A well-drafted escrow
agreement can form an important component of the risk mitigation strategies
used in information technology contracts.
The key to an effective
escrow arrangement is to ensure that the licensee is able to access and use
source code and other relevant materials to allow it, on the occurrence of
certain events, to obtain ongoing support for software (whether provided by the
licensee itself or a third party) with minimal disruption to the licensee's
business.
Set out below are some key
considerations for drafting effective escrow arrangements.
Description and deposit
of escrow materials
The materials to be placed
in escrow should include not only the source code itself, but also supporting
documentation and other materials (such as software development tools). The
escrow package should contain sufficient materials to enable the licensee, on
release of the escrow package, to have everything it needs to maintain, operate
and modify the
