EXHIBIT 10.3
RESTRICTIVE COVENANT AGREEMENT
     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 Federal District Court, District 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 Michael J. Pudil on October 7,
2009, Paul D. Sheely on October 7, 2009 and Benjamin Rashleger on October 12,
2009.]

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