Technology escrow eliminates any ambiguity about what the bank really owns if there is a default on the loan. To assure the lender of its position, the escrow agreement should include the ability to execute a TX Copyright transfer document. This document will allow the lending institution to take ownership of the technology under default conditions. This is the same process that applies when a bank repossesses a car if the buyer defaults on a loan. To ensure the completeness and validity of the deposit materials, the escrow agent should technically verify the deposit.
Technical verification involves three levels of analysis.
First, the agent documents a description of the computer environment necessary to maintain and compile the source code. Second, it will perform an analysis of the hardware and software environments to ensure that the computer media is readable. Third, the agent will use the deposited hardware and software materials to create an object code version of the software. After the deposit verification is complete, the escrow agent will request and receive periodic updates to the collateral deposit. In order to continually assure the lender that the deposit will have value if the loan is defaulted, the escrow agent will document and report all update activity on the account to the lender.