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EXHIBIT 10.190

 
LAURUS MASTER FUND, LTD.
VALENS U.S. SPV I, LLC
VALENS OFFSHORE SPV II, CORP.
c/o Laurus Capital Management, LLC
335 Madison Avenue
New York, New York 10017
 
February 25, 2008
 
Verso Technologies, Inc.
400 Galleria Parkway, Suite 200
Atlanta, Georgia 30303
Attention:  Chief Financial Officer
 

 
Re:
Letter Agreement

 
 
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.
 

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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 March 3, 2008, (b) 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.
 
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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.

 
 
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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/ Scott Bluestein        
Name: Scott Bluestein
       
Title:  Authorized Signatory
                          VALENS U.S. SPV I, LLC                           By:
Valens Capital Management, LLC       Its: Investment Manager                    
     
By:
/s/ Scott Bluestein        
Name: Scott Bluestein
       
Title:  Authorized Signatory
                         
VALENS OFFSHORE SPV II, CORP.
                          By: Valens Capital Management, LLC       Its:
Investment Manager                          
By:
/s/ Scott Bluestein        
Name: Scott Bluestein
       
Title:  Authorized Signatory
 

 
The foregoing is hereby accepted and agreed to
as of the date set forth above:

 
VERSO TECHNOLOGIES, INC.
 
By:
/s/ Martin D. Kidder        
Name: Martin D. Kidder
       
Title:   CFO