When a business purchases software from a creator-owner, the business will want to ensure the latter’s ability to support, maintain and improve its software, especially when this involves a significant investment. In such a case, the business will, prior to implementing the software, want to protect itself against adverse events that may prevent the use of the software and its evolution.

One way to resolve this problem is an escrow agreement, under which a copy of the source code as well as a copy of all related documentation is placed in the hands of a third party (the depositary) for safekeeping and returned to the client in the event that an event endangers the software. Depositing the source code with a third party gives the client access to the software in a timely manner, without requiring disclosure of the software content that might otherwise adversely affect the interests of the creator-owner. This template sets out the main elements of the legal framework relating to this type of agreement.

We recommend using this template to govern the tripartite relationship between the creator-owner of a software, the software users and the third party (depositary) who intervenes to protect the interests of the parties, more specifically, by protecting the confidentiality of the owner's product and by ensuring the users' access to the software at all times.

The depositary services are provided by a neutral third party who safeguards a copy of the software source code and related documentation. This agreement is generally ancillary to the principal contract (see our software licence agreement I02.200 and software development agreement I03.200) and ensures compliance with the obligations regarding the safekeeping of the software for the benefit of any licenced users or client.

0.00 INTERPRETATION
0.01 Definition
0.01.01 Activities
0.01.02 Agreement
0.01.03 Authorized Location
0.01.04 Breach
0.01.05 Change in Control
0.01.06 Confidential Information
0.01.07 Deposit
0.01.08 Encumber or Encumbrance
0.01.09 Escrowed Goods
0.01.10 Event of Default
0.01.11 Force Majeure
0.01.12 Fundamental Provisions
0.01.13 Improvements
0.01.14 Intellectual Property
0.01.15 Legal Representatives
0.01.16 License
0.01.17 Notice Delay
0.01.18 PARTY
0.01.19 Person
0.01.20 Principal Agreement
0.01.21 Related Person
0.01.22 Software
0.01.23 Source Code
0.01.24 System Documentation
0.02 Precedence
0.03 Jurisdiction
0.03.01 Governing Law
0.03.02 Non-compliance
0.04 Miscellaneous
0.04.01 Cumulative Rights
0.04.02 Time and Dates
0.04.03 Financial References
0.04.04 References within Agreement
0.04.05 Gender and Number
0.04.06 Headings
0.04.07 Presumptions
0.04.08 Knowledge
0.04.09 Approval
0.04.10 GAAP
1.00 PURPOSE
1.01 License
1.02 Escrow
1.02.01 Nomination
1.02.02 Removal
1.02.03 Replacement
1.02.04 Remittance
1.03 Proxy
2.00 CONSIDERATION
2.01 License
2.02 Adjustment
2.03 Deposit
2.03.01 Undertaking
2.03.02 Lump Fee
2.03.03 Hourly Fees
3.00 TERMS OF PAYMENT
3.01 Payment
3.02 Interest
4.00 SECURITY
4.01 Solidarity
4.02 Retention
4.03 Performance Bond
5.00 MUTUAL REPRESENTATIONS AND WARRANTIES
5.01 Status
5.02 Authority
5.03 Binding Agreement
5.04 Canadian Resident
5.05 Commission
5.06 Insurance
5.07 Nominee
5.08 Fundamental Provisions
5.09 Disclosure
6.00 REPRESENTATIONS AND WARRANTIES OF THE OWNER
6.01 Status
6.02 Authority
6.03 Binding Agreement
6.04 Insurance
6.05 Nominee
6.06 Fundamental Provisions
6.07 Disclosure
6.08 Identical Copy
6.09 Sufficiency
6.10 Functional Defects
6.11 Encumbrance
6.12 Contravention
6.13 Solvability
6.14 Continuous Effect
7.00 REPRESENTATIONS AND WARRANTIES OF THE LICENSEE
7.01 Status
7.02 Authority
7.03 Binding Agreement
7.04 Insurance
7.05 Nominee
7.06 Fundamental Provisions
7.07 Disclosure
8.00 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITARY
8.01 Status
8.02 Authority
8.03 Binding Agreement
8.04 Insurance
8.05 Nominee
8.06 Fundamental Provisions
8.07 Disclosure
9.00 MUTUAL DUTIES AND OBLIGATIONS
9.01 Confidential Information
9.01.01 Undertaking
9.01.02 End of Agreement
9.02 Insurance
9.02.01 Insured Risks
9.02.02 Amount of Coverage
9.02.03 Issuer
9.02.04 Co-insured
9.02.05 No Limitation
9.03 Indemnification
9.03.01 “Loss”
9.03.02 Scope
9.03.03 Procedure
9.03.04 Deductible
9.03.05 Limitation on Claims
9.04 Disclosure of Agreement
10.00 DUTIES AND OBLIGATIONS OF THE OWNER
10.01 Deposit
10.01.01 Initial Deposit
10.01.02 Improvements
10.01.03 Additional Deposit
10.02 Verification
10.02.01 Comparison
10.02.02 Register
10.03 Correction
10.03.01 Undertaking
10.03.02 Reimbursement
10.04 Assignment of the Software
10.05 Indemnification
10.05.01 By OWNER and LICENSEE
10.05.02 By OWNER
10.06 Event of Default
10.07 Waiver
10.08 Registration
10.09 Loss of the Escrowed Goods
11.00 DUTIES AND OBLIGATIONS OF THE LICENSEE
11.01 Acknowledgement
11.02 Verification
11.02.01 Notice
11.02.02 Delivery
11.02.03 Completion
11.02.04 No Retainment
11.02.05 Reimbursement
11.03 Event of Default
11.04 Restriction
11.04.01 Use
11.04.02 Copy
11.04.03 Sale of Business
11.05 Indemnification
11.05.01 By LICENSEE and OWNER
11.05.02 By LICENSEE
11.06 Ownership
12.00 DUTIES AND OBLIGATIONS OF THE DEPOSITARY
12.01 General Functions
12.02 Update
12.03 Special Functions
12.03.01 Event of Default
12.03.02 Contest
12.03.03 Delivery to LICENSEE
12.04 Liability
12.04.01 Scope
12.04.02 Exclusion
12.04.03 Limitation
12.05 Return to the Owner
12.06 Confidentiality
12.06.01 Acknowledgement
12.06.02 Disclosure
12.06.03 Return of Confidential Information
12.06.04 Security
12.07 Resignation
12.08 Transfer to a Successor
12.09 Copies
12.10 Litigation
12.11 Acknowledgement
12.12 Anti-money Laundering or Anti-terrorist Legislation
13.00 SPECIAL PROVISIONS
13.01 Assignment
13.01.01 Prohibition
13.01.02 Effect of Breach
13.01.03 Exception
13.02 Force Majeure
13.02.01 No Default
13.02.02 Duty
13.02.03 Rights of Other PARTY
13.03 Relationship
13.03.01 Independent Contractors
13.03.02 No Control over Performance
13.03.03 No Authority to Bind
13.04 Further Assurances
13.05 Other Remedies
13.05.01 Choices
13.05.02 No Limitations
13.06 Prescription
13.07 Intellectual Property
14.00 GENERAL PROVISIONS
14.01 Notice
14.02 Dispute Resolution
14.02.01 Good Faith Negotiations
14.02.02 Mediation
14.02.03 Arbitration
14.03 Election
14.04 Counterparts
14.05 Amendment
14.06 Waiver of Rights
14.07 Electronic Transmission
14.08 Language
15.00 TERMINATION
15.01 Mutual Consent
15.02 Resiliation
15.02.01 Without Notice
15.02.02 With Prior Notice from DEPOSITARY
15.03 Change in Control
16.00 EFFECTIVE DATE
16.01 Retroactivity
16.02 Execution
16.03 Deferral
17.00 DURATION
17.01 Initial Term
17.02 Extended Term
18.00 SCOPE


SCHEDULE A – EXCERPT FROM A RESOLUTION OF THE OWNER
SCHEDULE B – EXCERPT FROM A RESOLUTION OF THE LICENSEE
SCHEDULE C – EXCERPT FROM A RESOLUTION OF THE DEPOSITARY
SCHEDULE 0.01.16 - LICENSE
SCHEDULE 0.01.22 – SOFTWARE DESCRIPTION