Unassociated Document


    Exhibit 10.2

     

    REGISTRATION RIGHTS
AGREEMENT

     

    REGISTRATION RIGHTS AGREEMENT
(this “Agreement”), dated as
of February 8, 2011, by and between Electronic Control Security,
Inc. a New Jersey corporation
(the “Company”), and Auctus Private Equity Fund,
LLC, Massachusetts corporation
(the “Investor”).

     

    WHEREAS:

     

    A.             
In connection with the Drawdown Equity Financing Agreement by and between the
parties hereto of even date herewith (the “Drawdown Equity Financing
Agreement”), the Company has agreed, upon the terms and subject to the
conditions of the Drawdown Equity Financing Agreement, to issue and sell to the
Investor that number of shares of the Company’s common stock, par value $0.001
per share (the “Common
Stock”), which can be purchased pursuant to the terms of the Drawdown
Equity Financing Agreement for an aggregate purchase price of up to Ten
Million Dollars ($10,000,000). 
Capitalized terms not defined herein shall have the meaning ascribed to them in
the Drawdown Equity Financing Agreement.

     

    B.             
To induce the Investor to execute and deliver the Drawdown Equity Financing
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the “Securities Act”), and
applicable state securities laws.

     

    NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Investor hereby agree as
follows:

     

    1.                         DEFINITIONS.

     

    As used
in this Agreement, the following terms shall have the following
meanings:

     

    a.                          
“Person”
means a corporation, a limited liability company, an association, a partnership,
an organization, a business, an individual, a governmental or political
subdivision thereof or a governmental agency.

     

    b.                          
“Register,” “registered,” and
“registration”
refer to a registration effected by preparing and filing one or more
Registration Statements (as defined below) in compliance with the Securities Act
and pursuant to Rule 415 under the Securities Act or any successor rule
providing for offering securities on a continuous or delayed basis (“Rule 415”), and the
declaration or ordering of effectiveness of such Registration Statement(s) by
the United States Securities and Exchange Commission (the “SEC”).

     

    c.                           
“Registrable
Securities” have the meaning provided in definition 1c. of the Drawdown
Equity Financing Agreement.

    


    
      
        
           


        

        
          
          

          
            

          

        

        
           


        

      

    

    


    d.                          
“Registration
Statement” means a registration statement under the Securities Act which
covers the Registrable Securities.

     

    2.                         REGISTRATION.

     

    a.                          
Mandatory
Registration.  The Company shall prepare and file with the SEC a
Registration Statement on Form S-1, or on such other form as is available, no
later than no later than  thirty (180) calendar days from the date hereof
(the “Scheduled Filing
Deadline”).  The Company shall use all commercially reasonable
efforts to have the Registration Statement(s) declared effective by the SEC
within one hundred and twenty (120) calendar days after the scheduled filing
date.  The Company shall use commercially reasonable efforts to cause the
Registration Statement, or any subsequent registration statement covering the
Registrable Securities to remain effective until the full completion of the
Commitment Period (as such term is defined in the Drawdown Equity Financing
Agreement).

     

     b.                          
Sufficient
Number of Shares Registered.  In the event the number of shares
available under a Registration Statement filed pursuant to Section 2(a) is
insufficient to cover all of the Registrable Securities pursuant to the Drawdown
Equity Financing Agreement as result of the limitations imposed by the SEC
pursuant to Rule 415 of the Securities Act, the Company shall amend the
Registration Statement, or file a new Registration Statement (on the short form
available therefore, if applicable), or both, so as to cover all of such
Registrable Securities pursuant to the Drawdown Equity Financing Agreement as
soon as practicable, but in any event no later than three monthsafter the
necessity therefore arises.  The Company shall use its commercially
reasonable  efforts to cause such amendment and/or new Registration
Statement to become effective as soon as
practicable following the filing thereof.  For purposes of the foregoing
provision, the number of shares available under a Registration Statement shall
be deemed “insufficient to cover all of the Registrable Securities” if at any
time the number of Registrable Securities issuable on an Advance Notice Date is
greater than the number of shares available for resale under such Registration
Statement.

     

    3.                          RELATED
OBLIGATIONS.

     

    a.                          
The Company shall use commercially reasonable efforts to keep the
Registration Statement effective pursuant to Rule 415 at all times until the
completion of the Commitment Period (as such term is defined in the Drawdown
Equity Financing Agreement) (the “Registration
Period”), which Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.

    


    
      
        
           


        

        
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    b.                          
The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to a
Registration Statement and the prospectus used in connection with such
Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the Securities Act, as may be necessary to keep such
Registration Statement effective at all times during the Registration Period,
and, during such period, comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities of the Company covered
by such Registration Statement until such time as all of such Registrable
Securities shall have been disposed of in accordance with the intended methods
of disposition by the seller or sellers thereof as set forth in such
Registration Statement.  In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3(b)) by reason of the Company’s filing a
report on Form 10-KSB, Form 10-QSB or Form 8-K or any analogous report under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), the
Company shall have incorporated such report by reference into the Registration
Statement, if applicable, or shall file such amendments or supplements with the
SEC on the same day on which the Exchange Act report is filed which created the
requirement for the Company to amend or supplement the Registration
Statement.

     

    c.                           
To the extent such documents are unavailable via the SEC's live EDGAR
website, the Company shall furnish to the Investor without charge, (i) at least
one copy of such Registration Statement as declared effective by the SEC and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, all exhibits and each preliminary
prospectus, (ii) ten (10) copies of the final prospectus included in such
Registration Statement and all amendments and supplements thereto (or such other
number of copies as such Investor may reasonably request) and (iii) such other
documents as such Investor may reasonably request from time to time in order to
facilitate the disposition of the Registrable Securities owned by such
Investor.

     

    d.                          
The Company shall use its reasonable efforts to (i) register and qualify
the Registrable Securities covered by a Registration Statement under such other
securities or “blue sky” laws of such jurisdictions in the United States as the
Investor reasonably requests, (ii) prepare and file in those jurisdictions,
such amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (w) make any
change to its certificate of incorporation or by-laws, (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction.  The Company shall promptly notify the Investor of the
receipt by the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or “blue sky” laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.

    


    
      
        
           


        

        
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    e.                          
As promptly as practicable after becoming aware of such event or
development, the Company shall notify the Investor in writing of the happening
of any event as a result of which the prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading (provided that in no event shall such notice contain any
material, nonpublic information), and promptly prepare a supplement or amendment
to such Registration Statement to correct such untrue statement or omission, and
(to the extent that such document is not available via the SEC’s live EDGAR
website) deliver ten (10) copies of such supplement or amendment to each
Investor.  The Company shall also promptly notify the Investor in writing
(i) when a prospectus or any prospectus supplement or post-effective amendment
has been filed, and when a Registration Statement or any post-effective
amendment has become effective (notification of such effectiveness shall be
delivered to the Investor by facsimile on the same day of such effectiveness),
(ii) of any request by the SEC for amendments or supplements to a Registration
Statement or related prospectus or related information, and (iii) of the
Company’s reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.

     

    f.                            
The Company shall use its commercially reasonable best efforts to prevent
the issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction within the United States of
America and, if such an order or suspension is issued, to obtain the withdrawal
of such order or suspension at the earliest possible moment and to notify the
Investor of the issuance of such order and the resolution thereof or its receipt
of actual notice of the initiation or threat of any proceeding for such
purpose.

     

    g.                          
INTENTIONALLY OMITTED

     

    h.                          
The Company shall hold in confidence and not make any disclosure of
information concerning the Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement.  The Company agrees that it shall, to the extent permitted by
law, upon learning that disclosure of such information concerning the Investor
is sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt written notice to the Investor and allow the
Investor, at the Investor’s expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such
information.

    


    
      
        
           


        

        
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    i.                             
The Company shall use its commercially reasonable best efforts either to
cause all the Registrable Securities covered by a Registration Statement (i) to
be listed on each securities exchange on which securities of the same class or
series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange or to
secure the inclusion for quotation on the National Association of Securities
Dealers, Inc. OTC Bulletin Board for such Registrable Securities.  The
Company shall pay all fees and expenses in connection with satisfying its
obligation under this Section 3(i).

     

    j.                             
The Company shall cooperate with the Investor to the extent applicable,
to facilitate the timely preparation and delivery of certificates (not bearing
any restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the Investor may reasonably
request and registered in such names as the Investor may request.

     

    k.                           
The Company shall use its commercially reasonable best efforts to cause
the Registrable Securities covered by the applicable Registration Statement to
be registered with or approved by such other governmental agencies or
authorities as may be necessary to consummate the disposition of such
Registrable Securities.

     

    l.                            
The Company shall, every quarter make generally available to its security
holders as soon as practical, but not later than ninety (90) days after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the Securities Act) covering a
twelve-month period.  This obligation shall begin
no later than the first day of the Company’s fiscal quarter next following the
effective date of the Registration Statement.

     

    m.       
                 
The Company shall otherwise use its commercially reasonable best efforts
to comply with all applicable rules and regulations of the SEC in connection
with any registration hereunder.  The Investor shall provide the Company
with all information and agreements that the Company needs to include in the
Registration Statement or provide to the SEC regarding Investor or its
disposition of Registrable Securities in order to cause the SEC to declare the
Registration Statement(s) effective.

     

    n.                          
Within two (2) business days after a Registration Statement which covers
Registrable Securities is ordered effective by the SEC, the Company shall
deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Investor)
confirmation that such Registration Statement has been declared effective by the
SEC in the form attached hereto as Exhibit
A.

    


    
      
        
           


        

        
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    o.                          
The Company shall take all other reasonable actions necessary to expedite
and facilitate disposition by the Investor of Registrable Securities pursuant to
a Registration Statement.

     

    4.                          
OBLIGATIONS
OF THE INVESTOR.

     

    The
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e), the Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until the Investor’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(e) or receipt of
notice that no supplement or amendment is required.  Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to deliver
unlegended certificates for shares of Common Stock to a transferee of the
Investor in accordance with the terms of the Drawdown Equity Financing Agreement
in connection with any sale of Registrable Securities with respect to which the
Investor has entered into a contract for sale prior to the Investor’s receipt of
a notice from the Company of the happening of any event of the kind described in
Section 3(f) or the first sentence of 3(e) and for which the Investor has not
yet settled.

     

    5.                          
EXPENSES OF
REGISTRATION.

     

    All
expenses incurred in connection with registrations, filings or qualifications
pursuant to Sections 2 and 3, including, without limitation, all registration,
listing and qualifications fees, printers, legal and accounting fees shall be
paid by the Company.

     

    6.                          
INDEMNIFICATION.

     

    With
respect to Registrable Securities which are included in a Registration Statement
under this Agreement:

    


    
      
        
           


        

        
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    a.                          
To the fullest extent permitted by law, the Company will, and hereby
does, indemnify, hold harmless and defend the Investor, the directors, officers,
partners, employees, agents, representatives of, and each Person, if any, who
controls the Investor within the meaning of the Securities Act or the Exchange
Act (each, an “Indemnified Person”),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
expenses, joint or several (collectively, “Claims”) incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto (“Indemnified
Damages”), to which any of them may become subject insofar as such Claims
(or actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the qualification of
the offering under the securities or other “blue sky” laws of any jurisdiction
in which Registrable Securities are offered (“Blue Sky Filing”), or
the omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any final prospectus (as amended or supplemented, if the Company
files any amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading; or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation there under relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, “Violations”). 
The Company shall reimburse the Investor and each such controlling person
promptly as such expenses are incurred and are due and payable, for any legal
fees or disbursements or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim.  Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (x) shall not apply to a Claim by an Indemnified
Person arising out of or based upon a Violation which occurs in reliance upon
and in conformity with information furnished in writing to the Company by such
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto; (y)
shall not be available to the extent such Claim is based on a failure of the
Investor to deliver or to cause to be delivered the prospectus made available by
the Company, if such prospectus was timely made available by the Company
pursuant to Section 3(e); and (z) shall not apply to amounts paid in settlement
of any Claim if such settlement is effected without the prior written consent of
the Company, which consent shall not be unreasonably withheld.  Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person.

    


    
      
        
           


        

        
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    b.                          
In connection with a Registration Statement, the Investor agrees to
indemnify, hold harmless and defend, to the same extent and in the same manner
as is set forth in Section 6(a), the Company, each of its directors officers,
partners, employees, agents, representatives of,  and each Person, if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act (each an “Indemnified Party”),
against any Claim or Indemnified Damages to which any of them may become
subject, under the Securities Act, the Exchange Act or otherwise, insofar as
such Claim or Indemnified Damages arise out of or is based upon any Violation,
in each case to the extent, and only to the extent, that such Violation occurs
in reliance upon and in conformity with written information furnished to the
Company by the Investor expressly for use in connection with such Registration
Statement; and, subject to Section 6(d), the Investor will reimburse any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) and the agreement with respect to contribution
contained in Section 7 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Investor, which consent shall not be unreasonably withheld; provided, further,
however, that the Investor shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net proceeds to
the Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement.  Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such Indemnified
Party.  Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
prospectus shall not inure to the benefit of any Indemnified Party if the untrue
statement or omission of material fact contained in the prospectus was corrected
and such new prospectus was delivered to the Investor prior to the Investor’s
use of the prospectus to which the Claim relates.

     

    c.                           
Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such
Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is
to be made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one counsel for such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing  interests between such Indemnified Person or Indemnified Party
and any other party represented by such counsel in such proceeding. The
Indemnified Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such
action or claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party or
Indemnified Person which relates to such action or claim.  The indemnifying
party shall keep the Indemnified Party or Indemnified Person fully apprised at
all times as to the status of the defense or any settlement negotiations with
respect thereto.  No indemnifying party shall be liable for any settlement
of any action, claim or proceeding effected without its prior written consent,
provided, however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent.  No indemnifying party shall, without the
prior written consent of the Indemnified Party or Indemnified Person, consent to
entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party or Indemnified Person of a release from all
liability in respect to such claim or litigation.  Following
indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person with
respect to all third parties, firms or corporations relating to the matter for
which indemnification has been made.  The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of any
such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to defend such
action.

    


    
      
        
           


        

        
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    d.                          
The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or Indemnified Damages are
incurred.

     

    e.                          
The indemnity agreements contained herein shall be in addition to (i) any
cause of action or similar right of the Indemnified Party or Indemnified Person
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.

     

    7.                          
CONTRIBUTION.

     

    To the
extent any indemnification by an indemnifying party is prohibited or limited by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that: (i) no seller of
Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities.

     

    8.                          
REPORTS
UNDER THE EXCHANGE ACT.

     

    With a
view to making available to the Investor the benefits of Rule 144 promulgated
under the Securities Act or any similar rule or regulation of the SEC that may
at any time permit the Investors to sell securities of the Company to the public
without registration (“Rule 144”) the
Company agrees to:

    


    
      
        
           


        

        
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    a.                          
make and keep public information available, as those terms are understood
and defined in Rule 144;

     

    b.                          
file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act so long as
the Company remains subject to such requirements (it being understood that
nothing herein shall limit the Company’s obligations under Section 6.3 of the
Drawdown Equity Financing Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144;
and

     

    c.                           
furnish to the Investor so long as the Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company, and
(iii) such other information as may be reasonably requested to permit the
Investor to sell such securities pursuant to Rule 144 without
registration.

     

    9.                          
AMENDMENT
OF REGISTRATION RIGHTS.

     

    Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only by a written agreement between the Company and the
Investor.  Any amendment or waiver effected in accordance with this Section
9 shall be binding upon the Investor and the Company.  No consideration
shall be offered or paid to any Person to amend or consent to a waiver or
modification of any provision of any of this Agreement unless the same
consideration also is offered to all of the parties to this
Agreement.

     

    10.                      
MISCELLANEOUS.

     

    a.                          
A Person is deemed to be a holder of Registrable Securities whenever such
Person owns or is deemed to own of record such Registrable Securities.  If
the Company receives conflicting instructions, notices or elections from two or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.

     

    b.                          
Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered:  (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one business day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same.  The addresses and facsimile numbers for such
eel communications shall be:

    


    
      
        
           


        

        
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                    If
      to the Company, to:

                  	
                    Electronic
      Control Security, Inc.

                     790
      Bloomfield Avenue,

                  
	 
      	
                    Clifton,
      NJ 07012

                  
	 
      	
                    Telephone:
      (973) 574-8555

                  
	 
      	
                    Facsimile:
      (973) 574-8562

                  
	 
      	 
      
	
                    If
      to the Investor, to:

                  	
                    Auctus
      Private Equity Fund, LLC

                  
	 
      	
                    One
      Beacon Street, 34th
      Floor

                  
	 
      	
                    Boston,
      MA 02108

                  
	 
      	
                    Attention:
      Lou Posner

                  
	 
      	
                    Telephone:
      617-532-6408

                  
	 
      	
                    Facsimile: 
      617-532-6402

                  


          

        

      

       

    

    Any party
may change its address by providing written notice to the other parties hereto
at least five days prior to the effectiveness of such change.  Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by
the sender’s facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided by a
courier or overnight courier service shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.

     

    c.                           
Failure of any party to exercise any right or remedy under this Agreement
or otherwise, or delay by a party in exercising such right or remedy, shall not
operate as a waiver thereof.

     

    d.                          
The corporate laws of the State of New Jersey and the Commonwealth of
Massachusetts shall govern all issues concerning the relative rights of the
Company and the Investor, but with the venue being the Commonwealth of
Massachusetts.  All other questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by the
internal laws of the Commonwealth of Massachusetts without giving effect to any
choice of law or conflict of law provision or rule (whether of the Commonwealth
of Massachusetts or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the Commonwealth of Massachusetts. 
Each party hereby irrevocably submits to the non-exclusive jurisdiction of the
federal and state courts located in Massachusetts, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper.  Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law.  If any provision of
this Agreement shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE,
AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

    


    
      
        
           


        

        
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    e.                          
This Agreement and the Drawdown Equity Financing Agreement constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof.  There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and
therein.  This Agreement, the Drawdown Equity Financing Agreement and the
Placement Agent Agreement supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and
thereof.

     

    f.                            
This Agreement shall inure to the benefit of and be binding upon the
permitted successors and assigns of each of the parties hereto.

     

    g.                          
The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.

     

    h.                          
This Agreement may be executed in identical counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
agreement.  This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

     

    i.                            
Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated
hereby.

     

    j.                            
The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent and no rules of strict
construction will be applied against any party.

     

    k.                           
This Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person.

    


    
      
        
           


        

        
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    IN WITNESS WHEREOF, the
parties have caused this Registration Rights Agreement to be duly executed as of
day and year first above written.

     

    
      
        
          
            
              
                	 
      	
                        Electronic
      Control Security, Inc.

                      
	 
      	 
      
	 
      	
                        By:

                      	/s/
      Arthur Barchenko	  
      
	 
      	
                        Name:
      Arthur Barchenko

                      
	 
      	
                        Title: 
      CEO             

                      
	 
      	 
      
	 
      	
                        Auctus
      Private Equity Fund, LLC

                      
	 
      	 
      
	 
      	
                        By:

                      	/s/ Lou
      Posner	  
      
	 
      	
                        Name:
      Lou Posner

                      
	 
      	
                        Title:
      Director

                      


              

            

          

        

      

    

    


    
      
        
           


        

        
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    EXHIBIT
A

     

    FORM
OF NOTICE OF EFFECTIVENESS

    OF
REGISTRATION STATEMENT

     

    Attention:             

     

    Re:             
Electronic
Control Security, Inc.

     

    Ladies
and Gentlemen:

     

    We are
counsel to Electronic Control Security, Inc. (the “Company”), and have
represented the Company in connection with that certain Drawdown Equity
Financing Agreement (the “Drawdown Equity Financing
Agreement”) entered into by and between the Company and Auctus Private
Equity Fund, LLC (the “Investor”) pursuant
to which the Company issued to the Investor shares of its Common Stock, par
value $0.001 per share (the “Common Stock”). 
Pursuant to the Drawdown Equity Financing Agreement, the Company also has
entered into a Registration Rights Agreement with the Investor (the “Registration Rights
Agreement”) pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration Rights
Agreement) under the Securities Act of 1933, as amended (the “Securities
Act”).  In connection with the Company’s obligations under the
Registration Rights Agreement, on              
             
             
the Company will file a Registration Statement on Form ________ (File No.
333-_____________) (the “Registration
Statement”) with the Securities and Exchange Commission (the “SEC”) relating to the
Registrable Securities which names the Investor as a selling stockholder
thereunder.

     

    In
connection with the foregoing, we advise you that a member of the SEC’s staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the Securities Act at [ENTER TIME OF EFFECTIVENESS]
on [ENTER DATE OF
EFFECTIVENESS] and we have no knowledge, after telephonic inquiry of a
member of the SEC’s staff, that any stop order suspending its effectiveness has
been issued or that any proceedings for that purpose are pending before, or
threatened by, the SEC and the Registrable Securities are available for resale
under the Securities Act pursuant to the Registration Statement.

    


    
      
        
           


        

        
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