TENTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT AND WAIVER OF DEFAULTS
EXHIBIT
10.01
TENTH
AMENDMENT TO CREDIT AND SECURITY AGREEMENT
AND
WAIVER OF DEFAULTS
This
Amendment, dated as of November 11, 2005, is made by and among SANZ INC.,
formerly known as Storage Area Networks, Inc., a Colorado corporation (“SANZ” or
a “Borrower”), SOLUNET STORAGE, INC., a Delaware corporation (“Solunet” or a
“Borrower”), and XXXXX FARGO BANK, NATIONAL ASSOCIATION (the “Lender”), acting
through its XXXXX FARGO BUSINESS CREDIT operating division.
Recitals
The
Borrowers and the Lender are parties to a Credit and Security Agreement dated
as
of May 31, 2001, as amended by (i) the First Amendment to Credit and Security
Agreement and Waiver of Defaults dated as of January 17, 2002; (ii) the Second
Amendment to Credit and Security Agreement dated as of July 1, 2002; (iii)
the
Third Amendment to Credit and Security Agreement dated as of August 15, 2002;
(iv) the Fourth Amendment to Credit and Security Agreement and Waiver of
Defaults dated as of March 31, 2003; (v) the Fifth Amendment to Credit and
Security Agreement and Waiver of Defaults dated as of September 22, 2003;
(vi)
the Sixth Amendment to Credit and Security Agreement dated as of February
12,
2004; (vii) the Seventh Amendment to Credit and Security Agreement and Waiver
of
Defaults dated as of September 3, 2004; (viii) the Eighth Amendment to Credit
and Security Agreement and Waiver of Defaults dated as of October 29, 2004;
and
(ix) the Ninth Amendment to Credit and Security Agreement and Waiver of Defaults
dated as of March 29, 2005 (as so amended, the “Credit Agreement”). Capitalized
terms used in these recitals have the meanings given to them in the Credit
Agreement unless otherwise specified.
The
Borrowers have requested that certain amendments be made to the Credit
Agreement, which the Lender is willing to make pursuant to the terms and
conditions set forth herein.
NOW,
THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, it is agreed as follows:
1. Defined
Terms.
Capitalized terms used in this Amendment which are defined in the Credit
Agreement shall have the same meanings as defined therein, unless otherwise
defined herein.
2. Interest
Rate Margin.
The
Ninth Amendment to the Credit and Security Agreement and Waiver of Defaults
dated March 29, 2005 established net income milestones that would allow the
Borrower to reduce the Interest Rate Margin throughout the fiscal year. As
of
June 30, 2005 and September 30, 2005, the Borrower reported a loss of $283,000
and $606,000, respectively. As a result, the Borrower is not entitled to
a
decrease in the Interest Rate Margin, and the Interest Rate Margin effective
as
of July 1, 2005 is five percent (5.0%).
3. No
Other Changes.
Except
as explicitly amended by this Amendment, all of the terms and conditions
of the
Credit Agreement shall remain in full force and effect and shall apply to
any
advance thereunder.
4. Waiver
of Defaults.
The
Borrowers are in default under Section 7.4 (c) Investments
and Subsidiaries
as of
September 1, 2005 as a result of payments made from SANZ to Solunet (the
“Existing Defaults”). Upon the terms and subject to the conditions set forth in
this Amendment, the Lender hereby waives the Existing Defaults. This waiver
shall be effective only in this specific instance and for the specific purpose
for which it is given, and this waiver shall not entitle the Borrower to
any
other or further waiver in any similar or other circumstances.
5. Accommodation
Fee.
The
Borrowers shall pay the Lender as of the date hereof a fully earned,
non-refundable fee in the amount of $2,500 in consideration of the Lender’s
execution and delivery of this Amendment.
6. Conditions
Precedent.
This
Amendment, and the waiver set forth in Paragraph 4
hereof,
shall be effective when the Lender shall have received an executed original
hereof, together with each of the following, each in substance and form
acceptable to the Lender in its sole discretion:
(a) The
Acknowledgment and Agreement of Guarantor and the Acknowledgment and Agreement
of Subordinated Creditor set forth at the end of this Amendment, duly executed
by the Guarantor and the Subordinated Creditor.
(b) Payment
of the fee described in Paragraph 5.
(c) Such
other matters as the Lender may require.
7. Representations
and Warranties.
Each
Borrower hereby represents and warrants to the Lender as follows:
(a) Each
Borrower has all requisite power and authority to execute this Amendment
and to
perform all of its obligations hereunder, and this Amendment has been duly
executed and delivered by each Borrower and constitutes the legal, valid
and
binding obligation of each Borrower, enforceable in accordance with its
terms.
(b) The
execution, delivery and performance by each Borrower of this Amendment has
been
duly authorized by all necessary corporate action and does not (i) require
any authorization, consent or approval by any governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
(ii) violate any provision of any law, rule or regulation or of any
order,
writ, injunction or decree presently in effect, having applicability to either
Borrower, or the articles of incorporation or by-laws of either Borrower,
or
(iii) result in a breach of or constitute a default under any indenture
or
loan or credit agreement or any other agreement, lease or instrument to which
either Borrower is a party or by which either Borrower or its properties
may be
bound or affected.
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(c) All
of
the representations and warranties contained in Article V of the Credit
Agreement are correct on and as of the date hereof as though made on and
as of
such date, except to the extent that such representations and warranties
relate
solely to an earlier date.
8. References.
All
references in the Credit Agreement to “this Agreement” shall be deemed to refer
to the Credit Agreement as amended hereby; and any and all references in
the
Security Documents to the Credit Agreement shall be deemed to refer to the
Credit Agreement as amended hereby.
9. No
Other Waiver.
Except
as set forth in Paragraph 4 hereof, the execution of this Amendment and
acceptance of any documents related hereto shall not be deemed to be a waiver
of
any Default or Event of Default under the Credit Agreement or breach, default
or
event of default under any Security Document or other document held by the
Lender, whether or not known to the Lender and whether or not existing on
the
date of this Amendment.
10. Release.
Each
Borrower, and the Guarantor by signing the Acknowledgment and Agreement of
Guarantor set forth below, and the Subordinated Creditor by signing the
Acknowledgment and Agreement of Subordinated Creditor set forth below, each
hereby absolutely and unconditionally releases and forever discharges the
Lender, and any and all participants, parent corporations, subsidiary
corporations, affiliated corporations, insurers, indemnitors, successors
and
assigns thereof, together with all of the present and former directors,
officers, agents and employees of any of the foregoing, from any and all
claims,
demands or causes of action of any kind, nature or description, whether arising
in law or equity or upon contract or tort or under any state or federal law
or
otherwise, which such Borrower or such Guarantor or such Subordinated Creditor
has had, now has or has made claim to have against any such person for or
by
reason of any act, omission, matter, cause or thing whatsoever arising from
the
beginning of time to and including the date of this Amendment, whether such
claims, demands and causes of action are matured or unmatured or known or
unknown.
11. Costs
and Expenses.
Each
Borrower hereby reaffirms its agreement under the Credit Agreement to pay
or
reimburse the Lender on demand for all costs and expenses incurred by the
Lender
in connection with the Loan Documents, including without limitation all
reasonable fees and disbursements of legal counsel. Without limiting the
generality of the foregoing, each Borrower specifically agrees to pay all
fees
and disbursements of counsel to the Lender for the services performed by
such
counsel in connection with the preparation of this Amendment and the documents
and instruments incidental hereto. Each Borrower hereby agrees that the Lender
may, at any time or from time to time in its sole discretion and without
further
authorization by such Borrower, make a loan to such Borrower under the Credit
Agreement, or apply the proceeds of any loan, for the purpose of paying any
such
fees, disbursements, costs and expenses and the fee required under Paragraph
5
hereof.
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12. Joint
and Several Liability.
All
obligations of SANZ and Solunet under this Amendment shall be joint and several.
All references to the term “Borrower” herein shall refer to each of them
separately and to both or all of them jointly and each such Person shall
be
bound both severally and jointly with the other. Each of SANZ and Solunet
is
responsible for all of the Borrower obligations under this Amendment. Notices
from the Lender to either Borrower shall constitute notice to both. Directions,
instructions, representations, warranties or covenants made by either Borrower
to the Lender shall be binding on both.
13. Miscellaneous.
This
Amendment and the Acknowledgment and Agreement of Guarantor and the
Acknowledgment and Agreement of Subordinated Creditor may be executed in
any
number of counterparts, each of which when so executed and delivered shall
be
deemed an original and all of which counterparts, taken together, shall
constitute one and the same instrument.
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remainder of this page intentionally left blank.]
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IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first written above.
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XXXXX
FARGO BANK, NATIONAL ASSOCIATION,
acting
through its XXXXX FARGO BUSINESS CREDIT
operating
division
By:
/s/
Xxxx X. Xxxxxxx-Xxxxxx
Name: Xxxx
X. Xxxxxxx-Xxxxxx
Its: Vice
President
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SANZ
INC.
By:
/s/
Xxxx Xxxxxxx
Name: Xxxx
Xxxxxxx
Its: President
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SOLUNET
STORAGE, INC.
By:
/s/
Xxxxxx X. Xxxxx
Name: Xxxxxx
X. Xxxxx
Its: Chief
Financial Officer
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ACKNOWLEDGMENT
AND AGREEMENT OF GUARANTOR
The
undersigned, a guarantor of the indebtedness of SANZ Inc., formerly known
as
Storage Area Networks, Inc., (“SANZ”) to Xxxxx Fargo Bank, National Association
(the “Lender”), acting through its Xxxxx Fargo Business Credit operating
division, pursuant to a separate Guaranty dated as of May 31, 2001 (the
“Guaranty”), hereby (i) acknowledges receipt of the foregoing Amendment; (ii)
agrees and acknowledges that the Guaranty extends to the obligations of Solunet
to the Lender to the same extent, in the same manner and on the same terms
as to
SANZ; (iii) consents to the terms (including without limitation the release
set
forth in Paragraph 10 of the Amendment) and execution thereof;
(iv) reaffirms its obligations to the Lender pursuant to the terms
of its
Guaranty; and (v) acknowledges that the Lender may amend, restate,
extend,
renew or otherwise modify the Credit Agreement and any indebtedness or agreement
of the Borrower, or enter into any agreement or extend additional or other
credit accommodations, without notifying or obtaining the consent of the
undersigned and without impairing the liability of the undersigned under
its
Guaranty for all of the Borrower’s present and future indebtedness to the
Lender.
| SAN HOLDINGS, INC. | ||
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| By: | /s/ Xxxx Xxxxxxx | |
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Name:
Xxxx Xxxxxxx
Its:
President
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ACKNOWLEDGMENT
AND AGREEMENT OF SUBORDINATED CREDITOR
The
undersigned, a subordinated creditor of SANZ Inc., formerly known as Storage
Area Networks, Inc., (the “Borrower”) to Xxxxx Fargo Bank, National Association
(the “Lender”), acting through its Xxxxx Fargo Business Credit operating
division, pursuant to a Subordination Agreement dated as of January 17, 2002
(the “Subordination Agreement”), hereby (i) acknowledges receipt of the
foregoing Amendment; (ii) consents to the terms (including without
limitation the release set forth in Paragraph 10 of the Amendment) and execution
thereof; (iii) reaffirms its obligations to the Lender pursuant to
the
terms of its Subordination Agreement; and (iv) acknowledges that the
Lender
may amend, restate, extend, renew or otherwise modify the Loan Documents
and any
indebtedness or agreement of the Borrower, or enter into any agreement or
extend
additional or other credit accommodations, without notifying or obtaining
the
consent of the undersigned and without impairing the obligations of the
undersigned under its Subordination Agreement.
| SAN HOLDINGS, INC. | ||
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| By: | /s/ Xxxx Xxxxxxx | |
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Name:
Xxxx Xxxxxxx
Its:
President
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