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SOFTWARE ESCROW AGREEMENT
INTRODUCTORY COMMENTS: This sample agreement assumes a certain fact scenario and
is not meant to be representative of, or intended to create standards for, every possible
agreement whereby software developer agrees to place in escrow copies of its proprietary
software for the benefit of a new media producer who has licensed the right to use the software
in a new media project. Although based on examples of real transactions, by no means should
the reader conclude that the Agreement reflects commercial reality currently in existence in
Canada. Indeed, it is unlikely that the parties would contemplate incurring the costs associated
with an escrow agreement unless the proprietary software was very valuable and it was critical
to protect the source code and other confidential aspects of the software and there was no other
means of doing so. Software escrow agreements are used when the software developer does
not want to provide the source code to the licensee of the software in order to protect its trade
secrets and valuable proprietary software. Typically, the software license will have included a
maintenance agreement whereby the software developer provides its services to update,
maintain and repair the software licensed to the Licenses, since the Licensee will be unable to
perform those services without the source code. However, should the developer go out of
business or is otherwise unable to provide such maintenance services, the Licensee will not be
able to maintain the software it has properly licensed absent the source code. The purpose of
the escrow agreement is to protect the Licensee’s right to access the source code should
certain triggering events occur during the term of the license. The developer deposit a copy of
the source code in the hands of an independent third party who is contractually obliged to keep
it safe and confidential during the term of the license and to release it to the Licensee if the
developer goes out of business or is otherwise unable to continue to maintain it for the
Licensee.
In the following Agreement, it is assumed that New Media Productions Inc. (“Licensee”) has
licensed certain proprietary software from the “Developer” for use in an interactive new media
project (“Web Project”) the Licensee is producing. The Developer has not given the Licensee
the source code. Together they have agreed to enter into a Software Escrow Agreement with
an Escrow Agent. The comments provided herein are for educational purposes only and should
not be construed as providing any legal advice whatsoever. Anyone contemplating using this
template agreement for commercial purposes should consult an experienced lawyer for advice
and guidance. It should not be used as a substitute for consulting with legal counsel and
receiving advice based on the circumstances of a particular transaction. Due to the pace of
technological change, business practices, distribution methods and the law applicable to new
media is constantly and rapidly changing. Many of the legal principles discussed below are
subject to exceptions and qualifications that may not be mentioned and case law and legislation
may vary from jurisdiction to jurisdiction.
SOFTWARE ESCROW AGREEMENT
THIS AGREEMENT effective as of [DATE], [YEAR]
BETWEEN:
NEW MEDIA PRODUCTIONS INC. (“Licensee”)
a corporation incorporated under the laws of the Province of X,