Draft Issues List For Restrictive Covenant Agreement

---
name: draft-issues-list-restrictive-covenant
task_id: corporate-ma/draft-issues-list-for-restrictive-covenant-agreement
description: Guides preparation of a restrictive covenant agreement issues memorandum with an executive summary of the most critical issues, section references for each issue, enforceability analysis that connects transaction consideration to scope and duration reasonableness, and separate treatment of each draft agreement.
activates_for: [planner, solver, checker]
---

# Skill: Draft Issues List for Restrictive Covenant Agreement

## 1. Subject-matter triage

- Treat the requested output as an issues memorandum, not a rewrite of the agreements.
- If there are two draft restrictive covenant agreements, analyze each separately and keep the sections distinct.
- Start by mapping the source set: playbook, deal summary, client emails, operations overview, and each draft agreement.
- Identify which law, forum, and transaction documents govern the covenant analysis before evaluating substance.
- If a source document identifies the governing authority, use that authority in the memo and align the analysis to it.

## 2. Failure modes the skill is correcting

- Failing to connect the transaction consideration to enforceability analysis for duration and scope; the memo must explain how the full consideration package bears on reasonableness.
- Identifying issues without citing the specific section of the draft agreement that contains the problematic language.
- Collapsing multiple agreements, covenantors, or scope variants into one generic critique instead of analyzing each separately.
- Stating that a provision is overbroad or unenforceable without naming the legal rule that supports that conclusion.
- Listing issues without grading their relative importance or giving a practical next step.
- Omitting the downstream effect on closing, integration, enforcement, or litigation posture.

## 3. Legal frameworks / domain conventions that apply

- Non-compete enforceability is typically assessed under a reasonableness framework tied to legitimate business interests, duration, geographic reach, and the economic consideration supporting the covenant.
- Consideration analysis should account for the full deal package, not just any single cash component, when evaluating whether the restraint is proportionate.
- Geographic scope should track the target’s actual operating footprint, customer reach, and competitive threat area.
- Restricted activities should be tailored to the buyer’s protectable interests and not sweep in ordinary, noncompetitive conduct.
- Customer and employee non-solicitation provisions should be checked for definitional breadth, time period, and overlap with other restrictive covenants.
- Non-disparagement clauses should preserve truthful statements, legally compelled disclosures, and other standard carve-outs.
- Passive investment carve-outs should allow ownership of publicly traded securities held for passive investment purposes.
- Enforcement provisions should be checked for injunctive relief, specific performance, and other remedies that may be sought in equity.
- Blue-pencil or judicial modification language should be checked against the governing law’s treatment of overbroad restraints.
- Governing law, venue, and forum provisions should be consistent with the merger agreement and the deal structure.
- Cite the controlling authority for each legal proposition relied on, whether it appears in the source materials or is supplied from general legal knowledge.

## 4. Analytical scaffolds

- Begin with an executive summary that identifies the most consequential issues across the reviewed agreements and states the practical risk each creates.
- Use an ordinal severity scale and define it once at the top of the memo; apply it consistently to every issue.
- For each issue, include:
  - the agreement name or label,
  - the specific section reference,
  - the severity level,
  - a concise issue statement,
  - the governing legal rule or authority,
  - the reason the provision is problematic in context,
  - the consequence for the client,
  - a recommended fix or follow-up.
- For duration analysis, connect the covenant term to the consideration package and any state-law constraints identified in the sources.
- For geographic scope analysis, cross-check the draft against the operations overview and any customer geography in the source set.
- For activity restrictions, test whether the prohibited conduct is narrower than, or broader than, the buyer’s actual protectable interests.
- For non-solicitation and non-disparagement, assess definitional scope, exceptions, and any mismatch with the rest of the restrictive covenant package.
- For enforcement and modification provisions, test whether the draft provides adequate remedial flexibility if a restraint is challenged.
- If multiple agreements are in scope, run the full scaffold for each one rather than combining them into a single pass.

## 5. Vertical / structural / temporal relationships

- Compare the restrictive covenant agreement against the merger agreement and any related transaction document for consistency in governing law, venue, remedies, and defined terms.
- Cross-check the covenant’s duration and restricted scope against the timing of the closing, the earnout or payment structure if relevant, and any post-closing transition period.
- If the source set contains different covenantors or different business roles, analyze the vertical relationship between each person’s role and the breadth of restraint imposed.
- Note any dependency between a restrictive covenant clause and another clause that either narrows it, expands it, or creates an interpretive conflict.
- Where the agreements are not identical, identify the structural differences and explain why they matter for enforceability or negotiation leverage.

## 6. Output structure conventions

- Draft as an issues memorandum with an executive summary at the top.
- Use separate sections for each draft agreement, with issue-by-issue analysis beneath each section.
- Define severity levels once, then assign a severity to every issue.
- Include the specific section reference for every issue.
- Tie each legal conclusion to the controlling authority supporting it.
- Close each issue with the practical consequence to the client and a concrete recommended action.
- End with a Recommended Actions block that assigns the next step to the appropriate role and ties it to the transaction timeline or another source-based milestone.
- Keep the memo operational: prefer actionable edits, negotiation points, and diligence follow-ups over abstract commentary.