Document:

Exhibit 10.03

 

July 31, 2014

 

 

 

WPCS Australia Pty Ltd.

c/o WPCS International Incorporated

600 Eaglewood Blvd., Suite 300

Exton, Pennsylvania, 19341

Attention: Joseph Heater

 

Ladies and Gentlemen:

 

Reference is hereby made to: (a) the Securities
Purchase Agreement dated as of September 19, 2013 (the “Purchase Agreement”) by and between WPCS Australia Pty
Ltd, an Australian corporation (“Seller”) and Turquino Equity LLC, a Delaware limited liability company (“Purchaser”).

 

In connection with the consummation of the
transactions contemplated by the Purchase Agreement, this letter agreement memorializes the understanding of the Seller and the
Purchaser with respect to the matters described herein.

 

1.                 
All capitalized terms used but not otherwise defined in this letter agreement shall have the meaning ascribed to those terms
in the Purchase Agreement. Each Party acknowledges that it has previously executed and delivered the Purchase Agreement.

 

2.                 
Closing Date. The Closing shall take place at the offices of Sichenzia Ross Friedman Ference LLP, 61 Broadway, 32nd
Floor, New York, NY 10006, at 10:00 a.m. on July 31, 2014. The Closing Date shall be July 31, 2014.

 

3.                 
NTAV Calculation; Adjusted Purchase Price. In accordance with Section 1.01(b) of the Purchase Agreement, the Purchaser
has prepared and hereby delivers to the Seller the following calculation of the Company’s NTAV as of the Closing Date: AUD
$1,029,110, which equals USD $970,010 (using an AUD $0.942573 to USD $1.00 conversion rate) (the “Adjusted Purchase Price”).
The Seller has reviewed and agrees with the NTAV calculation as prepared and delivered by the Purchaser. The Parties agree that
the NTAV calculation is final, binding and conclusive and agree to settle the final Purchase Price, as adjusted by the NTAV, at
the Adjusted Purchase Price as of the Closing Date.

 

4.                 
Severance Agreement. This letter agreement clarifies certain provisions of the Severance Agreement dated as of July
24, 2013 (the “Severance Agreement”) entered into by and between Andrew Hidalgo (“Hidalgo”)
and WPCS International Incorporated, a Delaware corporation and the owner of all of the issued and outstanding capital stock of
the Company (the “Parent”). The Severance Agreement contemplates that Hidalgo would purchase from the Seller
the Shares and a separate New Jersey company wholly owned by the Parent (the “New Jersey Subsidiary”). Since
execution of the Severance Agreement, the Parties have agreed that (1) the New Jersey Subsidiary would no longer be sold to Hidalgo,
and (2) with that the Purchaser (and not Hidalgo), would purchase the Shares of the Australian subsidiary from the Seller. The
Parties agree that upon Closing, Parent and Hidalgo have fulfilled all their obligations under the Severance Agreement.

 

5.                 
Severance Amount. Based on the Closing Date of July 31, 2014, the total severance due to Hidalgo on August 1, 2014,
is equal to USD $1,137,500 (the “Gross Severance”). In consideration of not delaying the Closing past July 31,
2014 and to settle the Adjusted Purchase Price as of the Closing Date, Hidalgo has agreed to provide a concession on his Gross
Severance to Parent in the amount of USD $167,490 (the “Concession”) so that the adjusted gross severance due
to Hidalgo is equal to USD $970,010 (the “Adjusted Gross Severance Amount”), which Adjusted Gross Severance
equals the Adjusted Purchase Price.

 

Turquino Equity LLC 
10 East Kentucky Avenue  Long Beach Township
 New Jersey 
08008

 

    	 

    	 

    

 

6.                 
Settlement at Closing. Since the Adjusted Gross Severance Amount is equal to the Adjusted Purchase Price at the Closing,
the Parties agree that no exchange of funds or delivery of cross receipts will take place at the Closing. Purchaser will deposit
USD $200,000 (“Tax Obligation”) into an escrow account pursuant to an escrow agreement by and among Purchaser,
Seller and Sichenzia Ross Friedman Ference LLP (the “Escrow Agreement”), which amount will be transferred at
Closing to Parent to be paid as a personal tax obligation of Hidalgo owed on his Adjusted Gross Severance Amount. The Parent shall
timely remit the Tax Obligation to the appropriate governmental authority to fulfill Hidalgo’s personal tax obligation on
Hidalgo’s Adjusted Gross Severance Amount. Notwithstanding anything else to the foregoing, neither the Seller, the Parent
nor any of their officers, directors and/or representatives have provided any tax advice to Hidalgo or made any representations
or warranties that the Tax Obligation constitutes the appropriate or complete payment of any tax liability owed by Hidalgo as a
result of the Gross Severance Amount. The Purchaser and Seller have relied upon the advice and counsel of their own advisors.

 

7.                 
Tax Matters. The Parties agree that for purposes of Section 2.12 of the Purchase Agreement, the NTAV as of the Closing
Date includes an adjustment for $25,000 of Taxes estimated to be owed by the Company, which occurred prior to the date of execution
of the Purchase Agreement (the “Tax Adjustment”), and Seller shall not be required to indemnify Purchaser for
any Tax payments in an amount equal to or less than the Tax Adjustment.

 

8.                 
Releases. Seller has obtained the required written consents and or releases of the collateralized Shares from holders
of the Company’s convertible notes, issued December 5, 2012. Seller will deliver evidence of the release of the security
interest at or prior to the Closing.

 

9.                 
Closing Deliveries.

 

9.1             
At the Closing, Purchaser shall deliver to Seller:

 

(a)               
An Assignment and Assumption Agreement for the Leases set forth on Section 1.03(b)(iii) of the Company Disclosure Letter
duly executed by Purchaser;

 

(b)              
Executed copy of this letter agreement;

 

(c)               
A duly executed copy of Purchaser’s Bring-Down Certificate; and

 

(d)              
A duly executed copy of the Escrow Agreement.

 

9.2             
At the Closing, Seller shall deliver to Purchaser:

 

(a)               
Certificates representing the Shares, duly endorsed in blank or accompanied by stock powers duly endorsed in blank in proper
form for transfer;

 

(b)              
Evidence that the security interest equal to a 66% pledge of the capital stock of the Company that had been taken by holders
of the Company’s secured convertible notes, issued December 5, 2012, has been duly terminated and the capital stock that
had been pledged as collateral has been duly released;

 

(c)               
An Assignment and Assumption Agreement for the Leases set forth on Section 1.03(b)(iii) of the Company Disclosure Letter
duly executed by Seller;

 

Turquino Equity LLC 
10 East Kentucky Avenue  Long Beach Township
 New Jersey 
08008

 

    	 

    	 

    

 

(d)              
Counter-signed copy of this letter agreement acknowledging and agreeing to the terms hereto;

 

(e)               
A duly executed copy of Seller’s Bring-Down Certificate;

 

(f)               
A duly executed copy of Seller’s Director’s Certificate;

 

(g)               
A duly executed copy of the Escrow Agreement; and

 

(h)              
A duly executed copy of Joseph Heater’s resignation letter.

 

10.             
Further Assurances. Each Party agrees promptly to execute and deliver, or cause to be executed and delivered, any
instruments, documents or agreements as may be necessary or desirable to consummate the transactions contemplated under this letter
agreement.

 

11.             
Conflicts. Wherever the “Agreement” or “Purchase Agreement” is referred to in the Purchase
Agreement or in any other agreements, documents, instruments or certificates contemplated thereby, such reference shall be to the
Purchase Agreement and this letter agreement. The terms and conditions of the Purchase Agreement shall continue in full force and
effect, except that in the event of a conflict between the terms and conditions of the Purchase Agreement and this letter agreement,
the terms and conditions of this letter agreement shall control.

 

12.             
Governing Law. This letter agreement will be governed by and construed in accordance with the internal laws of the
State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or
any other jurisdiction) that would cause the application of Laws of any jurisdiction other than those of the State of Delaware.

 

13.             
Counterparts. This letter agreement may be executed in one or more counterparts, all of which shall be considered
one and the same agreement. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains
a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page
were an original thereof.

 

TURQUINO EQUITY LLC

 

By: /s/ ANDY HIDALGO

Name:Andy Hidalgo

Title: Managing Member

 

Agreed and Accepted:

 

WPCS AUSTRALIA PTY LTD

 

By: /s/ JOSEPH HEATER

Name: Joseph Heater

Title: Director

 

Turquino Equity LLC 
10 East Kentucky Avenue  Long Beach Township
 New Jersey 
08008EX 10.1 Q3 FY14 10-Q

        
Exhibit 10.1

Global Assignment Letter

Expatriate Name: Susan F. Davis    

Home Country: United States    

Host Location: Shanghai, China

International Assignment Services:  Joyce Sadler

This offer sets forth the specifics of the compensation and allowance package in connection with your assignment establishing additional infrastructure required for the Corporation’s Shanghai headquarters while continuing your role as Executive Vice President and Chief Human Resources Officer of Johnson Controls, Inc. (the “Company”), reporting to the CEO of the Company.

This Global Assignment Letter should be read in conjunction with the Employment Agreement between the employee and Johnson Controls, if applicable.  To the extent there is a conflict between the terms of this letter and the terms of the Employment Agreement, the terms of this Global Assignment Letter will be controlling.

This Assignment Letter is subject to you being able to obtain the necessary work visa/residence permit(s) in China and the necessary vaccinations/immunizations if applicable.

Your foreign assignment is expected to last eleven (11) months, commencing on August 1, 2014, provided that all immigration documents are in order.  

Base Salary:

Your base salary effective with the assignment will be $50,583.33 USD monthly ($607,000 USD annually). Salary administration procedures are in accordance with your home country guidelines.  While on foreign assignment, you will be paid once a month.

Bonus:

Your annual performance bonus will be targeted at 75% of your base salary. 

Goods and Services Allowance:

You will receive a Goods and Services allowance, where applicable, using information that we receive from our cost of living data provider.  If applicable, you will be paid this allowance every month to offset the difference in costs for goods and services between your home country and your Host location.  The current rate as of the date hereof will be $3,166 USD per month and subject to change effective June 1, 2014. This index is based upon the Cost Effective Home Country Index. This will become effective the date you move into long term housing and cease to be reimbursed for temporary living expenses.  This allowance will cease the date you move out of permanent housing in the Host country, or if you have to leave the Host country for an extended period.  It is your responsibility to notify your International Assignment Analyst about the dates you move in and/or out of temporary living.

Assignment Bonus:

You will receive an assignment bonus of $13,355 at the beginning of your assignment.  This bonus is delivered less applicable taxes paid by you, and will be delivered in your first monthly assignment paycheck.  

Upon successful completion of your assignment, and return to your home country, you will receive an assignment bonus of $13,355, less applicable taxes paid by you.

Both bonuses are capped at 5% of the mid-range of grade 182.

Hardship Allowance:

The Company will pay a 10% of your base salary hardship allowance to you.  The hardship allowance begins with the effective date of your assignment.  Please refer to your compensation worksheet for the monthly allowance amount.  It will be paid each monthly pay period and will continue only during the time that the area is classified as an area that warrants a hardship allowance.  The hardship percentage will be reviewed annually and may increase or decrease depending on the change in conditions.  The hardship allowance will discontinue upon the completion of this assignment.

Housing Allowance:

You will receive housing in your Host location that is commensurate with your peers in that location.  If you maintain your home location housing, 100% of the housing costs will be covered at your Host location.  However, if you sell or rent your primary residence in your home location, 15% of your base salary will be deducted on a monthly basis.  If you purchase property in the Host location, the cost becomes 100% your responsibility.

Utilities, including heat, water, electricity, and the installation charges for cable and telephone, are included in the company paid Host country housing payments.  Service utilities, such as phone and cable, are not reimbursed, as they are part of the goods and services allowance.

The housing allowance will commence the day you take residence in your Host country housing.

Home Leave:

For the length of this assignment, a total of eleven personal round trips via Business Class will be provided for use by you, your spouse or a family member or a family member partner.  If assignment is extended beyond 11 months these visits will be extended for every month / one/month.

Host Country Transportation:

The Company will provide a company car or an automobile allowance.   

Vacations and Holidays:

You will continue to be eligible for vacation based upon your home country policy.  You will observe the work hours and holidays of the Host country.

Host Country Club Membership:

You are eligible for reimbursement of club membership and initiation fees up to a maximum of $10,000 annually.
Tax Equalization:

You will receive Tax Equalization assistance to minimize, within practical limits, any tax advantage, or disadvantage of your foreign assignment (in accordance with the Johnson Controls Tax Equalization Policy).  This comes in the form of tax preparation work from our tax provider. It will remain your responsibility to file the necessary income tax returns, including any estimated returns, in your home country and Host location.  You are required to furnish any withholding allowances and exemption certificates that are necessary, so that the company’s withholding tax payments can be minimized within the requirements of the law.  For US Expatriates, Social Security Contributions will continue to be made by you. 

Termination:

You will remain an at-will employee of the Company subject to the terms of your Employment Agreement, which means that you or the Company may terminate your employment at any time.

Benefits:

You will continue to participate in the benefit programs of your home country, unless prohibited by home or Host country laws, regulations, or costs.  In such cases, an applicable coverage in the form of an expatriate benefits package will be provided to cover pension, medical, disability, and death benefits, if necessary.

Relocation:

You are eligible for destination services by the Host Country HR Representative or our Third Party Provider, BROOKFIELD.

You are eligible for settling in services by our Third Party Provider, BROOKFIELD, or the Host Country HR Representative.

You will be reimbursed for a shipment of essential items not available, or included, in the Host country, furnished housing.  

The Company will not pay the costs associated with the relocation of household pets.

 Repatriation:

You will be reimbursed for travel expenses back to your home country. 

You will be allowed a return shipment of goods, which can be 10% greater than the original shipment weight.

Any items in storage will be delivered to your home country residence.

Disputes About This Letter:

The parties agree that all disputes regarding this assignment letter or interpretation of the letter shall be governed by the laws of the State of Wisconsin and the parties further agree that the exclusive judicial forum for resolving all such disputes shall be the courts of the State of Wisconsin.  If any provision of this Assignment Letter is judicially or otherwise declared to be invalid, unenforceable or void, the remaining provisions shall nevertheless be effective to the same extent as if such invalid or unenforceable provision had never been included.

Accepted by:

/s/ Susan F. Davis                                   6/9/14        
Susan F. Davis                               Date 

Approved by:

/s/ Alex A. Molinaroli                    5/31/14    
Alex A Molinaroli                    Date
Chairman and Chief Executive Officer

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