SAN HOLDINGS INC
EXHIBIT 10.1--SEPARATION AGREEMENT
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<FILENAME>san1101048kex101.htm
<DESCRIPTION>EXHIBIT 10.1--SEPARATION AGREEMENT
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<TITLE>San Holdings Inc. November 1, 2004 8-K--Exhibit 10.1</TITLE>
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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B><U>SEPARATION
AGREEMENT AND GENERAL RELEASE</U></B></FONT></FONT></P>

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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">This
Separation  Agreement and General  Release,  dated  November 1, 2004,  is by and between
Michael J.  Phelan (&#147;Employee&#148;) and SANZ Inc. (the &#147;Company&#148;,  and
collectively with SAN Holdings,  Inc., Solunet Storage, Inc.  and Solunet Storage Holding
Corp., the &#147;Corporate Group&#148;).</FONT></FONT> </P>


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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>W I T N E
S S E T H:</B></FONT></FONT></P>

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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">WHEREAS,
Employee&#146;s employment with the Company and with the Corporate Group was
terminated effective August 20, 2004 (the &#147;Effective Date&#148;); and</FONT></FONT> </P>

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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">WHEREAS,
the parties hereto desire to put to rest and settle all controversy between them
related to and/or arising out of Employee&#146;s employment with, and
termination from, the Corporate Group and the facts and circumstances underlying
the same, and to settle and compromise any and all claims and differences
between them, of any sort, origin or description.</FONT></FONT> </P>

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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">NOW,
THEREFORE, Employee and the Company, intending to be legally bound hereby and in
consideration of the promises contained herein, do hereby agree as follows:</FONT></FONT> </P>

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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">1.&nbsp;&nbsp;
<U>Payments</U>. The Company will pay to Employee an aggregate of $200,000 (the
&#147;Separation Payment&#148;) less $78,000 in advance bonus payments
previously made to Employee but not yet earned by Employee, i.e., a net
Separation Payment of $122,000, less all appropriate payroll deductions. Such
payment will be contingent upon Employee&#146;s delivery of the executed
Separation Agreement and General Release to the General Counsel of the Company
no later than November 1, 2004, and the expiration of the 7-day revocation
period described in paragraph 14 below. Subject to the immediately preceding
sentence, the Separation Payment will be made in 14 payments of $8,333.33 plus
one payment of $5,333.38, in accordance with the Company&#146;s standard payroll
schedule in effect from time to time. The parties acknowledge that, solely for
the convenience of Employee, advances against the Severance Payment have already
commenced, and all such payments previously made constitute part of the
Separation Payment and will be credited against the Separation Payment.</FONT></FONT> </P>

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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">2.&nbsp;&nbsp;
<U>Amendments to Stock Option</U>. Pursuant to that certain Amendment to Grant
Agreement of even date herewith (the &#147;Option Amendment&#148;), the Company
agrees:</FONT></FONT> </P>

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     <TD><P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">a.&nbsp;&nbsp;
to cause one-fourth of the Stock Option dated December 18, 2003 currently held by
Employee (the &#147;Stock  Option&#148;) to become immediately vested (such one-fourth
portion consisting of an option to purchase  275,000 shares of SAN Holdings, Inc. Common
Stock at an exercise price of $.40), and</FONT></FONT> </P></TD>
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     <TD><P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">b.&nbsp;&nbsp;
that the vested portion of the Stock Option shall not expire as a consequence of
the termination of Employee&#146;s employment, but rather shall expire solely
upon the first to occur of the other termination events set forth in the Stock
Option;</FONT></FONT> </P></TD>
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     <TD><P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">c.&nbsp;&nbsp;
The foregoing summary of such amendments is qualified in its entirety by the
terms of the Option Amendment. Further, the effectiveness of such amendment is
expressly conditioned upon Employee&#146;s delivery of the executed Separation
Agreement and General Release to the General Counsel of the Company no later
than November 1, 2004, and the expiration of the 7-day revocation period
described in paragraph 14 below.</FONT></FONT> </P></TD>
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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">3.&nbsp;&nbsp;
<U>Resignation as Director</U>. Contemporaneously with his execution of this
Agreement, Employee will tender his written resignation as a Director of SAN
Holdings, Inc. In the event Employee fails to tender such resignation, this
Agreement shall constitute Employee&#146;s resignation as Director.</FONT></FONT> </P>

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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">4.&nbsp;&nbsp;
<U>Release</U>. In consideration of the Company&#146;s Separation Payment to
Employee as described in paragraph 1 and the Option Amendment summarized in
paragraph 2, Employee, on behalf of himself, his spouse and his dependents,
heirs, executors, administrators and assigns, past and present, and each of them
and its and their trustees, directors, officers, agents, attorneys, insurers,
employees, stockholders, representatives, successors, assigns and all persons
acting by, through, under or in connection with them, past and present
(hereinafter collectively referred to as &#147;Releasors&#148;), agrees that his
receipt of the payment(s) described in paragraph 1 and the Option Amendment
summarized in paragraph 2 is in full settlement of any and all claims which
Employee and Releasors have or may have had as a result of Employee&#146;s
employment with and separation from employment with the Company and the
Corporate Group, and hereby ABSOLUTELY AND IRREVOCABLY AND UNCONDITIONALLY
RELEASES AND FOREVER DISCHARGES each member of the Corporate Group and their
respective affiliates, successors, predecessors and assigns, past or present
(including without limitation Sun Solunet LLC, Sun Capital Partners II, L.P.,
Sun Capital Partners, Inc.), and each of them and its and their trustees,
directors, employees, shareholders, officers, insurers, representatives, agents,
consultants, related organizations, attorneys and successors and assigns, past
and present, jointly and individually, and all persons acting by, through, under
or in concert with them, past and present, and each of them (hereinafter
collectively referred to as the &#147;Released Parties&#148;), from any and all
rights, claims, demands, controversies, damages, costs, expenses, compensation,
consequential damages, actions, causes of action, suits, obligations, judgments,
promises, administrative claims, actions or proceedings, sums of money,
executions and liabilities of every kind and character whatsoever, known or
unknown, in law or in equity (hereinafter &#147;claims&#148;) under any federal,
state or local statute, regulation, ordinance, order, rule or common law theory,
including without limitation, claims arising from and during employment, whether
the claims are past or present, whether they arise from common law or statute,
whether they arise from labor laws or discrimination laws such as Title VII of
the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment
Act, as amended, the Civil Rights Act set forth at 42 U.S.C. s. 1981, the Civil
Rights Act of 1986, the Civil Rights Act of 1991, the Older Workers Benefit
Protection Act, and/or the Pennsylvania Human Relations Act, which Employee and
the Releasors have or may have had against the Released Parties, whether now
apparent or yet to be discovered or which may hereafter develop based on events
that have transpired from the beginning of time to the date of execution of this
Separation Agreement and General Release, whether or not an action, claim,
complaint or charge has been filed by Employee. Employee further agrees and
covenants that should any person, organization, or other entity file, charge,
claim, sue or cause or permit to be filed any civil action, suit or legal
proceeding involving any matter occurring at any time in the past concerning
Employee&#146;s employment relationship with or termination from the Corporate
Group, or involving any continuing effects of any acts or practices which may
have arisen or occurred on or prior to the date of this Separation Agreement and
General Release, Employee will not seek or accept any personal equitable or
monetary relief in such civil action, suit or legal proceeding.</FONT></FONT> </P>



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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">5.&nbsp;&nbsp;
<U>No Admission of Liability</U>. Execution of this Separation Agreement and
General Release and payment of the Separation Payment specified in paragraph 1
and the Option Amendment summarized in paragraph 2 do not constitute an
admission by any Released Party of any violation of any Civil Rights or other
employment discrimination statute, or any other legal statute, provision,
regulation, ordinance, order or action under common law. Rather, this Separation
Agreement and General Release expresses the intention of the parties to resolve
all issues and other claims related to or arising out of Employee&#146;s
employment by and termination from the Company.</FONT></FONT> </P>

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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">6.&nbsp;&nbsp;
<U>Covenants</U>.</FONT></FONT> </P>

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     <TD><P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">a.&nbsp;&nbsp;
<U>Covenant</U>. Employee agrees that, during the period ending August 20, 2006,
he shall not, directly or indirectly:</FONT></FONT> </P></TD>
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     <TD><P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(i)&nbsp;&nbsp;
own, manage, operate, control, be employed by, participate in, or be connected in any
manner with the  ownership,  management, operation or control of any business operating
in the United States  which (A) is engaged in the type of business conducted by the
Corporate Group as  of the Effective Date; or (B) is, or is reasonably likely to become,
directly or  indirectly, a material competitor of the Corporate Group with respect to the
lines of business conducted by the Corporate Group as of the Effective Date or  lines of
business in which, as of the Effective Date, the Corporate Group has  developed concrete
plans to engage in the future as a substantial part of its  business;</FONT></FONT> </P></TD>
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     <TD><P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(ii)&nbsp;&nbsp;
hire or employ anyone who is, at the time, an employee, agent, manager, consultant, or
other participant  in  the Corporate Group&#146;s business, or otherwise seek to induce
or persuade any  such person to terminate such employment or other relationship in order
to enter  into any business relationship with him, with any business organization in
which  he is a participant in any capacity whatsoever, or with any other business
organization in competition with the Company Business; or</FONT></FONT> </P></TD>
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     <TD><P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">(iii)&nbsp;&nbsp;
induce or attempt to persuade any person or entity who is a customer of the Corporate
Group as of the  date  of this Agreement or who has been such a customer within the
preceding twelve  months to purchase from any vendor other than the Corporate Group the
types of  products that are then offered for sale by the Corporate Group.</FONT></FONT> </P></TD>
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     <TD><P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">b.&nbsp;&nbsp;
<U>Passive Investments</U>. Notwithstanding the foregoing, Employee may own
interests of less than one percent of the outstanding equity securities of a
company that is engaged in a business otherwise prohibited under subsection (a)
if the equity securities of such company are registered under the Securities
Exchange Act of 1934.</FONT></FONT> </P></TD>
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     <TD><P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">c.&nbsp;&nbsp;
<U>Consideration</U>. Employee acknowledges and agrees that the Company&#146;s
commitment to pay the Severance Payment to Employee pursuant to paragraph&nbsp;1
and the Option Amendment summarized in paragraph 2 constitute sufficient
consideration for the covenant not to compete contained in this paragraph.</FONT></FONT> </P></TD>
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     <TD><P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">d.&nbsp;&nbsp;
<U>Reasonableness and Scope</U>. Employee acknowledges and agrees that the
foregoing restrictions are reasonable in all respects, including without
limitation in their duration and their geographical scope, and that those
restrictions will not prevent him from earning a living. Employee further
acknowledges that the market for the Corporate Group&#146;s services and
products is, by its nature, without geographical boundaries, and that it is
therefore reasonable for the foregoing restrictions to be without geographical
limitation except as provided in clause (i) of paragraph 6(a).</FONT></FONT> </P></TD>
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     <TD><P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">e.&nbsp;&nbsp;
<U>Tolling of Periods During Breach or Threatened </U>. In the event it becomes
necessary or desirable for the Company to seek compliance with the provisions of
this paragraph 6 by legal proceedings, the period during which Employee shall
comply with said provisions shall extend for a period of two years from the date
of the legal order requiring such compliance.</FONT></FONT> </P></TD>
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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">7.&nbsp;&nbsp;
<U>Nondisparagement</U>. Employee shall not issue or cause to be issued or
condone the issuance of any communication, written or otherwise, that
disparages, criticizes or otherwise reflects adversely or encourages any adverse
action against the Company and/or the Company&#146;s products or services. The
Company shall not authorize, direct or condone the issuance of any
communication, written or otherwise, that disparages, criticizes or otherwise
reflects adversely or encourages any adverse action against Employee. This
obligation extends to all statements, written or oral, whether intended to be
public or private (e.g., &#148; the Company discriminated against me&#148;). In
response to inquiries from third parties, Employee and the Company shall state
only that Employee separated from the Company on mutually acceptable terms.
Employee agrees that the Company may also confirm to third parties
Employee&#146;s dates of employment and title/position.</FONT></FONT> </P>

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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">8.&nbsp;&nbsp;
<U>Confidential Information, Proprietary Information and Inventions</U>. In
consideration of the Company&#146;s agreement to make the payments specified in
paragraph 1 and the Option Amendment summarized in paragraph 2, Employee agrees
that:</FONT></FONT> </P>



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     <TD><P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">a.&nbsp;&nbsp;
He will hold all Confidential Information in strictest confidence and will not
use or disclose any Confidential Information without the Company&#146;s written
authorization, indefinitely. &#147;Confidential Information&#148; means any
non-public information relating to the Corporate Group or its customers or
vendors, including but not limited to customer and supplier lists and data,
customer requirements, product plans or developments, computer programs,
procedures and processes, and any non-public information entrusted to the
Corporate Group by customers or other third parties. However, Confidential
Information does not include any information that becomes publicly known and
generally available through no wrongful act by Employee. Employee also agrees
that he will not use for his benefit or for the benefit of any other person any
information or intellectual property that, while not confidential, is treated as
proprietary by the Corporate Group and that may not be used by third parties
without payment (&#147;Proprietary Information&#148;). Employee further agrees
that all Confidential Information and Proprietary Information constitute the
property of the Corporate Group and represents that he has delivered to the
Corporate Group all writings, devices (including disks or other electronic
media) and other records containing Confidential Information or Proprietary
Information or otherwise belonging to the Corporate Group, and that he will not
retain (and will not deliver to anyone else) any of the same.</FONT></FONT> </P></TD>
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     <TD><P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">b.&nbsp;&nbsp; All
Inventions that Employee conceived, developed or reduced to practice (alone  or jointly
with others) during his employment by the Corporate Group are the  exclusive property of
the Corporate Group, and Employee hereby assigns to the  applicable member of the
Corporate Group all of his right, title and interest in  and to any such Inventions.
&#147;Inventions&#148; means all inventions,  original works of authorship and other
trade secrets (including computer  programs, procedures and processes) that relate to the
business in which the  Corporate Group is engaged or in which the Corporate Group is
anticipated to  become engaged as of the time of invention, whether or not they are
patentable  or registrable under copyright or similar laws. Without limiting the
foregoing,  Employee acknowledges that all original works of authorship that he made
(alone  or jointly with others) within the scope of his employment which relate to the
Corporate Group&#146;s business (or anticipated business) and which are  protectable by
copyright are &#147;works made for hire,&#148; as that term is  defined in the United
States Copyright Act. Employee agrees to assist the  Corporate Group, at the Corporate
Group&#146;s expense, in every reasonable way  to secure the Corporate Group&#146;s
rights in any Inventions and in any  copyrights, patents or other intellectual property
rights relating to those  Inventions, including by disclosing to the Corporate Group all
pertinent  information and by executing all applications, assignments and other
instruments  that the Corporate Group deems useful in order to obtain such rights and/or
in  order to convey to the Corporate Group or its nominees the exclusive right,  title
and interest in and to such Inventions and such related rights.</FONT></FONT> </P></TD>
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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">9.&nbsp;&nbsp;
<U>Return of Property</U>. Employee warrants that he has returned, or will
return by November 1, 2004, all property of the Corporate Group, including all
computers, printers and computer-related equipment and all copies of all
documents in his possession, custody and control, excluding only two laptop
computers that Employee shall be entitled to retain. Such property includes,
without limitation, handwritten, typed, printed, photocopied, audio recorded,
computer or diskette recorded materials prepared by him or any attorney, agent
or other Corporate Group employee which relate in any way to the Corporate
Group, including but not limited to any backup computer tapes from the Corporate
Group&#146;s servers that Employee has removed from the Company&#146;s offices
for safe-keeping.</FONT></FONT> </P>


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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">10.&nbsp;&nbsp;
<U>Governing Law</U>: This Separation Agreement and General Release shall be
subject to and governed by and interpreted in accordance with the laws of the
Commonwealth of Pennsylvania without regard to conflicts of law principles. The
parties hereby: (i) irrevocably submit to the jurisdiction of any state or
federal court sitting in either the State of Colorado or the Commonwealth of
Pennsylvania, for the purposes of any suit, action or other proceeding arising
out of or relating to this Separation Agreement and General Release; and (ii)
waive and agree not to assert in any such proceeding a claim that the parties
are not personally subject to the jurisdiction of the court referred to above,
or that the suit or action was brought in an inconvenient forum.</FONT></FONT> </P>

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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">11.&nbsp;&nbsp;
<U>Entire Agreement</U>. This Separation Agreement and General Release, together
with the Option Amendment referenced in paragraph 2, are the sole, complete and
entire agreements between the parties and supersede all prior negotiations
and/or agreements proposed or otherwise, written or oral, concerning the subject
matter hereof.</FONT></FONT> </P>

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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">12.&nbsp;&nbsp;
<U>Remedies and Enforcement</U>.</FONT></FONT> </P>

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     <TD><P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">a.&nbsp;&nbsp;
In the event of any breach or threatened breach of paragraph 6, paragraph 7
and/or paragraph 8 by Employee, the Company shall be entitled to cease any
further payments under paragraph&nbsp;1 hereof, provided that such cessation of
payments shall not be construed as liquidated damages and shall not limit or
restrict the Corporate Group&#146;s right to obtain other legal or equitable
remedies, including as provided in subparagraph b, below. Any such cessation
shall not constitute a breach of this Agreement by the Company.</FONT></FONT> </P></TD>
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     <TD><P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">b.&nbsp;&nbsp;
Employee acknowledges and agrees that it would be impossible or inadequate to
calculate the Corporate Group&#146;s damages from any breach of this Agreement.
Accordingly, Employee agrees that, in addition to any other remedy available to
it, each member of the Corporate Group will have the right to obtain an
injunction restraining any breach or threatened breach of paragraph 6, paragraph
7 and/or paragraph 8 of this Agreement, and will be entitled to specific
performance of any provision of this Agreement. The existence of any claim that
Employee may have against any member of the Corporate Group, whether predicated
on this Agreement or not, will not constitute a defense to the enforcement of
these covenants by the Corporate Group. In the event of any judicial proceeding,
the prevailing party shall be entitled to recover its attorneys&#146; fees and
all other costs and expenses associated therewith.</FONT></FONT> </P></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">13.&nbsp;&nbsp;
<U>Cooperation</U>. Employee will, in the event that the Corporate Group becomes
involved in any legal action relating to events which occurred during his
employment, cooperate to the fullest extent possible in the preparation,
prosecution, or defense of the Corporate Group&#146;s case, including, but not
limited to, the execution of affidavits or documents, testifying, or providing
information requested by the Corporate Group, such assistance to be provided at
the Corporate Group&#146;s expense.</FONT></FONT> </P>

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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">14.&nbsp;&nbsp;
<U>Knowing and Voluntary Settlement.</U> IN EXECUTING THIS SEPARATION AGREEMENT
AND GENERAL RELEASE, EMPLOYEE HEREBY REPRESENTS THAT HE HAS BEEN AFFORDED A
PERIOD OF NOT LESS THAN 21 DAYS TO CONSIDER THIS SEPARATION AGREEMENT AND
GENERAL RELEASE; THAT HE HAS COMPLETELY AND CAREFULLY READ THIS SEPARATION
AGREEMENT AND GENERAL RELEASE; THAT HE HAS HAD THE OPPORTUNITY TO HAVE AN
ATTORNEY EXPLAIN TO HIM THE TERMS OF THIS SEPARATION AGREEMENT AND GENERAL
RELEASE; THAT HE WILL BE PERMITTED TO REVOKE THIS SEPARATION AGREEMENT AND
GENERAL RELEASE AT ANY TIME DURING THE PERIOD OF 7 DAYS FOLLOWING THE EXECUTION
HEREOF BY DELIVERING WRITTEN NOTICE OF SUCH REVOCATION BY HAND DELIVERY OR FAX
TO THE COMPANY&#146;S GENERAL COUNSEL AT FAX NO. (617) 848-8302; THAT HE KNOWS
AND UNDERSTANDS THE CONTENTS OF THIS SEPARATION AGREEMENT AND GENERAL RELEASE;
THAT THE TERMS OF THIS SEPARATION AGREEMENT AND GENERAL RELEASE ARE TOTALLY
SATISFACTORY TO AND FULLY UNDERSTOOD AND VOLUNTARILY ACCEPTED BY HIM, AND THAT,
OTHER THAN THE PAYMENT IN PARAGRAPH ONE AND THE OPTION AMENDMENT SUMMARIZED IN
PARGRAPH&nbsp;2, NO PROMISES OR REPRESENTATIONS OF ANY KIND HAVE BEEN MADE TO
EMPLOYEE BY OR ON BEHALF OF EITHER THE COMPANY OR ANY OF THE COMPANY RELEASED
PARTIES. EMPLOYEE FURTHER CERTIFIES THAT HE HAS THE INTENTION OF RELEASING ALL
POTENTIAL CLAIMS HE MAY HAVE IN EXCHANGE FOR THE CONSIDERATION DESCRIBED HEREIN,
WHICH HE ACKNOWLEDGES AS ADEQUATE AND SATISFACTORY TO HIM.<B> </B>EMPLOYEE
FURTHER CERTIFIES THAT HE EXECUTES THIS SEPARATION AGREEMENT AND GENERAL RELEASE
AS HIS OWN FREE ACT AND DEED AND THAT THIS SEPARATION AGREEMENT AND RELEASE WAS
ENTERED INTO WITHOUT FRAUD, DURESS OR COERCION.</FONT></FONT> </P>

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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">15.&nbsp;&nbsp;
<U>Effect of Settlement</U>. The Company and Employee intend this Separation
Agreement and General Release to be legally binding upon and inure to the
benefit of each of them and their respective heirs, administrators, executors,
successors and assigns.</FONT></FONT> </P>

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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">16.&nbsp;&nbsp;
<U>Parties Benefited; Assignment</U>. This Agreement shall be binding on the
Employee and the Company, and their respective successors and assigns. In
addition, this Agreement is intended to benefit the other members of the
Corporate Group and the other Released Parties, and may be enforced by any of
the same. This Agreement shall be assignable to any purchaser of or other
successor to all or any substantial portion of the Company Business, and any
such purchaser or success shall be entitled to enforce Employee&#146;s covenants
made herein either in its own name or in the name of the Company.</FONT></FONT> </P>

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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">17.&nbsp;&nbsp;
<U>Severability</U>. Excluding the general release set forth in paragraph 4,
should any provision of this Separation Agreement and General Release be
declared illegal or unenforceable by any court of competent jurisdiction and
cannot be modified to be enforceable, such provision shall immediately become
null and void, leaving the remainder of the Separation Agreement and General
Release in full force and effect. However, if any portion of the general release
language were ruled to be unenforceable for any reason, Employee shall return
the consideration paid hereunder to the Company and the Option Amendment shall
immediately be rendered null and void ab initio.</FONT></FONT> </P>


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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-7-</FONT></FONT> </P>


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<P ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">IN
WITNESS WHEREOF, the aforesaid parties have hereunto set their hands and seals
as of the day below written.</FONT></FONT> </P>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="2"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">WITNESS:</FONT></FONT></TD>
     <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>MICHAEL J. PHELAN</B></FONT></FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><BR><BR><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">______________________________</FONT></FONT> </TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT"><BR><BR><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">/s/ _____________________________</FONT></FONT> </TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[full signature]</FONT></FONT> </TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Executed on:&nbsp;&nbsp;<U>October 28, 2004</U></FONT></FONT> </TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
</TABLE>
<BR>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="2"></TH>
     <TH COLSPAN="2"></TH></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">ATTEST:</FONT></FONT> </TD>
     <TD WIDTH="5%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="50%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>SANZ INC.</B></FONT></FONT> </TD>
     <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><BR><BR>______________________________</FONT></FONT> </TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><BR><BR>By:&nbsp;<U>/s/ </U>__________________________</FONT></FONT> </TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name: Hugh A. O'Reilly</FONT></FONT> </TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title: Vice President</FONT></FONT> </TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT">&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Executed on:&nbsp;&nbsp;<U>November 1, 2004</U></FONT></FONT> </TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
</TABLE>
<BR>



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<P ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">-8-</FONT></FONT> </P>

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