ESCROW AGREEMENT
Exhibit
10.8
This
Agreement is made as of the 2nd day of
August,
2007, by and among Xxx-Xxxx Ma and Xxxxxx Xxxxxxxxxxxx, each a member (the
“Members”) of Max Engineering LLC, a company organized and existing under the
laws of the State of Texas, with its principal offices located at 0000 XX
Xxxxxxx, Xxxxx 000, Xxxxxxx, XX 00000 ("Max"), 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
Members, Max and WPCS are parties
to that certain Membership Interest Purchase Agreement, dated as of August
2,
2007 (the "Purchase Agreement"). WPCS and the Members 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 Members hereby appoint the Escrow Agent to hold $120,000 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.
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 $288,000, 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 $288,000, the Escrowed Funds shall be delivered
to
the Members, pro rata, based upon their ownership of Membership
Interests. 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 Members 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.
(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 Members,
pro rata, based upon their ownership of Membership Interests, 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 Members in accordance with such written instructions, jointly
executed by WPCS and the Members, 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 of its duties
hereunder.
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.
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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 Members 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
Members 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 Members.
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 Members purporting to
act
on behalf of WPCS or the Members 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 and the Members,
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 Members, jointly and severally,
unless such loss, liability or expense is due to the willful breach by the
Escrow Agent of its duties hereunder.
11.2
WPCS and the Members 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.
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 Members,
jointly and severally.
11.4
The agreements contained in this section 11 shall survive any termination of
the
duties of the Escrow Agent hereunder.
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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 Members, 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 Members 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 Members 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 Members. 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.
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
Members.
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.
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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.
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.
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WPCS
INTERNATIONAL INCORPORATED
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By:
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/s/ XXXXXX XXXXXXX | |
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Xxxxxx
Xxxxxxx
Chief
Executive Officer
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| MAX ENGINEERING LLC | |||
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By:
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/s/ XXX-XXXX MA | |
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Xxx-Xxxx
Ma,
President
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| MEMBERS | |||
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By:
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/s/ XXX-XXXX MA | |
| Xxx-Xxxx Ma | |||
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By:
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/s/ XXXXXX XXXXXXXXXXXX | |
| Xxxxxx Xxxxxxxxxxxx | |||
ESCROW
AGENT:
SICHENZIA
XXXX XXXXXXXX XXXXXXX LLP
/s/
XXXXXX X. XXXX
Xxxxxx
X.
Xxxx,
Partner
