AMENDMENT NO. 2 TO ASSET PURCHASE AGREEMENT
Exhibit 2.1
AMENDMENT NO. 2 TO
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT
This Amendment No. 2 to the Asset Purchase Agreement (the “Amendment”) is made and entered
into on February 7, 2007 but is effective as of January 31, 2007 (the “Effective Date”) by and
between Verso Technologies Inc., a Minnesota corporation (“Buyer”), Paradyne Networks, Inc., a
Delaware corporation (“Seller”), and Zhone Technologies, Inc., a Delaware corporation (“Zhone”),
for the purpose of amending that certain Asset Purchase Agreement dated as of December 29, 2006, as
amended by Amendment No. 1 thereto dated as of January 25, 2007 (as so amended, the “Purchase
Agreement”) by and between Buyer, Seller, and for the limited purposes stated therein, Zhone, and
certain exhibits and schedules thereto. Capitalized terms not defined herein shall have the
meanings given to them in the Purchase Agreement.
RECITALS
WHEREAS, the parties have previously entered into that certain Amendment No. 1 to the Purchase
Agreement, dated January 25, 2007 (the “Prior Amendment”); and
WHEREAS, the parties desire to further amend the Purchase Agreement on the terms and
conditions set forth herein.
AGREEMENT
NOW, THEREFORE, the parties hereto agree as follows:
1. Amendments to Purchase Agreement. The parties hereby amend the Purchase Agreement
as follows:
(A) Sale of Assets. Section 2.1 of the Purchase Agreement is hereby amended and
replaced in its entirety to read as follows:
2.1 Sale of Assets. Upon the terms and subject to the conditions
contained herein, (a) at the Closing, conditioned upon Seller’s receipt of the
Closing Payment, Seller shall sell, convey, transfer, assign and deliver to Buyer,
and Buyer shall purchase and acquire from Seller, all of Seller’s right, title and
interest as of the Closing Date in and to the Engineering Equipment (including all
Contracts and Books and Records relating thereto) and all Contracts listed as
Service Agreements on Schedule 1.1A, for the consideration specified below
in Section 2.3(a), (b) on the Second IP Payment Date, conditioned upon
Seller’s receipt of the entire IP Payment, Seller shall sell, convey, transfer,
assign and deliver to Buyer, and Buyer shall purchase and acquire from Seller, all
of Seller’s right, title and interest as of the Second IP Payment Date in and to the
Transferred IP, for the consideration specified below in Section 2.3(b), and
(c) on the Inventory Payment Date, conditioned upon Seller’s receipt of the
Manufacturing Equipment Payment and the Inventory Payment, Seller shall sell,
convey, transfer, assign and deliver to Buyer, and Buyer shall purchase and acquire
from Seller, all of Seller’s right, title and interest as of the Inventory Payment
Date in and to the Manufacturing Equipment and Inventory
(including all Contracts and Books and Records relating
thereto), for the consideration specified below in Section 2.3(c) and 2.3(d). For purposes of
clarification, (i) if Buyer fails to deliver the Closing Payment on the Closing
Date, then Seller shall not be obligated to sell and transfer to Buyer the
Engineering Equipment (or any other Purchased Assets on any subsequent payment
date), (ii) if Buyer fails to deliver the First IP Payment on the First IP Payment
Date or the Second IP Payment on the Second IP Payment Date, then Seller shall not
be obligated to sell and transfer to Buyer the Transferred IP (or any other
Purchased Assets on any subsequent payment date), and (iii) if Buyer fails to
deliver the Manufacturing Equipment Payment or the Inventory Payment on the
Inventory Payment Date, then Seller shall not be obligated to sell and transfer to
Buyer the Manufacturing Equipment or Inventory.
(B) IP Payment. Clause (b) of Section 2.3 of the Purchase Agreement is hereby amended
and replaced in its entirety to read as follows:
(b) Cash in the aggregate amount of One Million Two Hundred Fifty Thousand
Dollars ($1,250,000) (the “IP Payment”), payable by wire transfer to an
account designated by Seller not later than two business days prior to the
respective payment dates in two installments as follows: (i) One Million Dollars
($1,000,000) (the “First IP Payment”) on January 31, 2007 (the “First
IP Payment Date”); and (ii) Two Hundred Fifty Thousand Dollars ($250,000) (the
“Second IP Payment”) on March 30, 2007 (the “Second IP Payment
Date”);
(C) Manufacturing Equipment Payment. A new Clause (d) to Section 2.3 of the Purchase
Agreement is hereby added to the Purchase Agreement, to read in its entirety as follows:
(d) Cash in the aggregate amount of Two Hundred Fifty Thousand Dollars
($250,000) (the “Manufacturing Equipment Payment”), payable by wire transfer
to an account designated by Seller no later than the Inventory Payment Date.
(D) Inventory. Section 2.5 of the Purchase Agreement is amended and replaced in its
entirety to read as follows:
2.5 Inventory. Following the Closing upon reasonable notice to Seller,
Buyer shall be entitled to review Seller’s Inventory and Seller’s records with
respect thereto and may reject and elect not to purchase any such Inventory that, in
Buyer’s reasonable good faith determination, is of a quality or quantity that is not
usable or, with respect to finished goods, saleable, in the Ordinary Course of
Business (all such inventory, “Rejected Inventory”). Prior to and in connection
with the Inventory Count conducted pursuant hereto, Buyer and Seller shall cooperate
in seeking to identify all Rejected Inventory. On or prior to June 27, 2007 (the
“Inventory Date”), Seller and Buyer shall, in accordance with Schedule 2.5 hereto,
conduct (or cause to be conducted) a physical count (the “Inventory Count”) of the
Inventory. At least two (2) business days prior to the Inventory Date, Seller shall
deliver to Buyer an inventory list of the Inventory reflecting each item of
Inventory and the inventory count for such item according to Seller’s inventory
records. The “Inventory Payment” shall be equal to the aggregate inventory value of
the Inventory determined pursuant to the Inventory Count where such Inventory is
valued as set forth on Schedule 2.5. Buyer shall pay Seller the Inventory Payment
in cash by wire transfer no later than the second (2nd) business day following the
Inventory Date; provided that in any event, Buyer shall pay Seller the Inventory
Payment no later than June 29, 2007 (subject, in the event of a dispute over
the Inventory
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Payment, to the last sentence of this Section 2.5, the “Inventory
Payment Date”). If Seller and Buyer are not able to agree upon the Inventory
Payment or the valuation or count for any item of Inventory in accordance with
Schedule 2.5, then Buyer shall immediately pay Seller the undisputed amount thereof,
and the disputed amount (the “Disputed Inventory Payment”) shall be referred to
Xxxxx Xxxxxxxx LLP or another mutually agreeable audit partner (the “Inventory
Auditor”). Within ten (10) business days following the Inventory Payment Date, the
Inventory Auditor shall deliver to Seller and Buyer its report with respect to the
determination of the Disputed Inventory Amount (the “Verification Statement”). The
Verification Statement shall be final and binding on the parties hereto unless
Seller or Buyer, within ten (10) business days of its receipt thereof, gives written
notice to the other specifying in reasonable detail its objections thereto (the
“Objection Notice”). Seller and Buyer will negotiate in good faith the resolution
of the matters set forth in the Objection Notice for a period of ten (10) business
days. If Seller and Buyer are unable to reach an agreement during such period, then
Seller and Buyer shall submit such matters to arbitration for final resolution. The
fees and expenses of the Inventory Auditor, or any other arbitrator, shall be borne
equally by Buyer and Seller. Buyer shall pay Seller the final determination of the
Disputed Inventory Amount within two (2) business days following such final
determination, by wire transfer, together with interest thereon from and after the
Closing Date at the rate equal to the prime rate of Bank of America, N.A. as
announced from time to time during the period following the Closing Date through the
date of such payment (with the due date for such payment being deemed the “Inventory
Payment Date” for purposes hereof).
(E) IP Closing. Section 3.3 of the Purchase Agreement is hereby amended and replaced
in its entirety to read as follows:
3.3 IP Closing. To effect the sale and transfer referred to in
Section 2.1(b), on the Second IP Payment Date, conditioned upon Seller’s
timely receipt of each installment of the IP Payment, Seller shall execute and
deliver to Buyer the IP Assignment Agreement.
(F) Inventory and Manufacturing Equipment Closing. Section 3.4 of the Purchase
Agreement is hereby amended and replaced in its entirety to read as follows:
3.4 Inventory and Manufacturing Equipment Closing. To effect the sale
and transfer referred to in Section 2.1(c), on the Inventory Payment Date,
conditioned upon Seller’s receipt of the Manufacturing Equipment Payment and the
Inventory Payment (and any other portion of the Purchase Price due on any prior
payment date), Seller shall execute and deliver to Buyer (a) a Xxxx of Sale in the
form of Exhibit C, conveying all of Seller’s Manufacturing Equipment and Inventory,
and (b) an Assignment of Contracts in the form of Exhibit D, to the extent necessary
to assign all Contracts included in the Manufacturing Equipment and Inventory.
(G) Covenant Not to Compete. The first paragraph of Section 9.5 of the Purchase
Agreement is hereby amended and replaced in its entirety to read as follows:
9.5 Covenant Not to Compete. For the period from the Closing Date until two (2) years from the Closing
Date ( the “Noncompete Period”), without the prior written consent of Buyer,
neither Zhone nor Seller shall (and shall cause each of its respective controlled
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affiliates not to) (collectively, the “Noncompete Parties”), on a worldwide
basis, directly or indirectly, own, manage, operate or control any business or
entity that engages in the design, manufacture or marketing of (a) any products or
services provided by the Business as of the Closing Date or (b) any products or
services substantially equivalent in form, fit and function to such products or
services of the Business (“Competitive Business”); provided that this
covenant not to compete shall be null and void and of no force or effect if Buyer
fails to timely pay (i) any portion or installment of the IP Payment pursuant to
Section 2.3(b), (ii) any portion or installment of the Manufacturing Equipment
Payment pursuant to Section 2.3(d) and/or (iii) the Inventory Payment pursuant to
Section 2.5; provided further, however, that the foregoing covenants
shall not prohibit, or be interpreted as prohibiting, any of the Noncompete Parties
from:
2. Amendments to License Agreement. The parties hereby amend Exhibit B to the
Purchase Agreement (the License Agreement dated December 29, 2006 between Buyer and Seller) as
follows:
(A) Retained IP. Section 2.01 of the License Agreement is hereby amended and replaced
in its entirety to read as follows:
Section 2.01 License Grant to Retained IP. Subject to the terms and conditions
of this Agreement, Licensor hereby grants to Licensee a perpetual (except as set
forth below), worldwide, royalty-free, non-transferable (except as set forth in
Section 7.07), non-exclusive license, under the Retained IP, to make, have
made, use, offer for sale, and sell Licensed Products and to practice any methods,
processes and procedures covered by the Retained IP, in each case solely within the
conduct of the Business and solely during the Term. Notwithstanding the foregoing,
the license granted to Licensee under this Section 2.01 shall terminate on
the earlier of (a) the First IP Payment Date if Licensee fails to provide to
Licensor the First IP Payment on the First IP Payment Date, or (b) the Second IP
Payment Date if Licensee fails to provide to Licensor the Second IP Payment on the
Second IP Payment Date. Otherwise, the license granted to Licensee under this
Section 2.01 shall continue in perpetuity.
(B) Transferred IP. Section 2.02 of the License Agreement is hereby amended and
replaced in its entirety to read as follows:
Section 2.02 License Grant to Transferred IP. Subject to the terms and
conditions of this Agreement, Licensor hereby grants to Licensee a limited term,
worldwide, royalty-free, non-transferable (except as set forth in Section
7.07), exclusive (except as set forth in Section 2.05) license, under
the Transferred IP, to make, have made, use, offer for sale, and sell Licensed
Products and to practice any methods, processes and procedures covered by the
Transferred IP, in each case solely within the conduct of the Business; provided
that, the license granted under this Section 2.02 shall terminate on the
earlier of (a) the First IP Payment Date, if Licensee fails to timely provide to
Licensor the First IP Payment on the First IP Payment Date, or (b) the Second IP
Payment Date.
3. General. Except as amended by this Amendment, the terms and conditions of the
Purchase Agreement shall remain in full force and effect.
4. Governing Law. This Amendment shall be construed under and governed by
the internal laws of the State of California without regard to its conflict of laws provisions.
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5. Entire Agreement. This Amendment, the Prior Amendment and the Purchase Agreement
and the exhibits and schedules thereto, including the License Agreement, reflect the entire
agreement of the parties with respect to the subject matter hereof and supersede all previous
written or oral negotiations, commitments and writings.
6. Execution in Counterparts. For the convenience of the parties and to
facilitate execution, this Amendment may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the same document, and such
counterparts may be delivered by facsimile.
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IN WITNESS WHEREOF, this Amendment has been duly executed on behalf of the parties as of the
Effective Date.
| VERSO TECHNOLOGIES, INC. |
||||
| By: | /s/ Xxxxxx X. Xxxxxx | |||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Chief Financial Officer | |||
| PARADYNE NETWORKS, INC. |
||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | Chief Financial Officer | |||
| ZHONE TECHNOLOGIES, INC. |
||||
| By: | /s/ Xxxx Xxxxxx | |||
| Name: | Xxxx Xxxxxx | |||
| Title: | Chief Financial Officer | |||
