RESTRICTIVE COVENANT AGREEMENT
EXHIBIT 10.3
THIS RESTRICTIVE COVENANT AGREEMENT (“Agreement”) is entered into as of [ ], by
and between [ ] (“Employee”) and WSI Industries, Inc., (the “Company” or the
“Employer”).
IN CONSIDERATION of employment, and the Employment (Change in Control) Agreement and the other
benefits offered Employee dated this date between Employee and Employer, to which Employee was not
otherwise entitled to, the Company and Employee agree as follows:
1. Confidential Information.
1.1 “Confidential Information” Defined. “Confidential Information” means information
not generally known and proprietary to the Company or to a third party for whom the Company is
performing work, including, without limitation, information concerning any patents or trade
secrets, confidential or secret designs, processes, formulae, source codes, plans, devices or
material, research and development, proprietary software, analysis, techniques, materials or
designs (whether or not patented or patentable), directly or indirectly useful in any aspect of the
business of the Company, any vendor names, customer and supplier lists, databases, management
systems and sales and marketing plans, accounting and financial reports, evaluations, statements,
audits of the Company or other affiliated entity, any confidential secret development or research
work of the Company, or any other confidential information or proprietary aspects of the business
of the Company. All information which Employee acquires or becomes acquainted with during
Employee’s employment by the Company (including employment by an affiliated company), whether
developed by Employee or by others, which Employee has a reasonable basis to believe to be
Confidential Information, or which is treated by the Company as being Confidential Information,
shall be presumed to be Confidential Information.
1.2 Disclosures and Use by Employee. Employee will not, during or at any time after
the term of employment under this Agreement, divulge, disclose or communicate to any person or
entity, or use for Employee’s benefit or for the benefit of any third party, in any manner
whatsoever, whether directly or indirectly, any information concerning any matters affecting or
relating to the business of Employer, including any of its customers, the prices it obtains or has
obtained from the sale of, or at which it sells or has sold, its products, or any other information
concerning its business, its manner of operation, its plans, processes, specifications,
merchandising techniques, or other data. Employee understands that such matters and information
are important, material, and confidential and are necessary to the effective and successful conduct
of Employer’s business and goodwill, and that any breach of the terms of this paragraph shall be a
material breach of this agreement.
1.3 Scope of Obligation. The foregoing obligations of confidentiality shall not apply
to any knowledge or information which is now published or which subsequently
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becomes generally publicly known in the form in which it was obtained from the Company, other
than as a direct or indirect result of the breach of this Agreement by Employee.
1.4 Ownership Rights: Confidentiality. Employee shall not acquire any rights
hereunder or during employment to any documents, records, tangible property, goodwill, trade
secrets, customer lists, proprietary interests, Confidential Information, or other property of
Employer, whether tangible or intangible. All such technical and business information of Employer,
including any records or documents which Employee shall compile while employed with Employer, are
to be considered confidential.
2. Non-competition and Non-solicitation.
2.1 Non-competition.
(a) During and After Employment. Throughout the period of Employee’s
employment with Employer, and thereafter for the period described in Section 2.1(c)
set forth below, Employee shall not, for any reason whatsoever, directly or
indirectly, plan, organize, advise, own, manage, operate, control, be employed by,
participate in or be connected in any manner with the ownership, management,
operation or control of any business similar to the type of business conducted by
Employer, and will not conspire with others to do so as a shareholder, officer,
director, agent, employee, advisor, consultant or independent contractor of any
competing business. A competing business includes any corporation, limited
liability company, partnership, proprietorship, association, or other entity or
person engaged in developing, producing, designing, providing, soliciting orders
for, selling, distributing or marketing products or services that directly or
indirectly compete with any of the Company’s products, services or business.
Ownership by Employee, as a passive investment, of capital stock or other securities
of any corporation dissimilar from the Company shall not constitute a breach of this
Section 2.1(a).
(b) Restriction as to Territory. Employee’s agreement not to compete
against Employer shall extend throughout the territory where it actually does
business or may reasonably expect to do business and the territory where its
customers are located.
(c) Restriction as to Duration. The duration of this agreement not to
compete shall extend throughout the term of Employee’s employment with Employer and
for an additional twelve (12) months thereafter; provided, however, that the
duration of the foregoing covenant shall be extended beyond the time period set
forth herein for a period equal to the duration of any breach or default of such
covenant by Employee. Employee agrees that this restriction as to duration is
reasonable in light of the nature of Employee’s job.
(d) Independent Covenant. Employee’s agreement not to compete as set
forth in this Section 2.1 is understood to be an independent covenant and
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agreement on Employee’s part which may be enforced against Employee regardless
of any claim Employee may have or assert against Employer.
(e) Court Ruling. In the event that the foregoing agreement not to
compete is determined by a court of competent jurisdiction to be excessive in its
duration or in the area to which it applies, it shall be considered modified and
valid for such duration and for such area as said court may determine to be
reasonable under the circumstances.
2.2 Non-solicitation. Employee further agrees that Employee will not at any time
during employment with the Company and for the period of twelve (12) months following the last day
of employment with the Company, directly or indirectly, induce or influence any employee of the
Company to leave the employ of the Company or any consultant or other independent contractor for
the Company to change or terminate any relationship between that person and the Company.
2.3 Prohibited Activity. Employee further agrees that, Employee will not, directly or
indirectly, assist or encourage any other person in carrying out, directly or indirectly, any
activity that would be prohibited by the above provisions of this Section 2 if such activity were
carried out by Employee, directly or indirectly, or induce any employee of the Company to carry
out, directly or indirectly, any such activity.
3. Copy to New Employer. Throughout the term of this Agreement, and for a period of
twelve (12) months thereafter, Employee will inform Employee’s new or prospective employer, prior
to accepting employment, of the existence of this Agreement and will provide such employer a copy
thereof.
4. Termination. Notwithstanding any termination of employment, Employee, in
consideration of employment through the date of such termination, shall remain bound by the
provisions of this Agreement, which specifically relate to periods, activities or obligations upon
or subsequent to the termination of Employee’s employment.
5. Settlement of Disputes.
5.1
Resolution of Certain Claims - Injunctive Relief. Claims brought by the Company
asserting a violation of this Agreement, or seeking to enforce, by injunction or otherwise, the
terms this Agreement may be maintained by the Company in a lawsuit subject to the terms of Section
5.2. Employee agrees that, in addition to, but not to the exclusion of any other available remedy,
the Company shall have the right to enforce the provisions of this Agreement by applying for and
obtaining temporary and permanent restraining orders or injunctions from a court of competent
jurisdiction without the necessity of filing a bond therefore, and the Company shall be entitled to
recover from Employee its reasonable attorneys’ fees and costs in enforcing this Agreement.
5.2 Venue. Any action at law, suit in equity, or judicial proceeding arising
directly, indirectly, or otherwise in connection with, out of, related to or from this Agreement or
any provision hereof, shall be litigated only in the courts of the state of Minnesota, or the
Xxxxxxx Xxxxxxxx Xxxxx, Xxxxxxxx of Minnesota. Employee waives any right Employee may have to
transfer
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or change the venue of any litigation brought against Employee by the Company. Employee also
waives any claim of inconvenient forum.
5.3 Severability. In the event any provision of this Agreement is found to be illegal
or unenforceable, such provision shall be severed or modified to the extent necessary to make it
enforceable, and as so severed or modified, the remainder of this Agreement shall remain in full
force and effect. Employee expressly stipulates that this Agreement be given the construction
which renders its provisions valid and enforceable to the maximum extent (not exceeding its express
terms possible under applicable law).
6. Miscellaneous.
6.1 Governing Law. This Agreement is made under and shall be governed by and
construed in accordance with the laws of the state of Minnesota other than its law dealing with
conflicts of law.
6.2 Amendments. No amendment or modification of this Agreement shall be deemed
effective unless made in writing and signed by both Employee and the Company.
6.3 No Waiver. No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel to enforce any provision of this Agreement, except by a
statement in writing signed by the party against whom enforcement of the waiver or estoppel is
sought. Any written waiver shall not be deemed a continuing waiver unless specifically stated,
shall operate only as to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that specifically waived.
6.4 Assignment. This Agreement shall not be assignable, in whole or in part, by the
Employee. This Agreement is freely assignable by the Company in connection with a sale of
substantially all of the equity or assets of the Company.
6.5 Effect of Agreement. Nothing contained in this Agreement is intended to create an
express or implied contract of employment or guarantee of employment. Employee agrees that
Employee is employed “at will” and agrees that the Company is not by reason of this Agreement
obligated to continue Employee’s employment at any time, for any reason.
6.6 Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which shall constitute one and the same
instrument.
6.7 Captions and Headings. The captions and paragraph headings used in this Agreement
are for convenience of reference only, and shall not affect the construction or interpretation of
this Agreement or any of the provisions thereof.
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IN WITNESS WHEREOF, Employee and the Company have executed this Agreement as of the date set
forth in the first paragraph.
| WSI INDUSTRIES, INC. | ||||||
| By: | ||||||
| Its: | ||||||
| EMPLOYEE | ||||||
[Restrictive Covenant Agreement entered into by Xxxxxxx X. Xxxxx on October 7, 2009, Xxxx X. Xxxxxx
on October 7, 2009 and Xxxxxxxx Xxxxxxxxx on October 12, 2009.]
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