1
EXHIBIT 2.2
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT (the "AMENDMENT") to the Agreement and Plan of Merger
(the "MERGER AGREEMENT;" capitalized terms used but not defined herein shall
have the meanings ascribed to them therein), dated as of May 4, 2001, by and
among VERSO TECHNOLOGIES, INC., a Minnesota corporation ("PARENT"), TITAN
ACQUIRING SUB, INC., a Delaware corporation and a wholly owned subsidiary of
Parent ("TITAN ACQUIRING SUB"), and XXXXXXXX.XXX SOFTWARE, INC., a Georgia
corporation ("TELEMATE"), is made as of the 1st day of June, 2001 by and among
Parent, Titan Acquiring Sub, and Telemate (collectively, the "PARTIES").
WITNESSETH:
WHEREAS, the Parties have entered into the Merger Agreement, which
provides, upon the terms and conditions set forth therein, for the Merger; and
WHEREAS, the boards of directors of the Parties have determined that it is
fair to and in the best interests of their respective shareholders to amend the
Merger Agreement as provided herein if (but only if) Telemate purchases $15
million of Parent's convertible preferred shares as described herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein, the Parties do hereby agree as follows:
SECTION 1. AMENDMENTS TO MERGER AGREEMENT. Subject to the terms of
Section 2 hereof, the Merger Agreement is hereby amended as follows:
(a) Section 2.1(b)(i) of the Merger Agreement is hereby amended and
restated in its entirety as follows:
"(i) "MERGER CONSIDERATION" shall mean a number of shares of fully
paid and nonassessable shares of common stock, $.01 par value per share
of Parent (the "PARENT COMMON STOCK"), equal to (x) $30.0 million less
(A) the amount by which the Unrestricted Cash (as hereinafter defined)
is less than Minimum Cash Requirement (as hereinafter defined) and (B)
the Infringement Amount (as hereinafter defined), divided by the Average
Price (as hereinafter defined); plus (y) the number of shares of Parent
Common Stock that could be purchased (assuming the purchase price
therefor equaled the greater of (A) the average closing price per share
of Parent Common Stock, as reported on The NASDAQ National Market
("NASDAQ"), for the ten trading days immediately preceding the Closing
Date (the "AVERAGE CLOSING PRICE") and (B) the closing price per share
of Parent Common Stock on the trading day immediately preceding the
Closing Date) with the aggregate cash proceeds payable to Telemate upon
exercise for cash of the vested portions of all outstanding Telemate
Stock Options (as hereinafter defined) that have an exercise price per
share less than the value of the shares of Parent Common Stock
comprising the Exchange Ratio, where such shares are valued at the
greater of (A) the Average Closing Price and (B) the closing price per
share of Parent Common Stock on the trading day immediately preceding
the Closing Date, and vesting is determined as of the Effective Time
(such Telemate Stock Options are referred to herein as the "TELEMATE
IN-THE-MONEY OPTIONS");"
(b) Section 2.1(b)(v) of the Merger Agreement is hereby amended and
restated in its entirety as follows:
"(v) "MINIMUM CASH REQUIREMENT" shall mean the amount equal to (u)
$20.0 million, plus (v) any of Telemate's unpaid restructuring or
transaction costs in any way related to the Transactions (including (i) any
unpaid severance amounts, (ii) the first $500,000 of fees and expenses of
Xxxxxxxx-Xxxxxxxx (as hereinafter defined), and (iii) 50% of the fees and
expenses of Xxxxxxxx-Xxxxxxxx in
2
excess of $500,000), less (w) the Cash Adjustment Amount, less (x) the
amount (the "PURCHASE AMOUNT"), if any, used by Telemate to purchase
certain convertible preferred shares to be issued by Parent pursuant to
that certain Series B Preferred Stock Purchase Agreement by and between
Telemate and Parent dated the date hereof, as amended from time to time (as
so amended, the "PREFERRED STOCK PURCHASE AGREEMENT"), less (y) if the
Effective Time occurs after August 1, 2001, one-half of the amount of
Telemate's weekly costs (to the extent that such aggregate costs do not
exceed $60,000.00 per week) attributable to personnel or activities
required by Telemate to operate its business prior to the Effective Time
and not intended to be retained or continued by Parent after the Effective
Time for each week (or portion thereof) following August 1, 2001 in which
the Effective Time does not occur, less (z) all accrued interest on the
Purchase Amount at the rate of 7.5% per annum, compounded annually;"
(c) Section 2.1(b)(vi) of the Merger Agreement is hereby amended and
restated in its entirety as follows:
"(vi) "EXCHANGE RATIO" shall mean the number of shares of Parent
Common Stock into which one share of Telemate Common Stock shall be
converted in accordance with Section 2.1(a);"
(d) Section 2.1(b) of the Merger Agreement is hereby amended by adding a
new section 2.1(b)(vii) to read in its entirety as follows:
"(vii) "CASH ADJUSTMENT AMOUNT" shall mean the amount equal to the sum
of (x) the proceeds payable upon exercise of the Telemate In-the-Money
Options (based upon the aggregate cash proceeds payable upon exercise
thereof for cash) that terminate by their terms on or before December 31,
2001, plus (y) the proceeds payable to Telemate pursuant to any binding
agreement to sell any of its assets entered into before the Effective Time,
provided the Steering Committee (as hereinafter defined) reasonably
believes that any such asset sale will be completed on or before December
31, 2001, plus (z) the proceeds payable to Telemate on or before December
31, 2001, arising out of (A) the sale by Telemate of its products or
services to the extent such sales would cause Telemate to exceed its
revenue projections for the year ending December 31, 2001, or (B) other
transactions entered into outside of the ordinary course of business,
provided that, in the case of clauses (A) or (B), such transactions are
approved by the Steering Committee as being appropriate for inclusion in
this calculation; provided further, however, that in no event shall the
Cash Adjustment Amount exceed $500,000; and"
(e) Section 2.1(b) of the Merger Agreement is hereby amended by adding a
new section 2.1(b)(viii) to read in its entirety as follows:
"(viii) "INFRINGEMENT AMOUNT" shall mean an amount equal to the amount
determined by expedited binding arbitration by an arbitrator (who shall be
selected in accordance with Section 9.5 hereof upon the request of Parent
made at any time on and after the date hereof and prior to the tenth (10th)
day before the date on which the parties reasonably expect the Effective
Time to occur) relating to any patent infringement alleged against Telemate
prior to the date hereof ("ALLEGED PATENT INFRINGEMENT") if Parent in its
reasonable judgment determines that the Alleged Patent Infringement could
reasonably be expected to constitute a Telemate Material Adverse Effect (as
hereinafter defined). Notwithstanding the foregoing or anything herein to
the contrary, (x) in no event shall the Infringement Amount exceed $1.0
million; (y) upon Parent's determination that such Alleged Patent
Infringement could reasonably be expected to constitute a Telemate Material
Adverse Effect, Verso shall promptly request the commencement of the
aforesaid expedited arbitration; and (z) upon the commencement of such
expedited arbitration, such Alleged Patent Infringement shall cease to (and
shall not thereafter) constitute a Telemate Material Adverse Effect for any
purpose of this Agreement. The arbitration commenced pursuant to this
Section 2.1(b)(viii) shall be binding as to the determination of the amount
of the Infringement Amount, shall be conducted on an expedited basis and
concluded within five (5) days of its commencement and shall otherwise be
conducted by the American Arbitration Association under its Commercial
Arbitration Rules then in effect.
SECTION 2. EFFECTIVENESS OF AMENDMENTS. This Amendment and the
modifications to the Merger Agreement represented hereby shall be effective if
(but only if) Telemate purchases at least $15 million of
2
3
Parent's convertible preferred shares pursuant to that certain Series B
Preferred Stock Purchase Agreement between Telemate and Parent dated as of May
4, 2001, as amended from time to time (as so amended, the "PREFERRED STOCK
PURCHASE AGREEMENT"). If Telemate does not purchase such preferred shares in
accordance with the Preferred Stock Purchase Agreement, then (a) this Amendment
shall terminate and be of no further force or effect and (b) the Merger
Agreement shall not be amended but shall remain in full force and effect.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES OF TELEMATE. Telemate hereby represents
and warrants to Parent and Titan Acquiring Sub that: (i) Telemate has all
necessary corporate power and authority to execute and deliver this Amendment
and to perform its obligations under the Merger Agreement as amended hereby;
(ii) the execution and delivery of this Amendment by Telemate and the
consummation by Telemate of the transactions contemplated by the Merger
Agreement as amended hereby have been duly and validly authorized by all
necessary corporate action (other than shareholder approval as described in the
Merger Agreement); and (iii) this Amendment has been duly executed and delivered
by Telemate and, assuming the due authorization, execution and delivery by
Parent and Titan Acquiring Sub, constitutes the legal, valid and binding
obligation of Telemate, enforceable against Telemate in accordance with its
terms.
(b) REPRESENTATIONS AND WARRANTIES OF PARENT AND TITAN ACQUIRING
SUB. Parent and Titan Acquiring Sub hereby jointly and severally represent and
warrant to Telemate that: (i) Parent and Titan Acquiring Sub have all necessary
corporate power and authority to execute and deliver this Amendment and to
perform their respective obligations under the Merger Agreement as amended
hereby; (ii) the execution and delivery of this Amendment by Parent and Titan
Acquiring Sub and the consummation by Parent and Titan Acquiring Sub of the
transactions contemplated by the Merger Agreement as amended hereby have been
duly and validly authorized by all necessary corporate action (other than
shareholder approval as described in the Merger Agreement); and (iii) this
Amendment has been duly executed and delivered by Parent and Titan Acquiring Sub
and, assuming the due authorization, execution and delivery by Telemate,
constitutes the legal, valid and binding obligation of Parent and Titan
Acquiring Sub, enforceable against Parent and Titan Acquiring Sub in accordance
with its terms.
SECTION 4. EFFECT ON MERGER AGREEMENT. Except as otherwise specifically
provided herein, the Merger Agreement shall not be amended but shall remain in
full force and effect.
SECTION 5. HEADINGS. The Section headings contained in this Amendment are
for reference purposes only and will not affect in any way the meaning or
interpretation of this Amendment.
SECTION 6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA
(WITHOUT REFERENCE TO CONFLICT OF LAW PRINCIPLES OTHER THAN THOSE DIRECTING
GEORGIA LAW).
SECTION 7. COUNTERPARTS. This Amendment may be executed simultaneously in
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. Executed counterparts may
be delivered via facsimile transmission.
SECTION 8. ENTIRE AGREEMENT. This Amendment (together with the Merger
Agreement and the Exhibits thereto) constitutes the entire agreement among the
Parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings among the Parties with respect thereto.
[SIGNATURES ON FOLLOWING PAGE]
3
4
IN WITNESS WHEREOF, each of the Parties has caused this Amendment to be
executed and delivered by its officer thereunto duly authorized, all as of the
day and year above written.
VERSO TECHNOLOGIES, INC.
By: /s/ XXXXXX X. XXXX
------------------------------------
XXXXXX X. XXXX
Its: Chief Executive Officer
TITAN ACQUIRING SUB, INC.
By: /s/ XXXXXX X. XXXXXXX
------------------------------------
XXXXXX X. XXXXXXX
Its: Vice President
XXXXXXXX.XXX SOFTWARE, INC.
By: /s/ XXXXXXX X. XXXXX
------------------------------------
XXXXXXX X. XXXXX
Its: Chief Executive Officer
4
