LAURUS MASTER FUND, LTD. VALENS U.S. SPV I, LLC VALENS OFFSHORE SPV II, CORP. c/o Laurus Capital Management, LLC
EXHIBIT
10.190
LAURUS
MASTER FUND, LTD.
VALENS
U.S. SPV I, LLC
VALENS
OFFSHORE SPV II, CORP.
c/o
Laurus Capital Management, LLC
000
Xxxxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
February
25, 2008
Verso
Technologies, Inc.
000
Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxx 00000
Attention: Chief
Financial Officer
|
Re:
|
Ladies
and Gentlemen:
Reference
is made to (a) the Security Agreement dated as of September 20, 2006 (as
amended, restated, modified and/or supplemented from time to time, the “Security Agreement”)
by and among Verso Technologies, Inc., a Minnesota corporation (the “Company”), certain
Eligible Subsidiaries (as defined in the Security Agreement), Laurus Master
Fund, Ltd. (“Laurus”), Valens U.S.
SPV I, LLC (as partial assignee of Laurus, “Valens US”), and
Valens Offshore SPV II, Corp. (as partial assignee of Laurus, “Valens Offshore”; and
together with Laurus and Valens US, collectively, the “Creditor Parties”),
(b) the Subordination Agreement dated as of September 20, 2006 (as amended,
restated, modified and/or supplemented from time to time, the “Subordination
Agreement”) by and among Clarent Corporation (“Clarent”), and
Creditor Parties, and (c) each of the other Ancillary Agreements (as defined in
the Security Agreement) (each of the foregoing, a “Document” and,
collectively, the “Documents”). Capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Security Agreement.
The
Company has requested that Creditor Parties consent to the amendments set forth
in the First Amendment dated as of February 12, 2003, in substantially the form
annexed hereto as Exhibit A (the “First Amendment”), to
the (a) Loan and Security Agreement by and among the Company and Clarent (the
“Loan
Agreement”), and (b) the Secured Subordinated Promissory Note in the
original principal amount of $3,000,000 (plus capitalized interest) made by the
Company in favor of Clarent (the “Note”), each dated
February 3, 2003, and Creditor Parties are willing to do so on the terms and
conditions hereinafter set forth.
Notwithstanding
anything to the contrary contained in the Subordination Agreement or the
Security Agreement and subject to the proviso set forth in this paragraph,
Creditor Parties hereby consent to (a) the Initial Extended Maturity Date (as
defined in the First Amendment) of Xxxxx 0, 0000, (x) the Company’s payment to
Clarent of the Capitalized Interest Payment (as defined in the First Amendment)
in an amount not to exceed Seven Hundred Twenty-Eight Thousand Five Hundred
Fifty-Seven Dollars and Ninety-Three Cents ($728,557.93) in the aggregate, so
long as (i) such payment shall not be made later than March 3, 2008 and (ii) the
funds utilized by the Company to make such payment shall be generated solely
from cash proceeds received by the Company from the sale of the Company’s equity
securities, as evidenced by such supporting documentation as shall be required
by Creditor Parties, (c) the interest rate modifications to the Note set forth
in Section 1(b) of the First Amendment, and (d) the payment by the Company to
Clarent of the amendment fee set forth in Section 2 of the First Amendment,
provided, that, the foregoing
consents are conditioned upon the satisfaction in form and substance
satisfactory to Creditor Parties in all respects of each of the following
conditions: (A) as respects payments under the foregoing clause
“(b),” at the time of such payment no Event of Default shall have occurred and
then be continuing, (B) receipt by each applicable Creditor Party, in form and
substance satisfactory to Creditor Parties, of (I) an original stock certificate
naming Laurus as the certificate holder evidencing 1,724,259 shares of the
Company’s Common Stock (the “Laurus Shares”), (II)
an original stock certificate naming Valens US as the certificate holder
evidencing 102,024 shares of the Company’s Common Stock (the “Valens US Shares”),
and (III) an original stock certificate naming Valens Offshore as the
certificate holder evidencing 173,717 shares of the Company’s Common Stock (the
“Valens Offshore
Shares” together with the Laurus Shares and the Valens US Shares,
collectively, the “Closing Shares”), and
(C) receipt by Creditor Parties, in form and substance satisfactory to Creditor
Parties, of (I) a fully executed Registration Rights Agreement dated as of the
date hereof between Laurus and the Company (the (“Laurus Registration Rights
Agreement”), (II) a fully executed Registration Rights Agreement dated as
of the date hereof between Valens US and the Company (the (“Valens US Registration
Rights Agreement”), and (III) a fully executed Registration Rights
Agreement dated as of the date hereof between Valens Offshore and the Company
(the (“Valens Offshore
Registration Rights Agreement”; and together with the Laurus Registration
Rights Agreement and the Valens US Registration Rights Agreement, collectively,
the “Registration
Rights Agreements”).
Notwithstanding
any other document, instrument or agreement (whether written or oral) between
any Creditor Party and the Company, the Company acknowledges and agrees that any
and all proceeds received by the Company from the sale or other disposition of
any and all intellectual property rights of the Company shall be remitted by the
Company to Creditor Parties for application to the Obligations (as defined in
the Security Agreement) in such order and manner as Creditor Parties shall elect
and until so remitted shall be held by the Company in trust for the Creditor
Parties. Nothing contained herein shall be deemed an implied consent
by any Creditor Party to any such sale or other disposition otherwise prohibited
by the terms of the Security Agreement or any other Ancillary
Agreement.
2
Company
hereby represents and warrants to each Creditor Party that (i) it is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its organization, (ii) it has the corporate power and authority
to own and operate its properties and assets and to execute and deliver this
letter agreement and all agreements, documents and instruments to be executed in
connection herewith and to issue the Closing Shares, (iii) neither the issuance
of the Closing Shares nor the consummation of any transaction contemplated
hereby or thereby will result in a change in the price or number of any
securities of the Company outstanding under anti-dilution or other similar
provisions contained in or affecting any such securities, (iv) all issued and
outstanding shares of the Company’s Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable, (v) the rights,
preferences, privileges and restrictions of the shares of the Company’s Common
Stock are as stated in the Company’s articles of incorporation as amended
through the date hereof, (vi) the Closing Shares have been duly and validly
reserved for issuance and when issued will be validly issued, fully paid and
nonassessable, and will be free of any liens or encumbrances, (vii) the issuance
of the Closing Shares is not subject to any preemptive rights or rights of first
refusal that have not been properly waived or complied with, (viii) its
execution, delivery and performance of and compliance with this letter agreement
and the issuance of the Closing Shares pursuant hereto will not, with or without
the passage of time or giving of notice, result in any material violation, or be
in conflict with or constitute a default under any term or provision of any
agreement to which it or any of its properties are bound, or result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of its
properties or assets or the suspension, revocation, impairment, forfeiture or
nonrenewal of any of its permits, licenses, authorizations or approvals
applicable to the Company, its business or operations or any of its assets or
properties, (ix) the Company’s obligation to issue the Closing Shares pursuant
hereto is binding upon the Company and enforceable regardless of the dilution
such issuance may have on the ownership interests of other shareholders of the
Company and (x) all issued and outstanding shares of the Company’s capital stock
shall be issued in compliance with all applicable state and federal laws
concerning the issuance of securities.
Each
Creditor Party acknowledges that this letter agreement shall constitute an
Ancillary Agreement (as defined in the Security Agreement) and the certificate
representing the Closing Shares shall bear the following legend:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE, STATE SECURITIES
LAWS. THESE SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM SUCH
REGISTRATION.”
Except as
specifically amended herein, the Security Agreement, the Subordination Agreement
and the other Ancillary Agreements (as defined in the Security Agreement) shall
remain in full force and effect, and are hereby ratified and
confirmed. The execution, delivery and effectiveness of this letter
agreement shall not operate as a waiver of any right, power or remedy of any
Creditor Party, nor constitute a waiver of any provision of the Security
Agreements, the Subordination Agreement and the other Ancillary
Agreements. This letter agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns
and shall be governed by and construed in accordance with the laws of the State
of New York.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
3
This
letter agreement may be executed by the parties hereto in one or more
counterparts, each of which shall be deemed an original and all of which when
taken together shall constitute one and the same agreement. Any
signature delivered by a party by facsimile transmission or other electronic
transmission shall be deemed to be an original signature hereto.
| Very truly yours, | ||||
| LAURUS MASTER FUND, LTD. | ||||
|
By:
|
/s/ Xxxxx Xxxxxxxxx | |||
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Name:
Xxxxx Xxxxxxxxx
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||||
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Title: Authorized
Signatory
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| VALENS U.S. SPV I, LLC | ||||
| By: | Valens Capital Management, LLC | |||
| Its: | Investment Manager | |||
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By:
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/s/ Xxxxx Xxxxxxxxx | |||
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Name:
Xxxxx Xxxxxxxxx
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||||
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Title: Authorized
Signatory
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VALENS
OFFSHORE SPV II, CORP.
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| By: | Valens Capital Management, LLC | |||
| Its: | Investment Manager | |||
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By:
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/s/ Xxxxx Xxxxxxxxx | |||
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Name:
Xxxxx Xxxxxxxxx
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||||
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Title: Authorized
Signatory
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The
foregoing is hereby accepted and agreed to
as of the
date set forth above:
VERSO TECHNOLOGIES, INC.
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By:
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/s/ Xxxxxx X. Xxxxxx | |||
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Name:
Xxxxxx X. Xxxxxx
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||||
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Title:
CFO
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