Exhibit 10.2

 

Escrow Agreement
 
The Pride Group (QLD) Pty Ltd ACN 086 453 269 (Company)
 
WPCS Australia Pty Ltd ACN 128 426 602 (Buyer)
 
Robert Edwin William Paynter, Peter Stuart McDonald, Nigel Kernick, Mark Stephen
Eaton, J.C. Paynter Pty Limited as trustee for the Paynter Family Trust, David
Charles Bugler & Katherine Susan Bugler as trustee for the ESF Trust and Stephen
Paul Mullane & Marie Mullane as trustee for the Mullane Family Trust (Sellers)
 
Mullins Lawyers (Escrow Agent)
 
 
1

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TABLE OF CONTENTS
 

 
BACKGROUND
3
 
OPERATIVE PART
3
1
DEFINITIONS & INTERPRETATION
3
1.1
Definitions
3
1.2
Interpretation
3
2
ESCROWED FUNDS
4
2.1
Appointment of Escrow Agent
4
2.2
Payment of Escrowed Funds
4
2.3
Retention of Escrowed Funds
4
2.4
Reduction of Purchase Price
5
2.5
Release of Escrowed Funds
5
2.6
Rights and obligations Escrow Agent
5
3
APPOINTMENT OF COUNSEL
6
3.1
Reimbursement of fees and disbursements
6
3.2
Indemnity
6
4
GENERAL
7
4.1
Action by Escrow Agent
7
4.2
Amendment
7
4.3
No waiver
7
4.4
Entire agreement
7
4.5
Further assurances
7
4.6
Severability
7
4.7
Assignment
7
4.8
Party acting as trustee
7
4.9
Notices
8
4.10
Governing law
8
 
EXECUTION
10

 

2

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ESCROW AGREEMENT
 
THIS AGREEMENT is made
this                                                                      day
of 2009
 
BETWEEN
THE PRIDE GROUP (QLD) PTY LTD of 155 Currie Street, Nambour Qld 4560 (the
“Company”);

 
AND
WPCS AUSTRALIA PTY LTD ACN 128 426 602 care of Mullins Lawyers, Level 21
Riverside Centre, 123 Eagle Street, Brisbane in the State of Queensland, 4000,
Australia (the “WPCS”);

 
AND
THE SHAREHOLDERS DESCRIBED IN ATTACHED SCHEDULE  (the “Shareholders”);

 
AND
MULLINS LAWYERS of Level 21, Riverside Centre, 123 Eagle Street, Brisbane Qld
4000 (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 "Share Purchase Agreement") regarding the respective sale
and purchase of the 97,939 fully paid ordinary A Class shares of the Company.

 
(B)  
As required by Clause 3.4 of the Share Purchase Agreement, WPCS and the
Shareholders wish to provide for the escrow of certain monies pursuant to the
Share 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 The Pride Group (Qld) Pty Ltd ACN 086 453 269;

 
 
1.1.4  
“Escrow Account” means the account maintained by the Escrow Agent in terms of
this Agreement;

 
 
1.1.5  
“Escrow Agent” means Mullins Lawyers;

 
 
1.1.6  
“Escrowed Funds” means the sum of AUD$200,000;

 
 
1.1.7  
“Schedule” means the schedule to this Agreement;

 
 
1.1.8  
“Seller” means the Shareholders described in the attached Schedule;

 
 
1.1.9  
“NTAV” means the net tangible asset value adjustment as determined by Clauses
3.3.7 and 3.3.8 of the Share Purchase Agreement.

 
 
 All capitalized terms contained herein and not otherwise defined shall have the
meaning ascribed to them in the Share 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;

 
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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 Australian (AUSD) currency and Australian
(AUSD) dollars and cents Australian 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

 
 
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 AUSD.

 
 
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.

 
 
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2.4  
Reduction of Purchase Price

 
 
2.4.1  
In the event the NTAV as of the Effective Date shall be less than
AUSD$1,200,000, 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 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 Share Purchase
Agreement; or

 
 
(b)  
the date that the NTAV is determined by an Independent Accounting Firm under
Clause 3.3.3 of the Share 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 Share 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), the Trust Accounts Regulation 1999 (Qld) and Legal
Professional Act 2007 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.

 
 
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 Share 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.

 
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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, jointly and severally.

 
 
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, jointly and severally, unless such loss, liability or expense
is due to the wilful breach by the Escrow Agent of its duties hereunder.

 
 
3.2  
Indemnity

 
 
3.2.1  
WPCS and the Shareholders 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:

 
 
(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 reasonable 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.

 
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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.

 
 
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;

 
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(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.

 
 
(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.

 
 
~~~~~~~~
 
 
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SCHEDULE 1
 
 
(SHAREHOLDERS)
 

   
Robert Edwin William Paynter
of 13 Kimberley Court, Buderim Qld 4556
32,180 A Class Shares
Peter Stuart McDonald
of 78 Carter Road, Nambour Qld 4560
2,000 A Class Shares
Nigel Kernick
of 10-12 Dunbar Road, Burpengary Qld 4505
2,000 A Class Shares
Mark Stephen Eaton
of 18 Stevenson Street, Calamvale Qld 4116
6,500 A Class Shares
J.C. Paynter Pty Limited as trustee for the Paynter Family Trust
of 13 Kimberley Court, Buderim Qld 4556
6,933 A Class Shares
David Charles Bugler & Katherine Susan Bugler as trustee for the ESF Trust
of 43 Marawa Drive, Buddina Qld 4575
32,893 A Class Shares
Stephen Paul Mullane and Marie Mullane as trustee for the Mullane Family Trust
of 15 Kapilano Crescent, Mountain Creek Qld 4557
15,433 A Class Shares
Total
97,939 A Class Shares

 
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EXECUTION
Executed as an Agreement.
 
Executed by WPCS AUSTRALIA PTY LTD
ACN 128 426 602 in accordance with section
127 of the Corporations Act 2001:
 
 
)
)
)
 
 
Director/Company Secretary
 
Director
     
Name of Director/Company Secretary
(BLOCK LETTERS)
 
Name of Director
(BLOCK LETTERS)

 

 
Executed by ROBERT EDWIN WILLIAM PAYNTER
   
at (suburb)
     
on (date)
     
Signature
in the presence of:
           
Witness
         
Name
   

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Executed by PETER STUART MCDONALD
   
at (suburb)
     
on (date)
     
Signature
in the presence of:
           
Witness
         
Name
   

Executed by NIGEL KERNICK
   
at (suburb)
     
on (date)
     
Signature
in the presence of:
           
Witness
         
Name
   

Executed by MARK STEPHEN EATON
   
at (suburb)
     
on (date)
     
Signature
in the presence of:
           
Witness
         
Name
   

11

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Executed by J.C. PAYNTER PTY LIMITED
ACN 002 365 844 as trustee for the Paynter Family Trust in accordance with
section
127 of the Corporations Act 2001:
 
 
)
)
)
 
 
Director/Company Secretary
 
Director
     
Name of Director/Company Secretary
(BLOCK LETTERS)
 
Name of Director
(BLOCK LETTERS)

Executed by DAVID CHARLES BUGLER as trustee for the ESF Trust
   
at (suburb)
     
on (date)
     
Signature
in the presence of:
           
Witness
         
Name
   

Executed by KATHERINE SUSAN BUGLER as trustee for the ESF Trust by her duly
appointed Attorney, DAVID CHARLES BUGLER
   
at (suburb)
     
on (date)
     
Signature
in the presence of:
           
Witness
         
Name
   

12

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Executed by STEPHEN PAUL MULLANE as trustee for the Mullane Family Trust
   
at (suburb)
     
on (date)
     
Signature
in the presence of:
           
Witness
         
Name
   

Executed by MARIE MULLANE as trustee for the Mullane Family Trust by her duly
appointed Attorney STEPHEN PAUL MULLANE
   
at (suburb)
     
on (date)
     
Signature
in the presence of:
           
Witness
         
Name
   

Executed by THE PRIDE GROUP (QLD) PTY LTD ACN 086 453 269 in accordance with
section 127 of the Corporations Act 2001:
 
 
)
)
)
 
 
Director/Company Secretary
 
Director
     
Name of Director/Company Secretary
(BLOCK LETTERS)
 
Name of Director
(BLOCK LETTERS)

13

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Executed by MULLINS LAWYERS for and on behalf of the Firm by an authorised
officer
   
at (suburb)
     
on (date)
     
Signature
in the presence of:
           
Witness
         
Name