Can I package PsExec.exe along with my application setup files.
I need to remotely setup my client applications from the Server machine, for this I need PsExec.
Will this attract any licensing issues.

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No.  I found this great script that may help you along.
Set objShell = CreateObject("Wscript.Shell")
Set objFSO = CreateObject("Scripting.FileSystemObject")
Set objNTInfo = CreateObject("WinNTSystemInfo")
strPSExec = "C:\Windows\psexec.exe"
strPSExec = objFSO.GetFile(strPSExec).ShortPath
strUser = "username"
strPass = "password"
strCmd = "cmd /c " & strPSExec & " \\%computername% " & " -accepteula " & " -d " & " -e " & " -u " & strUser & " -p " & strPass & " ""\\servername\install\AcrobatWriter5\Acrobat 5\setup.exe"""
strRealCmd = "cmd.exe /c echo " & strCmd & " & pause"
objShell.Run strRealCmd

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QlemoBatchelor, Developer and EE Topic AdvisorCommented:
You cannot package PsExec. See Eula.txt, item 2:

You may not:
* transfer the software or this agreement to any third party; or
It is legit to download PsExec on the remote site, and then use or copy it there. It is even legit to implement the download in the setup itself. But strictly seen you may not copy the program to other sites:
"You may install and use any number of copies of the software on your devices."
Packaging it internally should be fine, for different sites of the org, but not to distribute outside of your company (eg. customers, vendors etc...)

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