Non-Disclosure Exceptions: Compelled Disclosure

NDA

Non-Disclosure Exceptions: Compelled Disclosure

Disclosure in Compliance with Law

A party receiving confidential information under an NDA may be faced with a difficult situation if it is compelled by a court or regulatory authority to disclose such information. On one hand, the party is contractually obligated not to disclose the information unless one or more stipulated exceptions apply. On the other hand, the party risks being held in contempt, fined, or otherwise subject to civil (and possibly criminal) penalties for failing to comply with a subpoena or other duly issued order to disclose.

Accordingly, the right to make a disclosure under the so-called “forced disclosure” or “compelled disclosure” exception is often accompanied by several restrictions. The following exemplar identifies many of the standard exceptions to forced or compelled disclosure, including prior notice and responding narrowly/conservatively to a disclosure request:

Exemplar N18A-1

In the event that the Receiving Party or anyone to whom the Confidential Information has been supplied by that Party receives a request to disclose under the terms of a subpoena, order, civil investigative demand or similar process issued by a court of competent jurisdiction or by a governmental body all or any part of the Confidential Information, such Receiving Party agrees to:

(i) notify the Disclosing Party promptly in writing of the existence, terms, and circumstances surrounding such request;

(ii) consult with the Disclosing Party on the advisability of taking legally available steps to resist or narrow such request;

(iii) give the Disclosing Party the opportunity to defend, limit, or protect against such disclosure; and

(iv) if disclosure of such information is lawfully required, furnish only that portion of the Confidential Information which is legally necessary or appropriate in the light of all the circumstances and seek to obtain confidential treatment for any information required to be disclosed.

Exemplar N18A-2

The Evaluation Material will be used for the purpose of evaluating the Transaction and will be kept confidential by the Company, except that the Evaluation Material may be disclosed to any person or entity to whom information is required or requested to be disclosed by any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation.

Exemplar N18A-3

If the parties or any of their Representatives become legally compelled (by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process) or shall be advised by Counsel to disclose any of the Evaluation Material, the compelled party shall undertake reasonable efforts to provide the other party with prompt notice of such requirement or advice prior to disclosure so that the other party may seek a protective order or other appropriate remedy and/or waive compliance with the terms of this Agreement. If such protective order or other remedy is not obtained, or the other party waives compliance with the provisions hereof, the compelled party agrees to furnish only that portion of the Evaluation Material which it is legally required to so furnish and, at the request of the other party, to use reasonable efforts to obtain assurance that confidential treatment will be accorded such Evaluation Material, it being understood that such reasonable efforts shall be at the cost and expense of the party whose Evaluation Material has been sought.

Notice Requirement

The right to make a compelled disclosure may be limited by a requirement on the receiving party to give notice to the information owner to give the owner a meaningful opportunity to object to and/or seek a protective order against such disclosure. The following exemplars reflect this pre-disclosure notice requirement:

Exemplar N18A-4

Notwithstanding anything herein to the contrary, Recipient shall not be deemed to have violated this Agreement if it discloses Confidential Information in response to a subpoena or other lawful process issued by a court or agency of competent jurisdiction, on condition that the Recipient use reasonable efforts to notify the Discloser before any such disclosure so that the Discloser may seek by legal means to prevent or limit such disclosure, except to the extent that providing such prior notice to the Discloser is prohibited by law or regulatory authority.

Exemplar N18A-5

Each party agrees not to use the other's Confidential Information except in connection with the performance or use of the Service, as applicable, or the exercise of a party’s respective legal rights under this Agreement, or as may be required by law. Each party agrees not to disclose the other's Confidential Information to any third person except as follows: (i) to respective employees, agents, and representatives who have a need to know such Confidential Information, provided that such employees, agents, or representatives agree to confidentiality measures that are at least as stringent as those stated in this Agreement, and (ii) in response to a subpoena or other compulsory legal process, provided that each party agrees to give the other party reasonable written notice prior to disclosing Confidential Information under this subsection (or prompt notice in advance of disclosure, if seven days advance notice is not reasonably feasible), unless the law forbids such notice.

Exceptions to the Notice Requirement:

Prohibited By Law

An exception to the pre-disclosure notice requirement may be needed to cover circumstances where such notice is prohibited by law.

Exemplar N18A-6

Notwithstanding anything to the contrary contained herein, the Bank and its affiliates may disclose Confidential Information, without notice to the Company but only to the extent such notice is prohibited by law, to any governmental agency, regulatory authority or self-regulatory authority (including, without limitation, bank and securities examiners) having or claiming to have authority to regulate or oversee any aspect of the Bank’s business or that of its affiliates in connection with the exercise of such authority or claimed authority.

Exemplar N18A-7

Client acknowledges that Company is subject to examination and audit by federal and state regulatory agencies (collectively, the “Regulatory Agencies”) and that such Regulatory Agencies may require access to or delivery of Confidential Information of Contractor. Notwithstanding any other provision of this Agreement to the contrary, Client acknowledges that Company must comply with any such request from the Regulatory Agencies and agrees that Company will not be required to provide notice to Client of any such request or Company’s compliance therewith to the extent that such notice is prohibited by law.

Exemplar N18A-8

In the event Consultant is required to disclose Client documents or other communications under compulsion of law or by order of any court or governmental or regulatory body to whose supervisory authority Consultant is subject, Consultant shall notify Client as promptly as practicable under the circumstances to provide Client with a reasonable opportunity to intervene and shall cooperate with Client’s reasonable written instructions regarding same, unless prohibited by law or where Consultant has been requested by state or federal authorities not to divulge the existence of any legal process. In all events, Client agrees that Consultant shall have no obligation to assert any claims of privilege on Client’s behalf or its own behalf or to incur any legal expense defending against any demands of any party to produce Client documents or participate in any legal process.

Exemplar N18A-9

Notwithstanding the foregoing confidentiality obligations, the Receiving Party may disclose Confidential Information to the extent necessary (a) to comply with any law, rule, regulation or order applicable to the Receiving Party, (b) to comply with any subpoena or other legal process upon prior notice to the Receiving Party (unless prohibited by applicable law, rule, order or decree or other requirement having the force of law), or (c) as required by applicable law or a court of competent jurisdiction in connection with any litigation to which such party is a party; provided, however, that the Receiving Party shall first have given prior written notice to the Disclosing Party promptly upon becoming aware of any legal requirement to disclose any Confidential Information to enable the Disclosing Party to seek a protective order or other relief from disclosure of the Confidential Information. In the event of any required disclosure of the Confidential Information by a party, such party agrees to use all reasonable efforts to protect the confidentiality of the Confidential Information, seek a protective order or other relief from disclosure and only disclose that portion of the Confidential Information that is legally required to be disclosed.

Not Specific To/Not Targeted At

Another exception to giving pre-disclosure notice applies where the disclosure request is not specific to or targeted at the information owner:

Exemplar N18A-10

Notwithstanding the foregoing, the Receiving Party and its Representatives may disclose such information, and need not provide such notice, in connection with a proceeding in the ordinary course of the Receiving Party or any of its Representatives’ business (including in response to examinations, audits, oral questions, interrogatories or requests for information or documents), as applicable, and a regulatory authority with jurisdiction over the Receiving Party or such Representative; provided that such proceeding is not specifically directed at the Confidential Information or the Proposed Transaction, in which event the Receiving Party or such Representative shall provide notice to the Disclosing Party as specified above.

Exemplar N18A-11

Notwithstanding the foregoing, no prior notice or other action shall be required in respect of any disclosure made to any banking, financial, accounting, securities or similar supervisory authority exercising its routine supervisory or audit functions, provided that such disclosure and function are made in the ordinary course and are not specific to or otherwise targeted at the Company or the Proposed Transaction and the Confidential Information does not form a substantial portion of such disclosure.

Exemplar N18A-12

Notwithstanding anything contained in this Agreement to the contrary, neither the Company nor its Representatives shall be required to inform or notify Contractor or any other person or entity of any disclosure made to or requested by a bank examiner, regulatory examiner or self-regulatory examiner in the course of such examiner’s examination, inspection or audit, or to a credit bureau as required by law, and any such disclosure shall not be deemed a breach of this Agreement, provided that such disclosure is made in the ordinary course and is not specific to or otherwise targeted at Contractor or a transaction related to the Purpose and the Confidential Information does not form a substantial portion of such disclosure and for the avoidance of doubt, the Company shall only be required to notify Contractgor of a targeted exam if and to the extent permitted by applicable law or regulation.

Only What is Required

And then, even if a disclosure is legally compelled, the parties may agree that such disclosure be limited to only what is required under the law:

Exemplar N18A-13

The Receiving Party shall have no obligation to preserve the confidential or proprietary nature of any Information which it is required to disclose pursuant to an order of a duly empowered government agency or a court of competent jurisdiction, provided due notice and an adequate opportunity to intervene is given to the Disclosing Party, unless such notice is prohibited by such order, in which case, the Receiving Party shall disclose only such Information as is required and shall use reasonable efforts to obtain confidential treatment for any Information that is so disclosed.

Exemplar N18A-14

In the event that the Receiving Party, or any of its Representatives, is requested pursuant to, or required by, applicable Law to disclose any of the Disclosing Party’s Confidential Information, the Receiving Party or its Representative (as applicable) will notify the Disclosing Party as promptly as practicable under the circumstances so that the Disclosing Party may, at the Disclosing Party’s sole expense, seek a protective order or other appropriate remedy. In the event that no such protective order or other remedy is obtained, the Receiving Party or its Representative (as applicable) shall furnish only that portion of the Disclosing Party’s Confidential Information that the Receiving Party or its Representative (as applicable) determines, after consultation with its counsel, is required and will exercise commercially reasonable efforts to obtain reliable assurance that confidential treatment will be accorded such Confidential Information.

Integrated Exemplars

The following comprehensive exemplars reflect the issues discussed above regarding the exceptions for compelled disclosure (and exception to such exceptions):

Exemplar N18A-15

In the event that a Recipient or any of its Representatives are requested pursuant to, or required by, applicable law, regulation, regulatory or self-regulatory authority or legal process (collectively, “Law”) to disclose any Confidential Information, such Recipient will, to the extent permitted by Law, notify the Discloser promptly so that the Discloser may seek (at the Discloser’s sole expense) a protective order or other appropriate remedy (and, in such event, the Recipient agrees that it will, or will instruct such Representative to, provide reasonable assistance to the Discloser in such regard, at the sole expense of the Discloser) or, in the Discloser’s sole discretion, waive compliance with the terms of this Agreement. In the absence of such a protective order or other remedy or waiver prior to the time such Confidential Information is so requested or required to be disclosed, the Recipient or such Representative, as applicable, may, without violating this Agreement, disclose such portion of the Confidential Information that it is advised by counsel is required to be disclosed by Law and the Recipient shall (or shall instruct such Representative to) use commercially reasonable efforts to obtain reliable assurance that confidential treatment will be accorded to such portion of the Confidential Information disclosed. Notwithstanding anything herein to the contrary, the Recipient and its Representatives may disclose the Confidential Information of the Discloser in connection with any routine inspection, investigation, examination or inquiry (not specifically targeting the Discloser) by a regulatory or self-regulatory authority having jurisdiction over the Recipient or such Representative (or their respective affiliates) without providing notice to the Discloser or taking any other action hereunder.

Exemplar N18A-16

The term "Confidential Information" shall mean all information, whether written or oral, which is disclosed by the Company or its affiliates to Contractor and which is not in the public domain, but shall not include . . . which is required to be disclosed by Contractor or its outside counsel under compulsion of law (whether by oral question, interrogatory, subpoena, civil investigative demand or otherwise) or by order of any court or governmental or regulatory body to whose supervisory authority Contractor is subject, provided, that reasonable notice and an opportunity to intervene is given to the Company, unless such notice is prohibited by law, in which case Contractor shall disclose only such Confidential Information as is required and shall use reasonable efforts to obtain confidential treatment for any Confidential Information that is so disclosed, provided, further, that Contractor shall not be required to provide notice of any disclosures made in connection with any routine regulatory review of Contractor or its affiliates by any governmental agency or regulatory body with jurisdiction over Contractor or such affiliate, so long as such review is not specifically targeted at the Company; or (f) to Contractor's independent auditors or accountants who are bound by confidentiality obligations substantially similar to those prescribed in this Agreement.

Whistleblower Protection

An important express exception to an NDA’s standard non-disclosure restrictions involves legally protected disclosures under so-called “whistleblower” laws (for a more detailed examination of terms relating to disclosures subject to whistleblower laws, see the section entitled “Trade Secret Exception: Whistleblower Immunity” [N26B]). The following exemplar establishes the basic terms of this exception:

Exemplar N18A-17

Notwithstanding anything to the contrary in this Agreement or any other agreement between the Parties, the Parties understand and agree that nothing in this Agreement or any other agreement between the Parties prohibits, or is intended in any manner to prohibit, Supplier or any of its Representatives from reporting possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation and the Supplier (a) does not need the prior authorization of anyone at Buyer, including Buyer’s legal counsel to make any such reports or disclosures, or (b) is not required to notify Buyer that such reports or disclosures have been made.

CC

Non-Disclosure Exceptions: Compelled Disclosure

NDA

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