Confidentiality and Non-Disclosure Agreement
(Loan Transaction)

This is a template confidentiality agreement to be executed by potential lenders before receipt of confidential information during the preliminary stages of a financing transaction. This template includes practical guidance and drafting notes. A confidentiality agreement, sometimes called a “non-disclosure agreement” or an “NDA”, is entered into to ensure that the information delivered to a potential lender by a borrower will be kept confidential and will only be used as part of such potential lenders’ evaluation of the proposed financing transaction. Confidentiality agreements protect borrowers by setting forth restrictions on how confidential information may be used and, if well-drafted, will also protect potential lenders by clarifying the ways that they may permissibly use confidential information. Borrowers will generally seek to negotiate a broad scope for these confidentiality provisions to afford their confidential information as much protection as possible. On the other hand, potential lenders will want to keep the NDA restrictions narrow to minimize the operational burden of handling confidential information and maximize their ability to use confidential information. If the financing transaction proceeds to closing, confidentiality provisions in the final financing documentation will supersede any confidentiality agreement signed at the preliminary disclosure stage. The provisions in the final financing documentation will address sharing of information among all parties to the transaction and will allow confidential information to be delivered to prospective successors and assignees of the lenders (since syndicated loan agreements and other financing transactions are often traded on the secondary market). However, until the transaction is actually closed, confidentiality obligations are often governed by an NDA with the understanding that potential lenders will not shop the deal in the secondary market until the primary syndicate of lenders has been arranged. A potential lender that decides to pass on the transaction is expected to return any confidential information to the borrower and not make further use of such information. Read this template in conjunction with the practice note Mechanics of Loan Syndication. For more information on non-disclosure agreements, see Confidentiality Agreements in Financing Transactions.