The Quintessential Non Disclosure Agreement

If you run a company, you really can’t get away without signing an NDA. You need to sign one before you can talk to anybody. This is why I thought we should have a discussion about how is an NDA structured. So here we go:

1. The Title and the Recitals

Here we define who is Agreement between, where are each of them located. This also ensures that the first paragraph of your agreement discloses what the rest of the Agreement is really about. There isn’t much you can do to change it, though I have seen some slight variation in this from time to time.

This NON-DISCLOSURE AGREEMENT (this “Agreement”) is made as of July 22, 2010 (“Effective Date”) between

OOMPA LOOMPA PVT. LTD. (“Party A”), a company incorporated under the Indian Companies Act, 1956, with its principal place of Charlies’s Chocolate Factory

and

STONED MONK PVT. LTD. (“Party B”), a company incorporated under the Indian Companies Act, 1956, with its principal place of business at Some Random Place.

Party A and Party B (together referred to as the “Parties” and individually referred to as a “Party”) wish to disclose to each other certain Confidential Information (as defined below) in connection with the purpose of disclosure specified and acknowledged by the Parties as set forth below (the “Purpose”).

Each of the words in quotes eg. “Party” and “Purpose” etc, are called the Recitals. Sometimes they are mentioned separately in another paragraph for more clarity. But I believe it’s usually done where there are a lot of things to be mentioned.

2. Purpose

Like all of us, every document must have it’s purpose. Here the companies declare what they would like to agree on. For an NDA, it’s usually something like this:

Party A and Party B wish to share certain “Confidential Information” in connection with exploring the prospects of a business relationship. The exchange of Confidential Information here under is for the limited purpose of allowing each party to evaluate and develop potential business opportunities with the other.

3. The Terms

Now we are on to the juicy stuff. This is the part which mentions your rights and duties. The number of terms varies from client to client. I have seen it varying from 5 to 35. The beginning is usually like the following

This Agreement sets forth the terms under which Confidential Information disclosed by one Party (“Discloser”) to the other Party (“Recipient”) is to be treated. In consideration of the mutual promises and covenants contained in this Agreement, the Parties hereby agree to the following:

4. Popular Terms

Some of the terms are very popular and keep coming up in NDA after NDA. Some are very specific to a company. So here is a list of the terms, depending on the their popularity in the NDA.

#1

“Confidential Information” means all information disclosed by the Discloser hereunder that should reasonably be understood by the Recipient, because of legends or other markings, the circumstances of disclosure, or the nature of the information itself, to be proprietary and confidential to the Discloser, an affiliate of the Discloser or a third party, and includes information relating to the Discloser’s business, including, without limitation, business plans, proposals, forecasts, financial data, customer and prospect lists and information, personnel data, contract information, properties, methods of operation, software (including, without limitation, source code, specifications, data, works-in-process, alpha and beta versions, design documents and documentation), trade secrets, inventions, discoveries, know-how, and other intellectual property. “Confidential Information” includes such information that was disclosed by Discloser to Recipient prior to the date hereof as well as information currently provided and to be provided during the term of this Agreement specified and acknowledged by the Parties below (the “Term”). The existence of discussions between the Parties and the terms or Purpose of this Agreement also shall be deemed Confidential Information. Confidential Information may be disclosed in written or other tangible form (including as recorded on magnetic, optical or other storage media) or by electronic, oral, visual or other means.

This is by and far the most popular among the terms. It basically says that just don’t tell anybody what we’re telling you.

#2

Recipient shall take reasonable security precautions, using at least the same degree of care used to protect its own important confidential or proprietary information, but in any case no less than a reasonable degree of care, to keep the Confidential Information confidential. Recipient shall not disclose, make available or permit or suffer to be made available the Discloser’s Confidential Information to any person or entity other than Recipient’s employees, consultants and advisors who have a need to know such information to fulfill the Purpose, and who are bound to protect the received Confidential Information from unauthorized use and disclosure under the terms of a written agreement containing disclosure and use restrictions that are at least as protective of the Confidential Information as those set forth in this Agreement. Except as permitted by the previous sentence, in no event shall Recipient disclose, make available or permit or suffer to be made available the Discloser’s Confidential Information to any affiliate of Recipient or any person associated with any affiliate of Recipient.

#3

The restrictions of this Agreement on the use and disclosure of Confidential Information shall not apply to information that Recipient can prove: (a) was publicly known at the time of Discloser’s communication thereof to Recipient; (b) becomes publicly known through no action or fault of Recipient subsequent to the time of Discloser’s communication thereof to Recipient; (c) was in Recipient’s possession free of any obligation of confidence at the time of Discloser’s communication thereof to Recipient; (d) is developed by Recipient independently of and without reference to any of Discloser’s Confidential Information or other information that Discloser disclosed in confidence to any third party; (e) is rightfully obtained by Recipient from third parties authorized to make such disclosure without restriction; or (f) is identified by Discloser in writing as no longer proprietary or confidential.

#4

In the event that Recipient is required by law, regulation, or court order to disclose any of Discloser’s Confidential Information, Recipient shall promptly notify Discloser in writing prior to making any such disclosure in order to facilitate Discloser seeking a protective order or other appropriate remedy from the proper authority. Recipient agrees to cooperate with Discloser in seeking such order or other remedy. Recipient further agrees that if Discloser is not successful in precluding the requesting legal body from requiring the disclosure of the Confidential Information, it will furnish only that portion of the Confidential Information which is legally required, will promptly provide Discloser with a copy of the information so furnished, and will exercise all reasonable efforts to obtain reliable assurances that the receiving party will accord it confidential treatment.

#5

Recipient shall notify Discloser immediately upon discovery of any unauthorized use or disclosure of Confidential Information, or any breach of this Agreement by Recipient, and will cooperate with Discloser in every reasonable way to assist Discloser in regaining possession of the Confidential Information, mitigating the consequences of its disclosure, and preventing its further unauthorized use.

#6

No licenses or rights under patent, copyright, trademark, trade secret or other intellectual property laws are granted or implied by this Agreement. None of the Parties is obligated under this Agreement to purchase from or provide to the other Party any service or product.

#7

This Agreement shall automatically terminate upon the expiration of the Term, provided, however, that prior to such termination, either Party may terminate this Agreement at any time by written notice to the other. Notwithstanding such expiration or termination, and regardless of the outcome of discussions relating to the Purpose, all of Recipient’s nondisclosure obligations pursuant to this Agreement shall remain in full force and effect for One (1) year after the date of such expiration or termination with respect to any Confidential Information received prior to such expiration or termination.

#8

Beginning on the Effective Date of this Agreement and continuing until one (1) year after its expiration or termination for any reason, neither party will, for itself or any other person or entity, directly or indirectly solicit and either hire as an employee or retain as a consultant any person who was an employee of the other during the six (6) months prior to the termination date hereof. However, the Parties agree that general solicitation through such means as advertising and job fairs shall not be deemed a violation of this provision.

#9

No failure or delay in exercising any right, power, or privilege arising under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any such right, power, or privilege.

#10

This Agreement is the complete agreement of the Parties concerning the subject matter hereof and supersedes and terminates any prior such agreements with such subject matter. This Agreement may not be amended or in any manner modified except by a written instrument signed by authorized representatives of both Parties. This Agreement shall be governed and construed in accordance with the laws of India without regard to its choice of law provisions. By signing this Agreement, both Parties agree to submit to the exclusive jurisdiction and venue of courts located in or serving Pune, Maharashtra, India. Each Party shall bear its own costs and expenses if it employs attorneys to enforce any rights arising out of or relating to this Agreement.

#11

If any provision of this Agreement is found to be unenforceable, it shall be deemed severed from this Agreement and the remainder shall be enforced as fully as possible and the unenforceable provision shall be deemed modified to the limited extent required to permit its enforcement in a manner most closely representing the effect intended by the Parties

#12

Notices for each of the companies shall be sent to
_____________________________________________________
_____________________________________________________
_____________________________________________________

_____________________________________________________
_____________________________________________________
_____________________________________________________

Signatues

Finally, you ask each of the participants to add a name, title, date and get their signatures.

PS. I am not a lawyer and I am not authorize to tell you how to write your NDA. So please use this at your own discretion.