A "Covenant Not to Compete" is a contractual clause where one party agrees not to enter into or start a similar profession or trade in competition against another party. This clause is typically used to protect business interests by restricting competitive actions in a specified geographic area and for a certain period after the termination of a business relationship.
Covenant Not to Compete: Twelve (12) months
Covenant not to Compete. Employee agrees that upon termination of Employee’s employment at any time, whether voluntary or involuntary, with or without notice, Employee will not, for a period 18 months from the date of such termination compete with or render services to any entity which competes with the Company as described in paragraph 8(b).
For the purposes of this Covenant not to Compete, Employee shall be considered to be competing with Hills Bank if such Employee is employed by, directly or indirectly engages in, assists, consults, or has any active interest in any financial institution, or any affiliates or successors of any financial institution in the relevant and applicable market. For purposes of this agreement, the Company’s market includes the 50 mile radius extended from any of the Company’s physical branch locations, and the term “financial institution” includes any bank, credit union, trust, or other wealth management or securities brokerage firm. The Employee’s out-of-state home office is not a “physical branch location” of the Company.
Employee understands and acknowledges that the breach or threatened breach of the Covenant not to Compete in any manner would cause irreparable harm to the Company such that money damages would be an inadequate remedy, thereby entitling the Company to injunctive relief prohibiting such competition. In the event of Employee’s breach of the Covenant not to Compete, the Company shall also be entitled to recover from Employee its reasonable attorney fees, costs, and out-of-pocket expenses incurred herewith.
Except as expressly stated, nothing in this Employment Agreement shall have the effect of modifying the terms and provisions of Employee’s employment by the Company. In particular, Employee agrees that this Covenant not to Compete shall not alter the nature of Employee’s at-will employment by the Company, nor does it guarantee any particular term of employment.
The waiver by the Company of any provision in this Covenant not to Compete shall not constitute a waiver or consent to any subsequent breach.
For purposes of the application and enforceability of this Covenant not to Compete, the parties submit to the exclusive jurisdiction of the State and Federal Courts serving Johnson County, Iowa for any action or proceeding, and waive any objection they have to such jurisdiction or the convenience of the forum. The parties also agree that the Covenant not to Compete shall be governed by Iowa law and is not intended to have any effect outside the State of Iowa.
If a court of competent jurisdiction determines the enforcement of this Covenant not to Compete to the full extent as provided herein would be unreasonable in any manner, the parties specifically agree and authorize such court to enforce the covenant to the extent the court determines that such enforcement is reasonable.
This Amended Schedule amends the Schedule of Executive Officers Who Have Executed a Post-Termination Agreement and Covenant Not to Compete that followed the form of Post-Termination Agreement and Covenant Not to Compete originally filed by Walmart Inc. (formerly Wal-Mart Stores, Inc.) as Exhibit 10(p) to its Annual Report on Form 10-K for the year ended January 31, 2011, as filed on March 30, 2011 (the "Form Agreement").
If Maryland is deemed to be the Employment Jurisdiction, then the following applies to the Participant: the covenant not to compete contained in the Retirement Rule shall not apply if the Participant earns equal to or less than $15/hour or $31,200 annually.
Low Wage Worker Protections. The parties acknowledge that some states prohibit or place limitations on the use of covenants not to compete or noncompete covenants with an employee considered to be a low wage worker based on the employee’s rate of compensation or overtime exemption status under the Fair Labor Standards Act (a “Low Wage Worker Protection” law, or “LWWP law”). It is the parties’ intent not to create any restriction that would violate any controlling state LWWP law. Where the controlling state’s law includes an LWWP law, it is the parties’ intent that this Agreement’s obligations be construed so as to fit within any applicable exclusion for duty of loyalty obligations, non-solicitation covenants, confidential information protection covenants, and intellectual property assignment agreements recognized under the LWWP law at issue, and that it not create a prohibited covenant not to compete.
If Rhode Island is deemed to be the Employment Jurisdiction, then the covenant not to compete contained in the Retirement Rule shall not apply to the Participant post-employment if the Participant is: classified as non-exempt under the FLSA; an undergraduate or graduate student in an internship or short-term employment relationship; 18 years of age or younger; or a low wage employee (defined as earning less than 250% of the federal poverty level).
If Virginia law controls, the parties agree that the covenant not to compete in the Retirement Rule and the Customer Non-solicit Condition are reasonably limited in nature and do not prohibit employment with a competing business in a non-competitive position. If the Participant resides in Virginia on the Termination Date and their average weekly earnings calculated as provided for under Code of Virginia §40.1-28.7:7 (the “Virginia Act”), are less than the average weekly wage of the Commonwealth as determined pursuant to subsection B of §65.2-500 or the Participant otherwise qualifies as a “low-wage employee” under the Virginia Act then the covenant not to compete contained in the Retirement Rule shall not apply to the Participant and nothing in the Customer Non-Solicitation Condition in Section 7(c) shall restrict the Participant from providing a service to a customer, client, or key relationship of the Travelers Group if the Participant does not initiate contact with or solicit the customer, client, or key relationship. The Participant shall not be considered a “low-wage employee” if the Participant’s earnings are derived, in whole or in predominant part, from sales commissions, incentives, or bonuses paid to the employee by the Travelers Group.
V.Covenant Not to Compete Due to the strategic, sensitive and far-reaching nature of the Associate’s position at Walmart and the Confidential Information and goodwill to which the Associate will be exposed, Associate agrees, promises, and covenants that: a)For a period of two (2) years from the date on which Associate’s employment with Walmart terminates, and regardless of the cause or reason for such termination, Associate will not directly or indirectly: i.Own, manage, operate, finance, join, control, advise, consult, render services to, have a current or future interest in, or participate in the ownership, management, operation, financing or control of, or be employed by or connected in any manner with (whether or not for compensation), any Competing Business as defined below in Section V(b) and/or any Global Competing Business as defined below in Section V(c); and/or ii.Participate in any other activity that risks the use or disclosure of Confidential Information either overtly by the Associate or inevitably through the performance of such activity by the Associate; b)For purposes of this Agreement, the term “Competing Business” shall include any general or specialty retail, grocery, wholesale membership club, e-commerce, virtual marketplace, or merchandising business, inclusive of its respective parent companies, subsidiaries and/or affiliates, that: i.(1) sells goods or merchandise at retail to consumers and/or businesses in the United States (whether through physical locations, via the internet or combined),(2) provides services to consumers and/or businesses in the United States that are the same or substantially similar to the services Walmart provides to customers and/or businesses in the United States, and/or (3) has plans to sell goods or merchandise or provide services as described in (1) or (2) above within twelve (12) months following Associate’s last day of employment with Walmart; and ii.has gross annual consolidated sales volume or revenues attributable to the activities described in Section V(b)(i) equal to or in excess of U.S. $7 billion. c)For purposes of this Agreement, the term “Global Competing Business” shall include any general or specialty retail, grocery, wholesale membership club, e-commerce, virtual marketplace, merchandising, business, inclusive of its respective parent companies, subsidiaries and/or affiliates, that, in any country or countries outside of the United States in which Walmart conducts business: i.(1) sells goods or merchandise at retail to consumers and/or businesses (whether through physical locations, via the internet or combined), (2) provides services to consumers and/or businesses that are the same or substantially similar to the services Walmart provides to customers and/or businesses, and/or (3) has plans to sell good or merchandise or provide services as described in (1) or (2) above within twelve (12) months following Associate’s last day of employment with Walmart; and ii.has gross annual consolidated sales volume or revenues attributable to the activities described in Section V(c)(i) equal to or in excess of U.S. $7 billion. d)Ownership of an investment of less than the greater of $25,000 or 1% of any class of equity or debt security of a Competing Business and/or a Global Retail Business will not be deemed ownership or participation in ownership of a Competing Business and/or a Global Retail Business for purposes of this Agreement. e)The covenant not to compete contained in this Section V shall bind Associate, and shall remain in full force and effect, regardless of whether Associate qualifies for, continues to remain eligible for, or is required to return the Transition Payments described in Section III above. Termination of the Transition Payments pursuant to Section III will not release Associate from Associate’s obligations under this Section V.
The parties also expressly agree that if any portion of the covenant not to compete set forth in Section V shall be deemed unenforceable, then the Agreement shall automatically be deemed to have been amended to incorporate such terms as will render the covenant enforceable to the maximum extent permitted by law.
You further agree for a period of 24 (twenty-four) months from July 1, 2022 not to acquire a financial interest or shares in an enterprise engaged in the Tobacco Business or to enter into a partnership with such an enterprise. The acquisition of 5% or less of shares in a publicly held corporation will not be deemed a violation of this covenant not to compete.
In case of any violation of this covenant not to compete you agree that the Company will retain, and you will forfeit your right to, the amount of CHF 500’000.-- provided for in consideration for the non-competition obligations, or if already paid, you will return such amount to the Company. In addition, the Company reserves the right to seek further damages and/or specific performance of this covenant not to compete. For avoidance of doubt, neither this document nor the covenant not to compete until June 30, 2024 covered in it are intended to change or amend anything in our Agreement dated April 28, 2020, except as expressly stipulated in this letter.
The Company previously entered into a post-termination agreement and covenant not to compete with Mr. Nicholas dated May 20, 2018 (the “Nicholas Non-Compete Agreement”). The Nicholas Non-Compete Agreement is substantially similar to the form of post termination agreement and covenant not to compete that is attached as Exhibit 10(g) to the Company’s Form 10-K filed on March 28, 2019. The Nicholas Non-Compete Agreement prohibits Mr. Nicholas, for a period of two years following termination of employment with the Company for any reason, from participating in a business that competes with the Company and from soliciting certain of the Company’s associates for employment. The Nicholas Non-Compete Agreement also provides that, if Mr. Nicholas’s employment is terminated by the Company for any reason other than for a violation of the Company’s policies, the Company will continue to pay his base salary for two years following termination of employment.
Covenant Not to Compete. (i) For a period of either (X) two (2) years from the date of the termination of his employment with the Company for any reason other than a voluntary termination by the Executive for Good Reason, as defined in Section 10(a), or (Y) twelve (12) months from the date of voluntary termination by the Executive for Good Reason, as defined in Section 10(a), the Executive shall not, directly or indirectly, for the Executive’s own benefit or for, with or through any other individual, firm, corporation, partnership or other entity, whether acting in an individual, fiduciary or other capacity (collectively a “Person”), own, manage, operate, control, advise, invest in (except as a four percent (4%) or less shareholder of a publicly held company), loan money to, or participate or assist in the ownership, management, operation or control of or be associated as a director, officer, employee, partner, consultant, advisor, creditor, agent, independent contractor or otherwise with, or acquiesce in the use of the Executive’s name by, any Person, within any state in the United States of America or similar political subdivision of any other country in which the Company conducts business in at the time of termination of the Executive, that is in direct competition with the Company, and shall not solicit any employee or customer of the Company in connection with the business of any other Person. The foregoing restrictions on solicitation shall not preclude solicitations through the use of general advertising (such as web postings or advertisements in publications) or search firms, employment agencies or similar entities not specifically directed at the Company. For the avoidance of doubt, the parties acknowledge that notwithstanding anything to the contrary herein Scuba Select LLC, Givens Group Solutions LLC, The Givens Group LLC, and Vialytix LLC are not competitors of the Company. Executive represents that Scuba Select LLC, Givens Group Solutions LLC, The Givens Group LLC, and Vialytix shall adhere to the terms of this 13 (b) (i) Covenant Not to Compete.
Condition on Covenant Not to Compete. If the Executive’s employment with the Company is terminated for any reason other than by the Company for Cause and (X) the Executive is not in default of his obligations under Section 13 hereof and (Y) the Executive has not unreasonably refused to return an executed Release Agreement to the Company; then the Executive shall have the right to be released from the Covenant Not to Compete if the Company fails to render to the Executive two (2) consecutive termination payments, as provided herein. Before the Executive can be released from the Covenant Not to Compete, the Executive must provide written notice to the Company, in the manner described in Section 19, providing ten (10) days for the Company to render the past due termination payments to the Executive. If after ten (10) days the Company still has not paid the required termination payments to the Executive, then the Executive shall be released from the Covenant Not to Compete. Further, if the Executive is released from the Covenant Not to Compete, the Company shall not be relieved from its obligation to pay to the Executive the full Termination Payment Amount or Change of Control Termination Payment Amount, as provided herein.
A Covenant Not to Compete, also known as a non-compete agreement, is a clause in a contract where one party agrees not to enter into or start a similar profession or trade that competes against another party. This agreement essentially restricts one party (usually an employee or a seller of a business) from becoming a direct competitor to the other party (usually an employer or a buyer).
These covenants are designed to protect legitimate business interests such as trade secrets, confidential information, and the goodwill associated with a business. Their enforceability can vary significantly depending on jurisdiction, with some regions imposing strict limitations on their use.
A Covenant Not to Compete should be used when:
Hiring Employees: To prevent employees from joining a competitor immediately after leaving your company, especially if they have access to confidential information or sensitive data.
Selling a Business: To ensure the seller doesn’t start a new, competing business immediately after the sale, which could undermine the value of the business sold to the buyer.
Partnership Dissolution: When partners or co-owners part ways, it may be crucial to restrict former partners from competing against the partnership business.
In Contractor Agreements: To prevent contractors with critical insights from using the knowledge gained to compete directly against the company.
When drafting a Covenant Not to Compete, consider the following key elements:
Scope of Activity Restricted: Clearly define the types of activities or services that are prohibited.
Geographical Limitations: Specify where the restrictions apply geographically. This could be regional, national, or even international depending on the business’s scope.
Duration of the Covenant: Set a reasonable time period during which the restriction will remain in effect. Legal standards can vary by jurisdiction, but typically, shorter durations are more likely to be enforced.
Consideration: Confirm that both parties receive something of value in return for their compliance with the covenant. This is often continued employment or a portion of the sale price of a business.
Purpose and Reasonableness: The covenant should be reasonable and necessary to protect legitimate business interests without imposing undue hardship on the restricted party.
Legal Compliance: Ensure that the agreement complies with local laws to improve its enforceability.
Example: “The Employee agrees that, for a period of 12 months following the termination of their employment, they will not engage in any competing business within a radius of 50 miles of the company’s headquarters.”
Covenants Not to Compete are commonly found in:
Employment Contracts: Especially for employees in strategic, executive, or technical positions with access to sensitive business information.
Business Sale Agreements: Agreements involving the sale of a business or its assets often contain non-compete clauses to protect the buyer’s interests.
Partnership Agreements: To prevent former partners from engaging in competitive businesses within a certain period after the partnership ends.
Franchise Agreements: To prevent franchisees from operating similar businesses that could compete with other franchisees.
Each of these agreements uses a Covenant Not to Compete to safeguard proprietary information and maintain competitive advantage in the marketplace.
Dive deeper into the world of clauses and learn more about these other clauses that are used in real contracts.
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A CPI (Consumer Price Index) escalation clause allows for the adjustment of payments or costs in a contract based on changes in the Consumer Price Index, reflecting inflation or deflation trends. It ensures that the purchasing power of the agreed payments remains stable over the term of the contract by aligning them with current economic conditions.
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