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What are the typical terms for a software escrow agreement?

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Introduction
Typical Terms of a Software Escrow Agreement 2.1. Parties to the Agreement 2.2. Escrow Agent 2.3. Escrowed Materials 2.4. Trigger Events 2.5. Release of Escrowed Materials 2.6. Confidentiality 2.7. Audit and Inspection 2.8. Termination 2.9. Governing Law and Dispute Resolution
Conclusion

Introduction

This response will address the typical terms found in a software escrow agreement in Kenya. It will draw upon relevant legal principles and provisions from the Kenyan legal framework, including the Contracts Act, 2015, and the Data Protection Act, 2019.

2. Typical Terms of a Software Escrow Agreement

A software escrow agreement is a legally binding contract that outlines the terms and conditions for the deposit and release of software source code and related materials to a third-party escrow agent. This agreement is typically entered into between a software developer (licensor) and a software user (licensee) to ensure the continuity of the software in the event of certain trigger events, such as the developer's insolvency or breach of contract.

2.1. Parties to the Agreement

Software Developer (Licensor): The party that develops and owns the software.
Software User (Licensee): The party that licenses the software from the developer.
Escrow Agent: A neutral third party responsible for holding the escrowed materials and releasing them according to the terms of the agreement.

2.2. Escrow Agent

Selection: The parties should carefully select a reputable and experienced escrow agent with expertise in software escrow.
Responsibilities: The escrow agent's responsibilities include:
- Safekeeping: Securely storing the escrowed materials.
- Verification: Ensuring the completeness and integrity of the escrowed materials.
- Release: Releasing the escrowed materials upon the occurrence of a trigger event, as per the agreement.
Independence: The escrow agent should be independent of both the developer and the user to ensure impartiality.

2.3. Escrowed Materials

Source Code: The complete source code of the software, including all files, libraries, and documentation.
Documentation: Technical documentation, user manuals, and other relevant materials necessary for understanding and maintaining the software.
Build Tools: Tools and scripts required to compile and build the software.
Database Schemas: Definitions of the database structures used by the software.
Other Relevant Materials: Any other materials deemed necessary for the licensee to maintain and use the software.

2.4. Trigger Events

Insolvency: The developer's bankruptcy or insolvency.
Breach of Contract: The developer's failure to perform its obligations under the software license agreement.
Death or Disability: The death or disability of the developer's key personnel.
Change of Control: A significant change in the ownership or control of the developer.
Other Events: Any other events specified in the agreement that may trigger the release of the escrowed materials.

2.5. Release of Escrowed Materials

Conditions: The agreement should clearly define the conditions under which the escrowed materials will be released to the licensee.
Verification: The escrow agent should verify the occurrence of the trigger event and the licensee's right to access the escrowed materials.
Notification: The escrow agent should notify the developer and the licensee of the release of the escrowed materials.
Timeframe: The agreement should specify a reasonable timeframe for the release of the escrowed materials.

2.6. Confidentiality

Escrowed Materials: The escrow agent should maintain the confidentiality of the escrowed materials.
Disclosure: The escrow agent should only disclose the escrowed materials to the licensee upon the occurrence of a trigger event.
Non-Disclosure Agreement: The escrow agent should sign a non-disclosure agreement with the developer and the licensee to protect the confidentiality of the escrowed materials.

2.7. Audit and Inspection

Right to Audit: The licensee should have the right to audit the escrowed materials to ensure their completeness and integrity.
Frequency: The agreement should specify the frequency of audits.
Notice: The licensee should provide reasonable notice to the escrow agent before conducting an audit.

2.8. Termination

Termination Conditions: The agreement should specify the conditions under which the escrow agreement can be terminated.
Return of Materials: Upon termination, the escrow agent should return the escrowed materials to the developer.
Notice: The parties should provide reasonable notice to the escrow agent and each other before terminating the agreement.

2.9. Governing Law and Dispute Resolution

Governing Law: The agreement should specify the governing law that will apply to the agreement.
Dispute Resolution: The agreement should specify the method for resolving any disputes that may arise between the parties.

Conclusion

A well-drafted software escrow agreement is crucial for protecting the interests of both the software developer and the software user. The terms outlined above provide a framework for ensuring the continuity of the software in the event of unforeseen circumstances. It is important to consult with legal counsel to ensure that the agreement is tailored to the specific needs of the parties involved.