Unassociated Document


    Exhibit
      10.35

     

     

    


    


    Max
      Engineering LLC                                             
      June 20,
      2007 

    9000
      SW
      Freeway, Suite 410

    Houston,
      TX 77074

    


    Re:
      Acquisition

    


    


    This
      non-binding letter of intent (the “LOI”) sets forth the agreement and
      understanding as to the terms of the acquisition of Max Engineering LLC, a
      Texas
      corporation, together with any owned operations (“MAX”), by WPCS International
      Incorporated, a Delaware corporation (“WPCS”):

    


     

    General
      Conditions:

     

    WPCS
      will
      acquire 100% of the issued and outstanding capital stock of MAX. In
      consideration for such sale, WPCS will deliver, at the closing of this
      transaction (the “Closing Date”), $800,000 to the shareholders of MAX (the
“Purchase Price”) as such amount may be adjusted as set forth herein, of which
      $600,000 will be in U.S. dollars (“Cash”) and $200,000 in WPCS common stock (the
“Closing Payment”). In addition, WPCS will deliver $350,000 in Cash and/or WPCS
      common stock, at the discretion of WPCS, to the shareholders of MAX in the
      event
      MAX achieves an EBIT of $275,000 for the first twelve month period after the
      Closing Date and WPCS will deliver $375,000 in Cash and/or WPCS common stock,
      at
      the discretion of WPCS, to the shareholders of MAX in the event MAX achieves
      an
      EBIT of $375,000 for the second successive twelve month period after the Closing
      Date (the “Additional Purchase Price”). The Additional Purchase Price will be
      capped and prorated against achievement on a one to one basis and each year
      will
      stand alone. WPCS will review and validate the results and will pay the
      Additional Purchase Price amount within ninety days after each twelve month
      ending period. Anytime WPCS common stock is used for payment for this
      transaction, the stock will have demand registration rights and be valued at
      the
      NASDAQ closing price for WPCS on the day prior to issuance.

     

    Notwithstanding
      the foregoing, the Purchase Price shall be adjusted by an amount equal to the
      variation of a $288,000 net tangible asset value for MAX as of the Closing
      Date.
      Net Tangible Asset Value (NTAV) is defined as total assets minus total
      liabilities minus intangible assets. Any shortfall below $288,000 in NTAV shall
      proportionately reduce the Closing Payment. Any excess above $288,000 in NTAV
      shall be paid to the MAX shareholders in Cash.

     

    An
      amount
      equal to $120,000 in Cash shall be held in escrow pending determination of
      the
      net tangible asset value for MAX as of the Closing Date, which shall be
      calculated by WPCS within 90 days of the Closing Date and distributed with
      adjustments, if any, within five days after the date of such
      determination.

     

    Additional
      Conditions:

     

    


    
      	·  	
              WPCS
                will offer Hak-Fong Ma a two-year employment agreement, with mutually
                agreeable terms, as president of MAX with a salary of $60,000 per
                annum.
                Also, WPCS will offer a two-year employment agreement, with mutually
                agreeable terms, to Robert Winterhalter as senior vice president
                with a
                salary of $60,000 per annum.

            


    

    


    


    Page
      One


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    


    
      	·  	
              The
                MAX Board of Directors will consist of two MAX designees and three
                WPCS
                designees.

            


    

    


    
      	·  	
              Just
                after the Closing Date, MAX will develop a mutually acceptable income
                projection for the WPCS fiscal period ending April 30,
                2008.

            


    

    


    
      	·  	
              The
                MAX shareholders will be responsible for their own legal costs and
                fees
                for this transaction. WPCS will bear the expense of its accounting/legal
                due diligence and accounting audit conversions. WPCS will also prepare
                all
                the Definitive Agreements for this
                transaction.

            


    

     

    
      	·  	
              WPCS
                will continue to support all MAX employee benefit programs and will
                convert the employees to the corporate wide WPCS 401(k) plan. In
                addition,
                WPCS will make a grant allocation for stock options to be distributed
                to
                MAX employees by Hak-Fong Ma. 

            


    

    


    
      	·  	
              WPCS
                will need satisfactory confirmation of the MAX key client relationships
                and the tangibility of assets.

            


    

    


    
      	·  	
              Any
                MAX financial obligations that are non-business related will be
                transferred to the entity of
                benefit.

            


    

    


    
      	·  	
              Prior
                to the Closing Date, MAX will not enter into any material obligations
                or
                new compensatory arrangements without the consent of WPCS. Material
                obligations do not include expenses incurred in the normal course
                of
                operations.

            


    

    


    
      	·  	
              The
                acquisition agreement and related documents (collectively, the “Definitive
                Agreements”) will contain representations, warranties, covenants,
                including non-competition and confidentiality covenants, conditions
                to
                close and indemnities usual to a transaction of this nature, including
                representations and warranties made by the MAX
                shareholders.

            


    

    


    
      	·  	
              MAX
                shall delivery the financial statements required by WPCS for SEC
                filing
                purposes.

            


    

    


    
      	·  	
              MAX
                and WPCS must execute a confidentiality/standstill
                agreement.

            


    

    


    
      	·  	
              All
                parties will use their best efforts to complete the transaction outlined
                above as soon as possible. It is expected that an acquisition agreement
                will be executed and the transaction will close on or before August
                1,
                2007 but no later than August 31,
                2007.

            


    

    


    
      	·  	
              MAX
                agrees to conduct its business in accordance with the ordinary, usual
                and
                normal course of business heretofore conducted by
                MAX.

            


    

    


    
      	·  	
              The
                conclusion of this transaction is subject to approval and executed
                resolution of the board of directors for MAX and WPCS
                respectively.

            


    

    


     

    Page
      Two

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


     

    


    This
      Letter of Intent may be executed simultaneously in two or more counterparts,
      each of which shall be deemed an original, but all of which together shall
      constitute one and the same instrument. This Letter of Intent constitutes the
      entire agreement of the parties covering everything agreed upon or understood
      in
      this transaction and will only be superseded by the Definitive Agreements.
      

    


    If
      the
      foregoing accurately reflects our discussions, please execute and return to
      the
      undersigned one copy of this letter along with the duly executed
      confidentiality/standstill agreement.

    


    


     

    
      	
               WPCS
                International Incorporated

               

               

            	 	 	 Max
              Engineering LLC
	/s/ Andrew
              Hidalgo	 	 	/s/ Hak-Fong
              Ma
	
              
Andrew
              Hidalgo / CEO	 	 	
              
Hak-Fong
              Ma / President
	
               

               

              6/25/07 

              Date 

            	 	 	
               

               

              6/22/07

              Date

            




    


     

     

    


    


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