Contract
BETWEEN
(“Company”)
AND
WPCS
AUSTRALIA PTY LTD ACN 128 426 602
(“WPCS”)
THE
SHAREHOLDERS DESCRIBED IN SCHEDULE 1
(“Shareholders”)
AND
GILSHENAN
& LUTON LEGAL GROUP
(“Escrow
Agent”)
|
1
TABLE
OF CONTENTS
PAGE | |||
BACKGROUND |
3
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|
|||
OPERATIVE
PART
|
3
|
||
|
|||
1 |
DEFINITIONS
&
INTERPRETATION
|
3
|
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|
|||
1.1
|
Definitions
|
3
|
|
|
|||
1.2 |
Interpretation
|
4
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|
|
|||
2 |
ESCROWED
FUNDS
|
5
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|
|
|||
2.1
|
Appointment
of Escrow
Agent
|
5
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|
|
|||
2.2
|
Payment
of Escrowed
Funds
|
5
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|
|||
2.3
|
Retention
of Escrowed
Funds
|
5
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|
|
|||
2.4
|
Reduction
of Purchase
Price
|
5
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|
|
|||
2.5
|
Release
of Escrowed
Funds
|
5
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|
|
|||
2.6
|
Rights
and obligations Escrow
Agent
|
5
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|
|
|||
3 |
APPOINTMENT
OF
COUNSEL
|
6
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|
|
|||
3.1
|
Reimbursement
of fees and
disbursements
|
6
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|
|
|||
3.2
|
Indemnity
|
7
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|
|
|||
4
|
GENERAL |
7
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|
|
|||
4.1
|
Action
by Escrow
Agent
|
7
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|
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|||
4.2
|
Amendment
|
7
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|
|
|||
4.3
|
No
waiver
|
7
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|
|
|||
4.4
|
Entire
agreement
|
7
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|
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|||
4.5
|
Further
assurances
|
8
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|
|
|||
4.6
|
Severability
|
8
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|
|
|||
4.7
|
Assignment
|
8
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|
|
|||
4.8
|
Party
acting as
trustee
|
8
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4.9
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Notices
|
8
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|
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4.10
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Governing
law
|
9
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EXECUTION |
11
|
2
THIS AGREEMENT is made this | day of |
2007
|
BETWEEN
|
XXXXX
DESIGN PTY LTD ACN 010 768 359 of 000 Xxxxx Xxxx, Xxxxxxxxxxxxx
in the State of Xxxxxxxxxx, 0000; Australia (the
“Company”);
|
AND
|
WPCS
AUSTRALIA PTY LTD ACN 128 426 602 care of Gilshenan & Luton
Legal Group, Xxxxx 00, 000 Xxxxx Xxxxxx, Xxxxxxxx in the State of
Xxxxxxxxxx, 0000, Xxxxxxxxx (the
“WPCS”);
|
AND
|
THE
SHAREHOLDERS DESCRIBED IN ATTACHED SCHEDULE (the
“Shareholders”);
|
AND
|
GILSHENAN
& LUTON PTY LTD ACN 125 138 589 AS TRUSTEE OF THE GILSHENAN &
LUTON UNIT TRUST TRADING AS GILSHENAN & LUTON LEGAL GROUP
of Xxxxx 00, 000 Xxxxx Xxxxxx, Xxxxxxxx XXX 0000,
Xxxxxxxxx (the ‘Escrow Agent’).
|
BACKGROUND
(A)
|
The
Company, the Buyer and the Shareholders together with the directors
of the
Company have entered into a Share Purchase Agreement on or about
the date
of this Agreement (the "Purchase Agreement") regarding the respective
sale
and purchase of the 190 fully paid ordinary shares of the
Company.
|
(B)
|
As
required by Clause 4.4 of 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
pursuant to the provisions of this Agreement. The Escrow Agent
is willing to hold such cash pursuant to the provisions of this
Agreement.
|
OPERATIVE
PART
1
|
DEFINITIONS
& INTERPRETATION
|
1.1
|
Definitions
|
1.1.1
|
“Buyer”
means the WPCS Australia Pty Ltd ACN 128 426
602;
|
1.1.2
|
“Commencement
date” means the date of this
Agreement;
|
1.1.3
|
“Company”
means Xxxxx Design Pty Ltd ACN 010 768
359;
|
1.1.4
|
“Escrow
Account” means the account maintained by the Escrow Agent in
terms of this Agreement;
|
1.1.5
|
“Escrow
Agent” means Gilshenan & Luton Pty Ltd ACN 125 138 589 as
trustee of the Gilshenan & Luton Unit Trust trading as Gilshenan &
Luton Legal Group of Xxxxx 00, 000 Xxxxx Xxxxxx, Xxxxxxxx XXX
0000, Xxxxxxxxx;
|
1.1.6
|
“Escrowed
Funds” means the sum of USD
$120,000.00;
|
1.1.7
|
“Respective
Proportions” means :
|
(a)
|
in
respect of WPCS – 50%;
|
(b)
|
in
respect of each of the Shareholders the number (expressed as a percentage)
determined in accordance with the following formula
:
|
A = (
C / 190 ) x 100
2
where
C
equals the number of Shares held by the Shareholders as set out in Schedule
1 of
this Agreement;
1.1.8
|
“Schedule”
means the schedule to this
Agreement;
|
3
1.1.9
|
“Seller”
means the Shareholders described in the attached
Schedule;
|
1.1.10
|
“NTAV”
means the net tangible asset value
adjustment as determined by Clauses 3.3.7 and 3.3.8 of the Purchase
Agreement.
|
All
capitalized terms contained herein and not otherwise defined shall have the
meaning ascribed to them in the Purchase Agreement.
1.2
|
Interpretation
|
In
the
interpretation of this Agreement, unless the context otherwise
requires:
1.2.1
|
singular
includes plural and vice versa;
|
1.2.2
|
any
gender includes each other gender;
|
1.2.3
|
a
reference to a person includes a reference to an individual, corporation,
incorporated or unincorporated association, trust, partnership and
governmental or quasi-governmental department, council, agency, authority
or other body;
|
1.2.4
|
a
reference to writing includes any means of representing or reproducing
words, figures, drawings or symbols in a visible, tangible form,
in
English;
|
1.2.5
|
a
reference to any legislation or to any provision of any legislation
includes any modification or re-enactment of it, any legislative
provision
substituted for it and all regulations and statutory instruments
issued
under it;
|
1.2.6
|
a
reference to any party includes a reference to each of its staff
and
successors and permitted assigns, as well as any liquidator, provisional
liquidator, receiver, manager or administrator duly appointed under
the
Corporations Act, any person authorised to act on its behalf under
power
of attorney, and any other person duly authorised in writing to act
on its
behalf in respect of any of the purposes of provisions of this
Agreement;
|
1.2.7
|
a
reference to any agreement or document is that agreement or document
as
amended, novated, supplemented, varied or replaced from time to time,
except to the extent prohibited by this Agreement or that other agreement
or document;
|
1.2.8
|
a
reference to "dollars" or "$" is to American (USD) currency and American
(USD) dollars and cents United States
currency;
|
1.2.9
|
a
reference to "conduct" includes any omission and any representation,
statement or undertaking, whether or not in
writing;
|
1.2.10
|
a
reference to the "knowledge", "belief" or "awareness" of any person
in
relation to a matter means the knowledge, belief or awareness that
the
person would have if it had made all reasonable enquiries in the
circumstances;
|
1.2.11
|
mentioning
anything after "include", "includes" or "including" does not limit
what
else might be included;
|
1.2.12
|
headings
are used for ease of reference and convenience only and are not to
be
construed as forming any part of this Agreement;
and
|
4
1.2.13
|
where
any word or phrase is given a defined meaning, other than grammatical
form
of that word or phrase has a corresponding
meaning.
|
2
|
ESCROWED
FUNDS
|
2.1
|
Appointment
of Escrow Agent
|
2.1.1
|
WPCS
and the Shareholders hereby appoint the Escrow Agent to hold the
Escrowed
Funds, in a trust account, and the Escrow Agent accepts such appointment,
subject to the terms and conditions
hereof.
|
2.1.2
|
The
Escrowed Account shall be denominated in USD
currency.
|
2.2
|
Payment
of Escrowed Funds
|
2.2.1
|
The
parties acknowledge that WPCS has, prior to the execution of this
Escrow
Agreement, delivered by way of electronic 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.
|
2.3
|
Retention
of Escrowed Funds
|
2.3.1
|
The
Escrow Agent shall retain the Escrowed Funds until the NTAV of the
Company
as of the Completion Date shall be
determined.
|
2.4
|
Reduction
of Purchase Price
|
2.4.1
|
In
the event the NTAV as of the Completion Date shall be less than
USD$55,000, the Purchase Price shall be reduced by the amount of
the
shortfall and such amount shall be released to
WPCS.
|
2.4.2
|
The
balance of any amount remaining after the delivery of payments required
pursuant to Clause 2.4.1 above (the “Escrow Payment”) shall be delivered
to the Shareholders, pro rata, based upon their ownership of Shares,
within three (3) business days of
either:
|
(a)
|
the
date that the Seller gives notice of its agreement with the Buyer’s
calculation of the NTAV under Clause 3.3.2 of the of the Purchase
Agreement; or
|
(b)
|
the
date that the NTAV is determined by an Independent Accounting Firm
under
Clause 3.3.3 of the Purchase
Agreement.
|
2.5
|
Release
of Escrowed Funds
|
2.5.1
|
The
Escrow Agent shall only deliver the Escrowed Funds
upon:
|
(a)
|
written
notification signed by each of the Shareholders and WPCS of final
determination of the NTAV, or
|
(b)
|
delivery
to the Escrow Agent of a written determination of the NTAV by an
Independent Accounting Firm under Clause 3.3.3 of the Purchase
Agreement.
|
2.5.2
|
Notwithstanding
Clause 2.5.1, 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.
|
2.6
|
Rights
and obligations Escrow
Agent
|
2.6.1
|
The
Escrow Agent shall at all times comply with the requirements of the
Trust
Accounts Act 1973 (Qld) and the Trust Accounts Regulations 1999 (Qld)
with
respect to the receipt, management and disbursement of the Escrowed
Funds
under this Agreement, and the parties to this Agreement acknowledge
and
agree that those requirements prevail over the provisions of this
Agreement to the extent of any inconsistency between
them.
|
5
2.6.2
|
Subject
to Clause 2.6.1, 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
wilful
breach of its duties hereunder.
|
2.6.3
|
Subject
to Clause 2.6.1, 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.
|
2.6.4
|
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.
|
2.6.5
|
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.
|
2.6.6
|
The
Escrow Agent will receive no compensation for its services
hereunder.
|
2.6.7
|
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:
|
(a)
|
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
|
(b)
|
it
may commence an action in any court of competent jurisdiction to
seek an
adjudication of the rights of WPCS and the
shareholders.
|
2.6.8
|
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.
|
3
|
APPOINTMENT
OF COUNSEL
|
3.1
|
Reimbursement
of fees and disbursements
|
3.1.1
|
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 severally in their
Respective Proportions.
|
3.1.2
|
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 severally
in their
Respective Proportions unless such loss, liability or expense is
due to
the wilful breach by the Escrow Agent of its duties
hereunder.
|
6
3.2
|
Indemnity
|
3.2.1
|
WPCS
and the Shareholders severally in their Respective Proportions 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 :
|
(a)
|
anything
done or omitted by it in the performance of its duties hereunder,
or
|
(b)
|
on
account of acting in its capacity as an Escrow Agent or stakeholder
hereunder, except as a result of its wilful breach of its duties
under
this Escrow Agreement.
|
3.2.2
|
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
and
the Shareholders severally in their Respective
Proportions.
|
3.2.3
|
The
agreements contained in this 3.2 shall survive any termination of
the
duties of the Escrow Agent
hereunder.
|
4
|
GENERAL
|
4.1
|
Action
by Escrow Agent
|
4.1.1
|
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.
|
4.2
|
Amendment
|
4.2.1
|
This
Agreement may be amended only by another agreement executed by all
parties
who may be affected by the
amendment.
|
4.3
|
No
waiver
|
4.3.1
|
No
failure to exercise and no delay in exercising any right, power or
remedy
under this Agreement will operate as a waiver. Nor will any
single or partial exercise of any right, power or remedy preclude
any
other or further exercise of that or any other right, power or
remedy.
|
4.4
|
Entire
agreement
|
4.4.1
|
Subject
to Clause 4.2, this Agreement constitutes the sole and entire agreement
between the parties. No warranties, representations, guarantees
or other terms or conditions of any kind not contained and recorded
in
this Agreement are of any force or
effect.
|
7
4.5
|
Further
assurances
|
4.5.1
|
Each
party must take all steps, execute all documents and do everything
reasonably required by the other party to give effect to any of the
transactions contemplated by this
Agreement.
|
4.6
|
Severability
|
4.6.1
|
If
any provision of this Agreement is invalid and not enforceable in
accordance with its terms, all other provisions which are self-sustaining
and capable of separate enforcement without regard to the invalid
provisions are and continue to be valid and enforceable in accordance
with
their terms.
|
4.7
|
Assignment
|
4.7.1
|
The
rights and obligations of each party under this Agreement are
personal. They cannot be assigned, charged or otherwise dealt
with, and no party shall attempt or purport to do so without the
prior
written consent of all the parties.
|
4.8
|
Party
acting as trustee
|
4.8.1
|
If
a party enters into this Agreement as trustee of a trust, the party
and
its successors as trustee of the trust are liable under this Agreement
in
their own right and as trustee of the trust. Nothing releases
the party from any liability in its personal capacity. The
party warrants that:
|
(a)
|
all
the powers and discretions conferred by the deed establishing the
trust
are capable of being validly exercised by the party as trustee and
have
not been varied or revoked;
|
(b)
|
the
trust is a valid and subsisting
trust;
|
(c)
|
the
party is the sole trustee of the trust and has full and unfettered
power
under the terms of the deed establishing the trust to enter into
and be
bound by this Agreement on behalf of the
trust;
|
(d)
|
this
Agreement is executed and entered into as part of the due and proper
administration of the trust and for the benefit of the beneficiaries
of
the trust; and
|
(e)
|
no
restriction on the party's right of indemnity out of, or lien over,
the
trust's assets exists, or will be created or permitted to exist,
and that
right has priority over the right of the beneficiaries to the trust's
assets.
|
4.9
|
Notices
|
4.9.1
|
Each
notice given under this Agreement:
|
(a)
|
must
be typed or in legible writing;
|
(b)
|
must
be in the English language;
|
(c)
|
must
be signed by the party giving the notice;
and
|
(d)
|
be
addressed to the party at that party's address given at the beginning
of
this Agreement, or to a facsimile machine located at that address
(as
applicable);
|
4.9.2
|
Each
notice given under this Agreement may only be served personally,
by
prepaid post or by facsimile transmission. In that
regard:
|
(a)
|
Subject
to Clause 4.9.3, if a notice given under this Agreement is served
personally, it is deemed to be served the day it is
served.
|
8
(b)
|
Subject
to Clause 4.9.3, if a notice given under this Agreement is served
by
prepaid post, it is deemed to be served two business days after
posting.
|
(c)
|
If
a notice given under this Agreement is served by facsimile transmission
within Business Hours, it is deemed to be served when the facsimile
machine through which it was sent produces a report indicating a
successful transmission of the
notice.
|
(d)
|
If
a notice given under this Agreement is served by facsimile transmission
outside Business Hours, it is deemed to be served at the commencement
of
the next Business Hour after the time when the facsimile machine
through
which it was sent produces a report indicating a successful transmission
of the notice.
|
4.9.3
|
If
delivery or receipt is outside Business Hours, the notice is taken
to have
been given during Business Hours on the next Business
Day.
|
4.10
|
Governing
law
|
4.10.1
|
This
Agreement is governed by and construed in accordance with laws applicable
in the State of Queensland,
Australia.
|
4.10.2
|
Each
party submits to the respective jurisdictions (including, where
applicable, the non-exclusive jurisdictions) of the courts of Queensland,
Australia, as well as all other Australian courts or tribunals having
jurisdiction over laws applicable in the State of Queensland,
Australia.
|
4.10.3
|
Any
proceedings in respect of any cause of action arising under this
Agreement
must be instituted, heard and determined in a court of competent
jurisdiction in Queensland,
Australia.
|
9
SCHEDULE
1
(SHAREHOLDERS)
Xxxxxx
Xxxxx Xxxxx
of
000 Xxxxxx Xxxx, Xxxxxxxxx Xxx 0000
|
1
Ordinary Share
|
Xxxxxxx
Xxxxx Xxxxx
of
000 Xxxxxx Xxxx, Xxxxxxxxx Xxx 0000
|
1
Ordinary Share
|
Xxxxxx
Xxxx Xxxxxx & Xxxxxx Xxxx Xxxxxx jointly as trustees
of
00 Xxxxxx Xxxxxx, Xxxxxx Xxxx Xxx 0000
|
20
Ordinary Shares
|
Xxxxx
Xxxxxxxx
of
00 Xxxxxxxx Xxxxxxxx, Xxxxx Xxxxx Xxx 0000
|
00
Xxxxxxxx Xxxxxx
|
Xxxxxxx
Xxxxx Xxxxx & Xxxxxx Xxxxx Xxxxx jointly as trustees
of
000 Xxxxxx Xxxx, Xxxxxxxxx Xxx 0000
|
143
Ordinary Shares
|
Xxxxx
Xxxxxx Xxxxxx & Xxxxxx Xxxxxxx Xxxxxxx jointly as
trustees
of
00 Xxxxxxx Xxxxx, Xxxxxxxxxx Xxxxx Xxx 0000
|
15
Ordinary Shares
|
TOTAL
|
190
Ordinary Shares
|
10
EXECUTION
Executed
as an Agreement.
Executed
by WPCS AUSTRALIA PTY LTD ACN 128 426 602 in
accordance with section 127 of the Corporations Xxx
0000:
|
)
)
)
|
|
______________________________
Director/Company
Secretary
|
______________________________
Director
|
|
______________________________
Name
of Director/Company Secretary
(BLOCK
LETTERS)
|
______________________________
Name
of Director
(BLOCK
LETTERS)
|
Executed
by XXXXXX XXXXX XXXXX
|
||
at (suburb)
|
||
on (date)
|
||
Signature
|
||
in
the presence of:
|
||
Witness
|
||
Name
|
Executed
by XXXXXXX XXXXX XXXXX
|
||
at (suburb)
|
||
on (date)
|
||
Signature
|
||
in
the presence of:
|
||
Witness
|
||
Name
|
11
Executed
by XXXXXX XXXX XXXXXX
|
||
at (suburb)
|
||
on (date)
|
||
Signature
|
||
in
the presence of:
|
||
Witness
|
||
Name
|
Executed
by LIONEL XXXX XXXXXX
|
||
At (suburb)
|
||
on (date)
|
||
Signature
|
||
in
the presence of:
|
||
Witness
|
||
Name
|
Executed
by XXXXX XXXXXXXX
|
||
At (suburb)
|
||
on (date)
|
||
Signature
|
||
in
the presence of:
|
||
Witness
|
||
Name
|
12
Executed
by XXXXX XXXXXX XXXXXX
|
||
At (suburb)
|
||
on (date)
|
||
Signature
|
||
in
the presence of:
|
||
Witness
|
||
Name
|
Executed
by XXXXXX ROSSLYN WHIBLEY
|
||
at (suburb)
|
||
on (date)
|
||
Signature
|
||
in
the presence of:
|
||
Witness
|
||
Name
|
Executed
on behalf of GILSHENAN & LUTON PTY LTD ACN 125 138 589 AS
TRUSTEE OF THE GILSHENAN & LUTON UNIT TRUST TRADING AS GILSHENAN &
LUTON LEGAL GROUP by two Legal Practitioner
Directors
|
||
at (suburb)
|
Legal
Practitioner Director
|
|
on (date)
|
||
Name
(BLOCK LETTERS)
|
||
Legal
Practitioner Director
|
||
Name
(BLOCK LETTERS)
|
13