The modern trend in commercial negotiations is for the parties to execute a non-disclosure agreement, a sample of which is quoted in full below, to protect each other’s trade and other operational secrets during and after the negotiation stage, whether or not the negotiation fails. A lawyer of a corporation with whom a client of mine was dealing to establish international strategic alliances prepared the sample agreement quoted below. I reviewed it in behalf of my client prior to his signature therein. I am sharing it (identities are removed) for purposes of legal research of the readers, especially law students.
NON-DISCLOSURE AGREEMENT
KNOW ALL MEN BY THESE PRESENTS:
This NON-DISCLOSURE AGREEMENT, made and entered into this _______ day of _________________________, 2007, by and between:
X x x., a corporation duly organized and existing under and by virtue of the laws of the Republic of the Philippines, with office address at x x x x, Philippines, duly represented in this act by its President/Chief Executive Officer, x x x, herein referred to as "x x x";
- and -
x x x, of legal age, with address at x x x, hereinafter referred to as the "Recipient",
WITNESSETH, That:
WHEREAS, x x x is engaged in the business of conducting international x x x x;
WHEREAS, the parties intend to discuss and evaluate the possibility of entering into a strategic business arrangement with each other, and during such discussion it may be necessary to disclose certain Confidential Information, as defined hereunder, to the other party;
WHEREAS, in order to protect the Confidential Information, the parties agree as follows:
1. DEFINITION
In this Agreement the "Recipient" includes all his agents, associates, employees, advisors, and other authorized representatives, and x x x includes all related corporate bodies of x x x and all its agents, associates, employees, advisors, and other authorized representatives.
"Confidential Information" means all information of any kind, whether in written or other tangible form or orally or visually furnished, which ought reasonably and mutually to be understood by the parties to be confidential or which is mutually identified by them as being confidential including, but not limited to the following:
(a) information relating to commercial, financial, marketing, technical, planning or other business affairs and internal records of both parties;
(b) trade secrets, know-how, methods, techniques, processes, programs, inventions and other information relating to products, services or processes marketed or used in the course business of both parties; and
(c) customer lists and other information relating to other persons, including customers, subcontractors, employees, and co-venturers of both parties or any of their customers or potential customers.
Notwithstanding the foregoing enumeration, in case of doubt as to whether particular information is confidential, the same shall be treated as confidential.
2. ACKNOWLEDGMENT
A party may disclose Confidential Information (the "Disclosing Party") to the other party (the "Recipient"). The Recipient acknowledges the strict confidential and proprietary nature of all Confidential Information received from the Disclosing party, and that it has no proprietary right whatsoever to the Confidential Information unless otherwise mutually agreed upon in writing by the parties.
3. OBLIGATION TO MAINTAIN CONFIDENTIALITY
Neither party shall, without the prior written consent of the other party:
(a) disclose to any person that it possesses such Confidential Information;
(b) disclose any or all parts of the Confidential Information to any person, including any third party or employee of the parties, unless such persons are required to have knowledge of the Confidential Information for the parties to achieve their mutual purposes, as may be determined by the original disclosing party, and they have been advised of the confidential and proprietary nature of the Information and have agreed to protect the same; or
(c) reproduce, copy or permit to be reproduced or copied Confidential Information in any medium or form; Provided, that the receiving party shall AT ALL TIMES protect the Confidential Information by using the same degree of care to prevent its unauthorized use, dissemination or publication as the receiving party uses to protect its own confidential information of a like nature, but no less than a reasonable degree of care, and that the receiving party shall enforce this Agreement against those persons to whom it is authorized to disclose the Disclosing Party's Confidential Information for and on behalf of the Disclosing Party.
4. EXCLUSIONS
The parties' restrictions under clause 3 shall not apply to Confidential Information which:
(a) becomes publicly known through no wrongful act of the parties, or
(b) becomes known to the parties without confidential or proprietary restriction from a source other than any of the parties, or
(c) the receiving party can show by written records was rightfully in its possession prior to this Agreement; or
(d) the receiving party is obliged by law or proper government authority to disclose, in which case it shall notify the Disclosing Party in writing of the circumstances under which such disclosure will be made, including the nature of the disclosure and the entity to which it is to be made.
Notwithstanding the above, if the receiving party is obliged or required by any court or governmental, regulatory, or other body or person, to disclose Confidential Information, it shall, if so required in writing and for valid and lawful reasons by the Disclosing Party, and if practicable or feasible, cooperate with the Disclosing Party in opposing such requirement or request, subject to the duty of the disclosing party to equally share with the receiving party the necessary litigation and related expenses for the purpose.
5. OBLIGATIONS OF THE RECIPIENT PARTY
In consideration of the mutual exchange and disclosure of Confidential Information, each party undertakes, in relation to the other party's Confidential Information:
(a) To maintain the same in confidence and to use it solely and exclusively for the mutual purpose or purposes of the parties, for which the Confidential Information was disclosed, and not for any other purpose or benefit or for the purpose or benefit of any unauthorized third party;
(b) Not to copy, reproduce, or reduce in writing any part thereof except as may be reasonably necessary for the parties' mutual purpose or purposes. Any copies, reproduction or reductions to writing so made shall be the property of the Disclosing Party, unless otherwise agreed in writing by the parties or waived by the Disclosing Party in writing;
(c) Not to disclose the same whether to its employees or to third parties, except in confidence to such employees who need to know the same for the mutual purpose or purposes of the parties. Both parties undertake that these employees or third parties are obliged under their respective contracts of employment or service agreement or similar confidentiality agreements not to disclose the Confidential Information;
(d) To be responsible for the performance of sub-clauses (a), (b) and (c) above on the part of its employees to whom the same is disclosed pursuant to sub-clause (c) above; and
(e) To apply thereto security measures and such degree of care not less than those which the Receiving Party applies to its own confidential or proprietary information and which the Recipient warrants as providing adequate protection of such information from unauthorized disclosure, copy or use.
6. ASSIGNMENT
This Agreement is not assignable without the other party's prior written consent. Any attempt by the one party to assign or transfer any of the rights, obligations or duties of this Agreement without the prior written consent of the other party shall be void and of no effect.
7. RETURN OF CONFIDENTIAL INFORMATION
Upon termination of this Agreement, the parties shall demand of each other the immediate return of all copies of documents and materials containing Confidential Information disclosed to one party by the other, to the possession or control of the Disclosing Party within (1) one month from completion of the mutual purpose or purposes of the parties, or receipt of a written request from the other party, which written request shall enumerate the specific documents and materials wished by the disclosing party to be returned to it by the receiving party. The receiving party shall certify in writing to the Disclosing Party that it retains no copy and has fully complied with the requirements of this clause.
8. WARRANTY
8.1 Each party reserves all rights it may have by law or contract to its Confidential Information and no rights or obligation other than those expressly stated herein are granted or implied from this Agreement, unless otherwise agreed in writing by the parties. No license is hereby granted by one party to the other, directly or indirectly, under any existing patent, invention, discovery, copyright, trade secret, trademark, service mark, or other intellectual property held or obtained in the future by either party.
8.2 Each party warrants that it has full right and authority to enter into this Agreement, and that it is, unless expressly identified otherwise, the owner of its respective Confidential Information; and that it has the right to disclose its Confidential Information to the other party and to authorize the other party to use the same for the mutual purpose or purposes of the parties.
8.3 Unless otherwise stated in this Agreement, no warranty, express or implied, in the Confidential Information disclosed is granted by this Agreement, and warranties of merchantability, fitness for a particular purpose, accuracy or completeness are hereby disclaimed. Neither party shall be liable for any special, indirect or consequential damages, regardless of the form of action and even if such party is advised as to the possibility of such damages, except in cases of malice, bad faith and tortuous acts.
8.4 The parties agree that unless and until a definite and final agreement between them with respect to the possible joint venture or business strategic arrangement has been executed and delivered, neither party will be under any legal obligation of any kind with respect to such strategic business arrangement, except for the matters specifically agreed upon in this Agreement and in such other supplemental or subsequent agreements that the parties may execute in writing in relation to this Agreement.
9. ENTIRE AGREEMENT
This Agreement sets forth the entire agreement and understanding between the parties concerning the confidentiality of this Agreement and supersedes all previous agreements, negotiations, commitments, writings, and discussions between them as to the subject prior to the date hereof. There are no prior representations or warranties between the parties relating to the Confidentiality Information of this Agreement.
If any term or provision of this Agreement should be declared illegal or invalid by a court of competent jurisdiction, the remaining terms and provisions of this Agreement shall remain unimpaired and in full force.
10. TERM
The term of this Agreement shall be five (5) years from the date of execution of this Agreement by both parties' duly authorized representatives. Either party can terminate this Agreement without cause upon written notice to the other party at least thirty (30) days prior to the intended date of termination. Notwithstanding the expiration or termination of this Agreement, the obligation of the parties to protect Confidential Information and the restrictions on use of Confidential Information shall survive for the period of five (5) years counted from the date of such expiration or termination.
11. NOTIFICATION
The parties agree to immediately notify each other in writing if any one of them becomes aware of any disclosure of Confidential Information that it knows or believes to be unauthorized by the other party.
All notices under this Agreement shall be in writing and shall be sent personally, by facsimile, or registered mail to the party being served at its address specified above and marked for the attention of such party's signatory in this Agreement. The date of service shall be deemed to be the date of transmittal by the sending party, if the notice is sent by facsimile or the date of actual receipt of the notice is sent personally or by registered mail.
12. FORCE MAJEURE
Neither of the parties shall be considered in breach of an obligation under the Agreement to the extent such party can establish that fulfilment of the obligation has been prevented by force majeure. Force majeure, for the purposes of this Agreement, shall include acts of God, war (declared or undeclared), hostilities, rebellion, insurrections, acts of terrorism, actual or threatened, any act of any government, any instrumentality or agency thereof, or any act or cause which is reasonably beyond the control of such party ; Provided, that the party prevented from or hindered or delayed in performance by any such cause shall have used its best efforts to avoid, overcome, mitigate and offset its effects. The party so prevented from or hindered or delayed in complying herewith shall immediately give written notice thereof to the other party and shall continue to take any action within its power to comply as fully as possible with its obligations hereunder.
13. LIABILITY AND DISPUTE SETTLEMENT
13.1 Should any party breach any material provision of this Agreement, which breach may be established by substantial evidence in arbitration proceedings outlined herein, and unless the breach shall have been caused by force majeure, such party shall be liable for damages to the other party in an amount to be determined by the arbitration panel.
13.2 Any dispute or difference between the parties relating to their rights or obligations under this Agreement shall first be referred for consideration by each party by notice in writing to the other party. If the dispute or difference is not resolved within a period of sixty (60) days, then either party may submit the dispute for arbitration in accordance with the following:
13.2.1 The arbitration proceedings shall be conducted in accordance with the rules of procedure for arbitration of the Philippine Chamber of Commerce and Industry. Each Party shall appoint one arbitrator. The arbitrators thus appointed shall select a third arbitrator who shall act as the presiding arbitrator of the tribunal or panel;
13.2.2 Unless agreed otherwise by the Parties, the arbitration shall be conducted in the English language in Metro Manila, Philippines;
13.2.3 The Parties agree that this arbitration clause is an explicit waiver of immunity against validity and enforcement of the award or any judgment thereon made pursuant thereto and that such award or judgment thereon, if unsatisfied, shall be enforceable in any court having jurisdiction in accordance with its laws against any party participating in the arbitration;
13.2.4 The parties agree that the award of the arbitration tribunal shall be the sole remedy for all claims and counterclaims concerning the matter in dispute presented to the arbitration tribunal. The costs, expenses, fees, and charges of the arbitration proceedings shall be equally shared by the parties.
14. GOVERNING LAWS
This Agreement shall be governed by and construed in accordance with the laws of the Republic of the Philippines.
X x x.
