Hi Preet,
Escrow is normal business practice and it says they are taking the
relationship seriously.
Yes, get a good legal adviser to give you good advice!
Many years ago, I paid many thousands of dollars to get the following
agreement written up (which was very poor advice).
As I paid full price for it and there is no do not release clause in the
contract, please feel free to use as you need (but at your own risk).
I have taken out identifying information to protect the guilty and
incompetent!
Be warned, look at clause 10C and 11B, you will see the text:
10C: If any of the events specified in paragraphs (i) to (v) of this Clause
10 (c) occur
11B: If the events specified in paragraphs (i) to (iv) of this Clause 11(b)
occur
The failure of my useless lawyer to include the phrase “any of” in 11B cost
me months of f---ing about, when the client went bankrupt and I had to
prove that each of the four trigger events had occurred before I could get
out of the contract.
Yes I should have seen that, but that is what I was paying my shit useless
lawyer for.
Oh and by the way, I hired one of the “big” law firms, who you pay not to
make this sort of mistake. I should have sued the bastard lawyer that
wrote up the agreement!
Most escrow firms these days will have a standard agreement, which will be
balanced between serving your company and your client's company, but will
give the escrow company as much wiggle room as they can.
I was surprised that the escrow company we used did not have a standard
agreement and it cost me so much to get one written!
But this was a long time ago (in the 1990's).
A bit of Googling around I am sure will find you other agreements online.
Make sure you look at the release clauses and make sure that you are
comfortable with them.
Take care, what if the client does not upgrade, are you still supporting
their version of the software?
That could trigger a release.
Regards
Greg
*SOFTWARE ESCROW AGREEMENT*
DATED: dd-mmm-yyyy
*PARTIES:*
1. ESCROW company
ACN 123 456 789
2. My Company
ACN 123 456 789
3. Client Company
ACN 123 456 789
*THIS SOFTWARE ESCROW AGREEMENT* is made on dd-mmm-yyyy
BETWEEN: Escrow Company of the first part.
Address
AND My Company of the second part
Address
AND Client Company of the third part
Address
* WHEREAS:*
*A. *My Company and Client Company have jointly developed
computer software and related material (“Software Package”). Where My
Company owns the Source code and Client Company owns the right to use the
source code on the terms set out in the Agreement.
*B. *Access to the Material (as defined hereunder) may be
required by Client Company.
*C. *My Company has agreed to deposit with Escrow Company a copy
of the Material to enable Client Company to obtain access to the Material
in the circumstances specified in this Agreement.
*NOW THIS AGREEMENT WITNESSES:*
*1. **Definitions.*
In this Agreement the following terms have the following meanings:
*“Deposit Package”* means the latest version of the Material delivered to
and held by Escrow Company, along with:
(1) each previous version of the Material up to four previous
versions; or
(2) each previous version of the Material, each such version to
be held by Escrow Company for three months from the date of delivery to
Escrow Company of the subsequent version, whichever is the greater number
of versions.
*“Agreement” *means the Software Ownership, Support & Maintenance Agreement
between the My Company and Client Company dated dd-mmm-yyyy pursuant to
which Client Company owns the right to use the Software Package and My
Company retains the ownership of the Source code.
*“Material”* means a copy of the source code and object code together with
other documentation relating to the Software Package which may be required
by Client Company for the understanding, maintaining, modifying and
correcting of the Software Package and which is not furnished by My Company
to Client Company under the Agreement, except pursuant to clause 12 thereof.
*“Modification” *means a change to the Software Package provided by My
Company to Client Company under the Agreement which is designed to overcome
errors or malfunctions, or designed to improve the operation of the
Software Package and includes a new version of the Software Package.
*2. Appointment of Escrow Holder*
Escrow Company is hereby appointed jointly by My Company and Client Company
and is granted full power and authority to act on behalf of each party on
the terms and conditions of this Agreement.
*3. Duration*
This Agreement shall remain in force until the Deposit Package is released
in accordance with this Agreement or the Agreement is otherwise terminated.
*4. **My Company’s Obligations*
(a) My Company shall deliver to and deposit with Escrow
Company one copy of the latest version of the Material within thirty (30)
days of the date of this Agreement.
(b) Whenever any Modification is made My Company shall
within 35 days deliver to and deposit with Escrow Company as soon as
practicable whatever additional or substitute Material which is required to
make the Deposit Package equivalent to the latest version of the Material.
*5. **Escrow Company Obligations*
(a) Escrow Company shall accept custody of the Deposit
Package on the date of delivery in accordance with Clause 4 of this
Agreement and, subject to the terms of this Agreement, shall hold the
Deposit Package on behalf of My Company and Client Company.
(b) Escrow Company shall take all necessary steps to ensure
the preservation, care, safe custody and security of the Deposit Package
while it is in the possession, custody or control of Escrow Company.
(c) Escrow Company shall maintain a register of all
Material deposited, stored and released pursuant to this Agreement and
shall promptly comply with a request by My Company or Client Company to be
permitted to inspect the register during normal business hours, or be
provided with a copy of such register.
(d) Escrow Company shall be under no obligation or
responsibility:
(i) to determine the nature, completeness or accuracy of
the Deposit Package.
(ii) for any transaction between by My Company and Client
Company, other that the performance of its obligations under this Agreement
with respect to the Deposit Package.
*6. Confidentiality*
(a) Escrow Company shall not make public or disclose to any
person any information about this Agreement or the Deposit Package or allow
any person access to the Deposit Package except as permitted by this
Agreement or as required by law.
(b) Escrow Company shall not reproduce or cause to be
reproduced a copy of the Deposit Package or any part thereof.
(c) Escrow Company shall ensure that its employees observe
the provisions of this Clause 6.
(d) The obligations of this Clause shall survive the
termination of this Agreement.
*7. Escrow Fees*
Subject to clause 8, My Company shall pay Escrow Company for the services
provided by Escrow Company under this Agreement as specified in Schedule
1. No charge additional to those specified in Schedule 1 may be made by
Escrow Company in respect of time spent or expenses incurred in exercising
any discretion or discharging any obligation under this Agreement. Such
fees shall be due in full within 30 days of the receipt by My Company of a
correctly rendered invoice and such payment shall be of the essence of this
Agreement.
*8. Tests*
Upon 21 days prior written notice to Escrow Company and My Company, Client
Company shall have the right to conduct tests of the Deposit Package under
the supervision of My Company, and shall be given such information by
Escrow Company and My Company as Client Company reasonably requires to
confirm that Escrow Company holds the latest version of the Material. All
such tests will be conducted in accordance with the test clause in the
Agreement. All cost incurred in performing the test including Escrow
Company fees for such test as specified in Schedule 1 will be borne by
Client Company.
*9. **Intellectual Property*
Source code copyright and all other intellectual property rights in the
Deposit Package shall remain with My Company.
*10. Release of the Deposit Package*
(a) Escrow Company shall not release, or allow access to,
the Deposit Package except in accordance with the terms of this Agreement.
(b) Escrow Company shall release the Deposit Package to
Client Company upon written notice from My Company.
(c) If any of the events specified in paragraphs (i) to (v)
of this Clause 10 (c) occur, Client Company must provide written notice of
such event to both Escrow Company and My Company. If My Company does not,
within 14 days of receiving the notice, provide to Escrow Company written
objections to the release of the Deposit Package Escrow Company shall
release the Deposit Package to Client Company. If My Company objects to
the release of the Deposit Package Escrow Company shall provide a copy of
the written objection to Client Company. If Client Company and My Company
cannot resolve their difference regarding the release of the Deposit
Package within 7 days, Escrow Company shall refer the matter for dispute
resolution in accordance with Clause 16.
i My Company has become subject to any form of insolvency
administration;
ii My Company has ceased to maintain or support the Software
Package in breach of its obligations under the Agreement;
iii My Company ceases to carry on business;
iv My Company declines to perform an enhancement requested by
Client Company under the Agreement; or
v the Agreement is terminated by My Company in accordance with
clause 20 of that agreement.
*11 Release of Deposit Package to A. My Company*
(a) Escrow Company must release the Deposit Package to My Company
if the Agreement is terminated by Client Company in accordance with clause
20 of that Agreement.
(b) If the events specified in paragraphs (i) to (iv) of this
Clause 11(b) occur, My Company may provide written notice of such event to
both Escrow Company and My Company. If Client Company does not, within 14
days of receiving such notice, provide to Escrow Company written objections
to the release of the Deposit Package on the basis that the assertions of
fact relied upon by My Company are inaccurate, Escrow Company shall release
the Deposit Package to My Company. If Client Company makes such objection
to the release of the Deposit Package Escrow Company shall provide a copy
of the written objection to My Company. If Client Company and My Company
cannot resolve their difference regarding the release of the Deposit
Package within 7 days, Escrow Company shall refer the matter for dispute
resolution in accordance with Clause 16.
i Client Company is in breach of the Agreement and has not
rectified the breach within the period of notice required by the Agreement
or otherwise specified by My Company;
ii Client Company has become subject to any form of insolvency
administration;
iii Client Company ceases to carry on business;
iv the Agreement is terminated by Client Company in accordance
with clause 20 of that Agreement
*12. Client Company’s Permitted Use*
In the event the Deposit Package is released to Client Company in
accordance with Clause 10, Client Company shall only be entitled to use the
Deposit Package to maintain or correct the Software Package and shall not
do, or allow to be done, any act which is inconsistent with the terms and
conditions of the Agreement, or My Company’s intellectual property rights
in the Deposit Package or the Software Package.
*13. Termination*
(a) This Agreement shall be immediately terminated if
i Escrow Company becomes subject to any form of insolvency
administration; or
ii the Deposit Package is released by Escrow Company in
accordance with this Agreement.
(b) This Agreement may be terminated by Escrow Company
giving 3 months written notice to My Company and Client Company.
(c) This Agreement may be terminated by My Company and
Client Company jointly giving 3 months written notice to Escrow Company.
(d) This agreement may be terminated by My Company
immediately by notice in writing to the other parties if Escrow Company is
in breach of any term and the breach is not remedied within 14 days after
written notice by My Company.
(e) Upon termination of this Agreement under this Clause 13
(other than subclause 13(a)(ii)), the Deposit Package shall be returned to
My Company or, if My Company is no longer in existence, to such person or
firm as reasonably appears to Escrow Company to be entitled thereto.
*14. Amendments*
This Agreement shall not be revoked, rescinded or modified as to any of its
terms except by written agreement between the parties.
*15. Governing Law*
This Agreement shall be governed by and construed in accordance
with the law in force in the State of XYZ.
*16. Dispute Resolution*
All questions and matters in difference between the parties or between the
Owner and the Licensee relating to the release of the Deposit Package shall
be referred to the award and final determination of the President for the
time being of The Law Society of XYZ, or whomsoever that person shall
appoint.
*17. Force Majeure*
Failure or omissions to carry out or to observe any of the conditions of
this Agreement shall not give rise to any claim against a party or result
in the breach of this Agreement if such failure or omission arises by
reason of delay or inability to perform, caused by war whether declared or
not, insurrection, strikes, inability to obtain material, fire, storm or
other severe action or the elements, accidents, government restrictions or
for any other cause whether like or unlike the foregoing which are
unavoidable or beyond the control of the relevant party.
*18. Description of Software Package*
XYZ is a system for managing ABC and DEF in a GHI Organisation. Refer to
the attached user guide for a partial description of the application.
*19. Notices*
All notices under this Agreement shall be in writing and shall be deemed to
have been duly delivered when delivered by hand, mailed by registered
post or sent by facsimile transmission to the party to whom such notice is
required to be given at the following addresses:
*Escrow Company* Address
*My Company* Address
*Client Company *
Address
*Executed as an Agreement*
SIGNED for and on behalf of Escrow Company )
By a duly authorised representative in the )
Presence
of:
)
……………………………………………………. ………………………………………………
SIGNED for and on behalf of My Company )
By a duly authorised representative in the )
Presence
of:
)
……………………………………………………. ………………………………………………..
SIGNED for and on behalf of Client Company )
By a duly authorised representative in the )
Presence
of:
)
*SCHEDULE 1*
*SCHEDULE OF FEES*
*APPLICATION*
Application and processing of Escrow Company Standard Agreement:
One time fee $xxx.00
Application and processing of non standard agreement:
One time fee $yyy.00
*ANNUAL DEPOSIT FEE*
One Unit of Escrow Storage.
(One half cubic foot equals one Unit)
Includes controlled retention of deposits and maintenance
Of audit records and documentary evidentiary support of
Deposit movements; processing and certification of up to 4
Update deposits per annum.
Deposits in excess of 4 per annum will be charged at the
Additional rate set out
below.
$zzz.00
ADDITIONAL CHARGES
Additional Storage
Units
$aaa.00
Add or replace material to existing Deposit Package
$bbb.00
Verification
Release
$ccc.00
Controlled release and delivery of Deposit Package to
Client Company or court of competent jurisdiction.
Payable at the time of
request:
$ddd.00
*Courier costs to be met by requesting party*
RENEWAL FEES
Fees may be reviewed annually as at each anniversary of the date of the
Escrow Agreement and notice of any increase in fees shall be given in
writing 1 month prior to the anniversary date. Any such increase in fees
shall be limited to a maximum of 10% of the fees prior to such increase.
On Fri, Nov 6, 2015 at 12:14 PM, Preet Sangha <[email protected]> wrote:
> Thanks everyone. Just as an FYI I'm no longer a freelancer and am now
> working for a company. It's just the administrative side of things that
> have fallen into my lap, and not the legal side (atm)!
>
> Luckily we're moving to a new TFS based system so most of the admin side
> of the code preparation is fresh in my mind but I appcreciate that we'll
> need to be thorough (lot of dotting i's and crossing t's).
>
> From a general perspective - the escrow company has been doing it for 30
> years and I'll be chatting to them next week and wanted to get an idea of
> things I need to think about before talking to them. And all your comments
> have helped raise some talking points that should make it easier for me.
>
> Thank you.
>
>
>
>
> regards,
> Preet, in Auckland NZ
>
>
> On 6 November 2015 at 13:25, David Richards <[email protected]>
> wrote:
>
>> I haven't had to deal with the administrative side but I have had to
>> prepare the source code for such things. The biggest hassle is packaging
>> it in a format that is useful. You can't just give them you VS solution or
>> eclipse project. You need to include everything else necessary to
>> successfully compile the code. This includes third party libraries, DB
>> scripts, documentation, etc. You tend to forget everything you did to set
>> up your dev environment or build server so this can take some effort. It
>> also means maintaining this escrow package somewhere because you will
>> typically have to update it as you update your product.
>>
>>
>> David
>>
>> "If we can hit that bullseye, the rest of the dominoes
>> will fall like a house of cards... checkmate!"
>> -Zapp Brannigan, Futurama
>>
>> On 6 November 2015 at 11:02, Greg Low (罗格雷格博士) <[email protected]> wrote:
>>
>>> Mostly it’ll be because they have some concern about your company’s long
>>> term viability. It probably isn’t that they don’t want to pay for it. They
>>> just don’t want to have a situation where you disappear and they have no
>>> way to continue to work on it.
>>>
>>>
>>>
>>> I’ve seen that in a number of contracts.
>>>
>>>
>>>
>>> There’s a product that we shipped years ago in binary-only form. Someone
>>> asked about a source license and so we made one available for 25 times the
>>> binary price, thinking no-one would ever buy it. The source licenses ended
>>> up providing the highest income from the product. Many large companies
>>> purchased the source license, not because they wanted to work on the
>>> source, but just because they never wanted to be stuck if we weren’t around
>>> anymore.
>>>
>>>
>>>
>>> Regards,
>>>
>>>
>>>
>>> Greg
>>>
>>>
>>>
>>> Dr Greg Low
>>>
>>>
>>>
>>> 1300SQLSQL (1300 775 775) office | +61 419201410 mobile│ +61 3 8676 4913
>>> fax
>>>
>>> SQL Down Under | Web: www.sqldownunder.com
>>>
>>>
>>>
>>> *From:* [email protected] [mailto:
>>> [email protected]] *On Behalf Of *Tony Wright
>>> *Sent:* Friday, 6 November 2015 10:08 AM
>>> *To:* ozDotNet <[email protected]>
>>> *Subject:* Re: Escrow : anyone been involved in the process?
>>>
>>>
>>>
>>> Hi Preet,
>>>
>>> I would be very wary of entering into that process unless title was kept
>>> by you until they paid in full. They mustn't be allowed to use the software
>>> in production like environments until they've paid for everything. Escrow
>>> sounds to me like they will hold back payment until the software is big
>>> free, and as we all know that never happens.
>>>
>>> Kind regards, Tony
>>>
>>> On 6 Nov 2015 9:30 am, "Preet Sangha" <[email protected]> wrote:
>>>
>>> One of our customers (UK govt org) has requested that the software we
>>> provide is held in escrow.
>>>
>>>
>>>
>>> This will be our first product that is going to be escrowed and I've
>>> never been involved in the process and was wondering if it's a relatively
>>> straightforward process or something we'll need to carefully plan for.
>>>
>>>
>>>
>>> Also if there are any gotchas you found that would be great to hear
>>> about in advance. Thank you
>>>
>>>
>>>
>>>
>>> regards,
>>> Preet, in Auckland NZ
>>>
>>>
>>>
>>>
>>
>
