ex102.htm

This Agreement is made as of the 1^st day of November, 2007, by and among Harold L. Gomes, and Judy L. Gomes, each a shareholder (the “Shareholders”) of Gomes and Gomes, Inc. dba Empire Electric a corporation organized and existing under the laws of the State of California, with its principal offices located at 4801 Seaport Blvd., West Sacramento, CA 95691 ("EEI"), 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").

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

WPCS and Shareholders hereby appoint the Escrow Agent to hold $175,000 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.

(b)

In the event the NTAV as of the Closing Date shall be less than $1,100,000, 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 $1,100,000, the Closing Payment shall be increased by the amount of the excess and such amount shall be delivered 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 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 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.

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.

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 as 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.

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 Shareholders, 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 Shareholders, 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 Shareholders 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.

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.

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.

	WPCS INTERNATIONAL INCORPORATED

	By:	/s/ ANDREW HIDALGO
		Andrew Hidalgo
		Chief Executive Officer

	GOMES AND GOMES , INC. dba EMPIRE ELECTRIC

	By:	/s/ HAROLD L. GOMES
		Harold L. Gomes
		President

	SHAREHOLDERS:

	By:	/s/ HAROLD L. GOMES
		Harold L. Gomes


	By:	/s/ JUDY L. GOMES
		Judy L. Gomes