Escrow is a term that refers to money that a neutral third party keeps on behalf of the parties involved in a transaction. The escrow agent is frequently referred to as a trustee in the transaction because of their role as a neutral third party who protects the interests of all parties involved. In real estate, the escrow agent is a neutral and independent third party who acts on behalf of both the buyer and the seller.
When it comes to software escrow or source code escrow agreements, the processes are very similar. In place of money in a real estate transaction, a software vendor’s source code is placed in escrow. The source code for the software product and critical applications contains the instructions that create the software program, which can be transformed into an executable program in order for the software code to run as it should.
The Software Escrow Agents Responsibility
If you have recognized the need for a software escrow arrangement, it is vitally important that you understand the why and how, and the who. Therefore, we will dive into all things involving the role of your software escrow agent within the software escrow agreement.
National Software Escrow, Inc. (NSE) is an independent provider of software source code protection services to software companies and end-users. Since 1986, the professionals and escrow agents at NSE have been serving clients with software escrow needs. NSE is your trusted partner for software source code protection, with over 35 years of experience.
The escrow agent’s responsibility is to protect and maintain the escrow deposit as well as follow the terms and conditions pursuant to those in the Escrow Agreement.
This entails the following:
- The issuing of receipts of deposit to the vendor and beneficiary whenever the vendor submits a deposit.
- Our escrow agents carefully research and build sophisticated legal instruments that will protect your rights, interests, and investments, thus, saving you time and money from having an attorney draft one for you.
- The transportation of the physical deposit to the offsite storage facility if a physical deposit. Also, escrow materials can be stored, maintained, secured, and preserved in an electronic format. Escrow materials deposited in physical format will be stored, maintained, secured, and preserved offline in an in-house vault. Escrow materials deposited in electronic format will be stored, maintained, secured, and preserved with file encryption into a secure cloud environment.
- Click here to learn more about NSE’s secure storage options for escrow deposit materials
- NSE’s Agreements also address If technical verification is required. Upon request of a Licensee, the Software Vendor must verify and certify that the Deposit Materials deposited accurately and completely comprise the Source Code and related documentation needed to support the current version(s) of the Software.
- The escrow agent must follow the escrow instructions set forth by the parties in the escrow agreement to the letter. In addition, the escrow agent owes fiduciary duties to all the escrow agreement’s parties.
- Often, our agents will meet physically or virtually with the prospective parties to discuss the terms of the agreement; however, acting as a neutral third party, we maintain a practice of not offering strategies or insights in any way so as not to portray favoritism.
But the primary responsibility is to act as that neutral third party in the event that a beneficiary submits a claim or a “Notice of Default”. This is essentially a claim made by the beneficiary stating that the vendor has not fulfilled the obligations within the escrow agreement and thus, is requesting to have the materials released out of escrow following the release conditions.
As a default, National Software Escrow agents offer our escrow agreements free of charge. We believe that they are designed to protect the rights & investments of all the Parties. We do understand and appreciate that our template agreement is not 100% applicable to everyone’s requirements; so, we encourage our customers to review the terms and conditions of our default agreement and upon our review and approval, the parties can change the default terms and conditions in our agreements.
National Software Escrow agents understand that this escrow arrangement is like an insurance policy. And like insurance policies, you seldom know how well your agent will perform until a crisis is in effect. To negate this, we pride ourselves on customer service. Responding promptly to information requests, sharing instructions on how to submit a deposit, and instructions on how to establish or amend agreements. By demonstrating prompt and excellent service upfront, it is our goal to have a customer realize how the team at National Software Escrow, Inc. will service and maintain the intellectual property contained within the escrow account. When an event of a release happens due to the Vendor’s insolvency, issues in business continuity or the object code functionality is in question, our agents will have the tools in place to navigate these waters.
The Best Choice for Your Software Escrow Company
Whether you are a software vendor with an idea to sell and protect or a licensee with an investment to secure, National Software Escrow, Inc. has the escrow agents, the facility and legal structure to provide a secure, cost-effective escrow arrangement that provides the data protection both parties require. We protect your software investment by securing your software source code off-site. There is no other data escrow company that can offer a completely customizable software escrow service at a better value than National Software Escrow, Inc. Please call us at (877) 628-7638 or click here to set up an appointment with our team or to request a quote.