--------------------------------------------------------------------------------
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 his membership on all Boards of Directors of the
Company, except for the Board of Directors of the Parent; 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, except only for his membership on the Board of
Directors of Parent, effective on September 18, 1998. Except as otherwise set
forth herein, the Employment Agreement between the Parent and ▇▇▇▇▇▇ dated
August 1, 1997, a copy of which is attached hereto as Exhibit A (the "Employment
Agreement"), and the Term of the Employment Agreement (as that term is used
therein), shall terminate as of September 18, 1998.
2. Payments.
(a) Severance. The Company agrees to pay ▇▇▇▇▇▇ the sum of Three Hundred
Thousand Dollars ($300,000.00), subject to all applicable federal, state and
local tax (the "Severance Payment"), one-third of such amount to be paid by
check on September 21, 1998, one-third of such amount to be paid by check on
March 18, 1999 and the remaining one-third of such amount to be paid by check on
September 18, 1999. 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) Board. While he is a member of the Board of Directors of the Parent,
▇▇▇▇▇▇ will receive all benefits and compensation for services in such capacity
as is received by the other members of the Board of Directors of the Parent who
are not employees of the Parent ("Outside Directors") in their capacity as such;
provided, however, that prior to September 18, 1999, ▇▇▇▇▇▇ will not be entitled
to any cash compensation for services as a member of the Board of Directors of
Parent, except for cash payments on account of meeting fees if and to the extent
that such payments are made to other Outside Directors in their capacity as
such.
(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 September 18, 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
One Hundred Fifty Thousand Dollars ($150,000), 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.
(d) Expense Reimbursement. The Company agrees to reimburse ▇▇▇▇▇▇ in
accordance with its existing business practices for his reasonable business
expenses related to the Company prior to September 18, 1998 which have not yet
been reimbursed (the "Non-Reimbursed Expenses"). Within forty-five (45) days of
the execution hereof, ▇▇▇▇▇▇ agrees
-2-
to submit to ▇▇▇▇▇ ▇. ▇▇▇▇▇, the Chief Financial 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.
3. Option Continuation. The Company hereby agrees that the option to
purchase 100,000 shares of common stock of the Company granted to ▇▇▇▇▇▇ as of
December 9, 1997 pursuant to a Non-Qualified Stock Option Agreement (the "Option
Agreement") shall, notwithstanding terms in the Option Agreement or the
Company's 1997 Incentive Plan to the contrary, vest in full on September 18,
1998 and be exercisable thereafter in accordance with the Option Agreement until
(i) December 8, 2002, (ii) a Change of Control or (iii) the Sale of the Parent,
whichever first occurs.
4. Board Committee. The Company hereby agrees that if, while ▇▇▇▇▇▇ is a
member of the Board of Directors of Parent, such Board of Directors forms a
committee thereof to consider a potential Sale of the Parent or Change of
Control, ▇▇▇▇▇▇ shall be appointed to such committee.
5. Medical Benefit Continuation. For the period September 18, 1998 to
September 17, 1999, the Company will provide ▇▇▇▇▇▇ and his family full coverage
under the Company group medical plan subject to the requirements of the medical
plan. ▇▇▇▇▇▇ agrees to pay directly or to the Company for such 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 September 18, 1999. 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 this case, ▇▇▇▇▇▇ agrees to
immediately provide written notification of this 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 5 due to requirements of such plan,
the Company shall pay to ▇▇▇▇▇▇ an amount equal to the costs which the Company
would have incurred had it been able to provide such coverage.
6. Attorneys' Fees. Upon presentation of appropriate invoices, the Company
agrees to reimburse ▇▇▇▇▇▇ for all reasonable attorneys' fees incurred on or
prior to September 25, 1998 in connection with ▇▇▇▇▇▇' separation from
employment and the negotiation of this Agreement in a sum not to exceed Ten
Thousand Dollars ($10,000.00).
7. Return of ▇▇▇▇▇▇' Personal Property. The Company agrees to return to
▇▇▇▇▇▇, within five (5) business days of the execution of this Agreement, his
personal property, if any, within its possession or control. ▇▇▇▇▇▇ expressly
agrees that the Company may retain copies of any information embodied by, or
contained in, the property turned over to ▇▇▇▇▇▇ under the
-3-
terms of this paragraph if the Company reasonably believes that the information
serves its business needs.
8. 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, except with respect
to documents related to his role as a member of the Board of Directors of
Parent, which he may retain. Notwithstanding the foregoing, ▇▇▇▇▇▇ shall retain
the use of a Company owned laptop computer, e-mail address and one copy of
DocuROM software (including fully paid maintenance and support of the DocuROM
software) while he remains a member of the Board of Directors of Parent, after
which he will promptly return such items to the Company.
9. 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 Boards of Directors of the Company or the
termination of that employment and 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' Agreement dated as of November 19, 1996, as amended, the Parent's
obligations under the Option 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 Employer Retirement and Income
Security Act (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
-4-
the law states may not be waived; or (c) his vested rights, if any, under the
regular employment benefit plans of the Company, 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, as amended in paragraph 10 of this
Agreement) and 20 (specific performance) of the Employment Agreement; and (iii)
so long as ▇▇▇▇▇▇ remains a member of the Board of Directors of Parent, his
obligations under Section 8 (non-competition) of the Employment Agreement (as
amended and restated in paragraph 11 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.
10. Amendment of Definition of Confidential Information in Employment
Agreement. Section 7 of the Employment Agreement is hereby amended so that the
term "Confidential Information" does not include "ideas for marketing programs,"
except for those "ideas for marketing programs" that have been, on or prior to
September 18, 1998, reduced to writing.
11. Amendment and Restatement of Covenant Not to Compete in Employment
Agreement. Section 8 of the Employment Agreement is hereby amended and restated
as follows:
"8. Covenant Not to Compete. The Employee shall not, until September 18,
1999 (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
-5-
business conducted during the Term or, as of September 18, 1998, 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, that
nothing contained in this Section 8(b) shall prohibit Employee from owing, 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 or 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 September 18, 1998."
12. Press Release; Non-Defamation. The parties agree to the press release
attached as Exhibit B hereto. Each party further agrees not to intentionally
defame the other with respect to matters arising prior to the date of the
execution of this Agreement.
13. 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 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.
14. Governing Law; Enforcement. This Agreement shall be governed by and
construed and enforced under the laws of the Commonwealth of Pennsylvania. All
remedies at
-6-
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.
15. Review and Counsel. ▇▇▇▇▇▇ hereby acknowledges that, in connection with
this Agreement, he is acting of his own free will, that he has been afforded
ample opportunity to read and review the terms of this Agreement, that he has
read and reviewed the terms of this Agreement, that he has been represented by
counsel of his own selection and has relied upon the advice of such counsel in
connection with this Agreement and that he is voluntarily entering into this
Agreement with full knowledge of its provisions and effects.
16. 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.
17. 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:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Ingersoll, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esquire
-7-
If to the Company, to:
ImageMax, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chairman
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
3000 Two ▇▇▇▇▇ Square
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
18. 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.
19. 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.
20. 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]
-8-
21. 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:
------------------------------------ -------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Date:September 18, 1998
On behalf of IMAGEMAX, INC.:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Date:September 18, 1998
-9-