Non-Compete Agreement Template (Post-Sale)

This Non-Competition and Non-Solicitation Agreement ("Agreement") is entered into as of [DATE] between:

SELLER / COVENANTOR: [SELLER FULL LEGAL NAME] ("Covenantor")
BUYER / COVENANTEE: [BUYER LEGAL NAME] ("Covenantee")

This Agreement is entered into in connection with the Asset Purchase Agreement (or Stock Purchase Agreement) dated [DATE] between the parties for the sale of [BUSINESS NAME] ("Business"), and is a condition of and material inducement to the closing of that transaction.

Covenantor acknowledges that:
(a) The Business has developed substantial goodwill, customer relationships, and proprietary information over time;
(b) Covenantor's expertise, reputation, and relationships are reflected in the Purchase Price paid by Covenantee;
(c) Without the restrictions in this Agreement, Covenantor could exploit the goodwill and relationships acquired by Covenantee, causing immediate and irreparable harm;
(d) These restrictions are reasonable and necessary to protect Covenantee's legitimate business interests and to give full effect to the purchase of the Business.

2.1 RESTRICTED ACTIVITIES. During the Restricted Period (Section 3), Covenantor shall not, directly or indirectly:

(a) Own, manage, operate, control, be employed by, provide services to, participate in, or be connected with any business that competes with the Business in the Restricted Territory;

(b) Act as a founder, officer, director, manager, employee, consultant, contractor, agent, or owner (in whole or in part) of any competing business;

(c) Use Covenantor's personal relationships with customers, vendors, or employees of the Business to benefit any competing business.

2.2 DEFINITION OF COMPETING BUSINESS. A "competing business" means any person, entity, or enterprise engaged in [DESCRIBE SPECIFIC BUSINESS ACTIVITIES — be specific, e.g., "residential HVAC installation and maintenance services," "e-commerce sales of handmade leather goods," or "bookkeeping and accounting services for small businesses"].

2.3 PASSIVE INVESTMENT EXCEPTION. Ownership of less than [2%] of the outstanding equity of a publicly traded company shall not violate this Agreement.

3.1 RESTRICTED PERIOD. [3] years from the Closing Date of the acquisition.

3.2 RESTRICTED TERRITORY. [SELECT ONE AND CUSTOMIZE]:

Option A — Geographic radius:
A [25 / 50 / 100]-mile radius from [SPECIFIC ADDRESS — typically the principal business location].

Option B — Named states/regions:
The following states: [STATE 1, STATE 2, STATE 3].

Option C — National (for online businesses):
The United States of America and its territories.

Option D — Customer-based (for relationship businesses):
Any location where the Business had active customers within the 24 months prior to the Closing Date, as identified in the customer list attached as Exhibit A.

NOTE FOR ATTORNEY: Review applicable state law before selecting territory. Overly broad territories are the most common reason non-competes are struck down or blue-penciled.

4.1 CUSTOMER NON-SOLICITATION. During the [3 / 5]-year period following closing, Covenantor shall not, directly or indirectly:

(a) Solicit, contact, or attempt to induce any customer of the Business to terminate or reduce their relationship with the Business or Covenantee;

(b) Accept business from any current customer of the Business in competition with the Business, if such contact arises from Covenantor's knowledge or relationships developed through the Business.

4.2 CUSTOMER DEFINITION. "Customers" means any person or entity that purchased products or services from the Business within the 24 months prior to the Closing Date.

5.1 EMPLOYEE NON-SOLICITATION. During the [2]-year period following closing, Covenantor shall not, directly or indirectly:

(a) Recruit, hire, solicit, or attempt to hire any employee or former employee of the Business who was employed in the 12 months prior to the Closing Date;

(b) Encourage any employee of the Business to leave their employment with Covenantee.

EXCEPTION: This restriction does not apply to general, non-targeted employment advertisements.

6.1 CONFIDENTIAL INFORMATION. Covenantor acknowledges receipt of and access to confidential business information, including customer lists, pricing data, trade secrets, financial information, supplier relationships, and proprietary processes ("Confidential Information").

6.2 NON-DISCLOSURE. Covenantor shall not, at any time following closing, directly or indirectly disclose, use, or exploit any Confidential Information, except as required by law or court order (in which case Covenantor shall provide advance written notice to Covenantee).

6.3 RETURN OF INFORMATION. Covenantor shall deliver to Covenantee at closing all Confidential Information in Covenantor's possession or control.

7.1 IRREPARABLE HARM. Covenantor acknowledges that a breach of this Agreement would cause irreparable harm to Covenantee for which monetary damages would be inadequate. Covenantee is entitled to seek injunctive relief without bond in any court of competent jurisdiction, in addition to any other legal remedies.

7.2 LIQUIDATED DAMAGES. In addition to injunctive relief, any material breach of Section 2 or 4 shall entitle Covenantee to liquidated damages of $[AMOUNT] per breach, which the parties agree is a reasonable estimate of harm, not a penalty.

7.3 TOLL OF RESTRICTED PERIOD. The Restricted Period shall be tolled (paused) during any period of breach, so that Covenantee receives the full benefit of the agreed restriction period.

7.4 ATTORNEYS' FEES. The prevailing party in any enforcement action shall be entitled to recover reasonable attorneys' fees and costs.

8.1 GOVERNING LAW. This Agreement is governed by the laws of [STATE].

8.2 SEVERABILITY / BLUE PENCILING. If any provision is found unenforceable, the court is authorized to modify it to the minimum extent necessary to make it enforceable, and the remaining provisions shall continue in full force.

8.3 CONSIDERATION. Covenantor acknowledges that this Agreement is given as material inducement to Covenantee's purchase of the Business and is supported by adequate consideration.

8.4 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof.

______________________________________
[COVENANTOR / SELLER SIGNATURE]
Date: _______________

______________________________________
[COVENANTEE / BUYER SIGNATURE]
Date: _______________