What if an agreed-upon release event has occurred? What is the Licensee to do?
The answer to this question depends on the terms and conditions defined within the Escrow Agreement. NSE’s Escrow Agreements not only document the specific release events that govern the Arrangement, but also, the steps required of the Licensee to request that the Technology Vendor’s Intellectual Property be released from escrow.
Sample language in one of NSE’s Agreement follows:
On the alleged happening of one or more Events of Default, the BENEFICIARY must give electronic or written Notice of Default as provided by this Agreement to both the ESCROW AGENT and the TECHNOLOGY VENDOR of that alleged Default as identified by the BENEFICIARY. The Notice of Default shall be labeled a “Notice of Default,” shall identify the License Agreement and this Escrow Agreement, shall specify the nature of alleged Default, shall identify the Deposit Materials with reasonable specificity, and shall demand the delivery of a complete copy of the Deposit Materials to the BENEFICIARY.
Upon receipt of the Notice of alleged Default and payment corresponding to the Release Request Fee as detailed in Exhibit B, attached hereto and incorporated by reference as “PRICE SCHEDULE,” the ESCROW AGENT shall likewise send a copy of the Notice of Default to the TECHNOLOGY VENDOR by certified or registered mail, return receipt requested to the address identified in §9.14 (as updated). If the TECHNOLOGY VENDOR desires to dispute the Notice of alleged Default, the TECHNOLOGY VENDOR shall, within ten business days after receipt thereof, deliver to the ESCROW AGENT and BENEFICIARY in the manner specified in §9.14, an electronic or hardcopy affidavit or other sworn statement stating that in the TECHNOLOGY VENDOR’S view, no Default as alleged, has occurred.
If the ESCROW AGENT does not receive an electronic or hardcopy affidavit or other sworn written statement from the TECHNOLOGY VENDOR stating that the TECHNOLOGY VENDOR does not believe there has been a Default, within the time permitted by §3.1.5, the ESCROW AGENT is authorized and directed by TECHNOLOGY VENDOR to deliver the Deposit Materials to the BENEFICIARY even if no response is received by the ESCROW AGENT from the TECHNOLOGY VENDOR within the designated time which expires at 5:00 p.m., Eastern Time (either EDT or EST as applicable). The ESCROW AGENT shall provide the Deposit Materials to the BENEFICIARY in the same medium as delivered to the ESCROW AGENT by the TECHNOLOGY VENDOR and by the same delivery method (Physical Delivery or Electronic Delivery) as delivered to the ESCROW AGENT by the TECHNOLOGY VENDOR, except that ESCROW AGENT reserves the right to provide an archival copy of the Deposit Materials to the BENEFICIARY in the event that TECHNOLOGY VENDOR delivers the Deposit Materials to ESCROW AGENT via Electronic Delivery. The ESCROW AGENT’s responsibility for the Deposit Materials ceases upon release of the Deposit Materials to the BENEFICIARY, and the ESCROW AGENT is not responsible for any inability by the BENEFICIARY to successfully utilize the Deposit Materials after release, including a lack of an encryption password (if not originally provided to the ESCROW AGENT by the TECHNOLOGY VENDOR), or the validity of an encryption password (if originally provided to the ESCROW AGENT by the TECHNOLOGY VENDOR).
NSE’s Agreements also address steps for resolving disputes (e.g. the Technology Vendor disputes the Licensee’s Request to have the Deposit Materials Released).
NSE’s Escrow Agreements stipulate that the Escrow Agent will not release the “Deposit Materials” until it receives joint instructions from the TECHNOLOGY VENDOR and the BENEFICIARY, or a copy of a final non-appealable U.S. court order, or binding arbitration award requiring or authorizing such release, unless such judicial order or binding arbitration award is under seal, in which case, the TECHNOLOGY VENDOR and BENEFICIARY will provide a joint statement to that effect to the ESCROW AGENT and provide authorization to provide a release to the appropriate Party.
What about the Bankruptcy of the Technology Vendor?
But what if the Technology Vendor is not available to confirm/dispute the Licensee’s Notice of Default in the event of bankruptcy, bankruptcy proceeding or in the event that the assets of the Technology Vendor become subject to a bankruptcy proceeding?
Upon receipt of a Licensee’s Notice of Default due to an event like this, NSE will send a copy of the Licensee’s Notice of Default to the Trustee in Bankruptcy of the Technology Vendor by certified or registered mail, return receipt requested. NSE will then abide and enforce any order, instruction, or request made by the Trustee in Bankruptcy of the Technology Vendor regarding to the “Deposit Materials”.