Non-Compete. Seller, and all its parent company, sister companies, affiliates, and any direct or indirect majority owned and controlled subsidiaries or affiliates, and subsidiaries agree to forego, directly or indirectly, (i) top leasing any of the acreage currently covered by any of the Leases during the Restricted Period (as defined below), (ii) purchasing, farming-in or otherwise acquiring, directly or indirectly, during the Restricted Period (as defined below) of any oil and gas leases, oil, gas and mineral leases, working interests, production payments, net profits interests, fee mineral interests, royalty interests, overriding royalty interests, non-working and carried interests, reversionary interests, possibilities of reverter, conversion rights and options, operating rights and other interests in land, including, without limitation, any rights and interests in any unit or pooled area, and purchasing of any oil, gas and condensate xxxxx within a radius of one (1) mile from each of the Xxxxx existing as of the Closing Date or within a radius of one (1) mile from the boundaries of each of the Leases (the area described in subparts (i) and (ii) above are collectively referred to as the “Restricted Area”); and (iii) all activities related to exploration, drilling, development, production, marketing and/or selling of hydrocarbons produced from the Restricted Area for a period of one (1) year after the Closing Date (such period commencing on the Closing Date and expiring one (1) year thereafter is referred to as the “Restricted Period”) without the express written consent of Buyer. Acceptance by Buyer to particular exceptions to this clause will not constitute waiver of this clause. Seller acknowledges that the restrctions and covenants set forth herein constitute valuable consideration for Buyer’s agreement to enter into this Agreement and consummate the transactions contemplated herein, and Buyer would not have entered into this Agreement but for Seller’s agreement to the provisions of this Section 9.5. It is also agreed that in addition to any other rights or remedies that Buyer have have at law or in equity, Buyer shall have the continuing right to specific enforcement and injunctive relief, to enforce the provisions of this Section 9.5. Seller shall cause its affiliates and subsidiaries to comply with, assume and be bound by the provisions of this Section 9.5, and Seller shall be jointly and severally liable for any breach of these provisions by any of its affil...
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.
Non-Compete. The Executive agrees during the period commencing on the date hereof and ending twenty-four (24) months following the conclusion of the Term (the "Non-Compete Period"), not to, directly or indirectly (including through any affiliate), (a) compete with Company or its subsidiaries or the business of the Company or its subsidiaries as conducted on the last date of the Term (the "Business") or (b) (other than as a director, employee, agent, consultant, shareholder, member or manager of the Business or the Company) as an individual proprietor, partner, shareholder, member, equity holder, officer, director, manager, employee, consultant, independent contractor, joint venturer, investor or lender or otherwise, participate in any business or enterprise engaged anywhere in the United States in the provision of any services that are the same as, substantially similar to or competitive with the services that the Company or any of its subsidiaries was selling or providing or, to the Executive's knowledge, actively planning to sell or provide, during the twelve months preceding the end of the Term (each, a "Competing Business"), provided that this clause (b) shall not be construed to prevent the Executive from being employed by a division or a subsidiary of a Competing Business if the Executive's services to such division or subsidiary do not, in fact, compete with the Company or any of its subsidiaries. The foregoing restrictions shall not be construed to prohibit the ownership by the Executive of (i) not more than three percent (3%) of any class of equity securities of any corporation having a class of equity securities registered pursuant to the Securities Exchange Act of 1934 (a "public company") that are publicly owned and regularly traded on any national securities exchange or over-the-counter market or (ii) debt instruments of any privately owned entity, governmental entity, governmental entity, quasi-governmental entity, bond issuer or public company, if, with respect to both clauses (i) and (ii), such ownership represents a personal investment and the Executive does not either directly or indirectly in any way manage or exercise control of any such privately owned entity, governmental entity, quasi-governmental entity, bond issuer or public company, guarantee any of its financial obligations or otherwise take part in its business other than exercising the Executive's rights as a debt or equity holder, or seek to do any of the foregoing.
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. (check one)
a.) Communicating with related business owners, partners, members, officers, or agents; b.) Being employed by or consulting any related business;
c.) Being self-employed in a related business; or
d.) Soliciting any customer, client, affiliate, vendor, or any other relationship of the Employer.
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. 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. Employee hereby agrees that for a period commencing on the date hereof and ending on the Termination Date, and thereafter, through the later of (a) the period ending on the first anniversary of the Termination Date or (b) the period ending at the conclusion of the Severance Period (collectively, the “Restrictive Period”), he shall not, directly or indirectly, as employee, agent, consultant, stockholder, director, co-partner or in any other individual or representative capacity, own, operate, manage, control, engage in, invest in or participate in any manner in, act as a consultant or advisor to, render services for (alone or in association with any person, firm, corporation or entity), or otherwise assist any person or entity (other than the Company) that engages in or owns, invests in, operates, manages or controls any venture or enterprise that directly or indirectly engages or proposes to engage in any element of the Business anywhere within a 100-mile radius of the Chicago metropolitan area or within a 100-mile radius of any area (or in the event such area is a major city, the metropolitan area relating to such city) in which the Company on the Termination Date engages in any element of the Business (the “Territory”); provided, however, that nothing contained herein shall be construed to prevent Employee from investing in the stock of any competing corporation listed on a national securities exchange or traded in the over-the-counter market, but only if Employee is not involved in the business of said corporation and if Employee and his associates (as such term is defined in Regulation 14(A) promulgated under the Securities Exchange Act of 1934, as in effect on the date hereof), collectively, do not own more than an aggregate of 3% of the stock of such corporation. With respect to the Territory, Employee specifically acknowledges that the Company intends to expand the Business into and throughout the United States.
Non-Compete. During the Restricted Period, the Executive shall not (A) engage, anywhere within the Territory (as hereinafter defined), as an officer, director or in any other managerial capacity or as an owner, co-owner or other investor or creditor in or of, whether as an employee, independent contractor, consultant or advisor, in any business selling or providing any services which are sold or offered by the Company, within the territory surrounding each office or fabrication facility (each a "FACILITY") at which the Executive was employed by the Company within the three-year period immediately preceding the date of the Executive's termination of employment (for purposes of this Section 4.1, the territory surrounding a facility shall be: (1) the city, town or village in which the facility is located, (2) the county or parish in which the facility is located, (3) the counties or parishes contiguous to the county or parish in which the facility is located and (4) the area located within 100 miles of the facility, all of such locations being herein collectively called the "TERRITORY"), or (B) call on any person or entity that at the time is, or at any time within one year prior to the date of termination of the Executive's employment was, a customer of the Company, for the purpose of soliciting or selling any product or service which is then sold or offered within the Territory by the Company if the Executive has knowledge of that customer relationship; PROVIDED, HOWEVER, that nothing in this Section 4.1.1 shall prohibit the Executive from owning, directly or indirectly, solely as an investment, securities of any entity traded on any national securities exchange or over-the-counter market if the Executive is not a controlling person of, or a member of a group which controls, such entity and does not, directly or indirectly, own one percent or more of any class of securities of such entity. As used in this Section 4, the term "RESTRICTED PERIOD" means the period beginning on the Commencement Date and ending:
(i) if during the Employment Term the Executive's employment terminates as a result of (a) a termination for Cause under Section 5.2 or (b) the Executive's voluntary resignation, the fourth anniversary of the Commencement Date;
(ii) if during the Employment Term the Executive's employment terminates as a result of (a) a termination without Cause under Section 5.3 or (b) a termination for disability under Section 5.4, the expiration of the Total Severance Benefit Peri...
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 Recipient is prohibited from engaging in the following behavior and activities: [LIST PROHIBITED ACTIVITIES / BEHAVIORS].X
