severability. If any term, provision, covenant or restriction contained
in this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against public or regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
IN WITNESS WHEREOF, ▇▇▇▇▇ and the Parent, on its own behalf and on behalf
of each Company, each acknowledge that they are acting of their own free will,
that they have had a sufficient opportunity to read and review the terms of this
Agreement, they have each received the advice of their respective counsel with
respect hereto, and that they have voluntarily caused the execution of this
Agreement and by reference herein as of the day and year set forth below.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------- Witness: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇ --------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Date: April 16, 1999
On behalf of IMAGEMAX, INC.:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Date: April 16, 1999
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