Exhibit 99.1
SELLER
NON-COMPETITION AGREEMENT
This SELLER NON-COMPETITION
AGREEMENT (this “ Agreement ”) is made and
entered into as of February___, 2005 (the “ Agreement
Date ”), by and among JACKSONVILLE TECHNOLOGY
ASSOCIATES, INC. , a Delaware corporation now known as WSECI,
Inc. (the “ Seller ”), and the shareholders of
the Seller signatory hereto (each a “ Shareholder
” and collectively, the “ Shareholders ”)
on the one hand, and VERSO TECHNOLOGIES, INC. , a Minnesota
corporation (the “ Purchaser ”), on the other
hand.
RECITALS
WHEREAS , pursuant to the
terms and conditions set forth in that certain Asset Purchase
Agreement dated as of February 23, 2005 (the “ Asset
Purchase Agreement ”), by and among the Seller, the
Shareholders and the Purchaser, the Purchaser has agreed to
purchase certain assets, and assume certain liabilities, of the
Seller;
WHEREAS , the Seller will
derive substantial economic value from the consummation of the
transactions contemplated by the Asset Purchase Agreement,
including, among other things, the receipt of the Purchase Price
and the additional Purchaser Shares which may be earned by the
Seller pursuant to Sections 1.7 and 1.8 of the Asset Purchase
Agreement;
WHEREAS , the Shareholders
will derive substantial economic value from the consummation of the
transactions contemplated by the Asset Purchase Agreement,
including, among other things, the distribution by the Seller to
the Shareholders of the Purchaser Shares the Seller receives
pursuant to the Asset Purchase Agreement; and
WHEREAS , each of the Seller
and the Shareholders acknowledges that the execution and delivery
of this Agreement is a condition precedent to the Purchaser’s
obligation to consummate the transactions contemplated by the Asset
Purchase Agreement, and that the Purchaser would not have entered
into the Asset Purchase Agreement unless the Seller and the
Shareholders agreed to enter into this Agreement;
NOW, THEREFORE , based on the
above premises and in consideration of the mutual promises,
covenants, agreements, representations and warranties hereinafter
set forth and other good and valuable consideration, the receipt,
adequacy and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1.
Definitions . Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the
Asset Purchase Agreement.
2. Covenant Not
to Compete . Each of the Shareholders and the Seller
acknowledges that he, she or it is and will be in possession of
Confidential Information concerning the Business, including, but
not limited to, information about markets, key personnel, current
and prospective customers and other business affairs and methods
and other information not readily available to the public;
provided, however, that, for purposes of this Agreement,
Confidential Information shall not include information which
(a) is or becomes generally available to the public other than
as a result of wrongful disclosure by
any Shareholder or the
Seller, or (b) becomes available to any Shareholder or the
Seller, as applicable, from a third party without restriction or
breach of this Agreement and, to the knowledge of any Shareholder
or the Seller, as applicable, without breach of any other
confidentiality obligation owed to the Purchaser. As a means
reasonably designed to protect the Confidential Information, from
the Agreement Date above until the second anniversary of the
Agreement Date, the Seller agrees that it will not, directly or
indirectly (including through its Affiliates), within the
geographic region of North America and South America, engage in,
assist (financially or otherwise), render services to, or perform
any activity that is competitive with the Business (the “
Protected Activities ”). Also as a means reasonably
designed to protect the Confidential Information, from the
Agreement Date above until the second anniversary of the Agreement
Date, each of the Shareholders agrees that he, she or it will not,
directly or indirectly (including through his, her or its
Affiliates), within the geographic region of North America and
South America, engage in, assist (financially or otherwise), render
services to, or perform any activity that is competitive with the
Business and substantially similar to the services rendered or the
activities performed by such Shareholder for the Seller (the
“ Protected Activities ”) in the capacity of a
shareholder, officer, director or other management personnel,
whether as an employee or an independent contractor. For avoidance
of doubt, the Seller’s or any Shareholder’s engaging in
any Excluded Business shall not be limited by this paragraph 2.
Notwithstanding the foregoing, each of the Shareholders and the
Seller may own, directly or indirectly, an aggregate of no more
than one percent (1%) of the outstanding stock or other equity
interest of or in any publicly traded corporation or other business
enterprise that engages in the Protected Activities, provided that
such participation therein is solely as a passive investor and does
not include any role, as applicable, as director, officer, manager
or other service provider.
3.
Non-Interference and Non-Solicitation . From the
Agreement Date until the second anniversary of the Agreement Date,
neither the Seller nor any Shareholder will, without the prior
written consent of the Purchaser, directly, indirectly (including
through his, her or its Affiliates) or as an agent on behalf of or
in conjunction with any person, firm, partnership, corporation or
other entity: (a) hire, solicit, encourage the resignation of,
or in any other manner seek to engage or employ, any person who, as
of the Agreement Date or at any time during the six (6) month
period prior thereto, was an employee of the Seller and was engaged
in the Business, including (but not limited to) those employees
listed on Exhibit A hereto, whether or not for
compensation and whether as an officer, employee, consultant,
adviser, independent sales representative, vendor, independent
contractor or participant ( provided , however , that
if any such employee is hired by the Purchaser and thereafter
terminated by the Purchaser, then the Seller may hire such person),
or (b) contact, solicit, service or otherwise have any
dealings with any person or entity with whom the Purchaser has a
then-current business relationship in connection with the Protected
Activities or if such contact, solicitation or other dealings could
reasonably be expected to adversely impact the Purchaser’s
relationship with such person or entity.
4.
Non-Disclosure . Unless otherwise approved in writing
by the Purchaser, each of the Shareholders and the Seller covenants
and agrees that he, she or it will not use for any purpose and will
keep secret and will not intentionally disclose to anyone other
than the Purchaser, wherever located, any and all Confidential
Information during the term of this Agreement.
-2-
5. Equitable
Relief . It is expressly agreed among the parties hereto
that monetary damages would be inadequate to compensate a party
hereto for any breach by any other party of its covenants and
agreements in this Agreement. Accordingly, the parties agree and
acknowledge that any such violation or threatened violation will
cause irreparable injury to the other and that, in addition to any
other remedies which may be available, such
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