Software Escrow Clauses

A software escrow agreement is typically put in place as part of a wider software license, development or investor agreement.

Software escrow agreements are an arrangement to protect the beneficiary in the unlikely event that the developer ceases operations or the agreement is terminated due to a material breach.

The Escrow Company provides a pre-defined set of Event of Default clauses for all our agreements.

The clauses below are sourced from the The Escrow Company template agreements and may be modified if all parties agree to them.

• 4.1. The occurrence of any of the following shall constitute an “Event of Default” for purposes of this Agreement:
• 4.1.1. Depositor’s material failure to support the Deposit Materials in accordance with the License Agreement and failed to cure such material failure within ten (10) Business Days of Beneficiary’s written notice to Depositor of such material failure;
• 4.1.2. Depositor’s application for or consent to the appointment of a trustee, receiver or other custodian for Depositor, or makes a general assignment for the benefit of its creditors;
• 4.1.3. Any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceedings commenced by or against Depositor, and if such case or proceeding is not commenced by Depositor if it is acquiesced in or remains un-dismissed for sixty (60) days;
• 4.1.4. Depositor ceasing active operation of its business or discontinues the licensing or maintenance of the Deposit Materials in material breach of the License Agreement; or
• 4.1.5. Depositor assigning its Intellectual Property Rights to the Product to a “Third Party” and within 60 days, the Third Party does not agree to offer the Beneficiary substantially similar protection to that provided by this Agreement without significantly increasing the cost to the Beneficiary.

All The Escrow Company agreements include a Dispute Resolution clause. The purpose of this clause is to provide the opportunity for the developer to dispute any of the alleged Events of Default. If the dispute is unable to be resolved, The Escrow Company will appoint an independent arbitrator in London, UK, Atlanta, USA, Toronto, Canada, EU or Sydney, Australia. The sole purpose of the arbitrator will be to decide whether or not an Event of Default has occurred at the time the release application was delivered.

6. DISPUTE RESOLUTION

• 6.1.  A dispute resolution may be requested within thirty (30) Business Days of receipt of any Contrary Instructions pursuant. If The Escrow Company receives a call for dispute resolution by any of the parties pursuant to section 5 hereof, The Escrow Company shall appoint an independent arbitrator in {Atlanta, Georgia, USA / Toronto, Canada / London, England, EU or Sydney, Australia).
• 6.2. The parties shall submit all their claims including supporting documents in writing to the arbitrator within ten (10) Business Days following delivery of the request for dispute resolution. The sole question to be determined by the arbitrator shall be whether or not there existed an Event of Default at the time that the Contrary Instructions were delivered under Section 5. The decision by the arbitrator will be established on the written documentation submitted by all the parties without the requirement for a hearing.
• 6.3. Notwithstanding the applicable rules or arbitration, all arbitral awards shall be in writing and shall set forth in detail the findings of fact and conclusions of law of the arbitrator. The decision of the arbitrator shall be final and binding upon the parties and enforceable in any court of competent jurisdiction. The arbitrator shall immediately deliver a copy of such decision to Depositor, Beneficiary and The Escrow Company.
• 6.4. If the arbitrator finds that the Notice was properly given by the Beneficiary and that an Event of Default existed at the date Depositor had delivered the Contrary Instructions, The Escrow Company shall promptly deliver the Deposit Materials to Beneficiary.
• 6.5. All fees and expenses charged by the arbitrator in the arbitration shall be paid by the non-prevailing party in the arbitration. Each party shall bear the cost of its own counsel’s fees and expenses in connection with any arbitration or judicial proceeding brought hereunder.