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Himesh · Posted: Fri Dec 27, 2002 2:33 am Post subject: Escrow Agreement

What is an Escrow Agreement?
A source-code escrow agreement is an important part of any custom software licensing deal.

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Escrow Agreement[/url]

Himesh

Ed Goodman · Beginner Joined: 12 Dec 2002 Posts: 10 Topics: 2

Escrow is a concept of having a trusted third party hold on to some asset until a given condition is met.

In your example, the folks buying the software want to make sure they get access to the source code. Since a lot of companies have gone out of business, they can't rely on the seller to make it available for the next 10 or 20 years, they want it copied right now.

However, the seller would be cray to hand over the source code right away, or else the buyer may drop support and just start changing the code themselves.

So... the buyer and seller find another company, an Escrow comapny. this escrow company will take a copy if the source code and lock it up, out of reach of the other parties. Then, should the seller go out of business, the escrow company will release the soure code to the buyer. However, if the seller and buyer discontinue doing business, the escrow company will return the source code to the seller.

In short, it's a way to protect both side in a high stakes transaction. When folks here in the US buy homes, or businesses, they use an escrow company to hold the money until all of the paperwork is complete and the properties have been transferred.

Himesh · Posted: Fri Dec 27, 2002 9:40 am Post subject:

Aptly said Goodman...

i did not kno tht the Escrow agreement holds good for non-software "deals" also...! Rolling Eyes

Thx..
Himesh