252 PART 3 I MOVING FROM AN IDEA TO AN ENTREPRENEURIAL FIRM
FIGURE 7.2
Sample Nonclisclosure
and Noncompete
Agreement
Nondisclosure and Noncompetition. (a) At all times while this agreement is in force and after
its expiration or termination, [employee name] agrees to refrain from disclosing [company
name]'s customer lists, trade secrets, or other confidential material. [Employee name] agrees to
take reasonable security measures to prevent accidental disclosure and industrial espionage.
(b) While this agreement is in force, the employee agrees to use [his/her] best efforts to [describe
job] and to abide by the nondisclosure and noncompetition terms of this agreement; the employer
agrees to compensate the employee as follows: [describe compensation]. After expiration or
termination of this agreement, [employee name] agrees not to compete with [company name] for
a period of [number] years within a [number] mile radius of [company name and location] This
prohibition will not apply if this agreement is terminated because [company] violated the terms of
this agreement.
Competition means owning or working for a business of the following type: [specify type of
business employee may not engage in].
(c) [Employee name] agrees to pay liquidated damages in the amount of $[dollar amount] for any
violation of the covenant not to compete contained in subparagraph (b) of this paragraph.
IN WITNESS WHEREOE [company name] and [employee name] have signed this agreement.
[company name]
[employee s name]
Date
and procedures should be estabhshed to deal wtth these lssues In addltlon as
reflected 1n the Partnering for Success boxed features throughout th1s book
f1rms are mcreastngly partnermg W1th others to ach1eve thelr objectlves
Because of thts entrepreneunal ventures should be v1g1lant when selectlng
thelr alltance partners A flrm falls short 1n terms of establ1sh1ng hlgh eth1cal
standards 1f It lS wllllng to partner Wlllh flrms that behave IH a contrary man
ner Th1s chapters Partnertng for Success feature 1llustrates how two firms
Patagon1a and Bu1ld A Bear Workshop deal w1th thls lssue
When legal d1sputes do occur they can often be settled through negot1at1on or
medxatton rather than more expensive and potenttally damagmg l1t1gat1on
Mediation lS a process 1n whtch an tmparttal thtrd party (usually a profes
stonal medtatorl helps those involved 1n a dtspute reach an agreement At
t1mes legal dlsputes can also be avotded by a stmple apology and a smcere
pledge on the part of the offendtng party to make amends Yale Professor
Constance E Bagley tllustrates thls point 18 Spectftcally IH regard to the role a
simple apology plays 1n resolvmg legal disputes Professor Bagley refers to a
Wall Street Journal art1cle IH wh1ch the wrlter commented about a Jury award
1ng S2 7 m1ll1on to a woman who spzlled scaldxng hot McDonald s coffee on her
lap The Wall Street Journal writer noted that Ajury awarded S2 7 m1ll1on to a
woman who sptlled scaldlng hot McDonald s coffee on her lap Although th1s
case is often ctted as an example of a tort (legal) system run amok the Wall
Street Journal faulted McDonald s for not only falllng to respond to pr1or scald
mg 1nc1dents but also for mlshandltng the mjured woman s complamts by not
apologmng
A final lssue lmportant m promottng buslness eth1cs mvolves the manner m
whtch entrepreneurs and managers demonstrate accountablhty to then' lnvestors
and shareholders Tl'11S 1ssue wh1ch we dlscuss in greater deta_111_n Chapter 10 IS
pa.rt1cularly 1mportant tn l1ght of the corporate scandals observed during the early
2000s as Well as scandals that may surface 1n future years