EXHIBIT 2.2
FIRST AMENDMENT TO THE
ASSET PURCHASE AGREEMENT
THIS FIRST AMENDMENT (the "Amendment") to the Asset Purchase Agreement
(the "Purchase Agreement;" capitalized terms used but not defined herein shall
have the meanings ascribed to them therein), dated as December 13, 2002, between
VERSO TECHNOLOGIES, INC., a Minnesota corporation ("Purchaser"), and CLARENT
CORPORATION, a Delaware corporation ("Seller"), is made as of February 4, 2003,
between Purchaser and Seller.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Purchaser and Seller desire to amend the Purchase Agreement as
provided herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein, the parties hereto do hereby agree as follows:
SECTION 1. AMENDMENTS TO PURCHASE AGREEMENT. The Purchase
Agreement is hereby amended to include a new Section 9A to read in its entirety
as follows:
"9A. INDEMNIFICATION.
9A.1 RIGHTS TO INDEMNIFICATION.
(a) Subject to the limitations set forth in this Section
9A, Seller shall indemnify and hold harmless Purchaser from and against
any and all losses, liabilities, damages, demands, claims, suits,
actions, judgments or causes of action, assessments, costs and
expenses, including, without limitation, interest, penalties,
reasonable attorneys' fees, any and all reasonable expenses actually
incurred in investigating, preparing or defending against any
litigation commenced or threatened and any and all amounts actually
paid in settlement (collectively, "DAMAGES"), arising from any claim (a
"RESULTING CLAIM") asserted against Purchaser as a result of or arising
from any lien, claim, interest or encumbrance held or asserted by any
Notice Party (as hereinafter defined) against Seller or the Assets
(other than an Assumed Liability), but only to the extent that such
Resulting Claim could not have been enforced against Purchaser had the
Sale Order provided that the sale of the Assets to Purchaser was free
and clear of all liens, claims, interests and encumbrances of the
Notice Parties (individually an "INDEMNIFIABLE CLAIM" and collectively
"INDEMNIFIABLE CLAIMS"). For purposes hereof, "NOTICE PARTY" shall mean
any Person, other than Purchaser, who received notice of the Sale
Motion. For the avoidance of doubt, Indemnifiable Claims shall not
include (i) claims by a Notice Party related to the condition of
products not asserted as of the Closing or (ii) any Assumed Liability.
(b) For purposes of this Section 9A, all Damages shall be
computed net of any insurance coverage (from the amount of which
coverage there shall be deducted all costs and expenses, including,
without limitation, reasonable attorneys' fees, of Purchaser not
reimbursed by such coverage) with respect thereto that reduces the
Damages that would otherwise be sustained; provided, however, that in
all cases the timing of the receipt or realization of insurance
proceeds shall be taken into account in determining the amount of
reduction of Damages.
9A.2 LIMITATIONS ON INDEMNIFICATION.
Rights to indemnification hereunder are subject to the following
limitations:
(a) The obligation of indemnity pursuant to this Section
9A shall terminate on the earlier to occur of (i) the first anniversary
of the Closing or (ii) confirmation of a plan of reorganization or
liquidation for Seller that includes a provision that the Assets were
transferred to Purchaser free and clear of all liens, claims, interests
and encumbrances of Notice Parties.
(b) If, prior to the termination of any obligation to
indemnify as provided for herein, Purchaser has given the
Indemnification Notice (as defined below) to Seller, or a suit or
action based upon an Indemnifiable Claim is commenced against
Purchaser, Purchaser shall not be precluded from pursuing such
Indemnifiable Claim, or from recovering from Seller (whether through
the courts or otherwise) on such Indemnifiable Claim by reason of the
termination otherwise provided for above.
(c) Without limiting the effect of any other limitations
set forth herein, Purchaser may only set off the Inventory Note by an
aggregate maximum amount not to exceed $350,000 (the "INDEMNIFICATION
LIMIT"), and Seller's cumulative liability under this Section 9A shall
in no event exceed the Indemnification Limit.
(d) Seller shall not be liable to Purchaser for any
Damages that are indemnifiable pursuant to Section 9A.1 until the
aggregate amount of Damages exceeds $50,000, in which event Seller
shall be obligated to indemnify Purchaser as provided in this Section
9A for all such Damages (subject to the Indemnification Limit).
(e) Any dispute arising out of this Section 9A shall be
submitted to the Bankruptcy Court.
9A.3 PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO CLAIMS.
Purchaser shall give Seller prompt written notice of any claim, demand,
assessment, suit or proceeding to which the indemnification set forth
in this Section 9A applies, which notice to be effective must describe
such claim in reasonable detail (the "INDEMNIFICATION NOTICE").
Notwithstanding the foregoing, Purchaser shall not have any obligation
to give any notice of any assertion of liability by a third party
unless such assertion is in writing, and the rights of Purchaser in
respect of any third party claim shall not be adversely affected by its
failure to give notice pursuant to the foregoing unless
2
and, if so, only to the extent that, Seller is materially prejudiced
thereby. Purchaser shall have the right to control the defense or
settlement of any such action subject to the provisions set forth
below, but Seller may, at its election, participate in the defense of
any action or proceeding at its sole cost and expense. In the event
that Purchaser shall seek indemnification as provided herein, Seller
shall make available to Purchaser, at Seller's expense, all witnesses,
pertinent records, materials and information in Seller's possession or
under Seller's control relating thereto as is reasonably required by
Purchaser. Seller shall not be liable for any settlement effected
without its written consent, which consent shall not be unreasonably
withheld or delayed. Notwithstanding the immediately preceding
sentence, the right of Purchaser to compromise or settle any claim
without the prior written consent of Seller shall only be available if
a complete release of Seller is contemplated to be part of the proposed
compromise or settlement of such third party claim.
9A.4 SATISFACTION OF INDEMNIFIABLE CLAIMS. All actual
Damages incurred by Purchaser as to which Purchaser is entitled to
indemnification pursuant to this Section 9A shall be satisfied only by
Purchaser setting off the amount of the Damages in respect thereof as
determined by Purchaser in good faith, after giving a reasonably
detailed notice thereof to Seller, from the amounts due Seller under
the Inventory Note. If there should be a dispute as to the amount or
manner of determination of any Damages as to which Purchaser is
entitled to indemnification pursuant to this Section 9A, then such
dispute shall be submitted to the Bankruptcy Court for determination.
Such determination by the Bankruptcy Court shall be final and binding
on the parties. If there should be a dispute as to the amount or manner
of determination of any indemnity obligation owed under this Section
9A, Purchaser shall nevertheless be permitted to set off from the
Inventory Note such portion, if any, of the obligation as shall not be
subject to dispute, but in no event more than the Indemnification
Limit.
9A.5 EXCLUSIVITY. The right of Purchaser to assert
indemnification claims and receive indemnification payments pursuant to
this Section 9A shall be the sole and exclusive right and remedy
exercisable by Purchaser with respect to any Indemnifiable Claim.
SECTION 2. BANKRUPTCY COURT APPROVAL; EFFECTIVENESS. Seller shall
promptly make a motion on an expedited notice for an order from the Bankruptcy
Court to approve this Amendment. This Amendment shall be of no force or effect
until it has been approved by order entered by the Bankruptcy Court.
SECTION 3. EFFECT ON PURCHASE AGREEMENT. The words "(iii) states
that the sale of the Assets to Purchaser shall be free and clear of all liens,
claims, interests and encumbrances of parties that have notice of the Sale
Motion," shall be deleted from the definition of Sale Order in the first
sentence of Section 9.2(b) of the Purchase Agreement. Purchaser acknowledges
that the Sale Order is in form and substance reasonably satisfactory to
Purchaser for the purposes of Section 6.5 of the Purchase Agreement. Except as
otherwise specifically provided herein, the Purchase Agreement shall not be
amended but shall remain in full force and effect.
3
SECTION 4. 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 5. 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.
IN WITNESS WHEREOF, each of Purchaser and Seller has caused this
Amendment to be executed and delivered by its respective officers thereunto duly
authorized, all as of the day and year above written.
VERSO TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------
Xxxxxx X. Xxxxxxx
EVP & CFO
CLARENT CORPORATION
By: /s/ X. X. Xxxxx
----------------
X. X. Xxxxx
CFO
4
