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Explanation for EMPLOYEE Non Disclosure AGREEMENT

Below we provide an explanation for each of the provisions in the Employee Non Disclosure Agreement.

1.    Introductory Paragraph

Fill in the name of the company and employee.

Select Alternative 1 if a new employee will be signing the agreement.

Select Alternative 2 if the agreement is with a current employee. To ensure that the agreement will be legally binding, the employee should receive something of value over and above normal salary and benefits for signing it-for example, cash, additional vacation time, stock options or other benefits. Specify the compensation to be provided. It does not have to be substantial-for example, several additional days of vacation per year should do it.

2.    Company's Trade Secrets

This clause defines your company's trade secrets. You don't need to add anything to it; it sets out the types of information and material that should be considered trade secrets. There are several ways to define your company's trade secrets; you can use any of the alternatives provided here.

3.    Nondisclosure of Trade Secrets

This clause bars the employee from making unauthorized disclosures of your trade secrets. It also requires the employee to protect the trade secrets and shows that you're serious about keeping trade secrets secret.

This clause also explains that the employee's nondisclosure obligation does not extend to:

  • information the employee knew before coming to work for the company

  • information learned from sources outside the company, or

  • information that is public knowledge (so long as the employee didn't make it public).

4.    Confidential Information of Others

It is a good idea to remind new employees not to disclose to the company trade secrets learned from prior employers or others. Employers who take advantage of such information can easily end up being sued.

5.    Return of Materials

This clause requires employees to return all materials containing trade secrets when they leave the company. They should be reminded of this obligation before they leave. (See Chapter 2 for suggestions on conducting an "exit interview" when an employee leaves.)

6.    Confidentiality Obligation Survives Employment

This makes clear that the employee's duty not to disclose confidential information does not end when the job does. As long as the material remains a trade secret, the duty to keep it secret remains.

General Provisions

Here's an an explanation for the boilerplate provisions --  Relationships, Severability, Integration, Waiver. Injunctive Relief, Indemnity, Attorney Fees, Governing Law, Jurisdiction, Successors & Assigns, and Signatures

 

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