SUN SOLUNET, LLC Suite 470 Boca Raton, FL 33486 March 2, 2006
Exhibit
9.01
SUN
SOLUNET, LLC
0000
Xxxx
Xxxxxx Xxxxxx
Xxxxx
000
Xxxx
Xxxxx, XX 00000
March
2,
2006
SAN
Holdings, Inc.
0000
Xxxxxxx Xxxxx
Xxxxxxxxx,
XX 00000
Attn: Xxxx
Xxxxxxx
Xx.
Xxxxxxx:
Reference
is made to that certain Securities Purchase Agreement, dated as of February
28,
2006 (“Securities Purchase Agreement”), by and among SAN Holdings, Inc., a
Colorado corporation (the “Company”), and each of the purchasers identified on
the signature pages thereto (each, a “Purchaser” and collectively the
“Purchasers”). Capitalized terms used but not defined herein have the respective
meanings set forth in the Securities Purchase Agreement.
Pursuant
to the Securities Purchase Agreement, the Company expects to issue and sell
to
the Purchasers, and the Purchasers, severally and not jointly, expect to
purchase Units from the Company, each Unit consisting of (i) one share of the
Company’s newly designated convertible Preferred Stock, (ii) a $0.30 Warrant and
(iii) a $0.50 Warrant (each of the Warrants exercisable for the number of shares
of the Company’s Common Stock (as hereafter defined) as is set forth in the
Securities Purchase Agreement).
Sun
Solunet, LLC, a Delaware limited liability company (“Sun Solunet”), is the
majority shareholder of the outstanding common stock, no par value per share
(“Common Stock”), of the Company and is expected to be a Purchaser under the
Securities Purchase Agreement. Sun Solunet has agreed to execute this letter
to
induce the Purchasers to execute the Securities Purchase Agreement and to
purchase Units from the Company thereunder.
In
connection therewith, Sun Solunet hereby agrees as follows:
1.
Shareholder Meeting. After
the
Company files its Annual Report on Form 10-K for the fiscal year ended December
31, 2005 with the Securities and Exchange Commission, Sun Solunet shall cause
each of the directors of the Company who is employed by or who is an officer
of
Sun Solunet (the “Sun Directors”) to, as soon as reasonably practicable, take
steps reasonably necessary to call a shareholder meeting (the “Meeting”) for
purposes of, among other things, effecting a reverse stock split of the Common
Stock and increasing the Company’s authorized capital.
2.
Vote at the Meeting.
At
the
Meeting, whether by proxy or otherwise, Sun Solunet shall vote all of its shares
of Common Stock entitled to vote at the Meeting (which may now or hereafter
be
owned or held of record by Sun Solunet, or as to which Sun Solunet now or
hereafter has voting power) in favor of a reverse stock split of the Company’s
Common Stock on whatever basis is determined by the board of directors of the
Company (the “Board”) and an increase in the Company’s authorized capital in an
amount determined by the Board, to increase the authorized capital of the
Company in an amount sufficient to provide for the issuance of all of the Shares
upon exercise of all the Warrants and conversion of all the Preferred
Stock.
1
3.
Number of Directors on the Board.
Sun
Solunet shall as soon as reasonably practicable cause the Sun Directors to
take
steps reasonably necessary to reduce the number of directors serving on the
Board to a total of nine or less directors (at the sole discretion of the Sun
Directors), whether by resolution, amendment to the Company’s bylaws or
otherwise.
4.
Audit Committee.
(a) No
later
than five days after the Meeting, Sun Solunet shall cause the Sun Directors
to
take steps reasonably necessary to cause the Company to have an audit committee
of no less than three directors. So long as at least three directors meet the
requirements set forth in paragraphs (b) and (c) below, the Company may have
one
director on the audit committee that does not meet the requirements set forth
in
the remainder of this paragraphs (b) and (c) below.
(b) Each
of
the members of the audit committee shall (i) be independent as defined under
Rule 4200(a)(15) of the NASD Manual; (ii) meet the criteria for independence
set
forth in Rule 10A-3(b)(1) promulgated under the Securities Exchange Act of
1934,
as amended (subject to the exemptions provided in Rule 10A-3(c)); (iii) not
have
participated in the preparation of the financial statements of the Company
or
any current subsidiary of the Company at any time during the past three years;
and (iv) be able to read and understand fundamental financial statements,
including a company's balance sheet, income statement, and cash flow statement.
(c) At
least
one member of the audit committee shall have past employment experience in
finance or accounting, requisite professional certification in accounting,
or
any other comparable experience or background which results in the individual’s
financial sophistication, including being or having been a chief executive
officer, chief financial officer or other senior officer with financial
oversight responsibilities.
(d) If
there
is a vacancy on the audit committee or if a single member ceases to be
independent for reasons outside the member’s reasonable control, Sun Solunet
will have until the earlier of the next annual shareholders meeting of the
Company or one year from the occurrence of the vacancy to cause the Sun
Directors to take steps reasonably necessary to modify membership on the audit
committee to comply with the provisions of this Section. Any member of the
audit
committee that ceases to be independent as described in the first sentence
may
continue to serve during such time period.
(e) The
foregoing requirements for the audit committee shall terminate on the
Termination Date.
5.
Compensation of Executive Officers.
No
later than five days after the Meeting, Sun Solunet shall cause the Sun
Directors to take steps reasonably necessary such that future decisions relating
to the compensation of the executive officers of the Company shall be
recommended to the Board for determination by either a majority of the
independent directors of the Company, or a compensation committee comprised
solely of independent directors. The chief executive officer may not be present
during voting or deliberations on his compensation.
6.
Termination.
This
letter and all of Sun Solunet’s obligations and responsibilities set forth
herein shall terminate upon the earliest to occur of (a) the voluntary written
agreement of at least 66% of the Purchasers other than Sun Solunet (weighted
on
the basis of the amount of Securities then held by such Purchasers); (b) the
five year anniversary of this letter; (c) the date that the Purchasers other
than Sun Solunet collectively hold less than or equal to 25% of the Securities
(on a fully diluted basis) purchased by such Purchasers pursuant to the
Securities Purchase Agreement; and (d) the date that the Sun Directors no longer
constitute a majority of the directors of the Company (the “Termination
Date”).
2
7.
Effective Date.
This
letter shall become effective on the Closing Date upon the receipt by Sun
Solunet of counterparts
of the Securities Purchase Agreement executed by each of the Purchasers and
the
Company.
8.
Third Party Beneficiaries. The
Purchasers are named as express third party beneficiaries to this letter and
each may enforce or cause to be enforced the letter as if they were a party
hereto. There are no other third party beneficiaries to this letter.
[Remainder
of Page Intentionally Left Blank]
3
This
obligations of Sun Solunet set forth in this letter 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.
Very
truly yours,
SUN
SOLUNET, LLC
By
/s/ Xxxxx X. Xxxxxxx
Name: Xxxxx
X.
Xxxxxxx
Title:
Vice
President
4
