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What is Software Escrow & Why is it Needed?

A Software Escrow Arrangement is an agreement that protects both parties in a License Agreement.

What is a Software Escrow & Why is it needed?


A Software Escrow Arrangement is an agreement that protects both parties in a License Agreement. Its purpose is to provide a Licensee with access to a Software Vendor’s source code in the event that a specific release event agreed upon by the Parties occurs.

Companies implement custom software applications that are mission critical to the operation of their businesses every day. Because these applications are critical to their success, software license agreements often require the Software Vendor to store the source code and explanatory documentation in an escrow account for safe keeping.

Software source code is written in a human-readable computer programming language that controls the processing of data and the functionality of software applications. The source code itself can be hundreds of thousands of lines of code and is normally written by software programmers in programming languages. Source code is compiled into executable code that will then run on a computer by an end user.

Repairing problems or changing the functionality of a critical application is only possible with the source code. In a software escrow arrangement, the source code is held in escrow by a trusted Escrow Agent such as National Software Escrow. The source code is released upon the occurrence of an event agreed upon by the Parties. If the source code is released pursuant to the terms of the Escrow Agreement, the Licensee shall have the right to use the source code for the purpose of continuing the benefits afforded to them in the License Agreement.


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What Type of Escrow Arrangement is Right for Me?

NSE is a leading innovator in source code escrow services. We help to create and administer Escrow Agreements for the protection of software source code and intellectual property. We offer our customers three different types of Escrow services. Listed below are the Escrow Arrangements we offer our clients.

Are you Software Vendor licensing software to one Licensee?

Single Beneficiary Escrow Arrangement

Are you Software Vendor licensing software to multiple Licensees?

multi beneficiary agreement

Are you a Licensee with investments to secure?

multi vendor agreements

Storage of Escrow Materials

Physical delivery 

This is done by any non-electronic delivery manner such as a courier service, postal service, mail service, hand-delivery, or physical delivery in which the data stored on a tangible medium exchanges possession. When deposit materials are sent in physical format, they are stored, maintained, and secured in a firelock vault that features:

  • 24-hour surveillance and security system
  • Fire suppression system
  • Humidity and temperature level controls
  • Key card entry access
electronic storage
escrow storage

Electronic delivery

This is done by electronic transfer such as electronic mail (e-mail), File Transfer Protocol (FTP), or any electronic transfer that sends data from one storage location to another. Escrow Materials deposited in electronic format will be stored, maintained, and secured with the following:

  • Data storage over several large-scale data centers
  • File encryption using appropriate standards
  • Protection against network security issues such as Distribute Denial of Service (DDoS) attacks and Man in the Middle (IMITM) attacks
  • Data is secure and protected using a verified Secure Socket Layer (SSL)

When you select NSE as your software escrow agent, we promise the following:

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 in place the facility and legal structure to provide a secure, cost-effective escrow arrangement which ensures the protection and peace-of-mind both parties require.



No other company can offer completely customizable software escrow services at a better value than NSE. Various types of escrow arrangements are available to meet your needs.



Protect your software investment by utilizing an independent escrow service provider to secure your software source code off site. Have peace of mind that your licensed software is protected against unforeseen circumstances.



The professionals at NSE have been servicing clients since 1986. With more than 35 years of experience, we are your trusted partner for software source code protection.