ESCROW AGREEMENT
Exhibit
10.3
This
Agreement is made as of the 30th day of March, 2007, by and among Xxxxxxx
Xxxxxxx, Xxxxx Xxxxxxx, Xxxxxx Xxxxxxx and Xxxxx Xxxxxxx, each a shareholder
(collectively, the “Shareholders”) of Voacolo Electric Incorporated, Inc., a
corporation organized and existing under the laws of the State of New Jersey,
with its principal offices located at 00 Xxxxxxxxx Xxxxxx, Xxxxxxx, XX 00000
("Voacolo"), 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 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (the "Escrow Agent").
RECITALS
The
Shareholders, Voacolo and WPCS are parties to that certain Stock Purchase
Agreement, dated as of even date herewith (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:
1. WPCS
and
Shareholders hereby appoint the Escrow Agent to hold $62,500 in cash (the
"Escrowed Funds"), in an
attorney 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. Upon deposit of the Escrowed Funds, the Escrow
Agent shall provide written evidence of such deposit to the Shareholders and
WPCS.
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2.
(a) The
Escrow Agent shall retain the Escrowed Funds until the NTAV of the Company
as of
the Closing Date shall be determined.
(b) In
the
event the NTAV as of the Closing Date shall be less than $1,200,000, 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 $1,200,000, the Closing Payment shall be increased by the amount
of the excess and such amount shall be delivered by WPCS 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 a 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.
(c)
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.
3. The
Escrow Agent shall, from time to time, deliver all or some of the Escrowed
Cash
to WPCS or the Shareholders in accordance with such written instructions,
jointly executed by WPCS and the Shareholders, as the Escrow Agent may
receive.
4. 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 or gross negligence of its
duties hereunder.
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5. 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.
6. 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.
7. 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.
8. The
Escrow Agent will receive no compensation for its services
hereunder.
9. 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.
10. 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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11.1 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. 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, unless
such loss, liability or expense is due to the willful breach or gross negligence
by the Escrow Agent of its duties hereunder.
11.2
WPCS
hereby unconditionally agrees 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 or gross negligence of its duties
under
this Escrow Agreement.
11.3
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
The
agreements contained in this Section 11 shall survive any termination of the
duties of the Escrow Agent hereunder.
12. 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.
13. 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.
14. 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.
15. 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.
16. 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 Cash 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 Cash to the successor Escrow Agent.
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17. 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.
18.
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.
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.
19. This
Escrow Agreement shall be governed by, and its provisions construed in
accordance with the laws of the State of New York.
[Intentionally
blank]
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IN
WITNESS WHEREOF,
the
parties hereto have caused this Escrow Agreement to be duly executed as of
the
day and year first above written.
WPCS
INTERNATIONAL
INCORPORATED
By:
/s/
XXXXXX XXXXXXX
Xxxxxx
Xxxxxxx
Chief
Executive Officer
VOACOLO
ELECTRIC INCORPORATED
By:
/s/
XXXXXXX XXXXXXX
Xxxxxxx
Xxxxxxx,
President
SELLERS:
/s/
XXXXXXX XXXXXXX
Xxxxxxx
Xxxxxxx
/s/
XXXXX XXXXXXX
Xxxxx
Xxxxxxx
/s/
XXXXXX XXXXXXX
Xxxxxx
Xxxxxxx
/s/
XXXXX XXXXXXX
Xxxxx
Xxxxxxx
ESCROW
AGENT:
SICHENZIA
XXXX XXXXXXXX XXXXXXX LLP
/s/
XXXXXX X. XXXX
Xxxxxx
X.
Xxxx,
Partner
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