SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT ("Agreement") is made by and between Xxxxxxx X.
Xxxxxxx ("Xxxxxxx"), together with each and every dependent, heir, agent,
executor, legal representative, successor and assign of Xxxxxxx, and ImageMax,
Inc., a Pennsylvania corporation ("Parent"), and its subsidiaries (the Parent
and its subsidiaries collectively referred 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, Xxxxxxx and the Company have agreed that he should resign his
employment with the Company; and
WHEREAS, Xxxxxxx 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, Xxxxxxx 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. Xxxxxxx hereby resigns his employment, effective on
September 28, 1998; provided, however, until October 28, 1998, Xxxxxxx shall
continue to provide transition services to the Company in connection with the
projects on which he is working as of the date hereof (the "Transition
Services"). Except as otherwise set forth herein, the Employment Agreement
between the Parent and Xxxxxxx dated April 15, 1998, 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 28,
1998.
2. Severance Payments. The Company agrees to pay Xxxxxxx (collectively
referred to as the "Severance Payments"):
(a) Twenty-One Thousand Six Hundred Sixty-Seven Dollars ($21,667),
subject to all applicable federal, state and local tax, to be paid by check on
September 28, 1998;
(b) Subject to the reasonable satisfactory completion of the Transition
Services as determined by Xxxxxx Xxxxx (acting Chief Executive Officer), Ten
Thousand Eight-Hundred Thirty-Three Dollars ($10,833), subject to all applicable
federal, state and local tax, to
be paid by check on upon completion of the Transition Services; provided,
however, that notwithstanding anything in this subparagraph 2(a) to the
contrary, such amount shall be immediately paid to Xxxxxxx if Xxxxxx Xxxxx is no
longer the acting Chief Executive Officer of the Company;
(c) Subject to Section 15 below, on December 28, 1998, the sum of
Thirty-Two Thousand Five Hundred Dollars ($32,500.00) subject to all applicable
federal, state and local tax, to be paid by check on December 28, 1998;
(d) Subject to Section 15 below, beginning March 28, 1999 and continuing
on the 28th day of each month thereafter until September 28, 1999, the sum of
Sixty-Five Thousand Dollars ($65,000.00), in six (6) equal installments of
$10,833.33 each, subject to all applicable federal, state and local tax; and
(e) Five Thousand Dollars ($5,000.00), subject to all applicable
federal, state and local tax, to be paid by check on September 28, 1998 in lieu
of ten (10) days accrued vacation.
3. Change of Control. In addition to the applicable Severance Payments, the
completion of a Sale of the Parent or a Change of Control (each as defined
below) prior to September 28, 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 Xxxxxxx by check the sum
of Sixty-Five Thousand Dollars ($65,000.00), 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
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common stock of the Parent pursuant to a registration statement or any
transaction effected primarily to reincorporate the Parent in another
jurisdiction.
4. Relocation Expenses. The Company agrees to pay Xxxxxxx the sum of Twenty
Thousand Dollars ($20,000.00) (the "Base Relocation Expense Payment"), plus any
reasonable expenses associated with his relocation and the sale of his home in
Indiana, including any loss on the sale of such home (together with the Base
Relocation Expense Payment, the "Aggregate Relocation Expense Payment"). The
Aggregate Relocation Expense Payment shall not exceed Thirty-Five Thousand
Dollars ($35,000.00). The Company shall pay the Base Relocation Expense Payment
by check on September 28, 1998. Xxxxxxx agrees to submit to Xxxxx X. Xxxxx, the
Chief Financial Officer of the Company, all receipts or documentation reflecting
the reasonable expenses associated with his relocation and sale of his home in
Indiana, including any loss on the sale of such home. Once such reports are
processed, the Company will promptly reimburse the remaining unpaid portion of
the Aggregate Relocation Expense Payment.
5. Out Placement Service Expenses. The Company agrees to pay the reasonable
expenses associated with Xxxxxxx'x use of an out placement service to secure
employment. However, such payment shall be subject to review by Xxxxx X. Xxxxx,
the Chief Financial Officer of the Company or such other officer as the Company
so determines, and shall not exceed Fifteen Thousand Dollars ($15,000.00).
6. Business Expense Reimbursement. The Company agrees to reimburse Xxxxxxx
in accordance with its existing business practices for his reasonable business
expenses related to the Company prior to September 28, 1998 which have not yet
been reimbursed (the "Non-Reimbursed Expenses"). Within ten (10) days of the
execution hereof, Xxxxxxx agrees to submit to Xxxxx X. Xxxxx, the Chief
Financial Officer of the Company, the appropriate expense reports reflecting
such expenses. Once such reports are processed, the Company will promptly
reimburse Xxxxxxx for the Non-Reimbursed Expenses.
7. Option Continuation. The Company hereby agrees that the option to
purchase 50,000 shares of common stock of the Company granted to Xxxxxxx as of
April 15, 1998 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 according to the existing
vesting schedule set forth in the Option Agreement and the portion so vested
shall be exercisable in accordance with the Option Agreement until (i) April 15,
2003, (ii) a Change of Control or (iii) the Sale of the Parent, whichever first
occurs.
8. Medical Benefit Continuation. The Company agrees to continue paying for
a period of one year, beginning on September 28, 1998, Xxxxxxx'x group medical
coverage through his former employer which he retained upon separation from his
former employer pursuant to his statutory rights under COBRA. The Company's
obligation to continue paying for such medical coverage under Xxxxxxx'x former
employer group medical plan will cease if
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Xxxxxxx becomes eligible to participate in a comparable medical plan with a new
employer. In this case, Xxxxxxx 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.
9. Attorneys' Fees. Upon presentation of appropriate invoices, the Company
agrees to reimburse Xxxxxxx for all reasonable attorneys' fees incurred on or
prior to October 2, 1998 in connection with Xxxxxxx'x separation from employment
and the negotiation of this Agreement, in a sum not to exceed Three Thousand
Dollars ($3,000.00).
10. Return of Xxxxxxx'x Personal Property. The Company agrees to return to
Xxxxxxx, within five (5) business days of the execution of this Agreement, his
personal property, if any, within its possession or control. Xxxxxxx expressly
agrees that the Company may retain copies of any information embodied by, or
contained in, the property turned over to Xxxxxxx under the terms of this
paragraph if the Company reasonably believes that the information serves its
business needs.
11. Return of Company Property. Xxxxxxx 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. Xxxxxxx further agrees that he will not
make, retain or remove any copies of any of the foregoing. Notwithstanding the
foregoing, Xxxxxxx shall: permanently retain the Company owned laptop computer
in his possession at the time of this Agreement; and shall retain one copy of
DocuROM software (including fully paid maintenance and support of the DocuROM
software) until September 28, 1999, after which he will promptly return such
software to the Company.
12. Use of Office Infrastructure. The Company agrees to allow Xxxxxxx the
reasonable use of the Company's offices, including support infrastructure (e.g.,
photocopying, phone access, and secretarial access) until April 28, 1999, such
usage to be utilized during the Company's regular business hours. Xxxxxxx shall
not be responsible for the reasonable payment of any such usage, which may be
terminated by the Company at any time by payment to Xxxxxxx of the sum of Five
Hundred Dollars ($500.00).
13. Mutual Release of Claims. Xxxxxxx 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 Xxxxxxx ever had,
now has or may have, for or by reason of any cause, matter or thing whatsoever,
arising out of or in any
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way related to the Company or his employment with the Company, or the
termination of that employment; 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 "Shareholders'
Agreement"), or the Parent's obligations under the Option Agreement. Xxxxxxx
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. Xxxxxxx
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 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
Xxxxxxx 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, or the termination of that
employment; provided however, that nothing contained herein shall release
Xxxxxxx 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 14 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.
14. 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 September 28,
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 business conducted during the Term or,
as of September 28, 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, however,
that nothing contained in this Section 8(b) shall prohibit Employee from (i)
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., (ii) becoming employed by or consulting to any person, firm,
corporation, association or other entity that has annualized gross revenue of
less than Five Million Dollars ($5,000,000) as of the end of the calendar month
preceding the commencement date of such employment or consulting; or (c)
consulting to any person, firm, corporation, association or other entity that
has annualized gross revenue of less than One Hundred Million Dollars
($100,000,000) as of the end of the calendar month preceding the commencement of
such consulting, so long as Xxxxxxx'x xxxxx compensation for such consulting
does not exceed One Hundred Thousand Dollars ($100,000) prior to September 28,
1999.
(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 September 28, 1998."
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15. Release of Covenant Not to Compete. The Company agrees to release
Xxxxxxx from his Covenant Not to Compete set forth in Section 8 of his
Employment Agreement (as restated in paragraph 14 of this Agreement); provided,
however that Xxxxxxx agrees in writing to forfeit the unpaid Severance Payments
set forth in paragraphs 2(b), (c) and (d) of this Agreement and further payments
of out placement service expenses under paragraph 5 of this Agreement after such
date. Such forfeiture shall not affect Xxxxxxx'x other rights and obligations
under this Agreement or Xxxxxxx'x rights and the Company's obligations under the
Shareholders' Agreement or the Option Agreement.
16. Non-Defamation. 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.
17. 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.
18. 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
Xxxxxxx'x employment or other positions with the Company and/or the termination
thereof.
19. Review and Counsel. Xxxxxxx 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.
20. 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.
21. 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
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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 Xxxxxxx, to:
Xxxxxxx X. Xxxxxxx
000 Xxxx 00xx Xxxxxx
Xxxxxxxxxxxx, XX 00000
If to the Company, to:
ImageMax, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attention: Chairman
With a copy to:
Xxxxxx Xxxxxxxx LLP
3000 Two Xxxxx Square
00xx xxx Xxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Esquire
22. 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.
23. 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.
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24. 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.
25. 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, Xxxxxxx 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/ Xxxxxxx X. Xxxxxxx Witness: /s/ Xxxxxxxx X. XxXxxxxxxx
-------------------------------------- --------------------------
Xxxxxxx X. Xxxxxxx
Date: September 30, 1998
---------------------------------
On behalf of IMAGEMAX, INC.:
By: /s/ Xxxxx X. Xxxxx, Xx.
-----------------------------------
Name: Xxxxx X. Xxxxx, Xx.
By: /s/ Xxxxxx Xxxxx
-----------------------------------
Name: Xxxxxx Xxxxx
Date: September 30, 1998
---------------------------------
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