SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT ("Agreement") is made by and between S. ▇▇▇▇▇
▇▇▇▇▇ ("Model"), together with each and every dependent, heir, agent, executor,
legal representative, successor and assign of Model, 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, Model and the Company have agreed that he should resign his
employment with the Company; and
WHEREAS, Model 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 Model 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. Model hereby resigns all employment, Board of Director and
other positions with the Company, effective on November 9, 1998. Except as
otherwise set forth herein, the Employment Agreement between the Parent and
Model dated August 18, 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 November 9, 1998.
2. Payments.
(a) Severance. The Company agrees to pay Model the sum of Two Hundred
Twenty Five Thousand Dollars ($225,000.00), subject to all applicable federal,
state and local tax (the "Severance Payment"), to be paid by check in 36 equal
payments commencing on November 15, 1998 and continuing on the first and
fifteenth days of each calendar month thereafter until May 1, 2000, when the
last payment will be due. Notwithstanding the foregoing, any unpaid portion of
the Severance Payment shall be paid to Model 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) 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 November 9, 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 Model by check the sum of
Three Hundred Seventy Five Thousand Dollars ($375,000), 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.
(c) Expense Reimbursement. The Company agrees to reimburse Model in
accordance with its existing business practices for his reasonable business
expenses related to the Company prior to November 9, 1998 which have not yet
been reimbursed (the "Non-Reimbursed Expenses"). Within thirty (30) days of the
execution hereof, Model agrees 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
Model for the Non-Reimbursed Expenses.
(d) Consulting Arrangement. The Company may retain Model as a consultant
for assistance in certain operations of the Company. The Company shall pay Model
for such consulting services, and Model hereby agrees to accept, as compensation
a per diem rate of five hundred dollars ($500). All amounts will be paid
semi-monthly upon Model's submission of an itemized invoice to the Company for
services rendered. In addition, the Company shall reimburse Model for reasonable
travel expenses incurred in connection with the performance of such consulting
services, to the extent consistent with the Company's general
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expense reimbursement policy as may be in effect from time to time. Either Model
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 Model.
3. Benefits Continuation. For the period November 9, 1998 to May 8, 2000,
the Company will provide Model 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 Model is eligible for on the date hereof. Model
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. Model's
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 9, 2000. The Company's obligation to continue medical
coverage will cease if Model becomes eligible to participate in a comparable
medical plan with a new employer. In that case, Model 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 Model 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. Model 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. Model further agrees that he will not
make, retain or remove any copies of any of the foregoing.
5. Mutual Release of Claims. Model 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 Model 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' Agreement dated as of November 19, 1996, as amended (the
"Shareholders' Agreement"), and the Company's obligations to indemnify Model
from acts and omissions as a director and officer
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of the Company to the fullest extent permissible by law. Model 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. Model 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 Model
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 Model 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:
"8. Covenant Not to Compete. The Employee shall not, until November 9, 1999
(the "Restricted Period"), do any of the following directly or indirectly
without the prior written consent of the Parent:
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(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 November 9, 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 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 November 9, 1998.
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 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.
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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
Model's employment or other positions with the Company and/or the termination
thereof.
10. Review and Counsel. Model 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.
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 Model, to:
S. D. Model
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to the Company, to:
ImageMax, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chairman
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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, Model 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/ S. ▇▇▇▇▇ ▇▇▇▇▇ Witness: /s/ ▇▇▇▇ Model
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S. ▇▇▇▇▇ ▇▇▇▇▇
Date: November 9, 1998
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On behalf of IMAGEMAX, INC.:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Date: November 9, 1998
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