Non-Compete Sample Clauses

Non-Compete. During the term of this Agreement and for a period of twelve (12) months following the Director’s removal or resignation from the Board of Directors of the Company or any of its subsidiaries or affiliates (the “Restricted Period”), the Director shall not, directly or indirectly, (i) in any manner whatsoever engage in any capacity with any business competitive with the Company’s current lines of business or any business then engaged in by the Company, any of its subsidiaries or any of its affiliates (the “Company’s Business”) for the Director’s own benefit or for the benefit of any person or entity other than the Company or any subsidiary or affiliate; or (ii) have any interest as owner, sole proprietor, stockholder, partner, lender, director, officer, manager, employee, consultant, agent or otherwise in any business competitive with the Company’s Business; provided, however, that the Director may hold, directly or indirectly, solely as an investment, not more than one percent (1%) of the outstanding securities of any person or entity which is listed on any national securities exchange or regularly traded in the over-the-counter market notwithstanding the fact that such person or entity is engaged in a business competitive with the Company’s Business. In addition, during the Restricted Period, the Director shall not develop any property for use in the Company’s Business on behalf of any person or entity other than the Company, its subsidiaries and affiliates.
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Non-Compete. Employee acknowledges and recognizes the highly competitive ----------- nature of the Company's business and that Employee's duties hereunder justify restricting Employee's further employment following any termination of employment. The Employee agrees that so long as the Employee is employed by the Company, and (i) for a period of [two] years following the termination of this Agreement, Employee, except when acting at the request of the Company on behalf of or for the benefit of the Company, will not induce customers, agents or other sources of distribution of the Company's business under contract or doing business with the Company to terminate, reduce, alter or divert business with or from the Company, and (ii) for a period of one year following the termination of this Agreement, Employee shall not, directly or indirectly, either as a principal, agent, employee, employer, consultant, partner, member or manager of a limited liability company, shareholder of a company that does not have securities registered under the Securities Exchange Act of 1934, as amended (the "1934 Act"), or shareholder in excess of one percent of a company that has securities registered under the 1934 Act, corporate officer or director, or in any other individual or representative capacity, engage or otherwise participate in any manner or fashion in any business that is in competition in any manner whatsoever with the business activities of the Company, in or about any market in which the Company has, or has publicly announced a plan for doing business. Employee further covenants and agrees that the restrictive covenant set forth in this paragraph is reasonable as to duration, terms and geographical area and that the same protects the legitimate interests of the Company, imposes no undue hardship on Employee, and is not injurious to the public. The covenant set forth under (ii) above shall not apply if Employee's employment is terminated within twelve months of a Change in Control as defined in of this Agreement. Ownership by Employee, for investment purposes only, of less than one percent of any class of securities of a corporation if said securities are listed on a national securities exchange or registered under the 1934 Act shall not constitute a breach of the covenant set forth under (ii) above. It is the desire and intent of the Parties that the provisions of this paragraph be enforced to the fullest extent permissible under the laws and public policies applied in each jurisd...
Non-Compete. (check one) ☐ - There shall be no Non-Compete established in this Agreement. ☐ - During the term of employment, the Employee understands that he or she will be subject to learning proprietary information, including trade secrets, which could be applied to competitors of the employer. Therefore, in order to protect the fiduciary interests of the Employer, the Employee agrees to: (check all that apply) ☐ - Withhold from working in the following industry(ies): ☐ - Withhold from working for the following employer(s): ☐ - Withhold from working in the same industry(ies) as the Employer in the following area(s): ☐ - Other: This Non-Compete shall be in effect for ☐ Months ☐ Years following the date of Employee’s termination. This Section shall be applied to the Employee engaging, directly or indirectly, any competitive industry. This includes, but is not limited to:
See more samples of Non-Compete

Non-Compete: Everything you need to know

The non-compete agreement is used to avoid competition between two parties, typically an employee and an employer. The agreement puts a prohibition on the employee from working for or becoming a competitor for a certain period. The non-compete agreement also puts restrictions on the party (employee here) from working for a competitor in the same market or starting up another business in the same field.

The agreement, also known as a non-compete covenant, comes with a certain set of features. some key features of such an agreement are:

  • Duration: The agreement has a finite time duration till which it remains active. The agreement, in most cases, is valid till the completion of the period of employment. The agreement is a part of the Contract Act that operates in our country.
  • Legality: A non-compete agreement comes with statutory or legal backing. It is regulated by respective acts of each of the states in the US; for example, the Fla. Stat. § 542.335, Section 542.335(1)(b) provides for enforceability in Florida. The section also provides for the protection of the other party's (Employer) interests under the agreement.
  • Leave Clause: The agreement also carries a leave clause, also known as the garden leaves clause. As per it, the employer is required to pay salaries to the employees during the period of the agreement. The clause allowing for the salaries post-termination of the contract is, however, something not seen in most of such agreements generally.
  • Unilateral Obligation: The non-compete type of agreements come with a unilateral obligation. Such agreements are the ones where one party shares confidential information with the other. Thus, the obligation is on the other party to keep the promise. In this case, the obligation is on the employees to keep the agreement.
  • The Clause of Exception: Non-compete agreement, like most legal agreements, carries an exception clause. This calls for the breach of agreement on the part of the employee in certain exceptional cases. In that case, the employee would not be charged guilty for breaking the agreement.
  • Compensation Clause: The compensation clause comes into effect in case of willful default of the agreement by the 2nd party, that is, an employee. It calls the employee to reimburse the employer for the breach of contract causing the damage to the business of the employee.

Furthermore, the non-compete agreement can have additional clauses and features. However, the above-mentioned ones are the basic or core of the features that are common to all such agreements. The addition of features of more clauses and conditions is also based on the mutual understanding and agreement of the parties involved.

How It Works

Having understood the features of the non-compete agreement, it's important to know how it is put to work or what enforceability.

  • The agreement has a specified date from which it comes into effect. That date is usually the date on which both parties sign the given agreement.
  • The agreement also has a specific location that would be covered under its ambit. Say, for example, if the agreement is signed in Florida, then the obligations under the agreement may be applicable for that very region only. That is, the 2nd party or employee is free to compete in any other region.
  • Jurisdiction is another important part of the enforceability of the agreement. That is, in case of the breach of the agreement, judicial authorities of which region would be reached first by the aggrieved party. Taking the example of New York again, we would say that the jurisdiction of such an agreement would be New York County Supreme Court and other lower judicial authorities in the state.
  • The amount of compensation in case of breach of the contract to be provided by the 2nd party (Employee) is also a part of the working of the agreement. Further, it also provides for how compensation would be provided to the aggrieved party.
  • In case the agreement is signed for an employing company that is a part of a group and employs, the employment agreement does not need to be applicable for all firms. That is, the agreement can apply to the firm employing the employee in actuality and providing for the salary. It would not be applicable for the other firms of the group generally. However, as a special clause or extension, this can be made possible. Provided if both parties agree.

Read more on the implementation of non-compete clauses in US labor markets here.

Benefits of Non-Compete Agreement

The non-compete agreement comes with its own sets of benefits for party 1, that is, the employee. As by now, we have seen that it prevents the business competition for the employers by its very nature it brings in other benefits too. somese benefits include:

  • One major benefit of the agreement is that it safeguards the secrets of business to be utilized by the employer. That is, it prevents the exploitation of employers by safeguarding trade secrets.
  • Another benefit of the agreement for the employer is that it incentivizes providing specialized training to the employer as the agreement comes with an obligation period which can sync with a minimum service period post-training for the employees.
  • The agreement also prevents unfair competition, which ultimately has an effect on the consumers in the market.

Learn why companies use non-compete agreements in this article.

Drawbacks of Non-Compete Agreement

Along with its benefits (which are in favor of the employer as per the nature of the agreement), the non-compete agreement carries some drawbacks. These are mostly from the perspective of the employee. some drawbacks include:

  • One major drawback is that the agreement reduces the bargaining capacity of the employee. Further, it reduces the scope of exploration of opportunities for them.
  • The agreement kind of puts restrictions on the employee, which doesn't go well with them. An employee likes to work with free will without any restrictions. Making them sign an agreement as compulsion can be a turn-off for them. This can hinder performance as well.
  • The agreement is costly to enforce. For a firm, it might be manageable to manage the legal expenses for enforcement. However, most of the time, an employee can't manage it. Thus, it is a burden from an employee's perspective.
  • Geography, or what is called location for enforcement, is a limitation of the agreement that surely affects the employers. The agreement carries its enforceability and jurisdiction for a particular location. Thus, there is a threat to business even if the agreement's terms are not breached. This article details the enforceability of non-compete agreements in different US states.

A non-compete agreement carries its pros and cons. One set of features gives an edge to the employee while others tilt it in favor of the employer. However, the overall nature of the agreement keeps the employer's perspective in front.

More Samples of Non-Compete

Non-Compete. The Executive acknowledges that he/she has gained or will gain extensive and valuable experience and knowledge in the business conducted by the Company and has had or will have extensive contacts with the customers, suppliers, investors, and/or consultants of the Company. The Executive recognizes that it is critical to the ongoing success of the Company that it preserve its goodwill and protect its proprietary rights and its other important business interests. Accordingly, the Executive agrees that he/she will not, while employed by the Company during the Term hereof and for a period of one year thereafter (or, in the event of the Company's termination of the Executive without cause or if the Executive's employment is terminated by him/her for Good Reason (as defined herein) or by the Company within six months before or within twenty-four (24) months after a Change of Control (as defined herein), for such longer period during which the Executive is receiving compensation pursuant to the provisions of Section 8 hereof), directly or indirectly, engage in (whether as an officer, employee, consultant, director, proprietor, agent, partner or otherwise) or have an ownership interest in, or participate in the financing, operation, management or control of, any person, firm, corporation or business engaged in competition with the Company, any of its affiliates, its parent or subsidiaries in the business of manufacture or sale of printed circuit boards, backpanels, backplanes and/or box build assembly products, or in the development of technology for such businesses; provided, however, that these restrictions shall only apply to the Executive's activities post-termination of employment with persons, firms, corporations or businesses with annual gross revenues in a competing business, as defined herein, (in the aggregate with its affiliated entities) in excess of one hundred million United States dollars. It is agreed that ownership of no more than 4.9% of the outstanding voting stock of a publicly traded corporation shall not constitute a violation of this provision. In recognition of the fact that the Company's business is global, the territory to which the restrictions contained in this Section 5(a) shall apply shall be worldwide. The Company may waive the foregoing restrictions or their application in any particular circumstance and may condition any such waiver upon receipt of assurances satisfactory to the Company, from the Executive and/or others, that the Ex...
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Non-Compete. You acknowledge that due to your executive position in the Company and your knowledge of the Company’s confidential and proprietary information, your employment or affiliation with certain entities would be detrimental to the Company. You agree that, without the prior written consent of the Company, you will not represent, become employed by, consult to, advise in any manner or have any material interest in any business directly or indirectly in any Competitive Entity (as defined below). A “
Non-Compete. The Director agrees that during the Directorship Term and for a period of three (3) years thereafter, he shall not in any manner, directly or indirectly, through any person, firm or corporation, alone or as a member of a partnership or as an officer, director, stockholder, investor or employee of or consultant to any other corporation or enterprise; engage in the business of developing, marketing, selling or supporting technology to or for businesses in which the Company engages in or in which the Company has an actual intention, as evidenced by the Company’s written business plans, to engage in, within any geographic area in which the Company is then conducting such business. Nothing in this Section 6 shall prohibit the Director from being (i) a stockholder in a mutual fund or a diversified investment company or (ii) a passive owner of not more than three percent of the outstanding stock of any class of securities of a corporation, which are publicly traded, so long as the Director has no active participation in the business of such corporation.
Non-Compete. (check one) ☐ - There shall be no Non-Compete established in this Agreement. ☐ - During the term of employment, the Employee understands that he or she will be subject to learning proprietary information, including trade secrets, which could be applied to competitors of the employer. Therefore, in order to protect the fiduciary interests of the Employer, the Employee agrees to: (check all that apply) ☐ - Withhold from working in the following industry(ies): _________________________ ______________________________________________________________________ ☐ - Withhold from working for the following employer(s): _________________________ ______________________________________________________________________ ☐ - Withhold from working in the same industry(ies) as the Employer in the following area(s): ______________________________________________________________________ ☐ - Other: _____________________________________________________________ This Non-Compete shall be in effect for ____ ☐ Months ☐ Years following the date of Employee’s termination. This Section shall be applied to the Employee engaging, directly or indirectly, any competitive industry. This includes, but is not limited to: Communicating with related business owners, partners, members, officers, or agents; Being employed by or consulting any related business; Being self-employed in a related business; or Soliciting any customer, client, affiliate, vendor, or any other relationship of the Employer.
Non-Compete. For a period of two (2) years following the effective date of Termination of Employment of the Executive by any party for any reason (excluding death), including any Termination of Employment following a Change in Control under Paragraph 6 of this Agreement, the Executive will not, directly or indirectly: (1) engage in the business of banking, lending, trust operations or providing financial, property, casualty, or health insurance or investment adviser services or products anywhere in the Designated Area or (2) manage, operate, or control, or accept or hold a position as a director, officer, employee, agent or partner of or adviser or consultant to, or otherwise perform substantial services for or provide advice to, any bank or insured financial institution or other corporation or entity engaged in the business of banking, lending, trust operations or providing financial, property, casualty, or health insurance or investment adviser services and products (directly or through a subsidiary), excluding Arrow and its Affiliates (any such other bank, institution, corporation or entity, a “Financial Institution”), if, as of the effective date of such Termination of Employment, such Financial Institution has any office or branch located within the Designated Area or has immediate plans to establish any office or branch within the Designated Area. For purposes of the preceding sentence, the “Designated Area” as of any particular time will consist of all counties in the State of New York and any other state in which Arrow or any of its Affiliates maintains an office or branch through which it engages in Business or has acted to establish an office or a branch through which it will engage in Business. The provisions of this paragraph shall not prohibit Executive during such two-year period from working for a company whose principal business is providing property, casualty or health insurance, private equity investments, or serving as a securities broker if Executive is engaged solely in that business and not in the business of providing banking, lending or trust services. The term financial services means financial products associated with the business of banking, including in particular but not limited to credit cards, debit cards, checking and savings accounts, and money market funds.
Non-Compete. Executive acknowledges that during his employment relationship with, or through his involvement as a member or stockholder of, any Related Company, Executive has and will become familiar with trade secrets and other Confidential Information concerning such Related Companies, and with investment opportunities relating to their respective businesses, and that Executive’s services have been and will be of special, unique and extraordinary value to the foregoing entities. Therefore, Executive agrees that, during the Employment Period and for a period of two years thereafter (the “Noncompete Period”), he will not directly or indirectly own, manage, control, participate in, consult with, render services for, or in any other manner engage in any business, or invest in or lend money to any business (in each case, including on his own behalf or on behalf of another Person) which constitutes or is competitive with (including, without limitation, by competing for the same subscriber or customer base) any business conducted by any System owned or managed by any Related Company (as and where such Systems are operated or managed or are proposed to be operated or managed by the Related Companies during the Employment Period, or as of the end of the Employment Period if the Employment Period has then ended) (any such business, a “Competitive Business”). Nothing in this Section 8 will prohibit Executive from (i) being a passive owner of less than 5% of the outstanding stock of a corporation of any class which is publicly traded, so long as Executive has no direct or indirect participation in the business of such corporation or (ii) at any time during the portion of the Noncompete Period following the Termination Date, being employed by a Person that is engaged in any Competitive Business or investing in or lending money to any Competitive Business, provided that Executive (A) complies with Section 7 above and (B) has no direct involvement in any aspect of such Competitive Business. By initialing in the space provided below, Executive acknowledges that he has read carefully and had the opportunity to consult with legal counsel regarding the provisions of this Section 8(a). [initial].
Non-Compete. The Recipient is prohibited from engaging in the following behavior and activities: [LIST PROHIBITED ACTIVITIES / BEHAVIORS].X
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