Exhibit 10(w)
EMPLOYMENT, NONDISCLOSURE AND NON-COMPETE AGREEMENT
EMPLOYMENT, NONDISCLOSURE AND NON-COMIPETE AGREEMENT
("Agreement") made and entered into as of this 26th day of
September, 1999 by and between RICHARDSON ELECTRONICS, LTD., a
Delaware corporation with its principal place of business
located at 40W267 Keslinger Road, LaFox, IL 60147 (the
"Employer"), and Murray Kennedy, an individual whose current
residence is located at 1412 Ronzheimer, St. Charles, IL 60174
(Employee").
RECITALS
WHEREAS, the Employer desires to employ Employee as its
Vice President and General Manager Industrial Power Products
Division upon the terms and conditions stated herein; and
WHEREAS, Employee desires to be so employed by the Employer
at the salary and benefits provided for
herein; and
WHEREAS, Employee acknowledges and understands that during
the course of his employment, Employee has and will become
familiar with certain confidential information of the Employer
which provides Employer with a competitive advantage in the
marketplace in which it competes, is exceptionally valuable to
the Employer, and is vital to the success of the Employer's
business; and
WHEREAS, the Employer and Employee desire to protect such
confidential information from disclosure to third parties or its
use to the detriment of the Employer; and
WHEREAS, the Employee acknowledges that the likelihood of
disclosure of such confidential information would be
substantially reduced, and that legitimate business interests of
the Employer would be protected, if Employee refrains from
competing with the Employer and from soliciting its customers
and employees during and following the term of the Agreement,
and Employee is willing to covenant that he will refrain from
such actions.
NOW THEREFORE, in consideration of the promises and of the
mutual covenants and agreements hereinafter set forth, the
parties hereto acknowledge and agree as follows:
ARTICLE ONE
NATURE AND TERM OF EMPLOYMENT
1.01 Employment. The Employer hereby agrees to employ
Employee and Employee hereby accepts employment as the
Employer's Vice President and General Manager, Industrial Power
Products Division.
1.02 Term of Employment. Employee's employment pursuant to
this Agreement shall commence on March 23, 1994 or such earlier
date as may be agreed upon by Employee and the Employer and,
subject to the other provisions of this Agreement, the term of
such employment (the "Employment Term") shall continue
indefinitely on an "at will" basis.
1.03 Duties. Employee shall perform such managerial duties
and responsibilities in connection with the Company's Industrial
Power Products Division or its successor, and such other duties
and responsibilities as may be assigned by the President/COO, or
such other person as the Employer may designate from time to
time and Employee will adhere to the policies and procedures of
the Employer, including, without limitation, its Code of
Conduct, and will follow the supervision and direction of
Employer's President/COO or such other person as the Employer
may designate from time to time in the performance of such
duties. Employee agrees to devote his full working time,
attention and energies to the diligent and satisfactory
performance of his duties hereunder and to developing and
improving the business and best interests of the Company.
Employee will use all reasonable efforts to promote and protect
the good name of the Company and will comply with all of his
obligations, undertakings, promises, covenants and agreements as
set forth in this Agreement. Employee will not, during the
Employment Term or during any period during which Employee is
receiving payments pursuant to Article 2 and/or Section 5.04,
engage in any activity which would have, or reasonably be
expected to have, an adverse affect on the Employer's
reputation, goodwill or business relationships or which would
result, or reasonably be expected to result, in economic harm to
the Employer.
ARTICLE TWO
COMPENSATION AND BENEFITS
For all services to be rendered by Employee in any capacity
hereunder (including as an officer, director, committee member
or otherwise of the Employer or any parent or subsidiary thereof
or any division of any thereof) on behalf of the Employer, the
Employer agrees to pay Employee so long as he is employed
hereunder, and the Employee agrees to accept, the compensation
set forth below.
2.01 Base Salary. During the term of Employee's employment
hereunder, the Employer shall pay to Employee an annual base
salary ("Base Salary") of One Hundred Thirty Thousand and 00/100
Dollars ($130,000.00), payable in installments as are customary
under the Employer's payroll practices from time to time. The
Employer at its sole discretion may, but is not required to,
review and adjust the Employee's Base Salary from year to year;
provided, however, that, except as may be expressly consented
otherwise in writing by Employee, Employer may not decrease
Employee's Base Salary. No additional compensation shall be
payable to Employee by reason of the number of hours worked or
by reason of hours worked on Saturdays, Sundays, holidays or
otherwise.
2.02 Incentive Plan . During the term of the Employee's
employment hereunder, the Employee shall be a participant in the
SBU Incentive Plan, as modified from time to time (the "Annual
Incentive Plan"). The Employee's "target bonus percentage" for
purposes of the Annual Incentive Plan shall be fifty percent
(50%) for calendar year 1999 (as if paid for a full year). Such
bonus shall be paid strictly in accordance with the Annual
Incentive Plan. For calendar year 2000 and thereafter,
Employee's bonus shall be determined and paid strictly in
accordance with the Annual Incentive Plan as modified or reduced
by Employer at its discretion, and for any partial fiscal year
the bonus shall be computed and paid only for the portion of the
fiscal year Employee is employed hereunder.
2.03 Other Benefits. Employer will provide Employee such
benefits (other than bonus, severance and incentive compensation
benefits) as are generally provided by the Employer to its other
employees, including but not limited to, health/major medical
insurance, dental insurance, disability insurance, life
insurance, sick days and other employee benefits (collectively
"Other Benefits"), all in accordance with the terms and
conditions of the applicable Other Benefits Plan. Nothing in
this Agreement shall require the Employer to maintain any
benefit plan nor prohibit the Employer from modifying any such
plan as it sees fit from time to time. It is only intended that
Employee shall be entitled to participate in any such plan
offered for which he may qualify under the terms of any such
plan as it may from time to time exist, in accordance with the
terms thereof.
2.04 Disability. Any compensation Employee receives under
any disability benefit plan provided by Employer during any
period of disability, injury or illness shall be in lieu of the
compensation which Employee would otherwise receive under
Article Two during such period of disability, injury or
sickness.
2.05 Withholding. All salary, bonus and other payments
described in this Agreement shall be subject to withholding for
federal, state or local taxes, amounts withheld under applicable
benefit policies or programs, and any other amounts that may be
required to be withheld by law, judicial order or otherwise.
ARTICLE THREE
CONFIDENTIAL INFORMATION
RECORDS
REPUTATION
3.01 Definition of Confidential Information. For purposes
of this Agreement, the term "Confidential Information" shall
mean all of the following materials and information (whether or
not reduced to writing and whether or not patentable) to which
Employee receives or has received access or develops or has
developed in whole or in part as a direct or indirect result of
his employment with Employer or through the use of any of
Employer's facilities or resources:
(1) Marketing techniques, practices, methods, plans,
systems, processes, purchasing information, price
lists, pricing policies, quoting procedures,
financial information, customer names, contacts and
requirements, customer information and data, product
information, supplier names, contacts and
capabilities, supplier information and data, and
other materials or information relating to the manner
in which Employer, its customers and/or suppliers do
business;
(2) Discoveries, concepts and ideas, whether patentable or
not, or copyrightable or not, including without
limitation the nature and results of research and
development activities, processes, formulas,
techniques, "know-how," designs, drawings and
specifications;
(3) Any other materials or information related to the
business or activities of Employer which are not
generally known to others engaged in similar
businesses or activities or which could not be
gathered or obtained without significant expenditure
of time, effort and money; and
(4) All inventions and ideas which are derived from or
relate to Employee's access to or knowledge of any of
the above enumerated materials and information.
The Confidential Information shall not include any materials or
information of the types specified above to the extent that such
materials or information are publicly known or generally
utilized by others engaged in the same business or activities in
the course of which Employer utilized, developed or otherwise
acquired such information or materials and which Employee has
gathered or obtained (other than on behalf of the Employer)
after termination of his employment with the Employer from such
other public sources by his own expenditure of significant time,
effort and money after termination of his employment with the
Employer. Failure to mark any of the Confidential Information as
confidential shall not affect its status as part of the
Confidential Information under the terms of this Agreement.
3.02 Ownership of Confidential Information. Employee agrees
that the Confidential Information is and shall at all times
remain the sole and exclusive property of Employer. Employee
agrees immediately to disclose to Employer all Confidential
Information developed in whole or part by him during the term of
his employment with Employer and to assign to Employer any
right, title or interest he or she may have in such Confidential
Information.
Without limiting the generality of the foregoing, every
invention, improvement, product, process, apparatus, or design
which Employee may take, make, devise or conceive, individually
or jointly with others, during the period of his employment by
the Employer, whether during business hours or otherwise, which
relates in any manner to the business of the Employer either now
or at any time during the period of his employment), or which
may be useful to the Employer in connection with its business
(hereinafter collectively referred to as "Invention") shall
belong to and be the exclusive property of the Employer and
Employee will make full and prompt disclosure to the Employer of
every Invention. Employee will assign to the Employer, or its
nominee, every Invention and Employee will execute all
assignments and other instruments or documents and do all other
things necessary and proper to confirm the Employer's right and
title in and to every Invention; and Employee will perform all
proper acts within his power necessary or desired by the
Employer to obtain letters patent in the name of the Employer
(at the Employer's expense) for every Invention in whatever
countries the Employer may desire, without payment by the
Employer to Employee of any royalty, license fee, price or
additional compensation.
3.03. Non Disclosure of Confidential Information. Except as
required in the faithful performance of Employee's duties
hereunder (or as required by law), during the term of his
employment with Employer and for a period after the termination
of such employment until the Confidential Information no longer
meets the definition set forth above of Confidential Information
with respect to Employee, Employee agrees not to directly or
indirectly reveal, report, publish, disseminate, disclose or
transfer any of the Confidential Information to any person or
entity, or utilize for himself or any other person or entity any
of the Confidential Information for any purpose (including,
without limitation, in the solicitation of existing Employer
customers or suppliers), except in the course of performing
duties assigned to him by Employer. Employee further agrees to
use his best endeavors to prevent the use for himself or others,
or dissemination, publication, revealing, reporting or
disclosure of, any Confidential Information.
3.04 Protection of Reputation. Employee agrees that he or
she will at no time, either during his employment with the
Employer or at any time after termination of such employment,
engage in conduct which injures, harms, corrupts, demeans,
defames, disparages, libels, slanders, destroys or diminishes in
any way the reputation or goodwill of the Employer, its
subsidiaries, or their respective shareholders, directors,
officers, employees, or agents, or the services provided by the
Employer or the products sold by the Employer, or its other
properties or assets, including, without limitation, its
computer systems hardware and software and its data or the
integrity and accuracy thereof.
3.05 Records and Use of Employer Facilities. All notes,
data, reference materials, memoranda and records, including,
without limitation, data on the Employer's computer system,
computer reports, products, customers and suppliers lists and
copies of invoices, in any way relating to any of the
Confidential Information or Employer's business shall belong
exclusively to Employer, and Employee agrees to maintain them in
a manner so as to secure their confidentiality and to turn over
to Employer all copies of such materials (in whole or in part)
in his possession or control at the request of Employer or, in
the absence of such a request, upon the termination of
Employee's employment with Employer. Upon termination of
Employee's employment with Employer, Employee shall immediately
refrain from seeking access to Employer's (a) telephonic voice
mail, E-mail or message systems, (b) computer system and (c)
computer data bases and software. The foregoing shall not
prohibit Employee from using Employer's public Internet (not
intranet) site.
ARTICLE FOUR
NON-COMPETE AND NON-SOLICITATION COVENANTS
4.01 Non-Competition and Non-Solicitation. Employee
acknowledges that it may be very difficult for him to avoid
using or disclosing the Confidential Information in violation of
Article Three above in the event that he or she is employed by
any person or entity other than the Employer in a capacity
similar or related to the capacity in which he or she is
employed by the Employer. Accordingly, Employee agrees that he
or she will not, during the term of employment with Employer and
for a period of one (1) year after the termination of such
employment, irrespective of the time, manner or cause of such
termination, directly or indirectly (whether or not for
compensation or profit):
(1) Engage in any business or enterprise the nature of
which is directly competitive with that of the Employer (a
"Prohibited Business"); or
(2) Participate as an officer, director, creditor,
promoter, proprietor, associate, agent, employee, partner,
consultant, sales representative or otherwise, or promote
or assist, financially or other wise, or directly or
indirectly own any interest in any person or entity
involved in any Prohibited Business; or
(3) Canvas, call upon, solicit, entice, persuade, induce,
respond to, or otherwise deal with, directly or
indirectly, any individual or entity which, during
Employee's term of employment with the Employer, was or is
a customer or supplier, or proposed customer or supplier,
of the Employer whom Employee called upon or dealt with,
or whose account Employee supervised, for the following:
(a) to purchase (with respect to customers) or sell
(with respect to suppliers) products of the types
or kinds sold by the Employer or which could be
substituted for (including, but not limited to,
rebuilt products), or which serve the same
purpose or function as, products sold by the
Employer (all of which products are herein
sometimes referred to, jointly and severally, as
"Prohibited Products"), or
(b) to request or advise any such customer or
supplier to withdraw, curtail or cancel its
business with the Employer; or
(4) For himself or for or through any other individual or
entity call upon, solicit, entice, persuade, induce
or offer any individual who, during Employee's term
of employment with the Employer, was an employee or
sales representative or distributor of the Employer,
employment by, or representation as sales agent or
distributor for, any one other than the Employer, or
request or advise any such employee or sales agent or
distributor to cease employment with or
representation of the Employer, and Employee shall
not approach, respond to, or otherwise deal with any
such employee or sales representative or distributor
of Employer for any such purpose, or authorize or
knowingly cooperate with the taking of any such
actions by any other individual or entity.
4.02 Obligation independent Each obligation of each
subparagraph and provision of Section 4.01 shall be
independent of any obligation under any other subparagraph
or provision hereof or thereof.
4.03 Public Stock Nothing in Section 4.01, however, shall
prohibit Employee from owning (directly or indirectly through a
parent, spouse, child or other relative or person living in the
same household with Employee or any of the foregoing), as a
passive investment, up to I % of the issued and outstanding
shares of any class of stock of any publicly traded company.
4.04 Business Limitation If, at the termination of
Employee's employment and for the entire period of twelve (12)
months prior thereto his duties and responsibilities are limited
by the Employer so that he or she is specifically assigned to,
or responsible for, one or more divisions, subsidiaries or
business units of the Employer, then subparagraphs (1) through
(3) of Section 4.01 shall apply only to any business which
competes with the business of such divisions, subsidiaries or
business units.
4.05 Area Limitation If at the termination of Employee's
employment and for the entire period of twelve (12) months prior
thereto he or she has responsibility for only a designated
geographic area, then subparagraphs (1) through (3) of Section
4.01 shall apply only within such area.
ARTICLE FIVE
TERMINATION
5.01 Termination of Employee for Cause. The Employer shall
have the right to terminate Employee's employment at any time
for "cause." Prior to such termination, the Employer shall
provide Employee with written notification of any and all
allegations constituting "cause" and the Employee shall be given
five (5) working days after receipt of such written notification
to respond to those allegations in writing. Upon receipt of the
Employee's response, the Employer shall meet with the Employee
to discuss the allegations. For purposes hereof, "cause" shall
mean (i) an act or acts of personal dishonesty taken by the
Employee and intended to result in personal enrichment of the
Employee, (ii) material violations by the Employee of the
Employee's obligations or duties under, or any terms of, this
Agreement, which are not remedied in a reasonable period (not to
exceed ten (10) days) after receipt of written notice thereof
from the Employer, (iii) any violation by the Employee of any of
the provisions of Articles Three, or Four, or (iv) Employee
being indicted or convicted (by trial, guilty or no contest plea
or otherwise) of (a) a felony, (b) any other crime involving
moral turpitude, or (c) any violation of law which would impair
the ability of the Employer or any affiliate to obtain any
license or authority to do any business deemed necessary or
desirable for the conduct of its actual or proposed business.
5.02 Termination of Employee Because of Employee's
Disabili1y. Injury or Illness. The Employer shall have the right
to terminate Employee's employment if Employee is unable to
perform the duties assigned to him by the Employer because of
Employee's disability, injury or illness, provided however, such
inability must have existed for a total of one hundred eighty
(180) consecutive days before such termination can be made
effective. Any compensation Employee receives under any
disability benefit plan provided by Employer during any period
of disability, injury or illness shall be in lieu of the
compensation which Employee would otherwise receive under
Article Two during such period of disability, injury or
sickness.
5.03 Termination as a Result of Employee's Death. The
obligations of the Employer to Employee pursuant to this
Agreement shall automatically terminate upon Employee's death.
5.04 Termination of Employee for any Other Reason. The
Employer shall have the right to terminate Employee's employment
at any time at will for any reason upon ten (10) days prior
written notice to Employee. If Employee's employment is
terminated by the Employer during the Employment Term for any
reason other than the reason set forth in Sections 5.01, 5.02 or
5.03 above, the Employer shall continue to pay to Employee for a
period of twelve (12) months, an amount equal to one hundred
percent (100%) of his then current Base Salary and one hundred
percent (100%) of the Bonus earned and paid during the 12 months
prior to the date of termination (if employed for less than 12
months prior to termination the Bonus earned and paid for the
period of employment shall be annualized and 50% of the
annualized amount will be paid) in installments on the same
dates as the Employer makes payroll payments under its customary
practice. In such case Employee shall not be entitled to
receive, unless otherwise required by law, any subsequent Other
Benefits.
5.05 Termination by Employee. Subject to the provisions of
Articles Three and Four above, Employee may terminate his
employment by the Employer at any time by written notice to
Employer. If Employee's employment is so terminated, the
Employer shall be obligated to continue to pay to Employee his
then current Base Salary and Other Benefits accrued up to and
including the date on which Employee's employment is so
terminated, however, Employee and the Employer acknowledge and
agree to the fullest extent permitted by law, that Employee
shall forfeit, and the Employer shall not be responsible to pay
or fund, directly or indirectly, any accrued but unpaid bonus or
award (howsoever described including the Annual Incentive Plan);
accumulated but unpaid sick leave; accumulated but unpaid
vacation time; deferred compensation; severance pay or benefits;
any and all benefits which are accrued but not vested under any
pension, profit sharing or other qualified retirement plan and
all service credits under each such plan (subject to any
reinstatement of such credits upon future reemployment with the
Employer in accordance with federal law); and right to
post-employment coverage under any health, insurance or other
welfare benefit plan, including rights arising under Title X of
COBRA or any similar federal or state law (except that
continuation coverage rights of Employee's spouse and other
dependents, if any, under such plans or laws shall be forfeited
only with their consent); or any Other Benefits, if any,
provided to Employee under any policy, program or plan of the
Employer not specifically described above, after the date of
termination to which Employee might otherwise be entitled under
this Agreement but for his resignation.
ARTICLE SIX
REMEDIES
6.01 Employee acknowledges that the restrictions contained
in this Agreement will not prevent him from obtaining such other
gainful employment he or she may desire to obtain or cause him
any undue hardship and are reasonable and necessary in order to
protect the legitimate interests of Employer and that violation
thereof would result in irreparable injury to Employer. Employee
therefor acknowledges and agrees that in the event of a breach
or threatened breach by Employee of the provisions of Article
Three or Article Four or Section 1.03, Employer shall be
entitled to an injunction restraining Employee from such breach
or threatened breach and Employee shall lose all rights to
receive any payments under Section 5.04. Nothing herein shall be
construed as prohibiting or limiting Employer from pursuing any
other remedies available to Employer for such breach or
threatened breach, the rights hereinabove mentioned being in
addition to and not in substitution of such other rights and
remedies. The period of restriction specified in Article Four
shall abate during the time of any violation thereof, and the
portion of such period remaining at the commencement of the
violation shall not begin to run until the violation is cured.
6.02 Survival. The provisions of this Article Six and of
Articles Three and Four shall survive the termination or
expiration of this Agreement.
ARTICLE SEVEN
MISCELLANEOUS
7.01 Assignment. Employee and Employer acknowledge and
agree that the covenants, terms and provisions contained in this
Agreement constitute a personal employment contract and the
rights and obligations of the parties thereunder cannot be
transferred, sold, assigned, pledged or hypothecated, excepting
that the rights and obligations of the Employer under this
Agreement may be assigned or transferred pursuant to a sale of
the business, merger, consolidation, share exchange, sale of
substantially all of the Employer's assets, or other
reorganization described in Section 368 of the Code, or through
liquidation, dissolution or otherwise, whether or not the
Employer is the continuing entity, provided that the assignee,
or transferee is the successor to all or substantially all of
the assets of the Employer and such assignee or transferee
assumes the rights and duties of the Employer, if any, as
contained in this Agreement, either contractually or as a matter
of law.
7.02 Severabili1y. Should any of Employee's obligations
under this Agreement or the application of the terms or
provisions of this Agreement to any person or circumstances, to
any extent, be found illegal, invalid or unenforceable in any
respect, such illegality, invalidity or unenforceability shall
not affect the other provisions of this Agreement, all of which
shall remain enforceable in accordance with their terms, or the
application of such terms or provisions to persons or
circumstances other than those to which it is held illegal,
invalid or unenforceable. Despite the preceding sentence, should
any of Employee's obligations under this Agreement be found
illegal, invalid or unenforceable because it is too broad with
respect to duration, geographical or other scope, or subject
matter, such obligation shall be deemed and construed to be
reduced to the maximum duration, geographical or other scope,
and subject matter allowable under applicable law.
The covenants of Employee in Articles Three and Four and each
subparagraph of Section 4.01 are of the essence of this
Agreement; they shall be construed as independent of any other
provision of this Agreement; and the existence of any claim or
cause of action of Employee against the Employer, whether
predicated on the Agreement or otherwise shall not constitute a
defense to enforcement by the Employer of any of these
covenants. The covenants of Employee shall be applicable
irrespective of whether termination of employment hereunder
shall be by the Employer or by Employee, whether voluntary or
involuntary, or whether for cause or without cause.
7.03 Notices. Any notice, request or other communication
required to be given pursuant to the provisions hereof shall be
in writing and shall be deemed to have been given when delivered
in person or three (3) days after being deposited in the United
States mail, certified or registered, postage prepaid, return
receipt requested and addressed to the party at its or his last
known addresses. The address of any party may be changed by
notice in writing to the other parties duly served in accordance
herewith.
7.04 Waiver. The waiver by the Employer or Employee of any
breach of any term or condition of this Agreement shall not be
deemed to constitute the waiver of any other breach of the same
or any other term or condition hereof. Failure by any party to
claim any breach or violation of any provision of this Agreement
shall not constitute a precedent or be construed as a waiver of
any subsequent breaches hereof.
7.05 Continuing Obligation. The obligations, duties and
liabilities of Employee pursuant to Articles Three and Four of
this Agreement are continuing, absolute and unconditional and
shall remain in full force and effect as provided herein and
survive the termination of this Agreement.
7.06 No Conflicting Obligations or Use. Employer does not
desire to acquire from Employee any secret or confidential
know-how or information which he may have acquired from others
nor does it wish to cause a breach of any non compete or similar
agreement to which Employee may be subject. Employee represents
and warrants that (i) other than for this Agreement, he is not
subject to or bound by any confidentiality agreement or non
disclosure or non compete agreement or any other agreement
having a similar intent, effect or purpose, and (ii) he is free
to use and divulge to Employer, without any obligation to or
violation of any right of others, any and all information, data,
plans, ideas, concepts, practices or techniques which he will
use, describe, demonstrate, divulge, or in any other manner make
known to Employer during the performance of services
7.07 Attorneys Fees. In the event that either party
institutes litigation against the other party for violation of
this Agreement the losing party in such litigation, after a
hearing or a trial on the merits, shall pay to the other party
the other parties' costs and expenses, including attorneys fees,
in such litigation.
7.08 Advise New Employers. During Employee's employment
with the Employer and for one (1) year thereafter, Employee will
communicate the contents of Articles Three and Four to any
individual or entity which Employee intends to be employed by,
associated with, or represent which is engaged in a business
which is competitive to the business of Employer.
7.09 Captions. The captions of Articles and Sections this
Agreement are inserted for convenience only and are not to be
construed as forming a part of this Agreement.
EMPLOYEE ACKNOWLEDGES THAT HE OR SHE HAS READ AND FULLY
UNDERSTANDS EACH AND EVERY PROVISION OF THE FOREGOING AND DOES
HEREBY ACCEPT AND AGREE TO THE SAME.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
EMPLOYEE EMPLOYER
/s/ Murray Kennedy By: /s/ Joseph Grill
Title: Senior VP, Human Resources
