Unassociated Document


     

    
 

    Exhibit
      10.34

    


    


    


    Major
      Electric Incorporated        
      June 14,
      2007 

    18538
      142nd
      Avenue
      NE

    Woodinville,
      WA 98072

    


    Re:
      Acquisition

     

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

     

    General
      Conditions:

     

    WPCS
      will
      acquire 100% of the issued and outstanding capital stock of MEI. In
      consideration for such sale, WPCS will deliver, at the closing of this
      transaction (the “Closing Date”), $4,000,000 to the shareholders of MEI (the
“Purchase Price”) as such amount may be adjusted as set forth herein, of which
      $3,000,000 will be in U.S. dollars (“Cash”) and $1,000,000 in WPCS common stock
      (the “Closing Payment”). The common stock will be valued at the NASDAQ closing
      price for WPCS on the day prior to the Closing Date and will be issued with
      demand registration rights. In addition, WPCS will deliver $2,750,000 (the
      “Additional Purchase Price”) in Cash and/or stock with demand registration
      rights at the discretion of WPCS, to the shareholders of MEI in the event MEI
      achieves an EBIT of $1,500,000 for their fiscal year 2007 ending December 31,
      2007. The Additional Purchase Price will be capped and prorated against
      achievement on a one to one basis. WPCS will review and validate the results
      and
      will pay the Additional Purchase Price amount within ninety days after December
      31, 2007.

     

    Notwithstanding
      the foregoing, the Purchase Price shall be adjusted by an amount equal to the
      variation of a $1,900,000 net tangible asset value for MEI as of the Closing
      Date. Net Tangible Asset Value (NTAV) is defined as total assets minus total
      liabilities minus intangible assets. Any shortfall below $1,900,000 in NTAV
      shall proportionately reduce the Closing Payment. Any excess above $1,900,000
      in
      NTAV shall be paid to the MEI shareholders in WPCS common stock with demand
      registration rights or Cash at the discretion of WPCS.

     

    An
      amount
      equal to $300,000 in Cash shall be held in escrow pending determination of
      the
      net tangible asset value for MEI 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 Frank Mauger a one-year employment agreement, with mutually
                agreeable terms, as president of MEI with a salary of $150,000 per
                annum
                and an annual discretionary bonus based on MEI EBIT performance.
                In
                addition, he will receive a monthly car allowance of $500. WPCS will
                offer
                a two-year employment agreement, with mutually agreeable terms, for
                Jim
                Jordan as vice president and general manager and Todd Kahl as vice
                president of sales. Jim Jordan will receive a $130,000 base salary
                per
                annum and Todd Kahl will receive a $125,000 base salary per annum.
                Each
                will receive an annual discretionary bonus based on MEI EBIT
                performance.

            


    

    


     

    Page
      One 


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    
      	·  	
              The
                MEI Board of Directors will consist of one MEI designee and two WPCS
                designees.

            


    

    


    
      	·  	
              Prior
                to the Closing Date, MEI will develop a mutually acceptable income
                projection for the WPCS fiscal period ending April 30,
                2008.

            


    

    


    
      	·  	
              The
                MEI 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 MEI 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
                MEI employees by Frank Mauger. 

            


    

    


    
      	·  	
              WPCS
                will need satisfactory confirmation of the MEI backlog, add-backs,
                key
                client relationships and the tangibility of
                assets.

            


    

    


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

            


    

    


    
      	·  	
              Prior
                to the Closing Date, MEI 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 MEI
                shareholders.

            


    

    


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

            


    

    


    
      	·  	
              MEI
                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.

            


    

    


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

            


    

    


    
      	·  	
              The
                conclusion of this transaction is subject to approval and executed
                resolution of the board of directors for MEI 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

               

               

            	 	 	 Major
              Electric
              Incorporated
	/s/ Andrew
              Hidalgo	 	 	/s/ Frank
              Mauger
	
              
Andrew
              Hidalgo / CEO	 	 	
              
                

              

              Frank Mauger / President

            
	
               

               

              6/14/07

              Date

            	 	 	
               

               

              6/14/07

              Date

            




     

     

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