Non-Compete. Neither Client, nor "Company X", may at any time during contract term, and one year following termination of this contract, provide similar service to current customers
of the other party. “Current customers” is defined in this case as; any party having been a client within the past 12 months of the current date, regardless of whether client is currently
still utilizing such services. A signed waiver on a case by case basis is required, should both parties agree to make an exception. Both parties are required to notify each other should a customer attempt to switch service to the other party. In event of a breach of this clause, the parties agree that damages in the amount of 24 months (2x revenue) should be paid.

So my understanding of this is that if I were to rent a dedicated server from this "Company X" and I sold a customer that was with "X" webhosting for $5/mo I would have to pay in penalty 5x24x2 ($5.00 times 24 months times 2x revenue). So by accepting this $5 customer I am forced to pay $240.00 to "X" and if I don't I could possibly have my services terminated..

Should I be steering away from a company like this? They have mixed reviews on WHT (mostly good with a few bad, but then again ALL companies have bad reviews, you can't please everyone). However this type of TOS makes me "cringe" a bit...

Looking for input.

Before anyone would ask, YES services would overlap and possibly be able to violate the TOS. So I assume that means just stay away eh?

However, how common is this type of thing? I find myself re-reading all my TOS's to inspect them for little "loop holes" like this one.

Exactly how do they expect you to be able to determine if your customer is a "current customer" of the other company?

No clue, I suppose thats a good point though. Nothing really to worry about since even though I'm hosted with them, they do not have access to my billing or financial records without a court order.

You have me curious :). If you don't mind me asking, who is the host? Feel welcome to PM me if you don't want to make it public. It's a rather odd and confusing clause. I don't believe I have ever come across such a clause in my time in the web hosting industry.

actually the point I was trying to get at was are you going to run background checks on all your customers to see if they were customers of the other company?

There is no way you can be expected to know.

This type of clause is more usually seen in employment contracts, not host TOS.

actually the point I was trying to get at was are you going to run background checks on all your customers to see if they were customers of the other company?

There is no way you can be expected to know.

This type of clause is more usually seen in employment contracts, not host TOS.
Yet another fantastic point. Honestly the clause had me completely confused on why it was there.. I was hoping for more of a "oh yea, thats industry standard for the big guys" but that doesn't seem to be the case from what I've been reading on everyone elses TOS.

@InstantPH
I PM'd you, as you can see from the PM its a pretty sensitive issue at this current time, so I rather its name not be posted publicly - as to not drive potential customers from them.