Exhibit 10.3

                                ESCROW AGREEMENT

         THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as of
March  22,  2001,  by ARS  Networks,  Inc.,  a New  Hampshire  corporation  (the
"Company"); Cornell Capital Partners, L.P., a limited liability partnership (the
"Investor");  Butler Gonzalez LLP (the  "Investor's  Counsel");  and First Union
National Bank, a national  banking  association,  as Escrow Agent hereunder (the
"Escrow Agent").

                                   BACKGROUND
                                   ----------

         WHEREAS,  the Company and the Investor have entered into an Equity Line
of (the  "Equity  Line of  Credit  Agreement"),  dated  as of the  date  hereof,
pursuant  to which the  Company  proposes to sell the  Company's  Common  Stock,
$0.0001 par value per share (the "Common Stock"),  at a price per share equal to
the  Purchase  Price,  as that  term is  defined  in the  Equity  Line of Credit
Agreement, for an aggregate price of up to $5,000,000. The Equity Line of Credit
Agreement  provides  that on each Advance Date the  Investor  shall  deposit the
Advance pursuant to the Advance Notice in a segregated escrow account to be held
by Escrow Agent and the Company  shall deposit  shares of the  Company's  Common
Stock,  which shall be purchased by the Investor as set forth in the Equity Line
of Credit  Agreement,  with the  Investor's  Counsel,  in order to  effectuate a
disbursement  to  the  Company  of  the  Advance  by  the  Escrow  Agent  and  a
disbursement  to the  Investor of the shares of the  Company's  Common  Stock by
Investor's  Counsel at a closing  to be held as set forth in the Equity  Line of
Credit Agreement (the "Closing").

         WHEREAS,  Escrow  Agent has agreed to accept,  hold,  and  disburse the
funds deposited with it in accordance with the terms of this Agreement.

         WHEREAS,  Investor's  Counsel has agreed to accept,  hold, and disburse
the shares of the Company's  Common Stock which have been  deposited  with it in
accordance with the terms of this Agreement.

         WHEREAS, in order to establish the escrow of funds and shares to effect
the provisions of the Equity Line of Credit  Agreement,  the parties hereto have
entered into this Agreement.


         NOW THEREFORE,  in consideration of the foregoing,  it is hereby agreed
as follows:

         1. DEFINITIONS.  The following terms shall have the following  meanings
when used herein:


<PAGE>

         a.  "Escrow  Funds"  shall mean the Advance  funds  deposited  with the
Escrow Agent pursuant to this Agreement.

         b. "Joint Written Direction" shall mean a written direction executed by
the Investor and the Company directing Escrow Agent to disburse all or a portion
of the Escrow  Funds or to take or refrain  from  taking any action  pursuant to
this Agreement.

         c.  "Common  Stock  Joint  Written  Direction"  shall  mean  a  written
direction executed by the Investor and the Company directing  Investor's Counsel
to disburse all or a portion of the shares of the  Company's  Common Stock or to
refrain from taking any action pursuant to this Agreement.




         2.  APPOINTMENT  OF AND  ACCEPTANCE  BY  ESCROW  AGENT  AND  INVESTOR'S
             COUNSEL.
             -------------------------------------------------------------------

             A. The  Investor  and the Company  hereby  appoint  Escrow Agent to
serve as Escrow Agent  hereunder.  Escrow Agent hereby accepts such  appointment
and,  upon  receipt by wire  transfer  of the Escrow  Funds in  accordance  with
Section  3 below,  agrees to hold,  invest  and  disburse  the  Escrow  Funds in
accordance with this Agreement.

             B. The Investor and the Company hereby appoint  Investor's  Counsel
to serve as the holder of the shares of the  Company's  Common Stock which shall
be purchased by the Investor. Investor's Counsel hereby accepts such appointment
and,  upon  receipt via D.W.A.C of the shares of the  Company's  Common Stock in
accordance  with Section 3 below,  agrees to hold and disburse the shares of the
Company's Common Stock in accordance with this Agreement.

         3. CREATION OF ESCROW ACCOUNT/COMMON STOCK ACCOUNT.
            -----------------------------------------------

         A. On or prior to the date of this  Agreement  the Escrow  Agent  shall
establish  an escrow  account  for the deposit of the Escrow  Funds  entitled as
follows: ARS Networks, Inc./Cornell Capital Partners L.P. The Investor will wire
funds to the account of the Escrow Agent as follows:

--------------------------------------------------------------------------------
Bank:                          First Union National Bank of New Jersey
Routing #:                     031201467
--------------------------------------------------------------------------------
Account #:                     2020000659170
--------------------------------------------------------------------------------
Name on Account:               Butler Gonzalez LLP/First Union as Escrow Agent
--------------------------------------------------------------------------------
Name on Sub-Account:           ARS Networks, Inc./Cornell Capital Partners, L.P.
                               Escrow account
--------------------------------------------------------------------------------
Reference Sub-Account #:       1334-00
--------------------------------------------------------------------------------
Attn:                          Robert Mercado (732) 452-3005
--------------------------------------------------------------------------------
                                 Carmela Agugliaro (732) 452-3005
--------------------------------------------------------------------------------


                                       2


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Note:                          Only wire transfers shall be accepted.
--------------------------------------------------------------------------------



                                                .

         B. On or prior to the date of this Agreement  Investor's  Counsel shall
establish an account for the D.W.A.C.  of the shares of Common Stock entitled as
follows:  ARS Networks,  Inc. The Company will D.W.A.C.  shares of the Company's
Common Stock to the account of Investor's Counsel as follows:

--------------------------------------------------------------------------------
Brokerage Firm:                     The May Davis Group, Inc.
--------------------------------------------------------------------------------
Clearing Firm:                      Dain Rouscher
--------------------------------------------------------------------------------
Account #:                          12H7-16679688
--------------------------------------------------------------------------------
DTC #:                              0235
--------------------------------------------------------------------------------
Name on Account:                    Butler Gonzalez LLP
--------------------------------------------------------------------------------





         4. DEPOSITS INTO THE ESCROW ACCOUNT.  The Investor agrees that it shall
promptly  deliver all monies for the  payment of the Common  Stock to the Escrow
Agent for deposit in the Escrow Account.

         5. DISBURSEMENTS FROM THE ESCROW ACCOUNT.
            -------------------------------------

         (a)  At  such  time  as  Escrow  Agent  has  collected  and  deposited
instruments  of payment in the total  amount of the Advance  and the  Investor's
Counsel,  has received  such Common Stock via D.W.A.C from the Company which are
to be issued to the  Investor  pursuant to the Equity Line of Credit  Agreement,
Investor's  Counsel shall notify the Company and the Investor.  The Escrow Agent
will  continue to hold such funds  until the  Investor  and Company  execute and
deliver a Joint  Written  Direction  directing  the Escrow Agent to disburse the
Escrow Funds pursuant to Joint Written  Direction at which time the Escrow Agent
shall wire the Escrow Funds to the Company.  In  disbursing  such funds,  Escrow
Agent is authorized to rely upon such Joint Written  Direction  from Company and
may accept any signatory  from the Company  listed on the signature page to this
Agreement and any  signature  from the Investor that Escrow Agent already has on
file.  Simultaneous with delivery of the executed Joint Written Direction to the
Escrow Agent the Investor and Company  shall  execute and deliver a Common Stock
Joint Written Direction to Investor's Counsel directing


                                       3
<PAGE>

Investor's  Counsel to release  via  D.W.A.C to the  Investor  the shares of the
Company's  Common  Stock.  In releasing  such shares of Common Stock  Investor's
Counsel is  authorized  to rely upon such Common Stock Joint  Written  Direction
from  Company  and may  accept  any  signatory  from the  Company  listed on the
signature page to this Agreement and any signature from the Investor  Investor's
Counsel has on file.

In the event the Escrow  Agent does not receive  the amount of the Advance  from
the Investor, the Escrow Agent shall notify the Company and the Investor. In the
event  Investor's  Counsel  does not  receive  the shares of Common  Stock to be
purchased by the Investor  Investor's  Counsel  shall notify the Company and the
Investor.

In the event that the Escrow Agent is advised by the Investor's Counsel that the
Common Stock has not been received from the Company, in no event will the Escrow
Funds be released to the Company  until such shares are received by the Investor
's Counsel. For purposes of this Agreement, the term "Common Stock Certificates"
shall mean Common Stock  certificates to be purchased pursuant to the respective
Advance Notice pursuant to the Equity Line of Credit Agreement executed on March
22, 2001.

         6.  COLLECTION  PROCEDURE.  The Escrow  Agent is hereby  authorized  to
forward each wire for  collection  and, upon  collection of the proceeds of each
wire deposit the collected proceeds in the Escrow Account.

         Any wires returned  unpaid to the Escrow Agent shall be returned to the
Investor.  In such cases,  the Escrow Agent will promptly  notify the Company of
such return.

         7. SUSPENSION OF PERFORMANCE: DISBURSEMENT INTO COURT.
            --------------------------------------------------

A. ESCROW  AGENT.  If at any time,  there  shall  exist any dispute  between the
Company and the Investor with respect to holding or  disposition  of any portion
of the Escrow Funds or any other obligations of Escrow Agent hereunder, or if at
any  time  Escrow  Agent  is  unable  to  determine,   to  Escrow  Agent's  sole
satisfaction,  the proper  disposition  of any  portion  of the Escrow  Funds or
Escrow Agent's proper actions with respect to its obligations  hereunder,  or if
the parties have not within  thirty (30) days of the  furnishing by Escrow Agent
of a notice of resignation  pursuant to Section 9 hereof,  appointed a successor
Escrow Agent to act  hereunder,  then Escrow Agent may, in its sole  discretion,
take either or both of the following actions:

             i. suspend the  performance  of any of its  obligations  (including
             without limitation any disbursement  obligations) under this Escrow
             Agreement  until such dispute or  uncertainty  shall be resolved to
             the sole  satisfaction of Escrow Agent or until a successor  Escrow
             Agent shall be appointed  (as the case may be);  provided  however,
             Escrow  Agent  shall   continue  to  invest  the  Escrow  Funds  in
             accordance with Section 8 hereof; and/or


                                       4

<PAGE>

             ii.  petition  (by  means of an  interpleader  action  or any other
             appropriate  method)  any court of  competent  jurisdiction  in any
             venue convenient to Escrow Agent, for instructions  with respect to
             such dispute or uncertainty, and to the extent required by law, pay
             into such court, for holding and disposition in accordance with the
             instructions  of such  court,  all funds  held by it in the  Escrow
             Funds,  after deduction and payment to Escrow Agent of all fees and
             expenses  (including  court costs and attorneys'  fees) payable to,
             incurred  by,  or  expected  to be  incurred  by  Escrow  Agent  in
             connection  with  performance of its duties and the exercise of its
             rights hereunder.

             iii.  Escrow  Agent shall have no  liability  to the  Company,  the
             Investor,  or any person  with  respect to any such  suspension  of
             performance or disbursement into court,  specifically including any
             liability  or claimed  liability  that may arise,  or be alleged to
             have arisen, out of or as a result of any delay in the disbursement
             of funds held in the Escrow  Funds or any delay in with  respect to
             any other action required or requested of Escrow Agent.

B. INVESTOR'S COUNSEL. If at any time, there shall exist any dispute between the
Company and the Investor with respect to holding or disposition of any portion
of the shares of Common Stock or any other obligations of Investor's Counsel
hereunder, or if at any time Investor's Counsel is unable to determine, to
Investor's Counsel's sole satisfaction, the proper disposition of any portion of
the shares of Common Stock or Investor's Counsel's proper actions with respect
to its obligations hereunder, then Investor's Counsel may, in its sole
discretion, take either or both of the following actions:

             i. suspend the  performance  of any of its  obligations  (including
             without limitation any disbursement  obligations) under this Escrow
             Agreement  until such dispute or  uncertainty  shall be resolved to
             the sole  satisfaction  of Investor's  Counsel or until a successor
             shall be appointed (as the case may be); and/or

             ii.  petition  (by  means of an  interpleader  action  or any other
             appropriate  method)  any court of  competent  jurisdiction  in any
             venue  convenient  to Investor's  Counsel,  for  instructions  with
             respect to such dispute or uncertainty,  and to the extent required
             by law,  pay into  such  court,  for  holding  and  disposition  in
             accordance with the  instructions of such court,  all shares of the
             Company's  Common  Stock  funds  held by it,  after  deduction  and
             payment to Investor's  Counsel of all fees and expenses  (including
             court  costs and  attorneys'  fees)  payable  to,  incurred  by, or
             expected to be incurred by Investor's  Counsel in  connection  with
             performance of its duties and the exercise of its rights hereunder.

             iii. Investor's Counsel shall have no liability to the Company, the
             Investor,  or any person  with  respect to any such  suspension  of
             performance or disbursement into court,  specifically including any
             liability  or claimed  liability  that may arise,  or be alleged to
             have  arisen,  out of or as a result of any delay in the release of


                                       5
<PAGE>

             shares of the  Company's  Common Stock or any delay in with respect
             to any other action required or requested of Butler Gonzalez, LLP.

         8.  INVESTMENT  OF ESCROW  FUNDS.  The Escrow  Agent shall  deposit the
Escrow Funds in a non-interest bearing money market account.

         If Escrow Agent has not received a Joint Written  Direction at any time
that an investment  decision must be made,  Escrow Agent shall invest the Escrow
Fund, or such portion thereof,  as to which no Joint Written  Direction has been
received,  in investments  described above. The foregoing  investments  shall be
made by the Escrow Agent.  Notwithstanding  anything to the contrary  contained,
Escrow Agent may,  without  notice to the parties,  sell or liquidate any of the
foregoing  investments at any time if the proceeds  thereof are required for any
release of funds permitted or required hereunder,  and Escrow Agent shall not be
liable or responsible for any loss, cost or penalty resulting from any such sale
or  liquidation.  With respect to any funds received by Escrow Agent for deposit
into the Escrow Funds after ten  o'clock,  a.m.,  New Jersey time,  Escrow Agent
shall  not be  required  to  invest  such  funds or to  effect  such  investment
instruction  until  the next day upon  which  banks in New  Jersey  are open for
business.

         9.  RESIGNATION  AND REMOVAL OF ESCROW  AGENT.  Escrow Agent may resign
from the  performance of its duties  hereunder at any time by giving thirty (30)
days' prior  written  notice to the  parties or may be removed,  with or without
cause, by the parties,  acting jointly,  by furnishing a Joint Written Direction
to Escrow  Agent,  at any time by the  giving of ten (10)  days'  prior  written
notice  to  Escrow  Agent as  provided  herein  below.  Upon any such  notice of
resignation  or removal,  the  representatives  of the  Investor and the Company
identified  in Sections  13a.(iv) and 13b.(iv),  below,  jointly shall appoint a
successor  Escrow  Agent  hereunder,  which shall be a  commercial  bank,  trust
company or other financial  institution  with a combined  capital and surplus in
excess of  $10,000,000.00.  Upon the acceptance in writing of any appointment of
Escrow Agent hereunder by a successor Escrow Agent,  such successor Escrow Agent
shall  thereupon  succeed  to and become  vested  with all the  rights,  powers,
privileges  and duties of the retiring  Escrow  Agent,  and the retiring  Escrow
Agent  shall be  discharged  from its duties and  obligations  under this Escrow
Agreement,  but shall not be discharged  from any liability for actions taken as
Escrow Agent  hereunder  prior to such  succession.  After any  retiring  Escrow
Agent's  resignation or removal,  the provisions of this Escrow  Agreement shall
inure to its benefit as to any actions  taken or omitted to be taken by it while
it was Escrow Agent under this Escrow Agreement. The retiring Escrow Agent shall
transmit all records pertaining to the Escrow Funds and shall pay all funds held
by it in the Escrow Funds to the successor Escrow Agent,  after making copies of
such records as the retiring  Escrow Agent deems  advisable and after  deduction
and payment to the retiring  Escrow  Agent of all fees and  expenses  (including
court costs and  attorneys'  fees)  payable to,  incurred  by, or expected to be
incurred by the retiring  Escrow Agent in connection with the performance of its
duties and the exercise of its rights hereunder.


                                       6
<PAGE>

     10.  LIABILITY OF ESCROW AGENT.
          --------------------------

     a. Escrow Agent shall have no liability or obligation with respect to the
Escrow Funds except for Escrow Agent's willful misconduct or gross negligence.
Escrow Agent's sole responsibility shall be for the safekeeping, investment, and
disbursement of the Escrow Funds in accordance with the terms of this Agreement.
Escrow Agent shall have no implied duties or obligations and shall not be
charged with knowledge or notice or any fact or circumstance not specifically
set forth herein. Escrow Agent may rely upon any instrument, not only as to its
due execution, validity and effectiveness, but also as to the truth and accuracy
of any information contained therein, which Escrow Agent shall in good faith
believe to be genuine, to have been signed or presented by the person or parties
purporting to sign the same and conform to the provisions of this Agreement. In
no event shall Escrow Agent be liable for incidental, indirect, special, and
consequential or punitive damages. Escrow Agent shall not be obligated to take
any legal action or commence any proceeding in connection with the Escrow Funds,
any account in which Escrow Funds are deposited, this Agreement or the Equity
Line of Credit Agreement, or to appear in, prosecute or defend any such legal
action or proceeding. Escrow Agent may consult legal counsel selected by it in
any event of any dispute or question as to construction of any of the provisions
hereof or of any other agreement or its duties hereunder, or relating to any
dispute involving any party hereto, and shall incur no liability and shall be
fully indemnified from any liability whatsoever in acting in accordance with the
opinion or instructions of such counsel. The Company and the Investor jointly
and severally shall promptly pay, upon demand, the reasonable fees and expenses
of any such counsel.

         a. The Escrow Agent is hereby  authorized,  in its sole discretion,  to
comply with orders  issued or process  entered by any court with  respect to the
Escrow  Funds,  without  determination  by the  Escrow  Agent  of  such  court's
jurisdiction  in the matter.  If any portion of the Escrow  Funds is at any time
attached,  garnished  or  levied  upon  under any  court  order,  or in case the
payment, assignment, transfer, conveyance or delivery of any such property shall
be stayed or enjoined by any court order,  or in any case any order  judgment or
decree shall be made or entered by any court affecting such property or any part
thereof, then and in any such event, the Escrow Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ judgment or decree
which it is advised by legal counsel  selected by it,  binding upon it,  without
the need for appeal or other action;  and if the Escrow Agent  complies with any
such  order,  writ,  judgment  or  decree,  it shall not be liable to any of the
parties  hereto  or to any other  person or entity by reason of such  compliance
even though such order,  writ judgment or decree may be  subsequently  reversed,
modified, annulled, set aside or vacated.


     11.  Liability of Investor's Counsel.
          --------------------------------

         a. Notwithstanding any liability  attributable to Investor's Counsel as
counsel  to  the  Investor,  Investor's  Counsel  shall  have  no  liability  or
obligation  with respect to the shares of the Company's  Common Stock except for
Investor's   Counsel's  willful  misconduct  or  gross  negligence.   Investor's
Counsel's sole  responsibility  shall be for the  safekeeping and release of the
shares  of the  Company's  Common  Stock in  accordance  with the  terms of this

                                       7
<PAGE>

Agreement.  Investor's  Counsel shall have no implied duties or obligations  and
shall not be charged with  knowledge or notice or any fact or  circumstance  not
specifically set forth herein.  Investor's Counsel may rely upon any instrument,
not only as to its due execution, validity and effectiveness, but also as to the
truth and  accuracy  of any  information  contained  therein,  which  Investor's
Counsel  shall in good  faith  believe  to be  genuine,  to have been  signed or
presented  by the person or parties  purporting  to sign the same and conform to
the provisions of this Agreement. In no event shall Investor's Counsel be liable
for  incidental,  indirect,  special,  and  consequential  or punitive  damages.
Investor's  Counsel  shall not be obligated to take any legal action or commence
any proceeding in connection with the shares of the Company's  Common Stock, any
account in which shares of Common Stock are deposited and this Agreement,  or to
appear in,  prosecute or defend any such legal action or proceeding.  Investor's
Counsel may consult legal counsel  selected by it in any event of any dispute or
question  as to  construction  of any of the  provisions  hereof or of any other
agreement  or its duties  hereunder,  or relating to any dispute  involving  any
party hereto,  and shall incur no liability and shall be fully  indemnified from
any  liability   whatsoever  in  acting  in  accordance   with  the  opinion  or
instructions of such counsel. The Company and the Investor jointly and severally
shall promptly pay, upon demand,  the  reasonable  fees and expenses of any such
counsel.

         b. Investor's Counsel is hereby authorized,  in its sole discretion, to
comply with orders  issued or process  entered by any court with  respect to the
shares of the  Company's  Common  Stock,  without  determination  by  Investor's
Counsel of such court's jurisdiction in the matter. If any portion of the shares
of the Company's Common Stock are at any time attached, garnished or levied upon
under any court order, or in case the payment, assignment,  transfer, conveyance
or delivery of any such property shall be stayed or enjoined by any court order,
or in any case any order  judgment  or decree  shall be made or  entered  by any
court  affecting such property or any part thereof,  then and in any such event,
the Investor's Counsel is authorized,  in its sole discretion,  to rely upon and
comply with any such order, writ judgment or decree which it is advised by legal
counsel  selected by it,  binding upon it,  without the need for appeal or other
action; and if Investor's  Counsel complies with any such order, writ,  judgment
or decree,  it shall not be liable to any of the parties  hereto or to any other
person or entity by reason of such  compliance  even  though  such  order,  writ
judgment or decree may be subsequently reversed,  modified,  annulled, set aside
or vacated.


         12.  INDEMNIFICATION  OF ESCROW AGENT.  From and at all times after the
date of this Agreement, the parties jointly and severally, shall, to the fullest
extent  permitted by law and to the extent provided  herein,  indemnify and hold
harmless Escrow Agent and each director, officer, employee,  attorney, agent and
affiliate of Escrow Agent (collectively,  the "Indemnified Parties") against any
and all actions,  claims (whether or not valid), losses,  damages,  liabilities,
costs  and  expenses  of  any  kind  or  nature  whatsoever  (including  without
limitation  reasonable  attorney's  fees,  costs and  expenses)  incurred  by or
asserted against any of the Indemnified  Parties from and after the date hereof,
whether direct, indirect or consequential,  as a result of or arising from or in
any way relating to any claim,  demand,  suit, action, or proceeding  (including
any inquiry or  investigation) by any person,  including without  limitation the

                                       8
<PAGE>

parties to this Agreement,  whether  threatened or initiated,  asserting a claim
for any legal or  equitable  remedy  against  any  Indemnified  Party  under any
statute or  regulation,  including,  but not  limited  to, any  federal or state
securities  laws,  or under any  common  law or  equitable  cause or  otherwise,
arising from or in  connection  with the  negotiation,  preparation,  execution,
performance  or failure of  performance  of this  Agreement  or any  transaction
contemplated herein, whether or not any such Indemnified Party is a party to any
such  action  or  proceeding,  suit  or  the  target  of  any  such  inquiry  or
investigation; provided, however, that no Indemnified Party shall have the right
to be  indemnified  hereunder  for  liability  finally  determined by a court of
competent jurisdiction,  subject to no further appeal, to have resulted from the
gross negligence or willful  misconduct of such  Indemnified  Party. If any such
action or claim shall be brought or asserted against any Indemnified Party, such
Indemnified  Party shall promptly notify the Company and the Investor  hereunder
in writing, and the and the Company shall assume the defense thereof,  including
the  employment  of counsel and the payment of all  expenses.  Such  Indemnified
Party shall, in its sole  discretion,  have the right to employ separate counsel
(who may be selected by such  Indemnified  Party in its sole  discretion) in any
such action and to participate  and to participate in the defense  thereof,  and
the fees and expenses of such counsel shall be paid by such  Indemnified  Party,
except that the Investor  and/or the Company  shall be required to pay such fees
and  expense  if (a) the  Investor  or the  Company  agree to pay such  fees and
expenses,  or (b) the  Investor  and/or  the  Company  shall  fail to assume the
defense of such action or proceeding  or shall fail,  in the sole  discretion of
such  Indemnified  Party,  to  employ  counsel  reasonably  satisfactory  to the
Indemnified  Party in any such action or  proceeding,  (c) the  Investor and the
Company is the  plaintiff in any such action or  proceeding  or (d) the named or
potential  parties to any such action or proceeding  (including any  potentially
impleaded  parties)  include  both  Indemnified  Party the  Company  and/or  the
Investor  Indemnified Party shall have been advised by counsel that there may be
one or  more  legal  defenses  available  to it  which  are  different  from  or
additional to those  available to the Company or the Investor.  The Investor and
the Company  shall be jointly and  severally  liable to pay fees and expenses of
counsel  pursuant to the preceding  sentence,  except that any obligation to pay
under  clause (a) shall apply only to the party so  agreeing.  All such fees and
expenses  payable by the Company  and/or the Investor  pursuant to the foregoing
sentence  shall be paid from time to time as  incurred,  both in  advance of and
after the final  disposition  of such action or claim.  The  obligations  of the
parties under this section shall survive any termination of this Agreement,  and
resignation  or  removal  of  the  Escrow  Agent  shall  be  independent  of any
obligation of Escrow Agent.

         13.  INDEMNIFICATION OF INVESTOR'S COUNSEL. From and at all times after
the date of this  Agreement,  the parties  jointly and severally,  shall, to the
fullest extent permitted by law and to the extent provided herein, indemnify and
hold harmless Investor's Counsel and each partner, director,  officer, employee,
attorney,   agent  and  affiliate  of  Investor's  Counsel  (collectively,   the
"Indemnified  Parties")  against  any and all  actions,  claims  (whether or not
valid), losses, damages,  liabilities,  costs and expenses of any kind or nature
whatsoever  (including without limitation  reasonable attorney's fees, costs and
expenses)  incurred by or asserted  against any of the Indemnified  Parties from
and after the date  hereof,  whether  direct,  indirect or  consequential,  as a

                                       9
<PAGE>

result of or arising  from or in any way  relating to any claim,  demand,  suit,
action,  or proceeding  (including any inquiry or  investigation) by any person,
including without  limitation the parties to this Agreement,  whether threatened
or initiated,  asserting a claim for any legal or equitable  remedy  against any
person  under any  statute or  regulation,  including,  but not  limited to, any
federal or state  securities laws, or under any common law or equitable cause or
otherwise,  arising from or in  connection  with the  negotiation,  preparation,
execution,  performance  or  failure of  performance  of this  Agreement  or any
transaction  contemplated herein, whether or not any such Indemnified Party is a
party to any such action or  proceeding,  suit or the target of any such inquiry
or investigation;  provided,  however,  that no Indemnified Party shall have the
right to be indemnified hereunder for liability finally determined by a court of
competent  jurisdiction,  subject to no further appeal,  to have resulted solely
from the gross negligence or willful  misconduct of such  Indemnified  Party. If
any such action or claim shall be brought or  asserted  against any  Indemnified
Party, such Indemnified Party shall promptly notify the Company and the Investor
hereunder in writing,  and the Investor and the Company shall assume the defense
thereof,  including  the  employment of counsel and the payment of all expenses.
Such Indemnified  Party shall, in its sole discretion,  have the right to employ
separate  counsel  (who may be  selected by such  Indemnified  Party in its sole
discretion)  in any such action and to  participate  and to  participate  in the
defense thereof, and the fees and expenses of such counsel shall be paid by such
Indemnified Party, except that the Investor and/or the Company shall be required
to pay such fees and expense if (a) the  Investor  or the  Company  agree to pay
such fees and  expenses,  or (b) the Investor  and/or the Company  shall fail to
assume the  defense of such  action or  proceeding  or shall  fail,  in the sole
discretion of such Indemnified Party, to employ counsel reasonably  satisfactory
to the Indemnified Party in any such action or proceeding,  (c) the Investor and
the Company is the  plaintiff in any such action or  proceeding or (d) the named
or potential parties to any such action or proceeding (including any potentially
impleaded  parties)  include  both  Indemnified  Party the  Company  and/or  the
Investor  Indemnified Party shall have been advised by counsel that there may be
one or  more  legal  defenses  available  to it  which  are  different  from  or
additional to those  available to the Company or the Investor.  The Investor and
the Company  shall be jointly and  severally  liable to pay fees and expenses of
counsel  pursuant to the preceding  sentence,  except that any obligation to pay
under  clause (a) shall apply only to the party so  agreeing.  All such fees and
expenses  payable by the Company  and/or the Investor  pursuant to the foregoing
sentence  shall be paid from time to time as  incurred,  both in  advance of and
after the final  disposition  of such action or claim.  The  obligations  of the
parties under this section shall survive any termination of this Agreement,  and
resignation  or  removal  of  the  Escrow  Agent  shall  be  independent  of any
obligation of Escrow Agent.

         14.  EXPENSES  OF ESCROW  AGENT.  Except as set forth in Section 11 the
Company shall  reimburse  Escrow Agent for all of its  reasonable  out-of-pocket
expenses,  including  attorneys' fees, travel expenses,  telephone and facsimile
transmission  costs,  postage  (including  express mail and  overnight  delivery
charges),   copying  charges  and  the  like.  All  of  the   compensation   and


                                       10
<PAGE>

reimbursement  obligations  set forth in this  Section  shall be  payable by the
Company,  upon demand by Escrow Agent. The obligations of the Company under this
Section shall survive any  termination of this Agreement and the  resignation or
removal of Escrow Agent.


        15.      Warranties.
                 ----------

        a.       Investor makes the following representations and warranties to
        Escrow Agent and the Investor's Counsel:

                  (i)  Investor  has full power and  authority  to  execute  and
                  deliver this Escrow  Agreement and to perform its  obligations
                  hereunder.

                  (ii)  This  Escrow  Agreement  has been duly  approved  by all
                  necessary   corporate   action  of  Investor,   including  any
                  necessary  shareholder  approval,  has been  executed  by duly
                  authorized officers of the Investor, enforceable in accordance
                  with its terms.

                  (iii) The execution, delivery, and performance of the Investor
                  of this Agreement will not violate,  conflict with, or cause a
                  default under the  certificate of  incorporation  or bylaws of
                  Investor, any applicable law or regulation, any court order or
                  administrative  ruling or degree  to which the  Investor  is a
                  party or any of its  property  is subject,  or any  agreement,
                  contract, indenture, or other binding arrangement.

                  (iv)  Mark A.  Angelo  has been duly  appointed  to act as the
                  representative  of Investor  hereunder  and has full power and
                  authority  to  execute,   deliver,  and  perform  this  Escrow
                  Agreement, to execute and deliver any Joint Written Direction,
                  to amend,  modify,  or waive any provision of this  Agreement,
                  and to take  any  and  all  other  actions  as the  Investor's
                  representative  under  this  Agreement,  all  without  further
                  consent or direction  form,  or notice to, the Investor or any
                  other party.

                  (v) No party other than the parties  hereto and the  Investors
                  have, or shall have, any lien,  claim or security  interest in
                  the Escrow Funds or any part thereof.  No financing  statement
                  under  the  Uniform   Commercial   Code  is  on  file  in  any
                  jurisdiction  claiming a security  interest  in or  describing
                  (whether  specifically  or generally)  the Escrow Funds or any
                  part thereof.

                  (vi) All of the representations and warranties of the Investor
                  contained  herein are true and  complete as of the date hereof
                  and will be true and complete at the time of any  disbursement
                  from the Escrow Funds.


                                       11
<PAGE>

         b. The Company makes the following  representations  and  warranties to
Escrow Agent and Investor's Counsel:

                  (i) The  Company  is a  corporation  duly  organized,  validly
                  existing,  and in good standing under the laws of the State of
                  New  Hampshire , and has full power and  authority  to execute
                  and  deliver  this  Escrow   Agreement   and  to  perform  its
                  obligations hereunder.

                  (ii)  This  Escrow  Agreement  has been duly  approved  by all
                  necessary  corporate  action  of the  Company,  including  any
                  necessary  shareholder  approval,  has been  executed  by duly
                  authorized officers of the Company,  enforceable in accordance
                  with its terms.

                  (iii) The execution,  delivery, and performance by the Company
                  of this Escrow Agreement is in accordance with the Equity Line
                  of Credit  Agreement and will not violate,  conflict  with, or
                  cause a default  under the  certificate  of  incorporation  or
                  bylaws of the Company,  any applicable law or regulation,  any
                  court  order or  administrative  ruling or decree to which the
                  Company is a party or any of its  property is subject,  or any
                  agreement, contract, indenture, or other binding arrangement.

                  (iv) Sydney  Harland,  has been duly  appointed  to act as the
                  representative of the Company hereunder and has full power and
                  authority  to  execute,   deliver,  and  perform  this  Escrow
                  Agreement, to execute and deliver any Joint Written Direction,
                  to amend,  modify or waive any provision of this Agreement and
                  to take all  other  actions  as the  Company's  Representative
                  under this Agreement, all without further consent or direction
                  from, or notice to, the Company or any other party.

                  (v) No party other than the  parties  hereto  shall have,  any
                  lien,  claim or security  interest in the Escrow  Funds or any
                  part  thereof.   No  financing  statement  under  the  Uniform
                  Commercial  Code  is on file in any  jurisdiction  claiming  a
                  security  interest in or describing  (whether  specifically or
                  generally) the Escrow Funds or any part thereof.

                  (vi) All of the  representations and warranties of the Company
                  contained  herein are true and  complete as of the date hereof
                  and will be true and complete at the time of any  disbursement
                  from the Escrow Funds.


                                       12
<PAGE>

         16.  CONSENT TO  JURISDICTION  AND  VENUE.  In the event that any party
hereto commences a lawsuit or other proceeding  relating to or arising from this
Agreement,  the parties  hereto agree that the United States  District Court for
the District of New Jersey shall have the sole and exclusive  jurisdiction  over
any  such   proceeding.   If  all  such  courts  lack  federal   subject  matter
jurisdiction,  the parties agree that the Superior Court Division of New Jersey,
Chancery  Division of Essex County shall have sole and  exclusive  jurisdiction.
Any of these  courts  shall be proper  venue for any such  lawsuit  or  judicial
proceeding and the parties hereto waive any objection to such venue. The parties
hereto consent to and agree to submit to the  jurisdiction  of any of the courts
specified  herein  and agree to accept the  service of process to vest  personal
jurisdiction over them in any of these courts.

         17. NOTICE. All notices and other communications  hereunder shall be in
writing and shall be deemed to have been validly served, given or delivered five
(5) days after deposit in the United States mails, by certified mail with return
receipt requested and postage prepaid,  when delivered  personally,  one (1) day
delivered  to  any  overnight   courier,   or  when   transmitted  by  facsimile
transmission and addressed to the party to be notified as follows:

If to Investor, to:

         Cornell Capital Partners, L.P.
         c/o Yorkville Advisors Management, LLC
         521 Fifth Avenue - 17th Floor
         New York, NY 10175

with copy to:

         Butler Gonzalez LLP
         1000 Stuyvesant Avenue - Suite #6
         Union, NJ  07083
         Attention: David Gonzalez, Esq.
         Facsimile: (908) 810-0973

If to Company, to:

         ARS Networks, Inc.
         100 Walnut Street
         Champlain, New York, 12919
         Attn: Sydney Harland, Chief Executive Officer
         Facsimile:  (518) 298-2813


<PAGE>

with copy to:

         Kirkpatrick & Lockhart LLP
         201 South Biscayne Boulevard.
         Suite 2000
         Miami, Fl  33131
         Attn: Clayton Parker, Esq.
         Facsimile: (305) 358-7095

If to Escrow Agent, to:

                  First Union National Bank,
                  407 Main Street
                  Metuchen, NJ 08840
                  Attention: Robert Mercado
                             Carmela Agugliaro
                  Facsimile: (732) 452-3005

         Or to such other address as each party may designate for itself by like
notice.

         18.  AMENDMENTS  OR WAIVER.  This  Agreement  may be  changed,  waived,
discharged or terminated  only by a writing  signed by the parties of the Escrow
Agent.  No delay or omission by any party in  exercising  any right with respect
hereto  shall  operate  as  waiver.  A waiver on any one  occasion  shall not be
construed as a bar to, or waiver of, any right or remedy on any future occasion.

         19.  SEVERABILITY.  To the extent any  provision  of this  Agreement is
prohibited  by  or  invalid  under  applicable  law,  such  provision  shall  be
ineffective  to  the  extent  of  such  prohibition,   or  invalidity,   without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

         20. Governing Law. This Agreement shall be construed and interpreted in
accordance  with the  internal  laws of the State of New Jersey  without  giving
effect to the conflict of laws principles thereof.

         21. Entire Agreement.  This Agreement  constitutes the entire Agreement
between the parties relating to the holding, investment, and disbursement of the
Escrow Funds and sets forth in their entirety the  obligations and duties of the
Escrow Agent with respect to the Escrow Funds.

         22. Binding Effect. All of the terms of this Agreement, as amended from
time to time,  shall be binding upon, inure to the benefit of and be enforceable
by the  respective  heirs,  successors and assigns of the Placement  Agent,  the
Company, or the Escrow Agent.

         23.  Execution of  Counterparts.  This  Agreement and any Joint Written
Direction  may be  executed  in  counter  parts,  which when so  executed  shall
constitute one and same agreement or direction.


                                       14
<PAGE>

         24. Termination. Upon the first to occur of the disbursement of all
amounts in the Escrow Funds pursuant to Joint Written Directions or the
disbursement of all amounts in the Escrow Funds into court pursuant to Section 7
hereof, this Agreement shall terminate and Escrow Agent shall have no further
obligation or liability whatsoever with respect to this Agreement or the Escrow
Funds.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



                                       15
<PAGE>



         IN WITNESS WHEREOF the parties have hereunto set their hands and seals
the day and year above set forth.

                               ARS NETWORKS, INC.

                               By:
                                  -----------------------------------
                                  Name: Sydney Harland
                                  Title: Chief Executive Officer


                               FIRST UNION NATIONAL BANK

                               By:
                                  -----------------------------------
                                  Name: Robert Mercado
                                  Title: As Escrow Agent


                               CORNELL CAPITAL PARTNERS, L.P.

                               By: Yorkville Advisors Management
                               Its: General Partner


                               By:
                                  -----------------------------------
                                  Name: Mark A. Angelo
                                  Title: Fund Manager


                                  BUTLER GONZALEZ LLP

                               By:
                                  -----------------------------------
                                  Name: David Gonzalez
                                  Title: Partner