ESCROW AGENT FAQ

What is software / source code escrow?

Source code escrow is a term that is interchangeable with software escrow. Software escrow is a relationship in which a licensee requires source code to be stored with an escrow agent during the term of a license, support or other agreement. The source code would be released based upon the occurrence of specific events defined within the escrow agreement. Licensees use source code escrow services to protect against a disruption in support of mission critical technologies due to vendor failures.

Who pays the escrow agent?

Escrow Associates as your software escrow agent can invoice either the developer or beneficiary for the escrow fees. In two-party escrow agreements it is common for the developer to pay the escrow agent and invoice their clients some amount to participate in the escrow program. Since three-party escrow agreements are strictly for the benefit of a single beneficiary the beneficiary typically pays all escrow fees.

How do we know the deposit materials are complete and accurate?

With out performing a Technical Verification on the escrow deposit it is impossible to know if the escrow deposit is complete, accurate or will be useful when needed. Escrow Associates provides "turn key" Technical Verification services to determine if the deposit materials are complete and accurate. Also, there are several steps that can be undertaken in the software escrow agreement to require that certain information be included in the escrow deposit. Escrow Associates can provide a list of possible deposit materials once we have a better understanding of each situation.

How is Escrow Associates different from other escrow agents?

Escrow Associates is the fastest growing provider of software and source code escrow services. The principals of Escrow Associates have decades of software and technology escrow services at the highest levels. We understand that there are four key elements to providing quality software and source code escrow services and we excel in each area:

• Facilities - Electronic media must be handled and stored appropriately to protect and preserve the media so that it can be used in a time of need to support the application. Escrow Associates provides state of the art media vault storage in the US, UK & Canada. media vault facilities are designed to withstand fire and other disasters without affecting the contents of the vault. In addition, Escrow Associates has developed proprietary storage and retrieval systems to safeguard our client's intellectual property while in our custody.
• Escrow Experience - No other escrow representatives have more experience than your Escrow Associates consultant. We have negotiated thousands of escrow contracts with many of the leading technology companies and law firms the world over. Our clients rely upon us to bring added value to the escrow process by providing alternative solutions and consulting with their escrow agreement. When a release request occurs Escrow Associates has the experience and the procedures in place to administer the escrow terms with authority.
• Escrow Service - Escrow Associates is committed to providing the most responsive and professional services in our industry. We commit to "same day" response time upon request for agreement executions, beneficiary enrollments, notification letters and more. We provide our clients with online account access so they can access their account information anytime night or day via our website. In addition, our standard escrow agreements include FTP depositing services to make submitting escrow deposits as efficient as possible. All of these services exemplify our commitment to being the best escrow provider in our industry.
• Escrow Agreement - Every escrow provider offers sample contracts. However, Escrow Associates has designed our agreements to provide the utmost flexibility with regards to initial structure and long term usability. With Escrow Associates there are no proprietary terms that will hinder flexibility later or require separate agreements depending upon your release conditions. The flexibility designed into our escrow agreements makes meeting current and future escrow requirements as efficient and economical as possible with out compromising quality.

In the end, many companies can provide software escrow services and meet one or two of these key benefits. However, only Escrow Associates can provide all four key benefits and meet your budgetary requirements.

Where do you store the escrow deposit?

Escrow Associates utilizes only state of the art media vault facilities to store escrow deposits. We provide state of the art media vault storage in the US, UK & Canada so our clients can rely upon Escrow Associates for all escrow requirements worldwide.

What is a media vault?

A media vault is a storage facility that is designed and constructed specifically for the storage and preservation of electronic media. These facilities are designed to withstand fire for up to four hours without allowing internal temperatures to rise significantly. Our media vaults are equipped with devices that monitor and control the humidity and temperature to the exact levels determined to best preserve electronic media. Further, each form of electronic media must be stored in a fashion that best preserves the integrity of the media and the contents. True media vault faculties are equipped with the necessary shelving and storage containers to hold each media properly. In addition to providing only the best media storage environments Escrow Associates takes the additional measure to enter each deposit received into our proprietary deposit tracking systems to insure precision in the storage and retrieval of escrow deposits.

Why is this important to use a media vault for the storage of escrow deposits?

Software and source code escrow agreements are a good part of any business continuance plan. However, the quality, completeness and accuracy of the deposit materials determine the value of the escrow deposit. Since the deposit materials will not typically be utilized until some later date, often several years after the initial deposit was made, the storage and preservation is critical in preserving the value of the escrow deposit. All electronic media degrade overtime. Storing electronic media in the appropriate fashion under the appropriate environment for that media will significantly extend the life and value of the escrow deposit.

Can we use our attorney (banks or some other "casual agent") as the escrow agent?

The use of "casual escrow agents" has dropped significantly in the past decade. Conventional wisdom used to be that anyone other than the developer or licensee could serve as a neutral third party. However, as the technology escrow industry has evolved over time there are four critical characteristics to technology escrow services that have emerged as prime considerations in selecting an escrow agent:

• Escrow Contract
• Storage of the escrow deposit
• Services / Information
• Neutral Third Party

Typically a "casual agent" can only offer 1-2 of these four components of the service. Below are a few examples of the short comings of "casual escrow agents":

Attorneys - Typically attorneys have strong knowledge of the contracts and may be able to provide account information as needed. However, law firms typically lack the proper storage facilities and requisite experience in handling electronic media. Also, attorneys are never neutral third parties if they represent either party in the transaction.

Banks - Banks are often considered as escrow agents because of their vault facilities. However, bank vaults are not designed to store electronic media and banking industry employees typically have no training in this area. Further, their employees are not trained to handle electronic media. Over time banks have learned that software escrow services are not in their core competency. Perhaps this is most evident in the fact that so many banks utilize the services of professional escrow agents for their software and source code escrow needs. Further, their employees are not trained to handle electronic media.

What are the release conditions?

Escrow release conditions are the scenarios in which a release of the escrow deposit would be warranted. In some escrow agreements (i.e. domain name transfer, manufacturing escrow & etc) the release is an inevitable part of the transaction. In typical software escrow agreements the release conditions are not inevitable but serve as business continuance planning if some pre-negotiated event should occur. Escrow Associates can support a wide array of release conditions and we will work with you to draft an agreement that meets each escrow requirement. Typical release conditions include:

• Bankruptcy of developer
• Total cessation of Developer's business
• Failure to support the terms of a license or support agreement
• Death of key personnel
• Developer's acquisition by a key competitor
• Other

What can be placed into an escrow account?

Escrow Associates has administered escrow agreements containing a wide array of deposit materials. Certainly the typical escrow deposit consists of software source code,documentation related to the build environment and instructions for use. However, many other types of intellectual and physical property can be placed into escrow as well. Samples include but are not limited to:

• Computer / Networking Hardware
• Designs
• Domain Names
• Formulas
• Manufacturing plans / processes
• Customer & prospect lists
• Cash

Escrow Associates can help facilitate virtually any technology related transaction. Contact us today to discuss your situation.

We already have a software escrow agent. Can Escrow Associates administer our terms?

Yes. Many of our clients have transferred their existing escrow agreements to Escrow Associates to take advantage of our superior services and lower fees. Escrow Associates provides every client with their own online account management tools, FTP depositing services, unlimited updates and all inclusive pricing. In addition, since there are no additional fees for updates, account summaries, release or any other hidden fees our clients can easily budget for our fees and typically save money by transferring. The transfer process is simple and we can provide detailed instructions once we understand the details of your account. In many cases, Escrow Associates is even able to handle the bulk of the administrative details related to the transfer. Contact us today to learn how easy it can be to start using our great services.