As part of an acquisition of an Aged Care provider
network, the purchaser identified a risk with the provider’s existing HR software system. In order to reduce the risk, the purchaser stipulated that as a condition of sale, the software (source code) must be escrowed.
The contract of sale was due to be signed in two days.
A standard three-party escrow agreement was implemented between:
- the HR software vendor;
- the purchaser; and
- Escrow Agent.
The agreement costs and annual storage costs were the responsibility of the Aged Care provider – and incorporated into the sale contract. Access to the Escrow Agent’s online escrow management system was available as soon as the Escrow Agreement was signed. The HR software source code and documentation was submitted online and verified by the Escrow Agent.
The purchaser logged on to the escrow management system and confirmed that the HR software source code and documentation had been submitted successfully.
The purchaser executed the contract of sale.