ex101.htm


    Exhibit
      10.1

    


    


    


    


    


    


    


    


    


    STOCK
      PURCHASE AGREEMENT

    


     AMONG

    


    WPCS
      INTERNATIONAL INCORPORATED

    


    


    GOMES
      AND
      GOMES, INC. dba EMPIRE ELECTRIC

    


    AND

    


    HAROLD
      L.
      GOMES

    


    AND

    


    JUDY
      L.
      GOMES

    


    


    


    


    Dated
      November 1, 2007

    


    


    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

    


    


    TABLE
      OF
      CONTENTS

     

    
      
        	
                ARTICLE
                  I SALE AND PURCHASE OF SHARES 

              	 
                
                Page

              
	
                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

              


      

       

       

       

      
        
          
          

        

        
          ii

          
            

          

        

        
          
          

        

      

      
 

      
        	
                4.25

              	
                Product
                  Warranties and Product Liabilities

              	
                16

              
	
                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   

              	
                
                  Outstanding
                    Notes

                

              	26
	
                6.12   

              	
                
                  Financial
                    Statements

                

              	26
	
                6.13   

              	
                Tax
                  Election

              	26
	
                6.14   

              	
                Tax
                  Matters

              	27
	
                6.15

              	
                Non-Competition

              	
                28

              
	
                6.16

              	
                Registration
                  of Shares of Purchaser Common Stock

              	
                29

              
	
                6.17

              	
                Employee
                  Matters

              	
                29

              


      

       

       

      
 

      
        
          
          

        

        
          iii

          
            

          

        

        
          
          

        

      

      
        	 	 	 
	 	 	 
	 	 	 
	 	 	 
	
                ARTICLE
                  VII CONDITIONS TO CLOSING 

              	 
	
                7.1

              	
                Conditions
                  Precedent to Obligations of Purchaser  

              	29
	
                7.2

              	
                Conditions
                  Precedent to Obligations of the Sellers

              	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
	 	 	 
	 	 	 


      

    

    


    


    


    
      
        
        

      

      
        iv

        
          

        

      

      
        
        

      

    

    


    


    


    STOCK
      PURCHASE AGREEMENT

    


    


    THIS
      STOCK PURCHASE AGREEMENT is made as of November 1, 2007 (the “Agreement”), among
      WPCS International Incorporated, a corporation existing under the laws of
      Delaware (the “Purchaser”), Gomes and Gomes, Inc. dba Empire Electric, a
      California 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 10,000 shares of common stock, no par value
      (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 Annex
      A 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  Three
      Million dollars ($3,000,000) (the “Purchase Price”), subject to adjustment as
      set forth herein.

     

    2.2  Payment
      of Purchase Price.

     

    On
      the
      Closing Date, the Purchaser shall pay Two Million dollars ($2,000,000) of the
      Purchase Price to the Sellers (the “Closing Payment”), which shall be paid by
      wire transfer of immediately available funds into an account designated by
      the
      Sellers.

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    An
      additional $1,000,000 (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 October 31, 2007, shall equal or exceed $850,000 (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 end
      of such twelve month period.  For the purposes of the calculation of
      the Target EBIT, non-recurring income and expenses shall be excluded, including
      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 of the other
      party.  If the arbitrator 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 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 October 31, 2007 shall be less than the Target
      EBIT, the Second Payment shall be prorated by the percent of shortfall 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 as reported by the NASDAQ Stock Market
      on the date prior to date on which the amount of the payment is determined
      (“Purchaser Shares”).  The Second Payment shall be paid within ten
      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 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 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 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 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
      Purchaser, then the Sellers shall pay the legal fees and expenses 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 $1,100,000, the Closing Payment and the 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 $1,100,000, the Closing Payment and the Purchase
      Price shall be increased by the amount of the excess, which amount shall be
      paid
      in cash to the Sellers.

     

    
      
        
        

      

      
        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 or any indemnification
      claims, $175,000 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 of 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 November 15, 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.

     

    ARTICLE
      IV

    REPRESENTATIONS
      AND WARRANTIES OF THE SELLERS

     

    


    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 Effect”).

    


    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.

    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (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 25,000 shares of Common Stock, no
      par value, of which 10,000 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.

    


    (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, respective Boards
      of Directors and committees of such Boards of Directors of each such
      corporation.

    


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    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, (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,
      might 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.

    


    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 October 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 August 31, 2007 and the related compiled statement of operations
                of
                the Company for the ten month period then ended (such statements,
                including the related notes and schedules thereto, are referred to
                herein
                as the “Financial Statements.”)

            


    

    


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    In
      such Financial Statements, the
      statements of operations do not contain any items of special or nonrecurring
      income or any other 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 generally
      accepted accounting principles consistently applied, would alter the information
      contained in the foregoing Financial Statements in any material
      way.

    


    The
      final closing Balance Sheet will be
      complete and correct in all material respects determined in accordance with
      GAAP.

    


    For
      the purposes hereof, the balance
      sheet of the Company as of August 31, 2007 is referred to as the “Balance Sheet”
and August 31, 2007 is referred to as the “Balance Sheet Date”.

    


    


    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, 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.

    


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    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 (“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.

    


    (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.

    


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (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.

    


    (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)  .

    


    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.

    


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    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 generally accepted
      accounting principles 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 Fixed Assets of the Company are set forth
      on Schedule 4.14 hereto.

    


    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 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.  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.  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.

    


    
      
        
        

      

      
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    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 has it infringed, nor to the Sellers’ knowledge 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.  The Company has the sole and
      exclusive right to use its corporate and trade names in the jurisdictions where
      it transacts business.

    


    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 expiring prior to the Closing Date.  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.  Upon the Closing Date, all life insurance policies
      maintained by the Company shall be assigned to each respective
      Seller.

    


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    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.

    


    (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;

    


    
      
        
        

      

      
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    (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;

    


    (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 will not result in 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 this 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 four weeks from the date
      hereof or ten business days before the Closing Date, whichever is
      sooner.

    


    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.

    


    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.

    


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    (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 adversely
      affect 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;

    


    (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 generally accepted accounting
      principles due to income earned or expense 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;

    


    
      
        
        

      

      
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    (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 materially and adversely affecting 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.

    


    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.

    


    (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
      immaterial 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 Seller, 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;

    


    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    (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);

    


    (iii)           An
      entity is an “affiliate” of the Company for purposes of this Section 3.24
      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 are not aware 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.

    


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    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 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.

    


    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.

    


    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    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.

    


    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, if any, will be 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.

    


    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.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    4.35           Accreditation.

    


    Each
      Seller 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.

     

    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.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    (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.

     

    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 acknowledge 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
      represent, warrant and agree 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 requests to ensure compliance with all applicable laws
      concerning money laundering and similar activities.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    5.8  Due
      Authorization of Purchaser
      Shares.  The shares of Purchaser Common Stock, if 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.

     

    


    


    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 the Seller Documents.  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 executed
      by the parties as of August 30, 2007.

     

    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 Persons 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 (B) insurance upon all of the properties
      and
      assets of the Company in such amounts and of such kinds com-parable to that
      in
      effect on the date of this Agreement;

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    (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

     

    (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
      certificate of incorporation or by-laws 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, (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;

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    (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 person, 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;

     

    (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 person;

     

    (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 the
      Seller Documents untrue or incorrect in any material respect as of any time
      through and including the Effective Time.

     

    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.

     

    
      
        
        

      

      
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    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.

     

    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 person,
      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 person 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 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.

     

    
      
        
        

      

      
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    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 "Empire 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.

     

    6.9  Employment
      Agreements.

     

    On
      or
      prior to the Closing Date, each of Harold L. Gomes and Judy L. Gomes 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 Harold L. Gomes, Andrew Hidalgo and
      Joseph Heater, unless they shall be unable or unwilling to serve, in which
      case
      one member shall be appointed by the Company and two members shall be 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
      October 31, 2005 and 2006 and reviewed statements for the nine month period
      ended July 31, 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.

    


    
      
        
        

      

      
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    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 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 Return signed by
      the
      appropriate officer(s) of the Company for filing within ten (10) days following
      the Seller’s delivery to the Company and the Purchaser of any such
      Return.  The Sellers shall deliver to the Company promptly after
      filing each such Return a copy of the filed 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 may 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 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.

    


    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    (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 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 and the Sellers agree (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 person 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.

    


    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    


    6.15  Non-Competition.
      For a period of two years after the later of the Closing Date or the termination
      of employment by the Company, Sellers agree 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 a Seller 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 Seller
      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.

     

    6.16  Registration
      of Shares of Purchaser Common Stock.  In the event the Sellers
      shall receive any Purchaser Shares, the Purchaser shall file a registration
      statement with respect to the resale of such shares within 45 days of the
      written demand of the Sellers and the Purchaser shall use commercially
      reasonable efforts to have such registration statement declared effective as
      soon as possible.

     

    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;

    


    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    (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
      Harold Gomes.

    


    6.18  Elimination
      of Non-Business Financial Obligations.

     

    On
      or
      prior to the Closing Date, the Company shall eliminate all financial obligations
      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):

     

    (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;

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    (i)  the
      Purchaser shall have received the written resignations of each director of
      the
      Company, other than Harold Gomes;

     

    (j)   the
      Employment Agreements shall have been executed by Harold Gomes, Judy
      Gomes-Guerrero and  the Company; and

     

    (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.

     

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

     

    
      
        
        

      

      
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    (f)  the
      Employment Agreements shall have been executed by Harold L. Gomes, Judy L.
      Gomes
      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:

     

    (a)  stock
      certificates representing the Shares, 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) and 7.1(e) 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
      Harold L. Gomes and Judy L. Gomes;

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    (e)  written
      resignations of each of the directors of the Company, other than Harold
      L.Gomes;

     

    (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 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; and

     

    (h)  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
      Purchase Price;

     

    (b)  the
      certificates referred to in Section 7.2(d) hereof;

     

    (c)   the
      Escrow Agreement; substantially in the Form of Exhibit 2.3 hereto, duly executed
      by the Company and the Sellers; and

     

    (d)  such
      other documents as the Sellers shall reasonably request.

     

    


    ARTICLE
      IX

     

    INDEMNIFICATION

     

    9.1  Indemnification.

     

    (a)  Subject
      to Section 9.2 hereof, the Sellers hereby agrees to jointly and severally
      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;

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    (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 Section 9.2, 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

     

    (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 finally determined to arise thereunder based upon,
      attributable to or resulting from the failure of any representation or warranty
      to be true and correct, other than the representations and warranties set forth
      in Sections 4.3, 4.11, 4.24 and 4.29 hereof, exceeds $15,000 (the “Basket”) and,
      in such event, the indemnifying party shall be required to pay the entire amount
      of such Losses and Expenses.  Notwithstanding else contained herein,
      the maximum liability the Sellers in the aggregate shall be required to pay
      hereunder shall be the amount of the Purchase Price.

     

    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 or the
      Deductible 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.

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    (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.

     

    9.4  Tax
      Treatment of Indemnity Payments.

     

    The
      Sellers and the Purchaser agree to treat any indemnity payment made pursuant
      to
      this Article 9 as an adjustment to the Purchase Price for federal, state, local
      and foreign income tax purposes.

     

    


    


    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.

     

    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.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    10.4  Specific
      Performance.

     

    The
      Sellers acknowledge and agree that the breach of this Agreement would cause
      irreparable damage to the Purchaser and that the Purchaser will not have an
      adequate remedy at law.  Therefore, the obligations of the Sellers
      under this Agreement, including, without limitation, the Sellers' obligation
      to
      sell the Shares to the Purchaser, 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 State of California 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.

     

    (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.

    


    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

    


    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 August 31, 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 California.

     

    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 Persons 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):

     

    


    
      	
              (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

     

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

    


    
      	
              (b)  

            	
              Sellers
                and Company:

            


    

    


    Empire
      Electric Incorporated

    4081
      Seaport Boulevard

    West
      Sacramento, California 95691

    Attn:  Harold
      Gomes, President

    Phone:  (916)
      373-9153

    Facsimile:  (916)
      373-0964

    


    Copy
      to:

    


    Kristan
      Kelsch, Esq.

    3426
      American River Drive, Suite 11

    Sacramento,
      California 95864

    Phone:
      (916) 239-4000

    Fax:
      (916) 239-4008

    


    


    10.11  Severability.

     

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

     

    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]

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

    


     

    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	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	
              GOMES
                AND GOMES, INC.

              dba
                EMPIRE ELECTRIC

            	 
	 	 	 	 
	 	 	 	 
	 	 	/s/
              HAROLD L. GOMES	 
	 	 	Harold
              L. Gomes,	 
	 	 	President	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	SELLERS:	 
	 	 	 	 
	 	 	/s/
              HAROLD L. GOMES	 
	 	 	Harold
              L. Gomes	 
	 	 	 	 
	 	 	 	 
	 	 	/s/
              JUDY L. GOMES	 
	 	 	 Judy
              L. Gomes	 
	 	 	 	 


    

    


     

     

     

    


    


     

    


    


    


     

     

     

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      1.1

    


    


    
      	 Seller 	 Shares	 	 
	 	 	 	 
	 Harold
              L. Gomes  	 8,000	 	 
	 	 	 	 
	 Judy
              L. Gomes	 2,000