Unassociated Document


    Exhibit
      10.3

    ESCROW
      AGREEMENT

     

    This
      Agreement is made as of the 1st day of
      August,
      2007, by and among Frank Mauger, James Jordan and Todd Kahl, each a shareholder
      (the “Shareholders”) of Major Electric, Inc., a corporation organized and
      existing under the laws of the State of Washington, with its principal offices
      located at 18538 142nd Avenue
      NE,
      Woodinville, Washington 98072 ("MEI"), WPCS International Incorporated, a
      corporation organized and existing under the laws of the State of Delaware,
      with
      its principal offices at One East Uwchlan Avenue, Suite 301, Exton, Pennsylvania
      19341  ("WPCS"), and Sichenzia Ross Friedman Ference LLP, a New York
      limited liability partnership having offices at 61 Broadway, New York, New
      York
      10006 (the "Escrow Agent").

     

    RECITALS

     

     

    The
      Shareholders, MEI and WPCS are
      parties to that certain Stock Purchase Agreement, dated as of August 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:

     

    1.           WPCS
      and Shareholders hereby appoint the Escrow Agent to hold $300,000 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 $1,900,000, the
      Cash Purchase Price shall be reduced by the amount of the shortfall and such
      amount shall be delivered to WPCS by the Escrow Agent from the Escrowed
      Funds.  In the event the NTAV as of the Closing Date shall be greater
      than $1,900,000, 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
      final determination of the NTAV or (ii) delivery to the Escrow Agent of a final
      written determination of NTAV by the Independent Accounting Firm.

     

    (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
      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.

     

    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.

     

    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 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 an
      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.

     

    
      
         

      

      
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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 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.             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.

    


    


    


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      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/ ANDREW
              HIDALGO	 
	 	 	
              Andrew Hidalgo

              Chief
                Executive Officer

            	
            
	 	 	 	 
	 	 	 	 



      	 	MAJOR
              ELECTRIC, INC.	 
	 	 	 	 
	
               

            	
               

            	/s/ FRANK
              MAUGER	 
	 	 	Frank
              Mauger,	 
	 	 	President	 
	 	 	
               

               

            	 


    

    
      	 	SHAREHOLDERS	 
	 	 	 	 
	
               

            	
               

            	/s/ FRANK
              MAUGER	 
	 	 	Frank
              Mauger	 
	 	 	 	 
	 	 	 	 


    

    
      	 	
            	 
	 	 	 	 
	
               

            	
               

            	/s/ JAMES
              JORDAN	 
	 	 	James
              Jordan	 
	 	 	 	 
	 	 	 	 


    

    
      	 	
            	 
	 	 	 	 
	 	
               

            	/s/ TODD
              KAHL	 
	 	 	Todd
              Kahl	 
	 	 	 	 
	 	 	 	 


    

    


    
 

    ESCROW
      AGENT:

    SICHENZIA
      ROSS FRIEDMAN FERENCE LLP

    


    /s/
      THOMAS A. ROSE

    
      
        

      

    

    Thomas
      A.
      Rose,

     Partner