Exhibit 10.01
 
Harris Loan Authorization Agreement

The Company referred to below has applied for, and Harris N.A., Chicago,
Illinois (“Bank”), has approved the establishment of, a loan authorization
account (“Loan Account”) from which the Company may from time to time request
loans up to the maximum amount of credit shown below (the “Maximum Credit”).
Interest on such loans is computed at a variable rate which may change daily
based upon changes in the Bank’s Prime Rate. The Company may make principal
payments at any time and in any amount. The request by the Company for, and the
making by the Bank of, any loan against the Loan Account shall constitute an
agreement between the Company and the Bank as follows:

Name of Company:
SAN Holdings, Inc., a Colorado corporation

Address:
9800 Pyramid Court, Suite 130

Englewood, CO 80112
 
Type of Loan Account: 
x
Revolving, which means as principal is repaid, the Company may reborrow subject
to this Agreement.

     

  o Multiple Advances, which means that the Company may not reborrow any amounts
that have been repaid but may still borrow the difference between the Maximum
Credit and the principal amounts of prior borrowings.

 
Amount of Maximum Credit: $1,500,000.00

Each Loan Requested Shall Be At Least: $100,000

Variable Interest Rate:
The interest rate applicable prior to the Maturity Date equals the rate per
annum announced by the Bank from time to time as its prime commercial rate (the
“Prime Rate”).

Maturity Date: The Loan Account terminates, and Loans are payable, ON DEMAND.
 
Periodic Statement reflecting accrued interest will be sent and interest will be
payable:  x Monthly;        o Quarterly

Payments shall be due at the Bank’s principal office in
 
Chicago, Illinois, paid to the order of the Bank, and made by:
o
Debit to Harris Account #______________;

  x By Check

 
1.
Using the Account. All loans and advances from the Loan Account are referred to
in this Agreement as “Loans”. Loan requests must be in writing (including by
facsimile) or by telephone and shall be sent to the Company’s Harris Account
Officer on or before the date of such proposed borrowing. Loan proceeds shall be
credited to the Company’s deposit account at the Bank unless the Bank is
directed otherwise by special written directions from the Company. The amount of
each loan requested shall be at least the minimum amount shown above, and the
Bank shall have the right to refuse to honor any loan requested by the Company
which is less than that minimum amount, even if the Bank has previously honored
a loan request for less than the minimum amount. The Company shall not request
any Loan which, when taken together with the Loans then outstanding, would
exceed the Maximum Credit. If Loans are secured directly or indirectly by
securities traded on a national exchange or by other “margin stock” (as defined
by the Federal Reserve Board in Regulation U), then the Company promises to
furnish the Bank a duly executed and completed Form U-1 statement and agrees
that the proceeds of Loans from the Loan Account will not be used to purchase or
carry stock, convertible bonds or warrants unless the Company has obtained the
prior written consent of the Bank.

--------------------------------------------------------------------------------

 

 
Loans will be made available from the Loan Account subject to the Bank’s
approval on a loan-by-loan basis as and when Loans are requested by the Company.

All Loans shall be made against and evidenced by the Company’s promissory note
payable to the order of the Bank in the principal amount of $1,500,000.00, such
note to be in the form of Exhibit A attached hereto (the “Note”). The Bank
agrees that notwithstanding the fact that the Note is in the principal amount of
$1,500,000.00, it shall evidence only the actual unpaid principal balance of
Loans made under the Loan Account. All Loans made against the Note and the
status of all amounts evidenced by the Note shall be recorded by the Bank on its
books and records or, at its option in any instance, endorsed on a schedule to
the Note and the unpaid principal balance and status and rates so recorded or
endorsed by the Bank shall be prima facie evidence in any court or other
proceeding brought to enforce the Note of the principal amount remaining unpaid
thereon, the status of the Loans evidenced thereby and the interest rates
applicable thereto, absent manifest error; provided that the failure of the Bank
to record any of the foregoing shall not limit or otherwise affect the
obligation of the Company to repay the principal amount of the Note together
with accrued interest thereon.  The Bank agrees that if it transfers or assigns
the Note, the Bank will stamp thereon a statement of the actual principal amount
evidenced thereby at the time of transfer. The Company agrees that in any action
or proceeding instituted to collect or enforce collection of the Note, the
amount shown as owing the Bank on its records shall be prima facie evidence of
the unpaid balance of principal and interest on the Note, absent manifest error.

2.
Interest. The Company shall pay the Bank interest on the unpaid principal
balance of Loans in accordance with the terms of this Agreement. Accrued
interest will be billed monthly, and is due by the last day of each month (each,
an “Interest Payment Date”). Interest for each billing period is computed by
applying a daily periodic rate based on the Bank’s Prime Rate to each day’s
ending Loan balance. Interest shall be computed on the basis of a year of 360
days for the actual number of days elapsed. The Bank’s Prime Rate reflects
market rates of interest as well as other factors, and it is not necessarily the
Bank’s best or lowest rate. The daily Loan balance shall be computed by taking
the principal balance of Loans at the beginning of each day, adding any Loans
posted to the Loan Account that day, and subtracting any principal payments
posted to the Loan Account as of that day. Interest begins to accrue on the date
a Loan is posted to the Loan Account. The principal balance of Loans which
remains unpaid after demand for repayment shall bear interest until paid in full
at a post-maturity rate of 2% per annum above the interest rate otherwise
applicable to the Loans (determined as aforesaid). The interest rate payable
under this Agreement shall be subject, however, to the limitation that such
interest rate shall never exceed the highest rate which the Company may contract
to pay under applicable law.

3.
Fees. The Company agrees to pay to the Bank a non-refundable Closing Fee in the
amount of $2,250.

4.
Guaranty. Sun Capital Partners II, LP (the “Guarantor”) shall at all times
guarantee all Loans.

-2-

--------------------------------------------------------------------------------

 
5.
Maturity Date; Payments. The Company shall pay to the Bank the principal balance
of outstanding Loans together with any accrued interest ON DEMAND. Payments
received by the Bank shall be applied first to accrued interest and then to the
principal balance of outstanding Loans unless otherwise directed. If any payment
from the Company under this Agreement becomes due on a Saturday, Sunday, or a
day which is a legal holiday for banks in the State of Illinois, such payment
shall be made on the next bank business day and any such extension shall be
included in computing interest under this Agreement.

6.
Periodic Statements. The Bank will furnish the Company with a statement for each
billing period (either monthly or quarterly as shown on the front of this
Agreement) which has any transaction or balance.

7.
Financial Statements. The Company agrees to furnish financial information of the
Company and the Guarantor to the Bank upon request of the Bank from time to
time. Such information shall be furnished as soon as reasonably possible, but in
any event within 30 days after request by the Bank. Without any such request,
the Company shall furnish, or cause to be furnished, to the Bank:

(a) as soon as available, and in any event within 30 days after the last day of
each month, a copy of the consolidated balance sheet of the Company and its
subsidiaries as of the last day of such month and the consolidated statements of
income, retained earnings and cash flows of the Company and its subsidiaries for
the month and the fiscal year-to-date period then ended, each in reasonable
detail showing in comparative form the figures for the corresponding date and
period in the previous fiscal year, prepared by the Company in accordance with
general accepted accounting principles (“GAAP”), except as otherwise stated
therein, and certified to by its chief financial officer or such other officer
reasonably acceptable to the Bank;

(b) as soon as available, and in any event within 90 days after the close of
each fiscal year of the Company, a copy of the consolidated and consolidating
balance sheet of the Company and its subsidiaries as of the close of such period
and the consolidated statements of income, retained earnings and cash flows of
the Company and its subsidiaries for such period, and accompanying notes
thereto, each in reasonable detail showing in comparative form the figures for
the previous fiscal year, accompanied by an unqualified opinion thereon of Ernst
& Young or another firm of independent public accountants of recognized national
standing, selected by the Company and reasonably satisfactory to the Bank, to
the effect that the financial statements have been prepared in accordance with
GAAP and present fairly in all material respects in accordance with GAAP the
consolidated financial condition of the Company and its Subsidiaries as of the
close of such fiscal year and the results of their operations and cash flows for
the fiscal year then ended;

(c) as soon as available, and in any event within 45 days after the last day of
each month, a certificate as of such date in the form, or substantially the form
of Exhibit B hereto, properly completed and certified by the Guarantor;

(d) as soon as available, and in any event within 45 days after the close of
each fiscal quarter of the Guarantor, a copy of the Guarantor’s balance sheet as
of the last day of such fiscal quarter and its statements of income, retained
earnings and cash flows for the fiscal quarter and for the fiscal year-to-date
period then ended, each in reasonable detail showing in comparative form the
figures for the corresponding date and period in the previous fiscal year,
prepared by the Guarantor in accordance with GAAP and certified to by its chief
financial officer or such other officer reasonably acceptable to the Bank; and

-3-

--------------------------------------------------------------------------------

 
(e) as soon as available, and in any event within 90 days after the close of
each fiscal year of the Guarantor, a copy of the Guarantor’s balance sheet as of
the last day of the fiscal year then ended and its statements of income,
retained earnings and cash flows for the fiscal year then ended, and
accompanying notes thereto, each in reasonable detail showing in comparative
form the figures for the previous fiscal year, accompanied by an unqualified
opinion of Grant Thornton or another firm of independent public accountants of
recognized standing, selected by the Guarantor and reasonably satisfactory to
the Bank to the effect that the financial statements have been prepared in
accordance with GAAP and present fairly in all material respects in accordance
with GAAP the consolidated financial condition of the Guarantor as of the close
of such fiscal year and the results of our operations and cash flows for the
fiscal year then ended.

8.
Representations and Warranties. In consideration of establishing and maintaining
the Loan Account, the Company hereby represents and warrants to the Bank that:
(a) the Company is a corporation duly organized, validly existing, and in good
standing under the laws of its state of incorporation; (b) the execution,
delivery, and performance by the Company of this Agreement and the Note are
within its powers, have been duly authorized by all necessary action, and do not
contravene the Company’s articles of incorporation or by-laws or any law or
contractual restriction binding on or affecting the Company; (c) no
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required for the Company’s due
execution, deliver, and performance of this Agreement or the Note; (d) this
Agreement is, and the Note when executed and delivered by the Company will be,
the Company’s legal, valid, and binding obligation enforceable against the
Company in accordance with its terms except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar state
or federal debtor relief laws from time to time in effect which affect the
enforcement of creditors’ rights in general and the availability of equitable
remedies; (e) the Company is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve System),
and no proceeds of the Loans will be used to purchase or carry any margin stock
or to extend credit to others for the purpose of purchasing or carrying any
margin stock; and (f) there is no pending or threatened action or proceeding
affecting the Company before any court, governmental agency or arbitrator, which
may materially adversely affect the Company’s financial condition or operations
or which purports to affect the legality, validity, or enforceability of this
Agreement or the Note.

9.
DEMAND OBLIGATION; ENFORCEMENT. THE LOANS ARE PAYABLE “ON DEMAND.” ACCORDINGLY,
THE BANK CAN DEMAND PAYMENT IN FULL OF THE LOANS AT ANY TIME IN ITS SOLE
DISCRETION EVEN IF THE COMPANY HAS COMPLIED WITH ALL OF THE TERMS OF THIS
AGREEMENT.

No delay by the Bank in the exercise of any right or remedy shall operate as a
waiver thereof, and no single or partial exercise by the Bank of any right or
remedy shall preclude any other or further exercise thereof or the exercise of
any other right or remedy. The Company agrees to pay to the Bank all reasonable
expenses incurred or paid by the Bank in connection with the establishment and
maintenance of the Loan Account and the collection of the Loans and any court
costs and other reasonable amounts due under this Agreement, including, without
limitation, reasonable attorneys’ fees. The Bank shall have the right at any
time to set-off the balance of any deposit account that the Company may at any
time maintain with the Bank against any amounts at any time owing under this
Agreement, whether or not the balance of Loans under this Agreement is then due.

-4-

--------------------------------------------------------------------------------

 
10.
Termination; Renewal. The availability of additional Loans under this Agreement
will automatically terminate ON DEMAND. The Bank reserves the right at any time
without notice to terminate the Loan Account, suspend the Company’s borrowing
privileges or refuse any Loan request even though the Company has complied with
all of the terms under this Agreement. The Company may terminate this Agreement
at any time effective upon receipt by the Bank of at least 15 days prior written
notice. No termination under this Section shall affect the Bank’s rights or the
Company’s obligations regarding payment or default under this Agreement. Such
termination shall not affect the Company’s obligation to pay all Loans and the
interest accrued through the date of final payment. The Bank may also elect to
honor Loan requests after termination of this Agreement, and the Company agrees
that any such payment by the Bank shall constitute a Loan to Company under this
Agreement.

11.
Notices. The Bank may rely on instructions from the Company with respect to any
matters relating to this Agreement or the Loan Account, including telephone loan
requests (including by facsimile) which are made by persons whom the Bank
reasonably believes to be the persons authorized by the Company to make such
loan requests. All notices and statements to be furnished by the Bank shall be
sufficient if delivered to any such person at the billing address for the Loan
Account shown on the records of the Bank. All notices from the Company shall be
sent to the Bank at P.O. Box 755, Chicago, Illinois 60690, to the attention of
the Loan Accounting Division. The Company waives presentment and notice of
dishonor. This Agreement constitutes the entire understanding of the parties
with respect to the subject matter hereof and any prior agreements, whether
written or oral, with respect thereto are superseded hereby. No amendment or
waiver of any provision of this Agreement or the Note, nor consent to any
departure by the Company therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Bank and no amendment of any
provision of this Agreement or the Note shall be effective without the prior
written consent of the Guarantor. If any part of this Agreement is
unenforceable, that will not make any other part unenforceable. This Agreement
shall be governed by the laws of the State of Illinois.

12.
Consent to Jurisdiction. THE COMPANY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS AND OF
ANY ILLINOIS STATE COURT SITTING IN COOK COUNTY, ILLINOIS, FOR PURPOSES OF ALL
LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

13.
Jury Trial Waiver. THE COMPANY AND THE BANK WAIVE ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

* * * * *

-5-

--------------------------------------------------------------------------------

The Company Agrees to the Terms Set Forth Above.

Signed by Company on October 27, 2006.
 

 
SAN HOLDINGS, INC.
 
 
By: /s/ Robert C. Ogden
Name: Robert C. Ogden
Its: Chief Financial Officer and Secretary

Accepted and agreed to this 27th day of October, 2006.
 

 
HARRIS N.A.

By: /s/ Denise Sidlo
Printed Name: Denise Sidlo
Its: Vice President

 

-6-

--------------------------------------------------------------------------------

EXHIBIT A

DEMAND NOTE
 
$1,500,000.00
_____________, 2006

ON DEMAND, for value received, the undersigned, SAN HOLDINGS, INC., a Colorado
corporation, promises to pay to the order of HARRIS N.A. (the “Bank”) at its
offices at 111 West Monroe Street, Chicago, Illinois, the principal sum of One
Million Five Hundred Thousand Dollars ($1,500,000.00) or, if less, the amount
outstanding under the Harris Loan Authorization Agreement referred to below
together with interest payable at the times and at the rates and in the manner
set forth in the Harris Loan Authorization Agreement referred to below.

This Note evidences borrowings by the undersigned under that certain Harris Loan
Authorization Agreement dated as of ______________, 2006, between the
undersigned and the Bank; and this Note and the holder hereof are entitled to
all the benefits provided for under the Harris Loan Authorization Agreement, to
which reference is hereby made for a statement thereof. The undersigned hereby
waives presentment and notice of dishonor. The undersigned agrees to pay to the
holder hereof all court costs and other reasonable expenses, legal or otherwise,
incurred or paid by such holder in connection with the collection of this Note.
It is agreed that this Note and the rights and remedies of the holder hereof
shall be construed in accordance with and governed by the laws of the State of
Illinois.
 

 
SAN HOLDINGS, INC.

By: _____________________________________
Printed Name __________________________
Its: __________________________________

 

-7-

--------------------------------------------------------------------------------

 

EXHIBIT B

CERTIFICATE OF STATUS
OF
SUN CAPITAL PARTNERS II, LP
 

SUN CAPITAL PARTNERS II, LP, a Delaware limited partnership (the “Guarantor”),
does hereby certify that:

1. Michael McConvery is Vice President (the “VP”) of SUN CAPITAL PARTNERS, LLC,
a Delaware limited liability company (the “Management Company”), which is the
general partner of  SUN CAPITAL ADVISORS II, LP (the “General Partner”), which
is the general partner of the Guarantor.

2. This Certificate is being delivered to Harris N.A. (the “Bank”) in connection
with, and may be relied upon by the Bank in connection with, its extension of
credit from time to time to SAN Holdings, Inc., a Colorado corporation (the
“Company”), and the guaranty of that credit from the Guarantor to the Bank (the
“Guaranty”).

3. The VP, as the Vice President and authorized signatory of the Management
Company, and the Management Company, in its capacity as general partner of the
General Partner, and the General Partner, in its capacity as general partner of
the Guarantor, have each secured proper authorization to enter into the Guaranty
and to execute all instruments and documents in connection therewith, in
compliance with the Guarantor’s Agreement of Limited Partnership, dated as of
April 19, 2001 (the “Guarantor’s Agreement of Limited Partnership”). The
Guarantor has incurred indebtedness and become liable on guarantees, and will
continue to incur indebtedness and become liable on guarantees, in each case
only to the extent the same can be done in compliance with the Guarantor’s
Agreement of Limited Partnership, including, without limitation, the limitations
therein on indebtedness and guarantees set forth in Section 6.2 thereof. The
VP’s actions and the General Partner’s actions, each on behalf of the Guarantor,
have been taken in compliance with the General Partner’s Agreement of Limited
Partnership, dated as of April 19, 2001 (as amended from time to time, the
“General Partner’s Operating Agreement”).

4. The aggregate amount of outstanding indebtedness (after giving effect to the
Guaranty) of the Guarantor as of the date hereof is $_________________.

5. The aggregate amount of Commitments to the Guarantor as of the date hereof is
$_______________.

6. The aggregate amount of outstanding guarantees (after giving effect to the
Guaranty) on which the Guarantor is liable as of the date hereof is
$_________________.

7. The aggregate amount of uncalled Commitments to the Guarantor as of the date
hereof is $_________________ (including $_________________ of bridge financing
which is re-callable per the Guarantor’s Agreement of Limited Partnership).

8. The aggregate amount of Capital Contributions made to the Guarantor as of the
date hereof is $_________________ (including $_________________ of bridge
financing which is re-callable per the Guarantor’s Agreement of Limited
Partnership).

-8-

--------------------------------------------------------------------------------

 
9. The aggregate amount of outstanding indebtedness (and together with the
aggregate amount of outstanding guarantees of the Guarantor to the extent such
aggregate amount of outstanding guarantees exceeds the aggregate amount of
uncalled Commitments to the Guarantor) does not as of the date hereof and will
not at any time hereafter exceed 20% of the Guarantor’s aggregate Commitments.

10. The aggregate amount of outstanding indebtedness of the Guarantor and all
outstanding guarantees of the Guarantor (including without limitation guarantees
in favor of the Bank) does not as of the date hereof and will not at any time
hereafter exceed 100% of the Guarantor’s aggregate uncalled Commitments.

11. The Guarantor’s Agreement of Limited Partnership and the General Partner’s
Operating Agreement have not been amended or otherwise modified except by
instruments, true and correct copies of which previously have been delivered to
the Bank.

12. The aggregate amount of Capital Call Notices made on the Guarantor’s
partners since the most recently completed fiscal quarter of the Guarantor is
$_________________.

13. The aggregate amount of distributions made by the Guarantor in respect of
equity interest therein since the most recently completed fiscal quarter of the
Guarantor is $_________________.

14. The undersigned is an officer of the General Partner.

The Guarantor hereby agrees to notify the Bank in the event of any change which
would cause any of the above representations and warranties to cease to be true
and correct in any material respect.

The Guarantor agrees to promptly notify the Bank of any capital calls or
distributions.

-9-

--------------------------------------------------------------------------------

All capitalized terms used above without definition shall have the same meanings
herein as such terms have in the Guarantor’s Agreement of Limited Partnership.

Dated: _________________, 2006.
 

 
SUN CAPITAL PARTNERS II, LP
 
By: Sun Capital Advisors II, LP
Its: General Partner

By: Sun Capital Partners, LLC
Its: General Partner

By: ____________________________________
Name: Michael McConvery
Title: Vice President

 
-10-

--------------------------------------------------------------------------------