back to Business Plan Workshop index

FREE NDA example: Non-Disclosure and Non-Circumvention Agreement

NOTICE:
This agreement is excerpted from the JIAN software title JIAN Business Basics. We wish we could provide an agreement that was tailored exactly to your business. While this is not always possible, we feel that we've come very close and that this document provides you with the head start that you need to get your deal moving. Nevertheless, we must make this disclaimer:

This sample agreement template must be changed and edited to suit your specific purposes. This agreement does not constitute legal advice, and you should not use it without the assistance of competent legal counsel.

[ ] Free Access to Attorneys, Accountants & Consultants in Your Area
We're building a network of business experts who are eager to help you when you need it. They can review your work, make suggestions, handle unique situations and introduce you to influential people. On our website you can search by expertise and location, then e-mail or jump straight to their website. Although they are professionals and charge for their services, most offer an initial consultation free of charge. They're in your area and you can contact them directly. Look in our website under Professional Advisors Network.

[ ] Ongoing Update Service Keeps You Current
Things change, laws change, the world changes... new ideas come along all the time. When you register, you can access our website to get updates and changes... like new & improved spreadsheets and documents. They can be downloaded directly to your computer. Look in our website under Products & Updates.

[ ] The first and most gratifying thing to do is to use the Replace or Change function (usually under the Edit menu) and customize all items identified within the "[ ]" brackets with your information. To make sure your have filled in all the variables, use your word processors FIND function to locate and "[" which contain an uncompleted variable.

[ ] Upon completion, delete all comments that are preceded with "[ ]" and any unnecessary blank lines that remain.

[ ] You may format this document any way you like.

Non-Disclosure and Non-Circumvention Agreement

[ ] This is a standard introductory paragraph that lists the date and the parties to the Agreement.

[ ] Hint: If you do not know whether [Company] is a corporation, or partnership, and / or its state of incorporation, or partnership, leave this area blank and fill it in when the Agreement is signed.
The effective date of this Agreement: [Date]

This Agreement is by and between [Owner's full legal name]
[ ] Use global Search/Replace to change [Owner] to a simple but recognizable name (for example, above we would insert 'JIAN Tools For Sales, Inc.', but below we would use just 'JIAN'. It will read much better than, "[Owner] this and [Company] that..."
([Owners's abbreviated name]), a [State], [Corporation / Partnership / Sole Proprietorship]
located at [Address],

AND [Company],
[ ] Again, use the short form of your dealer's name below because it will be inserted throughout your agreement and read much better than "[Owner] and [Company] this and that."
([Company's abbreviated name]),
a [State], [Corporation / Partnership / Sole Proprietorship],
located at [Company 's Address].

Agreement
[ ] In Section 1 of this Recital, [Owner] is stating that the information he is about to impart is unique and commercially valuable.

1. [Owner] has developed certain Confidential Information (as defined in Section 1 of the Agreement below) that is proprietary to [Owner] and that [Owner] believes has substantial value for commercial exploitation.

[ ] Section 2 of this Recital states that [Owner] will share the information but subject to the terms, conditions, and limitations of this Agreement. By agreeing to the terms, conditions and limitations that follow, the party receiving the information must be careful to comply with all of [Owner]'s demands.

2. [Owner] is willing to disclose the Confidential Information to [Company] for the limited purpose, and subject to the terms and conditions, set forth in this Agreement.

[ ] Section 1 of this Agreement defines both the nature of the confidential information and the scope of the information covered. You should delineate the requested information as thoroughly as possible so as to avoid any confusion or ambiguity.

[ ] The first insert should include a broad description of the information you seek to protect such as "the proposed business concepts and plans of [Owner]." The second insert should be fairly inclusive and include as much information as possible. (i.e., Inventions, discoveries, processes, and know-how; computer software code, designs, routines, algorithms, and structures; product information; research and development information; information related to actual and potential customers; financial data and information; business plans; marketing materials and strategies; and any information regarding the foregoing [Owner] discloses to [Company].)

Definitions
1. "Confidential Information" means all information disclosed to [Company] by or on behalf of [Owner] either directly or indirectly and either in writing or orally, relating to: [x] (Insert appropriate language). Confidential Information shall include, without limitation: [x] (Insert appropriate language). Despite the foregoing, Confidential Information does not include:
(1) information already in possession of [Company] at the time of [Owner]'s disclosure;
(2) information that is now or later becomes part of the public domain, unless such information becomes part of the public domain as a result of any action or inaction on the part of [Company]; or
(3) information received by [Company] from a third party, unless such third party has been directed by [Owner] to retain such information on a confidential basis.

[ ] Section 2 describes the permissible uses [Company] may make of the confidential information and states that [Company] may not disclose the information to third parties. In the brackets in Section 2, describe exactly what the reasons are that you are providing (information to [Company]).

2. Use of Confidential Information. [Company] shall use the Confidential Information exclusively for the purpose of: [x] (evaluating potential business relationships, business plans and opportunities with [Owner] / preparing sales and marketing materials for [Owner] / advising [Owner]). Except as required by law, [Company] shall not disclose any Confidential Information to any third party excepting employees of [Company] who have expressly agreed in writing to be bound by the terms of this Agreement or make use of any Confidential Information in any manner without [Owner]'s prior written consent, that may be given or withheld by [Owner] in his sole discretion.

[ ] Where the previous section prohibits [Company] from disclosing the information to third parties, Section 3 prohibits [Company] from using the information in any manner not agreed upon by the parties. For the first insert, enter the time frame that should be made for as long as you anticipate the information remaining non-public. Try not to go overboard and set a ten or fifteen year period unless the circumstances require it.

3. Non-Circumvention. In consideration of [Owner]'s disclosure of the Confidential Information, [Company] shall not at any time prior to the date immediately preceding the [x] (first / second / third / fourth / fifth) anniversary date of this Agreement, attempt in any manner to commercially exploit [x] (the proposed business concepts and plans of [Owner] / [Owner]'s business concepts, including x, x, and x) or any of the Confidential Information without [Owner]'s prior written consent, that may be given or withheld by [Owner] in his sole discretion.

[ ] Section 4 merely acknowledges that [Owner], not [Company], owns the information, and that [Owner] may request the return of the information at any time.

4. Ownership and Return of Confidential Information. [Company] acknowledges that [Company] has no Ownership or proprietary rights in the Confidential Information. Upon [Owner]'s request, [Company] shall immediately return to [Owner] all Confidential Information provided to it, and shall retain no materials relating thereto, including copies of, notes on, or abstracts of, any Confidential Information.

[ ] Section 5 is a standard paragraph that says [Company] has no rights other than stated above to the information and that neither party is obligated to further contract with the other.

5. Further Agreements. Nothing contained in this Agreement shall be deemed, by implication or otherwise, to convey to [Company] any rights in any Confidential Information, nor shall this Agreement be deemed a commitment of any kind by either [Owner] or [Company] to enter into any further Agreements with each other with respect to any Confidential Information.

[ ] Section 6 states that if [Company] breaches the Agreement, [Owner] is entitled to recover his costs in the event of litigation. It further states that since monetary damages may be difficult to measure, [Owner] can seek equitable relief, which would be a judgment requiring [Company] to stop doing whatever it is doing to upset [Owner].

6. Miscellaneous. In the event any action is brought to enforce this Agreement, the prevailing party shall be entitled to recover its costs of enforcement including, without limitation, attorneys fees and court costs. The parties acknowledge and agree that the extent of damage to [Owner] in the event of breach by [Company] of any of the covenants contained in this Agreement will be difficult or impossible to ascertain and that there will be no adequate remedy of law available to [Owner] in the event of such breach. Consequently, [Company] agrees that, in the event of such breach, [Owner], in addition to receiving damages for the breach, shall be entitled to enforce any and all of the covenants contained in this Agreement by injunctive or other equitable relief. Notices shall be deemed delivered 3 days after the date of mailing if mailed, by first class mail, registered or certified, postage prepaid at the addresses stated above. If any provision of this Agreement as applied to either party or to any circumstance shall be adjudged by a court of competent jurisdiction to be void or unenforceable for any reason, the same shall in no way affect the validity or enforceability of any other provision of this Agreement to the maximum extent permissible by law. This Agreement contains the entire Agreement between the parties, and may be amended only by a written instrument signed by both parties.

[ ] Section 7 states that in the event of a lawsuit or proceeding involving this Agreement, the losing party will have to pay the winning party his or her costs and expenses, including reasonable attorney fees.

7. Attorney Fees. In the event of any litigation or other legal proceeding between the parties arising from this Agreement, the prevailing party shall be entitled to recover, in addition to any other relief awarded or granted, its reasonable costs and expenses (including attorney fees) incurred in the proceeding.

[ ] Section 8 lists a number of standard clauses found in most Agreements.

8. General

[ ] Section 8.1 requires any legal notices from one party to the other be in writing and delivered in person or via certified or registered mail.

8.1 All notices, demands or consents required or permitted under this Agreement shall be in writing and shall be delivered personally or sent by certified or registered mail to the respective parties at the addresses defined on the first page of this Agreement, or at such other address as shall be given by either party to the other in writing.

[ ] Section 8.2 requires any changes to this Agreement be in writing and signed by the party against whom that writing is to be used. Also, merely delaying to bring an action that one party has a right to bring does not cause that party to lose or waive his or her right to pursue that action.

8.2 No waiver, amendment or modification of any provisions of this Agreement shall be effective unless in writing and signed by the party against whom such waiver, amendment or modification is sought to be enforced. No failure or delay by either party in exercising any right, power or remedy under this Agreement, except as specifically provided in this Agreement, shall operate as a waiver of any such right, power or remedy.

[ ] Section 8.3 addresses whether the Buyer or the Seller assigns their respective rights to a third party, this Agreement is binding on those parties. However, with the exception of the Buyers assignment to a successor corporation or partnership, neither the Buyer nor the Seller may transfer his or her rights or obligations under this Agreement to a third party without the approval of the other party.

8.3 This Agreement shall be binding upon and defer to the benefit of the successors and permitted assigns of the Buyer or the Seller. Except as described below, the Buyer or the Seller may not assign any of its rights or delegate any of its obligations under this Agreement to any third party without the express written permission of the other. The Seller understands that the Buyer may assign this Agreement to a partnership or successor corporation and approves such transfer in advance.

[ ] In Section 8.4, you must decide the laws of which state govern this Agreement. Generally, it is your (Company's) state of residence.

8.4 The validity, construction and performance of this Agreement shall be governed by the internal laws of the State of [x] (State), without regard to provisions regarding conflicts of law.

[ ] Section 8.5 is an acknowledgment by the Buyer and the Seller that legal remedies, i.e. money damages, may not be sufficient; therefore, both parties agree to equitable remedies such as an injunction where the breaching party would be required to do or not to do something. For example, if the Seller refused to deliver an asset of the business that the Buyer contracted to purchase and that asset was instrumental to the viability of the business and a replacement was not readily available, a court might require the Seller to deliver that asset to the Buyer. This is the equitable remedy of specific performance, as opposed to damages that would require the Seller to pay the Buyer for the replacement of assets.

8.5 The Buyer and the Seller understand and acknowledge that violation of their respective covenants and Agreements may cause the other irreparable harm and damage, that may not be recovered at law, and each agrees that the others remedies for breach may be in equity by way of injunctive relief, as well as for damages and any other relief available to the non-breaching party, whether in law or in equity.

[ ] Section 8.6 provides that if any part of this Agreement is unenforceable or invalid, that the balance of the Agreement should be enforced. Basically, ignore any sections that are invalid.

8.6 If any provisions of this Agreement are held by a court of competent jurisdiction to be invalid under any applicable statute or rule of law, they are to that extent to be deemed omitted and the remaining provisions of this Agreement shall remain in full force and effect.

[ ] Section 8.7 states that this Agreement is intended to be the only Agreement, and that no other documents or communications are binding. Therefore, it is very important to make sure that everything the Buyer and the Seller have agreed to is included in this Agreement. Otherwise, it's as if it was not agreed to.

8.7 This Agreement, including the attached Exhibits, constitutes the entire Agreement between the Buyer and the Seller concerning this transaction, and replaces all previous communications, representations, understandings, and Agreements, whether verbal or written between the Buyer and the Seller or any official or representative of either of them.

[ ] Section 8.8 assumes the parties wish to use Arbitration in the event of a dispute, therefore, the following section should be included.

8.8 [x] (Any dispute relating to the interpretation or performance of this Agreement shall be resolved at the request of either party through binding arbitration. Arbitration shall be conducted in [x] (County where the arbitration will take place, followed by the State) in accordance with the then-existing rules of the American Arbitration Association. Judgment upon any award by the arbitrators may be entered by any State or Federal Court having jurisdiction. Buyer and Seller intend that this Agreement to arbitrate be irrevocable.)

[ ] The following paragraph is merely a formality.

Captions and section headings used in this Agreement are for convenience only and are not a part of this Agreement and shall not be used in construing it.

In witness of this, [Owner] and [Company] have executed this Agreement as of the day and year first written above.

[ ] Use your word-processor to re-install Tabs below

Owner Company

______________________________ ________________________________
By By

______________________________ ________________________________
Name Name

______________________________ ________________________________
Title Title

Reading from The Red Herring:
"Let's shake on it: the art of the verbal agreement "
Click here for the full article

By Alex Gove
August 21, 1999

back to Business Plan Workshop index