Sample Nondisclosure Agreement

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Nondisclosure Agreement

Preamble

EMPLOYEE CONFIDENTIALITY, NONDISCLOSURE, AND NONRECRUITING AGREEMENT (California)

This Employee Confidentiality, Nondisclosure, and Nonrecruiting Agreement (the “Agreement”) is entered into between _ _[name of employer]_ _ (“Company”) and the employee whose name and signature appear below (“Employee”), as of the date set forth below, in regard to the following facts:

Recitals

A. As part of Employee’s employment with Company, Employee has been or will be exposed to or provided with trade secrets (“Trade Secrets”) and proprietary and confidential information (“Confidential Information”) relating to the operation of Company’s business and its clients or customers.
B. Company wishes to protect its Trade Secrets and Confidential Information from unauthorized possession, use, or disclosure and to protect itself from unfair competition. Accordingly, Employee acknowledges that a part of the consideration that Employee is providing Company in exchange for his or her employment and continued employment with Company is Employee’s agreement to maintain the secrecy of Company’s Trade Secrets and Confidential Information in the manner provided herein.

In consideration of the foregoing, Employee agrees as follows:

Duty of Loyalty

1. Duty of Loyalty. While employed by Company, Employee agrees at all times to devote his or her best efforts to the business of the Company, to perform conscientiously all duties and obligations required or assigned, and to not usurp for personal gain any opportunities in Company’s line of business.

Definition of Trade Secrets

2. Protection of Company’s Trade Secrets and Confidential Information.
a. Definition of Trade Secrets. Employee acknowledges and agrees that, through his or her employment with Company, he or she has been or will be exposed to or provided with the Company’s Trade Secrets. As defined by California law, “Trade Secrets” means information, including a formula, pattern, compilation, program, device, method, technique or process, that (i) derives independent economic value, actual or potential, from not being generally known to the public or to other persons or entities who can obtain economic value from its disclosure or use and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Company’s Trade Secrets include, but are not limited to, the following: _ _[Describe specific formulas, patterns, compilations, programs, devices, methods, techniques, and processes that the company believes constitute its trade secrets]_ _. Employee acknowledges and agrees that Company’s Trade Secrets are not generally known to the public or to the Company’s competitors, were developed or compiled at significant expense by Company over an extended period of time, and are the subject of Company’s reasonable efforts to maintain their secrecy and that Company derives significant independent economic value by keeping secret its Trade Secrets.

Definition of Confidential Information

b. Definition of Confidential Information. Employee acknowledges and agrees that, through his or her employment with Company, he or she has been or will be exposed to or provided with Company’s Confidential Information. “Confidential Information” means information belonging to Company, whether reduced to writing or in a form from which such information can be obtained, translated, or derived into reasonably usable form, that has been provided to Employee during his or her employment with Company, that Employee has gained access to while employed by Company, or that was developed by Employee in the course of Employee’s employment with Company, and that is proprietary and confidential in nature. Company’s Confidential Information includes, but is not limited to, the following: (i) information believed by Company to be a Trade Secret that ultimately does not qualify as such under California law but nonetheless was maintained by Company as confidential; (ii) information concerning the nature of Company’s business and its manner of operation; (iii) the methods and systems used by Company in soliciting, selling, and providing its services and products to its clients and customers; (iv) financial and accounting information, such as cost, pricing, and billing information, client and customer profiles, financial policies and procedures, and revenues and profit margins; (v) sales and marketing information, such as sales strategies and programs; (vi) information concerning Company’s clients and customers and prospective clients or customers; (vii) information concerning Company’s vendors and suppliers; (viii) client and customer lists; (ix) prospective client and customer lists; (x) information regarding client and customer buying habits and special needs; (xi) employment policies and procedures; (xii) personnel records; (xiii) software developed by or for the benefit of Company and related data source code and programming information (whether or not patentable or registered under copyright or similar statutes); (xiv) information about Company’s circuit designs, blueprints, CAD drawings and designs, layouts, algorithms, design technology and know-how, formulas, manufacturing and/or design techniques, inventions (whether patentable or not); and (xv) information concerning Company’s business relationships with persons, firms, corporations, and other entities.

Exclusions From Definitions

c. Information Not Included Within Definition of Trade Secrets or Confidential Information. For avoidance of doubt, Company’s Trade Secrets and Confidential Information do not include any information that (i) is already in the public domain or becomes available to the public through no breach of this Agreement by Employee; (ii) was lawfully in Employee’s possession prior to disclosure to the Employee by Company; (iii) is lawfully disclosed to Employee by a third party without any obligations of confidentiality attaching to such disclosure; or (iv) is developed by Employee entirely on his or her own time without Company’s equipment, supplies, or facilities and does not relate at the time of conception to Company’s business or actual or demonstrably anticipated research or development of Company.

Property of Company

d. Property of Company. Employee acknowledges and agrees that all Trade Secrets and Confidential Information developed, created, or maintained by Employee, alone or with others, while he or she is employed by Company, shall remain at all times the sole property of Company.

Covenant Not to Disclose

e. Covenant Not to Use, Publish, or Disclose Company’s Trade Secrets or Confidential Information During and After Termination of Employment. Employee acknowledges and agrees that Employee’s employment with Company creates a relationship of confidence and trust with Company with respect to all of Company’s Trade Secrets and Confidential Information. Therefore, at any time during Employee’s term of employment or following the termination of Employee’s employment with Company, whether voluntary or involuntary, Employee shall not, except as required in the conduct of Company’s business or as authorized in writing by Company, use, publish, or disclose any of Company’s Trade Secrets or Confidential Information in any manner whatsoever.

Covenant Not to Solicit

f. Covenant Not to Solicit Company’s Clients or Customers After Termination of Employment Through Use of Company’s Trade Secrets or Confidential Information. Employee agrees that for a period of _ _[insert number of months or years; typically under California law 1 to 2 years]_ _ following the termination of his or her employment with Company, whether voluntary or involuntary, Employee shall not, directly or indirectly, solicit or attempt to solicit any business from any of Company’s clients or customers for the purposes of providing products or services that are competitive with those provided by Company when such solicitation or attempt at solicitation is done by Employee through the use of Company’s Trade Secrets or Confidential Information.

Nonrecruiting Covenant

3. Nonrecruiting Covenant. Employee acknowledges and agrees that Company has invested substantial time and effort in assembling its current personnel. Therefore, Employee agrees that for _ _[insert number of months or years; typically under California law 1 to 2 years]_ _ following his or her termination of employment with Company, whether voluntary or involuntary, Employee will not, in regard to any employee of Company that Employee had “material contact” with, directly or indirectly recruit or attempt to recruit any employee of Company or induce or attempt to induce any employee of Company to terminate or cease employment with Company. For purposes of this paragraph, “material contact” shall exist when Employee supervised the employee of Company, or worked directly with the employee of Company, or otherwise received Trade Secrets or Confidential Information from the employee of Company. Notwithstanding the foregoing, nothing in this Section 3 shall prevent Employee from receiving and considering any application from any employee of Company that is not solicited by Employee or on Employee’s behalf.

Covenant Not to Compete During Employment Term

4. Covenant Not to Compete During Term of Employment. Employee agrees that, during his or her term of employment with Company, he or she will not, directly or indirectly, either as an employee, employer, consultant, agent, principal, partner, corporate officer, board member, or director, or in any other individual or representative capacity, engage or attempt to engage in any competitive activity relating to the subject matter of his or her employment with Company or relating to Company’s line of business.

Reasonableness of Restrictive Covenenats

5. Reasonableness of Restrictive Covenants. Employee acknowledges that he or she has carefully read and considered Sections 2, 3, and 4 of this Agreement and agrees that the restrictions set forth therein are fair and reasonable, are supported by valid consideration, and are reasonably required to protect the legitimate business interests of Company.

Prior Agreements

6. Prior Agreements, Relationships, and Commitments.
a. Employee represents that he or she has no agreements, relationships, or commitments to or with any other person or entity that conflict with or would prevent Employee from performing any of Employee’s obligations to Company under this Agreement or would otherwise prevent Employee from performing his or her job duties while employed by Company.
b. Employee will not disclose and has not disclosed to Company and will not use or induce Company to use any trade secrets or confidential information of others. Employee represents and warrants that he or she has returned all property, trade secrets, and confidential information belonging to others and is not in possession of any such property, confidential information, or trade secrets.
c. Employee agrees to indemnify, defend, and hold harmless Company and its officers, directors, and employees from any and all claims, damages, costs, expenses, or liability, including reasonable attorney fees and costs, incurred in connection with or resulting from any breach or default of the representations and warranties contained in this Section 6.

Termination of Employment

7. Termination of Employment. If Employee’s employment with Company is terminated for any reason, whether voluntarily or involuntarily, Employee shall promptly:
a. Inform Company of and deliver to Company all records, files, electronic data, documents, plans, reports, books, notebooks, notes, memoranda, correspondence, contracts, and the like in Employee’s possession, custody, or control that contain any of Company’s Trade Secrets or Confidential Information that Employee prepared, used, or came in contact with while employed by Company;
b. Inform Company of and deliver to Company all records, files, electronic data, documents, plans, reports, books, notebooks, notes, memoranda, correspondence, contracts, and the like in Employee’s possession, custody, or control that pertain in any way to the business of Company and that Employee prepared, used, or came in contact with while employed by Company;
c. Deliver to Company all tangible property in Employee’s possession, custody, or control belonging to Company, including but not limited to key cards, office keys, cell phones, pagers, personal digital assistants, external hard drives, thumb drives, Zip drives, laptop computers, and desktop computers; and
d. Allow Company’s representative to inspect Employee’s personal desktop computer, laptop computer, thumb drive, Zip drive, and any other external hard drive in order to determine whether any of Company’s Trade Secrets or Confidential Information reside on that computer or drive and to remove any Trade Secrets or Confidential Information.
e. Sign the Certificate of Compliance Post-Termination attached to this Agreement as Exhibit A.

Injunctive Relief

8. Injunctive Relief. Employee acknowledges and agrees that if Company’s Trade Secrets or Confidential Information were disclosed to a competing business or used in an unauthorized manner as provided herein, such unauthorized disclosure or use would cause immediate and irreparable harm to Company and would give a competing business an unfair business advantage against Company for which Company may not have an adequate remedy at law. Therefore, Employee agrees that, in addition to any other remedies available to Company at law or in equity, Company shall be entitled to any proper injunction, including but not limited to any temporary, preliminary, or final injunction, any temporary restraining order, and any temporary protective orders, to enforce Sections 2, 3, and 4 of this Agreement in the event of breach or threatened breach by Employee. The restrictive covenants contained in this Agreement are independent of any other obligations between the parties, and the existence of any other claim or cause of action against Company is not a defense to enforcement of those covenants by injunction.

Employment at Will

9. Employment at Will. Employee understands and agrees that nothing in this Agreement shall confer any right with respect to continuation of employment with Company, nor shall it interfere in any way with Employee’s right or Company’s right to terminate Employee’s employment at any time, with or without cause, with or without notice.

Waiver

10. Waiver. No waiver by Company of any breach of this Agreement shall constitute a waiver of any preceding or succeeding breach. No waiver by Company of any right under this Agreement shall be construed as a waiver of any other right.

Tolling and Suspension

11. Tolling and Suspension. In the event of a breach by Employee of any restrictive covenant contained in this Agreement, the running of the period of restriction shall automatically be tolled and suspended for the amount of time that the breach continues and shall automatically commence when the breach is remedied so that Company shall receive the benefit of Employee’s compliance with the terms and conditions of this Agreement.

Entire Agreement, Governing Law, Survival

12. Entire Agreement, Governing Law, Survival. This Agreement constitutes the entire agreement between Company and Employee regarding the secrecy, use, and disclosure of Company’s Trade Secrets and Confidential Information, and this Agreement supersedes any and all prior agreements regarding these matters. The provisions of this Agreement shall be governed by and construed in accordance with the laws of the State of California without giving effect to the principles of conflict of laws. This Agreement consists of a series of separate restrictive covenants, all of which shall survive and be enforceable in law and equity after Employee’s termination or cessation of employment.

Severability

13. Severability. Each provision of this Agreement is intended to be severable. If any court of competent jurisdiction determines that one or more of the provisions of this Agreement, or any part thereof, is or are invalid, illegal, or unenforceable, that invalidity, illegality, or unenforceability shall not affect or impair any other provision of this Agreement, and this Agreement shall be given full force and effect while being construed as if such invalid, illegal, or unenforceable provision(s) had not been contained in it. If the scope of any provision in this Agreement is found to be too broad to permit enforcement of that provision to its full extent, Employee consents to judicial modification of that provision and enforcement to the maximum extent permitted by law.

Closing Paragraph, Signatures

The undersigned acknowledges that he or she has read and understood this Agreement and that he or she signs this Agreement intending to be bound by its terms as of the date set forth below.

Date: _ _ _ _ _ _
[Signature of employee]__ _ _
[Typed name]_ _

Accepted and agreed to by Company:

Date: _ _ _ _ _ _ _ _
[NAME OF ENTITY]_ _, a _ _[specify entity, e.g., California corporation]_ _
By: __[Signature]__
Name: _ _[Typed name]_ _
Its: _ _[Title]_ _

EXHIBIT A CERTIFICATE OF COMPLIANCE POST-TERMINATION

To be executed at time of termination only.

I hereby certify that I have complied with and shall continue to comply with all the terms of the Employee Confidentiality, Nondisclosure, and Nonrecruiting Agreement (the “Agreement”), which I signed. All capitalized terms used but not defined in this Certificate shall have the meanings assigned to them in the Agreement.

I further certify that I do not have in my possession, nor have I failed to return to Company, any Trade Secrets or Confidential Information, or copies of the same, or any other documents, materials, equipment, or other property belonging to Company. I further certify that I will not retain any electronic, written, or other tangible material containing any information concerning or disclosing any of Company’s Trade Secrets or Confidential Information.

I agree that, in compliance with the Agreement, I will preserve as secret all of Company’s Trade Secrets or Confidential Information, and I will not participate in the unauthorized use or disclosure of Company’s Trade Secrets or Confidential Information.

On termination of my employment with Company, I will be employed by ____________________________________________ and will be working in connection with the following projects or matters:

________________________________________________________

________________________________________________________

________________________________________________________

________________________________________________________

________________________________________________________

________________________________________________________

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Date: _ _ _ _ _ _ __[Signature of employee]__ _ _[Typed name]_ _

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