NON-COMPETE AND RESTRICTIVE COVENANT AGREEMENT

[// GUIDANCE: Use ONLY in the limited circumstances in which Minnesota law still permits a post-employment non-compete (e.g., sale of a business) OR for legacy agreements executed before 1 July 2023. Minn. Stat. § 181.988 (2023) renders employee/independent-contractor non-competes void unless they fall within the statute’s express exceptions. Outside those exceptions, replace Section 5 (Non-Competition Covenant) with permissible protections such as non-solicitation, confidentiality, and trade-secret covenants.]

This NON-COMPETE AND RESTRICTIVE COVENANT AGREEMENT (the “Agreement”) is entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and between:

1. [EMPLOYER LEGAL NAME], a [STATE OF INCORPORATION] [entity type] with its principal place of business at [ADDRESS] (“Employer”); and
2. [EMPLOYEE FULL LEGAL NAME], an individual residing at [ADDRESS] (“Employee”).

Employer and Employee are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

TABLE OF CONTENTS

1. Recitals
2. Definitions
3. Consideration & Commencement
4. Confidentiality
5. Non-Competition Covenant
6. Non-Solicitation & Non-Interference
7. Return of Property & Records
8. Tolling
9. Representations & Warranties
10. Defaults & Remedies
11. Indemnification
12. Dispute Resolution
13. General Provisions
14. Execution Block

1. Recitals

A. Employer is engaged in the business of [BRIEF BUSINESS DESCRIPTION] (the “Business”).
B. Employee has been offered employment in the position of [TITLE/POSITION].
C. In connection with such employment and the consideration described herein, Employee will have access to Confidential Information (as defined below) and will develop goodwill with Employer’s customers and other business relationships.
D. The Parties desire to set forth their agreement concerning protection of Employer’s legitimate business interests, subject to and consistent with Minnesota law.

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

2. Definitions

For purposes of this Agreement, the following terms shall have the meanings set forth below. Terms defined herein have the same meaning whether used in singular or plural form.

“Affiliate” means, with respect to any entity, any other entity controlling, controlled by, or under common control with such entity.

“Business” has the meaning set forth in Recital A.

“Competitive Business” means any business that, wholly or in relevant part, engages in [SPECIFY COMPETITIVE ACTIVITIES] that are the same as or substantially similar to the Business.

“Confidential Information” means all non-public, proprietary, or trade-secret information of Employer, whether disclosed orally, visually, electronically, or in writing, including but not limited to customer lists, pricing information, marketing plans, product roadmaps, software source code, methods, processes, and financial data.

“Garden Leave Compensation” means [AMOUNT OR FORMULA], payable during the Restricted Period if and to the extent required by applicable law as additional consideration.

“Independent Consideration” means consideration independent of continued employment, including but not limited to [SIGN-ON BONUS / EQUITY GRANT / PROMOTION], provided to Employee contemporaneously with Employee’s execution of this Agreement. [// GUIDANCE: Required if Employee signs after commencing employment.]

“Restricted Period” means the period beginning on the Termination Date and ending [NUMBER] months thereafter.

“Restricted Territory” means [DEFINE GEOGRAPHIC AREA—e.g., all counties in which Employee performed services or had material customer contact during the 12 months preceding the Termination Date]. [// GUIDANCE: Minnesota courts scrutinize geographic scope; tailor to actual area of competitive threat.]

“Termination Date” means the date on which Employee’s employment with Employer ends for any reason.

3. Consideration & Commencement

3.1 At-Will Employment. Employee acknowledges that employment with Employer is and shall remain “at-will.”

3.2 Consideration.
a. Pre-Employment Execution. If Employee executes this Agreement before commencing employment, the employment offer itself constitutes adequate consideration under Minnesota law.
b. Post-Employment Execution. If executed after employment has begun, Employer shall provide Independent Consideration contemporaneously with execution.
c. Garden Leave Compensation. During any Restricted Period in which the Non-Competition Covenant is enforced, Employer shall pay Employee the Garden Leave Compensation.

3.3 No Conflicts. Employee represents that the execution of this Agreement and performance of Employee’s duties do not and will not breach any agreement to which Employee is a party.

4. Confidentiality

4.1 Non-Disclosure. Employee shall hold Confidential Information in strict confidence and shall not, during or after employment, use or disclose Confidential Information except as authorized in writing by Employer.

4.2 Trade Secrets. Nothing herein is intended to limit any party’s rights or obligations under applicable trade-secret law.

4.3 Immunity Notice. Pursuant to 18 U.S.C. § 1833(b), Employee is notified that immunity from liability exists for the disclosure of a trade secret in confidence to a government official or attorney for the purpose of reporting a suspected violation of law.

5. Non-Competition Covenant

[// GUIDANCE: DELETE THIS SECTION FOR ordinary Minnesota employment agreements entered into on or after 1 July 2023 unless a statutory exception applies.]

5.1 Covenant. During the Restricted Period, Employee shall not, within the Restricted Territory, directly or indirectly:
a. engage in or render services to a Competitive Business in any capacity that is the same as or substantially similar to the position held with Employer;
b. have an ownership interest in a Competitive Business (other than ≤ 5 % of a publicly traded company); or
c. advise, consult, or assist any person or entity in activities that would violate this Section 5 if undertaken by Employee.

5.2 Reasonableness. Employee acknowledges that the duration and geographic scope of this covenant are reasonable and necessary to protect Employer’s legitimate business interests.

5.3 Carve-Out for Passive Investments. Nothing herein prohibits Employee from holding a passive investment not exceeding the ownership threshold set forth in Section 5.1(b).

5.4 Blue-Pencil/Reformation. If a court of competent jurisdiction determines that any aspect of this covenant is unenforceable, the court is authorized and directed to reform the covenant to the maximum extent permitted by law to render it enforceable.

6. Non-Solicitation & Non-Interference

6.1 Customer Non-Solicitation. During employment and for [NUMBER] months thereafter, Employee shall not solicit, divert, or appropriate, or attempt to solicit, divert, or appropriate, any customer or prospective customer of Employer with whom Employee had material contact during the 12 months preceding the Termination Date for the purpose of providing products or services competitive with those offered by Employer.

6.2 Employee/Contractor Non-Solicitation. During employment and for [NUMBER] months thereafter, Employee shall not solicit or induce any employee or contractor of Employer to terminate or reduce his or her relationship with Employer.

6.3 Non-Disparagement. Neither Party shall make any statement that is intended or reasonably likely to disparage or harm the reputation of the other Party.

7. Return of Property & Records

Upon termination of employment, or earlier upon request, Employee shall return to Employer all documents, files, devices, and other property (including all copies) belonging to Employer.

8. Tolling

If Employee violates any restrictive covenant in Sections 5 or 6, the Restricted Period shall be tolled and shall recommence upon the later of (a) the date the violation ceases or (b) the date of final judgment enforcing the covenant, in order to give Employer the full benefit of the bargained-for restriction.

9. Representations & Warranties

9.1 Employee’s Authority. Employee represents that Employee is free to enter into and fully perform this Agreement and that doing so will not breach any contract or legal duty.

9.2 Employer’s Authority. Employer represents that the signatory below is duly authorized to bind Employer to this Agreement.

9.3 Survival. The representations and warranties in this Section 9 shall survive the termination of this Agreement.

10. Defaults & Remedies

10.1 Events of Default. A breach or threatened breach of Sections 4, 5, 6, or 7 constitutes a material default.

10.2 Notice & Cure. Employer shall provide written notice of any alleged breach; Employee shall have [NUMBER] days to cure, except that no cure period applies to intentional or continuing breaches of confidentiality or restrictive covenants.

10.3 Injunctive Relief. Employee agrees that monetary damages alone are inadequate and that Employer shall be entitled to temporary, preliminary, and permanent injunctive relief, specific performance, or other equitable remedies, without the necessity of posting bond, to enforce this Agreement.

10.4 Attorneys’ Fees. In any action to enforce this Agreement, the prevailing Party shall be entitled to recover its reasonable attorneys’ fees and costs.

11. Indemnification

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

12. Dispute Resolution

12.1 Governing Law. This Agreement and any dispute arising hereunder shall be governed by and construed in accordance with the internal laws of the State of Minnesota, without regard to conflict-of-law principles.

12.2 Forum Selection. The Parties consent to exclusive jurisdiction and venue in the state courts located in [COUNTY], Minnesota.

12.3 Optional Arbitration. [ARBITRATION ELECTION BOX] ☐ The Parties agree that any dispute, claim, or controversy arising out of or relating to this Agreement shall be resolved by binding arbitration administered by [ARBITRATION ORGANIZATION] in accordance with its employment arbitration rules then in effect. Judgment on the award rendered by the arbitrator(s) may be entered in any court of competent jurisdiction.

12.4 Optional Jury Waiver. [JURY WAIVER ELECTION BOX] ☐ EACH PARTY HEREBY KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT.

12.5 Preservation of Injunctive Relief. Notwithstanding any agreement to arbitrate, either Party may seek temporary, preliminary, or permanent injunctive relief or other equitable remedies in a court of competent jurisdiction to prevent or curtail actual or threatened violations of Sections 4, 5, 6, or 7.

13. General Provisions

13.1 Amendment & Waiver. No amendment or waiver of any provision of this Agreement shall be effective unless in a writing signed by both Parties. Failure to enforce any provision shall not constitute a waiver.

13.2 Assignment. This Agreement is personal to Employee and may not be assigned by Employee. Employer may assign this Agreement to any Affiliate or successor in interest.

13.3 Severability & Reformation. If any provision of this Agreement is held unenforceable, the remaining provisions shall remain in full force, and the unenforceable provision shall be reformed to the minimum extent necessary to render it enforceable.

13.4 Integration. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous understandings.

13.5 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts (including via electronic transmission), each of which shall be deemed an original and all of which together shall constitute one instrument.

14. Execution Block

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

[// GUIDANCE: Minnesota does not generally require notarization or witnesses for employment agreements, but add if Employer policy dictates.]