Document:

ex10-190.htm

    
      

    

    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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    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.

     

    
      
        
        

      

      
        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/ 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:  
      CFOex10-191.htm

    
      
EXHIBIT
10.191

     

    
      

      

      SETTLEMENT
AGREEMENT AND RELEASE

       

      THIS SETTLEMENT AGREEMENT AND
RELEASE (“Agreement”) is made
this  25 day of March, 2008 (“Agreement Date”), by
and among Michael Daly, Chapter 7 Trustee for Estate of Entrata Communications
Corporation (“Entrata”), Citel
Technologies, Inc. (“Citel”), MCK
Communications, Inc. (now known as Needham (Nevada) Corp.) (“MCK”) and Verso
Technologies, Inc. (“Verso”), all of whom
are collectively referred to as the “Parties”.

       

      WHEREAS, Entrata is a debtor
under Chapter 7 of the United States Bankruptcy Code, case number 03-34157, in
the United States Bankruptcy Court for the District of Connecticut (the “Bankruptcy
Court”);

       

      WHEREAS, Entrata has filed a
civil action against Verso and Citel in the Norfolk County Superior Court, known
as Michael Daly, Chapter 7 Trustee for Estate of Entrata Corporation v. Verso
Technologies, Inc., et al., C.A. No. 08-00394 (the “Verso
Action”);

       

      WHEREAS, Verso disputes that
it is liable to Entrata the Parties acknowledge the amount of Entrata’s claim
being settled hereunder is alleged to be Seven Hundred Fifty Thousand Dollars
($750,000.00) plus 12% interest from February 1, 2002 plus Seventy Nine Thousand
Forty-Nine Dollars and six cents ($79,049.06) for attorneys’ fees (the “Verso
Claim”);

       

      WHEREAS, Entrata has filed a
civil action against MCK Communications, Inc., and others in the Norfolk County
Superior Court, known as Entrata Communications Corporation v. Superwire
Corporation, et al., C.A. No. 02-00281 (the “MCK
Action”);

       

      WHEREAS, the Parties desire to
enter into this Agreement to fully and finally resolve, settle and satisfy their
rights with respect to all claims, contentions and disputes between them, upon
the terms and conditions more fully set forth herein;

       

      NOW, THEREFORE, in
consideration of these covenants and the mutual promises contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties, intending to be legally bound, hereby
agree as follows:

       

      1.           Bankruptcy
Court Approval.  Promptly after the Agreement Date, the Trustee
shall file on behalf of Entrata a motion with the Bankruptcy Court seeking the
Bankruptcy Court’s order approving the terms of this Agreement on an expedited
basis.

       

      2.           Cash
Payment.  Verso shall pay to Entrata the sum of $100,000
(“Cash
Payment”) by certified check, bank check or wire transfer on or before
May 1, 2008.

       

      3.           Stock
Issuance.  On the Agreement Date, Verso shall issue an
irrevocable instruction letter to the transfer agent for Verso’s common stock
instructing such transfer agent to issue on an expedited basis to Entrata a
number of shares of Verso common stock, $0.01 par value per share, having an
aggregate value equal to $250,000 (the “Settlement Shares”),
with each such share valued at the Average Stock Price.  For purposes
of this Agreement, "Average Stock
Price" shall mean the average closing price of the Verso common stock as
reported on The Nasdaq Capital Market for the ten consecutive trading days
immediately prior to the Agreement Date.  Notwithstanding anything
herein to the contrary, in order to comply with Marketplace Rules of The Nasdaq
Stock Market LLC, the Parties understand and agree that in no event shall Verso
be obligated to issue pursuant to this Agreement a number of Settlement Shares
which exceeds 20% of the number of shares of Verso’s common stock outstanding
immediately prior to the Agreement Date.  Verso represents and
warrants to Entrata that the issuance of the Settlement Shares has been duly
authorized by all necessary corporate action and, upon such issuance, such
shares will be validly issued, fully paid and non-assessable.  Verso
further represents and warrants that assuming “Average Stock Price” to be equal
to the closing price of Verso common stock as of the Agreement Date the number
of Settlement Shares will not exceed 20% of the number of shares of Verso’s
common stock outstanding immediately prior to the Agreement Date.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      4.           The
Parties agree that the Cash Payment and the $250,000.00 represented by the
Settlement Shares are to be applied, at the option of Entrata, against interest
accruing under the Licensing Agreement and that in such instance none of the
Cash Payment or Settlement Shares shall be applied to reduce the principal
obligation of $750,000.  In connection herewith, the parties
acknowledge that as of March 24, 2008 interest accruing on Entrata’s claim is
equal to $552,750 and, as such, exceeds the value of the Cash Payment and
Settlement Shares.

       

      5.           Investment
Representations.  In connection with the issuance of the
Settlement Shares to Entrata, Entrata hereby represents and warrants to Verso as
follows:

       

       
a.            Entrata
understands and acknowledges that the issuance of the Settlement Shares to
Entrata will not be registered with, or reviewed by, the Securities and Exchange
Commission (the “SEC”) because the
offer and sale by Verso of the Settlement Shares to Entrata is intended to be a
non-public offering pursuant to Section 4(2) of the Securities Act of 1933, as
amended (the “Securities
Act”).

       

       
b.            Entrata
understands that no securities administrator of any state has made any finding
or determination relating to the fairness of the offer or sale of the Settlement
Shares by Verso to Entrata pursuant to this Agreement, and that no securities
administrator of any state has recommended or endorsed, or will recommend or
endorse, such offer and sale.

       

       
c.            The
Settlement Shares shall be held by Entrata for its account, for investment
purposes only and not with a view to any distribution or resale thereof, except
pursuant to the Registration Statement (as hereinafter defined) or pursuant to
any applicable exemption under the Securities Act.

       

       
d.            Entrata
understands that the sale, pledge, hypothecation or transfer of the Settlement
Shares by Entrata is subject to the provisions of the Securities Act restricting
such sales, pledges, hypothecation or transfers, unless they are registered
under the Securities Act and applicable state laws or are exempt from the
registration requirements thereof. Upon issuance of the Settlement Shares, a
legend in substantially the form set forth below shall be placed on all
certificates representing such shares.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
OFFERED FOR SALE OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH
REGISTRATION IS NOT REQUIRED.

         

         
e.            Verso has
made available to Entrata the opportunity to ask questions of, and receive
answers from, Verso with respect to the activities and operations of Verso and
otherwise to obtain any additional information, to the extent that Verso
possesses the information or could acquire it without unreasonable effort or
expense, which Entrata deems necessary in order to make its investment
decision.

      

       

       
f.            Entrata
acknowledges that no general solicitation or general advertising (including
communications published in any newspaper, magazine or other broadcast) has been
received by Entrata in connection with the Settlement Shares and that no public
solicitation or advertisement with respect to the Settlement Shares has been
made to Entrata.

       

       
g.            Entrata has
knowledge and experience in business and financial matters sufficient to enable
Entrata to understand and evaluate the risks of an investment in the Settlement
Shares and to make an investment decision with respect thereto, and, while it is
not anticipated that Entrata will hold the Settlement Shares indefinitely,
Entrata is able to bear the risk of such investment for an indefinite period and
to afford a complete loss thereof.

       

      6.          
Registration
of Settlement Shares.  On or prior to the May 1, 2008, Verso
shall prepare and file with the SEC a registration statement under the
Securities Act covering the resale of the Settlement Shares by Entrata under the
Securities Act and containing a plan of distribution substantially in the form
of Appendix A attached hereto (the “Registration
Statement”).  Verso shall use commercially reasonable efforts
to cause the Registration Statement to be declared effective by the SEC no later
than October 31, 2008.  Entrata shall promptly provide to Verso upon
its request therefor the information about Entrata required to be contained in
the Registration Statement.

       

      7.          
Assigned
Claims.

       

        a.
           On the
Agreement Date, but subject to approval of this Settlement Agreement by the
Bankruptcy Court, MCK shall, and does hereby, assign, convey and transfer to
Entrata all of the claims that MCK has asserted against any of Superwire.com,
Inc., Jeffers, Shaff & Falk, LLP and Mark R. Zeibel in the MCK Action
(“Assigned
Claims”).  Each of MCK and Verso jointly and severally warrants
and represents to Entrata that neither has assigned to any person any portion of
the Assigned Claims.

       

        b.
           Verso shall
use its commercially reasonable efforts to cooperate with Entrata in its
prosecution of the Assigned Claims, and, in doing so, Verso shall make available
to Entrata and its counsel, at reasonable times and places and upon reasonable
notice, any employees
of Verso (or any of its subsidiaries) whom Entrata reasonably believes may have
direct knowledge of any matter at issue relating to the Assigned Claims for
purposes of giving testimony with respect thereto.  In addition, Verso
shall request such employees to consider, and sign if accurate, affidavits
prepared by Entrata’s counsel concerning dealings with Superwire.com, Inc.,
Jeffers, Shaff & Falk, LLP and Mark R. Zeibel.  Entrata shall
reimburse Verso or any such employees for any out-of-pocket expenses incurred by
them in giving any such testimony.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      8.          
General
Release by Verso Parties.

       

       
a.            Except for
the obligations set out in this Agreement, Verso and MCK, on behalf of
themselves and each of their direct and indirect subsidiaries, and all of their
respective representatives, directors, officers, agents, employees, attorneys,
affiliates, successors and assigns (collectively, the “Verso Parties”),
hereby and unconditionally release, remise and forever discharge and shall be
deemed to have released remised and forever discharged Entrata, each of its
direct and indirect subsidiaries, and all of their respective representatives,
trustees, directors, officers, agents, employees, attorneys, affiliates,
successors and assigns (collectively, the “Entrata Parties”),
from any and all claims, rights, liabilities, complaints, debts, dues, sums of
money, demands, actions, causes of action, suits, defenses, counterclaims,
controversies, contest, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, agreements, promises, variances, trespasses,
controversies, damages, rights, whether statutory, at common law, in equity or
of any other kind, including, without limitations, any possible claim under any
state, federal or local law, statute or regulation, for commissions, salary,
compensation, damages, nuisances, levies, expenses, fees, debts, contracts,
agreements, promises, obligations or liabilities whatsoever, whatever they are,
at law or in equity, whether known or unknown, suspected or unsuspected,
foreseen or unforeseen, anticipated or unanticipated, of any kind, including any
consequence that the same may have, had or could have by reason of any matter,
cause or thing whatsoever from the beginning of time to the effective date of
this Agreement, including, but not limited to, all claims raised in the MCK
Action and the Verso Action.

       

       
b.            Except for
the obligations set out in this Agreement, Verso and MCK, on behalf of
themselves and the other Verso Parties, hereby and unconditionally release,
remise and forever discharge and shall be deemed to have released remised and
forever discharged Citel, each of its direct and indirect parents and
subsidiaries, and all of their respective representatives, directors, officers,
agents, employees, attorneys, affiliates, successors and assigns (collectively,
the “Citel
Parties”), from any and all claims, rights, liabilities, complaints,
debts, dues, sums of money, demands, actions, causes of action, suits, defenses,
counterclaims, controversies, damages and rights, whether statutory, or at
common law, whether at law or in equity, whether known or unknown, suspected or
unsuspected, foreseen or unforeseen, anticipated or unanticipated, related to
all claims raised in the MCK Action and the Verso Action.

       

      9.           General
Release by Entrata Parties.

       

       
a.            Except for
the obligations set out in this Agreement, Entrata, on behalf of itself and the
other Entrata Parties, does hereby and unconditionally release, remise and
forever discharge and shall be deemed to have released remised and forever
discharged the Verso Parties from any and all claims, rights, liabilities,
complaints, debts, dues, sums of money, demands, actions,
causes of action, suits, defenses, counterclaims, controversies, contest,
accounts, reckonings, bonds, bills, specialties, covenants, contracts,
agreements, promises, variances, trespasses, controversies, damages, rights,
whether statutory, at common law, in equity or of any other kind, including,
without limitations, any possible claim under any state, federal or local law,
statute or regulation, for commissions, salary, compensation, damages,
nuisances, levies, expenses, fees, debts, contracts, agreements, promises,
obligations or liabilities whatsoever, whatever they are, at law or in equity,
whether known or unknown, suspected or unsuspected, foreseen or unforeseen,
anticipated or unanticipated, of any kind, including any consequence that the
same may have, had or could have by reason of any matter, cause or thing
whatsoever from the beginning of time to the effective date of this Agreement,
including, but not limited to, all claims raised in the MCK Action and the Verso
Action.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

       
b.            Except for
the obligations set out in this Agreement, Entrata, on behalf of itself and the
other Entrata Parties, does hereby and unconditionally release, remise and
forever discharge and shall be deemed to have released remised and forever
discharged the Citel Parties from any and all claims, rights, liabilities,
complaints, debts, dues, sums of money, demands, actions, causes of action,
suits, defenses, counterclaims, controversies, contest, accounts, reckonings,
bonds, bills, specialties, covenants, contracts, agreements, promises,
variances, trespasses, controversies, damages, rights, whether statutory, at
common law, in equity or of any other kind, including, without limitations, any
possible claim under any state, federal or local law, statute or regulation, for
commissions, salary, compensation, damages, nuisances, levies, expenses, fees,
debts, contracts, agreements, promises, obligations or liabilities whatsoever,
whatever they are, at law or in equity, whether known or unknown, suspected or
unsuspected, foreseen or unforeseen, anticipated or unanticipated, of any kind,
including any consequence that the same may have, had or could have by reason of
any matter, cause or thing whatsoever from the beginning of time to the
effective date of this Agreement, including, but not limited to, all claims
raised in the MCK Action and the Verso Action.

       

      10.         Release
by Citel Parties.

       

       
a.            Except for
the obligations set out in this Agreement, Citel, on behalf of itself and the
other Citel Parties, does hereby and unconditionally release, remise and forever
discharge and shall be deemed to have released remised and forever discharged
the Verso Parties from any and all claims, rights, liabilities, complaints,
debts, dues, sums of money, demands, actions, causes of action, suits, defenses,
counterclaims, controversies, damages and rights, whether statutory, or at
common law, whether at law or in equity, whether known or unknown, suspected or
unsuspected, foreseen or unforeseen, anticipated or unanticipated, related to
all claims raised in the MCK Action and the Verso Action and any claim for
indemnification in connection therewith pursuant to that
certain  Asset Purchase Agreement dated as of January 21, 2005 by and
among Citel, Verso, MCK and certain of their respective affiliates.

       

       
b.            Except for
the obligations set out in this Agreement, Citel, on behalf of itself and the
other Citel Parties, does hereby and unconditionally release, remise and forever
discharge and shall be deemed to have released remised and forever discharged
the Entrata Parties from any and all claims, rights, liabilities, complaints,
debts, dues, sums of money, demands, actions, causes of action, suits, defenses,
counterclaims, controversies, contest, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, agreements, promises, variances,
trespasses, controversies, damages, rights, whether statutory, at common law, in
equity or of any other kind, including, without limitations, any possible claim
under any state, federal or local law, statute or regulation, for commissions,
salary, compensation, damages, nuisances, levies, expenses, fees, debts,
contracts, agreements, promises, obligations or liabilities whatsoever, whatever
they are, at law or in equity, whether known or unknown, suspected or
unsuspected, foreseen or unforeseen, anticipated or unanticipated, of any kind,
including any consequence that the same may have, had or could have by reason of
any matter, cause or thing whatsoever from the beginning of time to the
effective date of this Agreement, including, but not limited to, all claims
raised in the MCK Action and the Verso Action.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      11.         Conditions
Subsequent.  In accordance with this paragraph 11 and paragraph
11.1 , the continued effectiveness of the releases set forth in Paragraphs 8
through 10 above (the “Releases”) shall be
subject to the satisfaction of each of the following conditions
subsequent:

       

       
a.            The
Bankruptcy Court shall have approved this Agreement;

       

       
b.            The Cash
Payment shall have been paid by May 1, 2008;

       

       
c.            From the
Agreement Date until the date that is the later of (i) the date that is 91 days
following the date of the Cash Payment and (ii) the date that is 30 days after
the date on which the Settlement Shares may be sold pursuant to the Registration
Statement or Rule 144 under the Securities Act (such later date, the “Release Effective
Date”), Verso (1) shall not have filed a petition under Title 11 of the
United States Code or have had an involuntary petition filed against it under
Title 11 of the United States Code, which case is pending as of the Release
Effective Date, and (2) shall not have ceased operating, or be subject to a
voluntary or involuntary liquidation, receivership or other proceeding, either
formal or informal to restructure its debts; and

       

       
d.            On or
before October 31, 2008, (i) the Registration Statement shall have been declared
effective by the SEC or (ii) the Settlement Shares shall be salable pursuant to
Rule 144 under the Securities Act as evidenced by an opinion of securities
counsel to Verso delivered and reasonably accepted by Entrata.

       

      In the
event of the failure of condition a, this Agreement shall be deemed null and
void and the
Releases shall be thereupon revoked (retroactive to the Agreement Date)
and each of the releasing parties shall have the right to reinstate and pursue
the claims released by the Releases.  In the event of the failure of
any one or more of conditions b, c, or d, at the election of Entrata exercisable
by notice hereunder the Releases shall be revoked and the Parties shall have the
rights, obligations, claims and defenses set forth  under paragraph
11.1 hereof, in which event, except as set forth therein, Entrata may return any
Settlement Shares issued to and retained by him as of the date of such
election.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      11.1      
Liability
of Verso in Event of Failure of Conditions.  In the event all
of the conditions in paragraph 11 above are not satisfied and Entrata makes an
election under paragraph 11, the Parties shall have the following rights,
obligations and claims:

       

      (a) Verso
shall be thereupon liable and indebted to Entrata  in the amount of
$750,000.00 plus 12% interest from the Agreement Date, less (i) the Cash Payment
if paid to Entrata  hereunder,  (ii) an amount equal to (x)
the total number of Settlement Shares not returned by Entrata divided by the
total number of Settlement Shares issued hereunder, (y) multiplied by
$250,000.00 and (iii) any  recovery by Entrata of one or more of the
Assigned Claims net of and reduced by all attorneys fees, costs and expenses
incurred by Entrata in pursuing the MCK Action, the original Verso Action as
settled herein, and the Assigned Claims.   Verso
represents that its assets, properties and rights are subject to a security
interest of Verso’s senior lender, Laurus Master Fund, Ltd. Entrata acknowledges
that under this Section 11.1 it is  an unsecured creditor of Verso and
that Verso’s liability under this Section 11.1 may be subject to the said
security interest of  Laurus Master Fund, Ltd. in accordance with
generally  applicable law.

       

      (b)
Entrata may reinstate the Verso Action against Citel in which case all
applicable statutes of limitation shall be tolled as of the filing date of the
original Verso Action.

       

      (c) The
Releases by Citel set forth herein shall be revoked (retroactive to the
Agreement Date) and Citel shall have the right to assert any and all defenses
and claims allowed by law against Entrata and all defenses, claims and rights of
indemnification against Verso, including but not limited to any claim for
indemnification pursuant to that certain Asset Purchase Agreement dated as of
January 21, 2005 by and among Citel, Verso, MCK and certain of their respective
affiliates.

       

      12.         Opinions
of Counsel.  Verso shall cause its Minnesota counsel to deliver
to Entrata no later than ten business days after the Agreement Date a legal
opinion in substantially the form attached hereto as Appendix B. In addition,
Verso shall cause its securities counsel to deliver to Entrata no later than
five business days after the Registration Statement is declared effective by the
SEC a legal opinion in substantially the form attached hereto as Appendix
C.

       

      13.         Dismissal
of Actions. Contemporaneously with
the execution of this Agreement, counsel for Verso, Citel and Entrata will
execute and file a Stipulation of Dismissal Without Prejudice, in mutually
agreeable form in respect of the Verso Action, and counsel for MCK and Entrata
will execute and file a Motion to Vacate Judgment and Dismiss Entrata Without
Prejudice in mutually agreeable form in respect of the MCK Action. Each of the
Parties hereby authorizes and directs its counsel to execute such pleadings, and
any Orders of Dismissal required in connection therewith, on its behalf, and
hereby authorizes the same to be filed with the Norfolk County Superior
Court.

       

      14.         Entire
Agreement.  Except as set forth in this paragraph, this
Agreement contains the entire agreement between the Parties with respect to the
subject matter herein.  Each of the Parties acknowledges and agrees
that (i) such Party has not assigned to any person any portion of any claim
released by such Party hereunder and (ii) that there are no agreements,
promises, terms, conditions, understandings, representations or inducements
leading to the execution of this Agreement other than those expressly set forth
herein.  Any conflict between the provisions of this Agreement and any
other previous agreement shall be resolved and interpreted in favor of and in
accord with this Agreement.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      15.         Voluntary
Agreement.  The Parties acknowledge that they have read this
Agreement, fully understand its terms, and are accepting the terms, conditions,
and provisions of this Agreement voluntarily and without coercion.

       

      16.         Legal
Representation.  The Parties acknowledge that they have
retained legal counsel, and have had the opportunity to seek legal advice, in
connection with, and prior to entering into this Agreement.  Neither
the fact of this Agreement nor anything contained herein shall constitute or be
construed as an admission of liability by any party, and all parties
specifically acknowledge that it does not constitute such an
admission.

       

      17.         Successors
and Assigns.  The Parties stipulate and agree that this
Agreement may be enforced by, and against, the Parties’ successors and
assigns.

       

      18.         Governing
Law.  This Agreement shall be construed according to and
governed by the laws of the Commonwealth of Massachusetts.  Any
disputes arising from this Agreement shall be resolved in the state courts of
the Commonwealth of Massachusetts.

       

      19.         Multiple
Counterparts; Delivery.  This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same Agreement.  Counterparts may
be delivered by facsimile or “.pdf.”

       

      20.         Notices.  All
notices hereunder or relating to this Agreement should be addressed and
delivered as follows:

       

      To:                         
Entrata:

      

      Michael Daly, Trustee

      c/o Bodoff & Associates
P.C.

      225 Friend Street

      Boston MA 02114-1812

      Fax: 617-742-9969

      

      With a
copy to (which shall not constitute notice to Entrata):

      

      Joseph S.U. Bodoff, Esq.

      Bodoff & Associates
P.C.

      225 Friend Street

      Boston MA 02114-1812

      

      To:                         
Verso:

      

      Mr. Martin D. Kidder

      400 Galleria Parkway

      Suite 200

      Atlanta,
GA  30339

      Fax:  678-589-3572

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      With a
copy to (which shall not constitute notice to Verso):

      

      Mr. Larry Schwartz

      Verso Technologies, Inc.

      1221 West Mineral Avenue, Suite
100

      Littleton, CO 80120

      Fax:  303-734-4244

      

      To:           CITEL:

      

      Jose S. David and Carlen
Ruelos

      Citel Technologies, Inc.

      3131 Elliot Avenue

      Suite 250

      Seattle, WA 98121

      Fax: (206) 957-6275

      

      With a
copy to (which shall not constitute notice to CITEL):

      

      Attn: David M. Glynn, Esq.

      Kirkpatrick & Lockhart Preston
Gates Ellis LLP

      State Street Financial
Center

      One Lincoln Street

      Boston, MA 02111

      Fax: (617) 261-3175

      

      21.         Joint
Drafting.  Each Party has
cooperated in the drafting and preparation of this Agreement.  Thus,
if any interpretation or construction is to be made of this Agreement, the
responsibility for the drafting and preparation of this Agreement shall not be
construed against any Party.

       

      22.         Authority.  Each Party
represents that it has the full power and authority to enter into and consummate
the obligations contemplated hereby, and that this Agreement has been duly
authorized by all necessary corporate action, that this Agreement has been duly
executed and delivered and represents such Party’s binding obligation,
enforceable against such Party in accordance with its terms.

       

      23.         Invalid
Provisions.  Each provision of
this Agreement shall be enforceable to the fullest extent permitted by law, and
any unenforceable provision shall not invalidate or render unenforceable any
other provision.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      EACH PERSON
SIGNING THIS AGREEMENT ATTESTS THAT HE OR SHE HAS READ AND UNDERSTOOD THIS
AGREEMENT, INCLUDING THAT THIS AGREEMENT CONTAINS A GENERAL RELEASE OF CLAIMS,
HAS RECEIVED THE ADVICE OF COUNSEL REGARDING ITS TERMS AND CONDITIONS, IS DULY
AUTHORIZED TO SIGN FOR THE PARTY THAT HE OR SHE PURPORTS TO REPRESENT AND SIGNS
THIS AGREEMENT AS HIS OR HER FREE ACT AND DEED.

       

      
 

      [SIGNATURE
PAGE FOLLOWS.]

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      IN WITNESS WHEREOF, the
Parties have caused this Agreement to be executed by their duly authorized
representative under seal as of the date first above written.

       

       

      
        	 	
                MICHAEL DALY, CHAPTER 7
      TRUSTEE

                FOR ESTATE OF ENTRATA
      COMMUNICATIONS

                CORPORATION,

              
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Michael
      Daly	 
	 	Name: Michael Daly
      trustee and not individually	 
	 	Its:	Chapter 7
      Trustee	 
	 	 	 	 
	 	 	 	 
	 	CITEL TECHNOLOGIES,
      INC.	 
	 	 	 	 
	 	 	 	 
	 	By: 	/s/ Jose L.
      David	 
	 	Name: 	Jose L.
    David	 
	 	Its:	CFO	 
	 	 	 	 
	 	 	 	 
	 	NEEDHAM (NEVADA)
      CORP.	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Martin D.
      Kidder	 
	 	Name:	Martin D.
      Kidder	 
	 	Its:	CFO	 
	 	 	 	 
	 	 	 	 
	 	VERSO TECHNOLOGIES,
      INC.	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Martin D.
      Kidder	 
	 	Name:	Martin D.
      Kidder	 
	 	Its:	CFO	 

      

       

      
 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      APPENDIX
A

      

      PLAN OF
DISTRIBUTION

       

      The
selling shareholder and any of its assignees and successors-in-interest (but not
any pledgee of any such persons) may, from time to time, sell any or all of
their shares of common stock registered hereby on any stock exchange, market or
trading facility on which the shares are traded or in private
transactions.  These sales may be at fixed or negotiated
prices.  The selling shareholder may use any one or more of the
following methods when selling shares:

       

      
        	
                 
      

              	
                •

              	
                ordinary
      brokerage transactions and transactions in which the broker-dealer
      solicits purchasers;

              

      

       

      
        	
                 
      

              	
                •

              	
                block
      trades in which the broker-dealer will attempt to sell the shares as agent
      but may position and resell a portion of the block as principal to
      facilitate the transaction;

              

      

       

      
        	
                 
      

              	
                •

              	
                purchases
      by a broker-dealer as principal and resale by the broker-dealer for its
      account;

              

      

       

      
        	
                 
      

              	
                •

              	
                in
      exchange distribution in accordance with the rules of the applicable
      exchange;

              

      

       

      
        	
                 
      

              	
                •

              	
                privately
      negotiated transactions;

              

      

       

      
        	
                 
      

              	
                •

              	
                broker-dealers
      may agree with the selling shareholder to sell a specified number of such
      shares at a stipulated price per
share;

              

      

       

      
        	
                 
      

              	
                •

              	
                a
      combination of any such methods of sale;
and

              

      

       

      
        	
                 
      

              	
                •

              	
                any
      other method permitted pursuant to applicable law and not otherwise
      prohibited by this prospectus.

              

      

       

      The
selling shareholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.

       

      Broker-dealers
engaged by the selling shareholder may arrange for other broker-dealers to
participate in sales.  Broker-dealers may receive commissions or
discounts from the selling shareholder (or, if any broker-dealer acts as agent
for the purchaser of shares, from the purchaser) in amounts to be
negotiated.  The selling shareholder does not expect these commissions
and discounts to exceed what is customary in the types of transactions
involved.

       

      The
selling shareholder and any broker-dealers or agents who are involved in selling
the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales.  In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities
Act.

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