Employee Restrictive Covenant Agreement

“Competitive Business” means the business activities described in Cover Terms under Competitive Business.

“Confidential Information” means non-public information relating to Employer's business, including trade secrets, customer lists, pricing, business processes, technical data, and strategic plans, but excluding information that becomes public through no fault of Employee.

“Covered Customers” means customers, vendors, referral sources, and business partners with whom Employee had material contact or for whom Employee had responsibility during the 12 months before termination of employment.

“Covered Employees” means employees with whom Employee worked or whom Employee managed during the 12 months before termination of employment.

“Passive Public Holdings” means ownership of securities of a publicly traded company representing less than five percent of any class of such company's securities, and interests in diversified mutual funds, index funds, and exchange-traded funds that may hold securities of a Competitive Business.

“Protected Interests” means Employer's protectable business interests within the meaning of Ark. Code Ann. § 4-75-101(b), including its trade secrets, intellectual property, customer lists, goodwill with customers, knowledge of its business practices, methods, profit margins, costs, other confidential business information that increases in value from not being known by a competitor, the training and education of its employees, and other valuable employer data that Employer would reasonably seek to safeguard from a competitor.

“Restricted Period” means the duration specified in Cover Terms for each covenant, beginning on the date Employee's employment with Employer ends for any reason.

“Restricted Territory” means the geographic area described in Cover Terms under Restricted Territory.

“Solicit” means to directly or indirectly contact, approach, induce, encourage, or provide Confidential Information to any person or entity for the purpose of diverting business away from Employer, but does not include responding to general advertisements or unsolicited inquiries not initiated by Employee.

“Trade Secrets” has the meaning given in the Arkansas Trade Secrets Act, Ark. Code Ann. § 4-75-601 et seq.

Employer and Employee acknowledge that each restrictive covenant in this agreement is ancillary to an employment relationship or part of an otherwise enforceable employment agreement, and, to the extent it concerns competition or competitive work, is supported by one or more of Employer's Protected Interests and is limited with respect to time and scope in a manner not greater than necessary to defend those interests, as required by Ark. Code Ann. § 4-75-101(a). Consistent with § 4-75-101(b), the Protected Interests are drawn from the statutory categories rather than from any desire merely to keep Employee from competing; the parties acknowledge that a covenant that only prohibits ordinary competition protects nothing Arkansas law recognizes. Employer would not provide Employee with access to its Protected Interests absent the protections in this agreement, and each covenant is intended to defend a genuine Protected Interest and to reach no further than that interest requires.

Employee's continued employment with Employer is sufficient consideration for the restrictive covenants in this agreement, as provided by Ark. Code Ann. § 4-75-101(g); no separate bonus, promotion, or other benefit is required. Employer has given Employee the opportunity to consult with an attorney before entering into this agreement. The parties acknowledge that the execution date matters: Ark. Code Ann. § 4-75-101 took effect on July 22, 2015 pursuant to Act 921 of 2015, and, as recognized in Box v. J.B. Hunt Transp., Inc., 2017 Ark. App. 605, an agreement executed after that date is governed by the statute, while an earlier agreement remains on the pre-Act common-law track under which a covenant must be valid as written and a court will not narrow it. Employee acknowledges that the restrictions in this agreement are reasonable and necessary to protect Employer's Protected Interests. This agreement is effective as of the Effective Date listed in Cover Terms.

Employee must treat all Confidential Information as strictly confidential. Employee must not use or disclose Confidential Information except as required to perform authorized job duties or with Employer's prior written consent. Employee's obligations regarding trade secrets continue in perpetuity. Employee's obligations regarding other Confidential Information continue for the period specified in Cover Terms. Nothing in this agreement impairs, limits, or changes either party's protections and rights under the Arkansas Trade Secrets Act, Ark. Code Ann. § 4-75-601 et seq., which Ark. Code Ann. § 4-75-101(j)(1) expressly preserves; a trade-secret claim runs on its own track with its own remedies.

Nothing in this agreement prohibits Employee from: (a) reporting possible violations of law to any government agency, including the Securities and Exchange Commission, the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, or any other federal, state, or local agency; (b) making disclosures protected under whistleblower provisions of any law; (c) discussing wages, hours, or other terms and conditions of employment as protected by applicable law; (d) testifying truthfully in legal proceedings; or (e) filing a sealed complaint in court using Confidential Information without liability. Pursuant to the Defend Trade Secrets Act (18 U.S.C. § 1833(b)), Employee may not be held criminally or civilly liable for disclosing a trade secret in confidence to a government official or attorney solely for the purpose of reporting or investigating a suspected violation of law, or in a sealed court filing.

Upon termination of employment, Employee must promptly return to Employer all documents, devices, files, credentials, and other materials containing or relating to Confidential Information. Where permitted, Employee must permanently delete electronic copies of Confidential Information from personal devices and accounts. Employee must certify compliance with this section in writing upon Employer's request.

During the Restricted Period, Employee must not Solicit, recruit, hire, or attempt to hire any Covered Employee. This restriction does not prohibit Employee from providing a professional reference upon request or from hiring a person who responds to a general advertisement not directed specifically at Employer's employees. The parties acknowledge that, under Ark. Code Ann. § 4-75-101(i), an agreement not to solicit, recruit, or hire employees does not concern competition or competitive work and is not governed by the covenant-not-to-compete statute; this covenant is instead judged under Arkansas common-law reasonableness standards and is drawn as a modest restraint valid as written.

During the Restricted Period, Employee must not Solicit the business of any Covered Customer. This covenant protects Employer's Protected Interests in its customer lists and goodwill with customers. The parties acknowledge that a customer non-solicitation covenant that concerns competitive work may be tested under Ark. Code Ann. § 4-75-101, and this covenant is therefore drawn to that standard as well: it is limited to a specific group of customers with whom Employee had material contact, which is an express reasonableness factor under § 4-75-101(c), and it reaches no further in time or scope than necessary to defend Employer's Protected Interests.

During the Restricted Period, Employee must not accept, service, or do business with any Covered Customer, regardless of whether Employee or the Covered Customer first initiated contact. This restriction is broader than non-solicitation because it applies even if the Covered Customer approaches Employee. Because it restrains competitive work with Employer's customers, this covenant is drawn to the Ark. Code Ann. § 4-75-101(a) test: it defends Employer's Protected Interests in its customer lists and goodwill, is limited to a specific group of customers under § 4-75-101(c), and reaches no further in time or scope than necessary to defend those interests.

During the Restricted Period, Employee must not engage in, be employed by, consult for, or have an active ownership interest in any Competitive Business within the Restricted Territory. This covenant is drawn to be enforceable under Ark. Code Ann. § 4-75-101(a): it is ancillary to the employment relationship, is supported by Employer's Protected Interests, and is limited with respect to time and scope in a manner not greater than necessary to defend those interests. Where Cover Terms name Specified Competitors, this covenant is limited to those entities and their businesses, an express reasonableness factor under § 4-75-101(c). The lack of a specific geographic restriction does not by itself make this covenant overbroad, provided its time and scope remain no greater than necessary under § 4-75-101(c); the Covered Customer, activity, and Competitive Business limits supply the tailoring in that event. The Restricted Period is set within the two-year post-termination window that Ark. Code Ann. § 4-75-101(d) treats as presumptively reasonable. Passive Public Holdings are permitted. Notwithstanding anything in this agreement, this covenant does not restrict, and is void to the extent it would restrict, the right of a physician to practice within the physician's scope of practice, as provided by Ark. Code Ann. § 4-75-101(k).

During the Restricted Period, Employee must not acquire or hold any active ownership interest in, serve as a director, officer, manager, or advisor to, or have material economic participation in any Competitive Business. This restriction primarily targets active or material ownership in private competitors. Passive Public Holdings are permitted. Because this covenant restrains active roles at and material participation in a Competitive Business, it concerns competitive work and is drawn to the Ark. Code Ann. § 4-75-101(a) test: it is supported by Employer's Protected Interests and is limited in time and scope no greater than necessary to defend them, with the Restricted Period set within the § 4-75-101(d) two-year presumptive window.

During the Restricted Period specified in Cover Terms for Non-Disparagement, Employee must not make statements that are intended to or reasonably likely to disparage Employer, its officers, directors, employees, products, or services. This section does not restrict Employee from making truthful statements in legal proceedings, providing truthful testimony, making disclosures to government agencies, or exercising rights protected by law.

Notwithstanding any other provision of this agreement, no restrictive covenant in this agreement restricts, or is enforceable to restrict, the right of a physician to practice within the physician's scope of practice; any such restriction is void under Ark. Code Ann. § 4-75-101(k). For this purpose, "physician" means a person authorized or licensed to practice medicine under the Arkansas Medical Practices Act, Ark. Code Ann. § 17-95-201 et seq., § 17-95-301 et seq., and § 17-95-401 et seq., and a person authorized to practice osteopathy under § 17-91-101 et seq. Obligations that do not restrict a physician's right to practice within scope — including the confidentiality, trade-secret, property-return, and non-disparagement obligations in this agreement — remain in effect.

The parties acknowledge that, under Ark. Code Ann. § 4-75-101(j)(2), and except for the physician voiding rule of § 4-75-101(k), the covenant-not-to-compete statute does not apply to a person holding a professional license under Arkansas Code Title 17, Subtitle 3. If Employee holds such a license, the statutory framework — mandatory reformation, the continued-employment consideration rule, the two-year presumption, and the statutory irreparable-harm rule — does not govern the covenants that concern competitive work, and those covenants are instead judged under Arkansas common-law standards, under which a covenant must be valid as written because a court will not narrow it (Bendinger v. Marshalltown Trowel Co., 338 Ark. 410, 994 S.W.2d 468 (1999); NanoMech, Inc. v. Suresh, 777 F.3d 1020 (8th Cir. 2015)). Each covenant in this agreement is drawn to be reasonable and valid as written for that reason.

Employee represents that performing duties for Employer and complying with this agreement does not conflict with any prior agreement, court order, or legal obligation binding on Employee. Employee must promptly disclose to Employer any potential conflict that arises during employment.

Employer may disclose the existence and terms of this agreement to any prospective employer or business associate of Employee if Employer has a reasonable belief that Employee may breach this agreement. Employee consents to this disclosure. Employer will limit any such notice to covenants that remain valid and enforceable under Arkansas law and will not assert a covenant that is void or that does not reach Employee.

If Employee breaches any restrictive covenant in this agreement, Employer may seek to have the Restricted Period for that covenant extended by one day for each day of the breach, so that the full duration of the restriction runs from the date the breach ends. The parties acknowledge that Arkansas law does not squarely validate a contractual extension-on-breach mechanism: Ark. Code Ann. § 4-75-101(e) speaks to damages, injunctive relief, and reformation without addressing contractual tolling, and the Arkansas Court of Appeals in Bud Anderson Heating & Cooling, Inc. v. Neil, 2018 Ark. App. 183, treated only a prospective injunction running past the nominal period as legally possible in the injunction posture. This provision is intended as risk allocation between the parties and not as a statement of settled Arkansas law.

Employee acknowledges that the immediate harm associated with a breach of a covenant not to compete agreement is treated as irreparable for purposes of establishing the appropriateness of a preliminary injunction under Ark. Code Ann. § 4-75-101(e), a rule the Arkansas Court of Appeals applied to a non-compete executed after 2015 in Porter's Com. Refrigeration, Inc. v. Brewer, 2024 Ark. App. 232. In a private court action, a court may award Employer damages for a breach, appropriate injunctive relief, or both, if appropriate. Other defenses and the parties' rights to monetary damages are preserved. The Arkansas covenant statute does not provide for fee-shifting, so the American Rule applies unless the parties agree otherwise in a separate writing.

If any provision of this agreement is found to be unenforceable, the remaining provisions remain in full force and effect. Each restrictive covenant in this agreement is intended to be independently enforceable.

The parties acknowledge that, under Ark. Code Ann. § 4-75-101(f), if the restrictions in a covered covenant not to compete agreement are found to be unreasonable and to impose a greater restraint than necessary to protect Employer's protectable business interest, the court shall reform the covenant to the extent necessary to make its limitations reasonable and to impose no greater restraint than necessary, and shall enforce the covenant under the reformed terms. That reformation duty needs no contractual permission. Even so, each restrictive covenant in this agreement is drawn no broader than necessary and is intended to be enforceable as written rather than in reliance on judicial revision, because the court trims only to the extent necessary — to the minimum lawful restraint the drafter could have written at the outset — and because the mandatory-reformation remedy does not reach agreements executed before Act 921 took effect on July 22, 2015 (Box v. J.B. Hunt Transp., Inc., 2017 Ark. App. 605) or workers the statute excludes, for whom the covenant must be valid as written with no narrowing (Bendinger v. Marshalltown Trowel Co.; NanoMech, Inc. v. Suresh).

Each restrictive covenant in this agreement survives the termination of Employee's employment for the Restricted Period specified in Cover Terms. Obligations under the Confidential Information and Trade Secret Protection section survive indefinitely to the extent they relate to trade secrets. All other provisions survive to the extent necessary to enforce rights that arose during employment.

Employee may not assign this agreement or any rights or obligations under it. Employer may assign this agreement to any affiliate, successor, or acquirer of all or substantially all of Employer's business or assets. This agreement is binding on and inures to the benefit of the parties and their respective heirs, successors, and permitted assigns. A successor enforcing an assigned covenant should be prepared to show that the Protected Interests the covenant defends transferred with the business.

This agreement is governed by the law listed in Cover Terms, including Ark. Code Ann. § 4-75-101 for covenants concerning competition or competitive work executed on or after July 22, 2015. Disputes will be resolved in the courts of the Governing Law state, subject to non-waivable rights under applicable law.

This agreement constitutes the entire agreement between the parties regarding its subject matter and supersedes all prior agreements, understandings, and negotiations on this subject. This agreement may be amended only in writing signed by both parties. The parties acknowledge that an amendment or restatement executed after July 22, 2015 may move a covenant onto the statutory track (Box v. J.B. Hunt Transp., Inc.). A party's failure to enforce any provision does not waive that party's right to enforce it later. This agreement may be executed in counterparts, including by electronic signature, each of which is an original.