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Non Compete Agreement

Retain an employment attorney, not your neighbor's cousin who practices family law, to help you draft any agreements related to hiring and firing, both for full-time and part-time employees. Laws vary by state, so it's extremely important that your documents reflect current local law. Although the letter below contains good wording, do not use any part of it until and unless it has been reviewed by a competent employment lawyer.

I did not need a non-compete until I fired a long-term employee and she walked off with a major account worth $100,000+. After that, I recognized that I needed to put something in writing. A friend who owned an association management company had a stiff non-compete, complete with $100,000 in liquidated damages for taking her clients. [That means the penalty is agreed to in advance of signing the contract.] I included liquidated damages in early employment contracts, but removed it later. As an agreement gets more punitive, it's harded to sign.

At this time in Colorado, non-competes were essentially not enforceable. However, trade secrets were protected, and it was possible to create a contract not to solicit our clients--so that's what we did. At least two high-powered employment attorneys worked on this 2000-word agreement, so it's well written. It printed on six 8-1/2x11" pages. I tried shortening it, but any time you shorten, you give something away. Everyone in the organization signed the agreement, including me. My agreement is shown below.

When I explained it to new consultants I said, "We own everything including the paint on the walls, and you can't steal our clients--that's essentially what it says in 2,000 words."

My experience is that agreements are only as good as the people signing them. People who do the right thing will do the right thing, and people who don't, won't. A couple years ago two consultants left with part of our business. They copied our processes, procedures, methods and materials. While they didn't steal our clients, they stole our methods of getting clients. They had both signed the contract below. I had every right to sue them--but you know what, they weren't generating enough revenue to make a legal battle worthwhile. Instead of tying myself in legal knots and living with fits of rage, I've gone on building my business and enjoying my clients. That's produced high revenue and personal great happiness.

The moral of the story? It's better to have an agreement and choose not to enforce it than to have no agreement and need one.

AGREEMENT CONCERNING TRADE SECRETS
AND COVENANT-NOT-TO-SOLICIT CAREERLAB CLIENTS

This Agreement acknowledges and reduces to writing the oral employment Agreement by and between William S. Frank (hereinafter, Consultant) and CareerLab, Inc., a Colorado Corporation, and the subsidiary and affiliated companies of CareerLab, Inc., (collectively referred to herein as CareerLab), pertaining to the confidentiality of information and establishing the ownership of information, work products, works made for hire, and other property which has been and will be acquired, used or produced by Consultant during the performance of his work duties. The Consultant is considered a member of CareerLab's executive or professional staff reporting directly to the senior management of CareerLab. In consideration of the specific recognition and understanding by Consultant of the highly competitive and confidentially sensitive nature of the business of CareerLab, and further, in consideration of the agreed-upon compensation paid to Consultant by CareerLab, Consultant and CareerLab agree as follows:

A.Pursuant to the provisions of the Colorado Uniform Trade Secrets Act, C.R.S. §7-74-101, et. Seq., all information, data or material, of any nature, whether in verbal, written, typed or electronic form, including but not necessarily limited to business plans, policies and procedures developed as part of a confidential business plan, products, financial statements, cost reports, and other financial information, marketing strategies, drawings, sketches, artwork, reports, correspondence, copies, memoranda, computer software, proposals, contracts, and management systems and procedures, including manuals and supplements thereto, or any information derived therefrom, and all verbal communications, which are obtained or acquired by Consultant or communicated or provided to Consultant by CareerLab, CareerLab's clients, other contractors, Consultants, or employees, is trade secret and shall remain the sole confidential property of CareerLab or CareerLab's clients and shall not be disclosed, used, or disposed of by Consultant, in any manner whatsoever, to any person or organization not a party to this Agreement, without the prior written consent of an authorized officer of CareerLab, both during and after the term of this Agreement.

B. Pursuant to the provisions of the Colorado Uniform Trade Secrets Act, C.R.S. §7-74-101, et. Seq., all information concerning CareerLab's clients and prospective clients, clients' business or business plans, clients' employees or the nature and scope of the clients' projects, which is developed, obtained or acquired by Consultant, whether in verbal, written, typed or electronic form, whether compiled as a list or not, is trade secret, confidential and proprietary business information and, as such, shall not be disclosed, used, or disposed of by Consultant in any fashion to any party except officers, employees and authorized contractors or other Consultants of CareerLab and authorized officers, employees or representatives of CareerLab's clients, both during and after the term of this Agreement.

C. With respect to the trade secrets of paragraphs A & B, the Consultant shall use them only in the performance of his duties and shall take all reasonable precautions to hold such trade secrets in confidence to assure that they are not disclosed to any unauthorized persons, or used or published in an unauthorized manner, both during and after the term of this Agreement with CareerLab. Upon termination, Consultant shall return all tangible material containing the aforesaid trade secrets and shall not keep any copies thereof.

D. All furniture, fixtures, equipment, supplies, keys, identification cards, computers, computer software, computer data, and other tangible personal property ("the Property"), which is owned, leased or rented by CareerLab, is and shall remain the sole property of CareerLab, or its creditors, as applicable. Consultant shall not remove the Property from CareerLab's premises or use the Property for any purpose other than fulfilling the requirements of Consultant's job, unless Consultant obtains the prior written consent for removal or other use from an officer of CareerLab. Upon termination of this Agreement with CareerLab, Consultant shall return the Property, assigned to Consultant, to CareerLab in good condition and working order, normal wear and tear excepted.

E. It is expressly agreed that this Agreement shall survive termination of work assignments, and the Consultant agrees not to take any materials, of any kind or form, containing any of the trade secrets of Paragraphs A & B, or any property in Paragraph D.

F. All works of authorship including data, programs, software, brochures, pamphlets, and other writings authored by Consultant are works made for hire and, if not, are hereby assigned to CareerLab, and the Consultant agrees to cooperate in the signing of all legal documents necessary to register and perfect title in the copyrights to CareerLab.

G. The parties agree that during the term of his employment with CareerLab, Consultant will devote his best efforts to advance the interests of CareerLab; that he will not directly or indirectly engage in any business, whether as a proprietor, partner, joint venturer, employer, agent, employee, Consultant, officer, or beneficial or record owner of more than one percent (1%) of the stock of any corporation or association, which is in any manner competitive to the business conducted by CareerLab, any subsidiary of CareerLab, or any other affiliate of CareerLab.

H. If Consultant leaves the employment of CareerLab for any reason, either voluntarily or involuntarily, Consultant is free to compete with CareerLab in career development, employment testing and assessment, executive coaching, leadership development, organizational effectiveness, corporate sponsored outplacement, or human resources consulting, either by joining a competing firm or by starting his own business, except that:

1.The parties agree the clients and customers of CareerLab, whether local, national, or international at the time Consultant leaves are the exclusive property of CareerLab, since substantial time and money is spent to solicit and develop the accounts.

2. Consultant agrees that all past and present CareerLab clients and customers, as well as CareerLab's then-active sales prospects, including, but not limited to individuals, companies, corporations, institutions, public services, non-profit organizations, and professional firms are the exclusive property of CareerLab, and cannot be solicited as clients or customers by Consultant, or given consulting advice, with or without compensation, in the areas of career development, employment testing and assessment, executive coaching, leadership development, organizational effectiveness, corporate sponsored outplacement, or human resources consulting, for a period of two calendar years following the Consultant's last day of employment.

>a. "Past clients," as referenced above, means all clients to whom CareerLab actively provided services of any kind, either paid or voluntary, during the three years preceding Consultant's termination.

>b. "Then-active sales prospects," as used above, means those persons or entities with whom bilateral discussions have taken place in regard to the use of CareerLab's services within 120 days prior to Consultant's termination.

3.Further, Consultant agrees that he will not assist any other person, group, or organization by counsel, advice, or in any way whatsoever, directly or indirectly, with or without compensation, to divert or attempt to divert any business whatsoever from CareerLab, or to attempt to sell career development, employment testing and assessment, executive coaching, leadership development, organizational effectiveness, corporate sponsored outplacement, or human resources consulting, to said past, present, and prospective CareerLab clients for a period of two calendar years following Consultant's last day of employment.

I.That a breach of the obligations imposed on Consultant in Paragraph H. regarding solicitation and/or acquiring of CareerLab's clients is not one which is capable of being easily measured by monetary damages, but that this provision is an essential part of Consultant's relationship with CareerLab. Consequently, Consultant specifically agrees that this covenant-not-to-solicit CareerLab clients may be enforced by immediate restraining order or temporary injunctive relief. In addition to such injunctive relief, CareerLab shall be entitled to seek all relief at law to which it would otherwise be entitled.

J. Consultant specifically understands and agrees that his employment is at-will and may be terminated by CareerLab with or without cause at any time. If Consultant resigns or leaves CareerLab voluntarily, he will provide 30 days' written notice before leaving, and he will transition his existing clients, if any, to other Careerlab consultants.

K. If Consultant leaves CareerLab's employment for any reason whatsoever, he further agrees that he will keep the terms of this Agreement strictly confidential and that he will not publish, publicize or disseminate, or permit to be published, publicized or disseminated, any information, opinion or commentary about CareerLab or its officers or employees, his relationship with CareerLab, his employment with CareerLab, or the termination of his employment with CareerLab. The sole exception to this provision is that he may state the dates of his employment, positions held, duties and responsibilities, and major accomplishments.

L. If CareerLab shall at any time be merged or consolidated into or with any other corporation or entity or if substantially all of the assets of CareerLab are transferred to another corporation or entity, the provisions of this Agreement shall survive any such transaction and shall be binding upon and inure to the benefit of the corporation resulting from such merger or consolidation or the corporation to which such assets will be transferred, and this provision will apply in the event of any subsequent merger, consolidation or transfer.

M. This instrument contains the entire "Trade Secrets and Covenant-Not-to-Solicit CareerLab Clients" agreement between the parties. This Agreement, as of its effective date, supersedes and replaces any existing, or contemporaneous agreements, written or otherwise, between the Consultant and CareerLab relating generally to the same subject matter, and may not be changed, modified or amended verbally, but only by a written Agreement signed by the Consultant and an authorized officer of CareerLab.

N. In the event that any clause, sentence or portion of this Agreement should be declared invalid, illegal, void or unenforceable for any reason whatsoever, such declaration of the invalidity shall not affect the balance of the Agreement which shall remain valid and fully enforceable. None of the above provision is dependent upon the validity of any other provision and the invalidity of any such provision or part thereof will not affect any other provision of Consultant's Agreement hereunder. The covenants contained in this agreement shall be deemed to be separate for each state.

O. The failure of CareerLab to insist upon strict compliance by Consultant with any of the restrictions contained herein, on one or more occasions, will not be construed as a waiver, nor will such course of action deprive CareerLab of the right to thereafter require a strict compliance with the terms of Consultant's Agreement hereunder.

P. With respect to each and every breach or violation or threatened breach or violation by Consultant of any of the covenants set forth herein, CareerLab, in addition to all other remedies available at law or in equity, including specific performance of the provisions hereof, shall be entitled to enjoin the commencement or continuance thereof and may, without notice to Consultant, apply to any court or competent jurisdiction for entry of an immediate restraining order or injunction.

Q. This agreement may be enforced in any court of the state of Colorado where venue is appropriate. All parties shall pay their own attorney's fees in any such action.

By my signature below, I, the undersigned Consultant, acknowledge that I have read, understand and specifically agree, based upon the general consideration herein above referenced, to the foregoing terms and conditions of this Agreement and, further agree the information herein referenced in Paragraphs A & B is and shall remain trade secret. In the event of any dispute, I agree to the laws, jurisdiction and venue of the state of Colorado.

By my signature below, I acknowledge I have received a fully executed copy of this Agreement.