Exhibit 10.06

 

GUARANTY

 

GUARANTY, dated as of December __, 2012, made by each of the undersigned (each a
“Guarantor”, and collectively, the “Guarantors”), in favor of Worldwide Stock
Transfer LLC, in its capacity as collateral agent (in such capacity, the
“Collateral Agent”) for the “Buyers” (as defined below) party to the Securities
Purchase Agreement (as defined below).

 

W I T N E S S E T H :

 

WHEREAS, WPCS International Incorporated, a Delaware corporation (the “Company”)
and each party listed as a “Buyer” on the Schedule of Buyers attached thereto
(collectively, the “Buyers”) are parties to the Securities Purchase Agreement
dated as of the date hereof (as amended, restated, replaced or otherwise
modified from time to time, the “Securities Purchase Agreement”), pursuant to
which the Company shall be required to sell, and the Buyers shall purchase or
have the right to purchase, the “Notes” (as defined therein) issued pursuant to
the Securities Purchase Agreement (as defined therein);

 

WHEREAS, the Securities Purchase Agreement requires that the Guarantors execute
and deliver to the Collateral Agent, (i) a guaranty guaranteeing all of the
obligations of the Company under the Securities Purchase Agreement, the Notes
and the “Transaction Documents” (as defined in the Securities Purchase
Agreement, the “Transaction Documents”); and (ii) a Security Agreement dated the
date hereof granting the Collateral Agent a lien in all of their personal
property (the “Security Agreement”); and

 

WHEREAS, each Guarantor has determined that the execution, delivery and
performance of this Guaranty directly benefits, and is in the best interest of,
such Guarantor;

 

NOW, THEREFORE, in consideration of the premises and the agreements herein and
in order to induce the Buyers to perform under the Securities Purchase
Agreement, each Guarantor hereby agrees with each Buyer as follows:

 

Section 1. Definitions. Reference is hereby made to the Securities Purchase
Agreement and the Notes for a statement of the terms thereof. All terms used in
this Guaranty, which are defined in the Securities Purchase Agreement or the
Notes and not otherwise defined herein, shall have the same meanings herein as
set forth therein.

 

Section 2. Guaranty. The Guarantors, jointly and severally, hereby
unconditionally and irrevocably, guaranty to Collateral Agent, for the benefit
of the Buyers, the punctual payment, as and when due and payable, by stated
maturity or otherwise, of all Obligations (as defined in the Security Agreement)
of the Company from time to time owing by it in respect of the Securities
Purchase Agreement, the Notes and the other Transaction Documents, including,
without limitation, all interest that accrues after the commencement of any
Insolvency Proceeding (as defined in the

 

 

 

 

Security Agreement) of the Company or any Guarantor, whether or not the payment
of such interest is unenforceable or is not allowable due to the existence of
such Insolvency Proceeding, and all fees, interest, premiums, penalties,
contract causes of actions, costs, commissions, expense reimbursements,
indemnifications and all other amounts due or to become due under any of the
Transaction Documents (such obligations being the “Guaranteed Obligations”), and
agrees to pay any and all expenses (including reasonable counsel fees and
expenses) reasonably incurred by the Collateral Agent in enforcing any rights
under this Guaranty. Without limiting the generality of the foregoing, each
Guarantor’s liability hereunder shall extend to all amounts that constitute part
of the Guaranteed Obligations and would be owed by the Company to the Collateral
Agent or any Buyer under the Securities Purchase Agreement and the Notes but for
the fact that they are unenforceable or not allowable due to the existence of an
Insolvency Proceeding involving any Guarantor or the Company (each, a
“Transaction Party”).

 

Each Guarantor, and by its acceptance of this Guaranty, the Collateral Agent and
each Buyer, hereby confirms that it is the intention of all such Persons that
this Guaranty and the Guaranteed Obligations of each Guarantor hereunder not
constitute a fraudulent transfer or conveyance for purposes of bankruptcy law,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar foreign, federal, provincial or state law to the extent applicable
to this Guaranty and the Guaranteed Obligations of each Guarantor hereunder. To
effectuate the foregoing intention, the Collateral Agent, the Buyers and the
Guarantors hereby irrevocably agree that the Guaranteed Obligations of each
Guarantor under this Guaranty at any time shall be limited to the maximum amount
as will result in the Guaranteed Obligations of such Guarantor under this
Guaranty not constituting a fraudulent transfer or conveyance.

 

 

Section 3. Guaranty Absolute; Continuing Guaranty; Assignments.

 

(a) The Guarantors, jointly and severally, guaranty that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the
Transaction Documents, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Collateral Agent or any Buyer with respect thereto. The
obligations of each Guarantor under this Guaranty are independent of the
Guaranteed Obligations, and a separate action or actions may be brought and
prosecuted against any Guarantor to enforce such obligations, irrespective of
whether any action is brought against any Transaction Party or whether any
Transaction Party is joined in any such action or actions. The liability of any
Guarantor under this Guaranty shall be irrevocable, absolute and unconditional
irrespective of, and each Guarantor hereby irrevocably waives, to the extent
permitted by law, any defenses it may now or hereafter have in any way relating
to, any or all of the following:

 

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(i) any lack of validity or enforceability of any Transaction Document or any
agreement or instrument relating thereto;

 

(ii) any change in the time, manner or place of payment of, or in any other term
of, all or any of the Guaranteed Obligations, or any other amendment or waiver
of or any consent to departure from any Transaction Document, including, without
limitation, any increase in the Guaranteed Obligations resulting from the
extension of additional credit to any Transaction Party or otherwise;

 

(iii) any taking, exchange, release or non-perfection of any Collateral (as
defined in the Security Agreement),

 

(iv) any taking, release or amendment or waiver of or consent to departure from
any other guaranty, for all or any of the Guaranteed Obligations;

 

(v) any change, restructuring or termination of the corporate, limited liability
company or partnership structure or existence of any Transaction Party;

 

(vi) any manner of application of Collateral or any other collateral, or
proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of
sale or other disposition of any Collateral or any other collateral for all or
any of the Guaranteed Obligations or any other Obligations of any Transaction
Party under the Transaction Documents or any other assets of any Transaction
Party or any of its Subsidiaries;

 

(vii) any failure of the Collateral Agent or any Buyer to disclose to any
Transaction Party any information relating to the business, condition (financial
or otherwise), operations, performance, properties or prospects of any other
Transaction Party now or hereafter known to the Collateral Agent or any Buyer
(each Guarantor waiving any duty on the part of the Collateral Agent or any
Buyer to disclose such information); or

 

(viii) any other circumstance (including any statute of limitations) or any
existence of or reliance on any representation by the Collateral Agent or any
Buyer that might otherwise constitute a defense available to, or a discharge of,
any Transaction Party or any other guarantor or surety.

 

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Collateral Agent, any Buyer, or any other
Person upon the insolvency, bankruptcy or reorganization of any Transaction
Party or otherwise, all as though such payment had not been made.

 

(b) This Guaranty is a continuing guaranty and shall (i) remain in full force
and effect until the indefeasible cash payment in full of the Guaranteed
Obligations (other than inchoate indemnity obligations) and/or complete
conversion of all of the Company’s obligations under the Notes to equity
securities of the Company and payment of all other amounts payable under this
Guaranty (other than inchoate indemnity obligations) and shall not terminate for
any reason prior to the respective Maturity Date of each Note (other than
payment in full of the Notes and/or complete conversion of all of the Company’s
obligations under the Notes to equity securities of the Company) and (ii) be
binding upon each Guarantor and its respective successors and assigns. This
Guaranty shall inure to the benefit of and be enforceable by the Collateral
Agent, the Buyers, and their respective successors, and permitted pledgees,
transferees and assigns. Without limiting the generality of the foregoing
sentence, the Collateral Agent or any Buyer may pledge, assign or otherwise
transfer all or any portion of its rights and obligations under and subject to
the terms of any Transaction Document to any other Person, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
to the Collateral Agent or such Buyer (as applicable) herein or otherwise, in
each case as provided in the Securities Purchase Agreement or such Transaction
Document. Notwithstanding the foregoing and for the avoidance of doubt, this
Guaranty will expire and each Guarantor will be released from its obligation
hereunder upon the indefeasible and final payment in full in cash of the
Guaranteed Obligations.

 

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Section 4. Waivers. To the extent permitted by applicable law, each Guarantor
hereby waives promptness, diligence, notice of acceptance and any other notice
with respect to any of the Guaranteed Obligations and this Guaranty and any
requirement that the Collateral Agent exhaust any right or take any action
against any Transaction Party or any other Person or any Collateral. Each
Guarantor acknowledges that it will receive direct and indirect benefits from
the financing arrangements contemplated herein and that the waiver set forth in
this Section 4 is knowingly made in contemplation of such benefits. The
Guarantors hereby waive any right to revoke this Guaranty, and acknowledge that
this Guaranty is continuing in nature and applies to all Guaranteed Obligations,
whether existing now or in the future. To the extent permitted by applicable
law, each Guarantor hereby unconditionally and irrevocably waives (a) any
defense arising by reason of any claim or defense based upon an election of
remedies by the Collateral Agent or any Buyer that in any manner impairs,
reduces, releases or otherwise adversely affects the subrogation, reimbursement,
exoneration, contribution or indemnification rights of such Guarantor or other
rights of such Guarantor to proceed against any of the other Transaction
Parties, any other guarantor or any other Person or any Collateral, except to
the extent that such election of remedies constituted willful misconduct, and
(b) any defense based on any right of set-off or counterclaim against or in
respect of the Guaranteed Obligations of such Guarantor hereunder. Each
Guarantor hereby unconditionally and irrevocably waives any duty on the part of
the Collateral Agent or any Buyer to disclose to such Guarantor any matter, fact
or thing relating to the business, condition (financial or otherwise),
operations, performance, properties or prospects of any other Transaction Party
or any of its Subsidiaries now or hereafter known by the Collateral Agent or a
Buyer.

 

Section 5. Subrogation. No Guarantor may exercise any rights that it may now or
hereafter acquire against any Transaction Party or any other guarantor that
arise from the existence, payment, performance or enforcement of any Guarantor’s
obligations under this Guaranty, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of the Collateral Agent or any Buyer
against any Transaction Party or any other guarantor or any Collateral, whether
or not such claim, remedy or right arises in equity or under contract, statute
or common law, including, without limitation, the right to take or receive from
any Transaction Party or any other guarantor, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security solely
on account of such claim, remedy or right, unless and until all of the
Guaranteed Obligations (other than inchoate indemnity obligations) and all other
amounts payable under this Guaranty (other than inchoate indemnity obligations)
shall have indefeasibly been paid in full in cash. If any amount shall be paid
to a Guarantor in violation of the immediately preceding sentence at any time
prior to the later of the indefeasible and final payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this Guaranty, such
amount shall be held in trust for the benefit of the Collateral Agent and shall
forthwith be paid to the Collateral Agent to be credited and applied to the
Guaranteed Obligations and all other amounts payable under this Guaranty,
whether matured or unmatured, in accordance with the terms of the Transaction
Document, or to be held as Collateral for any Guaranteed Obligations or other
amounts payable under this Guaranty thereafter arising. If (a) any Guarantor
shall make payment to the Collateral Agent of all or any part of the Guaranteed
Obligations, and (b) all of the Guaranteed Obligations (other than inchoate
indemnity obligations) and all other amounts payable under this Guaranty (other
than inchoate indemnity obligations) shall indefeasibly be paid in full in cash,
the Collateral Agent will, at such Guarantor’s request and expense, execute and
deliver to such Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
such Guarantor of an interest in the Guaranteed Obligations resulting from such
payment by such Guarantor.

 

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Section 6. Representations, Warranties and Covenants.

 

(a) Each Guarantor hereby represents and warrants as of the date first written
above as follows:

 

(i) The Guarantor (A) is a corporation, limited liability company or limited
partnership duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization as set forth on the signature pages
hereto, (B) has all requisite corporate, limited liability company or limited
partnership power and authority to conduct its business as now conducted and as
presently contemplated and to execute and deliver this Guaranty and each other
Transaction Document to which the Guarantor is a party, and to consummate the
transactions contemplated hereby and thereby and (C) is duly qualified to do
business and is in good standing in each jurisdiction in which the character of
the properties owned or leased by it or in which the transaction of its business
makes such qualification necessary except where the failure to be so qualified
would not result in a Material Adverse Effect.

 

(ii) The execution, delivery and performance by the Guarantor of this Guaranty
and each other Transaction Document to which the Guarantor is a party (A) have
been duly authorized by all necessary corporate, limited liability company or
limited partnership action, (B) do not and will not contravene its charter,
articles or by-laws, its limited liability company or operating agreement or its
certificate of partnership or partnership agreement, as applicable, or any
applicable law or any contractual restriction binding on the Guarantor or its
properties do not and will not result in or require the creation of any lien
(other than pursuant to any Transaction Document) upon or with respect to any of
its properties, and (C) do not and will not result in any default,
noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of
any material permit, license, authorization or approval applicable to it or its
operations or any of its properties.

 

(iii) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority is required in connection with the due
execution, delivery and performance by the Guarantor of this Guaranty or any of
the other Transaction Documents to which the Guarantor is a party (other than
expressly provided for in any of the Transaction Documents).

 

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(iv) Each of this Guaranty and the other Transaction Documents to which the
Guarantor is or will be a party, when delivered, will be, a legal, valid and
binding obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, suretyship or
other similar laws and equitable principles (regardless of whether enforcement
is sought in equity or at law).

 

(v) There is no pending or, to the best knowledge of the Guarantor, threatened
action, suit or proceeding against the Guarantor or to which any of the
properties of the Guarantor is subject, before any court or other governmental
authority or any arbitrator that (A) if adversely determined, could reasonably
be expected to have a Material Adverse Effect or (B) relates to this Guaranty or
any of the other Transaction Documents to which the Guarantor is a party or any
transaction contemplated hereby or thereby.

 

(vi) The Guarantor (A) has read and understands the terms and conditions of the
Securities Purchase Agreement and the other Transaction Documents, and (B) now
has and will continue to have independent means of obtaining information
concerning the affairs, financial condition and business of the Company and the
other Transaction Parties, and has no need of, or right to obtain from any
Buyer, any credit or other information concerning the affairs, financial
condition or business of the Company or the other Transaction Parties that may
come under the control of any Buyer.

 

(vii) There are no conditions precedent to the effectiveness of this Guaranty
that have not been satisfied or waived.

 

(b) The Guarantor covenants and agrees that until indefeasible full and final
payment in cash of the Guaranteed Obligations and/or complete conversion of all
of the Company’s obligations under the Notes to equity securities of the Company
in accordance with the terms of the Notes, it will comply with each of the
covenants (except to the extent applicable only to a public company) which are
set forth in Section 4 of the Securities Purchase Agreement as if the Guarantor
were a party thereto.

 

Section 7. Right of Set-off. Upon the occurrence and during the continuance of
any Event of Default, any Buyer may, and is hereby authorized to, at any time
and from time to time, without notice to the Guarantors (any such notice being
expressly waived by each Guarantor) and to the fullest extent permitted by law,
set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by any Buyer to or for the credit or the account of any Guarantor against any
and all obligations of the Guarantors now or hereafter existing under this
Guaranty or any other Transaction Document, irrespective of whether or not any
Buyer shall have made any demand under this Guaranty or any other Transaction
Document and although such obligations may be contingent or unmatured. Each
Buyer agrees to notify the relevant Guarantor promptly after any such set-off
and application made by such Buyer, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of any Buyer under this Section 7 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which such Buyer may
have under this Guaranty or any other Transaction Document in law or otherwise.

 

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Section 8. Notices, Etc. All notices and other communications provided for
hereunder shall be in writing and shall be mailed, telecopied or delivered, if
to any Guarantor, to it at its address set forth on the signature page hereto,
or if to the Collateral Agent or any Buyer, to it at its respective address set
forth in the Securities Purchase Agreement; or as to any Person at such other
address as shall be designated by such Person in a written notice to such other
Person complying as to delivery with the terms of this Section 8. All such
notices and other communications shall be effective (i) if mailed (by certified
mail, postage prepaid and return receipt requested), when received or three
Business Days after deposited in the mails, whichever occurs first; (ii) if
telecopied, when transmitted and confirmation is received, provided same is on a
Business Day and, if not, on the next Business Day; (iii) if e-mailed, when
transmitted if the sending party does not receive an automatically generated
message from the recipient’s e-mail server that such e-mail could not be
delivered to such recipient, provided same is on a Business Day and, if not, on
the next Business Day; or (iv) if delivered by hand, upon delivery, provided
same is on a Business Day and, if not, on the next Business Day.

 

Section 9. CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER DOCUMENT RELATED
HERETO SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK IN
THE COUNTY OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
GUARANTOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE FOREGOING COURTS. EACH
GUARANTOR HEREBY IRREVOCABLY APPOINTS THE SECRETARY OF STATE OF THE STATE OF NEW
YORK AS ITS AGENT FOR SERVICE OF PROCESS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING AND FURTHER IRREVOCABLY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS DEEMED APPROPRIATE BY ANY OF THE FOREGOING COURTS. EACH
GUARANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
FOREGOING COURTS AND IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT ITS ADDRESS FOR
NOTICES AS SET FORTH ON THE SIGNATURE PAGE HERETO AND TO THE SECRETARY OF STATE
OF THE STATE OF NEW YORK, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER
SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT TO
SERVE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST EACH GUARANTOR IN ANY OTHER
JURISDICTION. ANY GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN
ANY OF THE FOREGOING COURTS AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY GUARANTOR HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, EACH GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF
ITS OBLIGATIONS UNDER THIS GUARANTY AND THE OTHER TRANSACTION DOCUMENTS.

 

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Section 10. WAIVER OF JURY TRIAL, ETC. EACH GUARANTOR HEREBY WAIVES ANY RIGHT TO
A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS
UNDER THIS GUARANTY OR THE OTHER TRANSACTION DOCUMENTS, OR UNDER ANY AMENDMENT,
WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN
THE FUTURE MAY BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH, OR ARISING FROM
ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS GUARANTY OR THE
OTHER TRANSACTION DOCUMENTS, AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR
COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH GUARANTOR
CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF THE COLLATERAL
AGENT OR ANY BUYER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT COLLATERAL
AGENT OR ANY BUYER WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR
COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS. EACH GUARANTOR HEREBY
ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE COLLATERAL
AGENT ENTERING INTO THIS AGREEMENT.

 

Section 11. Taxes.

 

(a) All payments made by any Guarantor hereunder or under any other Transaction
Document shall be made in accordance with the terms of the respective
Transaction Document and shall be made without set-off, counterclaim, deduction
or other defense. All such payments shall be made free and clear of and without
deduction for any present or future taxes, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto, excluding taxes
imposed on the net income of any Buyer by the jurisdiction in which such Buyer
is organized or where it has its principal lending office (all such nonexcluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities,
collectively or individually, “Taxes”). If any Guarantor shall be required to
deduct or to withhold any Taxes from or in respect of any amount payable
hereunder or under any other Transaction Document:

 

(i) the amount so payable shall be increased to the extent necessary so that
after making all required deductions and withholdings (including Taxes on
amounts payable to any Buyer pursuant to this sentence) each Buyer receives an
amount equal to the sum it would have received had no such deduction or
withholding been made,

 

(ii) such Guarantor shall make such deduction or withholding,

 

(iii) such Guarantor shall pay the full amount deducted or withheld to the
relevant taxation authority in accordance with applicable law, and

 

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(iv) as promptly as possible thereafter, such Guarantor shall send the Buyers an
official receipt (or, if an official receipt is not available, such other
documentation as shall be satisfactory to the Collateral Agent, as the case may
be) showing payment.  In addition, each Guarantor agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies that arise from any payment made hereunder or from the
execution, delivery, registration or enforcement of, or otherwise with respect
to, this Agreement or any other Transaction Document (collectively, “Other
Taxes”).

 

(b) Each Guarantor hereby indemnifies and agrees to hold the Collateral Agent
and each Buyer (each an “Indemnified Party”) harmless from and against Taxes or
Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Section 11) paid by any
Indemnified Party  as a result of any payment made hereunder or from the
execution, delivery, registration or enforcement of, or otherwise with respect
to, this Agreement or any other Transaction Document, and any liability
(including penalties, interest and expenses for nonpayment, late payment or
otherwise) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted.  This indemnification shall
be paid within 30 days from the date on which the Collateral Agent or such Buyer
makes written demand therefor, which demand shall identify the nature and amount
of such Taxes or Other Taxes.

 

(c) If any Guarantor fails to perform any of its obligations under this
Section 11, such Guarantor shall indemnify the Collateral Agent and each Buyer
for any taxes, interest or penalties that may become payable as a result of any
such failure. The obligations of the Guarantors under this Section 11 shall
survive the termination of this Guaranty and the payment of the Obligations and
all other amounts payable hereunder.

 

Section 12. Indemnification.

 

(a) Without limitation on any other Obligations of any Guarantor or remedies of
the Collateral Agent and the Buyers under this Guaranty, except to the extent
resulting from such Indemnified Party’s gross negligence or willful misconduct,
as determined by a final judgment of a court of competent jurisdiction, each
Guarantor shall, to the fullest extent permitted by law, indemnify, defend and
save and hold harmless the Collateral Agent and each Buyer and each of their
affiliates and their respective officers, directors, employees, agents and
advisors (each, an “Indemnified Party”) from and against, and shall pay on
demand, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party in
connection with or as a result of any failure of any Guaranteed Obligations to
be the legal, valid and binding obligations of any Transaction Party enforceable
against such Transaction Party in accordance with their terms.

 

(b) Each Guarantor hereby also agrees that none of the Indemnified Parties shall
have any liability (whether direct or indirect, in contract, tort or otherwise)
to any of the Guarantors or any of their respective affiliates or any of their
respective officers, directors, employees, agents and advisors, and each
Guarantor hereby agrees not to assert any claim against any Indemnified Party on
any theory of liability, for special, indirect, consequential or punitive
damages arising out of or otherwise relating to the facilities, the actual or
proposed use of the proceeds of the advances, the Transaction Documents or any
of the transactions contemplated by the Transaction Documents.

 

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Section 13. Miscellaneous.

 

(a) Each Guarantor will make each payment hereunder in lawful money of the
United States of America and in immediately available funds to each Buyer, at
such address specified by such Buyer from time to time by notice to the
Guarantors.

 

(b) No amendment or waiver of any provision of this Guaranty and no consent to
any departure by any Guarantor therefrom shall in any event be effective unless
the same shall be in writing and signed by each Guarantor and each Buyer, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.

 

(c) No failure on the part of any Buyer to exercise, and no delay in exercising,
any right hereunder or under any other Transaction Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any right hereunder
or under any Transaction Document preclude any other or further exercise thereof
or the exercise of any other right. The rights and remedies of the Collateral
Agent and the Buyers provided herein and in the other Transaction Documents are
cumulative and are in addition to, and not exclusive of, any rights or remedies
provided by law. The rights of the Collateral Agent and the Buyers under any
Transaction Document against any party thereto are not conditional or contingent
on any attempt by the Collateral Agent or any Buyer to exercise any of their
respective rights under any other Transaction Document against such party or
against any other Person.

 

(d) Any provision of this Guaranty that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or affecting the validity or enforceability of such provision in any
other jurisdiction.

 

(e) This Guaranty shall (i) be binding on each Guarantor and its respective
successors and assigns, and (ii) inure, together with all rights and remedies of
the Collateral Agent hereunder, to the benefit of the Collateral Agent, the
Buyers and their respective successors, transferees and assigns. Without
limiting the generality of clause (ii) of the immediately preceding sentence,
the Collateral Agent and any Buyer may assign or otherwise transfer its rights
and obligations under the Securities Purchase Agreement or any other Transaction
Document to any other Person in accordance with the terms thereof, and such
other Person shall thereupon become vested with all of the benefits in respect
thereof granted to the Collateral Agent or such Buyer, as the case may be,
herein or otherwise. None of the rights or obligations of any Guarantor
hereunder may be assigned or otherwise transferred without the prior written
consent of each Buyer.

 

(f) This Guaranty reflects the entire understanding of the transaction
contemplated hereby and shall not be contradicted or qualified by any other
agreement, oral or written, entered into before the date hereof.

 

(g) Section headings herein are included for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.

 

10

 

 

(h) This Guaranty shall be governed by and construed in accordance with the law
of the State of New York applicable to contracts made and to be performed
therein without regard to conflict of law principles (except 5-1401 of the New
York General Obligation Law). Further, the law of the state of New York shall
apply to all disputes or controversies arising out of or connected to or with
this guaranty without regard to conflict of law principles (except 5-1401 of the
New York General Obligation Law).

 

Section 14. Currency Indemnity.

 

If, for the purpose of obtaining or enforcing judgment against Guarantor in any
court in any jurisdiction, it becomes necessary to convert into any other
currency (such other currency being hereinafter in this Section 15 referred to
as the “Judgment Currency”) an amount due under this Guaranty in any currency
(the “Obligation Currency”) other than the Judgment Currency, the conversion
shall be made at the rate of exchange prevailing on the business day immediately
preceding (a) the date of actual payment of the amount due, in the case of any
proceeding in the courts of courts of the jurisdiction that will give effect to
such conversion being made on such date, or (b) the date on which the judgment
is given, in the case of any proceeding in the courts of any other jurisdiction
(the applicable date as of which such conversion is made pursuant to this
Section 13 being hereinafter in this Section 13 referred to as the “Judgment
Conversion Date”).

 

If, in the case of any proceeding in the court of any jurisdiction referred to
in the preceding paragraph, there is a change in the rate of exchange prevailing
between the Judgment Conversion Date and the date of actual receipt of the
amount due in immediately available funds, the Guarantor shall pay such
additional amount (if any, but in any event not a lesser amount) as may be
necessary to ensure that the amount actually received in the Judgment Currency,
when converted at the rate of exchange prevailing on the date of payment, will
produce the amount of the Obligation Currency which could have been purchased
with the amount of’ the Judgment Currency stipulated in the judgment or judicial
order at the rate of exchange prevailing on the Judgment Conversion Date. Any
amount due from the Guarantor under this Section 13 shall be due as a separate
debt and shall not be affected by judgment being obtained for any other amounts
due under or in respect of this Guaranty.

 

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11

 

 

IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed by
its respective duly authorized officer, as of the date first above written.

 

 

WPCS INTERNATIONAL INCORPORATED

 

By:___________________________________

Name: Joseph Heater
Title: Chief Financial Officer

 

 

GUARANTORS:

 

 

WPCS INTERNATIONAL – PORTLAND, INC.

 

By:___________________________________

Name: Joseph Heater
Title: Authorized Signatory

 

 

 

WPCS INTERNATIONAL – SEATTLE, INC.

 

By:___________________________________

Name: Joseph Heater
Title: Authorized Signatory

 

 

 

WPCS INTERNATIONAL – SUISUN CITY, INC.

 

By:___________________________________

Name: Joseph Heater
Title: Authorized Signatory

 

 

 

WPCS INTERNATIONAL – TRENTON, INC.

 

By:___________________________________

Name: Joseph Heater
Title: Authorized Signatory

 

 

 

 

 

WPCS INTERNATIONAL – HARTFORD, INC.

 

By:___________________________________

Name: Joseph Heater
Title: Authorized Signatory

 

 

 

WPCS INTERNATIONAL – LAKEWOOD, INC.

 

By:___________________________________

Name: Joseph Heater
Title: Authorized Signatory