SUN CAPITAL PARTNERS II, LP
Exhibit
10.01
SUN
CAPITAL PARTNERS II, LP
0000
Xxxx
Xxxxxx Xxxxxx
Xxxxx
000
Xxxx
Xxxxx, XX 00000
November
23, 2005
SAN
Holdings, Inc.
000
X.
Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxx
Xxxx, XX 00000
Attn: Xxxxxx
Xxxxx
Xx.
Xxxxx:
Reference
is made to that certain letter agreement, dated as of March 31, 2003, by
and
among, Sun Capital Partners II, LP, a Delaware limited partnership (the
"Fund"),
and
SAN Holdings, Inc., a Colorado corporation ("SANZ")
(the
"Letter
Agreement").
Capitalized terms used herein without definition have the meanings ascribed
to
them in the Letter Agreement.
Pursuant
to the Xxxxxx Loan Authorization Agreement, dated as of May 16, 2003 (as
amended
to date, the "Xxxxxx
Loan"),
SANZ
has borrowed the aggregate principal amount of $13,000,000 from Xxxxxx X.X.
Such
amount is guaranteed by the Fund.
Pursuant
to the Letter Agreement, SANZ is periodically required to issue Sun a Guaranty
Warrant. Such Guaranty Warrant is exercisable for the number of shares of
SANZ
Common Stock equal to the product of (i) the applicable Warrant Share Amount
and
(ii) a fraction, the numerator of which is the aggregate amount of outstanding
indebtedness of SANZ guaranteed by the Fund in excess of $3,000,000 at the
time
such Guaranty Warrant is required to be issued, and the denominator of which
is
$2,000,000.
Because
the Fund guaranteed an aggregate amount of outstanding indebtedness of SANZ
on
the Xxxxxx Loan as of November 16, 2005 of $13,000,000, in accordance with
the
Letter Agreement, SANZ issued to Sun a Guaranty Warrant on November 16, 2005
exercisable for 6,539,490 shares of SANZ Common Stock. The number of shares
of
SANZ Common Stock for which such Guaranty Warrant was exercisable was calculated
by multiplying the applicable Warrant Share Amount, i.e.,
1,307,898, by a fraction, the numerator of which was $10,000,000 (representing
the aggregate amount of outstanding indebtedness of SANZ guaranteed by the
Fund
in excess of $3,000,000), and the denominator of which was $2,000,000.
In
accordance with the Letter Agreement, SANZ is obligated to issue an additional
Guaranty Warranty to Sun on the six (6) month anniversary of November 16,
2005
and each six (6) month anniversary thereafter so long as the Fund continues
to
guaranty the Xxxxxx Loan in an amount in excess of $3,000,000.
Sun
anticipates purchasing the Xxxxxx Loan from Xxxxxx X.X. (thereafter, the
"Sun
Loan"),
and
the Fund anticipates terminating its guaranty of the Xxxxxx Loan. In the
event
such purchase is consummated and such guaranty is terminated, SANZ agrees
to
continue issuing additional Guaranty Warrants to Sun as contemplated by the
Letter Agreement and as set forth herein, notwithstanding that the Xxxxxx
Loan
has been purchased by Sun and notwithstanding that the Fund will no longer
guaranty the obligations of SANZ under the Xxxxxx Loan. XXXX will be obligated
to issue such Guaranty Warrants in the same six (6) month intervals contemplated
by the Letter Agreement, with each such Guaranty Warrant being exercisable
for
the number of shares of SANZ Common Stock equal to the product of (i) the
applicable Warrant Share Amount and (ii) a fraction, the numerator of which
shall be the aggregate principal amount owed to Sun under the Sun Loan in
excess
of $3,000,000 at such six (6) month interval as a result of Sun purchasing
the
Xxxxxx Loan, and the denominator of which shall be $2,000,000.
Except
as
set forth herein, the Letter Agreement shall remain in full force and effect
in
accordance with its original terms.
*
*
*
*
*
This
letter agreement shall be governed by and construed in accordance with the
laws
of the State of Delaware applicable to agreements made and to be performed
entirely within such state. This letter agreement may be executed in any
number
of counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
Very
truly yours,
Sun
Capital Partners II, LP
By:
Sun
Capital Advisors II, LP
Its:
General Partner
By:
Sun
Capital Partners, LLC
Its:
General Partner
By:
/s/
M.
Xxxxxx
Xxxx
M.
Xxxxxx
Xxxx, Vice President
Agreed
and accepted this 23rd day of November, 2005:
SAN
HOLDINGS, INC.
By: /s/
Xxxx
Xxxxxxx
Its:
Chief
Executive
Officer
SUN
SOLUNET, LLC
By:
/s/
M.
Xxxxxx
Xxxx
Name: M.
Xxxxxx
Xxxx
Title:
Vice
President