Exhibit 10.1


 


SEPARATION
AGREEMENT AND RELEASE


 


This
Agreement is between InfoNow Corporation (“InfoNow”) and Harold R. Herbst (“Herbst”),
and shall except as provided in paragraph 15, below, be effective as of January 9,
2006 (the “Effective Date”).


 


Recitals


 


1.             Herbst was employed by InfoNow
until January 9, 2006 as InfoNow’s Interim Chief Executive Officer
pursuant to the terms of an Employment Agreement, dated September 27, 2005
and effective September 1, 2005, between InfoNow and Herbst (the “Employment
Agreement”).


 


2.             InfoNow has elected to
terminate Herbst’s employment pursuant to Section 5(d) of the
Employment Agreement.


 


3.             InfoNow and Herbst wish to
fully, completely, and forever resolve all issues between them, including but
not limited to the obligations under the Employment Agreement.


 


Agreement


 


In
consideration of the conditions, covenants and agreements set forth below, the
parties agree as follows:


 


1.             Payment.


 


(a)           Pursuant to Section 3 of the Consulting Agreement,
dated as of January 9, 2006, between InfoNow and Herbst (the “Consulting
Agreement”), InfoNow shall pay Herbst on the first (1st) and
fifteenth (15th) day of each month at the rate of Herbst’s previous
annual base salary received in connection with Herbst’s previous position as Interim
Chief Executive Officer of the Company until such time as the Consulting
Agreement is terminated.   InfoNow shall
also pay Herbst severance pursuant to Section 4(b) of the Employment
Agreement.


 


(b)           Pursuant to Section 4(b) of the Employment Agreement, InfoNow
shall: (1) pay Herbst one year’s annual base salary in 24 biweekly
installments as severance; (2) continue to provide to Herbst, during the
one-year severance period, with the benefits of such insurance plans and
hospitalizations plans as shall be generally provided to employees of InfoNow
during the same period; and (3) deduct from such severance payment all
applicable deductions and withholdings.  Except as expressly set forth herein, Herbst
agrees he will receive no additional severance or other compensation from
InfoNow with respect to his employment with InfoNow.  The payment under this paragraph shall be
subject to standard payroll withholdings. 
InfoNow will issue an I.R.S. Form W-2 reporting this payment to
Herbst.


 


(c)           Herbst shall have 30 days
from the Effective Date to provide InfoNow with appropriate receipts and
documentation reflecting unreimbursed expenses incurred 


 





















 


by Herbst
ordinarily reimbursed in connection with his employment by InfoNow until January 10,
2006.  Upon the receipt of such
appropriate receipts and documentation, InfoNow shall reimburse Herbst for
expenses reasonably and necessarily incurred in connection with InfoNow’s
business, in an amount not to exceed the amount of accrued and unpaid expenses
reflected in the books and records of InfoNow and reimburseable expenses
incurred since December 1, 2005, in the approximate amount of $175.00 (one
hundred and seventy-five dollars).  Such
payment to Herbst shall be characterized as reimbursement of expenses, and
shall not be subject to standard payroll withholdings.  Herbst shall sign a receipt for any
reimbursement check before tendering it for payment, and agrees that upon
receipt of this payment he will have no further entitlement to reimbursement or
payment of any expenses incurred before the Effective Date.


 


(d)           All options to purchase
common stock of InfoNow held by Herbst shall be exercisable in accordance with
the terms and conditions of the applicable option plans and option agreements
relating to such options, provided however, that Herbst and InfoNow recognize
and agree that Herbst’s separation from employment at InfoNow was a “termination
for other than cause” as those terms are defined in the applicable stock option
plans and option agreements for purposes of determining the term of the
exercise period of such options.


 


(e)           Within five (5) days
after the execution of this agreement by Herbst, he shall be paid his accrued
and unused vacation, in the amount of $28,845.60 (twenty-eight thousand eight
hundred forty-five dollars and sixty cents), subject to standard payroll
deductions.  This payment shall satisfy
in full InfoNow’s obligations with respect to Herbst’s accrued vacation.


 


(f)            At InfoNow’s sole
discretion, Herbst shall be allowed to keep his InfoNow voicemail and e-mail
accounts for so long as he provides consulting services to InfoNow pursuant to
the Consulting Agreement, subject to the applicable terms of use for corporate
network security.  Should InfoNow determine
to terminate this benefit to Herbst, InfoNow shall provide ten (10) days
prior notice to Herbst and may terminate this benefit thereafter.


 


(g)           Herbst agrees to pay all
taxes relating to or arising from any payment made pursuant to this
agreement.  If any taxes, interest or
penalties are assessed against InfoNow in connection with any payment made
pursuant to this agreement, or based on InfoNow’s failure to withhold any sum
from any payment made pursuant to this agreement, InfoNow shall give notice to
Herbst.  Upon receiving that notice,
Herbst shall either pay to InfoNow the total amount of the assessment,
including all taxes, interest and penalties owed, or defend against the
assessment, at Herbst’s sole expense.  If
any assessment is imposed on InfoNow, Herbst shall immediately reimburse InfoNow
for all taxes, interest or penalties paid by InfoNow as a result of the
assessment.  InfoNow shall have no
obligation to contest the validity of any such assessment or to reimburse
Herbst for any amounts, including costs and attorneys’ fees,
that he incurs in contesting the assessment.


 





















 


(h)           Herbst shall be allowed to
keep his company-purchased laptop computer, associated software and computer
devices.


 


2.             Release.


 


(a)           Herbst,
for himself, his heirs, personal representatives and assigns, and any other
person or entity that could or might act on behalf of him, including, without
limitation, his counsel (all of whom are collectively referred to as “Releasers”),
hereby fully and forever release and discharge InfoNow, its affiliates and
subsidiaries, and each of their past and present officers, directors,
employees, shareholders, independent contractors, attorneys, insurers and any
and all other persons or entities that are now or may become liable to any
Releaser due to any Releasee’s act or omission, all of whom are collectively
referred to as “Releasees,” of and from any and all actions, causes of action,
claims, demands, costs and expenses, including attorneys’ fees, of every kind
and nature whatsoever, in law or in equity, whether now known or unknown, that
Releasers, or any person acting under any of them, may now have, or claim at
any future time to have, based in whole or in part upon any act or omission
occurring on or before the Effective Date, without regard to present actual
knowledge of such acts or omissions, including specifically, but not by way of
limitation, matters which may arise at common law, such as breach of contract,
express or implied, promissory estoppel, wrongful discharge, tortious
interference with contractual rights, infliction of emotional distress,
defamation, or under federal, state or local laws, such as the Fair Labor
Standards Act, the Employee Retirement Income Security Act, the National Labor
Relations Act, Title VII of the Civil Rights Act of 1964, the Age Discrimination
in Employment Act, the Rehabilitation Act of 1973, the Equal Pay Act, the
Americans with Disabilities Act, and the Colorado Civil Rights Act; EXCEPT for
the rights and obligations created by this Agreement; AND EXCEPT for any vested
rights under any pension, retirement, profit sharing or similar plan.  Herbst hereby warrants that he has not
assigned or transferred to any person any portion of any claim which is
released, waived and discharged above.  Herbst
further states and agrees that he has not experienced any illness, injury, or
disability compensable or recoverable under the worker’s compensation laws of
any state, and Herbst agrees that he will not file a worker’s compensation
claim asserting the existence of any such illness, injury, or disability.  Herbst has specifically consulted with his
attorneys with respect to the agreements, representations, and declarations set
forth in the previous sentence.  Herbst
understands and agrees that by signing this Agreement he is giving up his right
to bring any legal claim against InfoNow concerning, directly or indirectly, Herbst’s
employment relationship with InfoNow, including his separation from
employment.  Herbst agrees that this
legal release is intended to be interpreted in the broadest possible manner in
favor of InfoNow, to include all actual or potential legal claims that Herbst
may have against InfoNow, except as specifically provided otherwise in this
Agreement.


 


(b)           InfoNow, for itself, its
affiliates, and any other person or entity that could or might act on behalf of
it including, without limitation, its attorneys (all of whom are collectively
referred to as “InfoNow Releasers”), hereby fully and forever release and
discharge Herbst, his heirs, representatives, assigns, attorneys, and any and
all other persons or entities that are now or may become liable to any InfoNow
Releaser on 


 





















 


account of Herbst’s employment with
InfoNow or separation therefrom, all of whom are collectively referred to as “InfoNow
Releasees,” of and from any and all actions, causes of action, claims, demands,
costs and expenses, including attorneys’ fees, of every kind and nature
whatsoever, in law or in equity, whether now known or unknown, that InfoNow
Releasers, or any person acting under any of them, may now have, or claim at
any future time to have, based in whole or in part upon any act or omission
occurring before the Effective Date, without regard to present actual knowledge
of such acts or omissions; EXCEPT for all actions, causes of action, claims,
demands, and costs and expenses for which Herbst would not be indemnified by
InfoNow in his capacity as an officer or a director under InfoNow’s
indemnification policies; AND EXCEPT as specifically provided otherwise in this
agreement.  InfoNow understands and
agrees that by signing this agreement, it is giving up its right to bring any
legal claim against Herbst concerning, directly or indirectly, Herbst’s past
employment relationship with InfoNow, except as specifically provided otherwise
in this agreement.  InfoNow agrees that
this legal release is intended to be interpreted in the broadest possible
manner in favor of Herbst, to include all actual or potential legal claims that
InfoNow may have against Herbst through the Effective Date, except as
specifically provided otherwise in this agreement.


 


3.             Unemployment Compensation.  InfoNow shall not oppose any application by
Herbst for benefits under Colorado’s Unemployment Compensation Act.


 


4.             Trade Secrets and Confidential Business Information.


 


(a)           Herbst shall continue to
maintain the confidentiality of all documents, trade secrets, inventions,
software algorithms and other confidential and proprietary information (“Confidential
Information”) which consists of information known by Herbst as a consequence of
his employment with InfoNow and continue to comply with all terms and
conditions of the Non-Disclosure and Confidentiality Agreement between Herbst
and InfoNow.


 


(b)           Herbst acknowledges that
upon a breach of any obligation under this agreement, InfoNow may suffer immediate
and irreparable harm and damage for which money alone cannot fully compensate
InfoNow.  Upon a breach by Herbst of any
of the provisions of paragraphs 4(a) or 4(b) of this agreement,
InfoNow may be entitled to an injunction restraining Herbst from such
breach.  Nothing herein shall be
construed as prohibiting InfoNow from pursuing any other remedies for such
breach or threatened breach, including recovery of damages from Herbst.


 


(c)           Herbst warrants and
represents that he will return or destroy any and all documents or other
records containing or referring to Confidential Information that were prepared
by or provided to Herbst during the term of his employment by InfoNow and any
and all documents and other property of InfoNow constituting a trade secret or
other confidential research, development or commercial information in his
possession, custody or control and acknowledges that he has not retained any
copies or originals of any such property of InfoNow, except for such
Confidential information, documents and other property necessary for Herbst’s
service as a member of InfoNow’s Board of Directors.


 





















 


5.             Covenant Not to Interfere.  For 12 months after the Effective Date, Herbst
shall not (i) cause or attempt to cause any employee of InfoNow or any of
its affiliates to leave the employ of InfoNow or any affiliate, (ii) in
any way interfere with the relationship between InfoNow and any employee or
between an affiliate and any employee of the affiliate, (iii) hire any
employee of InfoNow or of any affiliate to work for any organization of which Herbst
is an officer, director, employee, consultant, independent contractor or owner
of an equity or other financial interest, or (iv) interfere with any
transaction in which InfoNow or any of its affiliates was involved during their
term of this Agreement or his employment. 
Herbst acknowledges that through his employment with InfoNow and service
as a consultant of InfoNow he has acquired and will acquire access to
information suited to immediate application by a business in competition with
InfoNow. Accordingly, Herbst considers the foregoing restrictions on his future
employment or business activities in all respects reasonable.


 


6.             Attorneys’ Fees.  Releasers understand and agree that the
compensation described in paragraph 1, above, is in complete satisfaction of
any right that Releasers or their counsel may have, or claim to have, to
recover attorneys’ fees from any Releasees.


 


7.             Indemnification.  Herbst shall continue to be entitled to “tail”
coverage and participation in InfoNow’s Directors’ and Officers’  Liability Insurance Policy for a
period of five (5) years following the Effective Date and InfoNow shall
continue to provide indemnification to Herbst to the extent provided in its
Certificate of Incorporation and Bylaws for any acts or omissions that occurred
in the course and scope of Herbst’s employment with InfoNow.


 


8.             Denial of Liability.  The parties understand and agree that this
Agreement shall not be construed as an admission of liability on the part of
any person or entity, liability being expressly denied.


 


9.             Authority and Nonassignment.  The parties warrant that each has authority
to enter into this Agreement, and that neither has transferred to any other
person or entity any claim, action, demand, or cause of action released by this
Agreement.


 


10.          Confidentiality.   The provisions of this Agreement shall be
held in strictest confidence by Herbst and InfoNow and shall not be publicized
or disclosed in any manner whatsoever; provided, however, that:  (a) Herbst may disclose this Agreement
to his immediate family; (b) the parties may disclose this Agreement in
confidence to their respective attorneys, accountants, auditors, tax preparers,
and financial advisors; (c) InfoNow may disclose this Agreement as
necessary to fulfill standard or legally required corporate reporting or
disclosure requirements (which the parties agree requires disclosure of this
agreement in an InfoNow Current Report on Form 8-K); and (d) the
parties may disclose this Agreement insofar as such disclosure may be necessary
to enforce its terms or as otherwise required by law.


 





















 


11.          Covenant of Non-Disparagement.


 


(a)           Herbst covenants never to
disparage or speak ill of InfoNow or any InfoNow product or service, or of any
past or present officer or director of InfoNow, nor shall Herbst at any time
harass or behave unprofessionally toward any past or present InfoNow officer or
director.


 


(b)           InfoNow covenants that no
InfoNow officer or director shall, while employed by or while serving on the
board of directors of InfoNow, disparage or speak ill of Herbst, nor shall any
such person, while employed by or while serving on the board of directors of
InfoNow, at any time harass or behave unprofessionally toward Herbst.


 


12.          Covenant of Cooperation in Litigation.  Herbst acknowledges that because of his
position with InfoNow, he may possess information that may be relevant to or
discoverable in litigation in which InfoNow is involved or may in the future be
involved.  Herbst agrees that he shall
testify truthfully in connection with any such litigation, shall cooperate with
InfoNow in connection with such litigation, and that his duty of cooperation
shall include an obligation to meet with InfoNow representatives and/or counsel
concerning such litigation for such purposes, and at such times and places, as InfoNow
deems necessary, in its sole discretion, and to appear for deposition upon InfoNow’s
request and without a subpoena.  Herbst
shall not be entitled to any compensation in connection with his duty of
cooperation, except that InfoNow will  reimburse Herbst for reasonable
out-of-pocket expenses that he incurs in honoring his obligation of
cooperation.


 


13.          Additional Warranty and Acknowledgment.  The parties warrant and represent that they have
been offered no promise or inducement except as expressly provided in this
Agreement, and that this Agreement is not in violation of or in conflict with
any other agreement of either party.


 


14.          Survival of Covenants and Warranties.  All covenants and warranties contained in this
Agreement are contractual and shall survive the closing of this Agreement.


 


15.          Acknowledgment of Rights Under the Older Worker’s
Benefits Protection Act.


 


(a)           Herbst agrees and
acknowledges that he: (i) understands the language used in this Agreement
and the agreement’s legal effect; (ii) understands that by signing this
Agreement he is giving up the right to sue InfoNow for age discrimination; (iii) will
receive compensation under this Agreement to which he would not have been
entitled without signing this Agreement; (iv) has been advised by InfoNow
to consult with an attorney before signing this Agreement; and (v) was
given no less than twenty-one days to consider whether to sign this Agreement.


 


(b)           For a period of seven days
after the Effective Date, Herbst may, in his sole discretion, rescind this
Agreement, by delivering a written notice of recision to InfoNow.  If Herbst rescinds this Agreement within
seven calendar days after the Effective Date, this Agreement shall be void, all
actions taken pursuant to this Agreement shall be 


 





















 


reversed, and neither this
Agreement nor the fact of or circumstances surrounding its execution shall be
admissible for any purpose whatsoever in any proceeding between the parties,
except in connection with a claim or defense involving the validity or
effective rescission of this Agreement. 
If Herbst does not rescind this Agreement within seven calendar days
after the Effective Date, this Agreement shall become final and binding and
shall be irrevocable.


 


16.          Miscellaneous.


 


(a)           Successors and Assigns.  This Agreement shall be binding in all
respects upon, and shall inure to the benefit of, the parties’ heirs,
successors and assigns.


 


(b)           Governing Law.  This Agreement shall be governed by the
internal laws of the State of Colorado, irrespective of the choice of law rules of
any jurisdiction.


 


(c)           Severability.  If any court of competent jurisdiction
declares any provision of this agreement invalid or unenforceable, the
remainder of the agreement shall remain fully enforceable.  To the extent that any court concludes that
any provision of this agreement is void or voidable, the court shall reform
such provision(s) to render the provision(s) enforceable, but only to the
extent absolutely necessary to render the provision(s) enforceable.


 


(d)           Integration.  This Agreement constitutes the entire
agreement of the parties and a complete merger of prior negotiations and
agreements.


 


(e)           Modification.  This Agreement shall not be modified except
in a writing signed by the parties.


 


(f)            Waiver.  No term or condition of this Agreement shall
be deemed to have been waived, nor shall there be an
estoppel against the enforcement of any provision of this Agreement, except by
a writing signed by the party charged with the waiver or estoppel.  No waiver of any breach of this Agreement
shall be deemed a waiver of any later breach of the same provision or any other
provision of this Agreement.


 


(g)           Headings.  Headings are intended solely as a convenience
and shall not control the meaning or interpretation of any provision of this
Agreement.


 


(h)           Gender and Number.  Pronouns contained in this Agreement shall
apply equally to the feminine, neuter and masculine genders.  The singular shall include the plural, and
the plural shall include the singular.


 


(i)            Other Agreements.  Each party shall promptly execute,
acknowledge and deliver any additional document or agreement that the other
party reasonably believes is necessary to carry out the purpose or effect of this
Agreement.


 


(j)            Burden of Proof.  Any party contesting the validity or
enforceability of any term of this agreement shall be required to prove by
clear and convincing evidence 


 





















 


fraud,
concealment, failure to disclose material information, unconscionability, misrepresentation
or mistake of fact or law.


 


(k)           Construction.  The parties acknowledge that they and their
respective counsel have reviewed this Agreement in its entirety and have had a
full and fair opportunity to negotiate its terms.  Each party therefore waives all applicable rules of
construction that any provision of this Agreement should be construed against
its drafter, and agrees that all provisions of the agreement shall be construed
as a whole, according to the fair meaning of the language used.


 


(l)            Disputes.  Every dispute arising from or relating to this
Agreement shall be tried only in the state or federal courts situated in the
Denver, Colorado, metropolitan area.  The
parties consent to venue in those courts, and agree that those courts shall
have personal jurisdiction over them in, and subject matter jurisdiction
concerning, any such action.


 


(m)          Fees and Costs.  In any action relating to or arising from this
Agreement, or involving its application, the party substantially prevailing
shall recover from the other party the expenses incurred by the prevailing
party in connection with the action, including court costs and reasonable
attorneys’ fees.


 


(n)           Counterparts and Telecopies.  This Agreement may be executed in
counterparts, or by copies transmitted by telecopier,
all of which shall be given the same force and effect as the original.


 


[SIGNATURES
FOLLOW]


 





















 


	
  Harold R. Herbst  

  	
   

  	
  InfoNow Corporation 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
              /s/
  Harold R. Herbst

  	
   

  	
     /s/ Jeffrey D.
  Peotter

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
      Jeffrey
  D. Peotter

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  As its: 

  	
  Chairman of the Board of Directors