Escrow Agreement
Among
Hyundai Syscomm Corp.
And
Electronic Control Security, Inc.
And
▇▇▇▇▇▇▇▇▇▇ Law, as Escrow Agent
Dated December as of December 22, 2006
ESCROW AGREEMENT
This Escrow Agreement is made and entered into as of December 22, 2006,
by and among Electronic Control Security, Inc., a New Jersey corporation
("ECSI"), Hyundai Syscomm Corp., a California corporation ("HYUNDAI"), and
▇▇▇▇▇▇▇▇▇▇ Law, as Escrow Agent hereunder (the "Escrow Agent").
R E C I T A L S
WHEREAS, HYUNDAI and ECSI have entered into a Stock Purchase Agreement
(the "Stock Purchase Agreement"), dated as of the date hereof, pursuant to
which, among other things, HYUNDAI has agreed to purchase from ECSI and ECSI has
agreed to sell to HYUNDAI, on the terms and conditions set forth therein, four
million eight hundred thousand (4,800,000) shares (the "Purchased Shares") of
ECSI Common Stock ("Common Stock") for an aggregate purchase price (the
"Purchase Price") of One Million Two Hundred Thousand Dollars ($1,200,000); and
WHEREAS, in order to facilitate the implementation of the Stock Purchase
Agreement, ECSI has agreed to deliver to the Escrow Agent ten (10) stock
certificates (the "Escrow Certificates"), each registered in the name of
HYUNDAI, nine (9) of which Escrow Certificates each evidence five hundred
thousand (500,000) shares of the Purchased Shares and one (1) of which Escrow
Certificates evidences three hundred thousand (300,000) shares of the Purchased
Shares; and
WHEREAS, in order to facilitate the implementation of the Stock Purchase
Agreement, HYUNDAI has agreed to deliver to the Escrow Agent's IOLTA account
(the "IOLTA Account") pursuant to the instructions attached hereto as Exhibit 1
a wire transfer in the amount of the Purchase Price; and
WHEREAS, the Escrow Agent has agreed to accept, hold, and distribute the
Purchase Price and the Purchased Shares to be deposited with it in accordance
with the terms and conditions of this Escrow Agreement and the Standard Terms
annexed hereto an Annex A (collectively, this "Agreement");
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed as follows: 1. Appointment of and Acceptance
by the Escrow Agent. ECSI and HYUNDAI hereby appoint the Escrow Agent to serve
as Escrow Agent hereunder. The Escrow Agent hereby accepts such appointment and,
upon receipt of the Purchased Shares and the Purchase Price, agrees to hold and
distribute the Purchased Shares and the Purchase Price in accordance with this
Agreement.
2. ECSI's Acknowledgement of the Escrow Agent's Legal Representation. ECSI
hereby acknowledges that the Escrow Agent has acted as counsel for HYUNDAI in
connection with the Stock Purchase Agreement and the transactions contemplated
thereby and has and may act as counsel for HYUNDAI in connection with various
other matters, including other matters relating to ECSI. ECSI agrees that in the
event of any dispute arising in connection with this Escrow Agreement or
otherwise in connection with any transaction or agreement contemplated and
referred herein, the Escrow Agent shall be permitted to continue to represent
HYUNDAI and ECSI will not seek to disqualify the Escrow Agent from continuing to
act as counsel for HYUNDAI by reason of its obligations hereunder.
3. Deposit of the Escrow Certificates. Concurrently with the execution and
delivery of this Agreement, ECSI has caused the Escrow Certificates to be
delivered to the Escrow Agent. The Purchased Shares will be deemed to be issued
at closing. . Receipt of the Escrow Certificates from ECSI is hereby
acknowledged by the Escrow Agent.
4. Deposit of the Purchase Price. As soon as reasonably practicable after
the receipt by the Escrow Agent of: (i) a fully executed counterpart of this
Agreement; (ii) the Escrow Certificates; and (iii) all necessary Waivers (as
such term is defined in the Stock Purchase Agreement) HYUNDAI shall cause the
Purchase Price to be wired to the Escrow Agent's IOLTA account; and
5. Delivery of the Purchase Price and the Escrow Certificates by the
Escrow Agent. As soon as the Escrow Agent has received the Escrow Certificates
and the Purchase Price, it shall cause the Purchase Price to be wire transferred
to or upon the order of ECSI and six (6) Escrow Certificates evidencing an
aggregate of three million (3,000,000) shares of Common Stock to be delivered to
or upon the order of HYUNDAI. The remaining four (4) Escrow Certificates
evidencing an aggregate of one million eight hundred thousand shares (1,800,000)
will continue to be held in escrow by the Escrow Agent until such time as the
Release Condition (as defined below) shall have been achieved. As used herein,
the "Release Condition" shall mean ECSI's receipt of purchase orders from
HYUNDAI or other indicia that shall make ECSI's Board of Directors comfortable,
in its sole discretion, that HYUNDAI is honoring its commitments to ECSI under
the Sub-Contract dated as of the date of this Agreement. The Release Condition
shall not require ECSI's actual receipt of any minimum amount of revenues. As
soon as the Release Condition is met and communicated to the Escrow Agent, the
Escrow Agent shall cause the four (4) remaining Escrow Certificates to be
delivered to or upon the order of HYUNDAI.
6. Suspension of Performance; Delivery of the Purchase Price and the
Escrow Certificates into Court. If at any time, there shall exist any dispute
between the ECSI and HYUNDAI with respect to holding or disposition of any
portion of the Purchased Shares or the Purchase Price or any other obligation of
the Escrow Agent hereunder, or if at any time the Escrow Agent is unable to
determine, to the Escrow Agent's sole satisfaction, the proper disposition of
any portion of the Purchased Shares or the Purchase Price or the Escrow Agent's
proper actions with respect to its obligations hereunder, or if HYUNDAI and ECSI
have not within ten (10) days of the furnishing by the Escrow Agent of a notice
of resignation pursuant to this Agreement, appointed a successor Escrow Agent to
act hereunder, then the Escrow Agent may, in its sole discretion, take either or
both of the following actions:
(a) suspend the performance of any of its obligations (including without
limitation any delivery obligations) under this Agreement until such dispute or
uncertainty shall be resolved to the sole satisfaction of the Escrow Agent or
until a successor Escrow Agent shall be appointed (as the case may be); and/or
(b) petition (by means of an interpleader action or any other appropriate
method) any court of competent jurisdiction in any venue convenient to the
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 Purchased Shares and
Purchase Price then held by it pursuant to this Agreement.
The Escrow Agent shall have no liability to ECSI, HYUNDAI or any other person
with respect to any such suspension of performance or payment 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 delivery of
any of the Purchased Shares or Purchase Price or any delay with respect to any
other action required or requested of the Escrow Agent.
7. Warranties.
(a) ECSI makes the following representations and warranties to the
Escrow Agent:
(i) ECSI has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.
(ii) This Agreement has been executed by ECSI and is enforceable
against ECSI in accordance with its terms.
(iii) The execution, delivery, and performance by ECSI of this
Agreement will not, subject to the receipt by ECSI of the Waivers,
violate, conflict with, or cause a default under any agreement to which
ECSI is a party or any applicable law or regulation, any court order or
administrative ruling or degree by which ECSI is bound.
(iv) No party other than the parties hereto have, or shall have, any
lien, claim or security interest in the Purchased Shares or any part
thereof.
(v) All of the representations and warranties of ECSI contained
herein are true and complete as of the date hereof and will be true and
complete at the time of any delivery of the Purchased Shares by the Escrow
Agent.
(b) HYUNDAI makes the following representations and warranties to the
Escrow Agent:
(i) HYUNDAI has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.
(ii) This Agreement has been executed by HYUNDAI and is enforceable
against HYUNDAI in accordance with its terms.
(iii) The execution, delivery, and performance by such HYUNDAI of
this Agreement will not violate, conflict with, or cause a default under
any agreement to which HYUNDAI is a party or any applicable law or
regulation, any court order or administrative ruling or degree by which
HYUNDAI is bound.
(iv) No party other than the parties hereto have, or shall have, any
lien, claim or security interest in the Purchased Shares or any part
thereof.
(v) All of the representations and warranties of HYUNDAI contained
herein are true and complete as of the date hereof and will be true and
complete at the time of any delivery of the Purchased Shares and/or the
Purchase Price by the Escrow Agent.
8. 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
after delivered to any overnight courier, or when transmitted by electronic
transmission by facsimile or E-mail addressed to the party to be notified as
follows:
(a) If to ECSI to: Electronic Control
Security, Inc. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇
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Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇_▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
(b) If to HYUNDAI to: Hyundai Syscomm Corp.
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▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (415)358--4551
E-Mail: ▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
(c) If to the Escrow Agent to: Hirshfiedld Law
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▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
E-Mail: ▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
9. Amendments or Waiver. This Agreement may be changed, waived, discharged
or terminated only by a writing signed by ECSI, HYUNDAI and 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.
10. Entire Agreement. This Agreement constitutes the entire agreement
among the parties relating to the holding and delivery of the Purchased Shares
and the Purchase Price and sets forth in their entirety the obligations and
duties of the Escrow Agent with respect to the Purchased Shares and the Purchase
Price.
11. Execution of Counterparts. This Agreement and any Joint Written
Instruction may be executed in separate counterparts, which when so executed
shall constitute one and same agreement or direction.
12. Electronic Counterparts Acceptable. ECSI, HYUNDAI and the Escrow Agent
hereby agree that an electronically transmitted copy of a manually signed
counterpart of this Agreement shall for all purposes be equivalent to the
manually signed counterpart so electronically transmitted.
13. Automatic Termination. Upon the first to occur of the delivery of all
of the Purchased Shares and the Purchase Price pursuant to Section 5 hereof or
the payment into court of all of the Purchased Shares and Purchase Price
pursuant to Section 6(b) hereof, this Agreement shall terminate and the Escrow
Agent shall have no further obligation or liability whatsoever with respect to
this Agreement, the Purchase Price or the Purchased Shares.
14. Termination By ECSI. ECSI shall have the unilateral right, exercisable
in its sole discretion, to terminate this Agreement pursuant to this Section 14
if HYUNDAI shall have failed to deposit the Purchase Price with the Escrow Agent
on or prior to January 15, 2007. In the event that ECSI elects to exercise its
termination right pursuant to this Section 14, it shall provide HYUNDAI and the
Escrow Agent with a notice of termination which shall set forth a date not
earlier than January 19, 2007 (the "Termination Effective Date") on which this
Agreement shall terminate unless HYUNDAI shall have deposited the Purchase Price
with the Escrow Agent on or prior to the Termination Effective Date. If HYUNDAI
shall have failed to deposit the Purchase Price with the Escrow Agent on or
prior to the Termination Effective Date, the Escrow Agent shall promptly return
all ten Escrow Certificates to ECSI. Upon ECSI's receipt of the ten (10) Escrow
Certificates this Agreement shall terminate and the Escrow Agent shall have no
further obligation or liability whatsoever with respect to this Agreement, the
Purchase Price or the Purchased Shares. Upon termination of this Agreement
pursuant to this Section 14, the Purchased Shares shall be retired and deemed
returned to ECSI's treasury.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
the day and year first above written.
FOR ECSI:
Electronic Control Security, Inc.
By:/s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
FOR HYUNDAI:
Hyundai Syscomm Corp.
By:/s/▇▇▇▇▇▇ ▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇
Title: Chairman of the Board
FOR THE ESCROW AGENT:
▇▇▇▇▇▇▇▇▇▇ Law
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Founder
▇▇▇▇▇▇▇▇▇▇ LAW
STANDARD TERMS FOR ALL ESCROW AGREEMENTS
Acceptance by ▇▇▇▇▇▇▇▇▇▇ Law (the "Escrow Agent") of its duties under the
Escrow Agreement to which this is attached is subject to the following terms and
conditions (the "Standard Terms"), which all parties to the Escrow Agreement
hereby agree shall govern and control the rights, duties and privileges of the
Escrow Agent and shall be deemed incorporated by reference into the Escrow
Agreement as if set forth in full therein (the Escrow Agreement and these
Standard Terms shall together be referred to as the "Agreement"):
The duties of the Escrow Agent are to be determined solely by the express
provisions of the Agreement and the Escrow Agent shall have no responsibilities
except the performance of such duties and obligations as are specifically set
forth in the Agreement.
The Escrow Agent shall not be liable for any error of judgment, or for any
act taken or omitted by it, or for any mistake in fact or law, or for anything
which it may do or refrain from doing in connection herewith, except for its own
willful misconduct. Without limiting the generality of the foregoing, the Escrow
Agent shall not incur liability and shall be fully protected in respect of any
action taken, omitted or suffered by it in good faith.
The Escrow Agent shall be entitled to act on or rely upon any written
notice, direction, request, waiver, consent, receipt or other paper or document
which appears to have been signed or presented by the party or parties entitled
to execute or deliver such document, and the Escrow Agent shall have no duty to
inquire of or investigate the authorization, signature or authenticity of such
person or document.
The Escrow Agent shall have no duty to invest or earn interest on any
funds held in escrow. It may, however, deposit such funds or proceeds thereof in
or with any bank, savings or loan association, trust company, money market
mutual fund or financial institution (in its own name or in the name of any of
its members or nominees). The Escrow Agent has no obligation to, and does not
undertake to, perfect any security interests in any of the property, register
any of the property or the proceeds thereof, invest or redeem any of the
property or proceeds thereof, or surrender or tender any of the property or the
proceeds thereof for any reason, or in any other respect enforce the obligations
or preserve the rights of any party relating to any notes, debt instruments,
securities, contracts or other property or proceeds thereof held in escrow.
The Escrow Agent may resign its duties and shall thereupon be discharged
from all further duties or obligations hereunder at any time upon giving 10
days' written notice to the parties to the Agreement. The parties to the
Agreement will thereupon jointly designate a successor escrow agent hereunder
within said 10-day period to whom the property held in escrow shall be delivered
and shall deliver to the Escrow Agent a general release executed by all parties
to the Agreement (other than the Escrow Agent) and shall pay the Escrow Agent in
full any amounts owed to it under the Agreement. In default of such a joint
designation of a successor escrow agent and delivery of such release and
amounts, and unless the Escrow Agent has deposited the property held in escrow
with a court, the Escrow Agent shall retain the property theretofore held in
escrow as custodian thereof until otherwise directed by the parties to the
Agreement jointly, without further liability or responsibility.
The parties to the Agreement other than the Escrow Agent (collectively
referred to as the "Indemnitors") jointly and severally agree to indemnify the
Escrow Agent and its members, employees and agents (jointly and severally the
"Indemnitees") against, and hold them harmless of and from, any and all loss,
liability, cost, damage and expense, including, without limitation, reasonable
counsel fees (excluding fees from Escrow Agent's own partners or employees),
which the Indemnitees may suffer or incur by reason of any action, claim or
proceeding brought or threatened to be brought, whether by any party hereto or
by any other person or entity, against any Indemnities or in which any
Indemnities may become involved arising out of or relating directly or
indirectly in any way to the Agreement or any transaction to which the Agreement
directly or indirectly relates. If the indemnification provided for in this
paragraph for any reason is held to be unavailable, the Indemnitors shall
contribute such amounts as are, as between the Indemnitors, just and equitable
to pay to the Indemnitees or to reimburse them for, the aggregate of any and all
losses, liabilities, costs, damages and expenses, including counsel fees,
incurred by the Indemnitees as a result of or in connection with, and any amount
paid in settlement of, any action, claim or proceeding arising out of or
relating directly or indirectly in any way to the Agreement or any transaction
to which the Agreement directly or indirectly relates. The provisions of this
paragraph shall survive any termination of the Agreement, whether by
disbursement of the property held in escrow, the resignation of the Escrow Agent
or otherwise.
The Escrow Agent may, but shall not be obligated to, in its sole
discretion at any time and from time to time, for any reason or for no reason,
commence an interpleaded or other action, suit or proceeding for the resolution
of any controversy regarding this Agreement or the subject matter of its escrow.
THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY, AND BE CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS, AND THIS AGREEMENT CANNOT BE
CHANGED OR TERMINATED EXCEPT BY A WRITING SIGNED BY ALL OF THE PARTIES HERETO.
THE PARTIES TO THIS AGREEMENT HEREBY AGREE THAT NO ACTION, SUIT OR PROCEEDING
SHALL BE COMMENCED AGAINST THE ESCROW AGENT UNLESS (A) THE ESCROW AGENT SHALL
FIRST HAVE BEEN GIVEN 30 DAYS' WRITTEN NOTICE OF THE CLAIM AND (B) THE SAME IS
BROUGHT IN A COURT OF COMPETENT JURISDICTION LOCATED IN THE COUNTY OF NEW YORK,
STATE OF NEW YORK. THE PARTIES TO THE AGREEMENT OTHER THAN THE ESCROW AGENT
AGREE THAT IN ANY ACTION, SUIT OR OTHER PROCEEDING COMMENCED BY THE ESCROW
AGENT, SERVICE BY MAIL AS PROVIDED HEREIN SHALL BE DEEMED GOOD, PROPER AND
EFFECTIVE SERVICE UPON SAID PARTY, AND EACH CONSENTS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE COUNTY OF NEW YORK,
STATE OF NEW YORK (OR ANY OTHER COURT SELECTED BY THE ESCROW AGENT) IN ANY
ACTION, SUIT OR PROCEEDING HEREUNDER, HEREBY WAIVING ANY AND ALL RIGHT TO OBJECT
TO THE JURISDICTION OR VENUE OF SAID COURT.
If a controversy arises between one or more of the parties hereto, or
between any of the parties hereto and any person not a party hereto, as to
whether or not or to whom the Escrow Agent shall deliver the property held in
escrow or any portion thereof, or as to any other matter arising out of or
relating to the Agreement or the property held in escrow, the Escrow Agent shall
not be required to make any inquiry or investigation, or make any determination
as to such controversy, and need not make any delivery of such property but may
retain it until the rights of the parties to the dispute shall have finally been
determined by agreement in form, substance and formalities satisfactory to the
Escrow Agent or by final order of a court of competent jurisdiction from which
final order the time for appeal has expired without an appeal having been taken.
If and to the extent directed to do so by said agreement or final order the
Escrow Agent shall deliver the property held in escrow within a reasonable time
after the Escrow Agent has received written notice of any such agreement or
final order, accompanied by proof satisfactory to it of the validity of such
agreement and/or the finality of such order. The Escrow Agent shall be entitled
to assume that no such controversy has arisen unless it has received a written
notice that such a controversy has arisen which refers specifically to the
Agreement and identifies by name and address all parties to the controversy.
Notwithstanding anything to the contrary set forth in the Agreement, the Escrow
Agent shall be entitled to comply with any order of any court or other lawful
authority which has not been stayed.
All notices, requests and other communications which may or must be given
hereunder shall be in writing and shall be deemed to have been duly given when
mailed by registered or certified mail, return receipt requested, to each of the
parties at their addresses set forth in the Agreement. Any of the parties hereto
by notice in writing delivered or mailed to the other parties hereto, as
aforesaid, may change the name or address, or both, to which future notices to
it shall be delivered or mailed.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, personal representatives, successors
and permitted assigns, but not to the benefit of any third party. The Agreement
and any rights thereunder may not be assigned without the prior written consent
of the Escrow Agent, and any purported assignment without the Escrow Agent's
prior written consent shall be null and void and of no effect whatsoever. The
rights granted the Escrow Agent herein are cumulative and the exercise of any
one or more rights hereunder shall not constitute a waiver of the Escrow Agent's
right to assert all other legal and equitable remedies available to it under the
circumstances. If one or more of the provisions or paragraphs of the Agreement
shall be held to be illegal or otherwise void or invalid, the remainder of the
Agreement shall not be affected and shall remain in full force and effect.
The parties to the Agreement acknowledge that the Escrow Agent has or may
have represented one or more of the parties to the Agreement in the past, and
consent to the continued representation by the Escrow Agent of one or more
parties to the Agreement.
To the extent inconsistent with any terms or provisions of the Escrow
Agreement to which this is attached, the provisions of these Standard Terms
shall govern.
FOR ECSI: FOR HYUNDAI:
Electronic Control Security, Inc. Hyundai Syscomm Corp.
By:/s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ By:/s/▇▇▇▇▇▇ ▇▇▇
--------------------------------- ------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇
Title: Chief Executive Officer Title: Chairman of the Board
FOR THE ESCROW AGENT:
▇▇▇▇▇▇▇▇▇▇ Law
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Founder
