SOFTWARE SOURCE CODE ESCROW AGREEMENT
This Software Source Code Escrow Agreeement (hereinafter referred to as the "Agreement") is made and effective _________________, 199_ , by and between _______________ (hereinafter referred to as the "Escrow Agent") and _______________________ (hereinafter referred to as the Developer").
Developer licenses the use of certain computer programs to certain users pursuant to license agreements. Continuous availability of such programs and maintenance thereof are critical to those users. Developer performs necessary maintenance and modification of its programs for its users without disclosing such documentation to them or other persons.
Developer wishes to protect the integrity of its programs from duplication, theft or other misappropriation by maintaining them in strict confidence as trade secrets, and wishes to inure that maintenance for Developer's software is available in the event Developer fails to fulfill its maintenance obligations or in the event Developer does not remain in business.
Escrow Agent is in the business of providing third party software escrow protection by storing, retaining and allowing limited access to proprietary computer software, related media and materials.
NOW, THEREFORE, the parties agree as follows:
1. Purpose of Agreement.
A. Developer will store with Escrow Agent certain computer program source code for the program(s) identified on Exhibit A. attached hereto, along with duplication instructions, flow charts, manuals, and other information necessary or appropriate for duplication and maintenance of said program(s) (the "Materials"); and
B. A "User" (as defined below) will be able to secure from Escrow Agent access to the Materials enumerated in its agreement with Developer and stored under this Agreement, under the circumstance, and subject to the terms and conditions, specified below. For these purposes a "User" is any licensee of one of Developer's computer software programs included with the Materials who:
A. Escrow Agent acknowledges (i) that Developer claims that the Materials contain information that includes trade secrets of Developer or another person; and (ii) that the Materials are intended to constitute items useful to persons reasonably skilled in computer technology for providing maintenance and/or manufacturing documentation support for computer software products Developer licensed to its Users, in the event that any of these Users becomes entitled to receive them.
B. From time to time during the escrow, Developer will furnish for User benefit then-current Materials to Escrow Agent that are either new Materials or in substitution for Materials in Escrow Agent's possession, and Developer shall identify the prior Materials that are superseded. Escrow Agent shall return to Developer such superseded Materials, provided they can be segregated conveniently. Escrow Agent is not responsible for enforcing or performing any obligation of Developer to Users to furnish then-current Materials.
C. Developer acknowledges that Escrow Agent does not intend, and is not expected, to open any package represented to contain Materials, except in the circumstance identified in Section 4 below, and hence, is not responsible for determining whether the Materials are useful and has no obligation to enforce Developer's duties under this Agreement.
D. Developer will retain copies of Materials left in Escrow Agent's possession and will furnish replacements of Materials to Escrow Agent promptly after each written request and without charge. However, if the reason for the request is that, through Escrow Agent's negligence or misconduct, any Materials were lost or damaged, Escrow Agent will reimburse Developer for the cost of the physical media so lost or damaged (but not for any costs incurred in re-recording or reconstructing the information recorded on such media).
3. Treatment of Material.
A. Escrow Agent will not furnish any Materials to any person other than Developer or a User so-entitled, except pursuant to a binding arbitration decision or final order of a court of competent jurisdiction, and will furnish Materials only pursuant to the provisions of this Agreement, or pursuant to such arbitration decision or court order. Escrow Agent shall not be required to incur any expense to challenge any arbitration decision or court order.
B. Escrow Agent will protect the Materials from disclosure to unauthorized persons by the use of the same measures it uses to protect its own software and documents of equivalent sensitivity.
C. Escrow Agent shall store the Materials in a climate controlled, secured storage area under the control of the Escrow Agent.
4. Release of Documentation.
A. Upon the occurrence of any Event of Default (as defined in Section 1) any User may notify Escrow Agent in writing as to such Event of Default (a "Notice"), and shall simultaneously provide a copy of any such Notice to Developer. Unless Developer shall have provided "Contrary Instructions" to Escrow Agent within ten (10) business days after Escrow Agent's receipt of such Notice, within five (5) business day following the end of such ten (10) day period, Escrow Agent shall deliver a copy of the Materials then in escrow to such User; provided, however, that Escrow Agent shall be under no obligation to deliver a copy of such Materials until such User has first paid to Escrow Agent the cost and expenses of reproduction and delivery of the Materials. Delivery to User shall terminate all duties and obligations of Escrow Agent to that User, and to Developer with respect to that User and with respect to the copy of the Materials delivered to that User.
B. "Contrary Instructions" for the purposes of this Escrow Agreement means a notarized affidavit executed by an officer of Developer stating that an Event or Events of Default specified in the User's Notice have not occurred, or have been cured.
C. Upon timely receipt of such Contrary Instructions, Escrow Agent shall not release a copy of the Materials then in escrow, but shall continue to store the Materials until otherwise directed by the User and Developer jointly, or until resolution of the dispute pursuant by a court of competent jurisdiction or binding arbitration order.
D. Developer shall be entitled to receive payment for costs, fees and expenses due it, prior to any release of a copy of the Materials.
E. Developer represents and warrants that its agreements with Users shall provide Users rights and obligations consistent with the provisions of this Section 4.
A. In consideration of performing its functions as Escrow Agent, Escrow shall be paid by Developer as set forth in Exhibit B. The fees set forth in Exhibit B will be billed periodically by Escrow Agent to Developer. Developer shall pay amounts due within thirty (30) days of receipt of Escrow Agent's invoice.
B. The fees set forth in Exhibit B are for the ordinary services of Escrow Agent. In the event Escrow Agent is required to perform additional or extraordinary services not contemplated in this Agreement, including intervention in any litigation or proceeding, Developer shall pay Escrow Agent reasonable compensation for such services and reimburse Escrow Agent for reasonable costs incurred, including attorney's fees.
6. Discharge of Escrow Agent.
A. Escrow Agent will be deemed to be discharged in the event that Developer removes all the Material from Escrow Agent's premises. Except as otherwise provided herein, Developer may do this at any time, entirely in its discretion, by giving at least thirty (30) days' prior notice to Escrow Agent who, upon receipt of Developer's notice, shall notify all Users.
B. Escrow Agent may resign as such, at its discretion, by giving Developer and all Users at least thirty (30) days' prior notice. Promptly after that resignation becomes effective, Escrow Agent will furnish to Developer all Material in its possession.
C. Whenever Escrow Agent ceases to hold the Materials in escrow, it will send a notice to that effect promptly to all Users.
Developer acknowledges that this Agreement is an "agreement supplementary to" each License Agreement as provided in Section 365(n) of Title 11, United States Code (the "Bankruptcy Code") as amended. Developer acknowledges that if Developer as a debtor in possession or a trustee in bankruptcy in a case under the Bankruptcy Code rejects a License Agreement or this Agreement, each User may elect to treat its License Agreement and this Agreement as terminated or to retain its rights under the License Agreement and this Agreement as provided in Section 365(n) of the Bankruptcy Code. If a User elects to retain its rights under the License Agreement and this Agreement, then upon written request of the User to Developer or the bankruptcy trustee, Developer or such Bankruptcy Trustee shall not interfere with the rights of User as provided in the License Agreement and this Agreement, including the right to obtain the Materials from Escrow Agent.
8. Indemnity and Liability of Escrow Agent.
A. Developer will indemnify Escrow Agent for, and hold it harmless against, any loss, cost, suit, damage, claim or expense incurred or suffered in connection with, or as a result of, serving as escrow agent, except any suffered as a result of Escrow Agent's negligent or intentional acts.
B. Except for liability to Developer for a breach of this Agreement, Escrow Agent will not be liable to Developer, any User, or any other person for any harm that results from any act or omission of Escrow Agent in connection with its serving as Escrow Agent, except in the case of Escrow Agent's negligence.
9. Effect of Waiver.
The waiver or failure of either party to exercise in any respect any right provided for in this Agreement shall not be deemed a waiver of any further or future right under it.
10. Applicable Law.
This Agreement shall be governed construed and enforced according to the laws of the [State of Governing Law].
All notices required or given pursuant to this Agreement shall be sufficiently served by mailing the same by certified or registered mail, return receipt requested, to the parties at their respective address as follows:
If to Escrow Agent:
In the event any of the provisions of this Escrow Agreement shall be held by a court of competent jurisdiction to be contrary to any state or federal law, the remaining provisions of this Escrow Agreement will remain in full force and effect.
The section headings in this Agreement are provided for convenience only and shall not be used to construe the meaning or intent of any term.
14. Final Agreement.
This Agreement terminates and supersedes all prior understandings or agreements on the subject matter hereof. This Agreement may be modified only by a further writing that is duly executed by both parties.
IN WITNESS WHEREOF, the parties have executed this Escrow Agreement on the date first above written.
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