Employment Covenants Agreement: Definition & Sample

An employment covenants agreement is a legal contract that ensures a business can maintain the best employees by limiting their ability to work for competitors. These agreements typically include non-compete clauses, confidentiality provisions, and trade secret protections.

With these terms in place, it is unlikely that an employee will leave or go out of business while they still have a contract with the company. However, if a business decides that this type of agreement is right for them, it's essential to talk with an attorney specializing in contracts law about what is allowed when drafting such an agreement. A lawyer can also help ensure this contract fits within state laws regarding employment matters.

Common Sections in Employment Covenants Agreements

Below is a list of common sections included in Employment Covenants Agreements. These sections are linked to the below sample agreement for you to explore.

Employment Covenants Agreement Sample

EXHIBIT NO. 10.40 – AGREEMENT REGARDING POST-EMPLOYMENT RESTRICTIVE

COVENANTS BETWEEN MAF BANCORP, INC. AND THOMAS R. PERZ

APPENDIX A TO PERZ EMPLOYMENT AGREEMENT

AGREEMENT REGARDING POST-

EMPLOYMENT RESTRICTIVE COVENANTS

THIS AGREEMENT made effective as of December 1, 2003, by and between MAF Bancorp, Inc. (“Purchaser”) and Thomas R. Perz (“Executive”).

W I T N E S S E T H :

WHEREAS, Purchaser and its affiliates are engaged in depository, lending and other financial services businesses (the “Business”);

WHEREAS, Executive has expertise, experience and capability in the Business;

WHEREAS, Purchaser has invested significant amounts in the acquisition of all of the stock of St. Francis Capital Corporation;

WHEREAS, Executive has served as President and Chief Executive Officer of St. Francis Capital Corporation and its subsidiaries and will be serving Purchaser and Mid America Bank, fsb (the “Bank”) in the capacity set forth on the signature page hereof;

WHEREAS, Purchaser desires to enter into this Agreement to obtain Executive’s agreements regarding confidentiality and post-employment restrictive covenants for Purchaser, the Bank, and/or subsidiaries (Purchaser, the Bank and/or subsidiaries hereinafter “Purchaser or its affiliates”) in return for the payments set forth herein; and

WHEREAS, Executive is willing to provide such agreements to Purchaser and the Bank.

NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which consideration is mutually acknowledged by the parties, it is hereby agreed as follows:

The recitals hereinbefore set forth constitute an integral part of this Agreement, evidencing the intent of the parties in executing this Agreement, and describing the circumstances surrounding its execution. Said recitals are by express reference made a part of the covenants hereof, and this Agreement shall be construed in light thereof.

2. Confidential Information .

Executive acknowledges that during the course of his employment he has learned or will learn or develop Confidential Information (as that term is defined in this Section 2). Executive further acknowledges that unauthorized disclosure or use of such Confidential Information, other than in discharge of Executive’s duties, will cause Purchaser or its affiliates irreparable harm.

For purposes of this Section, Confidential Information means trade secrets (such as technical and non-technical data, a program, method, technique, process) and other confidential or proprietary information concerning the products, processes, services, or customers of Purchaser or its affiliates, including but not limited to: computer programs; marketing, or organizational research and development; business plans; revenue forecasts; personnel information, including the identity of other employees of Purchaser or its affiliates, their responsibilities, competence, abilities, and compensation; pricing and financial information; current and prospective customer lists and information on customers or their employees; information concerning planned or pending acquisitions or divestitures; and information concerning purchases of major equipment or property, which information: (a) has not been made generally available to the public; and (b) is useful or of value to the current or anticipated business, or research or development activities of Purchaser or its affiliates; or (c) has been identified to Executive as confidential by Purchaser or its affiliates, either orally or in writing.

Except in the course of his employment and in the pursuit of the business of Purchaser or its affiliates, Executive shall not, during the course of his employment, or following termination of his employment for any reason, directly or indirectly, disclose, publish, communicate or use on his behalf or another’s behalf, any Confidential Information, proprietary information or other data of Purchaser or its affiliates.

Executive acknowledges that as to certain aspects of its business, Purchaser and its affiliates operate and compete throughout the Chicagoland and Milwaukee areas and that Purchaser or its affiliates will be harmed by unauthorized disclosure or use of Confidential Information regardless of where such disclosure or use occurs, and that therefore this confidentiality agreement is not limited to any single state or other jurisdiction.

During the term of his employment and service on the Board of Directors of the Purchaser and Bank and for the period ending twenty-four (24) months following the date the Executive ceases all such service (the “Non-Compete Period”), the Executive shall not, in the Territory (except in his capacity as an employee or director of Purchaser or a Purchaser affiliate), (a) engage or participate in the Business, (b) enter the employ of, or render any services to, any person or entity engaged in the Business or competitive with Purchaser or its affiliates, (c) engage or participate in, be employed by or render services to any person or entity engaged in the depository, lending or other activities constituting the Business, or (d) directly or indirectly become interested in any person or entity referred to in clauses (b) and (c) above in any capacity, including without limitation, as an individual, partner, shareholder, lender, officer, director, principal, agent or trustee; provided, however, that the Executive may own, directly or indirectly, solely as an investment, securities of any publicly-traded entity if Executive is not a controlling person of such entity, or a member of a group which controls such entity and Executive does not own more than 5% of any class of equity securities of such entity.

“Territory” for purposes hereof shall mean those communities in which Purchaser or any of its affiliates has a financial institution or a branch thereof, or has filed an application for regulatory approval to establish a financial institution or branch (whether de novo or by acquisition), together with those communities which are within a 25 mile radius of any such

financial institutions or branches. As of the date payment to Executive commences pursuant to Section 7 below, the “Territory” shall become fixed, and shall not be expanded as a result of any additional communities in which Purchaser or any of its affiliates may establish a financial institution or branch.

4. Inducement of Employees and Customers .

During the Non-Compete Period, Executive will not directly or indirectly solicit, induce or encourage any person or entity who, as of the date immediately preceding the date of the termination of Executive’s employment, is an employee or customer of Purchaser or any of its affiliates, to terminate his or her or its relationship with Purchaser or its affiliates.

5. Return of Purchaser’s Property .

All notes, reports, plans, published memoranda or other documents created, developed, generated or held by Executive during employment, concerning or related to Purchaser’s or its affiliates’ business, and whether containing or relating to Confidential Information or not, are the property of Purchaser or its affiliates and will be promptly delivered to Purchaser or its affiliates upon termination of Executive’s employment for any reason whatsoever.