Exhibit 10.1
 

STOCK PURCHASE AGREEMENT

 AMONG

WPCS INTERNATIONAL INCORPORATED

MAJOR ELECTRIC, INC.

AND

FRANK MAUGER
JAMES JORDAN

AND

TODD KAHL

Dated August 1, 2007

--------------------------------------------------------------------------------

TABLE OF CONTENTS
 
 

Section Page          ARTICLE I SALE AND PURCHASE OF SHARES      
1.1
Sale and Purchase of Shares
1
             ARTICLE II PURCHASE PRICE AND PAYMENT       
2.1
Amount of Purchase Price
1    
2.2
Payment of Purchase Price
1
   
2.3
 Net Tangible Asset Value Adjustment
2
             ARTICLE III CLOSING AND TERMINATION       
3.1
Closing Date
3
   
3.2
Termination of Agreement
3
   
3.3
Procedure Upon Termination
3
   
3.4
Effect of Termination
3
             ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS       
4.1
Organization and Good Standing
4
   
4.2
Authority
4
   
4.3
Shares
5
   
4.4
Basic Corporate Records
5
   
4.5
Minute Books
5
   
4.6
Subsidiaries and Affiliates
5
   
4.7
Consents
6
   
4.8
Financial Statements
6
   
4.9
Records and Books Account
6
   
4.10
Absence of Undisclosed Liabilities
6
   
4.11
Taxes
7
   
4.12
Account Receivable
9
   
4.13
Inventory
9
   
4.14
Machinery and Equipment
9
   
4.15
Real Property Matters
10
   
4.16
Leases
10
   
4.17
Patents, Software, Trademarks, Etc
10
   
4.18
Insurance Policies
11
   
4.19
Banking and Personnel Lists
11
   
4.20
Lists of Contracts, Etc
12
   
4.21
Compliance With the Law
13
   
4.22
Litigation, Pending Labor Disputes
13
   
4.23
Absence of Certain Changes or Events
14
   
4.24
Employee Benefit Plans
15
   
4.25
Product Warranties and Product Liabilities
16
 

 
 
 
i

--------------------------------------------------------------------------------

 

 
4.26
Assets
17
   
4.27   
Absence of Certain Commercial Practices
17    
4.28   
Licenses, Permits, Consents and Approvals
17    
4.29   
Environmental Matters
17    
4.30   
Broker
18    
4.31
Related Party Transactions
18
   
4.32  
 Patriot Act
18    
4.33
Investment Intent
19
   
4.34   
Investment Experience; Suitability
19    
4.35
Accreditation
19
   
4.36   
Disclosure
20              ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER       
5.1
Organization and Good Standing
20
   
5.2
Authority
20
   
5.3
Conflicts; Consents of Third Parties
20
   
5.4
Litigation
21
   
5.5
Investment Intention
21
   
5.6
Broker
21
   
5.7
Patriot Act
21
   
5.8
Due Authorization of Purchaser Common Stock
21
             ARTICLE VI COVENANTS       
6.1
Access to Information
22
 
 
6.2
Conduct of the Business Pending the Closing
22
   
6.3
Consents
24
   
6.4
Other Actions
24
   
6.5
No Solicitation
25
   
6.6
Preservation of Records
25
   
6.7
Publicity
25
   
6.8
Use of Name
25
   
6.9
Employment Agreements
26
   
6.10   
Board of Directors
26    
6.11   
Financial Statements
26    
6.12   
Tax Election
26    
6.13   
Tax Matters
27    
6.14
Non-Competition
28
   
6.15
Registration of Shares of Purchaser Common Stock
29
   
6.16
Employee Matters.
29
 

 
 
 
ii

--------------------------------------------------------------------------------

 

           ARTICLE VII CONDITIONS TO CLOSING       
7.1
Conditions Precedent to Obligations of Purchaser
29
   
7.2
Conditions Precedent to Obligations of the Seller
30
             ARTICLE VIII DOCUMENTS TO BE DELIVERED       
8.1
Documents to be Delivered by the Sellers
31
   
8.2
Documents to be Delivered by the Purchaser
32
 
           ARTICLE IX INDEMNIFICATION       
9.1
Indemnification
32
   
9.2
Limitations on Indemnification for Breaches of Representations and Warranties
33
   
9.3
Indemnification Procedures
34
   
9.4
Tax Treatment of Indemnity Payments
36
             ARTICLE X MISCELLANEOUS       
10.1
Payment of Sales, Use or Similar Taxes
34
   
10.2
Survival of Representations and Warranties
35
   
10.3
Expenses
35
   
10.4
Specific Performance
35
   
10.5
Further Assurances
35
   
10.6
Submission to Jurisdiction; Consent to Service of Process
35
   
10.7
Entire Agreement; Amendments and Waivers
36
   
10.8
Governing Law
36
   
10.9
Table of Contents and Headings
36
   
10.10
Notices
36
   
10.11
Severability 37    
10.12
Binding Effect; Assignment
37  

 
iii

--------------------------------------------------------------------------------

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT is made as of August 1, 2007 (the “Agreement”),
among WPCS International Incorporated, a corporation existing under the laws of
Delaware (the “Purchaser”), Major Electric, Inc., a Washington corporation (the
“Company”), and the shareholders of the Company listed on the signature pages
hereof (collectively the “Sellers”).
 
W I T N E S S E T H:
 
WHEREAS, the Sellers own an aggregate of 15,600 shares of common stock, no par
value per share (the “Shares”), of the Company, which Shares constitute all of
the issued and outstanding shares of capital stock of the Company; and
 
WHEREAS, the Sellers desire to sell to Purchaser, and the Purchaser desires to
purchase from the Sellers, the Shares for the purchase price and upon the terms
and conditions hereinafter set forth;
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, the parties hereby agree as follows:
 
ARTICLE I
 
SALE AND PURCHASE OF SHARES
 
1.1           Sale and Purchase of Shares.
 
Upon the terms and subject to the conditions contained herein, on the Closing
Date each Seller shall sell, assign, transfer, convey and deliver to the
Purchaser, and the Purchaser shall purchase from each Seller, all Shares of the
Company owned by such Seller set forth opposite such Seller's name on Schedule
1.1 attached hereto.  
 

ARTICLE II
 
PURCHASE PRICE AND PAYMENT
 
2.1           Amount of Purchase Price.
 
The purchase price for the Shares shall be an amount equal to Six Million Seven
Hundred Fifty Thousand dollars ($6,750,000) (the “Purchase Price”), subject to
adjustment as set forth herein.
 
2.2           Payment of Purchase Price.
 
On the Closing Date, the Purchaser shall pay Four Million dollars ($4,000,000)
of the Purchase Price to the Sellers (the “Closing Payment”), which shall be
paid as follows:
 
(i)                 $3,000,000 (the “Cash Purchase Price”) which shall be paid
by wire transfer of immediately available funds into an account designated by
the Sellers, provided that $300,000 of the Cash Purchase Price shall be
deposited into escrow pursuant to Section 2.3(b);
 

--------------------------------------------------------------------------------

(ii)           issuance of such number of shares of Purchaser common stock (the
“Common Stock”) as equals $1,000,000, divided by the closing price of the Common
Stock on the date which is one day prior to the Closing Date (the “Closing
Shares”).  The Closing Shares shall be delivered within three (3) business days
of the Closing Date; and
 
(iii)           an additional $2,750,000 (the “Second  Payment”) will be payable
to the Sellers in the event the Company’s earnings before interest and taxes
(“EBIT”) for the year ending December 31, 2007, shall equal or exceed $1,500,000
(the “Target EBIT”).  Determination of the Company’s EBIT for the Target EBIT
shall be made by the independent accounting firm regularly engaged by the
Purchaser (the “Auditor”), and shall be completed within 90 days after the year
ended December 31, 2007.  For the purposes of the calculation of the Target
EBIT, non-recurring income and expenses shall be excluded, including expenses
incurred or resulting from the sale and transfer of the Shares to Purchaser
(including, without limitation, the Second Payment, any excess Purchase Price to
be paid under Section 2.3 after the Closing, and any payments under Section
7.1(k)) and the preparation of financial statements required under this
Agreement. The Sellers shall have a period of thirty (30) days to review the
Company’s EBIT.  In the event the Sellers and the Purchaser are unable to agree
upon the EBIT after good faith negotiations for a period of 30 days, the Sellers
and the Purchaser shall submit such dispute for resolution to an independent
accounting firm mutually appointed by the Sellers and the Purchaser (the
“Independent Accounting Firm”), which shall determine and report to the parties
and such report shall be final, binding and conclusive on the parties
hereto.  If the Independent Accounting Firm determines that the EBIT is more
than five percent (5%) above the EBIT determined by the Purchaser, then the
party whose EBIT calculation is furthest from that of the Independent Accounting
Firm shall pay the legal fees and expenses (including the fees of the
Independent Accounting Firm) of the other party.  If the Independent Accounting
Firm determines that the EBIT is equal to or less than five percent (5%) above
the EBIT determined by the Purchaser, then the Sellers shall pay the legal fees
and expenses (including the fees of the Independent Accounting Firm) of the
Purchaser.  The parties shall cooperate with one another and provide reasonable
access of all pertinent books and records to the other party.  To the extent the
actual EBIT for the year ended December 31, 2007 shall be less than the Target
EBIT, the Second Payment shall be reduced by the amount of the shortfall, on a
dollar for dollar basis, from the Target EBIT.  At the option of the Purchaser,
any amounts due to be paid for the Second Payment may be paid in cash or shares
of Common Stock valued at the closing price of the Common Stock on the date
prior to the date on which the amount of the payment is determined (“Payment
Shares” and together with the Closing Shares, the “Purchaser Shares”).  The
Second Payment shall be paid within ten (10) days after receipt, review and
acceptance of the financial statements of the Company for such period.
 

2.3           Net Tangible Asset Value Adjustment.
 
(a) Within ninety (90) days after the Closing Date, the Sellers shall cause to
be prepared and delivered to Purchaser a calculation of the Company’s net
tangible asset value as of the Closing Date.  Net tangible asset value is
defined as total assets minus total liabilities minus intangible assets
(“NTAV”). The Purchaser shall have a period of twenty (20) days to review the
NTAV calculation.  In the event the Sellers and the Purchaser are unable to
agree upon the NTAV after good faith negotiations for a period of 20 days, the
Sellers and the Purchaser shall submit such dispute for resolution to an
Independent Accounting Firm, which shall determine and report to the parties and
such report shall be final, binding and conclusive on the parties hereto.  If
the Independent Accounting Firm determines that the NTAV is equal to or more
than five percent (5%) below the NTAV determined by the Sellers, then the party
whose NTAV calculation is furthest from that of the Independent Accounting Firm
shall pay the legal fees and expenses (including the fees of the Independent
Accounting Firm) of the other party.  If the Independent Accounting Firm
determines that the NTAV is equal to or less than five percent (5%) above the
NTAV determined by the Sellers, then the Sellers shall pay the legal fees and
expenses (including the fees of the Independent Accounting Firm) of the
Purchaser.  The parties shall cooperate with one another and provide reasonable
access of all pertinent books and records to the other party.  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.  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 excess amount shall be paid to
the Sellers within ten (10) days after determination of the NTAV.  At the option
of the Purchaser, any amounts due to be paid in excess of $1,900,000 may be paid
in cash or shares of Common Stock valued at the closing price of the Common
Stock on the date prior to the date on which the amount of the payment is
determined.
 
2

--------------------------------------------------------------------------------

 (b) In order to satisfy any amounts which the Sellers may be required to
deliver to the Purchaser as a result of a deficiency in the NTAV, $300,000 shall
be deposited into an escrow account until the NTAV as of the Closing Date shall
be determined and any deficiency in the NTAV shall have been paid from the
escrow account to the Purchaser (the “Escrowed Funds”).  The Escrowed Funds
shall be held for the benefit of the Sellers in accordance with their pro rata
ownership of the Shares as set forth on Schedule 1.1.  The Escrowed Funds shall
be held in accordance with the terms and conditions set forth in the escrow
agreement attached hereto as Exhibit 2.3 (the “Escrow Agreement”).
 

ARTICLE III
 
CLOSING AND TERMINATION
 
3.1           Closing Date.
 
Subject to the satisfaction of the conditions set forth in Sections 7.1 and 7.2
hereof (or the waiver thereof by the party entitled to waive that condition),
the closing of the sale and purchase of the Shares provided for in Section 1.1
hereof (the "Closing") shall take place at the offices of Sichenzia Ross
Friedman Ference LLP, 61 Broadway, New York, NY 10006 (or at such other place as
the parties may designate in writing) on such date as the Sellers and the
Purchaser may designate.  The Closing may also take place through the delivery
of documents in electronic or telefaxed format or through courier delivery of
actual signatures to counsel for the parties.
 
3.2           Termination of Agreement.
 
This Agreement may be terminated prior to the Closing as follows:
 
(a)           At the election of the Sellers or the Purchaser on or after August
31, 2007, if the Closing shall not have occurred by the close of business on
such date, provided that the terminating party is not in default of any of its
obligations hereunder;
 
(b)           by mutual written consent of the Sellers and the Purchaser; or
 
(c)           by the Sellers or the Purchaser if there shall be in effect a
final nonappealable order of a governmental body of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby; it being agreed that the parties hereto shall
promptly appeal any adverse determination which is not nonappealable (and pursue
such appeal with reasonable diligence).
 
3.3           Procedure Upon Termination.
 
In the event of termination and abandonment by the Purchaser or the Sellers, or
both, pursuant to Section 3.2 hereof, written notice thereof shall forthwith be
given to the other party or parties, and this Agreement shall terminate, and the
purchase of the Shares hereunder shall be abandoned, without further action by
the Purchaser or the Sellers.  If this Agreement is terminated as provided
herein, each party shall redeliver all documents, work papers and other material
of any other party relating to the transactions contemplated hereby, whether so
obtained before or after the execution hereof, to the party furnishing the same.
 
3

--------------------------------------------------------------------------------

3.4           Effect of Termination.
 
In the event that this Agreement is validly terminated as provided herein, then
each of the parties shall be relieved of their duties and obligations arising
under this Agreement after the date of such termination and such termination
shall be without liability to the Purchaser, the Company or any Seller;
provided, further, however, that nothing in this Section 3.4 shall relieve the
Purchaser or any Seller of any liability for a breach of this Agreement and/or
the confidentiality provisions of the Confidentiality/Standstill Agreement
executed by the parties as of June 14, 2007 (the “Confidentiality/Standstill
Agreement”), which confidentiality provisions shall remain in full force and
effect.
 
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS

For purposes of this Agreement, any statement made to the knowledge of  the
Company shall mean the knowledge of the Sellers.  A Seller shall be deemed to
have “knowledge” of a particular fact or other matter if such Seller is actually
aware of such fact or other matter, or should, by reason of his or her position
as an owner, director or executive officer of the Company, reasonably be
expected to be aware of such fact or other matter.
 
The Sellers hereby jointly and severally represent and warrant to the Purchaser
that:
 
4.1.           Organization and Good Standing of the Company.  The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation as set forth above. Except as otherwise
provided herein, the Company is not required to be qualified to transact
business in any other jurisdiction where the failure to so qualify would have a
material adverse effect on the business or operations of the Company (“Material
Adverse Affect”).
 

4.2.           Authority.

(a)           The Company has full power and authority (corporate and otherwise)
to carry on its business and has all permits and licenses that are necessary to
the conduct of its business or to the ownership, lease or operation of its
properties and assets, except where the failure to have such permits and
licenses would not have a Material Adverse Effect.

(b)           The execution of this Agreement and the delivery hereof to the
Purchaser and the sale contemplated herein have been, or will be prior to
Closing, duly authorized by the Company’s Board of Directors and by the
Company’s stockholders having full power and authority to authorize such
actions.

(c)           Subject to any consents required under Section 4.7 below, the
Sellers and the Company have the full legal right, power and authority to
execute, deliver and carry out the terms and provisions of this Agreement; and
this Agreement has been duly and validly executed and delivered on behalf of
Sellers and the Company and constitutes a valid and binding obligation of each
Seller and the Company enforceable in accordance with its terms, except as
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting generally the enforcement of creditor’s rights.

(d)           Except as set forth in Schedule 4.2, neither the execution and
delivery of this Agreement, the consummation of the transactions herein
contemplated, nor compliance with the terms of this Agreement will violate,
conflict with, result in a breach of, or constitute a default under any statute,
regulation, indenture, mortgage, loan agreement, or other agreement or
instrument to which the Company or any Seller is a party or by which it or any
of them is bound, any charter, regulation, or bylaw provision of the Company, or
any decree, order, or rule of any court or governmental authority or arbitrator
that is binding on the Company or any Seller in any way, except where such would
not have a Material Adverse Effect.

4.3.           Shares.

(a)           The Company’s authorized capital stock consists of 100,000 shares
of Common Stock, no par value per share, of which 15,600 shares have been issued
to Sellers and constitute the Shares as defined above.  All of the Shares are
duly authorized, validly issued, fully paid and non-assessable.

(b)           The Sellers are the lawful record and beneficial owners of all the
Shares, free and clear of any liens, pledges, encumbrances, charges, claims or
restrictions of any kind, except as set forth in Schedule 4.3, and have, or will
have on the Closing Date, the absolute, unilateral right, power, authority and
capacity to enter into and perform this Agreement without any other or further
authorization, action or proceeding, except as specified herein.

4

--------------------------------------------------------------------------------

(c)           There are no authorized or outstanding subscriptions, options,
warrants, calls, contracts, demands, commitments, convertible securities or
other agreements or arrangements of any character or nature whatever under which
any Seller or the Company are or may become obligated to issue, assign or
transfer any shares of capital stock of the Company except as set forth in
Schedule 4.3.  Upon the delivery to Purchaser on the Closing Date of the
certificate(s) representing the Shares, Purchaser will have good, legal, valid,
marketable and indefeasible title to all the then issued and outstanding shares
of capital stock of the Company, free and clear of any liens, pledges,
encumbrances, charges, agreements, options, claims or other arrangements or
restrictions of any kind.

4.4.           Basic Corporate Records.  The copies of the Articles of
Incorporation of the Company (certified by the Secretary of State or other
authorized official of the jurisdiction of incorporation), and the Bylaws of the
Company, as the case may be (certified as of the date of this Agreement as true,
correct and complete by the Company’s secretary or assistant secretary), all of
which have been delivered to the Purchaser, are true, correct and complete as of
the date of this Agreement.

4.5.           Minute Books.  The minute books of the Company, which shall be
exhibited to the Purchaser between the date hereof and the Closing Date, each
contain true, correct and complete minutes and records of all meetings,
proceedings and other actions of the shareholders, Boards of Directors and
committees of such Boards of Directors of the Company, if any, except where such
would not have a Material Adverse Effect and, on the Closing Date, will, to the
best of Sellers’ knowledge, contain true, correct and complete minutes and
records of any meetings, proceedings and other actions of the shareholders and
the Board of Directors and committees of such Board of Directors of the Company.

4.6.           Subsidiaries and Affiliates.  Any and all businesses, entities,
enterprises and organizations in which the Company has any ownership, voting or
profit and loss sharing percentage interest (the “Subsidiaries”) are identified
in Schedule 4.6 hereto, together with the Company’s interest therein.  Unless
the context requires otherwise or specifically designated to the contrary on
Schedule 4.6 hereto, “Company” as used in this Agreement shall include all such
Subsidiaries.  Except as set forth in Schedule 4.6 or 4.31, (i) the Company has
made no advances to, or investments in, nor owns beneficially or of record, any
securities of or other interest in, any business, entity, enterprise or
organization, (ii) there are no arrangements through which the Company has
acquired from, or provided to, any of the Sellers or their affiliates any goods,
properties or services, and (iii) there are no rights, privileges or advantages
now enjoyed by the Company as a result of the ownership of the Company by the
Sellers which, to the knowledge of the Sellers or the Company, will be lost as a
result of the consummation of the transactions contemplated by this
Agreement.  Each entity shown on Schedule 4.6 is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, and has full corporate power to own all of its property and to
carry on its business as it is now being conducted.  Also set forth on Schedule
4.6 is a list of jurisdictions in which each Subsidiary is qualified as a
foreign corporation.  Such jurisdictions are the only jurisdictions in which the
ownership or leasing
of property by each Subsidiary or the conduct of its business requires it to be
so qualified.  All of the outstanding shares of capital stock of each Subsidiary
have been duly authorized and validly issued, are fully paid and nonassessable,
and, except as set forth on Schedule 4.6, are owned, of record and beneficially,
by the Company, and on the Closing Date will be owned by the Company, free and
clear of all liens, encumbrances, equities, options or claims whatsoever.  No
Subsidiary has outstanding any other equity securities or securities options,
warrants or rights of any kind that are convertible into equity securities of
such Subsidiary, except as set forth on Schedule 4.6.

5

--------------------------------------------------------------------------------

4.7.           Consents.  Except as set forth in Schedule 4.7, no consents or
approvals of any public body or authority and no consents or waivers from other
parties to leases, licenses, franchises, permits, indentures, agreements or
other instruments are (i) required for the lawful consummation of the
transactions contemplated hereby, or (ii) necessary in order that the business
currently conducted by the Company can be conducted by the Purchaser in the same
manner after the Closing as heretofore conducted by the Company, nor will the
consummation of the transactions contemplated hereby result in creating,
accelerating or increasing any liability of the Company, except where the
failure of any of the foregoing would not have a Material Adverse Effect.

4.8.           Financial Statements.  The Sellers have delivered, or will
deliver prior to Closing, to the Purchaser copies of the following financial
statements (which include all notes and schedules attached thereto), all of
which are true, complete and correct, have been prepared from the books and
records of the Company in accordance with generally accepted accounting
principles (“GAAP”) consistently applied with past practice and fairly present
the financial condition, assets, liabilities and results of operations of the
Company as of the dates thereof and for the periods covered thereby:

 
the reviewed balance sheet of the Company at December 31, 2006 and 2005, and the
related statements of operations, and of cash flows of the Company for the
period then ended and (ii) the unaudited balance sheet of the Company as of June
30, 2007 and the related compiled statement of operations of the Company for the
six month period then ended (such statements, including the related notes and
schedules thereto, are referred to herein as the “Financial Statements.”)

In such Financial Statements, the statements of operations do not contain any
material items of special or nonrecurring income or any other material income
not earned in the ordinary course of business except as set forth in Schedule
4.8, and the financial statements for the interim periods indicated include all
adjustments, which consist of only normal recurring accruals, necessary for such
fair presentation.  There are no facts known to any of the Sellers or the
Company that, under GAAP consistently applied, would alter the information
contained in the foregoing Financial Statements in any material way.

The final Balance Sheet will be complete and correct in all material respects
determined in accordance with GAAP as of the Balance Sheet Date.  For the
purposes hereof, the balance sheet of the Company as of June 30, 2007 is
referred to as the “Balance Sheet” and June 30, 2007 is referred to as the
“Balance Sheet Date”.
 
6

--------------------------------------------------------------------------------

4.9.           Records and Books of Account.  The records and books of account
of the Company reflect all material items of income and expense and all material
assets, liabilities and accruals, have been, and to the Closing Date will be,
regularly kept and maintained in conformity with GAAP applied on a consistent
basis with preceding years.

4.10.         Absence of Undisclosed Liabilities.  Except as and to the extent
reflected or reserved against in the Company’s Financial Statements or disclosed
in Schedule 4.10, there are no liabilities or obligations of the Company of any
kind whatsoever exceeding $1,000,  individually or in the aggregate, whether
accrued, fixed, absolute, contingent, determined or determinable, and including
without limitation (i) liabilities to former, retired or active employees of the
Company under any pension, health and welfare benefit plan, vacation plan or
other plan of the Company, (ii) tax liabilities incurred in respect of or
measured by income for any period prior to the close of business on the Balance
Sheet Date, or arising out of transactions entered into, or any state of facts
existing, on or prior to said date, and (iii) contingent liabilities in the
nature of an endorsement, guarantee, indemnity or warranty, and there is no
condition, situation or circumstance existing or which has existed that could
reasonably be expected to result in any liability of the Company which is of a
nature that would be required to be disclosed on its Financial Statements in
accordance with GAAP, other than liabilities and contingent liabilities incurred
in the ordinary course of business since the Balance Sheet Date consistent with
the Company’s recent customary business practice, none of which is materially
adverse to the Company.

4.11           Taxes.

(a)           For purposes of this Agreement, “Tax” or “Taxes” refers to:  (i)
any and all federal, state, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities relating to taxes,
including taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property taxes and
escheatment payments, together with all interest, penalties and additions
imposed with respect to such amounts and any obligations under any agreements or
arrangements with any other person with respect to such amounts and including
any liability for taxes of a predecessor entity; (ii) any liability for the
payment of any amounts of the type described in clause (i) as a result of being
or ceasing to be a member of an affiliated, consolidated, combined or unitary
group for any period (including, without limitation, any liability under Treas.
Reg. Section 1.1502-6 or any comparable provision of foreign, state or local
law); and (iii) any liability for the payment of any amounts of the type
described in clause (i) or (ii) as a result of any express or implied obligation
to indemnify any other person or as a result of any obligations under any
agreements or arrangements with any other person with respect to such amounts
and including any liability for taxes of a predecessor entity.

(b)           (i)           The Company has timely filed all federal, state,
local and foreign returns, estimates, information statements and reports (“Tax
Returns”) relating to Taxes required to be filed by the Company with any Tax
authority effective through the Closing Date.  All such Returns are true,
correct and complete in all respects, except for immaterial amounts where such
would not have a Material Adverse Effect.  The Company has paid all Taxes shown
to be due on such Returns.  Except as listed on Schedule 4.11 hereto, the
Company is not currently the beneficiary of any extensions of time within which
to file any Returns. The Sellers and the Company have furnished and made
available to the Purchaser complete and accurate copies of all income and other
Tax Returns and any amendments thereto filed by the Company in the last three
(3) years.

7

--------------------------------------------------------------------------------

(ii)           The Company, as of the Closing Date, will have withheld and
accrued or paid to the proper authority all Taxes required to have been withheld
and accrued or paid, except for immaterial amounts where such would not have a
Material Adverse Effect.

(iii)           The Company has not been delinquent in the payment of any Tax
nor is there any Tax deficiency outstanding or assessed against the
Company.  The Company has not executed any unexpired waiver of any statute of
limitations on or extending the period for the assessment or collection of any
Tax.

(iv)           There is no dispute, claim, or proposed adjustment concerning any
Tax liability of the Company either (A) claimed or raised by any Tax authority
in writing or (B)  based upon personal contact with any agent of such Tax
authority, and there is no claim for assessment, deficiency, or collection of
Taxes, or proposed assessment, deficiency or collection from the Internal
Revenue Service or any other governmental authority against the Company which
has not been satisfied.  The Company is not a party to nor has it been notified
in writing that it is the subject of any pending, proposed, or threatened
action, investigation, proceeding, audit, claim or assessment by or before the
Internal Revenue Service or any other governmental authority, nor does the
Company have any reason to believe that any such notice will be received in the
future. Except as set forth on Schedule 4.11, neither the Internal Revenue
Service nor any state or local taxation authority has ever audited any income
tax return of the Company.  The Company has not filed any requests for rulings
with the Internal Revenue Service.  Except as provided to the Company’s
accountants, no power of attorney has been granted by the Company or its
affiliates with respect to any matter relating to Taxes of the Company.  There
are no Tax liens of any kind upon any property or assets of the Company, except
for inchoate liens for Taxes not yet due and payable.

(v)           Except for immaterial amounts which would not have a Material
Adverse Effect, the Company has no liability for any unpaid Taxes which has not
been paid or accrued for or reserved on the Financial Statements in accordance
with GAAP, whether asserted or unasserted, contingent or otherwise.

(vi)           There is no contract, agreement, plan or arrangement to which the
Company is a party as of the date of this Agreement, including but not limited
to the provisions of this Agreement, covering any employee or former employee of
the Company that, individually or collectively, would reasonably be expected to
give rise to the payment of any amount that would not be deductible pursuant to
Sections 280G, 404 or 162(m) of the Internal Revenue Code of 1986, as amended
(the “Code”). There is no contract, agreement, plan or arrangement to which the
Company is a party or by which it is bound to compensate any individual for
excise taxes paid pursuant to Section 4999 of the Code.
(vii)           The Company has not filed any consent agreement under
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of
the Code) owned by the Company.

8

--------------------------------------------------------------------------------

(viii)                      The Company is not a party to, nor has any
obligation under, any tax-sharing, tax indemnity or tax allocation agreement or
arrangement.

(ix)           None of the Company’s assets are tax exempt use property within
the meaning of Section 168(h) of the Code.

(x)           The Company made a valid election under Section 1362 of the Code
to be treated as an S corporation as defined in Code Section 1361, which
election was acknowledged by the IRS and became effective on August 1,
1999.  The election has remained in effect since that date without revocation,
cessation or termination, and the Company has qualified to be taxed under the
provisions of Subchapter S of the Code and under applicable similar provisions
of state income tax law for all periods beginning on or after August 1, 1999.

4.12.                      Accounts Receivable.  The accounts receivable of the
Company shown on the Balance Sheet Date, and those to be shown in the Financial
Statements, are, and will be, actual bona fide receivables from transactions in
the ordinary course of business representing valid and binding obligations of
others for the total dollar amount shown thereon, and as of the Balance Sheet
Date were not (and presently are not) subject to any recoupments, set-offs, or
counterclaims. To the best of Sellers’ knowledge, except as set forth on
Schedule 4.12, all such accounts receivable are, and will be, collectible in
amounts not less than the amounts (net of reserves) carried on the books of the
Company, including the Financial Statements, and will be paid in accordance with
their terms.  Except as listed on Schedule 4.12 hereto, all such accounts
receivable are and will be actual bona fide receivables from transactions in the
ordinary course of business.

4.13.                      Inventory.  The inventories of the Company are
located at the locations listed on Schedule 4.13 attached hereto. Except as
disclosed in Schedule 4.8, the inventories of the Company shown on its Balance
Sheet (net of reserves) are carried at values which reflect the normal inventory
valuation policy of the Company of stating the items of inventory at average
cost in accordance with GAAP consistently applied.  Inventory acquired since the
Balance Sheet Date has been acquired in the ordinary course of business and
valued as set forth above.  The Company will maintain the inventory in the
normal and ordinary course of business from the date hereof through the Closing
Date.

4.14.                      Machinery and Equipment.  Except for items disposed
of in the ordinary course of business, all machinery, tools, furniture,
fixtures, equipment, vehicles, leasehold improvements and all other tangible
personal property (hereinafter “Fixed Assets”) of the Company currently being
used in the conduct of its business (the “Business”), or included in determining
the net book value of the Company on the Balance Sheet Date, together with any
machinery or equipment that is leased or operated by the Company, are in fully
serviceable working condition and repair.  Said Fixed Assets shall be maintained
in such condition from the date hereof through the Closing Date.  Except as
described on Schedule 4.14 hereto, all Fixed Assets owned, used or held by the
Company are situated at its business premises and are currently used in its
Business. Schedule 4.14 describes all Fixed Assets owned by or an interest in
which is claimed by any other person (whether a customer, supplier or other
person) for which the Company is responsible (copies of all agreements relating
thereto being attached to said Schedule 4.14), and all such property is in the
Company’s actual possession and is in such condition that upon the return of
such property in its present condition to its owner, the Company will not be
liable in any amount to such owner.  There are no outstanding requirements or
recommendations by any insurance company that has issued a policy covering
either (i) such Fixed Assets or (ii) any liabilities of the Company relating to
operation of the Business, or by any board of fire underwriters or other body
exercising similar functions, requiring or recommending any repairs or work to
be done on any Fixed Assets or any changes in the operations of the Business,
any equipment or machinery used therein, or any procedures relating to such
operations, equipment or machinery.  All material Fixed Assets of the Company
are set forth on Schedule 4.14 hereto.

9

--------------------------------------------------------------------------------

4.15.                      Real Property Matters.  The Company does not own any
real property as of the date hereof and has not owned any real property during
the three years preceding the date hereof.

4.16.                      Leases.  All leases of real and personal property of
the Company are described in Schedule 4.16, are in full force and effect and, to
Sellers’ knowledge, constitute legal, valid and binding obligations of the
respective parties thereto enforceable in accordance with their terms, except as
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting generally the enforcement of creditor’s rights, and
have not been assigned or encumbered by Company or the Sellers.  The Company has
performed in all material respects the obligations required to be performed by
it under all such leases to date and it is not in default in any material
respect under any of said leases, except as set forth in Schedule 4.16, nor has
it made any leasehold improvements required to be removed at the termination of
any lease, except signs.  To Sellers’ knowledge, no other party to any such
lease is in material default thereunder.  Except as noted on Schedule 4.16, none
of the leases listed thereon require the consent of a third party in connection
with the transfer of the Shares.

4.17.                      Patents, Software, Trademarks, Etc.  The Company
owns, or possesses adequate licenses or other rights to use, all patents,
software, trademarks, service marks, trade names and copyrights and trade
secrets, if any, necessary to conduct its Business as now operated by it.  The
patents, software, trademarks, service marks, copyrights, trade names and trade
secrets, if any, registered in the name of or owned or used by or licensed to
the Company and applications for any thereof (hereinafter the “Intangibles”) are
described or referenced in Schedule 4.17.  Sellers hereby specifically
acknowledge that all right, title and interest in and to all patents and
software listed on Schedule 4.17 as patents owned by the Company are owned by
the Company or the Company has a right to use same and that the ownership of
such patents and software will be transferred as part of the Company to
Purchaser as part of the transaction contemplated hereby.  No officer, director,
shareholder or employee of the Company or any relative or spouse of any such
person owns any patents or patent applications or any inventions, software,
secret formulae or processes, trade secrets or other similar rights, nor is any
of them a party to any license agreement, used by or useful to the Company or
related to its business except as listed in Schedule 4.17.  All of said
Intangibles are valid and in good standing to the best of Sellers’ knowledge,
and are free and clear of all liens, security interests, charges, restrictions
and encumbrances of any kind whatsoever, and have not been licensed to any third
party except as described in Schedule 4.17.  The Company has not been charged
with, nor to Sellers’ knowledge has it infringed or is it threatened to be
charged with infringement of, any patent, proprietary rights or trade secrets of
others in the conduct of its business, and, to the date hereof, neither the
Sellers nor the Company has received any notice of conflict with or violation of
the asserted rights in intangibles or trade secrets of others.  The Company is
not now manufacturing any goods under a present permit, franchise or license,
except as set forth in said Schedule 4.17.  The consummation of the transactions
contemplated hereby will not alter or impair any rights of the Company in any
such Intangibles or in any such permit, franchise or license, except as
described in Schedule 4.17.  The Intangibles and the Company’s tooling,
manufacturing and engineering drawings, process sheets, specifications, bills of
material and other like information and data are in such form and of such
quality and will be maintained in such a manner that the Company can, following
the Closing, design, produce, manufacture, assemble and sell the products and
provide the services heretofore provided by it so that such products and
services meet applicable specifications and conform with the standards of
quality and cost of production standards heretofore met by it.  To Sellers’
knowledge, the Company has the sole and exclusive right to use its corporate and
trade names in the jurisdictions where it transacts business.

10

--------------------------------------------------------------------------------

4.18.                      Insurance Policies.  There is set forth in Schedule
4.18 a list and brief description of all insurance policies on the date hereof
held by the Company or on which it pays premiums, including, without limitation,
life insurance and title insurance policies, which description includes the
premiums payable by it thereunder.  Schedule 4.18 also sets forth, in the case
of any life insurance policy held by the Company, the name of the insured under
such policy, the cash surrender value thereof and any loans thereunder.  All
such insurance premiums in respect of such coverage have been, and to the
Closing Date will be, paid in full, if due and owing.  All claims, if any, made
against the Company which are covered by such policies have been, or are being,
settled or defended by the insurance companies that have issued such
policies.  Up to the Closing Date, such insurance coverage will be maintained in
full force and effect and will not be cancelled, modified or changed without the
express written consent of the Purchaser, except to the extent the maturity
dates of any such insurance policies expire prior to the Closing Date or where
such cancellation would not have a Material Adverse Effect.  No such policy has
been, or to the Closing Date will be, cancelled by the issuer thereof, and, to
the knowledge of the Sellers and the Company, between the date hereof and the
Closing Date, there shall be no increase in the premiums with respect to any
such insurance policy caused by any action or omission of the Sellers or of the
Company, except where the foregoing would not have a Material Adverse
Effect.  Upon the Closing Date, all life insurance policies maintained by the
Company shall be assigned to each respective Seller.

4.19.                      Banking and Personnel Lists.  The Sellers and the
Company will deliver to the Purchaser prior to the Closing Date the following
accurate lists and summary descriptions relating to the Company:

(i)           The name of each bank in which the Company has an account or safe
deposit box and the names of all persons authorized to draw thereon or have
access thereto.
 
 
11

--------------------------------------------------------------------------------

(ii)           The names, current annual salary rates and total compensation for
the preceding fiscal year of all of the present directors and officers of the
Company, and any other employees whose current base accrual salary or annualized
hourly rate equivalent is $20,000 or more, together with a summary of the
bonuses, percentage compensation and other like benefits, if any, paid or
payable to such persons for the last full fiscal year completed, together with a
schedule of changes since that date, if any.

(iii)           A schedule of workers’ compensation payments of the Company over
the past five full fiscal years and the fiscal year to date, a schedule of
claims by employees of the Company against the workers’ compensation fund for
any reason over such period, identification of all compensation and medical
benefits paid to date on each such claim and the estimated amount of
compensation and medical benefits to be paid in the future on each such claim.

(iv)           The name of all pensioned employees of the Company whose pensions
are unfunded and are not paid or payable pursuant to any formalized pension
arrangements, their agent and annual unfunded pension rates.

4.20.                      Lists of Contracts, Etc.  There is included in
Schedule 4.20 a list of the following items (whether written or oral) relating
to the Company, which list identifies and fairly summarizes each item
(collectively, “Contracts”):

(i)           All collective bargaining and other labor union agreements (if
any); all employment agreements with any officer, director, employee or
consultant; and all employee pension, health and welfare benefit plans, group
insurance, bonus, profit sharing, severance, vacation, hospitalization, and
retirement plans, post-retirement medical benefit plans, and any other plans,
arrangements or custom requiring payments or benefits to current or retiring
employees;

(ii)          All joint venture contracts of the Company or affiliates relating
to the Business;

(iii)         All contracts of the Company relating to (a) obligations for
borrowed money, (b) obligations evidenced by bonds, debentures, notes or other
similar instruments, (c) obligations to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (d) obligations under capital leases, (e) debt of others
secured by a lien on any asset of the Company, and (f) debts of others
guaranteed by the Company;

(iv)         All agreements of the Company relating to the supply of raw
materials for and the distribution of the products of its business, including
without limitation all sales agreements, manufacturer’s representative
agreements and distribution agreements of whatever magnitude and nature, and any
commitments therefor;
 
 
12

--------------------------------------------------------------------------------

(v)           All contracts that individually provide for aggregate future
payments to or from the Company of $50,000 or more, to the extent not included
in (i) through (iv) above;
 
(vi)           All contracts of the Company that have a term exceeding one year
and that may not be cancelled without any liability, penalty or premium, to the
extent not included in (i) through (v) above;

(vii)          A complete list of all outstanding powers of attorney granted by
the Company; and
 
(viii)         All other contracts of the Company material to the business,
assets, liabilities, financial condition, results of operations or prospects of
the Business taken as a whole to the extent not included above.
 
Except as set forth in Schedule 4.20, (i) all contracts, agreements and
commitments of the Company set forth in Schedule 4.20 are valid, binding and in
full force and effect, and (ii) neither the Company nor, to the best of Sellers’
knowledge, any other party to any such contract, agreement, or commitment has
materially breached any provision thereof or is in default thereunder.  Except
as set forth in Schedule 4.20, the sale of the Shares by the Sellers in
accordance with this Agreement is not restricted by, nor will it create grounds
for the termination of, any contract, agreement or commitment of the Company set
forth in Schedule 4.20, and immediately after the Closing, each such contract,
agreement or commitment will continue in full force and effect without the
imposition or acceleration of any burdensome condition or other obligation on
the Company resulting from the sale of the Shares by the Sellers.  True and
complete copies of the contracts, leases, licenses and other documents referred
to in Schedule 4.20 will be delivered to the Purchaser, certified by the
Secretary or Assistant Secretary of the Company as true, correct and complete
copies, not later than one business day before the Closing Date.

There are no pending disputes with customers or vendors of the Company regarding
quality or return of goods involving amounts in dispute with any one customer or
vendor, whether for related or unrelated claims, in excess of $5,000 except as
described on Schedule 4.20 hereto, all of which will be resolved to the
reasonable satisfaction of Purchaser prior to the Closing Date.  To the best
knowledge of Sellers and the Company, there has not been any event, happening,
threat or fact that would lead them to believe that any of said customers or
vendors will terminate or materially alter their business relationship with the
Company after completion of the transactions contemplated by this Agreement.
 
4.21.                      Compliance With the Law.  The Company is not in
violation of any applicable federal, state, local or foreign law, regulation or
order or any other, decree or requirement of any governmental, regulatory or
administrative agency or authority or court or other tribunal (including, but
not limited to, any law, regulation order or requirement relating to securities,
properties, business, products, manufacturing processes, advertising, sales or
employment practices, terms and conditions of employment, occupational safety,
health and welfare, conditions of occupied premises, product safety and
liability, civil rights, or environmental protection, including, but not limited
to, those related to waste management, air pollution control, waste water
treatment or noise abatement), except where such would not have a Material
Adverse Effect.  Except as set forth in Schedule 4.21, the Company has not been
and is not now charged with, or to the best knowledge of the Sellers or the
Company under investigation with respect to, any violation of any applicable
law, regulation, order or requirement relating to any of the foregoing, nor, to
the best knowledge of any Seller or the Company after due inquiry, are there any
circumstances that would or might give rise to any such violation.  The Company
has filed all reports required to be filed with any governmental, regulatory or
administrative agency or authority, except where the failure to file such would
not have a Material Adverse Effect.

13

--------------------------------------------------------------------------------

4.22.                      Litigation; Pending Labor Disputes.  Except as
specifically identified on the Balance Sheet or footnotes thereto or set forth
in Schedule 4.22:

(i)           There are no legal, administrative, arbitration or other
proceedings or governmental investigations pending or, to the best knowledge of
Sellers or the Company, threatened, against the Sellers or the Company, relating
to its Business or the Company or its properties (including leased property), or
the transactions contemplated by this Agreement, nor is there any basis known to
the Company or any Seller for any such action.

(ii)           There are no judgments, decrees or orders of any court, or any
governmental department, commission, board, agency or instrumentality binding
upon Sellers or the Company relating to its Business or the Company the effect
of which is to prohibit any business practice or the acquisition of any property
or the conduct of any business by the Company or which limit or control or
otherwise would have a Material Adverse Affect on its method or manner of doing
business.

(iii)           No work stoppage has occurred and is continuing or, to the
knowledge of Sellers or the Company, is threatened affecting its Business, and
to the best of Sellers’ knowledge, no question involving recognition of a
collective bargaining agent exists in respect of any employees of the Company.

(iv)           There are no pending labor negotiations or, to the best of
Sellers’ knowledge, union organization efforts relating to employees of the
Company.

(v)           There are no charges of discrimination (relating to sex, age,
race, national origin, handicap or veteran status) or unfair labor practices
pending or, to the best knowledge of the Sellers or the Company, threatened
before any governmental or regulatory agency or authority or any court relating
to employees of the Company.

4.23.                      Absence of Certain Changes or Events.  The Company
has not, since the Balance Sheet Date, and except in the ordinary course of
business consistent with past practice and/or except as described on Schedule
4.23:

(i)           Incurred any material obligation or liability (absolute, accrued,
contingent or otherwise), except in the ordinary course of its business
consistent with past practice or in connection with the performance of this
Agreement, and any such
obligation or liability incurred in the ordinary course is not materially
adverse, except for claims, if any, that are adequately covered by insurance;

14

--------------------------------------------------------------------------------

(ii)           Discharged or satisfied any lien or encumbrance, or paid or
satisfied any obligations or liability (absolute, accrued, contingent or
otherwise) other than (a) liabilities shown or reflected on the Balance Sheet,
and (b) liabilities incurred since the Balance Sheet Date in the ordinary course
of business that were not materially adverse;

(iii)           Increased or established any reserve or accrual for taxes or
other liability on its books or otherwise provided therefor, except (a) as
disclosed on the Balance Sheet, or (b) as may have been required under GAAP due
to income earned or expenses accrued since the Balance Sheet Date and as
disclosed to the Purchaser in writing;

(iv)           Mortgaged, pledged or subjected to any lien, charge or other
encumbrance any of its assets, tangible or intangible;

(v)           Sold or transferred any of its assets or cancelled any debts or
claims or waived any rights, except in the ordinary course of business and which
has not been materially adverse;

(vi)           Disposed of or permitted to lapse any patents or trademarks or
any patent or trademark applications material to the operation of its Business;

(vii)           Incurred any significant labor trouble or granted any general or
uniform increase in salary or wages payable or to become payable by it to any
director, officer, employee or agent, or by means of any bonus or pension plan,
contract or other commitment increased the compensation of any director,
officer, employee or agent;

(viii)        Authorized any capital expenditure for real estate or leasehold
improvements, machinery, equipment or molds in excess of $5,000.00 in the
aggregate;

(ix)           Except for this Agreement or as otherwise disclosed herein or in
any schedule to this Agreement, entered into any material transaction;

(x)           Issued any stocks, bonds, or other corporate securities, or made
any declaration or payment of any dividend or any distribution in respect of its
capital stock; or

(xi)           Experienced damage, destruction or loss (whether or not covered
by insurance) individually or in the aggregate having a Material Adverse Effect
on any of its properties, assets or business, or experienced any other material
adverse change or changes individually or in the aggregate affecting its
financial condition, assets, liabilities or Business (a “Material Adverse
Change”).
 
 
15

--------------------------------------------------------------------------------

4.24.                      Employee Benefit Plans.

(a)           Schedule 4.24 lists a description of the only Employee Programs
(as defined below) that have been maintained (as such term is further defined
below) by the Company at any time during the five (5) years prior to the date
hereof, except as set forth on Schedule 4.24.

(b)           There has not been any failure of any party to comply with any
laws applicable with respect to any Employee Program that has been maintained by
the Company, except where such would not have a Material Adverse Effect.  With
respect to any Employee Programs now or heretofore maintained by the Company,
there has occurred no breach of any duty under the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), or other applicable law which could
result, directly or indirectly, in any Taxes, penalties or other liability to
the Purchaser, the Company or any affiliate (as defined below), except for
exceptions which would not have a Material Adverse Effect.  No litigation,
arbitration, or governmental administrative proceeding (or investigation) or
other proceeding (other than those relating to routine claims for benefits) is
pending or, to the best knowledge of the Company and Sellers, threatened with
respect to any such Employee Program.

(c)           Except as set forth in Schedule 4.24 attached hereto, neither the
Company nor any affiliate has ever (i) provided health care or any other
non-pension benefits to any employees after their employment was terminated
(other than as required by Part 6 of Subtitle B of Title I of ERISA) or has ever
promised to provide such post-termination benefits or (ii) maintained an
Employee Program provided to such employees subject to Title IV of ERISA,
Section 401(a) or Section 412 of Code, including, without limitation, any
Multiemployer Plan.

(d)           For purposes of this Section 4.24:
 
(i)           “Employee Program” means (A) all employee benefit plans within the
meaning of ERISA Section 3(3), including, but not limited to, multiple employer
welfare arrangements (within the meaning of ERISA Section 3(40)), plans to which
more than one unaffiliated employer contributes and employee benefit plans (such
as foreign or excess benefit plans) which are not subject to ERISA; and (B) all
stock option plans, bonus or incentive award plans, severance pay policies or
agreements, deferred compensation agreements, supplemental income arrangements,
vacation plans, and all other employee benefit plans, agreements, and
arrangements not described in (A) above.  In the case of an Employee Program
funded through an organization described in Code Section 501(c)(9), each
reference to such Employee Program shall include a reference to such
organization;

(ii)           An entity “maintains” an Employee Program if such entity
sponsors, contributes to, or provides (or has promised to provide) benefits
under such Employee Program, or has any obligation (by agreement or under
applicable law) to contribute to or provide benefits under such Employee
Program, or if such Employee Program provides benefits to or otherwise covers
employees of such entity (or their spouses, dependents, or beneficiaries);
 
16

--------------------------------------------------------------------------------

 
(iii)           An entity is an “affiliate” of the Company for purposes of this
Section 4.24 if it would have ever been considered a single employer with the
Company under ERISA Section 4001(b) or part of the same “controlled group” as
the Company for purposes of ERISA Section 302(d)(8)(C); and

(iv)           “Multiemployer Plan” means a (pension or non-pension) employee
benefit plan to which more than one employer contributes and which is maintained
pursuant to one or more collective bargaining agreements.

4.25.                      Product Warranties and Product Liabilities.  The
product warranties and return policies of the Company in effect on the date
hereof and the types of products to which they apply are described on Schedule
4.25 hereto.  Schedule 4.25 also sets forth all product liability claims
involving amounts in controversy in excess of $5,000 that are currently either
pending or, to the best of the Sellers’ and the Company’s knowledge, threatened
against the Company.  The Sellers have no knowledge of any reason why the future
cost of performing all such obligations and paying all such product liability
claims with respect to goods manufactured, assembled or furnished prior to the
Closing Date will not exceed the average annual cost thereof for said past three
year period.

4.26.          Assets.   The assets of the Company are located at the locations
listed on Schedule 4.26 attached hereto. Except as described in Schedule 4.26,
the assets of the Company are, and together with the additional assets to be
acquired or otherwise received by the Company prior to the Closing, will at the
Closing Date be, sufficient in all material respects to carry on the operations
of the Business as now conducted by the Company.  The Company is the only
business organization through which the Business is conducted.  Except as set
forth in Schedule 4.16 or Schedule 4.26, all assets used by the Sellers and the
Company to conduct the Business are, and will on the Closing Date be, owned by
the Company.

4.27.         Absence of Certain Commercial Practices.  Except as described on
Schedule 4.27, neither the Company nor any Seller has made any payment (directly
or by secret commissions, discounts, compensation or other payments) or given
any gifts to another business concern, to an agent or employee of another
business concern or of any governmental entity (domestic or foreign) or to a
political party or candidate for political office (domestic or foreign), to
obtain or retain business for the Company or to receive favorable or
preferential treatment, except for gifts and entertainment given to
representatives of customers or potential customers of sufficiently limited
value and in a form (other than cash) that would not be construed as a bribe or
payoff.

4.28.        Licenses, Permits, Consents and Approvals.  The Company has, and at
the Closing Date will have, all licenses, permits or other authorizations of
governmental, regulatory or administrative agencies or authorities
(collectively, “Licenses”) required to conduct the Business, except for any
failures of such which would not have a Material Adverse Effect. All material
Licenses of the Company are listed on Schedule 4.28 hereto.  At the Closing, the
Company will have all such Licenses which are material to the conduct of the
Business and will have renewed all Licenses which would have expired in the
interim.  Except as listed in Schedule 4.28, no registration, filing,
application, notice, transfer, consent, approval, order, qualification, waiver
or other action of any kind (collectively, a “Filing”) will be required as a
result of the sale of the Shares by Sellers in accordance with this Agreement
(a) to avoid the loss of any License or the violation, breach or termination of,
or any default under, or the creation of any lien on any asset of the Company
pursuant to the terms of, any law, regulation, order or other requirement or any
contract binding upon the Company or to which any such asset may be subject, or
(b) to enable Purchaser (directly or through any designee) to continue the
operation of the Company and the Business substantially as conducted prior to
the Closing Date.  All such Filings will be duly filed, given, obtained or taken
on or prior to the Closing Date and will be in full force and effect on the
Closing Date.

17

--------------------------------------------------------------------------------

4.29.        Environmental Matters. Except as set forth on Schedule 4.29 hereto:
 
(a)           The operations of the Company, to the best knowledge of Sellers,
are in compliance with all applicable laws promulgated by any governmental
entity which prohibit, regulate or control any hazardous material or any
hazardous material activity (“Environmental Laws”) and all permits issued
pursuant to Environmental Laws or otherwise except for where noncompliance or
the absence of such permits would not, individually or in the aggregate, have a
Material Adverse Effect;
 
(b)          The Company has obtained all permits required under all applicable
Environmental Laws necessary to operate its business, except for any failures of
such which would not have a Material Adverse Effect;
 
(c)           The Company is not the subject of any outstanding written order or
Contract with any governmental authority or person respecting Environmental Laws
or any violation or potential violations thereof; and
 
(d)          The Company has not received any written communication alleging
either or both that the Company may be in violation of any Environmental Law, or
any permit issued pursuant to Environmental Law, or may have any liability under
any Environmental Law.

4.30           Broker.  Except as specified in Schedule 4.30, neither the
Company nor any Seller has retained any broker in connection with any
transaction contemplated by this Agreement.  Purchaser and the Company shall not
be obligated to pay any fee or commission associated with the retention or
engagement by the Company or Sellers of any broker in connection with any
transaction contemplated by this Agreement.

4.31.         Related Party Transactions.  Except as described in Schedule 4.31,
all transactions during the past five years between the Company and any current
or former shareholder or any entity in which the Company or any current or
former shareholder had or has a direct or indirect interest have been fair to
the Company as determined by the Board of Directors.  No portion of the sales or
other on-going business relationships of the Company is dependent upon the
friendship or the personal relationships (other than those customary within
business generally) of any Seller, except as described in Schedule 4.31.  During
the past five years, the Company has not forgiven or cancelled, without
receiving full consideration, any indebtedness owing to it by any Seller.
 
18

--------------------------------------------------------------------------------

4.32          Patriot Act.  The Company and the Sellers certify that the Company
has not been designated, and is not owned or controlled, by a “suspected
terrorist” as defined in Executive Order 13224.  The Company and the Sellers
hereby acknowledge that the Purchaser seeks to comply with all applicable laws
concerning money laundering and related activities.  In furtherance of those
efforts, the Company and the Sellers hereby represent, warrant and agree
that:  (i) none of the cash or property that the Sellers have contributed or
paid or will contribute and pay to the Company has been or shall be derived
from, or related to, any activity that is deemed criminal under United States
law; and (ii) no contribution or payment by the Company to the Purchaser, to the
extent that they are within the Company’s control shall cause the Purchaser to
be in violation of the United States Bank Secrecy Act, the United States
International Money Laundering Control Act of 1986 or the United States
International Money Laundering Abatement and Anti-Terrorist Financing Act of
2001.  The Sellers shall promptly notify the Purchaser if any of these
representations ceases to be true and accurate regarding the Sellers or the
Company.  The Sellers agree to provide the Purchaser any additional information
regarding the Company that the Purchaser reasonably requests to ensure
compliance with all applicable laws concerning money laundering and similar
activities.

4.33         Investment Intent.
 
The Purchaser Shares are being acquired hereunder by the Sellers for investment
purposes only, for their own account, not as a nominee or agent and not with a
view to the distribution thereof.  The Sellers have no present intention to sell
or otherwise dispose of the Purchaser Shares and they will not do so except in
compliance with the provisions of the Securities Act of 1933, as amended, and
applicable law.  The Sellers understand that the Purchaser Shares which may be
acquired hereunder must be held by them indefinitely unless a subsequent
disposition or transfer of any of said shares is registered under the Securities
Act of 1933, as amended, or is exempt from registration therefrom.  The Sellers
further understand that the exemption from registration afforded by Rule 144
(the provisions of which are known to such Seller) promulgated under the
Securities Act of 1933, as amended, depends on the satisfaction of various
conditions, and that, if and when applicable, Rule 144 may afford the basis for
sales only in limited amounts.  Notwithstanding the foregoing, this Section
shall not restrict the Sellers’ rights to require Purchaser to register the
Purchaser Shares for public sale pursuant to the Registration Rights Agreement
(as hereinafter defined).

4.34           Investment Experience; Suitability.

The Sellers are each sophisticated investors familiar with the type of risks
inherent in the acquisition of securities such as the Purchaser Shares and the
Sellers’ financial position is such that the Sellers can afford to retain the
shares of Purchaser Shares for an indefinite period of time without realizing
any direct or indirect cash return on its investment.
 
4.35           Accreditation.

Frank Mauger is an “accredited investor” within the meaning of Rule 501(a) of
Regulation D promulgated under the Securities Act of 1933, as amended.  The
Sellers understand that the Purchaser Shares are being offered to them in
reliance upon specific exemptions from the registration requirements of United
States federal and state securities laws and that the Purchaser is relying upon
the truth and accuracy of, and the Sellers’ compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Sellers set forth herein in order to determine the availability of such
exemptions and the eligibility of the Sellers to acquire the Purchaser Shares.

19

--------------------------------------------------------------------------------

4.36.         Disclosure.  All statements contained in any schedule,
certificate, opinion, instrument, or other document delivered by or on behalf of
the Sellers or the Company pursuant hereto shall be deemed representations and
warranties by each Seller and the Company herein.  No statement, representation
or warranty by the Sellers or the Company in this Agreement or in any schedule,
certificate, opinion, instrument, or other document furnished or to be furnished
to the Purchaser pursuant hereto contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading or necessary in order to provide a prospective purchaser of the
Business of the Company with full and fair disclosure concerning the Company,
its business, and the Company’s affairs.

ARTICLE V
 
REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
5.1           Organization and Good Standing.
 
The Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
 
5.2           Authority.
 
(a)           The execution and delivery of this Agreement and the consummation
of the transactions contemplated herein have been, or will prior to Closing be,
duly and validly approved and acknowledged by all necessary corporate action on
the part of the Purchaser.

(b)           The execution of this Agreement and the delivery hereof to the
Sellers and the purchase contemplated herein have been, or will be prior to
Closing, duly authorized by the Purchaser’s Board of Directors having full power
and authority to authorize such actions.

5.3           Conflicts; Consents of Third Parties.
 
(a)           The execution and delivery of this Agreement, the acquisition of
the Shares by Purchaser and the consummation of the transactions herein
contemplated, and the compliance with the provisions and terms of this
Agreement, are not prohibited by the Articles of Incorporation or Bylaws of the
Purchaser and will not violate, conflict with or result in a breach of any of
the terms or provisions of, or constitute a default under, any court order,
indenture, mortgage, loan agreement, or other agreement or instrument to which
the Purchaser is a party or by which it is bound.
 
(b)           No consent, waiver, approval, order, permit or authorization of,
or declaration or filing with, or notification to, any person or governmental
body is required on the part of the Purchaser in connection with the execution
and delivery of this Agreement or any other agreement referenced herein or the
compliance by Purchaser with any of the provisions hereof or thereof.
 
20

--------------------------------------------------------------------------------

5.4           Litigation.
 
There are no legal proceedings pending or, to the best knowledge of the
Purchaser, threatened that are reasonably likely to prohibit or restrain the
ability of the Purchaser to enter into this Agreement or consummate the
transactions contemplated hereby.
 
5.5           Investment Intention.
 
The Purchaser is acquiring the Shares for its own account, for investment
purposes only and not with a view to the distribution (as such term is used in
Section 2(11) of the Securities Act of 1933, as amended (the "Securities Act"))
thereof.  Purchaser understands that the Shares have not been registered under
the Securities Act and cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available.
 
5.6           Broker.
 
The Purchaser has not retained any broker in connection with any transaction
contemplated by this Agreement.  Sellers shall not be obligated to pay any fee
or commission associated with the retention or engagement by the Purchaser of
any broker in connection with any transaction contemplated by this Agreement.
 
5.7           Patriot Act.  The Purchaser certifies that neither the Purchaser
nor any of its subsidiaries has been designated, and is not owned or controlled,
by a “suspected terrorist” as defined in Executive Order 13224.  The Purchaser
hereby acknowledges that the Company and the Sellers seek to comply with all
applicable laws concerning money laundering and related activities.  In
furtherance of those efforts, the Purchaser hereby represents, warrants and
agrees that:  (i) none of the cash or property that the Purchaser has
contributed or paid or will contribute and pay to the Sellers has been or shall
be derived from, or related to, any activity that is deemed criminal under
United States law; and (ii) no contribution or payment by the Purchaser or any
of its subsidiaries to the Sellers, to the extent that they are within the
Purchaser’s control shall cause the Sellers or the Company to be in violation of
the United States Bank Secrecy Act, the United States International Money
Laundering Control Act of 1986 or the United States International Money
Laundering Abatement and Anti-Terrorist Financing Act of 2001.  The Purchaser
shall promptly notify the Sellers if any of these representations ceases to be
true and accurate regarding the Purchaser or any of its subsidiaries.  The
Purchaser agrees to provide the Sellers any additional information regarding the
Purchaser or any of its subsidiaries that the Sellers reasonably request to
ensure compliance with all applicable laws concerning money laundering and
similar activities.
 
5.8           Due Authorization of Purchaser Shares.  The shares of Purchaser
Common Stock, when delivered to the Sellers, shall be validly issued and
outstanding as fully paid and non-assessable, free and clear of any liens,
pledges, encumbrances, charges, agreements, options, claims or other
arrangements or restrictions of any kind.
 

21

--------------------------------------------------------------------------------

 
ARTICLE VI
 
COVENANTS
 
6.1           Access to Information.
 
The Sellers and the Company agree that, prior to the Closing Date, the Purchaser
shall be entitled, through its officers, employees and representatives
(including, without limitation, its legal advisors and accountants), to make
such investigation of the properties, businesses and operations of the Company
and its Subsidiaries and such examination of the books, records and financial
condition of the Company and its Subsidiaries as it reasonably requests and to
make extracts and copies of such books and records.  Any such investigation and
examination shall be conducted during regular business hours and under
reasonable circumstances, and the Sellers shall cooperate, and shall cause the
Company and its Subsidiaries to cooperate, fully therein.  No investigation by
the Purchaser prior to or after the date of this Agreement shall diminish or
obviate any of the representations, warranties, covenants or agreements of the
Sellers contained in this Agreement or any other agreement referenced
herein.  In order that the Purchaser may have full opportunity to make such
physical, business, accounting and legal review, examination or investigation as
it may reasonably request of the affairs of the Company and its Subsidiaries,
the Sellers shall cause the officers, employees, consultants, agents,
accountants, attorneys and other representatives of the Company and its
Subsidiaries to cooperate fully with such representatives in connection with
such review and examination.  It is agreed and understood that all information
provided pursuant to this Section 6.1 is subject to the terms and conditions of
the Confidentiality/Standstill Agreement.
 
6.2           Conduct of the Business Pending the Closing.
 
(a)           Except as otherwise expressly contemplated by this Agreement or
with the prior written consent of the Purchaser, prior to the Closing the
Sellers shall, and shall cause the Company to:
 
(i)           Conduct the respective businesses of the Company only in the
ordinary course consistent with past practice;
 
(ii)          Use its best efforts to (A) preserve its present business
operations, organization (including, without limitation, management and the
sales force) and goodwill of the Company and (B) preserve its present
relationship with parties having business dealings with the Company;
 
(iii)         Maintain (A) all of the assets and properties of the Company in
their current condition, ordinary wear and tear excepted and except for
dispositions in the ordinary course of business and (B) insurance upon all of
the properties and assets of the Company in such amounts and of such kinds
comparable to that in effect on the date of this Agreement;
 
(iv)         (A) maintain the books, accounts and records of the Company in the
ordinary course of business consistent with past practices, (B) continue to
collect accounts receivable and pay accounts payable utilizing normal procedures
and without discounting or accelerating payment of such accounts, and (C) comply
with all contractual and other obligations applicable to the operation of the
Company; and
 
22

--------------------------------------------------------------------------------

(v)           Comply in all material respects with applicable laws.
 
(b)           Except as otherwise expressly contemplated by this Agreement or
with the prior written consent of the Purchaser, prior to the Closing the
Sellers shall not, and shall cause the Company not to:
 
(i)           Declare, set aside, make or pay any dividend or other distribution
in respect of the capital stock of the Company or repurchase, redeem or
otherwise acquire any outstanding shares of the capital stock or other
securities of, or other ownership interests in, the Company;
 
(ii)           Transfer, issue, sell or dispose of any shares of capital stock
or other securities of the Company or grant options, warrants, calls or other
rights to purchase or otherwise acquire shares of the capital stock or other
securities of the Company;
 
(iii)           Effect any recapitalization, reclassification, stock split or
like change in the capitalization of the Company;
 
(iv)           Amend the Articles of Incorporation or Bylaws of the Company;
 
(v)           (A) materially increase the annual level of compensation of any
employee of the Company, (B) increase the annual level of compensation payable
or to become payable by the Company to any of its executive officers, (C) grant
any unusual or extraordinary bonus, benefit or other direct or indirect
compensation to any employee, director or consultant (except for bonuses to be
paid by Frank Mauger to James Jordan and Todd Kahl in connection with the
transactions contemplated hereby), (D) increase the coverage or benefits
available under any (or create any new) severance pay, termination pay, vacation
pay, Company awards, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, insurance, pension or other
employee benefit plan or arrangement made to, for, or with any of the directors,
officers, employees, agents or representatives of the Company or otherwise
modify or amend or terminate any such plan or arrangement or (E) enter into any
employment, deferred compensation, severance, consulting, non-competition or
similar agreement (or amend any such agreement) to which the Company is a party
or involving a director, officer or employee of the Company in his or her
capacity as a director, officer or employee of the Company;
 
(vi)           Except for trade payables and for indebtedness for borrowed money
incurred in the ordinary course of business and consistent with past practice,
borrow monies for any reason or draw down on any line of credit or debt
obligation, or become the guarantor, surety, endorser or otherwise liable for
any debt, obligation or liability (contingent or otherwise) of any other party,
or change the terms of payables or receivables;
 
(vii)          Subject to any lien (except for leases that do not materially
impair the use of the property subject thereto in their respective businesses as
presently conducted), any of the properties or assets (whether tangible or
intangible) of the Company;
 
23

--------------------------------------------------------------------------------

(viii)         Acquire any material properties or assets or sell, assign,
transfer, convey, lease or otherwise dispose of any of the material properties
or assets (except for fair consideration in the ordinary course of business
consistent with past practice) of the Company except, with respect to the items
listed on Schedule 6.2(b)(viii) hereto, as previously consented to by the
Purchaser;
 
(ix)           Cancel or compromise any debt or claim or waive or release any
material right of the Company except in the ordinary course of business
consistent with past practice;
 
(x)           Enter into any commitment for capital expenditures out of the
ordinary course;
 
(xi)           Permit the Company to enter into any transaction or to make or
enter into any Contract which by reason of its size or otherwise is not in the
ordinary course of business consistent with past practice;
 
(xii)           Permit the Company to enter into or agree to enter into any
merger or consolidation with any corporation or other entity, and not engage in
any new business or invest in, make a loan, advance or capital contribution to
or otherwise acquire the securities of any other party;
 
(xiii)          Except for transfers of cash pursuant to normal cash management
practices, permit the Company to make any investments in or loans to, or pay any
fees or expenses to, or enter into or modify any Contract with, any Seller or
any affiliate of any Seller; or
 
(xiv)          Agree to do anything prohibited by this Section 6.2 or anything
which would make any of the representations and warranties of the Sellers in
this Agreement or any other agreement referenced herein untrue or incorrect in
any material respect as of any time through and including the Closing.
 
6.3           Consents.
 
The Sellers shall use their best efforts, and the Purchaser shall cooperate with
the Sellers, to obtain at the earliest practicable date all consents and
approvals required to consummate the transactions contemplated by this
Agreement, including, without limitation, the consents and approvals referred to
in Section 4.7 hereof; provided, however, that neither the Sellers nor the
Purchaser shall be obligated to pay any consideration therefor to any third
party from whom consent or approval is requested.
 
6.4           Other Actions.
 
Each of the Sellers and the Purchaser shall use its best efforts to (i) take all
actions necessary or appropriate to consummate the transactions contemplated by
this Agreement, and (ii) cause the fulfillment at the earliest practicable date
of all of the conditions to their respective obligations to consummate the
transactions contemplated by this Agreement.
 
24

--------------------------------------------------------------------------------

6.5           No Solicitation.
 
The Sellers will not, and will not cause or permit the Company or any of the
Company's directors, officers, employees, representatives or agents
(collectively, the "Representatives") to, directly or indirectly, (i) discuss,
negotiate, undertake, authorize, recommend, propose or enter into, either as the
proposed surviving, merged, acquiring or acquired corporation, any transaction
involving a merger, consolidation, business combination, purchase or disposition
of any amount of the assets or capital stock or other equity interest in the
Company other than the transactions contemplated by this Agreement (an
"Acquisition Transaction"), (ii) facilitate, encourage, solicit or initiate
discussions, negotiations or submissions of proposals or offers in respect of an
Acquisition Transaction, (iii) furnish or cause to be furnished, to any party,
any information concerning the Business, operations, properties or assets of the
Company in connection with an Acquisition Transaction, or (iv) otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other party to do or seek any of the
foregoing.  The Sellers will inform the Purchaser in writing immediately
following the receipt by any Seller, the Company or any Representative of any
proposal or inquiry in respect of any Acquisition Transaction.
 
6.6           Preservation of Records.
 
Subject to Section 6.14(d) hereof (relating to the preservation of Tax records),
the Sellers and the Purchaser agree that each of them shall preserve and keep
the records held by it relating to the Business of the Company (including but
not limited to books, records and accounts, financial information,
correspondence, production records, employment records and other similar
information) for a period of six years from the Closing Date and shall make such
records and personnel available to the other as may be reasonably requested by
such party in connection with, among other things, any insurance claims by,
legal proceedings against or governmental investigations of the Sellers or the
Purchaser or any of their affiliates or in order to enable the Sellers or the
Purchaser to comply with their respective obligations under this Agreement and
each other agreement, document or instrument contemplated hereby or thereby.  
 
6.7           Publicity.
 
None of the Sellers nor the Purchaser shall issue any press release or public
announcement concerning this Agreement or the transactions contemplated hereby
without obtaining the prior written approval of the other party hereto, which
approval will not be unreasonably withheld or delayed, unless, in the sole
judgment of the Purchaser or the Sellers, disclosure is otherwise required by
applicable law or by the applicable rules of any stock exchange on which the
Purchaser lists securities, provided that, to the extent required by applicable
law, the party intending to make such release shall use its best efforts
consistent with such applicable law to consult with the other party with respect
to the text thereof.
 
6.8           Use of Name.
 
The Sellers hereby agree that upon the consummation of the transactions
contemplated hereby, the Purchaser and the Company shall have the sole right to
the use of the name "Major Electric Incorporated" and the Sellers shall not, and
shall not cause or permit any affiliate to, use such name or any variation or
simulation thereof.
 
25

--------------------------------------------------------------------------------

6.9           Employment Agreements.
 
On or prior to the Closing Date, each of Frank Mauger and James Jordon shall
enter into an employment agreement with the Company, substantially in the form
of agreement attached hereto as Exhibit 6.9 (the “Employment Agreements”).
 
6.10           Board of Directors.
 
The Board of Directors of the Company as of the Closing Date shall consist of
two members appointed by the Sellers and three members appointed by the
Purchaser.
 
6.11           Fiscal Projection; Confirmation of Financial Information.
 
On or prior to the Closing Date, the Company will provide (i) a fiscal
projection for the twelve month period ending April 30, 2008, which projection
shall be mutually acceptable to the Company and the Purchaser, and (ii)
confirmation to the Purchaser of information related to backlog, add-backs, key
client relationships and the tangibility of assets.

6.12           Financial Statements.
 
If required for Securities and Exchange Commission purposes, the Sellers shall
cooperate with the Purchaser, to provide all information required for the
completion of audited financial statements of the Company for the years ended
December 31 , 2005 and 2006 and reviewed statements for the six month period
ended June 30, 2006 and 2007, and delivered no later than 60 days from the
Closing Date.  The costs of such financial statements shall be borne by the
Purchaser.

6.13           Tax Election.
 
At the sole discretion of the Purchaser, the Sellers agree to make a timely
election under Internal Revenue Code Section 338(h)(10) (“338(h)(10) election”),
and Purchaser shall indemnify and hold harmless Sellers from and against any Tax
liabilities imposed on Sellers as a result of having made any such 338(h)(10)
election to the extent that such Tax liabilities exceed the Tax liabilities that
the Sellers would incur in the absence of such election (the “Purchaser Tax
Payments”).  In the event that the Sellers incur any Tax obligations as a result
of the 338(h)(10) election which are in excess of amounts due had the
transactions set forth herein been taxed as a stock sale, then the amount that
the Purchaser shall be required to reimburse Sellers under this paragraph (1)
shall be grossed up to assure that Sellers do not incur any Tax cost as a result
of the 338(h)(10) election and the reimbursement payments under this paragraph
and (2) shall take into account the highest marginal income tax rate applicable
to payments of this type at the applicable times as applies to any of the
Sellers.  Any Purchaser Tax Payments shall be treated by the parties as
additional Purchase Price and shall be paid to Sellers not less than seven (7)
days prior to the time Sellers are required to pay such amounts with a Federal
tax return or estimate.  Any amounts payable hereunder to the Sellers shall be
paid in cash unless otherwise agreed to in writing by the Sellers.

26

--------------------------------------------------------------------------------

6.14           Tax Matters.
 
(a)           Tax Periods Ending on or Before the Closing Date.  The Sellers
shall prepare or cause to be prepared and file or cause to be filed all Tax
Returns for the Company for all periods ending on or prior to the Closing Date
which are filed after the Closing Date as soon as practicable and prior to the
date due (including any proper extensions thereof).  The Sellers shall permit
the Company and the Purchaser to review and provide comments, if any, on each
such Tax Return described in the preceding sentence prior to filing.  Unless the
Purchaser or the Company provides comments to the Sellers, the Company shall
deliver to the Sellers each such Tax Return signed by the appropriate officer(s)
of the Company for filing within ten (10) days following the Sellers’ delivery
to the Company and the Purchaser of any such Tax Return.  The Sellers shall
deliver to the Company promptly after filing each such Tax Return a copy of the
filed Tax Return and evidence of its filing.  The Sellers shall pay the costs
and expenses incurred in the preparation and filing of the Tax Returns on or
before the date such costs and expenses are due.

If the Company provides comments to the Sellers and at the end of such ten (10)
day period the Company and the Sellers have failed to reach written agreement
with respect to all of such disputed items, the parties shall submit the
unresolved items to arbitration for final determination. Promptly, but no later
than thirty (30) days after its acceptance of its appointment as arbitrator, the
arbitrator shall render an opinion as to the disputed items. The determination
of the arbitrator shall be conclusive and binding upon the parties. The Company
and the Sellers (as a group) shall each pay one half of the fees, costs and
expenses of the arbitrator.  The prevailing party shall be entitled to an award
of pre- and post-award interest as well as reasonable attorneys’ fees incurred
in connection with the arbitration and any judicial proceedings related thereto
as determined by the arbitrator.

(b)           Tax Periods Beginning Before and Ending After the Closing
Date.  The Company or the Purchaser shall prepare or cause to be prepared and
file or cause to be filed any Tax Returns of the Company for Tax periods that
begin before the Closing Date and end after the Closing Date.  To the extent
such Taxes are not fully reserved for in the Company’s financial statements, the
Sellers shall pay to the Company an amount equal to the unreserved portion of
such Taxes that relates to the portion of the Tax period ending on the Closing
Date.  Such payment, if any, shall be paid by the Sellers within fifteen (15)
days after receipt of written notice from the Company or the Purchaser that such
Taxes were paid by the Company or the Purchaser for a period beginning prior to
the Closing Date.  For purposes of this Section, in the case of any Taxes that
are imposed on a periodic basis and are payable for a Taxable period that
includes (but does not end on) the Closing Date, the portion of such Tax that
relates to the portion of such Tax period ending on the Closing Date shall (i)
in the case of any Taxes other than Taxes based upon or related to income or
receipts, be deemed to be the amount of such Tax for the entire Tax period
multiplied by a fraction the numerator of which is the number of days in the Tax
period ending on the Closing Date and the denominator of which is the number of
days in the entire Tax period (the “Pro Rata Amount”), and (ii) in the case of
any Tax based upon or related to income or receipts, be deemed equal to the
amount that would be payable if the relevant Tax period ended on the Closing
Date.  The Sellers shall pay to the Company with the payment of any Taxes due
hereunder, the Sellers’ Pro Rata Amount of the costs and expenses incurred by
the Purchaser or the Company in the preparation and filing of the Tax Returns.
Any net operating losses or credits relating to a Tax period that begins before
and ends after the Closing Date shall be taken into account as though the
relevant Tax period ended on the Closing Date.  All determinations necessary to
give effect to the foregoing allocations shall be made in a reasonable manner as
agreed to by the parties.

27

--------------------------------------------------------------------------------

(c)           Refunds and Tax Benefits.  Any Tax refunds that are received after
the Closing Date by the Sellers (other than Tax refunds received in connection
with such Sellers’ individual Tax Returns), the Purchaser or the Company, and
any amounts credited against Tax to which the Sellers, the Purchaser or the
Company become entitled, shall be for the account of the Company, and the
Sellers shall pay over to the Company any such refund or the amount of any such
credit within fifteen (15) days after receipt or entitlement thereto.  In
addition, to the extent that a claim for refund or a proceeding results in a
payment or credit against Tax by a taxing authority to the Sellers, the Sellers
shall pay such amount to the Company within fifteen (15) days after receipt or
entitlement thereto.

(d)           Cooperation on Tax Matters.

(i)           The Purchaser, the Company and the Sellers shall cooperate fully,
as and to the extent reasonably requested by the other party, in connection with
the filing of any Tax Returns pursuant to this Section and any audit, litigation
or other proceeding with respect to Taxes.  Such cooperation shall include the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder.  The Company agrees (A) to retain all books and records with respect
to Tax matters pertinent to the Company relating to any taxable period beginning
before the Closing Date until the expiration of the statute of limitations (and,
to the extent notified by the Purchaser or the Sellers, any extensions thereof)
of the respective tax periods, and to abide by all record retention agreements
entered into with any taxing authority, and (B) to give the other party
reasonable written notice prior to transferring, destroying or discarding any
such books and records and, if the other party so requests, the Company or the
Sellers, as the case may be, shall allow the other party to take possession of
such books and records.

(ii)           The Purchaser and the Sellers further agree, upon request, to use
their commercially reasonable best efforts to obtain any certificate or other
document from any governmental authority or any other party as may be necessary
to mitigate, reduce or eliminate any Tax that could be imposed (including, but
not limited to, with respect to the transactions contemplated hereby).

(iii)           The Purchaser and the Sellers further agree, upon request, to
provide the other party with all information that either party may be required
to report pursuant to §6043 of the Code and all Treasury Department Regulations
promulgated thereunder.
 
6.15           Non-Competition. For a period of two years with respect to Frank
Mauger and six months with respect to James Jordan after the later of the
Closing Date or the termination of such individual’s employment by the Company,
Frank Mauger and James Jordan each agrees not to engage in any of the following
competitive activities: (a) engaging directly or indirectly in any business or
activity substantially similar to any business or activity engaged in (or
scheduled to be engaged) by the Company or the Purchaser in any areas where the
Company or the Purchaser engage in business; (b) engaging directly or indirectly
in any business or activity competitive with any business or activity engaged in
(or scheduled to be engaged) by the Company or the Purchaser in any areas where
the Company or the Purchaser engage in business; (c) soliciting or taking away
any employee, agent, representative, contractor, supplier, vendor, customer,
franchisee, lender or investor of the Company or the Purchaser, or attempting to
so solicit or take away; (d) interfering with any contractual or other
relationship between the Company or the Purchaser and any employee, agent,
representative, contractor, supplier, vendor, customer, franchisee, lender or
investor; or (e) using, for the benefit of any person or entity other than the
Company, any confidential information of the Company or the Purchaser. Nothing
in this Section 6.15 shall be deemed, however, to prevent Frank Mauger or James
Jordan from owning securities of any publicly-owned corporation engaged in any
such business, provided that the total amount of securities of each class owned
by such individual in such publicly-owned corporation (other than Purchaser)
does not exceed two percent (2%) of the outstanding securities of such class. In
addition, no Seller shall make any negative statement of any kind concerning the
Company, the Purchaser or their affiliates, or their directors, officers or
agents, except as such may be compelled by legal proceeding or governmental
action or authority.
 
28

--------------------------------------------------------------------------------

 
6.16           Registration of Shares of Purchaser Common Stock.  Sellers and
the Purchaser shall enter into the registration rights agreement substantially
in the form of Exhibit 6.16 hereto (the “Registration Rights Agreement”).
 
6.17           Employee Matters.  The Company and the Purchaser agree that
following the Closing Date:
 
(i)           the Company shall convert its current 401(k) benefit plan into the
plan maintained by the Purchaser;

(ii)           the Company shall make a good faith effort to maintain the
existing health and life insurance policies;

(iii)           the Company’s employees shall be eligible for grants pursuant to
the Purchaser’s stock option plan, which shall be allocated as determined in
good faith by Frank Mauger.

6.18           Elimination of Non-Business Financial Obligations.
 
On or prior to the Closing Date, the Company shall eliminate all financial
obligations, if any, which are not directly related to the Business and
operations of the Company.
 
Article VII
 
CONDITIONS TO CLOSING
 
7.1           Conditions Precedent to Obligations of Purchaser.
 
The obligation of the Purchaser to consummate the transactions contemplated by
this Agreement is subject to the fulfillment, on or prior to the Closing Date,
of each of the following conditions (any or all of which may be waived by the
Purchaser in whole or in part to the extent permitted by applicable law):
 
29

--------------------------------------------------------------------------------

(a)           all representations and warranties of the Sellers contained herein
shall be true and correct as of the date hereof;
 
(b)           all representations and warranties of the Sellers contained herein
qualified as to materiality shall be true and correct, and the representations
and warranties of the Sellers contained herein not qualified as to materiality
shall be true and correct in all material respects, at and as of the Closing
Date with the same effect as though those representations and warranties had
been made again at and as of that time;
 
(c)           the Sellers shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by  them on or prior to the Closing Date;
 
(d)           the Purchaser shall have been furnished with certificates (dated
the Closing Date and in form and substance reasonably satisfactory to the
Purchaser) executed by each Seller certifying as to the fulfillment of the
conditions specified in Sections 7.1(a), 7.1(b) and 7.1(c) hereof;
 
(e)           Certificates representing 100% of the Shares shall have been, or
shall at the Closing be, validly delivered and transferred to the Purchaser,
free and clear of any and all liens;
 
(f)           there shall not have been or occurred any Material Adverse Change;
 
(g)           the Sellers shall have obtained all consents and waivers referred
to in Section 4.7 hereof, in a form reasonably satisfactory to the Purchaser,
with respect to the transactions contemplated by this Agreement;
 
(h)           no legal proceedings shall have been instituted or threatened or
claim or demand made against the Sellers, the Company, or the Purchaser seeking
to restrain or prohibit or to obtain substantial damages with respect to the
consummation of the transactions contemplated hereby, and there shall not be in
effect any order by a governmental body of competent jurisdiction restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby;
 
(i)           the Purchaser shall have received the written resignations of each
director of the Company, other than Frank Mauger and James Jordan;
 
(j)            the Employment Agreements shall have been executed by Frank
Mauger and James Jordon and the Company;
 
(k)           the Purchaser shall have received information satisfactory in its
sole discretion to verify the accuracy of the backlog, add-backs, key client
relationships and the tangibility of assets; and
 
30

--------------------------------------------------------------------------------

(l)           Debt of the Company shall have been extinguished or converted to
terms acceptable to the Purchaser in its reasonable discretion.
 

7.2           Conditions Precedent to Obligations of the Sellers.
 
The obligations of the Sellers to consummate the transactions contemplated by
this Agreement are subject to the fulfillment, prior to or on the Closing Date,
of each of the following conditions (any or all of which may be waived by the
Sellers in whole or in part to the extent permitted by applicable law):
 
(a)           all representations and warranties of the Purchaser contained
herein shall be true and correct as of the date hereof;
 
(b)           all representations and warranties of the Purchaser contained
herein qualified as to materiality shall be true and correct, and all
representations and warranties of the Purchaser contained herein not qualified
as to materiality shall be true and correct in all material respects, at and as
of the Closing Date with the same effect as though those representations and
warranties had been made again at and as of that date;
 
(c)           the Purchaser shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by Purchaser on or prior to the Closing Date;
 
(d)           the Sellers shall have been furnished with certificates (dated the
Closing Date and in form and substance reasonably satisfactory to the Sellers)
executed by the Chief Executive Officer and Chief Financial Officer of the
Purchaser certifying as to the fulfillment of the conditions specified in
Sections 7.2(a), 7.2(b) and 7.2(c);
 
(e)           no legal proceedings shall have been instituted or threatened or
claim or demand made against the Sellers, the Company, or the Purchaser seeking
to restrain or prohibit or to obtain substantial damages with respect to the
consummation of the transactions contemplated hereby, and there shall not be in
effect any order by a governmental body of competent jurisdiction restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby; and
 
(f)           the Employment Agreements shall have been executed by Frank Mauger
and James Jordan and the Company.
 

ARTICLE VIII
 
DOCUMENTS TO BE DELIVERED
 
8.1           Documents to be Delivered by the Sellers.
 
At the Closing, the Sellers shall deliver, or cause to be delivered, to the
Purchaser the following:
 
31

--------------------------------------------------------------------------------

(a)           stock certificates representing the Shares referred to in Section
7.1(e) hereof, duly endorsed in blank or accompanied by stock transfer powers
and with all requisite stock transfer tax stamps attached;
 
(b)           the certificates referred to in Section 7.1(d) hereof;
 
(c)           copies of all consents and waivers referred to in Section 7.1(g)
hereof;
 
(d)           Employment Agreements, substantially in the form of Exhibit 6.9
hereto, duly executed by Frank Mauger and James Jordan;
 
(e)           written resignations of each of the directors of the Company,
other than Frank Mauger and James Jordan;
 
(f)           certificate of good standing with respect to the Company issued by
the Secretary of State of the State of incorporation, and for each state, if
any, in which the Company is qualified to do business as a foreign corporation;
 
(g)           the Escrow Agreement, substantially in the form of Exhibit 2.3
hereto, duly executed by the Company and the Sellers;
 
(h)           the Registration Rights Agreement, substantially in the form of
Exhibit 6.16 hereto, duly executed by the Sellers; and
 
(i)           such other documents as the Purchaser shall reasonably request.
 
8.2           Documents to be Delivered by the Purchaser.
 
At the Closing, the Purchaser shall deliver to the Sellers the following:
 
(a)           The Closing Payment (provided that the Closing Shares may be
delivered within three (3) business days of the Closing Date pursuant to Section
2.2(ii));
 
(b)           the certificates referred to in Section 7.2(d) hereof;
 
(c)           the Employment Agreements of Frank Mauger and James Jordan,
substantially in the form of Exhibit 6.9 hereto, duly executed by the Purchaser;
 
(d)           the Escrow Agreement, substantially in the form of Exhibit 2.3
hereto, duly executed by the Purchaser;
 
(e)           the Registration Rights Agreement, substantially in the form of
Exhibit 6.16 hereto, duly executed by the Purchaser; and
 
(f)           such other documents as the Sellers shall reasonably request.
 
32

--------------------------------------------------------------------------------

 
ARTICLE IX
 
INDEMNIFICATION
 
9.1           Indemnification.
 
(a)           Subject to Sections 9.2 and 10.2 hereof, Frank Mauger (“Mauger”)
hereby agrees to indemnify and hold the Purchaser, the Company, and their
respective directors, officers, employees, affiliates, agents, successors and
assigns (collectively, the "Purchaser Indemnified Parties") harmless from and
against:
 
(i)           any and all liabilities of the Company of every kind, nature and
description, absolute or contingent, existing as against the Company prior to
and including the Closing Date or thereafter coming into being or arising by
reason of any state of facts existing, or any transaction entered into, on or
prior to the Closing Date, except to the extent that the same have been fully
provided for in the Balance Sheet, or disclosed in the notes thereto or were
incurred in the ordinary course of business between the Balance Sheet Date and
the Closing Date;
 
(ii)           subject to Section 10.3, any and all losses, liabilities,
obligations, damages, costs and expenses based upon, attributable to or
resulting from the failure of any representation or warranty of the Sellers set
forth in Section 4 hereof, or any representation or warranty contained in any
certificate delivered by or on behalf of the Sellers pursuant to this Agreement,
to be true and correct in all respects as of the date made;
 
(iii)           any and all losses, liabilities, obligations, damages, costs and
expenses based upon, attributable to or resulting from the breach of any
covenant or other agreement on the part of the Sellers under this Agreement;
 
(iv)           any and all notices, actions, suits, proceedings, claims,
demands, assessments, judgments, costs, penalties and expenses, including
reasonable attorneys' and other professionals' fees and disbursements
(collectively, "Expenses") incident to any and all losses, liabilities,
obligations, damages, costs and expenses with respect to which indemnification
is provided hereunder (collectively, "Losses").
 
(b)           Subject to Sections 9.2 and 10.2 hereof, Purchaser hereby agrees
to indemnify and hold the Sellers and their respective affiliates, agents,
successors and assigns (collectively, the "Seller Indemnified Parties") harmless
from and against:
 
(i)           any and all Losses based upon, attributable to or resulting from
the failure of any representation or warranty of the Purchaser set forth in
Section 5 hereof, or any representation or warranty contained in any certificate
delivered by or on behalf of the Purchaser pursuant to this Agreement, to be
true and correct as of the date made;
 
(ii)           any and all Losses based upon, attributable to or resulting from
the breach of any covenant or other agreement on the part of the Purchaser under
this Agreement or arising from the ownership or operation of the Company from
and after the Closing Date, unless such claim is for a pre-Closing matter; and
 
33

--------------------------------------------------------------------------------

(iii)           any and all Expenses incident to the foregoing.
 
9.2           Limitations on Indemnification for Breaches of Representations and
Warranties.
 
An indemnifying party shall not have any liability under Section 9.1(a)(ii) or
Section 9.1(b)(i) hereof unless the aggregate amount of Losses and Expenses to
the indemnified parties exceeds $50,000 (the “Basket”) (except for Losses and
Expenses based upon, attributable to or resulting from the failure of any
representation or warranty to be true and correct under Section 4.3, for which
the Basket shall not apply) and, in such event, the indemnifying party shall be
required to pay the entire amount of such Losses and Expenses in excess of the
Basket.  Notwithstanding anything else contained herein, the maximum liability
Mauger shall be required to pay hereunder, in the aggregate, shall be the
aggregate amount of cash and shares of the Purchaser (valued as of their date of
issuance) paid or delivered to the Sellers (the “Cap”).  In addition, if any
Loss or Expense of Purchaser is covered by insurance, Mauger shall not be
required to indemnify Purchaser for the amount of such Losses or Expenses to the
extent of such insurance proceeds and Mauger shall only pay Purchaser the excess
of the Losses and Expenses, if any, over such insurance proceeds, subject to the
Cap.  Following the Closing, other than in cases of fraud, this Article 9 shall
be the sole and exclusive remedy of the parties hereto and their successors and
assigns with respect to any and all claims for Losses and Expenses sustained or
incurred arising out of this Agreement.
 
9.3           Indemnification Procedures.
 
(a)           In the event that any legal proceedings shall be instituted or
that any claim or demand ("Claim") shall be asserted by any person or entity in
respect of which payment may be sought under Section 9.1 hereof (regardless of
the Basket referred to above), the indemnified party shall reasonably and
promptly cause written notice of the assertion of any Claim of which it has
knowledge which is covered by this indemnity to be forwarded to the indemnifying
party.  The indemnifying party shall have the right, at its sole option and
expense, to be represented by counsel of its choice, which must be reasonably
satisfactory to the indemnified party, and to defend against, negotiate, settle
or otherwise deal with any Claim which relates to any Losses indemnified against
hereunder.  If the indemnifying party elects to defend against, negotiate,
settle or otherwise deal with any Claim which relates to any Losses indemnified
against hereunder, it shall within five (5) days (or sooner, if the nature of
the Claim so requires) notify the indemnified party of its intent to do so.  If
the indemnifying party elects not to defend against, negotiate, settle or
otherwise deal with any Claim which relates to any Losses indemnified against
hereunder, fails to notify the indemnified party of its election as herein
provided or contests its obligation to indemnify the indemnified party for such
Losses under this Agreement, the indemnified party may defend against,
negotiate, settle or otherwise deal with such Claim.  If the indemnified party
defends any Claim, then the indemnifying party shall reimburse the indemnified
party for the Expenses of defending such Claim upon submission of periodic
bills.  If the indemnifying party shall assume the defense of any Claim, the
indemnified party may participate, at his or its own expense, in the defense of
such Claim; provided, however, that such indemnified party shall be entitled to
participate in any such defense with separate counsel at the expense of the
indemnifying party if, (i) so requested by the indemnifying party to participate
or (ii) in the reasonable opinion of counsel to the indemnified party, a
conflict or potential conflict exists between the indemnified party and the
indemnifying party that would make such separate representation advisable; and
provided, further, that the indemnifying party shall not be required to pay for
more than one such counsel for all indemnified parties in connection with any
Claim.  The parties hereto agree to cooperate fully with each other in
connection with the defense, negotiation or settlement of any such Claim.
 
34

--------------------------------------------------------------------------------

(b)           After any final judgment or award shall have been rendered by a
court, arbitration board or administrative agency of competent jurisdiction and
the expiration of the time in which to appeal therefrom, or a settlement shall
have been consummated, or the indemnified party and the indemnifying party shall
have arrived at a mutually binding agreement with respect to a Claim hereunder,
the indemnified party shall forward to the indemnifying party notice of any sums
due and owing by the indemnifying party pursuant to this Agreement with respect
to such matter and the indemnifying party shall be required to pay all of the
sums so due and owing to the indemnified party by wire transfer of immediately
available funds within 10 business days after the date of such notice.
 
(c)           The failure of the indemnified party to give reasonably prompt
notice of any Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent that
the indemnifying party can demonstrate actual loss and prejudice as a result of
such failure.
 
(d)           With respect to amounts payable by Mauger hereunder to the
Purchaser hereunder, it is agreed that Mauger shall first be obligated to pay
all amounts in cash, up to the amount of cash actually received by the Sellers
pursuant to Article II of this Agreement.  Mauger may then deliver shares of
Purchaser common stock to the Purchaser to pay any additional amounts due
hereunder.  Any shares of Purchaser common stock so used to make payments
hereunder shall be valued at the closing price of such shares on the day prior
to the date of delivery to the Purchaser, endorsed for transfer.  Any additional
amounts which Mauger shall be required to pay after the delivery of any shares
of Purchaser common stock shall be made in cash.
 

ARTICLE X
 
MISCELLANEOUS
 
10.1           Payment of Sales, Use or Similar Taxes.
 
All sales, use, transfer, intangible, recordation, documentary stamp or similar
Taxes or charges, of any nature whatsoever, applicable to, or resulting from,
the transactions contemplated by this Agreement shall be borne by the Sellers.
 
10.2           Survival of Representations and Warranties.
 
The parties hereto hereby agree that the representations and warranties
contained in this Agreement or in any certificate, document or instrument
delivered in connection herewith, shall survive the execution and delivery of
this Agreement, and the Closing hereunder, regardless of any investigation made
by the parties hereto; provided, however, that any claims or actions with
respect thereto (other than claims for indemnifications with respect to the
representation and warranties contained in Sections 4.3, 4.11, 4.24, 4.29 and
5.8 which shall survive for periods coterminous with any applicable statutes of
limitation) shall terminate unless within twenty four (24) months after the
Closing Date written notice of such claims is given to the Sellers or such
actions are commenced.
 
35

--------------------------------------------------------------------------------

10.3           Expenses.
 
Except as otherwise provided in this Agreement, the Sellers and the Purchaser
shall each bear its own expenses incurred in connection with the negotiation and
execution of this Agreement and each other agreement, document and instrument
contemplated by this Agreement and the consummation of the transactions
contemplated hereby and thereby, it being understood that in no event shall the
Company bear any of such costs and expenses.
 
10.4           Specific Performance.
 
The Sellers and Purchaser acknowledge and agree that the breach of this
Agreement would cause irreparable damage to the other party and that the other
party will not have an adequate remedy at law.  Therefore, the obligations of
each party under this Agreement, including, without limitation, the Sellers'
obligation to sell the Shares to the Purchaser and the Purchaser’s obligation to
purchase such Shares, shall be enforceable by a decree of specific performance
issued by any court of competent jurisdiction, and appropriate injunctive relief
may be applied for and granted in connection therewith.  Such remedies shall,
however, be cumulative and not exclusive and shall be in addition to any other
remedies which any party may have under this Agreement or otherwise.
 
10.5           Further Assurances.
 
The Sellers and the Purchaser each agrees to execute and deliver such other
documents or agreements and to take such other action as may be reasonably
necessary or desirable for the implementation of this Agreement and the
consummation of the transactions contemplated hereby.

10.6           Submission to Jurisdiction; Consent to Service of Process.
 
(a)           The parties hereto hereby irrevocably submit to the non-exclusive
jurisdiction of any federal or state court located within the Commonwealth of
Pennsylvania or the State of Washington over any dispute arising out of or
relating to this Agreement or any of the transactions contemplated hereby and
each party hereby irrevocably agrees that all claims in respect of such dispute
or any suit, action proceeding related thereto may be heard and determined in
such courts.  The parties hereby irrevocably waive, to the fullest extent
permitted by applicable law, any objection which they may now or hereafter have
to the laying of venue of any such dispute brought in such court or any defense
of inconvenient forum for the maintenance of such dispute.  Each of the parties
hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
 
(b)           Each of the parties hereto hereby consents to process being served
by any party to this Agreement in any suit, action or proceeding by the mailing
of a copy thereof in accordance with the provisions of Section 10.10.
 
36

--------------------------------------------------------------------------------

(c) If any legal action or any arbitration or other proceeding is brought for
the enforcement or interpretation of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with or related to
this Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorneys' fees and other costs in connection with that action or
proceeding, in addition to any other relief to which it or they may be entitled.

10.7           Entire Agreement; Amendments and Waivers.
 
This Agreement (including the schedules and exhibits hereto, together with the
Confidentiality/Standstill Agreement executed by the parties as of June 14,
2007) represents the entire understanding and agreement between the parties
hereto with respect to the subject matter hereof and can be amended,
supplemented or changed, and any provision hereof can be waived, only by written
instrument making specific reference to this Agreement signed by the party
against whom enforcement of any such amendment, supplement, modification or
waiver is sought.  No action taken pursuant to this Agreement, including without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representation, warranty, covenant or agreement contained herein.  The waiver by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a further or continuing waiver of such breach or as a
waiver of any other or subsequent breach.  No failure on the part of any party
to exercise, and no delay in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
such right, power or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.  All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by
law.
 
10.8           Governing Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of Washington without giving effect to
principles regarding conflict of laws.
 
10.9           Table of Contents and Headings.
 
The table of contents and section headings of this Agreement are for reference
purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
 
10.10          Notices.
 
All notices and other communications under this Agreement shall be in writing
and shall be deemed given when delivered personally, mailed by certified mail,
return receipt requested, or via recognized overnight courier service with all
charges prepaid or billed to the account of the sender to the parties (and shall
also be transmitted by facsimile to the parties receiving copies thereof) at the
following addresses (or to such other address as a party may have specified by
notice given to the other party pursuant to this provision):
 
37

--------------------------------------------------------------------------------

 
(a)
Purchaser:

WPCS International Incorporated
One East Uwchlan Avenue, Suite 301
Exton, Pennsylvania 19341
Attn:  Andrew Hidalgo, Chief Executive Officer
Phone:  (610) 903-0400
Facsimile: (610) 903-0401

Copy to:

Thomas A. Rose, Esq.
Sichenzia Ross Friedman Ference LLP
61 Broadway
New York, New York 10006
Phone:  (212) 930-9700
Facsimile: (212) 930-9725

 
(b)
Sellers and Company:

Major Electric, Inc.
18538 142nd Avenue NE
Woodinville, WA 98072
Attn:  Frank Mauger
Phone:  (425) 483-2677
Facsimile:  (425) 402-9708

    Copy to:

Ryan, Swanson & Cleveland, PLLC
Attn:  Paul Meier, Esq.
1201 Third Avenue, Suite 3400
Seattle, WA 98101
Phone:  (206) 654-2214
Fax:  (206) 652-2914

10.11                      Severability.
 
If any provision of this Agreement is invalid or unenforceable, the balance of
this Agreement shall remain in effect.
 

38

--------------------------------------------------------------------------------

10.12                      Binding Effect; Assignment.
 
This Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns.  Nothing in this Agreement
shall create or be deemed to create any third party beneficiary rights in any
person or entity not a party to this Agreement except as provided below.  No
assignment of this Agreement or of any rights or obligations hereunder may be
made by either the Sellers or the Purchaser (by operation of law or otherwise)
without the prior written consent of the other parties hereto and any attempted
assignment without the required consents shall be void.
 
[intentionally blank]
 
39

--------------------------------------------------------------------------------

 
IN WITNESS WHEREOF, the parties hereto have executed or caused to be duly
executed this Stock Purchase Agreement as of the date first set forth above.

 

 
WPCS INTERNATIONAL INCORPORATED
         
 
By:
/s/ ANDREW HIDALGO      
Andrew Hidalgo,
Chief Executive Officer
                 

  MAJOR ELECTRIC, INC.          
 
By:
/s/ FRANK MAUGER      
Frank Mauger,
President
                 

  SELLERS:          
 
By:
/s/ FRANK MAUGER       Frank Mauger                  

      

             
 
By:
/s/ JAMES JORDAN       James Jordan                  

           
 
By:
/s/ TODD KAHL       Todd Kahl                  

 
 
40

--------------------------------------------------------------------------------

SCHEDULE 1.1
 
 

 Seller 
 Shares
     Frank Mauger
 15,000
      James Jordan   
 300
     Todd Kahl       
 300