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. This definition is scoped to genuinely secret or competitively sensitive information; it is not intended to reach the general knowledge, skill, and experience Employee acquired during employment or otherwise to operate as a covenant not to compete.

“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 South Carolina covenant may protect under the five-factor reasonableness test, namely Employer's Confidential Information, Employer's trade secrets as protected by the South Carolina Trade Secrets Act (S.C. Code Ann. § 39-8-30), and Employer's goodwill in its customer, vendor, referral-source, and business-partner relationships, but not Employer's interest in avoiding ordinary competition, which is not a legitimate interest an employer is entitled to enforce.

“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, and ending on its stated end date without extension.

“Restricted Territory” means the geographic area described in Cover Terms under Restricted Territory, and, as an alternative narrower restriction the parties agree is separately enforceable on its own terms, the area described in Cover Terms under Restricted Territory (Step-Down Alternative).

“Solicit” means to directly or indirectly contact, approach, induce, or encourage 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. Where this term is ambiguous, the parties intend it to be construed narrowly, consistent with South Carolina's rule that ambiguous covenant language is read against the drafter.

“Trade Secrets” means information protected as a trade secret under the South Carolina Trade Secrets Act, which endures and is protectable and enforceable until it is disclosed or discovered by proper means (S.C. Code Ann. § 39-8-30(A)).

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 necessary for that protection. South Carolina has no general non-compete statute; a covenant not to compete is a restraint of trade against public policy, disfavored and strictly construed against the employer, and enforceable only if it satisfies every factor of the conjunctive five-factor reasonableness test of Standard Register Co. v. Kerrigan, 238 S.C. 54, 119 S.E.2d 533 (1961), as restated in Team IA, Inc. v. Lucas, 395 S.C. 237, 717 S.E.2d 103 (Ct. App. 2011): the covenant will be upheld only if it is (1) necessary for the protection of the legitimate interest of the employer; (2) reasonably limited in its operation with respect to time and place; (3) not unduly harsh and oppressive in curtailing the legitimate efforts of the employee to earn a livelihood; (4) reasonable from the standpoint of sound public policy; and (5) supported by valuable consideration. Because the factors are conjunctive, a covenant that fails any single factor is unenforceable. The parties acknowledge that each covenant is meant to guard Employer's Confidential Information, trade secrets, and customer goodwill and not to eliminate ordinary competition, and that Employer would not provide Employee with access to these Protected Interests absent the protections in this agreement.

The parties acknowledge that this agreement is supported by valuable consideration, which is the fifth factor of the South Carolina reasonableness test. If this agreement is signed at the outset of employment, the offer and commencement of employment is the consideration. If, as indicated in Cover Terms under Signed After Employment Began, this agreement is entered into after Employee's employment has already begun, the parties acknowledge that continued at-will employment alone is not sufficient consideration under South Carolina law, and that the separate consideration described in Cover Terms under Separate Consideration — such as a raise, bonus, promotion, or change in status — is provided in addition to continued employment specifically in exchange for these covenants (Poole v. Incentives Unlimited, Inc., 345 S.C. 378, 548 S.E.2d 207 (2001)). Employee acknowledges having had the opportunity to consult with independent legal counsel before signing this agreement. Employee acknowledges that valuable consideration establishes only the fifth factor — that the covenants are supported — and not that they are reasonable; each covenant must independently satisfy all five factors on legitimate interest, time and place, harshness, public policy, and consideration. 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; under the South Carolina Trade Secrets Act, a trade secret endures and is protectable and enforceable until it is disclosed or discovered by proper means (S.C. Code Ann. § 39-8-30(A)). Employee's obligations regarding other Confidential Information continue only for the finite period specified in Cover Terms under Other Confidential Information Duration. The parties intend this confidentiality obligation to protect genuinely secret or competitively sensitive information and not to operate as a covenant not to compete: a nondisclosure provision with the effect of a non-compete requires a reasonable time restriction, and an untimed one violates South Carolina public policy (Fay v. Total Quality Logistics, LLC, 419 S.C. 622, 799 S.E.2d 318 (Ct. App. 2017)), while a genuine confidentiality clause is not a restraint of trade (Milliken & Co. v. Morin, 399 S.C. 23, 731 S.E.2d 288 (2012)). South Carolina also imposes on every employee a statutory duty, independent of and in addition to this agreement, to refrain from using or disclosing an employer's trade secret (S.C. Code Ann. § 39-8-30(B)). This obligation 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 making any disclosure required by law, court order, or a government investigation; 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. Because a trade secret is protected only until it is disclosed or discovered by proper means (S.C. Code Ann. § 39-8-30(A)), the parties intend these return, deletion, and certification mechanics to preserve the secrecy on which the statute's protection depends.

During the Restricted Period, Employee must not Solicit any Covered Employee to breach or terminate an employment relationship with Employer. Consistent with South Carolina law, this covenant is construed as restraining Employee from inducing Covered Employees to breach their employment relationship with Employer, and not as a blanket bar preventing Employee from ever hiring them or seeking their services where there is no interference with those relationships (Oxman v. Sherman, 239 S.C. 218, 122 S.E.2d 559 (1961)). 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, it reaches only Covered Employees during the Restricted Period, no broader than necessary to protect Employer's workforce stability and goodwill under the five-factor reasonableness test.

During the Restricted Period, Employee must not Solicit the business of any Covered Customer. This covenant reaches only Covered Customers with whom Employee had material contact during the stated look-back window and is no broader than necessary to protect Employer's goodwill in its customer relationships; a covenant so limited has withstood an overbreadth challenge under South Carolina law (Vessel Med., Inc. v. Elliott, No. 6:15-cv-00330-MGL (D.S.C. Sept. 15, 2015)). It does not reach customers Employee never serviced or contacted, because prohibiting solicitation of customers the employee never served protects no legitimate interest of the employer, and an employer is not entitled to enforce an agreement preventing ordinary competition (Fournil v. Turbeville Ins. Agency, Inc., No. 3:07-cv-03836-JFA (D.S.C. Mar. 2, 2009)). This covenant maps directly onto Employer's customer-goodwill 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. Because barring contact with customers the employee never serviced protects no legitimate interest (Fournil v. Turbeville Ins. Agency, Inc., No. 3:07-cv-03836-JFA (D.S.C. Mar. 2, 2009)), this covenant is sized tightly and reaches only Covered Customers with whom Employee had material contact during the stated look-back window, so that it stays within the harshness and legitimate-interest factors of the five-factor reasonableness test.

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 Confidential Information, trade secrets, and customer goodwill — and not to restrain ordinary competition. The parties intend this covenant to satisfy every factor of the conjunctive five-factor reasonableness test of Standard Register Co. v. Kerrigan, 238 S.C. 54, 119 S.E.2d 533 (1961), and Team IA, Inc. v. Lucas, 395 S.C. 237, 717 S.E.2d 103 (Ct. App. 2011): to be necessary for the protection of Employer's legitimate interest, reasonably limited in time and place, not unduly harsh and oppressive, reasonable from the standpoint of sound public policy, and supported by valuable consideration, with its time and territory sized to Employee's actual role and Employer's actual market. A territorial scope is unreasonable if it covers an area broader than necessary to protect Employer's legitimate interest. If Employer has identified specific competitors in Cover Terms under Specified Competitors, the parties agree this covenant is understood and enforceable as limited to those named competitors, because narrowing done in the agreement is the only narrowing this covenant will receive. Passive Public Holdings are permitted.

As separately enforceable alternative restrictions that the parties agree stand on their own terms, if the primary Restricted Period for this covenant is found overbroad the parties agree the shorter duration stated in Cover Terms under Duration (Step-Down Alternative) applies, and if the primary Restricted Territory is found overbroad the parties agree the narrower area stated in Cover Terms under Restricted Territory (Step-Down Alternative) applies. These step-down alternatives are real agreed text, not a request that a court rewrite the covenant.

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 judged under the five-factor reasonableness test 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.

If Employee is a physician, any covenant in this agreement restraining Employee from the practice of medicine is reviewed under South Carolina's ordinary five-factor reasonableness test, with patient access to care a likely pressure point on the sound-public-policy factor. South Carolina has no enacted statute banning physician non-competes as of the Effective Date; a bill that would declare physician non-compete clauses against the public policy of the State (H.4767, Physician Noncompete Contract Prohibition Act) had passed the South Carolina House and drawn a favorable Senate committee report but had not been enacted as of this drafting. This agreement states its treatment of physicians under current law and does not assume that pending legislation has passed; any physician covenant 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 the five-factor test. A physician deal signed now should be priced with the pending bill in mind rather than drafted as if it had already become law.

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, including any restrictive covenant with a former employer. 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 asserting a covenant that cannot clear the five-factor reasonableness test overstates Employer's position and may create its own interference exposure, and that it should condition any such notice on a restraint it is prepared to defend on all five factors.

The parties do not rely on tolling or extension to lengthen any Restricted Period past its stated end date. Under South Carolina law, any extension of a covenant's time period past its stated expiration would be against public policy, because it would be arbitrary and would let a court disrupt the parties' private right to contract, and no South Carolina decision endorses automatic judicial tolling during a breach (Stonhard, Inc. v. Carolina Flooring Specialists, Inc., 366 S.C. 156, 621 S.E.2d 352 (2005)). Each Restricted Period is a fixed, definite term that runs from the end of employment to its stated end date. To the extent any contractual pause-the-clock term is read into this agreement, it is intended to operate only as a separate, reasonable term tied to the actual duration of a breach, and it must still satisfy the reasonably-limited-in-time factor of the five-factor reasonableness test (Team IA, Inc. v. Lucas, 395 S.C. 237, 717 S.E.2d 103 (Ct. App. 2011)); the parties do not intend any 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 South Carolina Trade Secrets Act (S.C. Code Ann. § 39-8-30), under which the employee's statutory duty to protect trade secrets exists independent of any covenant. The parties acknowledge that any such relief presupposes a covenant that first satisfies all five reasonableness factors: an unenforceable restraint supports no injunction, because a covenant that fails any factor is unenforceable whole and receives no judicial repair.

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 does not affect the others. The parties do not ask any court to rewrite, blue-pencil, or reduce an overbroad covenant to whatever a court would find reasonable: in South Carolina the restrictions in a non-compete cannot be rewritten by a court or limited by the parties' later agreement but must stand or fall on their own terms (Poynter Investments, Inc. v. Century Builders of Piedmont, Inc., 387 S.C. 583, 694 S.E.2d 15 (2010)), and a court will not supply a missing limitation the parties never agreed to (Stonhard, Inc. v. Carolina Flooring Specialists, Inc., 366 S.C. 156, 621 S.E.2d 352 (2005)).

South Carolina courts will neither blue-pencil nor reform an overbroad covenant, and this agreement does not rely on any savings, reformation, or court-may-modify clause to cure overbreadth. An overbroad covenant fails whole: the restrictions must stand or fall on their own terms (Poynter Investments, Inc. v. Century Builders of Piedmont, Inc., 387 S.C. 583, 694 S.E.2d 15 (2010)), and a contract may not be reformed or blue-penciled to add a new term to which the parties never agreed (Stonhard, Inc. v. Carolina Flooring Specialists, Inc., 366 S.C. 156, 621 S.E.2d 352 (2005)). The only narrowing a South Carolina covenant will receive is text the parties actually wrote: an alternative, narrower restriction built into the original agreement can remain enforceable even when the primary one is overbroad (Team IA, Inc. v. Lucas, 395 S.C. 237, 717 S.E.2d 103 (Ct. App. 2011)). Accordingly, each restrictive covenant in this agreement is drawn as a self-contained, reasonable restraint sized to the Protected Interests from the start, with the step-down duration and territory alternatives in the Non-Competition section and Cover Terms provided as real agreed text that the parties intend to be separately enforceable on its own terms.

This agreement is an employment restrictive covenant agreement, and each covenant in it is judged under the strict five-factor test that applies to covenants signed as a condition of employment. If a covenant instead arises from a genuine sale of a business, it should be papered as part of the transaction — given by the seller in the purchase documents and supported by transaction consideration — rather than routed through this employment agreement, because non-compete covenants executed in conjunction with the sale of a business are scrutinized at a more relaxed level than those executed in conjunction with employment contracts (Palmetto Mortuary Transport, Inc. v. Knight Systems, Inc., 424 S.C. 444, 818 S.E.2d 724 (2018)). The relaxed sale-of-business standard does not travel to a covenant a worker signs to keep or take a job, so a sale-related covenant routed through this employment agreement risks losing the more forgiving framework.

Each restrictive covenant in this agreement survives the termination of Employee's employment for the Restricted Period specified in Cover Terms and expires on its own stated end date. Because South Carolina gives a failed covenant no judicial repair, each covenant is intended to be self-contained and to be read on its own, so that a sound non-solicit can outlive a non-compete that fails the five-factor test. Obligations under the Confidential Information and Trade Secret Protection section survive to the extent they relate to trade secrets, for as long as the information remains a trade secret. 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. The parties include this express assignment and successor language so that a buyer or successor may enforce the covenants, provided the covenants remain reasonable in its hands under the five-factor reasonableness test and the assignee actually holds the customer relationships and other Protected Interests the covenants guard.

This agreement is governed by the law listed in Cover Terms. Where South Carolina law governs, the enforceability of each restrictive covenant is determined under the common-law five-factor reasonableness test of Standard Register Co. v. Kerrigan and Team IA, Inc. v. Lucas and their progeny; there is no general South Carolina non-compete statute and no statutory safe harbor, so each covenant is drafted to survive the conjunctive 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.

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.