The Acquisition Non-Compete Agreement is a critical document in Canadian business acquisitions, designed to protect the buyer's investment by preventing sellers from competing with the acquired business for a specified period and within defined geographical boundaries. This agreement becomes essential when the transaction involves transfer of goodwill, customer relationships, or proprietary knowledge. It must be carefully drafted to comply with Canadian competition laws and common law principles, which require such restrictions to be reasonable and necessary for protecting legitimate business interests. The document typically includes detailed provisions on prohibited activities, geographical limitations, duration, and consequences of breach, while considering recent Canadian jurisprudence on the enforceability of restrictive covenants.
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1. Parties: Identification of the parties to the agreement, including the seller(s), buyer(s), and any key individuals or entities bound by the non-compete provisions
2. Background: Context of the acquisition transaction and rationale for the non-compete provisions
3. Definitions: Detailed definitions of key terms, including 'Competitive Business', 'Territory', 'Confidential Information', and other relevant terms
4. Non-Compete Obligations: Core restrictions on competitive activities, including specific prohibited actions and business activities
5. Geographic Scope: Clear definition of the territorial limitations of the non-compete obligations
6. Duration: Specific timeframe for which the non-compete obligations will remain in effect
7. Non-Solicitation Provisions: Restrictions on soliciting employees, customers, suppliers, or other business relationships
8. Confidentiality Obligations: Requirements regarding the protection and non-disclosure of confidential information
9. Consideration: Details of the consideration provided in exchange for the non-compete obligations
10. Remedies: Available remedies in case of breach, including injunctive relief and damages
11. Severability: Provisions for maintaining validity of remaining clauses if any clause is found unenforceable
12. Governing Law: Specification of Canadian law as governing law and jurisdiction for disputes
1. Independent Legal Advice: Acknowledgment that parties had the opportunity to seek independent legal advice, particularly important when dealing with individual sellers
2. Carve-outs: Specific exceptions to the non-compete obligations, used when certain activities or investments should be permitted
3. Assignment Rights: Rights to assign the agreement to successors or affiliates, important in corporate restructuring scenarios
4. Transition Services: Provisions for any temporary services or support to be provided by the restricted party
5. Monitoring and Compliance: Procedures for monitoring compliance with non-compete obligations, used in complex business situations
6. Alternative Dispute Resolution: Procedures for resolving disputes through mediation or arbitration before litigation
7. Industry-Specific Provisions: Special provisions related to specific industry regulations or requirements
1. Schedule A - Restricted Territory: Detailed description or maps of the geographic areas covered by the non-compete restrictions
2. Schedule B - Restricted Business Activities: Comprehensive list of specific business activities that are prohibited
3. Schedule C - Key Customers and Suppliers: List of specific customers and suppliers covered by non-solicitation provisions
4. Schedule D - Consideration Details: Breakdown of consideration and payment terms related to the non-compete obligations
5. Schedule E - Permitted Activities: List of specifically permitted activities or investments that are carved out from restrictions
6. Appendix 1 - Compliance Certificate: Form of certificate to be signed periodically confirming compliance with restrictions
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