Eight crucial steps are outlined: assessing risk, determining deposit content, budgeting, selecting an escrow agent, negotiating contracts, prompt verification. This practice note addresses key issues in drafting and negotiating a software source code escrow agreement involving an independent thirdparty escrow agent.The licensor and licensee must agree not only whether to enter into a source code escrow agreement but also who should bear the expense. When should I require an Escrow Agreement for my contract? There is a potential need to obtain source code for a software, application or complex solution. In addition, ensure that the agreement sets out the procedure for delivering the Deposit Materials to the escrow agent. More influential licensees may be in a position to negotiate a release-on- demand clause in their escrow agreements. Software Escrow is a three party agreement between a software developer (licensor), the end user (licensee) and the software escrow vendor. The escrow agreement also requires the software supplier to keep the escrowed software updated.