SOFTWARE ESCROW AGREEMENT1 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 2 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 ...
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