Exhibit 10.31
SEPARATION AGREEMENT AND GENERAL RELEASE
This Separation Agreement and General Release ("Separation Agreement")
is made and entered into this 26th day of February, 1998, by and between Xxx
Xxxxx ("Xxxxx"), a resident of the State of Minnesota, and Ancor Communications,
Inc. ("Ancor"), a Minnesota corporation with its principal place of business in
Minnetonka, Minnesota.
WHEREAS, Xxxxx was employed by Ancor from approximately December 9,
1993, through February 27, 1998, most recently as Vice President -
Administration;
WHEREAS, as of February 27, 1998, Xxxxx will resign his employment with
Ancor, effective August 31, 1998, maintaining his status as an employee until
that date;
WHEREAS, Xxxxx has negotiated with Ancor regarding the terms and
conditions of his separation from Ancor;
WHEREAS, it is the desire of Xxxxx and Ancor to settle all disputes
related directly or indirectly to Xxxxx'x employment by Ancor, and/or Xxxxx'x
separation from employment, in accordance with the terms and conditions set
forth in this Separation Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Separation Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
IT IS AGREED, by and between the undersigned, as follows:
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A) COMPENSATION AND BENEFITS
(1) SEVERANCE COMPENSATION: Ancor will pay the sum of Fifty-Seven
Thousand, Five Hundred and No/100 Dollars ($57,500.00) to Xxxxx. This sum will
be provided equal periodic payments throughout the next six months, in
accordance with Ancor's normal bi-monthly payroll disbursements. Ancor will make
state and federal tax deductions, social security deductions, and all other
appropriate deductions from this severance payment. These severance payments
represent six (6) months of Xxxxx'x current base compensation.
(2) VACATION COMPENSATION: In addition to the compensation described in
Paragraph (1) above, Ancor will provide Xxxxx with compensation for his accrued,
unused vacation in the amount of One Thousand, One Hundred Five and 77/100
Dollars ($1,105.77), less all appropriate deductions.
(3) STOCK OPTIONS: Xxxxx may exercise his current vested options for
shares of Ancor stock for a period of ninety (90) days, commencing on the day
following the expiration of Xxxxx'x severance compensation. Xxxxx must exercise
his options in accordance with the "Ancor Communications, Incorporated Incentive
Stock Option Agreements" dated December 20, 1993; August 9, 1994; January 4,
1995; January 10, 1996 and June 18, 1996, copies of which are attached hereto as
Exhibits A-E and which are incorporated herein by reference. Ancor acknowledges
that Xxxxx was granted options: (a) on December 20, 1993, for the purchase of
25,000 shares at the purchase price of $3.20 per share, 100 percent of which
(25,000 shares) is vested; (b) on August 9, 1994, for the purchase of 10,000
shares at the purchase price of $3.3125, 75 percent of which (7,500 shares) is
vested; (c) on January 4, 1995, for the purchase of
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15,000 shares at the purchase price of $5.375, 75 percent of which (11,250
shares) is vested; (d) on January 10, 1996, for the purchase of 25,000 shares at
the purchase price of $5.75, 66.7 percent of which (16,666 shares) is vested;
and (e) on June 18, 1996, for the purchase of 25,000 shares at the purchase
price of $13.25, 33.3 percent of which (8,333 shares) is vested.
Further, Ancor has agreed to accelerate the vesting of certain options
for which Xxxxx will become eligible, from their current vesting dates of
January 4 and 10, 1999, to the earlier date of August 31, 1998. Consistent with
the preceding provisions of this Paragraph (3), Xxxxx will have ninety (90) days
from August 31, 1998, to exercise his options on the 12,084 accelerated shares.
Xxxxx will have an unfettered right to trade any Ancor shares he
currently owns and/or any Ancor shares he acquires pursuant to the option grants
described in this Paragraph, so long as he fully complies with all federal and
state securities laws.
(4) INSURANCE BENEFITS: Ancor will continue Xxxxx'x coverage for
health and dental care through August 31, 1998, co-terminus with the termination
of his employment with Ancor and the expiration of his severance compensation.
Thereafter, Xxxxx will be eligible to continue his health and dental care
coverage through COBRA for an additional eighteen (18) months. Ancor will
provide Xxxxx information regarding his eligibility for COBRA benefits and his
obligations pursuant to COBRA. Xxxxx understands and agrees that following
August 31, 1998, he will be solely responsible for making his COBRA payments.
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(5) OUTPLACEMENT BENEFITS: Ancor will provide Xxxxx with outplacement
assistance through an outplacement firm mutually acceptable to Ancor and Xxxxx.
The maximum cost Ancor will pay to provide Xxxxx this assistance is Fifteen
Thousand and No/100 Dollars ($15,000.00). Xxxxx will direct the outplacement
firm selected, if any, to send its bills directly to Ancor and Ancor will ensure
that the outplacement firm is compensated, subject to the financial limitation
set forth above. This outplacement benefit, whether used or not, will expire as
of December 31, 1998.
(6) NO LEGAL ENTITLEMENT TO COMPENSATION AND BENEFITS: Xxxxx agrees
that Ancor has no legal obligation to provide him the compensation and benefits
described in Paragraphs (1) - (5) above. Ancor has agreed to provide Xxxxx the
compensation and benefits described in Paragraphs (1) - (5) above to reach an
expeditious and amicable resolution regarding the terms and conditions of
Xxxxx'x separation from employment, to minimize the attorneys' fees that
otherwise would be incurred in the defense of any litigation instituted by
Xxxxx, and to minimize the management time that otherwise would be expended in
the defense of any litigation instituted by Xxxxx.
(7) INCLUSIVE OF ALL INCOME AND OTHER BENEFITS: Xxxxx agrees that the
compensation and benefits described in Paragraphs (1) - (5) above are inclusive
of any and all income or other benefits for which Xxxxx may be, is, or would
have been eligible, had his employment with Ancor been continued in the same or
some other manner.
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(8) ATTORNEYS' FEES AND EXPENSES: Xxxxx agrees that he is responsible
for payment of all of his own attorneys' fees and expenses, if any, incurred in
conjunction with the resolution of any and all disputes he may have with Ancor
relating to his employment or the termination of his employment.
B) RIGHTS TO CONSIDER AND RESCIND
(9) RIGHT TO CONSIDER EXECUTING THIS SEPARATION AGREEMENT: Xxxxx
understands that he has twenty-one (21) days to consider whether he should
execute this Separation Agreement. Xxxxx further understands, however, that he
is not required to take the entire 21-day period to decide whether he wishes to
execute this Separation Agreement and that he may do so on an accelerated basis
without prejudice to his own or Ancor's rights under this Separation Agreement.
(10) RIGHT TO RESCIND THIS SEPARATION AGREEMENT: Xxxxx understands that
he has the right to rescind this Separation Agreement for any reason within
fifteen (15) days after he signs it. Xxxxx understands that this Separation
Agreement will not become effective or enforceable unless and until he executes
this Separation Agreement and the applicable rescission period has expired.
Xxxxx understands that if he wishes to rescind, the rescission must be in
writing and must be hand-delivered or mailed to Xxxxxxx X. Xxxxxxxxxxx.
If hand-delivered, the rescission must be: (a) addressed to
Xxxxxxx X. Xxxxxxxxxxx, Chief Executive Officer, Ancor Communications Corp.,
0000 Xxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxxx 00000; and (b) delivered to Xx.
Xxxxxxxxxxx within the 15-day rescission period. If mailed, the rescission must
be:
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(a) postmarked within the 15-day rescission period; (b) addressed to Xx.
Xxxxxxxxxxx at the above address; and (c) sent by certified mail, return receipt
requested.
To the extent that Xxxxx receives any compensation and benefits during
the period preceding the expiration of rescission period, he agrees to return
and/or refund the amount of, or as to the benefits, the value of, all
compensation and benefits he receives, if he rescinds or revokes this Separation
Agreement. Xxxxx further understands that if he rescinds or revokes this
Separation Agreement, Ancor will be relieved of all obligations delineated in
Paragraphs (1) - (5) above.
C) FULL COMPROMISE/GENERAL RELEASE
(11) FULL COMPROMISE: Xxxxx agrees that the payment and acceptance of
the consideration described in Paragraph (1) above, is in full, final, and
complete compromise, settlement, and satisfaction of any and all claims relating
directly or indirectly to: Xxxxx'x association with or employment by Ancor;
Xxxxx'x resignation and/or termination from employment; any conduct or
statements by Ancor's current or former directors, officers or executives;
and/or, claims Xxxxx could have asserted in any litigation of any kind against
Ancor.
(12) GENERAL RELEASE OF ANCOR: Xxxxx, for and on behalf of himself and
his heirs, administrators, executors, successors and assigns, agrees to, and
hereby does, release, acquit, and forever discharge Ancor and its parent,
affiliates, subsidiaries, and related companies, and the current and former
directors, officers, members, agents, attorneys, servants, independent
contractors and employees of Ancor and all its related entities (the "Released
Parties"), from any and all claims, whether direct or indirect, fixed or
contingent, known or unknown, which Xxxxx ever had, has, or
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may claim to have, for, upon, or by reason of any matter, act or thing prior to
the date of this Separation Agreement, including but not limited to, any cause
of action Xxxxx could have asserted in any litigation against any of the
Released Parties, any cause of action or claim relating to Xxxxx'x association
with or employment by Ancor, and/or any cause of action or claim relating to
Xxxxx'x separation from employment. This General Release specifically
encompasses, but is not limited to, claims that could be brought under the
Minnesota Human Rights Act, Minn. Stat. ss.363.01 et seq., Title VII, 42 U.S.C.
ss. 2000(e) et seq., the Americans With Disabilities Act, 42 U.S.C.
ss.ss.12101-12213, the Age Discrimination in Employment Act, 29 U.S.C. ss.621,
et seq., and any other state or federal statute, or local ordinance, including
any attorneys' fees that could be awarded in connection with these or any other
statutory claims.
This General Release also specifically encompasses any and all claims
grounded in contract or tort theories, including, but not limited to: Breach of
contract, interference with contractual relations, promissory estoppel, breach
of the implied covenant of good faith and fair dealing, breach of employee
handbooks, manuals or other policies, wrongful discharge, wrongful discharge in
violation of public policy, whistleblower claims, assault, battery, fraud,
intentional or negligent misrepresentation, defamation, including all forms of
libel and slander, discharge defamation and self-defamation, intentional or
negligent infliction of emotional distress, breach of fiduciary duty, negligent
hiring, retention or supervision, and/or any other contract or tort theory based
on intentional or negligent conduct of any
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kind, including any attorneys' fees that could be awarded in connection with
these or any other claims.
(13) GENERAL RELEASE OF XXXXX: Ancor, for and on behalf of itself and
its administrators, executors, successors and assigns, hereby agrees to and does
release, acquit, and forever discharge Xxxxx, from any and all claims, whether
direct or indirect, fixed or contingent, known or unknown, which Ancor, ever
had, has, or may claim to have, for, upon, or by reason of any matter, act, or
thing, prior to the date of this Separation Agreement, including, but not
limited to: any cause of action it could have asserted in litigation against
Xxxxx; any cause of action or claim relating to Xxxxx'x employment by or
association with Ancor; any cause of action relating to any statements or
actions by Xxxxx; and/or any cause of action relating to the termination of
Xxxxx'x employment.
D) MISCELLANEOUS
(14) LETTER OF REFERENCE/INQUIRIES FROM PROSPECTIVE EMPLOYERS: At
Xxxxx'x written request, Ancor will provide Xxxxx a mutually acceptable letter
of reference. Xxxxx will be responsible for creating the initial draft of this
reference letter. Ancor reserves the right, in its sole discretion, to make any
modifications it deems appropriate to Xxxxx'x draft document.
Further, if inquiries are made to Ancor from prospective employers of
Xxxxx, the inquiries (whether written or oral) will be referred to Xx. Xxxxxxx
X. Xxxxxxxxxxx or another executive mutually agreed upon by Xxxxx and Ancor.
Xx.Xxxxxxxxxxx or the other executive will provide the following information:
Xxxxx'x name, title, tenure with Ancor and job responsibilities. If authorized
by Xxxxx in writing in advance, Ancor also will provide the prospective employer
any other information mutually agreed upon by Xxxxx and Ancor. If authorized by
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Xxxxx in writing in advance, Ancor also will provide the prospective employer
the letter of reference, if any, prepared pursuant to this Paragraph.
(15) MUTUAL NON-DISPARAGEMENT AGREEMENT: Xxxxx agrees that he will not
disparage or defame Ancor and/or its current or former Directors and Officers.
Ancor's current Directors and Officers agree that they will not disparage or
defame Xxxxx.
(16) PROPRIETARY INFORMATION: Xxxxx recognizes that during the course
of his employment with Ancor, he has had access to confidential, proprietary and
trade secret information belonging to Ancor, including but not limited to,
employee and personnel data and information, and Ancor's strategies, plans, and
proposals (including but not limited to, Ancor's customer, marketing, and
operation strategies), and Ancor's financial information. Xxxxx will comply with
his legal obligations to maintain the confidentiality of this confidential,
proprietary and trade secret information. Xxxxx represents that he will not
remove any Ancor property, including but not limited to business records,
manuals, customer lists and records, business forms, personnel lists, plans and
records, information regarding suppliers and vendors, marketing and strategy
plans, contracts, contract information, correspondence, computer tapes and
diskettes, data processing and other computer reports, and business files, from
Ancor's premises.
(17) RETURN OF ANCOR PROPERTY: Xxxxx agrees that within fourteen (14)
days of executing this Separation Agreement, he will return to Ancor any and all
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Ancor property currently in his possession, including but not limited to, any
Ancor keys, access cards, credit cards, computer equipment, computer tapes and
diskettes, documents, manuals, client information, and any other information in
either printed or electronic formats which he obtained as a result of his
employment by Ancor, regardless of whether the information was obtained during
his employment or after his employment with Ancor ended.
(18) CONFIDENTIALITY: Xxxxx agrees that it is the intent of the parties
to maintain the complete confidentiality of the terms of this Separation
Agreement and the negotiations leading to this Separation Agreement. Therefore,
Xxxxx agrees that he will not publicize, and will take all prudent steps to
ensure the confidentiality of this Separation Agreement. The only comment Xxxxx
will make about his resignation from Ancor is that he resigned voluntarily and
that all matters relating to his employment with Ancor have been resolved to the
mutual satisfaction of the parties. Notwithstanding the terms of this Paragraph,
Xxxxx will be entitled to disclose the terms of this Separation Agreement to his
lawyers, tax advisors, accountants, and immediate family on the condition that
those to whom such disclosure is made also will be bound by the terms of this
Paragraph.
(19) NO ADMISSION OF FAULT: Xxxxx and Ancor agree that their
willingness to enter into this Separation Agreement does not constitute and
should not be construed as, any admission of liability or fault on the part of
Xxxxx or Ancor or any of the Released Parties.
(20) INDEMNIFICATION: Ancor agrees to fulfill any statutory and/or
common law indemnification obligations it owes to Xxxxx, stemming from his
employment
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by Ancor. This specifically includes, but is not limited to, the obligation
Ancor has assumed to defend and indemnify Xxxxx in connection with the lawsuit
captioned IN RE ANCOR COMMUNICATIONS INC. SECURITIES LITIGATION, Case No.
97-1996.
This Paragraph is neither intended to increase nor diminish any
statutory and/or common law indemnification obligation Ancor may owe to Xxxxx.
Further, Ancor's indemnification obligation does not extend to any criminal
conduct engaged in by Xxxxx, though neither Xxxxx nor Ancor believe that any of
Xxxxx'x conduct can be characterized in that manner.
(21) COMPLETE AGREEMENT: Xxxxx agrees that there are no covenants,
promises, undertakings, or understandings outside of this Separation Agreement,
except as specifically set forth herein. Unless preserved elsewhere in this
Separation Agreement, all prior agreements and understandings between Ancor and
Xxxxx are null and void. This includes, but is not limited to, any agreements or
covenants Ancor previously entered with Xxxxx restricting Xxxxx'x rights to
obtain alternative, competitive employment following his employment by Ancor.
Any modification of, or addition to, this Separation Agreement must be
in writing, signed by Xxxxx and Ancor's Chief Executive Officer.
(22) SEVERABILITY: Should any provision of this Separation Agreement be
held invalid or illegal, such illegality shall not invalidate the whole of this
Separation Agreement, but, rather, the Separation Agreement shall be construed
as if it did not contain the illegal part, and the rights and obligations of the
parties shall be construed and enforced accordingly.
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(23) KNOWING AND VOLUNTARY AGREEMENT: Xxxxx agrees that he has entered
into this Separation Agreement knowingly and voluntarily. Xxxxx further
acknowledges that Ancor has recommended that he retain counsel to review this
Separation Agreement and explain to him any paragraphs, sentences, clauses or
terms used herein which he did not understand.
(24) GOVERNING LAW: This Separation Agreement and General Release shall
be governed by, and interpreted in accordance with, the laws of the State of
Minnesota.
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XXX XXXXX
Subscribed and sworn to before me
this day of FEBRUARY, 1998.
----------------------------------
Notary Public
ANCOR COMMUNICATIONS, INC.
By
-----------------------------
Xxxxxxx X. Xxxxxxxxxxx
Its Chief Executive Officer
Subscribed and sworn to before me
this day of FEBRUARY, 1998.
------------------------------------
Notary Public
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