Employee Non-Compete Agreement

(Delaware-Governed)

[// GUIDANCE: This template is drafted for use with employees whose employment is substantially connected to the State of Delaware. Confirm enforceability in any other jurisdiction in which the Employee resides, works, or where the covenant will be enforced.]

TABLE OF CONTENTS

I. Document Header
II. Definitions
III. Operative Provisions
IV. Representations & Warranties
V. Covenants & Restrictions
VI. Default & Remedies
VII. Risk Allocation
VIII. Dispute Resolution
IX. General Provisions
X. Execution Block

I. DOCUMENT HEADER

Employee Non-Compete Agreement (this “Agreement”) made and entered into as of [EFFECTIVE DATE] (the “Effective Date”), by and between [LEGAL NAME OF EMPLOYER], a [STATE & TYPE OF ENTITY] (“Employer”), and [EMPLOYEE LEGAL NAME], an individual resident of [STATE] (“Employee”). Employer and Employee are hereinafter sometimes referred to individually as a “Party” and collectively as the “Parties.”

Recitals

A. Employer is engaged in [GENERAL DESCRIPTION OF BUSINESS] (the “Business”) and has expended substantial time, money, and effort to develop goodwill, trade secrets, and confidential information.
B. Employee desires employment (or continued employment) with Employer in the position of [TITLE/POSITION] and will have access to Employer’s Confidential Information (as defined below).
C. Employer is willing to employ Employee, and Employee is willing to accept such employment, subject to the covenants, terms, and conditions set forth herein, which the Parties agree are reasonable and necessary to protect Employer’s legitimate business interests.
D. In consideration of the mutual covenants and promises herein contained, and other good and valuable consideration as specified below, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

II. DEFINITIONS

The following terms shall have the meanings set forth below and shall apply equally to the singular and plural forms. All cross-references are to Article/Section numbers of this Agreement.

1. “Affiliate” means any entity controlling, controlled by, or under common control with Employer, directly or indirectly.
2. “Cause” has the meaning assigned in Section V.2.
3. “Competing Business” means any business or enterprise that [DESCRIBE PRODUCTS/SERVICES] and operates within the Restricted Territory (defined below).
4. “Confidential Information” means all proprietary or confidential data—whether or not trade-secret-protected—of Employer or its Affiliates, including information regarding customers, suppliers, pricing, marketing, intellectual property, and business strategies, that is not generally available to the public.
5. “Garden Leave” means the paid non-working notice period, if any, described in Section III.2(c).
6. “Post-Employment Restricted Period” means [NUMBER] months following the Termination Date, subject to Section V.3(b).
7. “Restricted Territory” means [DESCRIBE GEOGRAPHIC SCOPE – e.g., “within a 50-mile radius of any office where Employee worked or over which Employee had responsibility in the 12 months preceding termination”].
8. “Termination Date” means the date Employee’s employment with Employer ends for any reason.

[// GUIDANCE: Tailor “Post-Employment Restricted Period” and “Restricted Territory” to be no broader than necessary; Delaware courts routinely strike or blue-pencil overbroad covenants.]

III. OPERATIVE PROVISIONS

1. Employment & Duties.
   a. Position. Employer hereby employs Employee as [TITLE], and Employee accepts such employment.
   b. Duties. Employee shall devote Employee’s full professional time, loyalty, and best efforts to performing the duties customarily associated with such position and any other duties assigned by Employer.

2. Consideration. As specific consideration for Employee’s obligations herein, Employer shall provide:
   a. Initial Consideration. (i) [SIGNING BONUS AMOUNT] payable within [NUMBER] days after Employee signs this Agreement; and/or (ii) the offer of employment on the terms set forth in [EMPLOYMENT AGREEMENT/OFFER LETTER], incorporated herein by reference.
   b. Continued Employment. Employer’s agreement to employ or continue to employ Employee is additional consideration for this Agreement and is expressly acknowledged as adequate under Delaware law.
   c. Garden Leave (Optional). Employer may, at its sole discretion, place Employee on Garden Leave for all or any portion of the notice period required under Section IX.2, during which Employee shall continue to receive regular base salary and benefits but shall have no work duties.

3. Conditions Precedent. Employer’s obligations are conditioned upon Employee’s execution and delivery of this Agreement on or before [DATE].

IV. REPRESENTATIONS & WARRANTIES

1. Mutual Authority. Each Party represents that it has full power and authority to enter into and perform this Agreement, and that doing so will not violate any other agreement.
2. Employee Specific. Employee represents and warrants that:
   a. Employee is not party to any agreement (written or oral) that conflicts with or would be breached by Employee’s execution or performance of this Agreement;
   b. Employee has disclosed to Employer all restrictive covenants to which Employee is bound; and
   c. Employee understands the terms, scope, and effect of this Agreement and has had the opportunity to seek independent legal counsel.
3. Survival. The representations and warranties in this Article IV shall survive the Termination Date for the duration of the Post-Employment Restricted Period.

V. COVENANTS & RESTRICTIONS

1. Confidentiality. Employee shall hold all Confidential Information in strict confidence, use it solely for Employer’s benefit, and not disclose it without Employer’s prior written consent, both during and at all times after employment.

2. Non-Competition.
   a. Covenant. During employment and the Post-Employment Restricted Period, Employee shall not, directly or indirectly, within the Restricted Territory, own, manage, operate, control, be employed by, consult with, or otherwise participate in any Competing Business.
   b. Exception. Passive ownership of up to two percent (2%) of the outstanding securities of a publicly traded entity shall not, by itself, constitute a breach of this covenant.
   c. Tolling. The Post-Employment Restricted Period shall be tolled for any period during which Employee is in breach of this Section V.2.

3. Non-Solicitation. During employment and for a period of [NUMBER] months thereafter (not to exceed the Post-Employment Restricted Period), Employee shall not:
   a. Solicit or attempt to solicit any customers or prospective customers of Employer with whom Employee had Material Contact* during the 12 months preceding the Termination Date;
   b. Solicit or recruit any employee, consultant, or contractor of Employer to terminate or reduce such person’s relationship with Employer.

*“Material Contact” means interaction between Employee and a customer or prospective customer in furtherance of Employer’s business that took place during the specified look-back period.

4. Non-Disparagement. Employee shall not, at any time, make any false or misleading statement that disparages or defames Employer, its Affiliates, or their respective officers, directors, or employees.

5. Compliance and Monitoring. Employee shall, upon reasonable notice, provide Employer with such information as Employer may reasonably request to verify Employee’s compliance with this Article V.

VI. DEFAULT & REMEDIES

1. Events of Default. The following constitute Events of Default:
   a. Employee’s breach of any covenant in Article V;
   b. Employer’s material breach of its payment obligations under Section III.2.

2. Notice & Cure.
   a. Employer Default. Employer shall have ten (10) business days after receipt of written notice from Employee specifying the breach to cure any monetary default.
   b. Employee Default. Because of the nature of the covenants, any breach by Employee shall be deemed incapable of adequate cure solely by monetary payment; however, Employee must promptly cease the violation upon written notice from Employer.

3. Graduated Remedies. In addition to any other rights or remedies available at law or in equity:
   a. Employer may seek temporary, preliminary, and/or permanent injunctive relief without posting bond (to the maximum extent permitted by law) to prevent any actual or threatened breach;
   b. Employer may recover actual damages, disgorgement of profits, and reasonable attorneys’ fees and costs;
   c. Employer may require Employee to forfeit any unpaid consideration described in Section III.2; and
   d. All time periods in Article V shall be extended by the duration of any breach.

VII. RISK ALLOCATION

1. Indemnification by Employee. Employee shall indemnify, defend, and hold harmless Employer, its Affiliates, and their respective officers, directors, and employees from and against any and all losses, damages, liabilities, claims, costs, and expenses (including reasonable attorneys’ fees) arising out of or resulting from Employee’s breach of this Agreement.

2. Limitation of Liability. The Parties expressly agree that no limitation of liability or liability cap shall apply to either Party’s obligations under this Agreement; each Party shall be liable for all direct damages arising from its own breach. Neither Party shall be liable for consequential, special, or punitive damages except where awarded in connection with a third-party claim subject to indemnification.

3. Insurance. Employer maintains commercial general liability and employment practices liability insurance; however, nothing herein shall be construed to limit Employee’s indemnification obligations under Section VII.1.

4. Force Majeure. Neither Party shall be liable for failure or delay in performance (other than payment obligations and restrictive covenants) due to acts of God, war, terrorism, civil unrest, epidemics, or governmental actions, provided that the affected Party gives prompt notice and resumes performance as soon as practicable.

VIII. DISPUTE RESOLUTION

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 Delaware, without regard to its conflict-of-laws principles.

2. Forum Selection. Each Party irrevocably submits to the exclusive jurisdiction of the state courts located in [NEW CASTLE COUNTY, DELAWARE], and waives any objection to venue or forum non conveniens with respect to any suit, action, or proceeding arising under this Agreement.

3. Optional Arbitration. [SELECT ONE]
   • [ ] The Parties agree to binding arbitration as set forth in Exhibit A.
   • [ ] The Parties do not agree to arbitration.

[// GUIDANCE: Remove Exhibit A and Section VIII.3 if arbitration will not be used.]

4. Jury Trial Waiver (Optional). [SELECT ONE]
   • [ ] EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY.
   • [ ] Jury waiver not selected.

5. Injunctive Relief Preservation. Notwithstanding any agreement to arbitrate, Employer may seek injunctive relief in any court of competent jurisdiction to enforce the covenants in Article V.

IX. GENERAL PROVISIONS

1. Amendment & Waiver. No amendment or waiver of any provision of this Agreement shall be effective unless in writing and signed by both Parties. No failure to exercise, and no delay in exercising, any right or remedy shall operate as a waiver thereof.

2. Notice. All notices shall be in writing and deemed duly given when delivered by: (i) certified U.S. mail (return receipt requested), (ii) nationally recognized overnight courier (signature required), or (iii) email with confirmed receipt, in each case addressed to the receiving Party at the address set forth below or such other address as that Party may designate.

3. Assignment. Employee may not assign Employee’s rights or delegate Employee’s obligations under this Agreement. Employer may assign this Agreement to any successor or Affiliate.

4. Severability & Reformation. If any provision is held unenforceable, such provision shall be reformed to the minimum extent necessary to render it enforceable while preserving the Parties’ intent, and the remaining provisions shall remain in full force.

5. Integration. This Agreement, together with [APPLICABLE EMPLOYMENT AGREEMENT/OFFER LETTER], constitutes the entire agreement of the Parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, and representations.

6. Counterparts; Electronic Signature. This Agreement may be executed in counterparts (including by electronic signature under the federal E-SIGN Act and the Delaware Uniform Electronic Transactions Act), each of which shall be deemed an original, all of which together shall constitute one and the same instrument.

7. Headings. Headings are for convenience only and shall not affect interpretation.

X. EXECUTION BLOCK

IN WITNESS WHEREOF, the Parties hereto have executed this Employee Non-Compete Agreement as of the Effective Date first written above.

[// GUIDANCE: Delaware does not generally require notarization for a non-compete, but notarization may enhance evidentiary weight. Add notarization blocks if desired.]

Exhibit A – Arbitration Provision (Optional)

[Only include if Section VIII.3 selects arbitration]

1. Rules. Binding arbitration shall be conducted by the American Arbitration Association under its Employment Arbitration Rules then in effect.
2. Location. Wilmington, Delaware.
3. Arbitrator Authority. The arbitrator shall have authority to award all remedies available at law or equity, except that the arbitrator may not modify or refuse to enforce Article V’s covenants except as Delaware law permits.
4. Confidentiality. The proceedings and award shall be confidential.
5. Fees and Costs. Employer shall bear the arbitrator’s fees; each Party shall bear its own attorneys’ fees, except as otherwise provided in Section VI.3.

[// GUIDANCE: Prior to issuance to Employee, confirm that (i) the Restricted Territory is tied to the employee’s actual work area, (ii) the Post-Employment Restricted Period does not exceed two years absent highly sensitive positions, and (iii) the Agreement is presented prior to (or contemporaneous with) the commencement of employment or accompanied by separate consideration if introduced mid-employment, consistent with Delaware enforceability requirements.]