Source Code Escrow Trust Agreement for a Creditor

Agreement providing for the delivery of source codes of a software to a trust fund, for financing purposes.

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A escrow trust agreement is created to protect a creditor or a supplier. The main parties involved are:

  • the grantor, who is the software supplier;
  • the trustee, who is an impartial person designated by the grantor but accepted by the creditor;
  • the principal beneficiary, who is the creditor.

A software supplier (the grantor) establishes a trust estate in which the source codes are transferred. This supplier entrusts to a trustee the administration and preservation of the source codes, as well as the updates of the related software. This transfer, in accordance with the Civil Code of Quebec, allows the creditor, subject to certain events, to access the source codes deposited in trust.

The trustee shall retain, under lock and key, the source version of the software provided as collateral, the source codes, and their update(s), according to the terms and conditions of the trust agreement.

The grantor must undertake to transfer to the trust estate, within 15 days following the date of signature of the trust agreement, the source codes, the technical documentation used for the design and realization of the software provided as collateral, and, if applicable, all the necessary tools for the development and compilation of the source version. Thereafter, the grantor must make these transfers for every software update.

At no time is the trustee obligated to ensure that the source codes constitute, in terms of their content, the assets to be deposited in the trust estate.

The trustee and its personnel are subject to confidentiality obligations. The trustee undertakes, with the supplier, to take necessary measures to ensure that all members of its personnel always respect the obligations stipulated in the trust agreement.

From the date of deposit of the source codes and documentation in trust, and throughout the trust period, all source codes of the software provided as collateral, the documentation, any update or new version of the related software, shall remain the sole and exclusive property of the trust estate. The same applies to all copyright and other intellectual property rights owned by the supplier.

Upon receiving written notice from the creditor regarding the occurrence of a default by the supplier, as defined in any loan agreement granted by the creditor to the supplier, the trustee must promptly deliver to the creditor the source codes in its possession.

The fees for drafting escrow trust agreements for source codes are billed at an hourly rate.

It is therefore important to consult Notaire-Direct, as they are specialized in this matter.

If you need more information on this service, please contact us
514 374-4303
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