Law - California Company - Is she excluded from our Non-Compete?
We have a shareholder
who says our Non-Compete agreement does not apply to her. The Non-Compete is part of the overall shareholder agreement (SA) she signed when she invested $127,000 in the company. The "Section 3: Non-Compete" is part of the longer SA and says, "Effective beginning the date employment with the company ends, and continuing for one (1) year, the shareholder shall not … (compete with the company…)”.
She was not an employee when she invested the money and signed the SA, and she has not been since. However, she was an employee earlier, but quit three months before she made her investment
. We do not have a non-compete for employees to sign (yet!), so she only signed the SA that included the non-compete. Now, six months after she resigned, and three months after she signed the SA, she joined a competitor that falls within our definition in the non-compete.
Is she excluded from our Non-Compete?
Do you think we would likely prevail in a lawsuit against her?
Can an agreement be “retroactive” since she had once been an employee?