Unassociated Document


    Exhibit
      10.1

    


    


    
 

    


    


    INTEREST
      PURCHASE AGREEMENT

    


    BETWEEN

    


    WPCS
      INTERNATIONAL INCORPORATED,

    


    AMERICAN
      GAS SERVICES, INC.

    


    AND

    


    AMERICAN
      GAS SERVICES, INC. CONSULTANTS

    


    


    


    Dated
      as
      of April 5, 2007

    


    


    


    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

    



    INTEREST
      PURCHASE AGREEMENT

    


    


    INTEREST
      PURCHASE AGREEMENT, dated as of April 5, 2007 (the “Agreement”), between WPCS
      International Incorporated, a corporation existing under the laws of Delaware
      (the “Purchaser”), American Gas Services, Inc., a corporation existing under the
      laws of Minnesota (“AGS”), and American Gas Services, Inc. Consultants, a
      corporation existing under the laws of Florida (“AGS Consultants,” together with
      AGS, the “Sellers”).

     

    W
      I T
      N E S S E T H:

     

    WHEREAS,
      AGS is a wholly-owned subsidiary of AGS Consultants;

     

    WHEREAS,
      AGS owns a 60% joint venture interest (the “Equity Interest”) in Taian AGS
      Pipeline Construction Co. Ltd., a joint venture enterprise in the City of Taian,
      Shandong province, the People's Republic of China (the “Company”); 

     

    WHEREAS,
      AGS Consultants owns a 60% profit interest (the “Profits Interest,” together
      with the Equity Interest, the “Interest”) in the Company; 

     

    WHEREAS,
      AGS and AGS Consultants desire to sell to Purchaser and the Purchaser desires
      to
      purchase from AGS the Equity Interest and from AGS Consultants the Profits
      Interest, for the purchase price and upon the terms and conditions hereinafter
      set forth;

     

    WHEREAS,
      the Company specializes in the construction of pipelines for coal gas, natural
      gas, propane, water, sewer construction projects and consulting work of
      technical nature, post-construction services and other operations currently
      held
      in its license (the “Business”).

     

    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 THE INTERESTS

     

    1.1 Sale
      and Purchase of the Interests. Upon
      the
      terms and subject to the conditions contained herein, on the Closing Date AGS
      and AGS Consultants shall sell, assign, transfer, convey and deliver to the
      Purchaser, and the Purchaser shall purchase the Equity Interest from AGS and
      the
      Profits Interest from AGS Consultants (collectively, the
      "Transaction"). 

     

    ARTICLE
      II

     

    PURCHASE
      PRICE AND PAYMENT

     

    2.1 Amount
      of Purchase Price. The
      purchase price for the Interest shall be an amount equal to $1,600,000 (the
      “Purchase Price”),
      subject to adjustment as set forth herein.

     


    
      
         

        
        

      

      
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    2.2 Payment
      of Purchase Price. On
      the
      Closing Date, the Purchaser shall pay the Purchase Price to AGS as
      follows:

     

    (a) $800,000
      (the “Cash Purchase Price”) which
      shall be paid by
      wire
      transfer of immediately available funds into an account designated by AGS
      Consultants; and

     

    (b) issuance
      of such number of shares of Purchaser common stock (the “Common Stock”) as
      equals $800,000, divided by the closing price of the Common Stock on the date
      which is one day prior to the Closing Date (the “AGS Shares”). The AGS Shares
      shall be issued in the name of AGS Consultants and delivered within three (3)
      business days of the Closing Date.

     

    2.3 Purchase
      Price Adjustment.
      Notwithstanding the foregoing, the Purchase Price shall be adjusted by an amount
      equal to 60% of the difference between (a) the net tangible asset value of
      the
      Company as of the Closing Date, and (b) $3,300,000. Net tangible asset value
      is
      defined as total assets minus total liabilities minus intangible assets,
      calculated in accordance with Generally Accepted Accounting Principles (“NTAV”).
      Any shortfall from the $3,300,000 shall proportionately reduce the cash and
      stock components of the Purchase Price. An amount equal to 10% of the Purchase
      Price (cash and AGS Shares in equal value) shall be held in escrow pending
      determination of the NTAV of the Company as of the Closing Date, which shall
      be
      calculated within 90 days of the Closing Date as set forth below and distributed
      within five days after the date of such determination.

     

    (a) Not
      later
      than 60 days following the Closing Date, the Purchaser shall prepare and deliver
      to the Sellers the NTAV calculation (the “NTAV Calculation”). Sellers shall have
      30 days following the delivery of the NTAV Calculation (the “Review Period”) to
      review the NTAV Calculation. The NTAV Calculation shall be conclusive and
      binding upon the parties unless, within 10 days following the expiration of
      the
      Review Period, Sellers notify the Purchaser in writing (the “Objection Notice”)
      that the Sellers dispute any of the amounts set forth therein. The Objection
      Notice shall identify each item of the NTAV Calculation to which the Sellers
      object and describe the nature of such objection and the Sellers' calculation
      of
      such disputed item. (i) If the Sellers do not deliver an Objection Notice to
      Purchaser within the Review Period or (ii) following delivery of any Objection
      Notice to Purchaser on a timely basis in respect of which the parties achieve
      resolution of any disputes set forth therein within the time period set forth
      in
      subsection (b) below, the NTAV Calculation (as amended to the extent necessary
      to reflect the resolution of such disputes), shall be conclusive and binding
      on
      the parties.

     

    (b) If
      the
      Sellers deliver an Objection Notice to Purchaser, Purchaser and the Sellers
      shall during the 20 day period following receipt of such Objection Notice use
      commercially reasonable efforts to negotiate in good faith and reach agreement
      on each item of the NTAV Calculation disputed pursuant to the Objection Notice.
      If during such period, Purchaser and the Sellers are unable to reach agreement,
      they shall immediately refer any such unresolved items to an unrelated certified
      public accountant chosen mutually by the Purchaser and the Sellers (the
“Unrelated Accountant”) for resolution in accordance with this subsection (any
      such referred item, a “Disputed Item”). Promptly, but no later than 20 days
      after acceptance of his or her appointment as Unrelated Accountant, the
      Unrelated Accountant shall determine those
      Disputed Items and shall render a written report 

     


    
      
         

        
        

      

      
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      as
        to the
        resolution of the Disputed Items and the resulting computation of the final
        Purchase Price, which computation shall be conclusive and binding on the
        parties. In the course of the Unrelated Accountant’s review, the parties may
        deliver written submissions to the Unrelated Accountant describing their
        respective positions. In resolving any Disputed Item, the Unrelated Accountant
        shall be bound by the provisions of this Section 2.3. Upon receipt of the
        Unrelated Accountant’s written report, the NTAV Calculation, as modified to
        reflect the Unrelated Accountant’s determinations, shall be deemed accepted by,
        and such determinations shall be final and binding on, the Sellers and Purchaser
        and enforceable as an arbitration award pursuant to the Federal Arbitration
        Act,
        9 U.S.C. § 1-16. The Unrelated Accountant’s fees and expenses shall be borne by
        Purchaser and the Sellers in such proportion as the Unrelated Accountant
        may
        determine and, in the absence of such determination,
        equally.

       

    

    ARTICLE
      III

     

    CLOSING

     

    3.1 Closing
      Date. The
      closing of the sale and purchase of the Interests provided for in Section 1.1
      hereof (the “Closing”) shall take place at the offices of Sichenzia Ross
      Friedman Ference LLP located at 61 Broadway, New York, New York 10006 (or at
      such other place as the parties may designate in writing) on such other date
      as
      the Sellers and the Purchaser may designate in writing. The date on which the
      Closing shall be held is referred to in this Agreement as the “Closing
      Date”.

     

    ARTICLE
      IV

     

    REPRESENTATIONS
      AND WARRANTIES OF THE SELLERS

     

    The
      Sellers hereby represents and warrants to the Purchaser that:

     

    4.1 Organization
      and Good Standing of the Sellers.
      AGS is
      a corporation duly organized, validly existing and in good standing under the
      laws of the jurisdiction of its incorporation as set forth above. AGS
      Consultants is a corporation duly organized, validly existing and in good
      standing under the laws of the jurisdiction of its incorporation as set forth
      above. 

    


    4.2 Authority.

    


    (a) 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 each Sellers’ Board of Directors.

    


    (b) Subject
      to any consents required under Section 4.6 below, the Sellers 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 the Sellers and constitutes a valid and
      binding obligation of the Sellers enforceable in accordance with its
      terms, except
      to
      the extent that enforceability may be limited by bankruptcy, insolvency and
      other similar laws affecting the enforcement of creditor’s rights generally and
      general equity principles.


    
      
         

        
        

      

      
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    (c) 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 either of the Sellers is a party or
      by
      which either is bound, any charter, regulation, or bylaw provision of the
      Sellers, or any decree, order, or rule of any court or governmental authority
      or
      arbitrator that is binding on either of the Sellers in any way.

    


    4.3 The
      Interest.
      The
      Sellers are the lawful record and beneficial owner of the Interests, free and
      clear of any liens, pledges, encumbrances, charges, claims or restrictions
      of
      any kind, and has, 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. Upon the delivery to Purchaser on the Closing Date of the
      Interests, Purchaser will have good, legal, valid, marketable and indefeasible
      title to a 60% interest in the Company, free and clear of any liens, pledges,
      encumbrances, charges, agreements, options, claims or other arrangements or
      restrictions of any kind.

    


    4.4. Minute
      Books.
      The
      minute books of the Sellers, 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
      each such corporation, if any, and, on the Closing Date, will 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.

    


    4.5. Subsidiaries
      and Affiliates.
      The
      Company does not have any subsidiaries.

    


    4.6. Consents.
      Except
      as set forth in Schedule 4.6, 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 required
      for the lawful consummation of the transactions contemplated hereby, nor will
      the consummation of the transactions contemplated hereby result in creating,
      accelerating or increasing any liability of the Company.

    


    4.7 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, together with any machinery or
      equipment that is leased or operated by the Company, are in fully serviceable
      working condition and repair (reasonable wear and tear excepted). All Fixed
      Assets owned, used or held by the Company are currently used in its business.
      All Fixed Assets used by the Company are set forth on Schedule 4.7
      hereto.


    
      
         

        
        

      

      
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    4.8 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, except
      as
      set forth on Schedule 4.8. To the knowledge of the Sellers, the real property
      and improvements thereon owned by the Company do not violate or contravene
      any
      planning or zoning ordinance or other administrative regulations or any
      restrictive covenant or any provision of local law in effect or any other law,
      ordinance, executive order or judicial decree, whether pertaining to pollution
      of the earth, water, atmosphere or otherwise, that in any material respect
      interferes with or prevents the continued use of such properties for the
      purposes for which they are now being used or which would materially affect
      the
      value thereof or the ability to transfer the same under state or federal laws
      or
      regulations. 

    


    4.9 Leases.
      All
      leases of real and personal property of the Company are described in Schedule
      4.9 and to the knowledge of the Sellers, 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. To the knowledge of the Sellers, the Company has
      performed in all material respects the obligations required to be performed
      by
      it under all such leases to date and it is not in default in any material
      respect under any of said leases, except as set forth in Schedule 4.9, 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, to the knowledge
      of
      the Sellers, is in material default thereunder. Except as noted on Schedule
      4.9,
      none of the leases listed thereon require the consent of a third party in
      connection with the transfer of the Interest.

    


    4.10 Patents,
      Software, Trademarks, Etc.
      The
      Company does not own or possess adequate licenses or other rights in patents,
      software, trademarks, service marks, trade names and copyrights, except for
      its
      name as listed on Schedule 4.10.

    


    4.11. Lists
      of Contracts, Etc.
      There is
      included in Schedule 4.11 a list of the following items (whether written or
      oral) relating to the Company:

    


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

    


    (ii) 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.

    


    Except
      as
      set forth in Schedule 4.11, (i) to the knowledge of the Sellers, all
      contracts, agreements and commitments of the Company set forth in Schedule
      4.11
      are valid, binding and in full force and effect, and (ii) neither the
      Company nor, to the knowledge of the Sellers, any other party to any such
      contract, agreement, or commitment has materially breached any provision thereof
      or is in default thereunder. 


    
      
         

        
        

      

      
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    To
      the
      knowledge of Sellers, 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.

    


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

    


    (a) 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.

    


    (b) 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.

    


    4.13 Compliance
      With the Law.
      The
      Company is not in violation of the Foreign Corrupt Practices Act. To the
      knowledge of the Sellers, 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 as set forth in Schedule 4.13, the Company has not been and is not now
      charged with, or to the knowledge of the Sellers, under investigation with
      respect to, any violation of any applicable law, regulation, order or
      requirement relating to any of the foregoing, nor, to the knowledge of the
      Sellers, are there any circumstances that would or might give rise to any such
      violation. To the knowledge of the Sellers, the Company has filed all reports
      required to be filed with any governmental, regulatory or administrative agency
      or authority.

    


    4.14 Litigation.
      Except
      as specifically identified on Schedule 4.14:

    


    (a) There
      are
      no legal, administrative, arbitration or other proceedings, or to the knowledge
      of the Sellers, governmental investigations, pending or, to the knowledge of
      the
      Sellers, threatened, against the Sellers or the Company, relating to the
      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
      Sellers for any such action.

    


    (b) There
      are
      no judgments, decrees or orders, to the knowledge of the Sellers, of any court,
      or any governmental department, commission, board, agency or instrumentality
      relating to the 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.


    
      
         

        
        

      

      
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    4.15 Absence
      of Certain Changes or Events.
      The
      Company has not, since December 31, 2006 (the “Balance Sheet Date”), except as
      described on Schedule 4.15:

    


    (a) Incurred
      any material obligation or liability (absolute, accrued, contingent or
      otherwise) except in the ordinary course of its business 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;

    


    (b) Discharged
      or satisfied any lien or encumbrance, or paid or satisfied any obligations
      or
      liability (absolute, accrued, contingent or otherwise) other than in the
      ordinary course of business that were not materially adverse;

    


    (c) Increased
      or established any reserve or accrual for taxes or other liability on its books
      or otherwise provided therefor, except 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;

    


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

    


    (e) 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;

    


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

    


    (g) 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;

    


    (h) Authorized
      any capital expenditure for real estate or leasehold improvements, machinery,
      equipment or molds in excess of $25,000.00 in the aggregate;

    


    (i) Except
      for this Agreement, entered into any material transaction other than in the
      ordinary course of business;

    


    (j) 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,
      except the dividend in the amount of US$172,436 or in the ordinary course of
      business; or


    
      
         

        
        

      

      
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    (k) 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.

    


    4.16. Absence
      of Certain Commercial Practices.
      To the
      knowledge of the Sellers, neither the Company nor the Sellers have made any
      payment (directly or by secret commissions, discounts, compensation or other
      payments) or given any gifts to 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, in either case, that would violate the laws of the
      United States.

    


    4.17 Employee
      Benefit Plans.
      The
      Company does not maintain any employee benefit plans.

    


    4.18 Licenses,
      Permits, Consents and Approvals.
      To the
      knowledge of the Sellers, the Company has all licenses, permits or other
      authorizations of governmental, regulatory or administrative agencies or
      authorities (collectively, “Licenses”) required to conduct the Business. All
      Licenses of the Company are listed on Schedule 4.18 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 4.18, 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 Interest by the 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.
      19 Environmental
      Matters.
      To the
      knowledge of the Sellers, except
      as
      set forth on Schedule 4.19 hereto:

     

    (a) the
      operations of the Company 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 on the Company;

     

    (b) the
      Company has obtained all permits required under all applicable Environmental
      Laws necessary to operate its business;

     


    
      
         

        
        

      

      
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    (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.

    


    4.20 Broker.
      Other
      than North American Capital Resources, LLC (d/b/a Sunbelt, neither the Company
      nor the Sellers have 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 the Sellers of any broker in connection with any transaction
      contemplated by this Agreement.

    


    4.21 Patriot
      Act.
      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
      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 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. 

    


    4.22 Investment
      Intent.
      The AGS
      Shares are being acquired hereunder by the Sellers for investment purposes
      only,
      for their own account, not as a nominee or agent and not with a view to the
      distribution thereof, except in compliance with the Securities Act of 1933,
      as
      amended, and applicable law. The Sellers have no present intention to sell
      or
      otherwise dispose of the AGS Shares and 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 AGS Shares acquired hereunder must be held
      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 the
      Sellers) 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.

     

    4.23 Investment
      Experience; Suitability.
      The
      Sellers are sophisticated investors familiar with the type of risks inherent
      in
      the acquisition of securities such as the AGS Shares and the Sellers’ financial
      position is such that the Sellers can afford to retain the AGS Shares for an
      indefinite period of time without realizing any direct or indirect cash return
      on their investment.


    
      
         

        
        

      

      
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    4.24 No
      Other Representations or Warranties; Schedules.
      Except
      for the representations and warranties contained in this Article IV (as modified
      by the schedules hereto), neither the Sellers nor any other person makes any
      express or implied representation or warranty with respect to the Sellers,
      the
      Company, the Business or the transactions contemplated by this Agreement, and
      the Sellers disclaim any other representations or warranties, whether made
      by
      the Sellers, any affiliate of the Sellers or any of their respective officers,
      managers, employees, agents or representatives. Except for the representations
      and warranties contained in Article IV hereof (as modified by the schedules
      hereto), the Sellers (i) expressly disclaim and negate any representation or
      warranty, expressed or implied, at common law, by statute or otherwise, relating
      to the condition of the Fixed Assets (including any implied or expressed
      warranty of merchantability or fitness for a particular purpose, or of
      conformity to models or samples of materials) and (ii) hereby disclaims all
      liability and responsibility for any representation, warranty, projection,
      forecast, statement, or information made, communicated, or furnished (orally
      or
      in writing) to the Purchaser or its affiliates or representatives (including
      any
      opinion, information, projection or advice that may have been or may be provided
      to the Purchaser by any director, officer, employee, agent, consultant or
      representative of the Sellers or any of their affiliates). The Sellers makes
      no
      representations or warranties to the Purchaser regarding the probable success
      or
      profitability of the Company of the Business. The disclosure of any matter
      or
      item in any schedule hereto shall not be deemed to constitute an acknowledgment
      that any such matter is required to be disclosed.

    


    ARTICLE
      V

     

    REPRESENTATIONS
      AND WARRANTIES OF PURCHASER

     

    The
      Purchaser hereby represents and warrants to the Sellers that:

     

    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.

    


    (c) The
      Purchaser has 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 the Purchaser and
      constitutes a valid and binding obligation of the Purchaser enforceable in
      accordance with its terms, except
      to
      the extent that enforceability may be limited by bankruptcy, insolvency and
      other similar laws affecting the enforcement of creditor’s rights generally and
      general equity principles


    
      
         

        
        

      

      
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    .

    


    5.2 Conflicts;
      Consents of Third Parties. 

     

    (a) The
      execution and delivery of this Agreement, the acquisition of the Interest 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 the Purchaser Documents or the compliance by Purchaser with any
      of
      the provisions hereof or thereof.

     

    5.3 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.

     

    5.4 Due
      Authorization of AGS Shares. The
      AGS
      Shares when delivered to the Sellers shall be validly issued and outstanding
      as
      fully paid and non-assessable,
      free
      and clear of any liens, pledges, encumbrances, charges, agreements, options,
      claims or other arrangements or restrictions of any kind.

     

    


    5.5 Condition
      of the Business.
      Notwithstanding anything contained in this Agreement to the contrary, Purchaser
      acknowledges and agrees that Sellers are not making any representations or
      warranties whatsoever, express or implied, beyond those expressly given by
      the
      Sellers in Article IV hereof (as modified by the Schedules hereto as
      supplemented or amended), and Purchaser acknowledges and agrees that, except
      for
      the representations and warranties contained therein, the Company and the
      Business are being transferred on a “where is” and, as to condition, “as is”
basis. Any claims Purchaser may have for breach of representation or warranty
      shall be based solely on the representations and warranties of the Sellers
      set
      forth in Article IV hereof (as modified by the Schedules hereto as supplemented
      or amended). Purchaser further represents that neither the Sellers nor any
      of
      their affiliates nor any other person has made any representation or warranty,
      express or implied, as to the accuracy or completeness of any information
      regarding the Company, the Business or the transactions contemplated by this
      Agreement not expressly set forth in this Agreement, and none of the Sellers,
      any of their affiliates or any other person will have or be subject to any
      liability to Purchaser or any other person resulting from the distribution
      to
      Purchaser or its representatives or Purchaser’s use of, any such information,
      including any confidential memoranda distributed on behalf of the Sellers
      relating to the Company, the Business or other publications or data room information
      provided to Purchaser or its representatives, or any other document or
      information in any form provided to Purchaser or its representatives in
      connection with the sale of the Interests and the transactions contemplated
      hereby. Purchaser acknowledges that it has conducted to its satisfaction, its
      own independent investigation of the Business and, in making the determination
      to proceed with the transactions contemplated by this Agreement, Purchaser
      has
      relied on the results of its own independent investigation.
      


    


    
      
         

        
        

      

      
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    ARTICLE
      VI

     

    POST-CLOSING
      COVENANTS

     

    6.1 Publicity. Neither
      of the Sellers nor the Purchaser shall issue any press release or public
      announcement concerning this Agreement or the transactions contemplated hereby
      without obtaining the prior written approval of the other party hereto, which
      approval will not be unreasonably withheld or delayed, unless, in the sole
      judgment of the Purchaser or the Sellers, disclosure is otherwise required
      by
      applicable Law or by the applicable rules of any stock exchange on which the
      Purchaser lists securities, provided that, to the extent required by applicable
      law, the party intending to make such release shall use its best efforts
      consistent with such applicable law to consult with the other party with respect
      to the text thereof. 

     

    6.2 Financial
      Statements.
      The
      Sellers shall cooperate with the Purchaser to provide all information required
      for the completion of audited financial statements of the Company to be prepared
      and delivered no later than 75 days from the Closing Date.

     

    6.3 Non-Competition.
      For a
      period of three years after the Closing Date, 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 in the Peoples Republic
      of China; (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 in the Peoples Republic of China; (c) soliciting or
      taking away any employee, agent, representative, contractor, supplier, vendor,
      customer, franchisee, lender or investor of the Company, or attempting to so
      solicit or take away; (d) interfering with any contractual or other relationship
      between the Company 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. In addition, no Seller shall make or permit the
      making of any negative statement of any kind concerning the Company, the
      Purchaser or their affiliates, or their directors, officers or
      agents.

     

    6.4 Registration
      of AGS Shares. 

     

    (a) Purchaser
      shall file a registration statement with the Securities and Exchange Commission
      within 45 days after the Closing Date which seeks to register for resale the
      AGS
      Shares (the
      “Registration Statement”).
      Purchaser shall use its reasonable best efforts to cause such registration
      statement to be declared effective within 120 days of the filing date of such
      registration statement.
      The
      Purchaser will furnish to the Sellers all information concerning the Purchaser
      and any of its affiliates required to be set forth in the Registration
      Statement, and the Purchaser will provide the Sellers and their counsel the
      opportunity to review and approve such
      information as set forth in the Registration Statement. The Purchaser shall
      also
      take any reasonable action required to be taken under any applicable blue sky
      laws in connection with the issuance of the AGS Shares.

     


    
      
         

        
        

      

      
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    (b) The
      Purchaser agrees to indemnify, defend, reimburse and hold harmless, to the
      extent permitted by law, each holder of the AGS Shares included in the
      Registration Statement against all losses, claims, damages, liabilities and
      expense (including reasonable legal expenses and any expenses incurred in
      investigation any claims) caused by any untrue or alleged untrue statement
      of
      material fact contained in the Registration Statement or any amendment thereof
      or supplement thereto or any omission or alleged omission of a material fact
      required to be stated therein or necessary to make the statements therein,
      in
      light of the circumstances under which they were made, not misleading or any
      other violation or breach of the Securities Act of 1933, as amended, the
      Securities Exchange Act of 1934, as amended, or any state securities or blue
      sky
      law by the Purchaser.

    


    (c) The
      Purchaser shall pay all of its own expenses incident to its performance of
      or
      compliance with this Section 6.4, including all registration and filing
      fees, printing, messenger, telephone and delivery expenses, fees and
      disbursements of counsel for the Purchaser and fees and disbursements of all
      independent auditors of the Purchaser. 

    


    ARTICLE
      VII

     

    DOCUMENTS
      TO BE DELIVERED

     

    7.1 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) copies
      of
      all consents and waivers necessary to consummate the transaction;

     

    (b) written
      resignations of each of the directors of the Company, other than Zhou Chuanli
      and Liu Deyin; 

     

    (c) the
      Joint
      Venture Interest Transfer Agreement duly executed by AGS, in the form attached
      hereto as Exhibit A (the “Transfer
      Agreement”);
      provided; however, if a provision of this Agreement and a provision of the
      Transfer Agreement are in conflict, the applicable provision of this Agreement
      and then the applicable provision of the Transfer Agreement shall control,
      in
      that order; and

    


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

     

    7.2 Documents
      to be Delivered by the Purchaser. At
      the
      Closing, the Purchaser shall deliver to the Sellers the following:

     

    (a) the
      Cash
      Purchase Price;

     

    (b) the
      AGS
      Shares; and

     

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

     


    
      
         

        
        

      

      
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    ARTICLE
      VIII

     

    INDEMNIFICATION

     

    8.1 Indemnification.

     

    (a) Subject
      to Section 8.2 hereof, the Sellers hereby agrees to indemnify and hold the
      Purchaser, the Company, and their respective directors, officers, employees,
      affiliates, agents, successors and assigns harmless from and
      against:

     

    (i) 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 to be true and correct in all
      respects as of the date made;

     

    (ii) 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; and

     

    (iii) any
      and
      all notices, actions, suits, proceedings, claims, demands, assessments,
      judgments, costs, penalties and expenses, including 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 (individually,
      a
“Loss”
      and, collectively, “Losses”).

     

    Purchaser
      acknowledges and agrees that the Sellers shall not have any liability under
      any
      provision of this Agreement for any Loss to the extent that such Loss relates
      to
      action taken by Purchaser or any other person (other than Sellers in breach
      of
      this Agreement) after the Closing Date. Purchaser shall take and shall cause
      its
      affiliates to take all reasonable steps to mitigate any Loss upon becoming
      aware
      of any event which would reasonably be expected to, or does, give rise thereto,
      including incurring costs only to the minimum extent necessary to remedy the
      breach which gives rise to the Loss. No representation or warranty of the
      Sellers contained herein shall be deemed untrue or incorrect, and the Sellers
      shall not be deemed to have breached a representation or warranty, as a
      consequence of the existence of any fact, circumstance or event of which (i)
      is
      disclosed in response to another representation or warranty contained in this
      Agreement, (ii) is disclosed in any accounting and/or due diligence reports
      prepared at the request of Purchaser, or (iii) Purchaser is aware as of the
      Closing Date.

    


    (b) Purchaser
      hereby agrees to indemnify and hold the Sellers and their respective
      shareholders, directors, officers, employees, affiliates, agents, successors
      and
      assigns 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 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; and

     


    
      
         

        
        

      

      
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    (iii) any
      and
      all Expenses incident to the foregoing.

     

    Sellers
      shall take and shall cause its affiliates to take all reasonable steps to
      mitigate any Loss upon becoming aware of any event which would reasonably be
      expected to, or does, give rise thereto, including incurring costs only to
      the
      minimum extent necessary to remedy the breach which gives rise to the Loss.
      No
      representation or warranty of Purchaser contained herein shall be deemed untrue
      or incorrect, and Purchaser shall not be deemed to have breached a
      representation or warranty, as a consequence of the existence of any fact,
      circumstance or event of which (i) is disclosed in response to another
      representation or warranty contained in this Agreement or (ii) the Sellers
      are
      aware as of the Closing Date.

    


    8.2 Limitations
      on Indemnification for Breaches of Representations and Warranties: Maximum
      Amount of Indemnification.
      An
      indemnifying party shall not be liable for any claim for indemnification
      pursuant to Section 8.1(a)(i) or Section 8.1(b)(i) 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, equals or exceeds $25,000
      (the “Basket”) and, in such event, the indemnifying party shall be required to
      pay the entire amount of such Losses and Expenses in excess of $25,000 (the
      “Deductible”). In no event shall the aggregate liability of the indemnifying
      party with respect to all indemnified party claims for indemnification exceed,
      in the aggregate, the Purchase Price.

     

    8.3 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 in respect of which payment may be
      sought under Section 8.1 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 ten (10) 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 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

     


    
      
         

        
        

      

      
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     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.

     

    (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.

     

    8.4 Calculation
      of Losses.
      The
      amount of any Loss subject to indemnification under Sections 8.1(a) and (b)
      shall be calculated net of (a) any Tax Benefit received by the indemnified
      party
      or any of their affiliates on account of such Loss and (b) any insurance
      proceeds or any indemnity, contribution or other similar payment received by
      the
      indemnified party from any third party with respect thereto. If the indemnified
      party receives a Tax Benefit after an indemnification payment is made to it,
      the
      indemnified party shall promptly pay to the indemnifying party the amount of
      such Tax Benefit at such time or times as and to the extent that such Tax
      Benefit is actually realized by the indemnified party. For purposes hereof,
“Tax
      Benefit” shall mean any refund of taxes paid or reduction in the amount of taxes
      which otherwise would have been paid. The indemnified party shall seek full
      recovery under all insurance policies covering any Loss to the same extent
      as
      they would if such Loss were not subject to indemnification hereunder. In the
      event that an insurance or other recovery is made by any indemnified party
      with
      respect to any Loss for which any such person has been indemnified hereunder,
      then a refund equal to the aggregate amount of the recovery shall be made
      promptly to the indemnifying party. The indemnifying party shall be subrogated
      to all rights of the indemnified party and their affiliates in respect of any
      Losses indemnified by the indemnifying party

    


    8.5 No
      Extraordinary Damages.
      Notwithstanding anything to the contrary elsewhere in this Agreement, no party
      shall, in any event, be liable to any other Person for any consequential,
      incidental, indirect, special or punitive damages of such other
      Person.


    
      
         

        
        

      

      
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    8.6 Exclusive
      Remedy.
      The
      sole and exclusive remedy for any breach or inaccuracy, or alleged breach or
      inaccuracy, of any representation or warranty in this Agreement or any covenant
      or agreement to be performed on or prior to the Closing Date, shall be
      indemnification in accordance with this Article VIII. In furtherance of the
      foregoing, the parties hereby waive, to the fullest extent permitted by
      applicable law, any and all other rights, claims and causes of action (including
      rights of contributions, if any) known or unknown, foreseen or unforeseen,
      which
      exist or may arise in the future, that it may have against the Sellers or
      Purchaser, as the case may be, arising under or based upon any federal, state
      or
      local law (including any such law relating to environmental matters or arising
      under or based upon any securities law, common Law or otherwise).

    


    8.7 Tax
      Treatment of Indemnity Payments. The
      Sellers and the Purchaser agree to treat any indemnity payment made pursuant
      to
      this Article VIII as an adjustment to the Purchase Price for federal, state,
      local and foreign income tax purposes.

     

    ARTICLE
      IX

     

    MISCELLANEOUS

     

    9.1 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
      Purchaser.

     

    9.2 Survival
      of Representations and Warranties. The
      parties hereto hereby agree that the representations and warranties contained
      in
      this Agreement shall survive the execution and delivery of this Agreement,
      and
      the Closing hereunder, for a period of eighteen (18) months after the Closing
      Date.

     

    9.3 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.

     

    9.4 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
      Interest 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.

     


    
      
         

        
        

      

      
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    9.5 Further
      Assurances. The
      Sellers and the Purchaser each agree 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.

     

    9.6 Submission
      to Jurisdiction.
      The
      parties hereto hereby irrevocably submit to the non-exclusive jurisdiction
      of
      any federal or state court located within the State of Delaware 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.

     

    9.7 Entire
      Agreement; Amendments and Waivers.
      This
      Agreement (including the schedules and exhibits hereto) 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.

     

    9.8 Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Delaware.

     

    9.9 Dispute
      Resolution.

     

    (a) As
      used
      in this Agreement, “Dispute” shall mean any dispute or disagreement between
      Purchaser and the Sellers concerning the interpretation of this Agreement,
      the
      validity of this Agreement, any breach or alleged breach by any Party under
      this
      Agreement or any other matter relating in any way to this Agreement provided,
      that "Dispute" shall not include any dispute relating to the NTAV Calculation,
      which shall be resolved in accordance with Section 2.3.

     

    (b) If
      a
      Dispute arises, the parties to the Dispute shall follow the procedures specified
      in Sections 9.9(c), (d) and (e).

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    (c) The
      parties shall promptly attempt to resolve any Dispute by negotiations between
      Purchaser and the Sellers. Purchaser or the Sellers, as the case may be, shall
      give the other party written notice (the “Dispute Notice”) of any Dispute not
      resolved in the normal course of business. Purchaser and the Sellers (or their
      representatives) shall meet at a mutually acceptable time and place within
      thirty (30) days after receipt of the Dispute Notice by the party to whom such
      Dispute Notice was delivered, and thereafter as often as they reasonably deem
      necessary, to exchange relevant information and to attempt to resolve the
      Dispute. If Purchaser or the Sellers intend to be accompanied at any such
      meeting by legal counsel, the other party shall be given at least three (3)
      business days' prior written notice of such intention and may also be
      accompanied by legal counsel. If the Dispute has not been resolved by the
      parties (i) within ninety (90) days of receipt of a Dispute Notice, or (ii)
      if
      the parties fail to meet within thirty (30) days of receipt of such Dispute
      Notice, either Purchaser or the Sellers may initiate binding arbitration as
      provided in Section 9.9(d).

     

    (d) If
      the
      Dispute is not resolved by negotiations pursuant to Section 9.9(c), all Disputes
      shall be determined by binding arbitration in Chicago, Illinois in accordance
      with the commercial rules of the AAA then in effect unless the parties mutually
      agree in writing to waive this provision. This agreement to arbitrate shall
      be
      specifically enforceable under the laws of the State of Illinois. The party
      initiating arbitration shall file written notice of the demand for arbitration
      with the other party to the Dispute and with the AAA in Chicago, Illinois.
      Such
      demand for arbitration shall be made within sixty (60) days after the expiration
      of the applicable time period set forth in the last sentence of Section 9.9(c),
      and in no event shall such demand be made after the date when an institution
      of
      legal or equitable proceedings based upon such Dispute would be barred by this
      Agreement or the applicable statute of limitations. The arbitration shall be
      before a single arbitrator chosen in accordance with the rules of the AAA,
      who
      shall interpret this Agreement in accordance with the internal laws of the
      State
      of Delaware without reference to any rule or provision thereof which would
      cause
      the application of the law of any other state. The award rendered by the
      arbitrator shall be final and binding and may not be appealed, and any judgment
      may be entered upon it in accordance with the applicable law in any court having
      jurisdiction thereof. In no event shall any party be awarded punitive
      damages.

     

    (e) At
      any
      time during the procedures specified in Sections 9.9(c) and (d), a party may
      seek a preliminary injunction or other provisional judicial relief in the courts
      of Cook County, Illinois or the U.S. District Court for the Northern District
      of
      Illinois if in the judgment of such party such action is necessary to avoid
      irreparable harm. Each party hereto consents to the exclusive jurisdiction
      of
      such courts with respect to this Section 9.9(e) and waive any objection to
      venue
      laid therein. Process in any proceeding referred to in this Section 9.9(e)
      may
      be served on any party anywhere in the world. Each Party shall use its
      commercially reasonable efforts to perform its obligations under this Agreement
      pending final resolution of any Dispute. All deadlines specified in this Section
      9.9 may be extended by mutual written agreement between Purchaser and the
      Sellers. The parties regard the obligations in this Section 9.9 to constitute
      an
      essential provision of this Agreement and one that is legally binding on them.
      In case of a violation of the obligations in this Section 9.9 by either
      Purchaser or the Sellers, the other party may bring an action to seek
      enforcement of such obligations in any court of law having jurisdiction thereof.
      The parties to the dispute shall pay their own costs, fees, and expenses
      incurred in connection with the application of the provisions of this Section
      9.9, and the prevailing party shall pay the fees and expenses of the AAA and
      the
      arbitrator in connection with the application of the provisions of Section
      9.9.

    


    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    9.10 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.

     

    9.11 Notices. All
      notices and other communications under this Agreement shall be in writing and
      shall be deemed given when delivered personally or mailed by certified mail,
      return receipt requested, 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, President

    Phone:
      (610) 903-0400

    Facsimile:
      (610) 903-0401

    


    Copy
      to:

    


    Thomas
      A.
      Rose, Esq.

    Sichenzia
      Ross Friedman Ference LLP

    61
      Broadway

    New
      York,
      New York 10006

    Phone:
      (212) 930-9700

    Facsimile:
      (212) 930-9725

    


    (b) Sellers:

    


    American
      Gas Services, Inc. Consultants

    c/o
      Harold Mueller

    1270
      Gulf
      Boulevard #1406

    Clearwater,
      Florida 33767

    Phone:
      (727) 447-4748

    Facsimile:
      

    


    Copy
      to:

    


    Daniel
      J.
      Brink

    Reinhart
      Boerner Van Deuren s.c.

    W233
      N2080 Ridgeview Parkway

    Waukesha,
      WI 53188

    Phone:
      (262) 951-4532

    Facsimile:
      (262) 951-4690

    


    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

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

     

    9.13 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; provided, however, that the
      Purchaser may assign this Agreement and any or all rights or obligations
      hereunder (including, without limitation, the Purchaser's rights to purchase
      the
      Interest and the Purchaser's rights to seek indemnification hereunder) to any
      affiliate of the Purchaser. Upon any such permitted assignment, the references
      in this Agreement to the Purchaser shall also apply to any such assignee unless
      the context otherwise requires.

     

    9.14 Counterparts;
      Facsimile Signature.
      This
      Agreement may be executed in counterparts, each of which shall be deemed an
      original and all of which together shall constitute one and the same agreement.
      Each of the parties to this Agreement agrees that a signature affixed to a
      counterpart of this Agreement and delivered by facsimile by any person is
      intended to be its, his or her signature and shall be valid, binding and
      enforceable against such person.

    


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      blank]

     


    
      
         

         

        
        

      

      
        22

        
          

        

      

      
        
        

      

    


     

     

    
      	 	 	 
	 	WPCS INTERNATIONAL
              INCORPORATED
	 
 	 
 	 
 
	
            	By:  	/s/ ANDREW
              HIDALGO
	 	
              
                

              

              Andrew
                Hidalgo,

              Chief
                Executive Officer

            
	 	 



      	 	 	 
	 	AMERICAN GAS SERVICES,
              INC.
	 
 	 
 	 
 
	
            	By:  	/s/ HAROLD
              MUELLER
	 	
              
                

              

              Harold
                Mueller,

              President

            
	 	 


    

     

    
      	 	 	 
	 	AMERICAN GAS SERVICES, INC.
              CONSULTANTS:
	 
 	 
 	 
 
	 	By:  	/s/ HAROLD
              MUELLER
	 	
              
                

              

              Harold
                Mueller,

              President