# Employee Restrictive Covenant Agreement

## Cover Terms

The terms below are incorporated into and form part of this agreement.

Employer
: {employer_name}

Employee
: {employee_name}

Employee Title / Position
: {employee_title}

Effective Date
: {effective_date}

Governing Law
: {governing_law}

Confidentiality

Trade Secrets Duration
: {confidentiality_trade_secret_duration}

Other Confidential Information Duration
: {confidentiality_other_duration}

Employee Non-Solicitation

Duration
: {employee_nonsolicit_duration}

Covered Employee Period
: {covered_employee_period}

Customer Non-Solicitation

Duration
: {customer_nonsolicit_duration}

Covered Customer Period
: {covered_customer_period}

Non-Competition

Duration
: {noncompete_duration}

Restricted Territory
: {territory}

Competitive Business
: {competitive_business_definition}

Specified Competitors
: {specified_competitors}

Non-Investment

Duration
: {noninvestment_duration}

Passive Public Holdings Threshold
: {passive_public_holdings_threshold}

Non-Disparagement

Duration
: {nondisparagement_duration}

## Standard Terms

### Defined Terms

[[Competitive Business]] means the same business or profession as that of Employer, 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 existing customers of Employer with whom Employee had material contact or for whom Employee had responsibility during the {covered_customer_period} before termination of the agreement. This definition does not reach prospective customers, former customers, or an entire market.

[[Covered Employees]] means employees with whom Employee worked or whom Employee managed during the {covered_employee_period} before termination of the agreement.

[[Passive Public Holdings]] means ownership of securities of a publicly traded company representing less than {passive_public_holdings_threshold} 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 legitimate interests in its Confidential Information and trade secrets, its relationships with its existing customers, and its goodwill. The parties acknowledge that, under SDCL chapter 53-9, whether a covenant is enforceable turns on statutory fit rather than on a free-floating reasonableness test.

[[Restricted Period]] means the duration specified in Cover Terms for each covenant, beginning on the date of termination of the agreement and, for the non-competition and customer non-solicitation covenants, not exceeding two years from that date as required by SDCL 53-9-11.

[[Restricted Territory]] means the specified county, first- or second-class municipality, or other specified area described in Cover Terms under Restricted Territory in which Employer continues to carry on a like business.

[[Solicit]] means to directly or indirectly contact, approach, induce, or encourage any person or entity for the purpose of diverting business away from Employer. Soliciting is affirmative outreach; it does not include accepting, servicing, or selling to a Covered Customer who initiates contact without solicitation by Employee, and it does not include responding to general advertisements or unsolicited inquiries not initiated by Employee.

[[Trade Secrets]] has the meaning given in the South Dakota Uniform Trade Secrets Act, SDCL 37-29-1.

### Recitals and Statutory Basis

Employer and Employee acknowledge that each restrictive covenant in this agreement is intended to fit within an exception to SDCL 53-9-8, which voids any contract restraining the exercise of a lawful profession, trade, or business to that extent except as provided by SDCL 53-9-9 to 53-9-12. The non-competition and customer non-solicitation covenants rely on the employee exception in SDCL 53-9-11, which permits an agreement not to engage in the same business or profession as that of Employer and not to solicit existing customers of Employer, within a specified county, first- or second-class municipality, or other specified area, for a period not exceeding two years from the date of termination of the agreement, while Employer continues to carry on a like business therein. The parties acknowledge that these exceptions are construed narrowly to promote the proscription against general restraints on trade (American Rim & Brake, Inc. v. Zoellner, 382 N.W.2d 421 (S.D. 1986)), and each covenant is drawn to protect Employer's Protected Interests and no broader than the applicable exception permits.

### Timing, Consideration, and Acknowledgements

SDCL 53-9-11 permits Employee to agree to these covenants at the time of employment or at any time during employment, and Employee acknowledges receiving adequate consideration for them, including employment or continued employment, compensation, and access to Employer's Confidential Information. Employee acknowledges having had the opportunity to consult an attorney before signing. Employee further acknowledges that if Employee's employment ends through no fault of Employee, a South Dakota court may take that circumstance into account in reviewing the reasonableness of these covenants (Central Monitoring Serv., Inc. v. Zakinski, 1996 S.D. 116, 553 N.W.2d 513). This agreement is effective as of the Effective Date listed in Cover Terms, which is also the date from which the statutory two-year ceiling and, for a covered practitioner, the July 1, 2023 threshold in SDCL 53-9-11.2 are measured.

### Confidential Information and Trade Secret Protection

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, and are enforced only to the extent reasonably necessary to protect Employer's interest in Confidential Information (1st American Systems, Inc. v. Rezatto, 311 N.W.2d 51 (S.D. 1981)). Trade secrets are protected under the South Dakota Uniform Trade Secrets Act, SDCL 37-29-1 et seq., which supplies its own remedies — including a three-year limitations period (SDCL 37-29-6) and attorney-fee shifting for bad-faith claims, bad-faith injunction motions, and willful and malicious misappropriation (SDCL 37-29-4) — that operate independently of any covenant in this agreement.

### Permitted Disclosures and Protected Conduct

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 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.

### Return, Deletion, and Certification of Company Property

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.

### Non-Solicitation of Employees

During the Restricted Period specified in Cover Terms for Employee Non-Solicitation, 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 no South Dakota statute or staged decision squarely addresses a worker's own no-recruit promise, and this covenant is drawn narrowly for that reason.

### Non-Solicitation of Existing Customers

During the Restricted Period specified in Cover Terms for Customer Non-Solicitation, Employee must not Solicit any Covered Customer within the Restricted Territory while Employer continues to carry on a like business therein. This covenant is limited to affirmative solicitation of Employer's existing customers, as SDCL 53-9-11 permits, and does not prohibit Employee from accepting, servicing, or selling to a customer who seeks out Employee without solicitation — an agreement not to solicit is not an agreement not to sell (Farm Bureau Life Ins. Co. v. Dolly, 2018 S.D. 28, 910 N.W.2d 196), and no statutory exception permits an agreement not to accept unsolicited business (Miller v. Honkamp Krueger Fin. Servs., Inc., 9 F.4th 1011 (8th Cir. 2021)). The Restricted Period for this covenant does not exceed two years from the date of termination of the agreement.

### Non-Competition

During the Restricted Period specified in Cover Terms for Non-Competition, Employee must not engage, directly or indirectly, in the same business or profession as that of Employer — that is, in any Competitive Business — within the Restricted Territory, while Employer continues to carry on a like business therein. This covenant relies on the employee exception in SDCL 53-9-11; its duration does not exceed two years from the date of termination of the agreement, its territory is confined to the specified county, first- or second-class municipality, or other specified area named in Cover Terms, and it operates only while Employer carries on a like business in that area. The covenant is drawn to the exact limits of the statutory exception rather than in reliance on judicial narrowing. Passive Public Holdings are permitted.

### Non-Investment

During the Restricted Period specified in Cover Terms for Non-Investment, 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 within the Restricted Territory. This restriction primarily targets active or material ownership in private competitors. Passive Public Holdings are permitted. Because a restraint on active roles at and material participation in a Competitive Business functions as a covenant not to compete, it is subject to the same SDCL 53-9-11 limits as the non-compete in this agreement — the specified area, the like-business condition, and the two-year ceiling measured from the date of termination of the agreement — and investment language broad enough to operate as a restraint on Employee's own trade would fall within the SDCL 53-9-8 void baseline.

### Non-Disparagement

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 protected concerted activity under Section 7 of the National Labor Relations Act.

### Healthcare Practitioner Carve-Out

If Employee is a practitioner as defined in SDCL 53-9-11.1 — a broad class that includes physicians, physician assistants, paramedics and emergency medical technicians, respiratory care practitioners, chiropractors, and other licensed clinical roles — and this agreement was entered into on or after July 1, 2023, then under SDCL 53-9-11.2 any provision of this agreement that would restrict Employee from practicing or otherwise providing professional services in accordance with the applicable scope of practice, after the conclusion of the employment or professional relationship, is voidable at Employee's election and Employer will not seek to enforce it as a practice restriction. This section does not apply to a provision effective upon the sale of a practice or an interest in a practice, or to a restriction on soliciting current patients or clients that complies with the geographic and temporal limitations referenced in SDCL 53-9-11.

### No Restraint Through a Third-Party Agreement

Employer's rights under this agreement rest on Employee's own covenants. Employer does not rely on, and this agreement does not incorporate, any no-hire, no-solicit, or no-recruit clause in any agreement between Employer and a customer, vendor, or other third party as a means of restraining Employee, because an employer may not bind its own employee through an agreement with a third party (Communication Technical Sys., Inc. v. Densmore, 1998 S.D. 87, 583 N.W.2d 125).

### No Conflicting Obligations

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.

### Notice to Future Employers and Other Third Parties

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 a covenant in this agreement that fits an SDCL chapter 53-9 exception. Employee consents to this disclosure. Employer acknowledges that asserting a covenant the chapter would void may expose Employer to a claim of tortious interference.

### Tolling During Breach

If Employee breaches any restrictive covenant in this agreement, Employer may seek to extend the Restricted Period for that covenant by one day for each day of the breach. The parties acknowledge that no South Dakota statute addresses tolling, that the two-year ceiling in SDCL 53-9-11 is written into the exception and runs from the date of termination of the agreement, and that a court may decline to enforce any extension that would carry a covenant past the statutory limit.

### Remedies

Employee acknowledges that a breach of this agreement may cause Employer irreparable harm for which money damages would be inadequate, and Employer may seek injunctive or other equitable relief in addition to any other remedies available at law. The parties acknowledge that the South Dakota Uniform Trade Secrets Act supplies independent remedies, including attorney-fee shifting in the circumstances described in SDCL 37-29-4 and a three-year limitations period under SDCL 37-29-6, that operate whether or not any covenant in this agreement survives. Absent a contractual fee-shifting provision, each party bears its own attorney fees under the default American Rule.

### Statutory Fit and Severability

Each restrictive covenant in this agreement is drawn to fit within an exception to SDCL 53-9-8 and is intended to be enforceable as written rather than in reliance on judicial revision. The parties acknowledge that South Dakota recognizes partial enforcement only to conform a covenant to its statutory limits and will not read into chapter 53-9 an exception the Legislature did not adopt (Franklin v. Forever Venture, Inc., 2005 S.D. 53, 696 N.W.2d 545; Miller v. Honkamp Krueger Fin. Servs., Inc., 9 F.4th 1011 (8th Cir. 2021)). If any restraint is found to exceed the applicable exception, it is enforced only to the extent the exception permits and is otherwise void to that extent under SDCL 53-9-8. Because the agreement is divisible, the confidentiality and trade-secret obligations and any other separable provisions remain in full force even if a restrictive covenant is found unenforceable (1st American Systems, Inc. v. Rezatto, 311 N.W.2d 51 (S.D. 1981)).

### Survival and Expiration of Each Covenant

Each restrictive covenant in this agreement expressly survives the termination or expiration of Employee's employment and of this agreement, including the expiration of any fixed term, for the Restricted Period specified in Cover Terms for that covenant. The parties intend this survival to apply covenant by covenant, so that a covenant remains in effect for its Restricted Period even if this agreement otherwise ends by its own terms (Wilbur-Ellis Co. v. Erikson, 103 F.4th 1352 (8th Cir. 2024)). 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.

### Assignment and Successors

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. Any successor that holds a restrictive covenant takes it subject to the same SDCL 53-9-11 limits, including the like-business condition; a successor that ceases to carry on a like business in the Restricted Territory loses the condition on which the covenant depends. This agreement is binding on and inures to the benefit of the parties and their respective heirs, successors, and permitted assigns.

### Governing Law, Venue, and Dispute Process

This agreement is governed by the law listed in Cover Terms. The parties acknowledge that South Dakota courts honor a contractual choice-of-law provision only unless it contravenes South Dakota public policy, and that SDCL 53-9-8 expresses such a public policy; a covenant affecting a South Dakota worker, a South Dakota restricted territory, or a South Dakota customer base is expected to be analyzed under SDCL chapter 53-9 whatever law is named here (Miller v. Honkamp Krueger Fin. Servs., Inc., 9 F.4th 1011 (8th Cir. 2021)). Disputes will be resolved in the courts of the Governing Law state, subject to non-waivable rights under applicable law.

### Entire Agreement, Amendment, Waiver, and Electronic Signatures

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, and any amendment must preserve the date on which the agreement was entered into and the date from which the statutory two-year ceiling runs. 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.

## Signatures

By signing this agreement, each party acknowledges and agrees to the restrictive covenant obligations above. Employee confirms having read and understood each provision, including the Cover Terms.

Employer: {employer_name}

Signature: _______________
Signatory Name: {employer_signatory_name}
Title: {employer_signatory_title}
Date: _______________

**Employee**

Signature: _______________
Print Name: {employee_name}
Date: _______________