EX-10.5 6 file006.htm SOFTWARE ESCROW AGREEMENT, DATED AS OF JANUARY 28,


                            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 Mr. Amiram Ofir, 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
          Title 11, United States 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
                               c/o Great Court Capital
                               444 Madison Avenue, 24th floor
                               New York, NY 10022

          (b)  If to Licensee: ViVaVu Systems, Ltd.
                               P.O. Box 39001
                               Givat-Ram, Jerusalem 91390
                               Israel
                               Attn: Mr. Amiram Ofir

          (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/ Eli Kissos
                  ------------------------------
                  Eli Kissos, President




Licensee:         ViVaVu SYSTEMS, LTD.



             By:   /s/ Amiram Ofir
                  ------------------------------
                  Amiram Ofir, President





Escrow Agent:     ------------------------------

By:               ------------------------------

Address:          ------------------------------

Name  and Title:  ------------------------------







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                                    EXHIBIT A

Licensor Name: VSUS Technologies Incorporated
               ------------------------------

Licensee Name: ViVaVu Systems, Ltd.
               --------------------

 Product Name: SAFe-mail System
               -----------------

Version No.: 2.0.20
             ----------------------------------------------

Date of Deposit:
                 -----------------

Description of Materials Deposited:

1 CD-ROM containing all the source code of the SAFe-mail System
---------------------------------------------------------------





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