During the negotiation to sell off certain part of the business, the interested party who is an outsider would have access to some of your confidentiality data. Hence, it’s important to draw up a certain document which is called “ Confidentiality agreement” so as to protect the interest of your company in the event that the proposed buyer whether directly or indirectly leaks out confidential information to your competitors or others.

I append below a sample of such Agreement.

The Confidentiality Agreement can be in your Company’s letterhead and address to the outsider who is interested to buy certain part of your business. Please get acknowledgement of receipt of this document from the interested party.

Sample of Letter Agreement:

Name & Address of Interested Buyer

Dear Sir,

Confidentiality Agreement

We refer to your expression of interest in acquiring our business in xxxxxxxxxx(“ the Business”) by way of your fax dated xxxxx . You acknowledge that during the course of anticipated discussions in relation to the possibility of your acquiring business ( “ the Proposed Transaction”), certain confidential information will be disclosed or made available to you or your Representatives.

In consideration of our agreeing to furnish you with such information as we may deem fit, and subject to such conditions as we deem fit to impose, you hereby acknowledge, agree and undertake to us as follows:-

(1) Any written and oral information now or hereafter furnished, disclosed or communicated by us or on behalf to you in connection with the Proposed transaction and the Business, its financial position, operations, assets, affairs, organization, dealings, prospect, customers/clients and officers ( the “ Confidential Information”) is confidential and that the Confidential Information shall be kept in the strictest confidence and will not be disclosed, divulged, copied reproduced in any form whatsoever or distributed, supplied or provided (directly or indirectly), in whole or in part, by you or on your behalf to any person without our prior written consent except where such disclosure is expressly permitted hereunder.

(2) You acknowledge the confidential nature of the Confidential Information and that damage could result to the Business or any of its associated or related Companies if such Confidential Information is disclosed, divulged, copied, reproduced in any form whatsoever or distributed, supplied or provided (directly or indirectly), in whole or in part, to any third person or used by any third person.

(3) The Confidential Information is to be used solely for the purposes of evaluating the Proposed Transaction and shall not used in a manner or for a purpose detrimental to us or any part of the Business or that of its related or associated companies.

(4) You will take all steps to minimize the risk of disclosure of the Confidential Information by ensuring that the Confidential Information may only be disclosed on a “need-to-know” basis to those directors, employees or advisors approved by us (“Representatives”) who are directly involved in the evaluation and negotiation of the Proposed Transaction and whose duties require them to possess the Confidential Information; and who (prior to such disclosure) has agreed in writing to keep the Confidential Information strictly and completely confidential and to be bound by and adhere to the terms herein as if they were a party hereto. In the event , you shall be responsible for any breach of the terms of this letter agreement by any of your Representatives and shall take measures (including but not limited to court proceedings) to restrain such Representatives from prohibited or unauthorized disclosure or use of the Confidential Information.

(5)     Without our express written consent, you shall not, and shall procure that, none of your Representatives shall disclose to any person, publish any news releases or make any announcements or denial or confirmation in any medium in respect of the fact that the Confidential Information has been made available to you, that discussions or negotiations are taking place concerning a possible transaction or any of the terms, conditions or other facts with respect to any such possible transaction including without limitation, the existence of this letter agreement unless required by law.

(6) You shall also ensure the security and control of any Confidential Information which is in documentary or other tangible form by physically restricting the location and use of such Confidentiality Information to areas of restricted access in your premises and by storing such Confidential Information in a secured manner and place when the same is not in use.

(7) In the event that you or your Representatives are obligated to disclose any Confidential Information as a result of a court order or pursuant to any government action, it is agreed that prior to making such disclosure, you shall immediately notify us of the same so that we are given an opportunity to object to such disclosure or to seek a protective order and/or waive your compliance with the provisions of this letter agreement. Should any objection by you be unsuccessful or in the absence of a protective order or the receipt of a waiver hereunder, you or your Representatives are, in the opinion of your external legal advisers, obligated to disclose the Confidential Information to any court, tribunal or other administrative body that can impose criminal sanctions or else stand liable for contempt or suffer censure and penalty, you or such Representative may disclose only such Confidential Information to the extent legally required by the relevant court order or government action.

(8) Immediately upon request by us at any time and for any reason whatsoever, you hereby agree that you shall promptly deliver to us all and you shall not retain any, nor permit your Representatives to retain any, originals, copies or extracts from the documents containing the Confidential Information and that all Confidential Information is erased from any computer, word processor or other device under the control of you or your Representatives, provided that you or your Representatives will continue to be bound by the terms herein notwithstanding the return of the documents pursuant to this paragraph. You shall upon our request confirm to us in writing that the above has been effect.

(9) You shall immediately advise us of any unauthorized disclosure, misappropriation or misuse by any person of any Confidential Information, upon you having knowledge of the same.

(10) Neither we nor our shareholders, directors, officers, employees, advisers or agents accept responsibility for or make any warranty or representation, express or implied with respect to the accuracy or completeness of the Confidential Information. In particular, without limiting the generality of the foregoing, the Company specifically excludes any responsibility for any forward-looking statements and forecasts that may be contained in such Confidential information. These are merely internal management targets and you agree that actual events in the future may or may not match these statements. You further agree that neither we nor our shareholders, directors, officers, employees, advisers or agents shall have any liability to you or any other persons whatsoever and howsoever arising in connection with the Confidential Information and the supply or disclosure thereof.

(11) Any Confidential Information made available to you or your Representatives prior to, in the course of, or for the purpose of, evaluating and negotiating the Proposed Transaction, shall not constitute or be taken as a recommendation, an inducement or an offer by us or on our behalf, nor shall the Confidential Information contained therein form the basis or be relied on in connection with any contract and we are under no obligation to accept any offer or proposal made by you or on your behalf.

(12) You shall also be responsible for making your own assessment and decision on the Confidential Information and that you shall in the subsequent execution of any agreement(the “Agreement”) relating to the Proposed Transaction, acknowledge that you have not relied on or been induced to enter into any such agreement by any representation or warranty other than expressly set forth in such Agreement, subject to such limitations and restrictions as may be specified therein.

(13) You shall not for a period of 24 months from the date hereof:-

(i) either on your own account or for any person, firm, company or organization, solicit or entice or endeavour to solicit or entice away from any member of the Business, any director, manager or employee of any such company whether or not such person would commit any breach of his contract of employment by reason of leaving the service of the relevant company; and

(ii) directly or indirectly employ any director, manager, employee or consultant to the Business who by reason of such employment is or is likely to be in possession of any Confidential Information or trade secrets relating to the Business.

(14) You shall ensure that neither you nor your Representatives will at any time approach any of the Business’ customers/clients in connection with the Proposed Transaction.

(15) Disclosure of specific customer/client information will only be made after we have accepted such appropriate additional confidential arrangements as may be required by us (including if necessary, the obtaining of customer/clients’ consent).

(16) You undertake that you will not at any time make use of any Confidential Information for the purpose of dealing or causing or procuring another person to deal in the securities of our Company.

(17) You understand and agree that damages would not be an adequate remedy for any breach of the terms of this letter agreement by you and that in the event of any breach or threatened breach of the terms herein, we shall be entitled to equitable relief in addition to any other remedies which may be available to us in any competent jurisdiction. You further agree to indemnify us against any costs, expenses, losses, claims, damages or liabilities incurred by us directly or indirectly as a result of or arising out of any such breach.

(18) You shall bear any costs, expenses, damages or losses incurred by you or your Representatives in connection with the subject matter of this letter agreement whether or not a legally binding transaction ensues.

(19) The terms and conditions of this letter agreement shall continue to apply whether or not you shall enter into any agreement or transaction with us.

(20) This letter agreement does not apply to any Confidential Information which:-

(i) at the time of disclosure to you or your Representatives is in the public domain or becomes generally available to the public other than as a result of a breach of the terms herein by you or your Representatives;

(ii) is required to be disclosed by law; and

(iii) is in the lawful possession of you or your Representatives prior to disclosure by us, as evidenced by the written records of you or your Representatives and which was not acquired directly or indirectly from us.

(21) This letter agreement shall be governed by and construed in accordance with Malaysian law and the parties hereby submit to the non-executive jurisdiction of the Malaysian courts.

If you are in agreement with the foregoing, please sign and return to us a copy of this letter agreement which will constitute our agreement with respect to the subject matter of this letter agreement.

Yours faithfully

Seller Company

…………….

 

Sample of Acknowledgement by potential buyer company

 

To : Seller Company

Name & Address

 

Dear Sirs,

Confidentiality Agreement

We hereby accept the terms of the Confidential Agreement as set out in your letter of Monday,04 May 2005.

Yours faithfully,

For and ON BEHALF OF Buyer Company

……………………

Name :

Title:

 

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