Non-Compete Agreement - Arizona

NON-COMPETE AGREEMENT

(Arizona – Comprehensive Template)

TABLE OF CONTENTS

1. I. Document Header
2. II. Definitions
3. III. Operative Provisions
4. IV. Representations & Warranties
5. V. Covenants & Restrictions
6. VI. Default & Remedies
7. VII. Risk Allocation
8. VIII. Dispute Resolution
9. IX. General Provisions
10. X. Execution Block

I. DOCUMENT HEADER

1.1 Title and Parties

This Non-Compete Agreement (this “Agreement”) is made and entered into as of [Effective Date] (the “Effective Date”) by and between [Legal Name of Employer], a [State of Formation] [type of entity] with its principal place of business at [Address] (“Employer”), and [Employee Full Legal Name], an individual residing at [Address] (“Employee”) (each, a “Party,” and collectively, the “Parties”).

1.2 Recitals

A. Employer is engaged in the business of [brief description] (the “Business”).
B. Employee is or will be employed by Employer in the position of [Position Title] and will have access to Confidential Information (as defined below) and substantial relationships with Employer’s clients, vendors, and employees.
C. Employer desires to protect its legitimate business interests and goodwill, and Employee desires to accept reasonable restrictions on competition as a condition of employment and/or continued employment.
D. Role gate. Do not use this form for an employee of a television station, television network, radio station, or radio network; A.R.S. § 23-494 bars a broadcast employer from requiring a noncompete as a condition of employment. Physician restrictions require heightened, case-specific public-policy review under Valley Medical Specialists v. Farber.

NOW, THEREFORE, in consideration of the mutual covenants herein and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the Parties agree as follows:

II. DEFINITIONS

For purposes of this Agreement, the following terms shall have the meanings set forth below. Defined terms appear throughout this Agreement in bold italics. Any term used but not defined herein shall have its plain and ordinary meaning.

1. “Affiliate” – any entity controlling, controlled by, or under common control with Employer.
2. “Competing Business” – any person or entity that, during the Restricted Period, engages in all or any material part of the Business within the Restricted Territory.
3. “Confidential Information” – information, whether or not in written form, that is proprietary to Employer or its Affiliates, including trade secrets, technical data, client lists, pricing, marketing plans, and all non-public information obtained by Employee in the course of employment.
4. “Legitimate Business Interests” – the following Employer-specific information or relationships that are identified and supported by facts: [DESCRIBE]. Ordinary competition, standing alone, is not included.
5. “Restricted Period” – the period beginning on the termination of Employee’s employment and ending [___] months later.
6. “Restricted Territory” – [SPECIFIC AREA IN WHICH EMPLOYEE MATERIALLY WORKED OR DEVELOPED PROTECTED RELATIONSHIPS].
7. “Services” – the following duties Employee materially performed during the last twelve (12) months of employment: [DESCRIBE NARROWLY]. General skill and experience are excluded.

III. OPERATIVE PROVISIONS

3.1 Consideration

Employee acknowledges and agrees that the consideration for this Agreement includes:
a. Initial Employment / Promotion / New Duties;
b. [Signing Bonus in the amount of $_____]; and
c. Access to Confidential Information and specialized training.

Arizona counsel should confirm that the selected consideration is adequate for the timing and circumstances of this Agreement.

3.2 Term of Employment

Nothing herein guarantees any minimum length of employment. Employment shall remain [at-will / as otherwise provided in separate Employment Agreement].

3.3 Condition Precedent

Execution and delivery of this Agreement is a condition precedent to Employee’s commencement or continuation of employment with Employer.

IV. REPRESENTATIONS & WARRANTIES

4.1 Mutual Authority. Each Party represents that it has full authority to enter into and perform this Agreement.

4.2 Employee Capacity. Employee represents that (i) Employee is not a party to any agreement that would conflict with or be violated by the execution of this Agreement, and (ii) Employee has not misappropriated any confidential information of a prior employer.

4.3 Employer Disclaimers. Employer makes no representation regarding the duration of Employee’s employment or any future compensation.

4.4 Survival. The representations and warranties contained in this Article IV shall survive termination of this Agreement to the fullest extent necessary to enforce the Parties’ rights.

V. COVENANTS & RESTRICTIONS

5.1 Non-Competition

Employee shall not, during the Restricted Period, within the Restricted Territory, directly or indirectly:
a. Own, manage, operate, control, or participate in the ownership, management, operation, or control of a Competing Business;
b. Perform the Services (or services substantially similar to the Services) for a Competing Business; or
c. Assist a Competing Business by performing the Services.

Passive ownership of less than [2]% of a publicly traded company is not prohibited.

5.2 Non-Solicitation of Customers

For the Restricted Period, Employee shall not solicit competitive business from a customer with whom Employee had material contact during the last twelve (12) months of employment and whose relationship or Employer-specific information supports the restriction.

5.3 Non-Solicitation of Employees

For the Restricted Period, Employee shall not, directly or indirectly, solicit or induce any employee, consultant, or contractor of Employer to terminate or lessen such person’s relationship with Employer.

5.4 Confidentiality

Employee shall at all times maintain the confidentiality of Confidential Information and shall not disclose or use Confidential Information except as necessary to perform Employee’s duties for Employer.

5.5 Return of Property

Upon termination of employment or upon Employer’s request, Employee shall promptly return all property and Confidential Information of Employer in Employee’s possession or control.

VI. DEFAULT & REMEDIES

6.1 Events of Default

Any breach by Employee of Articles V or VII shall constitute an “Event of Default.”

6.2 Notice and Cure

Upon an Event of Default, Employer shall provide written notice to Employee specifying the nature of the breach. Unless the breach involves the misappropriation of Confidential Information or competitive activity (which by its nature is not curable), Employee shall have five (5) calendar days after receipt of such notice to cure the breach.

6.3 Injunctive Relief

Employer may seek temporary, preliminary, or permanent injunctive relief upon the proof and security, if any, required by applicable law. This clause does not establish irreparable harm or waive Employee's defenses.

6.4 Cumulative Remedies

Employer may seek proven contract damages and other relief available under applicable law.

6.5 Attorneys’ Fees

In an action to enforce this Agreement, the prevailing Party may seek reasonable attorneys' fees and costs under this contractual provision to the extent permitted by applicable law.

VII. RISK ALLOCATION

7.1 No Automatic Risk Transfer

This Agreement creates no employee indemnity, uncapped-liability declaration, insurance obligation, or predetermined damages measure.

VIII. DISPUTE RESOLUTION

8.1 Governing Law

This Agreement and any dispute arising hereunder shall be governed by and construed in accordance with the laws of the State of Arizona, without regard to its conflicts-of-law principles.

8.2 Forum Selection

Subject to Section 8.3 (Arbitration), the Parties consent to the exclusive jurisdiction of the state courts located in [County, Arizona] and waive any objection to venue therein.

8.3 Arbitration (Optional)

[OPTION 1 – INCLUDE]
Any dispute (except for actions seeking injunctive relief under Section 6.3) shall be resolved by binding arbitration administered by the [American Arbitration Association] under its Employment Arbitration Rules. The arbitration shall take place in [City, Arizona] before a single arbitrator. Judgment upon the award may be entered in any court of competent jurisdiction.

[OPTION 2 – OMIT]

8.4 Jury Trial Waiver (Optional)

To the fullest extent permitted by law, the Parties knowingly, voluntarily, and irrevocably waive their right to a trial by jury in any action or proceeding arising under this Agreement.

8.5 Equitable Relief Preservation

Nothing in this Article VIII shall limit Employer’s right to seek equitable relief in a court of competent jurisdiction as provided in Section 6.3.

IX. GENERAL PROVISIONS

9.1 Amendment and Waiver

No amendment or waiver of any provision of this Agreement shall be effective unless in a writing signed by both Parties and, in the case of Employer, approved by an authorized officer. A waiver on one occasion shall not constitute a waiver on any subsequent occasion.

9.2 Assignment

This Agreement is personal to Employee and may not be assigned by Employee. Employer may freely assign this Agreement to any Affiliate or successor by operation of law or otherwise.

9.3 Successors and Assigns

This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns.

9.4 Severability; Blue-Pencil

If a grammatically severable portion of a restriction is unenforceable, the Parties request that the court disregard only that severable language to the extent Arizona law permits. The court is not authorized or requested to add terms or rewrite a restriction. See Valley Medical Specialists v. Farber, 194 Ariz. 363, 982 P.2d 1277 (1999). The remaining lawful provisions continue only to the extent they can operate without creating a new covenant.

9.5 Integration

This Agreement, together with any confidentiality or invention assignment agreement executed by Employee, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior or contemporaneous oral or written understandings.

9.6 Counterparts; Electronic Signatures

This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one instrument. Signatures transmitted via facsimile, PDF, or other electronic means shall be deemed original signatures for all purposes.

X. EXECUTION BLOCK

IN WITNESS WHEREOF, the Parties have executed this Non-Compete Agreement as of the Effective Date.

EMPLOYER
[Legal Name of Employer]

By: _______________________________
Name: _____________________________
Title: _____________________________
Date: _____________________________

EMPLOYEE

___________________________________
[Employee Full Legal Name]
Date: _____________________________

Sources and References

• Arizona Supreme Court, Valley Medical Specialists v. Farber, 194 Ariz. 363, 982 P.2d 1277 (1999): https://www.azcourts.gov/Portals/0/23/pdf1999/cv970488.pdf
• Arizona Legislature, A.R.S. § 23-494 (broadcast-employee restriction): https://www.azleg.gov/ars/23/00494.htm