Thе defendant appeals from an interlocutory decree confirming a master’s report and from a final decree enjoining him until November 16, 1962, from engaging directly or indirectly for himself or for others in the business of selling certain types of plastic goods within twenty-six designated States of the United States.
The master, whose report was based upon a stiрulation and uncontroverted evidence offered by the plaintiffs, estab *715 lished the following: The plaintiffs are allied corporations engaged in the business of manufacturing and selling narrow fabrics cut from nylon plastic and imitation leather piece goods, including weltings and automobile and furniture trimmings. The defendant was general manager and sales manager of both corporations. He had been employed by the plaintiff Novelty Bias Binding Co. since 1950; and thereafter upon the formation of the plaintiff Novelty Plastics, Inc., was employed by it and became a stockholder and director. The plaintiffs have developed detailed confidential processes which were kept secret from their customers and competitors. The defendant was the controlling factor in both corporations. He controlled and supervised the confidential material, plans, and method of trade, the sales, sales forces, and confidential relations with commission men, the procurement and purchase of material, and the formulae and processes of manufacture. The business of the plaintiffs is highly competitive, and was conducted on a national scale during the time of the defendant’s еmployment.
The defendant’s employment was terminated in 1959 because it was discovered that since 1952 he had embezzled from the plaintiffs a sum in excess of $130,000. Criminal proceedings were commenced in a District Court. On November 16, 1959, as part of an agreement to make restitution prepared by the defendant’s counsel, the defendant agreed nоt to disclose any secret knowledge or confidential information entrusted to him during his employment and to refrain from competition with the plaintiffs within twenty-eight named States for а period of three years. He also signed a note for $30,000, payable to the plaintiffs, to be held in escrow pending compliance with the restrictive covenants. The agreement was filed in the court where the criminal proceedings had been brought.
The defendant sought employment with competitors of the plaintiffs and obtained such employment in New York on March 10, 1960. He solicited business from customers of the plaintiffs and made available to Ms present employer *716 some of the secret and confidеntial processes of the plaintiffs.
The master found that the restrictive agreement was reasonable as to time and territory.
The question presented is whether the cоntract is enforceable in so far as it restricts the defendant from competing with the plaintiffs. It has been long settled in this Commonwealth that a covenant inserted in a contract for personal service restricting trade or competition or freedom of employment is not invalid and may be enforced in equity provided it is necessary for thе protection of the employer, is reasonably limited in time and space, and is consonant with the public interest. What is reasonable depends on the facts in eаch case.
Economy Grocery Stores Corp.
v.
McMenamy,
At the very outset the defendant contends that the restrictive covenant is illegal and unenforceable because it is not a covenant inserted in a сontract for personal service and it is not “ancillary ... to an existing employment or contract of employment, ’ ’ citing Restatement: Contracts, § 515 (e), and
Bond Elec. Corp.
v.
Keller,
113 N. J. Eq. 195. The defendant’s employment had come to an end when the agreement was signed. The Restatement: Contracts carries its own caveat. Comment a of § 515 states: “ ... no implication is intеnded that all bargains that do not fall within these rules are legal. They may or may not be. Section 516 states some bargains that are reasonable and therefore legal; but thеre is a territory between the two Sections . . . which is not covered by the rules stated in either Section.” A somewhat similar reservation was made by this court in
Myott
v.
Greer,
We are of the opinion that the case on its facts falls in the open territory referred to. The relationship of employer and employeе had terminated because of the defendant’s substantial thefts over an extended period when he held a position of unusual responsibility with the plaintiffs. The covenant entеred into was at least ancillary to a permissible transaction (see Williston, Contracts [Rev. ed.] § 1636), namely, an agreement for restitution for the thefts committed during employment. Reparation or restitution in criminal cases is consonant with the public policy of the Commonwealth. See G. L. c. 266, § 61, and G. L. c. 276, § 92. Plainly, in the civil aspect of the matter, the plаintiffs had a right to be paid, and the defendant had the duty to repay, the money stolen. We take notice that restitution in whole or in part, or the promise thereof, by a repentant defendant may often be an important factor in the disposition of a criminal case, and we infer that it must have been an important factor in the disposition оf the defendant’s case. The defendant doubtless desired to avoid imprisonment; the plaintiffs obviously desired that the good will of the businesses be protected from one who at liberty could do them immediate and grievous harm. In the circumstances disclosed, we think considerations of public policy, equity and fair dealing favor enforcement of the covenant if it is otherwise reasonable.
The limitation as to space in the decree is not greater than is reasonably necessary to protect the good will of the plaintiffs from competition by the defendant. The master has found that the plaintiffs did business in all of the States mentioned in the agreement, and that the defendant personаlly had almost absolute control over the arrangements whereby the plaintiffs maintained their competitive sales position throughout the country. This court has adhered to the test of reasonableness in determining
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the restrictions of time and territory which maybe imposed, and we have rejected a rule which would arbitrarily limit the restriction to the gеographical area of the place of employment.
New England Tree Expert Co. Inc.
v.
Russell,
We consider the three year restriction to be reasonable. The рlaintiffs are obliged to reorganize their personnel and perhaps their methods of production and marketing to meet the condition created by the defendant’s misconduct. During this period of organization they would be particularly vulnerable to the competitive operations of a business rival who had the defendant in his service. The аgreement and the decree provide the protection to cover this period.
We cannot accept the defendant’s argument that his $30,000 note be considered a substitute for performance or as barring the plaintiffs’ right to specific performance of the covenant. The note was expressly described “as collateral to guarantee the compliance of Solomon Shevrin with the terms of the restrictive covenant, said note to be returned upon the expiration of said agreement.” As was said in
Rigs
v.
Sokol,
The interlocutory and final decrees are affirmed.
So ordered.