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 and the general knowledge, skill, and experience Employee acquired during employment.

“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 the legitimate business interests a New Jersey covenant may protect under the Solari/Whitmyer reasonableness rule, namely Employer's trade secrets as defined by the New Jersey Trade Secrets Act (N.J.S.A. 56:15-2), Employer's confidential business information, and Employer's customer relationships, but not Employer's interest in avoiding ordinary competition or the employee's general skill and knowledge.

“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 New Jersey Trade Secrets Act, N.J.S.A. 56:15-2.

Employer and Employee acknowledge that each restrictive covenant in this agreement is intended to protect one or more of Employer's Protected Interests and to impose no restraint greater than is reasonable for that protection. New Jersey has no general non-compete statute for the ordinary workforce; enforceability is governed by the common-law reasonableness rule of Solari Industries, Inc. v. Malady, 55 N.J. 571 (1970), and Whitmyer Bros., Inc. v. Doyle, 58 N.J. 25 (1971), restated in Community Hospital Group, Inc. v. More, 183 N.J. 36 (2005), under which a post-employment restraint is given effect only where it protects the employer's legitimate interests, imposes no undue hardship on the employee, and is not injurious to the public. The recognized legitimate interests are Employer's trade secrets, confidential business information, and customer relationships (Whitmyer; Ingersoll-Rand Co. v. Ciavatta, 110 N.J. 609 (1988)); a covenant that merely suppresses ordinary competition or the employee's general skill and knowledge protects nothing the doctrine recognizes. The parties acknowledge that Employer would not provide Employee with access to these Protected Interests absent the protections in this agreement. Each covenant is intended to be reasonable in time, territory, and scope, to impose no undue hardship on Employee, and to cause no injury to the public. A post-employment covenant is scrutinized more closely than a covenant tied to the sale of a business, which is more freely enforceable as protection of the goodwill sold.

The parties acknowledge that this agreement is supported by adequate consideration. If Employee is an existing employee, the parties agree that the continuation of Employee's employment after acknowledging the covenants in this agreement is itself sufficient consideration, because New Jersey finds consideration for a post-employment restraint in either the original contract of employment or in the continuation of employment after signing (Hogan v. Bergen Brunswig Corp., 153 N.J. Super. 37 (App. Div. 1977)); no separate payment, raise, or promotion is required. If this agreement is signed at the outset of employment, the offer and commencement of employment is the consideration. Employee acknowledges having had the opportunity to consult with independent legal counsel before signing this agreement. Employee acknowledges that the restrictions in this agreement are reasonable and necessary to protect Employer's Protected Interests, and understands that adequate consideration establishes only that the covenants are supported, not that they are reasonable — each covenant must independently satisfy the Solari/Whitmyer reasonableness test on legitimate interest, undue hardship, and public interest. 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, for as long as the information remains a trade secret. Employee's obligations regarding other Confidential Information continue for the period specified in Cover Terms. Trade secrets are protected under New Jersey law, including the New Jersey Trade Secrets Act, N.J.S.A. 56:15-1 et seq., which defines a trade secret by its independent economic value derived from not being generally known and not being readily ascertainable by proper means, and by efforts that are reasonable under the circumstances to maintain its secrecy (N.J.S.A. 56:15-2). This confidentiality obligation is intended to operate alongside, and independent of, any restrictive covenant, and does not restrict Employee's use of the general knowledge, skill, and experience Employee acquired during employment.

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, including Section 7 of the National Labor Relations Act (29 U.S.C. § 157); (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. The parties intend that these return, deletion, and certification mechanics serve as part of Employer's efforts reasonable under the circumstances to maintain the secrecy of its trade secrets, as contemplated by the New Jersey Trade Secrets Act, N.J.S.A. 56:15-2.

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. As the lightest restraint in this agreement, this covenant is analyzed under the Solari/Whitmyer reasonableness rule and reaches only Covered Employees during the Restricted Period, no broader than necessary to protect Employer's workforce stability and customer relationships.

During the Restricted Period, Employee must not Solicit the business of any Covered Customer. New Jersey courts analyze this customer non-solicitation covenant under the Solari/Whitmyer reasonableness rule; it reaches only Covered Customers with whom Employee had material contact and is no broader than necessary to protect Employer's customer relationships. Tiered restrictive covenants built around actual customer relationships have been upheld as furthering legitimate business interests and complying with New Jersey public policy (ADP, LLC v. Rafferty, 923 F.3d 113 (3d Cir. 2019)). This covenant maps directly onto Employer's customer-relationship interest and, together with the confidentiality and trade-secret protections in this agreement, is often a stronger and more readily enforceable protection than a broad non-compete.

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, and because it presses harder on the undue-hardship and public-interest prongs of the Solari/Whitmyer reasonableness rule it is sized tightly to the customer relationships it protects and reaches only Covered Customers with whom Employee had material contact.

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 exists to protect Employer's Protected Interests — its trade secrets, confidential business information, and customer relationships — and not to restrain ordinary competition or the general skill and knowledge Employee acquired. Consistent with the Solari/Whitmyer reasonableness rule, the parties intend this covenant to protect Employer's legitimate interests, to impose no undue hardship on Employee, and to cause no injury to the public, with its time and territory sized to Employee's actual role and Employer's actual market. If Employer has identified specific competitors in Cover Terms under Specified Competitors, the parties intend this covenant to be understood and, if necessary, enforced as limited to those named competitors, because a restraint bound to named competitors is strong evidence that it protects an identified interest rather than suppressing competition at large. Passive Public Holdings are permitted.

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. Because this covenant restrains active roles at and material participation in a Competitive Business, it is a post-employment restraint analyzed under the Solari/Whitmyer reasonableness rule and is drawn no broader than necessary to protect Employer's Protected Interests. Passive Public Holdings are permitted.

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, including rights protected under Section 7 of the National Labor Relations Act. Consistent with the discrimination-claim concealment carve-out below, no part of this section has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment.

No provision of this agreement, including any confidentiality or non-disparagement obligation, has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment. Under N.J.S.A. 10:5-12.8(a), added by P.L.2019, c.39, such a provision is against public policy and unenforceable against a current or former employee, and the label on the clause does not control (Savage v. Township of Neptune, 257 N.J. 204 (2024)). A party that enforces or attempts to enforce a provision barred by that rule is liable for the employee's reasonable attorney fees and costs (N.J.S.A. 10:5-12.9). This carve-out is surgical: N.J.S.A. 10:5-12.8(c) expressly preserves an employer's agreement that the employee not compete and not disclose proprietary information, so the covenant suite in this agreement remains intact and only the claim-details concealment is excluded.

If Employee is a lawyer, no provision of this agreement restricts Employee's right to practice law after the relationship ends, apart from an agreement concerning benefits upon retirement. RPC 5.6 bars a lawyer from participating in offering or making a partnership or employment agreement that restricts post-termination practice rights, and that bar reaches indirect financial disincentives — such as compensation forfeitures aimed at a departing lawyer who keeps serving firm clients — not just outright bans (Jacob v. Norris, McLaughlin & Marcus, 128 N.J. 10 (1992)). The rule applies to in-house and corporate counsel practicing in New Jersey whether or not admitted in the State (N.J. Advisory Comm. on Prof'l Ethics, Op. 708 (2006)). Any covenant in this agreement is void to the extent it would operate as such a restriction on a lawyer.

If Employee is a licensed psychologist, no provision of this agreement interferes with or restricts a client's ability to see or continue to see his or her therapist of choice. N.J.A.C. 13:42-10.16 forbids a licensed psychologist from entering into any business agreement that so interferes, and the uniquely personal patient-psychologist relationship forbids restraints that might interrupt an ongoing course of treatment (Comprehensive Psychology Sys., P.C. v. Prince, 375 N.J. Super. 273 (App. Div. 2005)). This bar operates independently of the Solari/Whitmyer weighing: a covenant whose duration and territory look reasonable still fails to the extent it would cut a client off from the treating psychologist, and any such covenant in this agreement is void to that extent.

If Employee is a physician, any covenant in this agreement restraining Employee from the practice of medicine is drafted against New Jersey's heightened public-interest scrutiny for physician covenants and not as an ordinary commercial restraint. Physician covenants are not per se void, but the public-interest prong does the heavy lifting: the New Jersey Supreme Court applied the three-part test to a physician covenant and reduced its geographic reach so that enforcement would not impair the public's access to care, rather than voiding the covenant (Community Hospital Group, Inc. v. More, 183 N.J. 36 (2005)), and the trial court must determine whether the covenant protects a legitimate interest, imposes no undue hardship, and is not adverse to the public interest (Pierson v. Medical Health Centers, P.A., 183 N.J. 65 (2005)). Accordingly, any physician covenant in this agreement is intended to use a narrow radius and a short term, to preserve patient access and continuity of care, and to be enforced only to the extent it survives that heightened scrutiny under the Solari/Whitmyer reasonableness rule. There is no enacted New Jersey statute banning health-care non-competes, and this agreement does not assume any pending legislation.

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 acknowledges that a notice built on a covenant that later fails or is narrowed under the Solari/Whitmyer reasonableness analysis may expose Employer to a tortious-interference claim, and that it should keep any such disclosure factual, tied to the covenant's actual terms, and conditioned on a restraint it is prepared to defend on all three prongs.

If Employee breaches any restrictive covenant in this agreement, the Restricted Period for that covenant is tolled and extended for the period during which Employee is in actual violation of the covenant, so that the full duration of the restriction runs from the date the violation ends. New Jersey affirmatively supports breach-tied tolling: the Appellate Division enforced contractual tolling and remanded for the trial court to toll the time limitations of the covenants during the period of the defendants' violations (ADP, LLC v. Kusins, 460 N.J. Super. 368 (App. Div. 2019)). The extension is tied to a real, court-determined breach and not to the mere passage of time or the pendency of litigation: restrictive covenants are not favored, and a court refused to extend a covenant beyond its stated period absent justification (Community Hospital Group, Inc. v. More, 183 N.J. 36 (2005)). The parties do not intend an automatic, open-ended, or indefinite extension.

Employee acknowledges that a breach of this agreement may cause Employer irreparable harm for which money damages would be inadequate. Employer may seek injunctive or other equitable relief in addition to any other remedies available at law, including relief under the New Jersey Trade Secrets Act (N.J.S.A. 56:15-1 et seq.), under which actual or threatened misappropriation of a trade secret may be enjoined independent of any covenant. A court still weighs each covenant's reasonableness, prong by prong, before restraining anyone. Employer further acknowledges the asymmetric exposure created by N.J.S.A. 10:5-12.9: a party that enforces or attempts to enforce a provision concealing the details of a discrimination, retaliation, or harassment claim is liable for the employee's reasonable attorney fees and costs, so any fee-shifting the parties agree to must be read consistently with the discrimination-claim concealment carve-out above.

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, so that a court's refusal to enforce one covenant, or a court's decision to enforce a covenant only to a reasonable extent, does not affect the others.

A severability and reformation clause works with the grain of New Jersey doctrine: Solari Industries, Inc. v. Malady, 55 N.J. 571 (1970), abandoned the void-per-se rule in favor of total or partial enforcement of noncompetitive agreements to the extent reasonable under the circumstances, and curtailing an overbroad covenant's scope is the approach the New Jersey Supreme Court prescribes (ADP, LLC v. Rafferty, 923 F.3d 113 (3d Cir. 2019); ADP, LLC v. Kusins, 460 N.J. Super. 368 (App. Div. 2019), applying blue-penciling to narrow overbroad non-solicitation provisions). Partial enforcement is the norm, and Employer therefore requests reformation if any restraint in this agreement is found to be overbroad. That latitude is no license to overreach: reformation is an equitable remedy, so each restrictive covenant in this agreement is drawn as a tiered, severable, reasonable restraint sized to the Protected Interests from the start and is intended to be enforceable as written rather than in reliance on judicial revision.

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. Keeping survival stated per covenant keeps the perpetual trade-secret track and the finite covenant tracks visibly distinct, because duration is a live prong of the reasonableness weighing rather than boilerplate. 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. Assignment moves the covenant but not its enforceability: whoever ends up enforcing it must still show a legitimate interest, no undue hardship, and no public injury on the facts as they then stand.

This agreement is governed by the law listed in Cover Terms. Where New Jersey law governs, the enforceability of each restrictive covenant is determined under the common-law reasonableness rule of Solari Industries, Inc. v. Malady and Whitmyer Bros., Inc. v. Doyle and their progeny; there is no general New Jersey non-compete statute for the ordinary workforce and no statutory safe harbor, so each covenant is drafted to survive the holistic reasonableness analysis rather than to escape it. Disputes will be resolved in the courts of the Governing Law state, subject to non-waivable rights under applicable law. The parties intend that the governing-law and venue choices match where Employee actually lives and works, because a clause selecting another state means the analysis must be re-run under that state's doctrine before any of these conclusions hold.

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. 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.