Software Escrow Arrangement…

The answer to this question depends on your business needs.

  • Are you a Technology Vendor licensing software to one Licensee?

If so, your need for establishing a Software Escrow Arrangement may be dictated by a Licensee who is interested in licensing your software, but desires to protect their investment, in the event that your business plan does not support providing the source code to them.  If that is the case, the company that you choose to open your source code escrow account can address this need by offering a “Single Beneficiary” Escrow Arrangement.  In theory, this is a 3-party Escrow Agreement that is established by the Technology Vendor, the Licensee (“Beneficiary”) and the Escrow Agent.

So how do I get started?  Most trusted, neutral third-party providers of Technology Escrow Services can provide you with a template 3-party Agreement, thus saving you time and money associated with hiring an attorney to draft one for you.  Technology Escrow Providers usually have specialists, or retain the services of law firms who specialists in computer-related contracts understand the technical objectives of these sophisticated transactions.  It is important that both the Technology Vendor and Licensee review the terms and conditions of the Agreement, in an effort to make certain that the Agreement protects the rights, interests and investments of both parties.

  • Are you a Technology Vendor licensing software to multiple Licensees?

If so, you may elect to establish a unique 3-party Escrow Agreement for each and every Licensee.  A different approach however, is to establish a Master Escrow Agreement for all of your Licensees.  The company that you choose to open your source code escrow account can address this need by offering a “Multi-Beneficiary” Escrow Arrangement.  In theory, this is a 2-party Escrow Agreement that is established by the Technology Vendor and the Escrow Agent and permits you to enroll multiple Licensees (“Beneficiaries”) to the one, universal Escrow Agreement. (master agreement)

So how do I get started?  Similar to the “Single Beneficiary” Agreement mentioned above, most trusted, neutral third-party providers of Technology Escrow Services can provide you with a template 2-party Agreement, thus saving you time and money associated with hiring an attorney to draft one for you.  Once the Escrow Agreement is established and your source code has been deposited into escrow, you can easily enroll a Licensee as an “escrow beneficiary” once your License Agreement with them is in place.

The advantages for establishing a “Multi-Beneficiary” Agreement are many; however, the primary one is that by having a “Multi-Beneficiary” established and in place, you demonstrate that your organization has their customers’ needs in mind.

  • Are you a Licensee with an Investment to secure?

If so, you may elect to establish an unique 3-party Escrow Agreement for each and every Vendor whose software you license.  A different approach however, is to establish a Master Escrow Agreement for all of your vendors’ Intellectual Property.  The company that you choose to open your source code escrow account can address this need by offering a”Multi-Vendor” Escrow Arrangement.  In theory, this is a 2-party Escrow Agreement that is established by the Licensee (“Beneficiary”) and the Escrow Agent and permits you to enroll multiple Technology Vendors to the one, universal Escrow Agreement (master agreement).

So how do I get started?  Similar to the “Multi-Beneficiary” Agreement mentioned above, most trusted, neutral third-party providers of Technology Escrow Services can provide you with a template 2-party Agreement, thus saving you time and money associated with hiring an attorney to draft one for you.  Once the Escrow Agreement is established, you can easily enroll a Technology Vendor once your License Agreement with them is in place

The advantages for establishing a “Multi-Vendor” Agreement are many; however, the primary one is that by having a “Multi-Vendor” Agreement established and in place, you can have all of your Vendors’ source code deposited with one Technology Escrow Provider, and in one location.

Summary

The type of Software Escrow Arrangement that is right for you is dependent upon your organization’s business needs. Most trusted, neutral third-party Escrow Providers will offer an Escrow Arrangement that meets your needs, including a template Escrow Agreement to get you started.  Review the terms and conditions of the Agreement in an effort to make certain that the Agreement protects the rights, interests and investments of both the Technology Vendor and Licensee.

The company you choose to open your source code escrow account should permit you to review their template Agreement free-of-charge, as well as permit you to tailor the Agreement to satisfy your requirements.

 

National Software Escrow, Inc.

8225 Brecksville Road, Building Three, Suite #105 Brecksville, OH 44141

PHONE: (440) 546-9750 FAX: (440) 546-0207

Contact Us Today to secure your future!

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