Non-Compete Addendum (APA) Template

Non-Compete Addendum (APA) Template

This Non-Compete Addendum (this “Addendum”) is made as of [Addendum Date].

1. Parties and Reference to Asset Purchase Agreement

Buyer:
Full Legal Name: [Buyer Full Legal Name]
Business Name (if different): [Buyer Business Name]
Jurisdiction of Organization: [Buyer Jurisdiction]
Entity Type: [Buyer Entity Type]
Address: [Buyer Address]

Seller:
Full Legal Name: [Seller Full Legal Name]
Business Name (if different): [Seller Business Name]
Jurisdiction of Organization: [Seller Jurisdiction]
Entity Type: [Seller Entity Type]
Address: [Seller Address]

Other Bound Parties (if any, such as owners or affiliates of Seller):
Name(s): [Other Bound Party Names]
Relationship to Seller: [Relationship]
Address: [Other Bound Party Address]

Asset Purchase Agreement:
Title: [Title of Asset Purchase Agreement]
Date: [APA Date]
Parties: [APA Parties]

This Addendum supplements the Asset Purchase Agreement (the “Agreement”). Capitalized terms used but not defined in this Addendum have the meanings given in the Agreement.

2. Background and Purpose

2.1 Background

Under the Agreement, Buyer is acquiring certain assets and goodwill of the business described below. Buyer requires, and Seller is willing to grant, reasonable non-competition and non-solicitation protections to help preserve the value of the Purchased Assets and Goodwill.

2.2 Restricted Business

For purposes of this Addendum, “Restricted Business” means:

Restricted Business Description: [Description of the business, products, and services being sold]

3. Restricted Territory and Restricted Period

Restricted Territory: [Countries, states/provinces, regions, or radius around specified locations]

Restricted Period: [Length of time after Closing Date or after termination of Seller’s involvement, such as “three (3) years after the Closing Date”]

The non-compete and non-solicitation obligations in this Addendum apply within the Restricted Territory for the Restricted Period, unless otherwise stated.

4. Non-Competition Covenant

4.1 Non-Competition

During the Restricted Period, within the Restricted Territory, Seller and any Other Bound Parties will not:

a) Own, manage, operate, control, or participate in the ownership, management, operation, or control of any business that is engaged primarily in the Restricted Business;

b) Assist or provide services to any third party in a role that is substantially similar to the Restricted Business, where such assistance is materially competitive with the Business acquired by Buyer under the Agreement; or

c) Use Confidential Information of the Business to compete with Buyer in the Restricted Business.

4.2 Indirect Involvement

Subject to Section 6, Seller and any Other Bound Parties may hold passive investments in publicly traded securities of a company engaged in the Restricted Business if such holdings do not exceed [Maximum Percentage] of the outstanding securities of that company.

5. Non-Solicitation

5.1 Non-Solicitation of Customers and Business Relationships

During the Restricted Period, within the Restricted Territory, Seller and any Other Bound Parties will not, directly or indirectly:

a) Solicit or attempt to solicit business in the Restricted Business from any person or entity that was a customer or active prospective customer of the Business during the [Look-Back Period] ending on the Closing Date, for the purpose of providing products or services that compete with the Restricted Business;

b) Induce or encourage any customer, supplier, or other significant business partner of the Business to reduce, terminate, or adversely modify its relationship with Buyer in a way that materially harms the Restricted Business.

5.2 Non-Solicitation of Employees and Contractors

During the Restricted Period, Seller and any Other Bound Parties will not, directly or indirectly:

a) Solicit or attempt to solicit for employment or engagement any employee or contractor of the Business who was employed or engaged at any time during the [Employee Look-Back Period] ending on the Closing Date; or

b) Induce or encourage any such person to leave their employment or engagement with Buyer or its Affiliates.

The restrictions in this Section 5.2 do not prohibit general solicitations that are not specifically targeted at employees or contractors of Buyer or its Affiliates.

6. Permitted Activities and Carve-Outs

6.1 Permitted Activities

The parties agree that the following activities are not prohibited by this Addendum:

a) Ownership and operation of any business that is not engaged in the Restricted Business;

b) Passive investment holdings within the limits stated in Section 4.2;

c) Any activities explicitly permitted under the Agreement or listed here:

Additional Permitted Activities: [List any specifically permitted activities]

6.2 Existing Businesses

If Seller or any Other Bound Party operates any existing business at the time of the Agreement that overlaps in part with the Restricted Business, the following rules apply:

Existing Business Description: [Description of existing business]

Permitted Operations: [Scope of operations that are permitted to continue]

7. Confidentiality and Non-Disparagement

7.1 Confidentiality

The confidentiality obligations in the Agreement continue to apply. To the extent consistent with the Agreement, Seller and any Other Bound Parties will not use or disclose Confidential Information of the Business in any manner that would violate the Agreement or this Addendum.

7.2 Non-Disparagement

During the Restricted Period, Seller and any Other Bound Parties will not make false or misleading statements about Buyer, the Business, or their key officers or owners in a manner reasonably likely to cause material harm to the reputation or goodwill of the Business acquired by Buyer.

8. Reasonableness; Reformation

8.1 Reasonableness

The parties acknowledge that the scope, territory, and duration of the covenants in this Addendum are intended to be reasonable and designed to protect the value of the Business and its goodwill as acquired by Buyer under the Agreement.

8.2 Reformation

If a court or other authority determines that any covenant in this Addendum is overly broad or otherwise unenforceable, the parties intend that such covenant be modified or “blue penciled” to the minimum extent necessary to make it enforceable, and enforced as so modified.

9. Remedies

9.1 Injunctive Relief

Seller and any Other Bound Parties acknowledge that a breach of this Addendum may cause irreparable harm to Buyer for which monetary damages alone may be an inadequate remedy. Buyer will be entitled to seek injunctive relief or specific performance, in addition to any other remedies available at law or in equity, without the need to post any bond or other security to the extent permitted by law.

9.2 Other Remedies

The availability of injunctive relief does not limit Buyer’s right to seek monetary damages or other remedies for any breach of this Addendum.

10. Relationship to Asset Purchase Agreement

10.1 No Change to Other Terms

Except as expressly provided in this Addendum, the Agreement remains unchanged and in full force and effect.

10.2 Inconsistencies

If there is a direct conflict between this Addendum and the Agreement concerning non-competition or non-solicitation obligations, the terms of this Addendum will control with respect to those specific matters, unless the parties sign a later written amendment.

11. Governing Law

This Addendum is governed by the same governing law specified in the Agreement, unless a different governing law is stated here:

Alternative Governing Law (if different): [Governing Law]

12. Counterparts and Electronic Signatures

This Addendum may be signed in counterparts, each of which is considered an original, and all of which together form one instrument. Signatures delivered by electronic means will have the same effect as original signatures.

Signatures

Buyer:
Signature: _______________________________
Printed Name: [Buyer Signatory Name]
Title: [Buyer Signatory Title]
Date: [Date Signed by Buyer]

Seller:
Signature: _______________________________
Printed Name: [Seller Signatory Name]
Title: [Seller Signatory Title]
Date: [Date Signed by Seller]

Other Bound Party (if applicable):
Signature: _______________________________
Printed Name: [Other Bound Party Signatory Name]
Title: [Other Bound Party Signatory Title]
Date: [Date Signed by Other Bound Party]

Witnesses (If Used)

Witness 1:
Signature: _______________________________
Printed Name: [Witness 1 Full Legal Name]
Address: [Witness 1 Address]
Date: [Date]

Witness 2 (if required):
Signature: _______________________________
Printed Name: [Witness 2 Full Legal Name]
Address: [Witness 2 Address]
Date: [Date]

Notary Acknowledgment (If Required)

State/Province of [State/Province]
County of [County]

On [Notarization Date], before me, [Notary Full Name], a Notary Public, personally appeared [Buyer Signatory Name], [Seller Signatory Name] and [Other Bound Party Signatory Name, if applicable], who proved their identities on the basis of satisfactory evidence and acknowledged that they executed this Non-Compete Addendum (APA) for the purposes stated in it.

Notary Public Signature: _______________________________
Notary Public Printed Name: [Notary Full Name]
My Commission Expires: [Commission Expiration Date]
Notary Seal: ☐