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                  THE SUPREME COURT OF NEW HAMPSHIRE

                            ___________________________


Rockingham
No. 2017-0318


                                  ATRONIX, INC.

                                         v.

                             KENNETH MORRIS & a.

                             Argued: April 12, 2018
                        Opinion Issued: October 23, 2018

      Hinckley, Allen & Snyder, LLP, of Manchester (Christopher H.M. Carter
and Kimberly M.R. Sullivan on the brief, and Mr. Carter orally), for the plaintiff.


      Devine, Millimet & Branch, P.A., of Manchester (Jonathan M. Shirley on
the joint brief and orally), for defendant Scott Electronics, Inc.


      Daniel R. Tenczar, of Tyngsborough, Massachusetts, on the joint brief,
and Law Office of Brian W. Leahey, P.C., of Tyngsborough, Massachusetts
(Brian W. Leahey on the joint brief and orally), for defendant Kenneth Morris.

       HICKS, J. The plaintiff, Atronix, Inc., which brought this action for,
among other things, breach of contract against defendant Kenneth Morris and
tortious interference with contractual relations against defendant Scott
Electronics, Inc. (Scott), appeals a decision of the Superior Court (Wageling, J.)
dismissing its action for lack of standing. We reverse and remand.

      The following facts were recited in the trial court’s orders. Morris started
working at Atronix Sales, Inc. (Old Atronix) in 1982. He was promoted several
times over the course of his employment, eventually becoming program
manager in the sales department. That position entailed responsibility for the
largest and most important of Old Atronix’s accounts. Accordingly, in 1997,
Morris was required to sign a non-compete and non-solicitation agreement (the
non-compete agreement), and a non-disclosure agreement (collectively, the
Agreements).

       In 2011, Old Atronix merged with Atronix, Inc. (the Company). In 2014,
the Company entered into an Asset purchase agreement (the APA) with
Consolidated Cable Assembly Holdings, Inc. (CCAH). Pursuant to the APA, the
Company sold its assets, including the tradename “Atronix, Inc.,” to a
subsidiary of CCAH. The subsidiary, doing business under the name Atronix,
Inc., is the plaintiff here.

       In 2016, Morris left his job with the plaintiff and was hired as a general
manager by Scott, a competitor of the plaintiff. Thereafter, the plaintiff filed
the instant suit, alleging breach of contract, tortious interference with contract,
and violation of the New Hampshire Consumer Protection Act, see RSA ch.
358-A (2009 & Supp. 2017), and seeking a declaratory judgment and injunctive
relief. The defendants moved to dismiss, asserting that the plaintiff lacked
standing to enforce the Agreements. The trial court granted the motion, and
denied the plaintiff’s subsequent motion for reconsideration.

      On appeal, the plaintiff argues that: (1) the trial court’s decision conflicts
with the APA’s plain terms; (2) the trial court’s decision “also conflicts with the
well-established rule that when a business is sold as a going concern under an
asset purchase, restrictive covenants are assigned to the buyer along with
goodwill and other assets necessary to the continued operation of that
business”; (3) the trial court “conflated the issue of whether the non-compete
agreement was assigned under the APA, with the wholly separate issue of
whether Morris consented to the assignment”; and (4) consent by Morris was
not required in any event.

      Because the underlying facts relevant to this appeal are undisputed, we
review the trial court’s ruling that the plaintiff lacks standing to enforce the
non-compete agreement de novo. See In the Matter of P.B. & T.W., 167 N.H.
627, 629 (2015). The trial court’s decision on that issue was based, in its
words, on “[w]hether the terms of the APA transferred the right to enforce the
Agreements.” We note that the trial court’s order, by using the term
“Agreements” — which it defined to refer collectively to the non-compete
agreement and non-disclosure agreement — broadly rules that neither


                                         2
agreement was transferred under the APA. The plaintiff, however, challenges
only the court’s ruling with respect to the non-compete agreement.
Accordingly, we decide only the narrow issue of whether the non-compete
agreement was transferred to the plaintiff under the APA.

      Determining what the APA conveyed requires us to interpret that
agreement. We note that although the APA provides that it is to be governed by
Delaware law, Delaware’s law regarding contract interpretation does not differ
materially from our own. Compare Signal Aviation Servs. v. City of Lebanon,
169 N.H. 162, 166 (2016), with Exelon Generation Acquis. v. Deere & Co., 176
A.3d 1262, 1266-67 (Del. 2017), and GMG Capital Inv. v. Athenian Venture, 36
A.3d 776, 779, 783-84 (Del. 2012).

      It is axiomatic that we give an agreement the meaning intended by
      the parties when they wrote it. When interpreting a written
      agreement, we give the language used by the parties its reasonable
      meaning, considering the circumstances and context in which the
      agreement was negotiated, when reading the document as a whole.
      Absent ambiguity, the parties’ intent will be determined from the
      plain meaning of the language used. Only when the parties
      reasonably disagree as to its meaning will the agreement’s
      language be deemed ambiguous. If the agreement’s language is
      ambiguous, it must be determined what the parties, under an
      objective standard, mutually understood the ambiguous language
      to mean.

Signal Aviation Servs., 169 N.H. at 166 (quotation omitted); see also Exelon
Generation Acquis., 176 A.3d at 1266-67; GMG Capital Inv., 36 A.3d at 779,
783-84.

      The plaintiff first argues that the trial court’s conclusion that the plaintiff
did not acquire Morris’s non-compete agreement conflicts with the APA’s
express terms. In relevant part, Section 2.02 of the APA broadly provides:

            (a) Upon the terms and subject to the conditions of this
      Agreement, at the Closing, the Company shall sell, assign, transfer,
      convey and deliver, or cause to be sold, assigned, transferred,
      conveyed and delivered, to [the plaintiff], and [the plaintiff] shall
      purchase from the Company, all the assets, properties, goodwill
      and business of every kind and description and wherever located,
      whether tangible or intangible, real, personal or mixed, directly or
      indirectly owned by the Company or to which it is directly or
      indirectly entitled and, in any case belonging to or used or
      intended to be used in the Business, other than the Excluded
      Assets . . . , including the following:



                                         3
                   (i) the Business as a going concern;

                   ...

                   (viii) all goodwill of the Company;

                   ...

                   (xii) all rights of the Company under all Material
            Contracts listed in Section 3.16 of the Disclosure Schedule,
            all other contracts, licenses, sublicenses, agreements, leases,
            commitments, and sales and purchase orders, and under all
            bids and offers related to the Business;

                   ...

                  (xiv) all the Company’s right, title and interest at the
            Closing in, to and under all other assets, rights and claims of
            every kind and nature.

       The trial court concluded that the plaintiff lacked standing to enforce the
Agreements because “[t]he purchasing of [the Company’s] assets, absent an
explicit transfer of Morris’ Agreements, does not make Plaintiff a contracting
party with Morris.” The plaintiff counters that Morris’s non-compete agreement
was included within the phrase “all other contracts . . . [and] agreements” as
used in section 2.02(a)(xii). See Beta LaserMike, Inc. v. Swinchatt, No. 18059,
2000 WL 262628, at *1, *3-4 (Ohio Ct. App. Mar. 10, 2000) (rejecting argument
that employee confidentiality contracts were not assigned by an asset purchase
agreement that failed to list them because, in part, “[t]he Asset Purchase
Agreement clearly states . . . that all of the contracts [seller] used in its
business were being transferred to [buyer]”).

      As the plaintiff argues, “Morris’ non-compete agreement with [the
Company] is clearly a ‘contract’ or ‘agreement’ belonging to [the Company].” As
such, the plaintiff asserts, it was conveyed to the plaintiff “by the clear terms of
the APA.” The defendants disagree with that conclusion, arguing that it
“ignores basic rules of contract interpretation and relies on stray references
and general clauses as proof of an assignment.”

      The defendants first assert that the APA contains no reference to
employee contracts in general, and no specific reference to Morris’s non-
compete agreement. Rather, they note, the APA contemplated that the plaintiff
would offer employment to the Company’s employees on the same terms and
conditions as in effect at the time of closing. In addition, Article V of the APA
contains a non-compete provision, but it does not name Morris.



                                         4
      Based on the foregoing, the defendants analogize this case to Hedgeye
Risk Management, LLC v. Heldman, 196 F. Supp. 3d 40 (D.D.C. 2016), in
which a company (Hedgeye) that had purchased the assets of another firm
(PRG) sought to enforce against one of PRG’s former employees (Heldman)
certain restrictive covenants contained in Heldman’s employment contract with
PRG. Hedgeye, 196 F. Supp. 3d at 42. Hedgeye asserted that it had acquired
Heldman’s contract when it purchased PRG’s assets. Id. The court disagreed,
noting that Heldman’s contract was neither included among the scheduled
assets nor otherwise referenced in the APA. Id. at 44, 49. Moreover, the court
reasoned, “[t]he fact that the APA explicitly provides that Hedgeye could offer
employment to PRG employees, and that those employees might then either
accept or reject such an ‘offer,’ is squarely at odds with Hedgeye’s contention
that PRG’s existing employment contracts conveyed to Hedgeye as ‘assets’ of
PRG.” Id. at 50. Finally, the court noted that the APA “expressly addresse[d]
‘non-competition,’” but rather than mentioning Heldman, was “limited to PRG
and its founder.” Id.

      The defendants contend that, as in Hedgeye, “the language and
organization of the APA rebuts any claim that it conveyed the Morris non-
compete agreement to Plaintiff as an ‘asset’ of [the Company].” Finding
Hedgeye distinguishable, we disagree.

       In Hedgeye, the restrictive covenants were included in Heldman’s
employment contract. Id. at 42-43. Here, Morris’s non-compete and non-
solicitation covenants are not contained in an employment contract, but in a
written document titled “Atronix Sales, Incorporated Non-compete and Non-
solicitation Agreement.” (Capitalization and underlining omitted.) Cf.
Symphony Diagnostic Services No. 1 v. Greenbaum, 828 F.3d 643, 646 (8th
Cir. 2016) (distinguishing case holding that employment contract requiring
exclusive service to employer was not assignable without employee’s consent
on basis that “this case . . . does not involve a personal services contract: it
involves free-standing non-compete and confidentiality agreements”). Although
“the employment or continued employment of [Morris] by the Company”
constituted partial consideration for his covenants, the agreement was also
supported by the additional consideration of the Company’s payment to Morris
of $15.00 per week. The contract contains no other provisions regarding
Morris’s employment, or the terms and conditions thereof; the only substantive
matters dealt with are the prohibitions on competition and the solicitation of
the Company’s customers and employees. The plaintiff represents that Morris
was an at-will employee with no written employment contract and, according to
the trial court’s recitation of facts, he executed the non-compete agreement
approximately fifteen years after commencing employment with Old Atronix.

       Because the non-compete agreement at issue here, unlike the contract in
Hedgeye, is not an employment contract, the APA provision requiring the
plaintiff to “offer employment to each of the then-current employees of the


                                       5
Company upon the same terms and conditions as immediately prior to the
Closing” is not inconsistent with the plaintiff’s contention that the non-compete
agreement was conveyed to the plaintiff under the APA. Cf. Hedgeye, 196 F.
Supp. 3d at 49. Arguing to the contrary, the defendants assert that “the APA
contemplated Plaintiff entering into a wholly new employment relationship with
Morris, untethered from past employment contracts.” To conclude, however,
that the APA did not convey Morris’s non-compete agreement because it
“contemplated” the creation of a new employment relationship fails to account
for the possibility that Morris could have rejected the offer of employment, and
thus, would not enter into new employment and non-compete agreements with
the plaintiff.

       Morris’s non-compete agreement, by its terms, applies “[w]hile the
Employee is employed by the Company and for a period of 3 years after the
termination or cessation of such employment for any reason.” Thus, the non-
compete agreement would remain a valuable asset even if Morris had declined
employment with the plaintiff and, indeed, would have been all the more
necessary in that situation to protect the goodwill conveyed to the plaintiff
under the APA. To interpret the term “other contracts” in section 2.02(a)(xii) as
not including Morris’s non-compete agreement would conflict with the APA’s
evident intent to convey both the Company’s business as a going concern
(section 2.02(a)(i)) and all of the Company’s goodwill (section 2.02(a)(viii)). See
AutoMed Technologies, Inc. v. Eller, 160 F. Supp. 2d 915, 919, 924 (N.D. Ill.
2001) (noting that “the confidential information and good will protected by
[employee confidentiality and non-compete] agreements are typically critical
components of an asset purchase”). Given that the parties to the APA clearly
expressed the intent to convey the business as a going concern, with all of its
goodwill intact, we conclude that the term “other contracts” includes the non-
compete agreement, which has as its object the protection of the employer’s
goodwill. See, e.g., Sentry Ins. v. Firnstein, 442 N.E.2d 46, 47 (Mass. App. Ct.
1982).

       In light of the foregoing, we also reject the defendants’ arguments that
the plaintiff’s interpretation impermissibly fails to consider the APA as a whole,
give effect to all of its provisions, and give specific terms more weight than
general ones. Similarly, we reject the defendants’ attempt to read significance
into the APA’s structure. They point out that “[n]ot only does the APA omit any
reference to employment contracts in the list of assets transferred under Article
II, but it segregates discussion of employee matters to other sections of the
agreement.” Given, however, that the non-compete agreement is not an
employment contract, the APA’s treatment of employment matters does not
affect our analysis.

       Finally, unlike the Hedgeye court, we find it immaterial that the APA
failed to mention the employee at issue (there Heldman, here Morris) in the
APA’s non-compete clause. See Hedgeye, 196 F. Supp. 3d at 50. Courts have


                                         6
long recognized two distinct sets of circumstances under which non-compete
agreements are created: employment and the sale of a business. See, e.g.,
Hess v. Gebhard & Co., Inc., 808 A.2d 912, 918 (Pa. 2002) (noting that “[i]n
Pennsylvania, early distinctions evolved between covenants ancillary to the sale
of a business and those ancillary to employment”). We need not consider
whether contracts arising under those different circumstances are subject to
different treatment. See Alexander & Alexander, Inc. v. Danahy, 488 N.E.2d
22, 28 (Mass. App. Ct. 1986) (stating that “there are considerations which
dictate that noncompetition covenants arising out of the sale of a business be
enforced more liberally than such covenants arising out of an employer-
employee relationship”). We simply note that the APA’s creation of non-
compete covenants between the buyer (the plaintiff) and the seller (the
Company) is of no interpretive significance with respect to whether it assigns to
the plaintiff a wholly separate employee non-compete agreement.

       To the extent the defendants argue that Morris’s non-compete agreement
was not conveyed to the plaintiff because the law that governs the non-compete
agreement precludes conveyance under the circumstances, we conclude that
the argument suffers much the same infirmity as the plaintiff attributes to the
trial court’s decision; namely, “conflating the issue of whether the [non-
compete] agreement was an asset acquired by Plaintiff, with the separate and
distinct issue of whether Morris consented to the assignment of that
agreement, where the issue of Morris’ consent was not before the court.”
(Emphasis added.)

       The non-compete agreement provides that it “shall be governed by and
construed in accordance with the laws of the Commonwealth of
Massachusetts.” The defendants contend that while “[t]he Massachusetts
Supreme Judicial Court has not yet addressed whether an employer may
assign an employee non-compete agreement in an asset sale” without the
employee’s express consent, “Massachusetts decisional law strongly suggests
the Morris non-compete agreement is not assignable absent the express
consent of Morris.” The defendants acknowledge, however, that the trial court
in this case “never reached th[at] question,” but, rather, concluded that the
plaintiff lacked standing “because the APA did not assign the Morris non-
compete agreement in the first place.” Because the trial court has not ruled on
this issue, we decline to do so in the first instance. See Dolbeare v. City of
Laconia, 168 N.H. 52, 54 (2015).

      Finally, the defendants argue that, even if Morris’s non-compete
agreement was assigned to the plaintiff, the plaintiff would still not be able to
enjoin Morris from working for Scott. The defendants first contend that,
because the Company continues to exist under the name PSJL Corporation
and, they assert, “the non-compete agreement [only] barred Morris from
competing against PSJL Corporation or its subsidiaries,” it could not be used to
prevent Morris from competing with the plaintiff. The defendants also assert


                                       7
that “whatever restrictions governed Morris under the non-compete agreement
ended in July 2017, three years after he ceased employment with PSJL
Corporation.” Accordingly, they argue that the plaintiff’s “claims for equitable
relief are moot.” We decline to address these arguments because, so far as
appears on the record before us, the trial court has not ruled on them, and we
decline to do so in the first instance. See id.

         Because we conclude that Morris’s non-compete agreement was
conveyed to the plaintiff under the plain language of section 2.02(a)(xii), we
need not address either the plaintiff’s additional arguments or the defendants’
argument that the plaintiff’s “numerous theories for why the Morris non-
compete agreement was assigned to it irrespective of the language of the APA
. . . find [no] support in Massachusetts law.”

                                                  Reversed and remanded.

      LYNN, C.J., and HANTZ MARCONI, J., concurred.




                                        8
