SOFTWARE ESCROW AGREEMENT
1 INTRODUCTION
1.1 This is a Source Code Escrow Agreement under which VSUS Technologies,
Inc., a Delaware corporation ("Licensor") is depositing source code to
be held in escrow by an Escrow agent reasonably satisfactory to both
parties acting in good faith ("Escrow Agent"), and under which the
source code will be released to ViVaVu Systems, Ltd., an Israeli
corporation ("Licensee") founded by ▇▇. ▇▇▇▇▇▇ ▇▇▇▇, a resident of
Israel ("Amiram") or returned to Licensor, only upon the occurrence of
certain conditions specified herein. Licensor and Licensee agree that
this Agreement is supplementary to the Software License Agreement (the
"License Agreement") between them entered into simultaneously
herewith, and that as such the Licensee should enjoy, in the event of
any bankruptcy of the Licensor, the full benefit of Section 365(n) of
▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code (the "Bankruptcy Code"). The parties are
entering into this agreement, and have entered into the License
Agreement, in reliance upon said statutory provision.
2 DEPOSIT IN ESCROW
2.1 Within ten (10) Israeli Business Days (defined below) after execution
of this Agreement, Licensee (because it happens to be in current
possession of the source code belonging to Licensor) shall deliver to
Escrow Agent in a sealed package a copy of the complete current
version of the Source Code for the Programs, in machine readable form,
as described more fully in Exhibit A and collectively referred to
hereinafter as the "Source Material," along with such documentation as
Licensor and Licensee happen to possess. Licensee shall certify the
completeness and accuracy of the Source Material in a cover letter
sent to Escrow Agent, with a copy to Licensor. Within five (5) days
after receipt of the Source Material (or such longer time as Escrow
Agent's standard terms may stipulate), Escrow Agent shall notify
Licensor of receipt. As used herein, "Israeli Business Days" are
Sunday through Thursday, except the entire Jewish holidays of Passover
and Sukkot, in both cases as observed in Israel.
2.2 Licensee, and not Licensor, shall have sole access to the Source
Material in escrow for so long as this escrow remains in place.
Licensee is required, pursuant to a Development Services Agreement
between Licensee and Licensor of even date herewith (the "Development
Services Agreement"), to provide certain software development services
to Licensor, which may improve or amend the Source Material. For each
such improvement or amendment, Licensee shall deliver each revision of
the Source Material to Escrow Agent within thirty (30) days of the
date when the corresponding revision of the finalization of such
improvement or amendment. Delivery to the Escrow Agent shall be made
together with a description of the contents of the deposit and with
Licensee's certification of the completeness and accuracy of
description of each deposit. At such time as any revisions to the
Source Material are deposited, Escrow Agent shall give written notice
of such deposits
to Licensor, including a photocopy of Licensee's description of the
deposit and Licensee's certification of the completeness and accuracy
of the description of the deposit. As used herein, the term "Source
Material" shall include all versions deposited.
2.3 Escrow Agent shall hold the Source Material in an appropriate, secure
facility and shall release the same only upon the terms and conditions
provided in this Agreement. The Licensor and Licensee both agree that
the standard terms and conditions of the Escrow Agent, to the extent
not inconsistent with the terms and conditions set forth in this
agreement, shall be binding upon both of them.
3 RELEASE FROM ESCROW
3.1 Delivery by Escrow Agent to Licensee. The Source Material shall be
released and delivered to Licensee, thus ending the escrow hereunder,
only in the event that one of the following (a "Licensor Default")
occurs:
(a) Licensor directs Escrow Agent in writing to make delivery to
Licensee at a specific address, and the notification is
accompanied by a certified or cashier's check payable to Escrow
Agent in an amount equal to any amounts outstanding and due to
Escrow Agent under this Agreement; or
(b) Licensor shall have failed to pay the fees of Escrow Agent when
due, subject to the provisions of Section 3.5 hereto; or
(c) A Bankruptcy Event occurs with respect to Licensor, or Escrow
Agent receives from Licensee written notification alleging in
good faith that such a Bankruptcy Event has occurred.
As used herein, the term "Bankruptcy Event" shall mean that a
party has filed for protection under the bankruptcy laws of any
jurisdiction, or is involuntarily subjected to such laws or
otherwise has been adjudicated a bankrupt, or makes an assignment
for the benefit of creditors, or voluntarily or involuntarily
becomes the subject of any similar laws, or has a trustee or
receiver appointed for its business or property and either
acquiesces in same or fails to remove such trustee or receiver
within ninety (90) days, or has substantially ceased business
operations.
3.2 Delivery By Escrow Agent to Licensor. Escrow Agent shall release and
deliver the Source Material to Licensor only upon the occurrence of
any of the following conditions:
(a) Licensee directs Escrow Agent in writing to make delivery to
Licensor at a specific address, and the notification is
accompanied by a certified or cashier's check payable to Escrow
Agent in an amount
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equal to any amounts outstanding and due to Escrow Agent under
this Agreement; or
(b) Licensee shall have materially defaulted under the terms of the
Development Services Agreement between Licensor and Licensee
dated January 26, 2005, and shall have failed to cure such
default within fifteen (15) Israeli Business Days after notice of
such default (specifying in detail the nature thereof and
describing then specific instances); provided, however, that a
failure to adequately provide Customer Support Services (as
therein defined) shall not be deemed a default thereof so long as
Licensee has exercised reasonable efforts in good faith to comply
therewith; or
(c) A Bankruptcy Event (as defined in Section 3.1(c) hereof)occurs
with respect to Licensee (unless the Original IP, as defined in
the License Agreement, has been assigned to Amiram or a permitted
assignee of his pursuant thereto, in which case the Bankruptcy
Event would have to occur, for purposes of this clause, with
respect to Amiram or such assignee), or Escrow Agent receives
from Licensor written notification alleging in good faith that
such a Bankruptcy Event has occurred.
3.3 Procedure upon Default.
(a) Upon a Licensor's Default or Licensee's Default, Escrow Agent
shall release the Source Material to the non-defaulting party
after receipt of the following, and after compliance with the
additional requirements of Subsection 3.3(b) and Section 3.4
hereto):
(i) Notice from the non-defaulting party as to the occurrence
and nature of the default;
(ii) Evidence satisfactory to Escrow Agent that the
non-defaulting party has previously notified the defaulting
party of such default in writing;
(iii) A written demand that the Source Material be released and
delivered to the non-defaulting party;
(iv) Specific instructions from the non-defaulting party on where
and how to make delivery; and
(v) A certified or cashier's check payable to Escrow Agent equal
to any amounts outstanding and due to Escrow Agent under
this Agreement.
(b) In the event that the provisions of paragraphs 3.1 or 3.2 are
met, Escrow Agent shall, within five (5) days of receipt of all
of the items
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specified in paragraph 3.3(a), send to the allegedly defaulting
party notice that the non-defaulting party has demanded release
of the Source Material and shall include a photocopy of the items
specified in paragraph 3.3(a). The allegedly defaulting party
shall have thirty (30) days from the date of such notice by
Escrow Agent to make written notice of any objection to the
release of the Source Material. The allegedly defaulting party
shall send a copy of any such objection promptly to the
non-defaulting party.
In the event that the allegedly defaulting party sends such
notice of objection to Escrow Agent within the thirty (30) day
period, the matter shall be submitted to, and settled by
arbitration. Three (3) arbitrators shall be chosen by the
American Arbitration Association office located in Jerusalem,
Israel (or, if there then is none within Jerusalem, then the
nearest city within Israel or, if there is none, then the
American Arbitration Association office in London, England), in
accordance with the rules of the American Arbitration
Association's Centre for Dispute Resolution. The arbitrators
shall apply New York law but the arbitration shall take place in
Jerusalem, Israel, whether or not any American Arbitration
Association office is located there. The parties shall request
that, if feasible, the AAA appoint one arbitrator to the panel of
three arbitrators who shall possess knowledge of the computer
software industry; however the arbitration shall proceed even if
such a person is unavailable.
The decision of the arbitrators shall be binding and conclusive
on all parties involved. Judgment on the arbitrator's decision
may be entered in any forum, federal or state, having
jurisdiction. All costs of the arbitration, including reasonable
attorneys' fees and costs incurred by the prevailing party and
Escrow Agent shall be paid by the non- prevailing party.
3.4 If, within thirty (30) days after mailing or sending the items
specified in paragraph 3.3(a) to the allegedly defaulting party,
Escrow Agent has not received written notice of objection to the
release of the Source Material, then Escrow Agent shall release the
Source Material to the non-defaulting party in accordance with the
delivery instructions referred to in paragraph 3.3(a)(iv).
3.5 Non-Payment. It shall be the responsibility of Licensor, not Licensee,
to pay all fees and expenses of Escrow Agent hereunder. Nevertheless,
Escrow Agent shall give notice to both Licensee and Licensor of the
non-payment of any fee due and payable hereunder. Upon prompt payment
after such notice by Licensor of the unpaid fee, this Agreement shall
continue in force and effect. Otherwise, the provisions of Section
3.1(b) shall apply.
4 OWNERSHIP OF SOURCE MATERIAL
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4.1 Absent release and delivery of the Source Material to Licensee,
ownership of the source code itself and any accompanying documentation
(together with all copyrights and proprietary rights therein) shall
remain with Licensor.
4.2 Upon release and delivery of the Source Material to Licensee, Licensee
shall have the right to possession of the Source Material, and
Licensee shall be licensed to use, maintain, modify and update the
Source Material as are reasonably required to receive all benefits
that are due to Licensee under the terms of the License Agreement. Any
source code or object code resulting from Licensee's modification,
modification, or updating of the Source Material shall be Licensee's
property. However, nothing herein shall discharge Licensor or Licensee
from the obligations of the License Agreement and Software Services
Agreement, which shall remain in full force and effect notwithstanding
any termination of the escrow hereunder.
5 FEES AND TERM
5.1 Escrow Agent shall be entitled to the fees described in Exhibit B,
which shall be paid solely by Licensor.
5.2 Escrow Agent shall issue an invoice for its initial fee to Licensor
which shall be due at the time of the execution of this Agreement, and
shall issue additional invoices to Licensor from time to time as
additional fees become due. Payment is due within twenty (20) days of
invoice date.
5.3 The term of this Agreement shall be perpetual unless terminated by a
written instrument signed by both Licensee and Licensor or by the
release of the Source Material as provided hereby.
5.4 Upon notice from Escrow Agent that it no longer desires to serve
hereunder, or by mutual decision of the Licensee and Licensor
(evidenced by a written instrument signed by both of them), a
substitute Escrow Agent shall be appointed, and the Escrow Agent
agrees to convey the Source Material, and any relevant records and
files, to such successor Escrow Agent. The successor Escrow Agent
shall agree in writing to the terms hereof prior to assuming such
office.
5.5 This Agreement shall terminate upon the deliver of the Source Material
to any party, provide however that all fees due to Escrow Agent shall
remain due and owning notwithstanding the termination of this
Agreement. No fee shall become refundable or be discharged on account
of such termination.
6 BANKRUPTCY
6.1 Licensor acknowledges that if Licensor or its trustee in bankruptcy
rejects the License Agreement or this Agreement under the provisions
of the Bankruptcy Code, Licensee may elect to retain its rights under
the License Agreement and this Agreement as provided in Section 365(n)
of the Bankruptcy Code. Neither
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Licensor nor such trustee in bankruptcy shall interfere with the
rights of Licensee as provided in the License Agreement and this
Agreement, including the right to obtain the Source Material from
Escrow Agent.
7 LIABILITY
7.1 Except for actual fraud, gross negligence or intentional misconduct,
Escrow Agent shall not be liable to Licensor, Licensee or to any other
party for any act, or failure to act. Any liability of Escrow Agent
under this Agreement, regardless of cause, shall be limited to the
actual cost of new blank magnetic media or blank documentation of the
same type and quality of any lost or destroyed source code copy.
Escrow Agent will not be liable for special, indirect, incidental or
consequential damages.
8 INDEMNITY
8.1 Licensor and Licensee shall indemnify and hold harmless Escrow Agent
and each of its directors, officers, and stockholders from any and all
claims, damages, suits, liabilities, obligations, costs, fees, and any
other expenses whatsoever, including legal fees, that may be incurred
by Escrow Agent or any of its directors, officers, or stockholders
relating to the duties or performance of Escrow Agent under this
Agreement, except as otherwise provided in paragraph 7.1.
9 DISPUTES
9.1 In the event of any dispute between Licensor and Licensee or any other
party claiming rights under this Agreement, Escrow Agent may submit
the matter to any court of competent jurisdiction in an interpleader
or similar action. However, Escrow Agent shall not be obligated to
bring such a proceeding. Licensor and Licensee shall indemnify and
hold harmless Escrow Agent harmless from all costs and fees incurred
in such a proceeding, including legal fees.
9.2 If Escrow Agent shall be uncertain as to its duties or rights
hereunder, Escrow Agent may, without incurring any liability, refrain
from taking any action until it receives direction in writing in the
form of the order, decree, or judgment of a court of competent
jurisdiction; but Escrow Agent shall be under no duty to institute or
defend any such proceeding.
10 VERIFICATION
10.1 Upon receipt of a written request from Licensor and payment by the
Licensor of the applicable fee, Escrow Agent shall inspect the Source
Material to verify its contents, completeness and accuracy, and shall
send its written Technical Verification Report to Licensor. Upon
request from Licensee, Escrow Agent will send Licensee a copy of its
written Technical Verification Report.
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10.2 Licensee shall cooperate with Escrow Agent by making available
promptly facilities, computer systems, object code, technical and
support personnel and all other materials and assistance as Escrow
Agent may reasonably request for the purpose of verification.
11 SOURCE MATERIAL
11.1 Except as otherwise provided in this Agreement, Escrow Agent shall
have no responsibility with respect to the accuracy or completeness of
the Source Material or any revisions thereto.
12 NOTICES
12.1 All notices required or permitted by this Agreement shall be in
writing and sent by registered or certified mail, return receipt
requested, or by any form of express delivery that generates a
receipt. Notices and other communication hereunder shall be deemed
given three (3) days after having been postmarked by registered or
certified mail (unless earlier received), or otherwise upon actual
receipt. The following addresses shall be used for notice:
(a) If to Licensor: VSUS Technologies Incorporated
▇/▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ Avenue, 24th floor
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
(b) If to Licensee: ViVaVu Systems, Ltd.
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇-▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Israel
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇
(c) If to Escrow Agent: [to the address set forth immediately after
its signature at the end of this agreement]
13 MISCELLANEOUS
13.1 This Agreement contains the entire understanding of the parties with
respect to the subject matter hereof, and supersedes any and all
written and oral agreements and understandings with respect to the
subject matter hereof. This Agreement shall not be construed as
creating an agency, partnership, franchise, joint venture or other
relationship between the parties other than one of independent
contractors. Neither party has the right to bind the other, to act as
agent for or with the other, or to conduct business in the other's
name or for the other's account. Neither party shall contract
obligations in the name of, or on behalf of, the other, nor make any
representation, guaranty or warranty with respect to the other's
personnel or services except as authorized in writing by such other
party in advance. This agreement shall
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be binding upon the parties and their respective successors and
assigns, but any such assignment shall not relieve a party hereto from
responsibility hereunder.
13.2 This Agreement shall be modified or amended only by means of a written
agreement executed by both parties. No waiver of any part of this
Agreement shall be effective unless made in writing and signed by the
waiving party. No waiver of any breach of this Agreement shall
constitute a waiver of any subsequent breach of the same or any other
provision of this Agreement.
13.3 The parties recognize and acknowledge that they would not have any
adequate remedy at law in the event of a breach of this Agreement, and
a party may suffer irreparable damage and injury and/or damages which
would be practically impossible to ascertain, and accordingly the
parties hereby agrees that, in the event of a breach hereof, the other
party, in addition to any other available rights and remedies, shall
be entitled to equitable relief with respect thereto.
13.4 In the event any provision of this Agreement shall be held invalid or
unenforceable, such provision shall be deemed modified in time,
geography, scope or otherwise, but only to the extent necessary to
make it enforceable. To effect such modification, the said provision
shall be deemed supplemented and/or rewritten (or deleted if such
provision is incapable of such addition and/or rewriting), whichever
shall most fully preserve the intentions of the parties as originally
expressed herein.
13.5 This agreement shall be governed by the law of the State of New York
but, in deference to the likely location of evidence and the
convenience of witnesses, any disputes or claims hereunder shall be
resolved exclusively by the courts of the State of Israel, and the
parties hereby submit to the jurisdiction of said forum.
13.6 Paragraph headings herein are for convenience only and shall not be
considered in the interpretation of this Agreement.
13.7 This agreement was thoroughly negotiated by competent counsel for both
parties to their respective satisfaction. Therefore, the parties agree
that, in the interpretation hereof, no weight or consideration should
be given with respect to which party's attorneys prepared the initial
draft hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives this 26th day of January,
2005.
Licensor: VSUS TECHNOLOGIES, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇ ▇▇▇▇▇▇, President
Licensee: ViVaVu SYSTEMS, LTD.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇▇▇▇, President
Escrow Agent: ------------------------------
By: ------------------------------
Address: ------------------------------
Name and Title: ------------------------------
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EXHIBIT A
Licensor Name: VSUS Technologies Incorporated
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Licensee Name: ViVaVu Systems, Ltd.
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Product Name: SAFe-mail System
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Version No.: 2.0.20
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Date of Deposit:
-----------------
Description of Materials Deposited:
1 CD-ROM containing all the source code of the SAFe-mail System
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