ESCROW AGREEMENT
Exhibit
10.2
This
Agreement is made as of the 1st day of
November,
2007, by and among Xxxxxx X. Xxxxx, and Xxxx X. Xxxxx, each a shareholder (the
“Shareholders”) of Xxxxx and Xxxxx, Inc. dba Empire Electric a
corporation organized and existing under the laws of the State of California,
with its principal offices located at 0000 Xxxxxxx Xxxx., Xxxx Xxxxxxxxxx,
XX
00000 ("EEI"), WPCS International Incorporated, a corporation organized and
existing under the laws of the State of Delaware, with its principal offices
at
Xxx Xxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxx Xxxxxxxxxxxx
00000 ("WPCS"), and Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP, a New York
limited liability partnership having offices at 00 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx
00000 (the "Escrow Agent").
RECITALS
The
Shareholders, EEI and WPCS are parties to that certain Stock Purchase Agreement,
dated as of November 1, 2007 (the "Purchase Agreement"). WPCS and the
Shareholders wish to provide for the escrow of certain monies pursuant to the
Purchase Agreement, and desire that the Escrow Agent hold such monies in
connection therewith pursuant to the provisions of this Agreement, and the
Escrow Agent is willing to hold such cash pursuant to the provisions of this
Agreement. All capitalized terms contained herein and not otherwise
defined shall have the meaning ascribed to them in the Purchase
Agreement. In consideration of the premises and mutual covenants,
agreements, representations and warranties contained herein, the parties hereby
agree as follows:
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1.
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WPCS
and Shareholders hereby appoint the Escrow Agent to hold $175,000
in cash
(the "Escrowed Funds"), in a trust account, and the Escrow Agent
accepts
such appointment, subject to the terms and conditions
hereof. WPCS has, prior to the execution of this Escrow
Agreement, delivered by way of wire transfer to the Escrow Agent
the
Escrowed Funds and hereby irrevocably instructs the Escrow Agent
to deal
with the Escrowed Funds on and subject to the terms hereof. In
executing this Escrow Agreement the Escrow Agent acknowledges receipt
of
the Escrowed Funds and the instructions contained
herein.
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1
| 2. |
(a)
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The
Escrow Agent shall retain the Escrowed Funds until the NTAV of the
Company
as of the Closing Date shall be
determined.
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(b)
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In
the event the NTAV as of the Closing Date shall be less than $1,100,000,
the Cash Purchase Price shall be reduced by the amount of the shortfall
and such amount shall be delivered to WPCS. In the event the
NTAV as of the Closing Date shall be greater than $1,100,000, the
Closing
Payment shall be increased by the amount of the excess and such amount
shall be delivered to the Shareholders, pro rata, based upon their
ownership of Shares. The NTAV shall be determined in accordance
with the terms and conditions of Section 2.3(a) of the Purchase
Agreement. The Escrow Agent shall only deliver the Escrowed
Funds upon (i) written notification signed by each of the Shareholders
and
WPCS of final determination of the NTAV, or (ii) delivery to the
Escrow
Agent of a written arbitration award with respect to the determination
of
the NTAV.
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(c)
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The
balance of any amount remaining after the delivery of payments required
pursuant to section 2(b) above (the “Escrow Payment”) shall be delivered
to the Shareholders, pro rata, based upon their ownership of Shares,
within three (3) business days of the date of the escrow payments
required
by section 2(b) above.
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3.
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The
Escrow Agent shall, from time to time, deliver all or some of the
Escrowed
Funds to WPCS or the Shareholders in accordance with such written
instructions, jointly executed by WPCS and the Shareholders, as the
Escrow
Agent may receive.
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4.
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The
Escrow Agent shall not be under any duty to give the Escrowed Funds
any
greater degree of care than it gives its own similar property, and
it
shall have no liability hereunder, except for the willful breach
of its
duties hereunder.
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2
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5.
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The
Escrow Agent shall have no duties or responsibilities except those
expressly set forth herein, and no implied duties or obligations
should be
read into this Escrow Agreement against the Escrow Agent. The
Escrow Agent need not refer to, and will not be bound by, the provisions
of any other agreement, except for definitions of terms contained
in the
Purchase Agreement.
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6.
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The
Escrow Agent may consult with counsel and shall be fully protected
with
respect to any action taken or omitted by it in good faith on advice
of
counsel.
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7.
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The
Escrow Agent makes no representation as to the validity, value,
genuineness or the collectibility of any security or other document
or
instrument held by or delivered to
it.
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8.
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The
Escrow Agent will receive no compensation for its services
hereunder.
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9.
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In
the event that the Escrow Agent shall be uncertain as to its duties
or
rights hereunder, or shall receive instructions from WPCS and the
Shareholders or both of them, with respect to the Escrowed Funds,
which,
in its opinion, are in conflict with any of the provisions hereof
(i) it
shall be entitled to refrain from taking any action, and in doing
so shall
not become liable in any way or to any person for its failure or
refusal
to comply with such conflicting demands, and it shall be entitled
to
continue so to refrain from acting and so refuse to act until it
shall be
directed otherwise, in writing, jointly by WPCS and the Shareholders
or
until it shall receive a final determination of a court of law,
arbitration panel, or similar adjudicative body, or (ii) it may commence
as interpleader action in any court of competent jurisdiction to
seek an
adjudication of the rights of WPCS and the
Shareholders.
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10.
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The
Escrow Agent may act in reliance upon any notice, instruction,
certificate, statement, request, consent, confirmation, agreement
or other
instrument which it believes to be genuine and to have been signed
by a
proper person or persons, and may assume that any of the officers
of WPCS
or the Shareholders purporting to act on behalf of WPCS or the
Shareholders in giving any such notice or other instrument in connection
with the provisions hereof has been duly authorized to do
so.
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3
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11.1
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In
the event that the Escrow Agent retains counsel or otherwise incurs
any
legal fees by virtue of any provision of this Escrow Agreement, the
reasonable fees and disbursements of such counsel and any other liability,
loss or expense which the Escrow Agent may thereafter suffer or incur
in
connection with this Escrow Agreement or the performance or attempted
performance in good faith of its duties hereunder shall be paid (or
reimbursed to it) by WPCS and the Shareholders, jointly and
severally. In the event that the Escrow Agent shall become a
party to any litigation in connection with its functions as Escrow
Agent
pursuant to this Escrow Agreement, whether such litigation shall
be
brought by or against it, the reasonable fees and disbursements of
counsel
to the Escrow Agent including the amounts attributable to services
rendered by members or associates of Escrow Agent at the then prevailing
hourly rate charged by them and disbursements incurred by them, together
with any other liability, loss or expense which it may suffer or
incur in
connection therewith, shall be paid (or reimbursed to it) by WPCS
and the
Shareholders, jointly and severally, unless such loss, liability
or
expense is due to the willful breach by the Escrow Agent of its duties
hereunder.
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11.2
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WPCS
and the Shareholders jointly and severally hereby unconditionally
agree to
indemnify the Escrow Agent and hold it harmless from and against
any and
all taxes (including federal, state and local taxes of any kind and
other
governmental charges), expenses, damages, actions, suits or other
charges
incurred by or brought or assessed against it for (i) anything done
or
omitted by it in the performance of its duties hereunder, or (ii)
on
account of acting in its capacity as an Escrow Agent or stakeholder
hereunder, except as a result of its willful breach of its duties
under
this Escrow Agreement.
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11.3
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All
expenses incurred by the Escrow Agent in connection with the performance
of its duties hereunder shall be paid (or reimbursed to it) by WPCS
and
the Shareholders, jointly and
severally.
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11.4
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The
agreements contained in this section 11 shall survive any termination
of
the duties of the Escrow Agent
hereunder.
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4
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12.
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The
terms and provisions of this Escrow Agreement may not be waived,
discharged or terminated orally, but only by an instrument in writing
signed by the person or persons against whom enforcement of the discharge,
waiver or termination is sought.
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13.
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The
Escrow Agent shall not be bound by any modification of the provisions
of
this Escrow Agreement, unless such modification is in writing and
signed
by WPCS and the Shareholders, and, with respect to any modification
in
Escrow Agent's duties or its rights of indemnification hereunder,
it shall
have given their prior written consent
thereto.
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14.
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WPCS
and the Shareholders shall, from time to time, execute such documents
and
perform such acts as the Escrow Agent may reasonably request and
as may be
necessary to enable the Escrow Agent to perform its duties hereunder
or
effectuate the transactions contemplated by this Escrow
Agreement.
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15.
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WPCS
and the Shareholders hereby acknowledge that the acts of the Escrow
Agent
are purely ministerial and do not represent a conflict of interest
for the
Escrow Agent to act, or continue to act, as counsel for any party
to this
Agreement with respect to any litigation or other matters arising
out of
this Agreement or otherwise.
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16.
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The
Escrow Agent may resign at any time upon ten (10) days' written notice
to
WPCS and the Shareholders. In the event of the Escrow Agent's
resignation, its only duty thereafter shall be to hold and dispose
of the
Escrowed Funds in accordance with the provisions of this Agreement
until a
successor Escrow Agent shall be appointed and written notice of the
name
and address of such successor Escrow Agent shall be given to the
resigning
Escrow Agent by the other parties hereto, whereupon the resigning
Escrow
Agent's only duty shall be to deliver the Escrowed Funds to the successor
Escrow Agent.
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17.
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The
rights created by this Agreement shall inure to the benefit of, and
the
obligations created hereby shall be binding upon, the heirs, successors,
assigns and personal representatives of the Escrow Agent, WPCS and
the
Shareholders.
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18.
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Each
notice, demand, request, approval or communication ("Notice") which
is or
may be required to be given by any party to any other party in connection
with this Agreement and the transactions contemplated hereby, shall
be in
writing, and given by personal delivery, certified mail, return receipt
requested, prepaid, or by overnight express mail delivery and properly
addressed to the party to be served at such address as set forth
above.
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Notices
shall be effective on the date delivered personally, the next day if delivered
by overnight express mail or three days after the date mailed by certified
mail.
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19.
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This
Escrow Agreement shall be governed by, and its provisions construed
in
accordance with the laws of the State of New
York.
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[Intentionally
blank]
5
IN
WITNESS WHEREOF,
the parties hereto have caused this Escrow Agreement to be duly executed as
of
the day and year first above written.
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WPCS
INTERNATIONAL
INCORPORATED
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By:
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/s/ XXXXXX XXXXXXX | |
| Xxxxxx Xxxxxxx | |||
| Chief Executive Officer | |||
| XXXXX
AND XXXXX
, INC.
dba
EMPIRE ELECTRIC
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By:
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/s/ XXXXXX X. XXXXX | |
| Xxxxxx X. Xxxxx | |||
| President | |||
| SHAREHOLDERS: | |||
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By:
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/s/ XXXXXX X. XXXXX | |
| Xxxxxx X. Xxxxx | |||
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By:
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/s/ XXXX X. XXXXX | ||
| Xxxx X. Xxxxx | |||
ESCROW
AGENT:
SICHENZIA
XXXX XXXXXXXX XXXXXXX LLP
/s/
XXXXXX X. XXXX
Xxxxxx
X.
Xxxx,
Partner
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