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.