Purchase Agreement: Non-compete and Non-solicit Provision

by Practical Law Corporate & Securities

A Standard Clause that provides a restrictive covenant for use in an asset purchase, stock purchase, or private merger agreement. This covenant is designed to protect the goodwill of the acquired business by contractually limiting the seller and its affiliates from competing with the business or soliciting its employees and customers for a specified period after the closing. This Standard Clause addresses key negotiated points, including the scope of the restricted business, the geographical territory, and the duration of the restrictions. It also explores critical enforcement mechanisms, such as provisions for equitable remedies to address potential breaches and a "blue-pencil" provision, which may permit a court to modify an overly broad covenant.