NON-COMPETITION AGREEMENT
(Commonwealth of Massachusetts)
[// GUIDANCE: This template is drafted to comply with the Massachusetts Noncompetition Agreement Act (“MNAA”), G.L. c. 149, § 24L, effective 1 October 2018, and current best practices. Verify that the agreement is provided to the Employee at least ten (10) business days before the earlier of (i) the commencement of employment or (ii) the date on which the Employee is required to sign, and that the Employee is expressly advised to consult counsel.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Operative Provisions
- Representations & Warranties
- Covenants & Restrictions
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
(Section headings are for convenience only and shall not affect interpretation.)
1. DOCUMENT HEADER
This NON-COMPETITION AGREEMENT (this “Agreement”) is entered into as of [EFFECTIVE DATE] (the “Effective Date”) by and between:
• [COMPANY NAME], a [STATE OF INCORPORATION] corporation, with its principal place of business located at [ADDRESS] (“Company”); and
• [EMPLOYEE NAME], residing at [ADDRESS] (“Employee”).
Recitals
A. Company develops and markets [GENERAL DESCRIPTION OF BUSINESS] (the “Business”) and possesses Confidential Information (as defined below).
B. Company desires to employ or continue to employ Employee in the position of [TITLE] and to provide Employee with access to Confidential Information and goodwill.
C. In consideration of the mutual promises herein and other good and valuable consideration set forth below, the parties agree as follows.
2. DEFINITIONS
For purposes of this Agreement, the following capitalized terms have the meanings set forth below:
“Affiliate” – any entity that directly or indirectly controls, is controlled by, or is under common control with Company.
“Base Salary” – Employee’s regular base salary (exclusive of bonuses, commissions, benefits, or equity) in effect immediately prior to the commencement of any Restricted Period.
“Competitive Services” – services that are the same as or substantially similar to services Employee provided to Company during the last two (2) years of employment and that are provided to a Competing Business.
“Competing Business” – any person or entity that engages in the Business or a substantially similar business within the Restricted Territory.
“Confidential Information” – information not generally known to the public, whether oral, written, electronic, or in any other form, including trade secrets, client lists, pricing, marketing plans, and proprietary technology, to the extent such information is protected under applicable law.
“Garden Leave” – the consideration described in Section 3.3(a).
“Restricted Period” – the twelve (12) month period immediately following the Termination Date, subject to extension under Section 5.3(b).
“Restricted Territory” – the geographic area(s) in which Employee (i) provided services or (ii) had a material presence or influence on behalf of Company at any time during the last two (2) years of employment.
“Termination Date” – the date Employee’s employment with Company ends for any reason.
3. OPERATIVE PROVISIONS
3.1 Employment Relationship. Company hereby employs (or continues to employ) Employee as [TITLE], and Employee accepts such employment, subject to the terms of this Agreement.
3.2 Notice & Right to Counsel.
(a) Company provided Employee with this Agreement on [DATE DELIVERED], at least ten (10) business days prior to the earlier of (i) the start of employment and (ii) the date Employee is required to sign.
(b) Employee is hereby advised to consult with an attorney before signing and acknowledges receipt of such advice.
3.3 Consideration.
(a) For New Hires – Garden Leave. During the Restricted Period, Company shall pay Employee an amount equal to fifty percent (50%) of Employee’s Base Salary on a pro-rata, bi-weekly basis (the “Garden Leave”), subject to standard payroll deductions and withholdings, unless a greater amount or different form of consideration is mutually agreed upon and stated here: [ALTERNATIVE CONSIDERATION, IF ANY].
(b) For Existing Employees – Additional Consideration. If Employee is already employed, Company shall provide the following fair, reasonable, and mutually agreed consideration, in addition to continued employment, in exchange for the covenants herein: [SPECIFY E.G., SIGN-ON BONUS, RAISE, EQUITY GRANT] (the “Additional Consideration”).
[// GUIDANCE: MA law requires “fair and reasonable consideration” independent of continued employment for existing employees.]
3.4 At-Will Employment. Nothing herein alters the at-will nature of Employee’s employment unless a separate written agreement signed by both parties expressly provides otherwise.
4. REPRESENTATIONS & WARRANTIES
4.1 Authority. Each party represents that it has full power and authority to enter into and perform this Agreement.
4.2 No Conflicts. Employee represents that execution of this Agreement does not breach any other agreement to which Employee is a party.
4.3 Accuracy of Information. Each party warrants that all information provided in connection with this Agreement is true and complete.
4.4 Survival. Representations and warranties shall survive termination of employment for the duration of the Restricted Period.
5. COVENANTS & RESTRICTIONS
5.1 Non-Competition. During the Restricted Period, Employee shall not, directly or indirectly, within the Restricted Territory, engage in, own, manage, operate, control, or participate in the ownership, management, operation, or control of, or be employed by, any Competing Business to the extent Employee would be performing Competitive Services.
5.2 Permitted Activities. Passive ownership of up to two percent (2%) of any class of securities of a publicly-traded company shall not violate this Agreement.
5.3 Tolling & Extension.
(a) Tolling. The Restricted Period shall be tolled during any breach by Employee, such that the full duration is enforceable.
(b) Extension for Misappropriation. If Employee has (i) breached fiduciary duties or (ii) unlawfully taken, physically or electronically, property belonging to Company, the Restricted Period may be extended up to twenty-four (24) months under G.L. c. 149, § 24L(b)(vii).
5.4 Confidential Information & Non-Disclosure. Employee shall maintain the confidentiality of Company’s Confidential Information both during and after employment, without limitation in time.
5.5 Return of Property. Upon the Termination Date, Employee shall immediately return all Company property, including all documents containing Confidential Information.
6. DEFAULT & REMEDIES
6.1 Events of Default. The following constitute defaults:
(a) Employee’s breach of any covenant in Section 5;
(b) Failure by Company to make Garden Leave payments when due, after ten (10) days’ written notice and opportunity to cure.
6.2 Notice & Cure. The non-breaching party shall provide written notice detailing the default. If the breach is curable, the breaching party shall have five (5) business days to cure.
6.3 Remedies. Upon default, the non-breaching party may pursue:
(a) Injunctive relief, including temporary, preliminary, and permanent injunctions;
(b) Specific performance;
(c) Recovery of actual damages;
(d) Attorneys’ fees and costs, as provided in Section 6.4.
6.4 Attorneys’ Fees. The prevailing party in any action to enforce this Agreement shall be entitled to reasonable attorneys’ fees, costs, and expenses.
7. RISK ALLOCATION
7.1 Indemnification by Employee. Employee shall indemnify, defend, and hold harmless Company and its Affiliates, and their respective officers, directors, employees, and agents, from and against any and all losses, damages, liabilities, and expenses (including reasonable attorneys’ fees) arising out of or resulting from Employee’s breach of this Agreement.
7.2 No Limitation of Liability. Nothing herein limits either party’s liability for breach; no liability cap applies.
7.3 Insurance. [OPTIONAL – INSERT REQUIREMENTS OR “N/A”.]
7.4 Force Majeure. Neither party shall be liable for failure to perform its obligations (other than payment obligations) to the extent such failure is caused by events beyond its reasonable control, including acts of God, war, terrorism, epidemic, or governmental action.
8. DISPUTE RESOLUTION
8.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without regard to its conflict-of-laws rules.
8.2 Forum Selection. The parties consent to the exclusive jurisdiction of the state courts of the Commonwealth of Massachusetts sitting in [COUNTY], and waive any objection based on inconvenient forum.
8.3 Arbitration. [OPTIONAL – INSERT IF ELECTED: “Any dispute arising out of or relating to this Agreement shall, at the election of Company [OR “either party”], be resolved by final and binding arbitration administered by the American Arbitration Association under its Employment Arbitration Rules. The arbitral tribunal shall have authority to award any remedy available at law or in equity, including injunctive relief.”]
8.4 Jury Trial Waiver. [OPTIONAL – INSERT: “Each party hereby waives its right to a trial by jury in any proceeding arising out of or relating to this Agreement.”]
8.5 Injunctive Relief Carve-Out. Notwithstanding any agreement to arbitrate, either party may seek temporary, preliminary, or permanent injunctive relief in a court of competent jurisdiction to prevent or curtail actual or threatened breach of this Agreement.
9. GENERAL PROVISIONS
9.1 Amendment & Waiver. No modification or waiver of any provision shall be effective unless in writing and signed by both parties. Waiver of any breach shall not constitute waiver of any other or subsequent breach.
9.2 Assignment. Employee may not assign or delegate any rights or obligations under this Agreement. Company may assign this Agreement to a successor in interest in connection with a merger, acquisition, or sale of substantially all assets.
9.3 Successors & Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.
9.4 Severability & Reformation. If any provision is held unenforceable, the court shall reform the provision to the extent necessary to render it enforceable, consistent with the parties’ intent and applicable law. All other provisions shall remain in full force and effect.
9.5 Integration. This Agreement constitutes the entire agreement between the parties with respect to the subject matter and supersedes all prior or contemporaneous agreements or understandings, oral or written.
9.6 Counterparts. This Agreement may be executed in counterparts, each of which is deemed an original, and all of which together constitute one instrument.
9.7 Electronic Signatures. Signatures transmitted electronically (e.g., via PDF or electronic signature platform) shall be deemed original and binding.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.
| COMPANY: | EMPLOYEE: |
|---|---|
| [COMPANY NAME] | [EMPLOYEE NAME] |
| By: ________ | _____ |
| Name: ______ | |
| Title: _______ | |
| Date: _______ | Date: ______ |
[NOTARY ACKNOWLEDGMENT – Include if Company practice or MA law for your industry requires notarization.]
[// GUIDANCE:
1. MA prohibits enforcement of non-competes against (i) non-exempt employees under the Fair Labor Standards Act, (ii) undergraduate or graduate students in internships, (iii) employees terminated without cause or laid off, and (iv) employees under age 18. Verify applicability before use.
2. Provide Employee a copy of this signed Agreement within thirty (30) days after termination of employment, as a best practice for evidentiary purposes.
3. Revisit this template periodically to ensure continued compliance with any statutory amendments or judicial interpretations.]