Exhibit 10.02
 
ESCROW AGREEMENT
 
THIS ESCROW AGREEMENT (this “Agreement”) is made as of July 25, 2012 by and
among New England Communications Systems Corp., a Connecticut corporation
(“NECS”), Quality Communications Systems Inc., a New Jersey corporation
(“Quality” and together with NECS, the “Purchasers”), WPCS International –
Hartford, Inc., a Connecticut corporation (“Hartford”), WPCS International -
Lakewood, Inc., a New Jersey corporation (“Lakewood” and together with Hartford,
the “Sellers”), WPCS International Incorporated, a Delaware corporation (
“WPCS”), and Sichenzia Ross Friedman Ference LLP, with an address at 61
Broadway, New York, New York 10006 (the “Escrow Agent”).  All capitalized terms
contained herein and not otherwise defined shall have the meaning ascribed to
them in the Purchase Agreement (as hereinafter defined).
 
W I T N E S S E T H:
 
WHEREAS, the Purchasers, the Sellers and WPCS are parties to that certain asset
purchase agreement, dated as of even date herewith (the “Purchase Agreement”);
 
WHEREAS, pursuant to Section 2.4 of the Purchase Agreement, the Purchasers have
agreed to place in escrow under the terms of the Purchase Agreement an aggregate
amount equal to SIX HUNDRED THOUSAND DOLLARS ($600,000) of the Purchase Price
into two separate escrow accounts, as follows: (i) Two Hundred Fifty Thousand
Dollars ($250,000) and (ii) Three Hundred Fifty Thousand Dollars ($350,000),
respectively, for purposes of satisfying certain adjustments to the Purchase
Price or repurchase obligations of the Sellers to the Purchasers pursuant to the
Purchase Agreement;
 
WHEREAS, the Purchasers, the Sellers and WPCS have requested that the Escrow
Agent hold such $600,000 (the “Funds”) in escrow and to distribute such Funds
upon the terms set forth herein; and
 
WHEREAS, the Purchasers, the Sellers and WPCS desire to appoint the Escrow Agent
as escrow agent and the Escrow Agent is willing to accept such appointment and
be bound as set forth herein, subject to the terms and conditions of this
Agreement.
 
NOW, THEREFORE, in consideration of the covenants and mutual promises contained
herein and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged and intending to be legally bound
hereby, the parties agree as follows:
 
 
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ARTICLE I
 
TERMS OF THE ESCROW
 
1.1           The parties hereby agree to establish the escrow accounts with the
Escrow Agent whereby the Escrow Agent shall hold the Funds. Notwithstanding
anything else to the foregoing, the parties agree that the Escrow Agent may hold
the Funds in one or more sub-accounts under a master attorney escrow account.
 
1.2           Upon the Escrow Agent’s receipt of the Funds into the escrow
accounts, it shall advise the Purchasers, the Sellers and WPCS, or each of their
designated attorneys or agents, in writing, of the Funds it has received
into  the escrow accounts.
 
1.3           Wire transfers to the Escrow Agent shall be made as follows:
 

  Citibank N.A.   666 Fifth Avenue   New York, NY 10103   A/C of Sichenzia Ross
Friedman Ference LLP (IOLA Account)   A/C#: 92883436   ABA#: 021000089   SWIFT
Code:  CITIUS33   REMARK: WPCS/KAVVERI

 
1.4 The duties and responsibilities of the Escrow Agent are as set forth below:
 
 (A)             (1) If the Purchase Price is reduced pursuant to Section 2.5(d)
of the Purchase Agreement, or, if pursuant to Sections 2.4(a)(ii), 2.4(a)(iii)
or 6.10 of the Purchase Agreement, the Purchasers are entitled to a distribution
of all or a part of the Funds, or (2) if pursuant to Section 2.4(a)(iii) of the
Purchase Agreement, the Sellers are entitled to a distribution of all or a part
of the Funds (in each case, the “Requesting Party”), the Requesting Party shall
deliver an instruction to the Escrow Agent to distribute to such Requesting
Party the applicable portion of the Funds (each, a “Distribution Request”). Upon
receipt of a Distribution Request, the Escrow Agent shall send a copy of such
Distribution Request to the other party (the “Recipient Party”).  Additionally,
the Requesting Party agrees that upon the delivery of a Distribution Request to
the Escrow Agent, the Requesting Party will simultaneously deliver a copy of
such Distribution Request to the Recipient Party in the manner for notices
provided in Section 2.2 hereof.  Such Recipient Party shall have five (5)
Business Days (as defined in this Agreement) following receipt of such
Distribution Request within which to notify the Escrow Agent of its objection to
such Distribution Request (the “Objection Period”).  If such Recipient Party
objects to such Distribution Request within such five (5) Business Day period,
then there will be deemed to be a conflict (a “Conflict”) between the Requesting
Party and the Recipient Party, and the Escrow Agent shall proceed in accordance
with the terms and conditions of Section 2.15 of this Agreement.  If the
Recipient Party fails to timely deliver an objection to the Escrow Agent
pursuant to this Section 1.4(A), the Escrow Agent shall pay to the Requesting
Party a portion of the Funds equal to the amount requested in the Distribution
Request, not to exceed the entire amount of the Funds.  Any such payment shall
be made within two (2) Business Days following the expiration of the Objection
Period.
 
 (B)             The Escrow Agent shall continue to hold any remaining Funds
following the payment of any Distribution Request in accordance with the terms
of this Agreement.
 
 (C)             Subject to the Purchase Agreement, the balance of any Funds
remaining after the delivery of payments required pursuant to Section 1.4(A),
which are not subject to a Conflict, shall be delivered to the Sellers or their
designee, in proportions as shall be determined by the Sellers, within two (2)
Business Days following the expiration of the final Objection Period.
 
 (D)             The Escrow Agent may also disburse the Funds pursuant to the
joint written instruction of the Purchasers, the Sellers and WPCS.
 
 
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ARTICLE II
 
MISCELLANEOUS
 
2.1 No waiver or any breach of any covenant or provision herein contained shall
be deemed a waiver of any preceding or succeeding breach thereof, or of any
other covenant or provision herein contained.  No extension of time for
performance of any obligation or act shall be deemed an extension of the time
for performance of any other obligation or act.
 
2.2 Unless otherwise provided in this Agreement, any agreement, notice, request,
instruction or other communication to be given hereunder by any party to another
must be in writing and (a) delivered personally (such delivered notice to be
effective on the date it is delivered), (b) mailed by certified mail, postage
prepaid (such mailed notice to be effective three (3) Business Days after the
date it is mailed), (c) deposited with a reputable overnight courier service
(such couriered notice to be effective one (1) Business Day after the date it is
sent by courier) or (d) sent by electronically confirmed facsimile or email
transmission (such facsimile or email transmission notice to be effective on the
date that confirmation of such facsimile or email transmission is received), as
follows:
 

  If to the Sellers or WPCS, addressed to:           Andrew Hidalgo     c/o WPCS
International Incorporated     One East Uwchlan Avenue, Suite 301     Exton,
Pennsylvania 19341     Telephone: (610) 903-0400     Facsimile: (610) 903-0401  
  Email: andy.hidalgo@wpcs.com  

 

 
With a copy to:
          Sichenzia Ross Friedman Ference LLP     61 Broadway, 32nd Floor    
New York, New York 10006     Attention:  Marc J. Ross       Thomas A. Rose    
Telephone: (212) 930-9700     Facsimile: (212) 930-9725     Email:
trose@srff.com  

 
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  If to the Purchasers, addressed to:           Kavveri Technologies Americas
Inc.     15 Allstate Parkway, Suite 600     Markham, Ontario L3R 5B4 Canada    
Attention: William McBride     Telephone: (905) 947-4264 x 2011     Facsimile:
(905) 947-4265     Email: wmcbride@kaveritelecoms.com  

 
With a copy to:
          Abrams Fensterman     1111 Marcus Avenue, Suite 107     Lake Success,
New York     Attention:  Neil M. Kaufman     Telephone: (516) 368-9411    
Facsimile: (516) 368-9568     Email: nkaufman@abramslaw.com  

 

 
If to Escrow Agent:
          Sichenzia Ross Friedman Ference LLP     61 Broadway, 32nd Floor    
New York, New York 10006     Attention:  Marc J. Ross       Thomas A. Rose    
Telephone: (212) 930-9700     Facsimile: (212) 930-9725     Email:
trose@srff.com  

 
Any party may designate in a writing to any other party any other address,
facsimile number or email address to which, and any other Person to whom or
which, a copy of any such notice, request, instruction or other communication
should be sent.

 
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2.3 This Agreement shall be binding upon and shall inure to the benefit of the
respective successors and assigns of the parties hereto.
 
2.4 This Agreement is the final expression of, and contains the entire agreement
between, the parties with respect to the subject matter hereof and supersedes
all prior understandings with respect thereto.  This Agreement may not be
modified, changed, supplemented or terminated, nor may any obligations hereunder
be waived, except by written instrument signed by the parties to be charged or
by its agent duly authorized in writing or as otherwise expressly permitted
herein; provided, however, that nothing herein shall be construed to alter the
obligations of the Purchasers, the Sellers or WPCS under the Purchase Agreement.
 
2.5 Whenever required by the context of this Agreement, the singular shall
include the plural and masculine shall include the feminine.  This Agreement
shall not be construed as if it had been prepared by one of the parties, but
rather as if all parties had prepared the same.
 
2.6 The parties hereto expressly agree that this Agreement shall be governed by,
interpreted under and construed and enforced in accordance with the laws of the
State of New York.  Each party to this Agreement hereby (i) consents to submit
himself, herself or itself to the personal jurisdiction of the Federal courts of
the United States located in the Southern District of New York or, if such
courts do not have jurisdiction over such matter, to the applicable courts of
the State of New York located in New York County, (ii) irrevocably agrees that
all actions or proceedings arising out of or relating to this Agreement will be
litigated in such courts and (iii) irrevocably agrees that he, she or it will
not institute any Proceeding relating to this Agreement or any of the
transactions contemplated hereby in any court other than such courts.  Each
party to this Agreement accepts for himself, herself or itself and in connection
with his, her or its properties, generally and unconditionally, the exclusive
jurisdiction and venue of the aforesaid courts and waives any defense of lack of
personal jurisdiction or inconvenient forum or any similar defense, and
irrevocably agrees to be bound by any non-appealable judgment rendered thereby
in connection with this Agreement.
 
2.7 The Escrow Agent’s duties hereunder may be altered, amended, modified or
revoked only by a writing signed by the Purchasers, the Sellers, WPCS and the
Escrow Agent.
 
2.8 The Escrow Agent shall act as such without compensation.
 
2.9 The Escrow Agent shall be obligated only for the performance of such duties
as are specifically set forth herein and may rely and shall be protected in
relying or refraining from acting on any instrument reasonably believed by the
Escrow Agent to be genuine and to have been signed or presented by the proper
party or parties. The Escrow Agent shall not be personally liable for any act
the Escrow Agent may do or omit to do hereunder as the Escrow Agent while acting
in good faith and in the absence of gross negligence, fraud and willful
misconduct, and any act done or omitted by the Escrow Agent pursuant to the
advice of the Escrow Agent’s attorneys-at-law shall be conclusive evidence of
such good faith, in the absence of gross negligence, fraud and willful
misconduct.
 
2.10 The Escrow Agent is hereby expressly authorized to comply with and obey
orders, judgments or decrees of any court.  In case the Escrow Agent obeys or
complies with any such order, judgment or decree, the Escrow Agent shall not be
liable to any of the parties hereto or to any other person, firm or corporation
by reason of such decree being subsequently reversed, modified, annulled, set
aside, vacated or found to have been entered without jurisdiction.
 
2.11 The Escrow Agent shall not be liable in any respect on account of the
identity, authorization or rights of the parties executing or delivering or
purporting to execute or deliver any documents or papers deposited or called for
thereunder in the absence of gross negligence, fraud and willful misconduct.
 
2.12 The Escrow Agent shall be entitled to employ such legal counsel and other
experts as the Escrow Agent may deem necessary properly to advise the Escrow
Agent in connection with the Escrow Agent’s duties hereunder, may rely upon the
advice of such counsel, and may pay such counsel reasonable compensation;
provided that the costs of such compensation shall be borne by the Escrow Agent.
 
 
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2.13 It is understood that the Escrow Agent reserves the right to resign as
Escrow Agent at any time by giving written notice of its resignation, specifying
the effective date thereof, to each other party hereto.  Within thirty (30) days
after receiving the aforesaid notice, the other party or parties hereto shall
appoint a successor escrow agent to which the Escrow Agent may distribute the
Funds then held hereunder.  If a successor escrow agent has not been appointed
and has not accepted such appointment by the end of such thirty (30) day period,
the Escrow Agent may apply to a court of competent jurisdiction for the
appointment of a successor escrow agent and the fees, costs and expenses
(including counsel fees and expenses) which it incurs in connection with such a
proceeding shall be borne equally by the Purchasers, on the one hand, and the
Sellers, on the other hand.
 
2.14 If the Escrow Agent reasonably requires other or further instruments in
connection with this Agreement or obligations in respect hereto, the necessary
parties hereto shall join in furnishing such instruments.
 
2.15 It is understood and agreed that should any dispute arise with respect to
the delivery and/or ownership or right of possession of the documents (if any)
or the Funds held by the Escrow Agent hereunder, the Escrow Agent is authorized
and directed in the Escrow Agent’s sole discretion (1) to retain in the Escrow
Agent’s possession without liability to anyone all or any part of said documents
or the Funds until such disputes shall have been settled either by mutual
written agreement of the parties concerned by a final order, decree or judgment
or a court of competent jurisdiction after the time for appeal has expired and
no appeal has been perfected, but the Escrow Agent shall be under no duty
whatsoever to institute or defend any such proceedings, or (2) to deliver the
Funds and any other property and documents held by the Escrow Agent hereunder to
a state or Federal court having competent subject matter jurisdiction and
located in New York County in accordance with the applicable procedure
therefore.
 
2.16 The Purchasers, the Sellers and WPCS agree jointly and severally to
indemnify and hold harmless the Escrow Agent and its partners, employees, agents
and representatives from any and all claims, liabilities, costs or expenses in
any way arising from or relating to the duties or performance of the Escrow
Agent hereunder or the transactions contemplated hereby other than any such
claim, liability, cost or expense to the extent the same shall have been
determined by final, unappealable judgment of a court of competent jurisdiction
to have resulted from the gross negligence, fraud or willful misconduct of the
Escrow Agent.
 
2.17 The Escrow Agent shall be permitted to act as counsel for WPCS and/or the
Sellers in any transaction and/or dispute including any dispute between
Purchasers, on one hand, and WPCS and/or the Sellers, on the other, whether or
not the Escrow Agent is then holding the escrow funds held by the Escrow Agent
hereunder.
 
2.18 This Agreement may be executed in one or more counterparts (including by
facsimile or emailed scanned signature), each of which will be deemed to be an
original copy of this Agreement and all of which, when taken together, will be
deemed to constitute one and the same agreement.
 
2.19 Any provision of this Agreement which 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
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
 
2.20 This Agreement shall terminate upon: (i) the distribution by the Escrow
Agent of all of the Funds as provided herein, (ii) in accordance with Section
2.15 above, or (iii) upon the expiration of all periods of time for which a
claim can be made against the Funds pursuant to the Purchase Agreement.
 
2.21 “Business Day” shall mean a day on which commercial banks in the State of
New York are open for the general transaction of business.  If any action or
time for performance pursuant to this Agreement is to occur on any Saturday,
Sunday or holiday, such time for action or performance shall be extended to the
next Business Day.
 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of date
first written above.
 
NEW ENGLAND COMMUNICATIONS SYSTEMS CORP.

By: /s/ UMA CHENNAREDDY REDDY
      Name: Uma Chennareddy Reddy
      Title: President

QUALITY COMMUNICATIONS SYSTEMS INC.

By: /s/ UMA CHENNAREDDY REDDY
      Name: Uma Chennareddy Reddy
      Title: President

WPCS INTERNATIONAL – HARTFORD, INC.

By: /s/ JOSEPH HEATER
     Name: Joseph Heater
     Title: Chief Financial Officer

WPCS INTERNATIONAL – LAKEWOOD, INC.

By: /s/ JOSEPH HEATER
     Name: Joseph Heater
     Title: Chief Financial Officer

WPCS INTERNATIONAL INCORPORATED

By: /s/ JOSEPH HEATER
     Name: Joseph Heater
     Title: Chief Financial Officer

ESCROW AGENT:

SICHENZIA ROSS FRIEDMAN FERENCE LLP

By: /s/ THOMAS A. ROSE
     Name: Thomas A. Rose
     Title: Partner

 
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